said the u.s. can move more slowly than its european counterparts. she warned that long term would have to be dealt with. her remarks about 35 minutes. remarks are about 35 minutes. >> thank you, tom. you're is sheer love of the craft of journalism and the people who practice it. this has made a difference to us. our guest speaker attracts a dazzling array of superlatives - -firm, tough, chic, smart. they do not say that about us at the ap somehow. christine lagarde is rightly called one of the most powerful

people in the world today. she takes the helm at the time of economic turmoil around the world. christine lagarde brings a unique background to these challenges. she was born in france. she went to law school and graduate school. she joined the international law firm of baker and mckenzie where she specialized in labor, antitrust, and mergers and acquisition, becoming chairman of the global executive committee and then chairman of the global strategic committee. the last six years were spent in chicago and baker and mckenzie. she moved back to france and was named finance bannister of france, the first woman to hold that post in any g-7 country.

christine lagarde has broken many barriers in their career. she is a powerful person. "the financial times" named her financial minister of the year. turn to facebook and you'll find frequent postings on the christine lagarde page in several languages punctuated by photos and videos. on youtube call you will find her interview with john stuart -- jon stewart. throughout her career, christine lagarde has championed the need for more women in fields like finance, saying, "there should never be too much

testosterone in the room." the financial questions over which he presides have never been more urgent. she has warned against becoming "so optimistic that we give a false sense of security." ladies and gentlemen, please join me in welcoming the managing director of the international monetary fund, christine lagarde. [applause] >> thank you very much. apologies for my appearance. i'm capable of breaking my knee. good morning.

i like to acknowledge tom curley, who is stepping down as ap president after a lifetime of distinguished service in journalism. i want to thank kathleen very much for who she is under kind words of introduction. speaking of warm, you know, it is a testament to associated press. to have a french woman as the opener for the president of the united states, which in french which translate into -- "the american opener." well done. it is important for the imf to

have an open and fully dialogue with its membership, particularly with the yen's states of america -- with the united states of america. thank you very much for having me. i don't know how you managed, tom, but this is complicated. i'm going to lift my paper. i came this morning with the simple message. the world needs u.s. economic leadership. now is not the time to withdraw or to phase out. now is the time to engage. we have seen the united states leadership indispensable, bringing people together around shared values and an abiding vision of human potential and

economic potential. we saw this after the marshall plan, after the second world war. we saw it again during and after the cold war. and we've seen it again over the past half century. the result has been a more successful and more peaceful world. today we stand at yet another moment in history were the united states working closely with its partners can help lead the world to a better economic future. these are trying times. the global economy is trying to emerge from a deep crisis since the depression. the world is growing smaller and more interconnected, thanks to you. we feel so much more vulnerable

as well as with many more opportunities. with this in mind, what i would like to try to do this morning is to try to answer three questions. where does the global economy stand today? why the united states in particular needs to be engaged? why corporation is so vital and what does the imf must play a bigger role? let me begin with the global economy. things have improved quite a bit over the last two months. there are signs of improvement -- this started back in the summer.

right in the middle of august. people should never go on vacation in august. [laughter] we see encouraging signs from financial stabilization in europe. we are seeing encouraging signs in the united states as well. manufacturing activity. as you said, we should not delude ourselves into a false sense of security. the recovery is still very fragile. the financial system in europe is still under heavy straits. debt is still high. stubbornly high unemployment is straining the seams. oil prices are another cloud on

the horizon. policymakers make use of the current moment. breathing space to put in place the policies and contained the job they have started. i would say to take a matter of completing and continuing the job. remember that we are here not because of random circumstance but because of strong policies that were decided a few years ago. the strong coordination initiated by the g-20. the bold policy actions taken by central banks. so what should be done to keep things on course?

i see three key dimensions. the first one is stability. we must ensure financial calm. i welcome the decision taken by the europeans to strengthen their -- it could help stop contagion and this should support a stronger global -- achieved in part by increasing the resources of the imf. we also need a stronger and safer financial sector. this means better and more coordinated regulations. we have seen some results here. this is a step in the right direction. coordinated and better

regulations. more needs to be done. it will be a question of coordinated implementation and of better regulation as well in areas that are still in the dark. i am thinking of derivatives and the shuttle banking. -- shadow banking. putting in place circuit breakers. that was the first objective, stability, particularly in the financial sector. the second is growth. in the short run, what matters most for growth is going to be demand. here comes the canadian approach.

demand is fine but we cannot possibly meet supply -- leave supply by the sideline. supply will take us further in a steady and solve way towards growth. boosting growth means using monetary policy to support activity, a special with no real signs of inflation. it also means using fiscal policy to support policy whenever possible. most countries need to bring their debt down, particularly in the advanced economies. some of those countries need to take a hard measures now to reduce the deficits now. those countries that can borrow at low interest rates can also

slow the course, take a bit of time. this is probably the case for the united states of america. it should not move too quickly. we cannot be complacent again. the u.s. debt exceeds 100% of its gdp. curbing the growth of entitlement spending and raising more revenue. the recovery is being held back by the burden of household debt. some of the statistics are just mind-boggling. over 1.5 million mortgages are seriously delinquent. measures have to be taken to

restore the capacity of those households by taking advantage of it easier refinancing and mortgage write-downs. the u.s. administration has made good proposals in that regard. remember, banks were helped to give credit again. households must be helped to begin to consume again. jobs. there is no magic bullet. it allowed to be reinvented from the ground in each economy where it is needed. there are over to order million people -- 200 million in search of a job.

