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Increasing Pressure on DSK and the Euro-Zone

Posted by Larry Doyle on May 23, 2011 8:58 AM |

Despite areas of concern both here at home and around the world, most eyes remain fixated on developments within the Euro-zone at large and specifically on the case of former IMF head Dominique Strauss-Kahn.

The temperatures are rising on both the dethroned former international banker extraordinaire and the peripheral countries of the EU. Our market is opening sharply lower this morning on the heels of weakness in the EU. Let’s navigate.

People the world over want to know what really happened a week ago this past Saturday in the suite occupied by DSK at the Sofitel Hotel in New York City. 

We should continually remind ourselves that DSK, as with any indicted individual, is obviously innocent until proven guilty and entitled to due process. Along these lines, I truly hope the process works so real justice can be done. While DSK is now under house arrest in lower Manhattan, a recent release by the Center for Public Integrity reports, New Details of Investigation of a Hotel Maid’s Charge That She Was Sexually Assualted by IMF Chief,

The hotel maid who alleged she was sexually assaulted by the former head of the International Monetary Fund was found by a supervisor in a hallway after she escaped from his luxury suite, according to two people familiar with the investigation. Three members of the Sofitel hotel staff heard her story and then took her to the hotel’s security office.

They described her as traumatized, having difficulty speaking and concerned about losing her job if she pressed charges. The hotel security chief found her story credible and called police.

These sources, who spoke only condition of anonymity because of the ongoing investigation, provided the first detailed account of the hour-long window between the alleged attack and when police were summoned. What transpired in that hour is certain to be questioned by Strauss-Kahn’s lawyers as criminal charges move forward.

The sources asserted that the steps taken during that hour helped make the criminal case and apprehend the suspect before he fled the country. In that hour, Sofitel hotel staff calmed the maid, got her to overcome her difficulty describing what happened, did a thorough interview, and got police on the scene for forensic testing.

The security officer interrogated the maid, getting extensive details of what had happened in the suite. Throughout the questioning, the maid appeared traumatized and several times spit on the floor and walls. At one point she went to a bathroom to try to vomit. Her saliva was later removed from carpet and walls as evidence.

The hotel security officer then alerted the chief of hotel security, a former law enforcement officer, who conducted another interview that was halting at times because the woman had become increasingly traumatized and sick, the sources said.

The maid repeated her concerns about being fired and inquired whether she should even press charges.

The security chief made the decision to call New York police and an ambulance once he had ascertained there was enough evidence of a crime and that the maid’s story had been consistent during all four conversations she had with hotel employees, the sources said.

The four interviews and repeated efforts to calm the woman took about an hour. Police were summoned around 1:30 p.m.

I do not typically like to write on stories of personal destruction but this case is such a high profile story within the financial community with very real impact on the ongoing developments within the EU that I feel compelled to write. I treasure the principles of truth and integrity. Due process is also a prized virtue.

While conspiracy theories continue to run rampant as to what happened on Saturday the 21st of May at the Sofitel Hotel, I think there is a very real lesson here for all of us. That lesson is called respect. Self-respect and respect for each and every human being regardless of status is a cornerstone for justice and decency in the world. Those who would abuse their position and their power and display real disrespect in the process are a bane upon all of us who appreciate not only free and fair markets but also the virtues that promote truth and integrity in the process.

In regard to the markets overnight, the value of sovereign debt in the peripheral nations of Europe continues to decline. “Mister Market” continues to tell us that the debt of these nations will lead to an eventual default or restructuring. The only real question remains how the sizable embedded losses are distributed? Will the heads of state and central bankers foist these losses onto the taxpayers of the respective nations and protect a collection of large money center banks? Will they look for temporary bailouts that will only exacerbate the eventual pain? In doing so, might that lead to further social unrest and political upheaval? These developments are very fluid and continue to highlight that the EU specifically and the world at large remain filled with risk.

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.




  • Patrick

    Who would we include on the list of those who would and have abused their power and position?

    This may be a long list.

    Let’s start with Eliot Spitzer. Also should include Bill Clinton. Republicans are not paragons of virtue…so clearly we need to include Ahnold…John Ensign…Blago (obviously a Democrat)….Nixon…

    Help me out here…who would you add?

  • Dave

    Will DSK be able to receive a fair trial? The only people in New York who are not aware of the case must be those who do not look at the news or can’t read.

  • ACS

    Add Berlusconi to the list…

  • Frank

    Dartmouth professor David Blanchflower slams the EU for denying the reality of the impending disaster.

    Take a listen to Bloomberg’s,

    Blanchflower Interview on Europe Debt Crisis


  • DSK

    DSK Says His Good-Bye…

    Dear Colleagues:
    You have seen my letter of resignation as Managing Director of the Fund—one of the most difficult communications of my life. I wanted very much to be in touch with you, personally and directly, to express my profound sadness and frustration in having to leave under these circumstances. I am doing so because I believe it to be in the best interests of the institution that I care about so much, and of you, the staff, whom I deeply appreciate and admire.

    The past days have been extremely painful for me and my family, as I know they have been for everyone at the Fund. I am very sorry that this has been the case. I deny in the strongest possible terms the allegations which I now face; I am confident that the truth will come out and I will be exonerated. In the meantime, I cannot accept that the Fund—and you dear colleagues—should in any way have to share my own personal nightmare. So, I had to go.

  • Jackson

    What do the French think of these behaviors? Bloomberg writes,

    While sexual assault and attempted rape allegations that Strauss-Kahn is accused of in New York are also crimes in his home country, the French have been more indulgent when it comes to the indiscretions of their politicians.

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