EUROPA AL BORDE DE UN COLAPSO POLITICO

Europe on the Verge of a Political Breakdown - Barry Eichengreen - Project Syndicate

“But Europe doesn’t have months, much less years, to resolve its crisis. At this point, it has only days to avert the worst. It is critical that leaders distinguish what must be done now from what can be left for later.

The first urgent task is for Europe to bulletproof its banks. Doubts about their stability are at the center of the storm. It is no coincidence that bank stocks were hit hardest in the recent financial crash.

There are several ways to recapitalize Europe’s weak banks. The French and German governments, which have budgetary room for maneuver, can do so on their own. In the case of countries with poor fiscal positions, Europe’s rescue fund, the European Financial Stability Facility, can lend for this purpose. If still more money is required, the International Monetary Fund can create a special facility, using its own resources and matching funds put up by Asian governments and sovereign wealth funds.

The second urgent task is to create breathing space for Greece. The Greek people are making an almost superhuman effort to stabilize their finances and restructure their economy. But the government continues to miss its fiscal targets, more because of the global slowdown than through any fault of its own.

This raises the danger that the EU and IMF will feel compelled to withdraw their support, leading to a disorderly debt default – and the social, political, and economic chaos that this scenario portends. In Greece itself, political and social stability are already tenuous. One poorly aimed rubber bullet might be all that is needed to turn the next street protest into an outright civil war.

Again, help can come in any number of ways. Creditors can agree to relax Greece’s fiscal targets. The limp debt exchange agreed to in July can be thrown out and replaced by one that grants the country meaningful debt relief. Other EU countries, led by France and Germany, can provide foreign aid. Those who have spoken of a Marshall Plan for Greece can put their money where their mouths are.

(…)

The third urgent task is to restart economic growth. Financial stability, throughout Europe, depends on it. Without growth, tax revenues will remain stagnant, and the capacity to service debts will continue to erode. Social stability, similarly, depends on it. Without growth, austerity will become intolerable.

Here, too, the problem has several solutions. Germany can cut taxes. Better still would be coordinated fiscal stimulus across northern Europe.

But the fact of the matter is that northern European governments, constrained by domestic public opinion, remain unwilling to act. Under these circumstances, the only practical source of stimulus is the ECB. Interest rates will have to be slashed, and the ECB will have to follow up with large-scale asset purchases like those recently announced by the Swiss National Bank.

(…)

European leaders’ continued focus on the long run at the expense of short-term imperatives may indeed be the death knell for their single currency."

Barry Eichengreen

MAS CRISIS DE LA DEUDA

Mientras los responsables europeos vuelven a rehacer las cuentas sobre las cifras necesarias para parar la crisis de la deuda, resulta pertinente el diagnóstico de Eichengreen ("La elección de Alemania") desde lel otro lado del atlántico sobre las alternativas reales en relación con dicha crisis.Tampoco es probable que vaya a ser escuchado esta vez:

“EU leaders, led by Ms. Merkel, have been nothing if not consistent in addressing this danger. They have consistently refused to acknowledge it. If the crisis countries fail to meet their budgetary targets, EU leaders insist, then they should impose deeper spending cuts – this despite the fact that deeper cuts will mean even slower growth. If there are going to be further bailouts when the existing rescue fund, the European Financial Stability Facility or EFSF, expires, then this should be conditional on private investors taking losses – this despite the fact that heavily indebted countries will then find it impossible to roll over their debts.

This stance of unmitigated denial may be consistent, but it is not coherent. It can only lead to disorderly defaults, bank distress, and contagion to yet additional countries. If German policy makers think their economy can remain an island of prosperity in such stormy financial seas, then they have forgotten how to navigate.

The feasible alternatives are two:

1) European leaders can allow countries like Greece and Ireland to write down their already heavy debts. They can use some of the resources of the EFSF to collateralize or provide guarantees on the new “discount bonds” the Greek and Irish governments offer investors in exchange for existing obligations. Their debts will again become sustainable, and their governments will be able to play by the new, more demanding rules put in place in 2013.

But this will also mean losses for banks in Germany and elsewhere. Shareholders will be unhappy if those banks have to go out and raise more capital. Taxpayers will be unhappy if the banks find themselves unable to do so and governments are forced to inject public funds. No wonder that this course does not appeal to Ms. Merkel and Mr. Sarkozy.

