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Jim Rickards: Strauss-Kahn Is a Cause for Concern
CNBC.com | May 16, 2011 | 12:15 PM EDT

Wall Street continues to digest the implications of the arrest of International Monetary Fund Managing Director Dominique Strauss-Kahn.

John Lipsky, the fund's number two man, is now in the big seat but for how long? Succession is already being debated. So is the potential impact on the bailouts of Greece and Ireland.

I asked Jim Rickards, Senior Managing Director of Market Intelligence at Tangent Capital, about the key questions many of my contacts are talking about in the wake of this alleged sex scandal.

LL: The- Arrest of IMF chief, Dominique Strauss-Kahn, is raising questions about the organization‘s leadership amid European debt crisis. Are you concerned?

JR: Yes, this is cause for concern. Of course, the IMF will be able to continue its technical work as before and acting leadership has been put in place. However, bailout negotiations are delicate processes where a lot is based on trust and confidence in the people doing the negotiations. Not everything can be put in writing and verbal assurances about how things will play out are common. Dominique Strauss-Kahn has been a key player in every phase of this crisis starting with the Washington G20 summit in November 2008. By removing him, the players will need to start over on certain aspects and build new bridges. Also some confidence in the IMF itself has been lost.

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