to see those young job-seekers in pretty much every country -- their so much renaissance for those looking for a job who have the training and whose trading is adjusted for the needs of the job market. there is hope but nothing to match it. americans might think to themselves, "why should i bother? we have our own problems." you know better. the answer is simple. we cannot afford the luxury of staying in our mental backyard. we have to look beyond. some of you might have the same experience and the same feeling as i do.

when we were younger, life was simpler. not just about kansas. well, our livelihood depended on what we were doing, what our country could produce. but things have changed dramatically. today, we live in a world that is densely woven. since 1908, the volume of world trade has increased fivefold. compare the volume between 1995 and just before the crisis, it has tripled in such a short span of time. let's take a practical example, cars. cars are made of roughly 40,000 different parts.

takey country -- let's japan, with the dramatic earthquake and tsunami. there was a shortage of energy. car dealers around the corner will be short vehicles to sell. that is one example. the financial networks circuits that allow money to move across the world's. the financial crisis is -- this is probably due in this country to the fact that the financial sector is in large and sizable sector. the same is true for the uk. our analysis shows foreign banks hold about $5.5 trillion

of u.s. assets, while u.s. banks hold $2.2 trillion of foreign debt. it is fast and it is deep. trade. the united states is heavily integrated into global trade. the u.s. accounts for 11% of total trade around the world. 11% of u.s. trade -- 11% of total trade is accounted for by the united states. this connection is strong with your.

europe accounts for about 60% of the trade. 20% goes to the united states. the same is true with direct investments. of the top-10 markets for the u.s. invests, five of them are european. 3.5 million jobs are with european-based companies. the woven between these regions is strong. as the european economy falters, the u.s. recovery and jobs might well be in jeopardy. america has a stake in making

sure that european economies and world economy goes better. that brings me to my third and larger point. if integration poses great problems, it also is a promise for great rewards. it will only be so if there's heightened corp. between the nations. when nations faced common challenges, everybody wins. when they retire to their own backyard or the operate in isolation, everybody loses. we have seen it. "the reason why the world lacks unity is because man is disunited with himself." this concept -- two visionaries back in the last century really got it.

an american man and englishman figured that out. they live to the hardship when countries pulled apart and sometimes toward each other apart. they were the founders of the imf. the idea behind the imf was simple. if countries brought together and help each other in times of need, everybody would prosper together. this idea was important in 1944 and it is equally important today. what is the imf? that is a question i asked myself when i decided to join. i have to keep it simple for myself and everybody else.

the imf is and economic club like a giant credit union with 187 members, nations of the club. they operate together with one single purpose -- better financial stability. what we do, we are a conduit between them. if any of 187 members is in trouble, the others can come and rescue. we pool resources, reallocate, loans that are always reimbursed so that any member that is in trouble can have the benefit of it. of the imf is not for poor country. the imf is for all countries, 187.

we have a program -- the imf has been in the trenches all the time, helping the members overcome all kinds of challenges in order to bring them back to their feet so that they can just face the necessity of financing themselves and dealing with the economy. when european nations clutched to the marshall plan and try to rebuild their economy, we were there. when the newly independent countries in africa and asia hoped to find a new footing, we were there.

when latin american countries tried to break through from debt in the 1980's, we were there. when the berlin wall came crashing down and new nations stepped out into a brave new world trying to build institutions from the bottom up, we were there. when the global economy almost collapsed three short years ago, we were there. the imf can provide a circle of protection that will help countries get back on their feet and face sustaining their economy. but to do this in today's world, we need more resources.

now that the europeans have moved first, the time has come to increase our firepower. you wouldn't know that and i asked my team to look for it. the ratio -- the capital of the funds -- the ratio of funds quota relative to gdp is a three to four times less that was at the creation of the fund. we need more resources. i must also point out that the imf is quite a good investment for all the membership, including the united states. the imf does not give grants or does not give the nation -- the imf lends and gets its money

back. your money is only drawn upon when needed. your money earns interest. your money is used prudently. were put in place a program that has condition now is that we check on every quarter or so to make sure that they are satisfied. the money is not lent randomly but with conditionality. no one has ever lost money when investing in the imf. it will be the same under my watch. last point. you were the prime witnesses of this tectonic shift that we are seeing in the global economy.

countries like brazil, india, and china are just reaching a stage where they are no longer emerging but emerged -- not on a per capita basis for some of them. they want to have their seat at the table. we regulate reassess quotas, and reforms have been decided that now need to be implemented. we can implement those changes that will give more say, more votes, and a heavier burden on those countries that are emerging and ask for their seat at the table. it is fine to engage.

anyone with these reforms, the unites states of america was still remain my lead shareholder, as it should be the case for the leading economy which leadership is much needed. i would like you to lead with 3 concluding messages. corporations can deliver. it has happened in the past. i have witnessed this on the european scene. u.s. economically leadership is needed for cooperation to work. in a world driven by an infinite of interconnections, the idea of corporation is as urgent -- "geography has made its neighbors, the economy has made us partner and."

this is another time when that has to be demonstrated. the imf was founded by an american and englishmen who had a vision. that division is still true today and the imf continues to serve the community. all i would say to you is that use us. work with us. we will serve you and we will work with you. thank you very much. [applause] >> we will take a few questions. >> we will take a few questions.