2) Alternatively, the EU can re-think the terms of its rescue packages. To give Greece and Ireland fighting chance, it can reduce the 6 per cent interest rate they are being charged on their IMF-EU loans. It can triple the size of the EFSF to enable it to provide cheap and ample funding for Spain when the time comes. Issuing “e-bonds” backed by the full faith and credit of EU member states as a group and allowing the crisis countries to exchange their existing debt for these new securities up to some limit, say 60 per cent of GDP, would be another way of achieving the same goal.

The EU will also have to relax the rules governing the extension of assistance when the EFSF is replaced by a permanent entity, the European Stability Mechanism, in 2013. It can authorize the ESM to lend not just to countries that pass a “rigorous debt sustainability analysis,” as the German government has proposed, but more freely. It can authorize the ESM to lend at concessional rates. It can back away from the idea that ESM loans will have seniority, a situation that makes it more likely that other claims will have to be restructured.

This would represent a transfer of resources from Germany and the other members of the EU core to the crisis countries. It would be the first step toward a fiscal union in which there were ongoing payments from rich to poor European countries. Again, this is not something that will appeal to decision makers in Germany and the other members of core Europe. The cost, approximately 3 per cent of the combined GDP of Germany and France, would be equivalent to the cost of recapitalizing those two countries’ banks.

But that both feasible alternatives are unappealing does not relieve European leaders of having to choose. Pretending that doing nothing is also a feasible alternative leads only to chaos.”

Barry Eichengreen is George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley. His book, Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System, has just been published by Oxford University Press.

DANIEL GROS: LA CRISIS ECONOMICA NACIONAL

Ha tenido que ser el director del CEPS (Centre for European Policy Studies) el que diga “Ni Zapatero ni Rajoy tuvieron el valor en la campaña de decir que España está ante una burbuja inmobiliaria” ( El Mundo , 3 de Mayo de 2008).

Acostumbrados a una política supuestamente “nacional” no está de más reproducir aquí otras afirmaciones del Director del CEPS:

“También es preocupante la situación económica des España, donde los problemas son el doble de serios que los estadounidenses”

“La construcción aporta un 18% del PIB español, es decir, casi el doble que en Alemania (…) Pero las burbujas no explotan, se desinflan muy lentamente. En Alemania, por ejemplo, el proceso duró 10 años y en Japón, 17 (...) Después de una década de aumento, ahora España tendrá otros 10 años de bajada de precios”

“Los bancos centrales han valorado bien el impacto a corto plazo sobre el funcionamiento y la estabilidad del sistema financiero y se ha superado la crisis aguda, pero todos han subestimado las consecuencias negativas a largo plazo de la burbuja inmobiliaria”

(El Banco Central Europeo) “no debe hacer nada. En Alemania los precios han bajado con tipos de interés altos y bajos. España ha ido hacia arriba también con tipos en las dos tendencias.”

¿Por qué hay tanta diferencia entre los think tanks europeos y los estadounidenses?.¿No hay pensadores en la vieja Europa?.”Sí, pero muchos think tanks observan la realidad solo desde el prisma nacional del Estado donde están asentados y esto limita su relevancia para el resto del mundo.”

NO podrá, sin embargo, haber ninguna política verdaderamente "nacional" mientras nos escondamos de la realidad y la verdad a nivel mundial, europeo y nacional. El “excepcionalismo” es la única baza de todos los políticos “nacionales”. Sus resultados están a la vista, porque la realidad no es complaciente.

Para los escépticos partidarios de la “excepcionalidad” europea o española, o madrileña, o catalana o andaluza … resulta también recomendable la lectura del trabajo de Barry Eichengreen (George C. Pardee and Helen N. Pardee Professor of Economics and Professor of Political Science at the University of California):

“This leaves me pessimistic about Europe. A long recession with more credit problems in the United States will not be good for the European economy. If the euro stays as strong as it is currently against the dollar, then German export growth, which has been pulling the German economy and therefore the European economy along behind it, will peter out. The IMF has recently come under fire, from Germany in particular, for its pessimistic forecasts of European growth. It sees European growth slowing from 2.8 per cent in 2007 to 1.5 per cent in 2008. My view is that the Fund remains, if anything, overly optimistic.” The Credit Crisis: Final Act or Intermission?

¿Qué más decir de España si Eichengreen está en lo cierto respecto de Europa (en el mundo) y Gros en lo cierto de España (en Europa)?.