SECRETARIA DE ESTADO DE ECONOMÍA,
MINISTERIO SECRETARÍA GENERAL DE POLÍTICA ECONÓMICA DE ECONOMÍA Y ECONOMÍA INTERNACIONAL Y HACIENDA SUBDIRECCIÓN GENERAL DE ECONOMÍA INTERNACIONAL
CUADERNO DE DOCUMENTACION
Número 91º ANEXO V
Alvaro Espina Vocal Asesor 6 de Septiembre de 2010
BACKGROUND PAPERS
1. Acaba la recesión, se agrava la crisis, de Alejandro Bolaños…7 2. Juicio urgente a la recesión, de A.B. …10 3. Agencias de “rafting”…12 4. A Money too far, The New York Times by Paul Krugman…14 5. Instead of solving the problem, European leaders play the blame game, Eurointelligence…16 6. ¿Se puede salvar al euro?, Project Syndicate de Joseph E Stiglitz…18 7. Trichet plays for time as Greek debt crisis spreads (Update2), Bloomberg.com by Gabi Thesing and Simon Kennedy…21 8. The Greek Government shouldn’t panic’, Spiegel On Line …24 9. Germany approves Greek deal ahead of euro summit, Spiegel On line…26 10. Pimco’s El-Erian, Loomis’s fuss say Greek crisis going global, Bloomberg.com by Sree Vidya Bhaktavatsalam and Christopher Condon…28 11. Trichet decepciona a los mercados, El País de Francesc Relea…30 12. Las máquinas se apoderan de Wall Street y provocan el pánico en el mercado, El País de Sandro Pozzi…32 13. US shares plunge amid fears over debt, FT.com by Michale Mackenzie and Francesco Guerrera and Tom Braithwaite …34 14. Trading goes wild on Wall Street, Ft.com by Niclle Bulloch, Michael Makenzie and Francesco Guerrera …35 15. Senators say volatility makes case for regulation, FT.com by Tom Braidwaite …36 16. Greed, fear and confusion, Ft.com by Michael Mackenzie …38 17. Greece’s debt crisis could spread across Europe, The Washington Post by Neil Irwin…39 18. Wild day on Wall Street leaves electronic exchanges under scrutiny, The Washington Post by David Cho and Jia Lynn Yang…41 19. Why Wall Street panicked, The Washington Post by David Cho …43 20. Steven Pearlstein: Greek crisis exposes cracks in Europe’s foundation, The Washington Post by Steven Pearlstein…44 21. US markets plunge, the stage a rebound, The New York Times by Graham Bowley…46 22. Aid for Greece hasn’t stopped euro’s slide, Spiegel On Line by Michael Kroger…49 23. Die EZB und der nächste Sündenfall, Financial Times …51 24. Warum Spanien nicht Griechenland ist by Tobias Bayer …53 25. Spekulieren über Spekulanten by Jochen Sanio…56 26. El comisario de Comercio dice que se conocían los engaños helenos, El País de RM Rituerto…58 27. On the brink of the abyss, Eurointelligence …59 28. Kohl usa cumpleaños para reviver desavenencias con CDU, FT.com by Gerrit Wiesmann …61 29. The father of German reunification, happy birthday! Former chancellor Helmut Kohl turns 80, Bild.com by Kai Diekmann…63
1 30. What happened to the global economy and what we can do about it, The Baseline Scenario by Simon Johnson…67 31. Nikkei sinks 3 percent on worries over Greek debt, The New York Times by Bettina Wassener…69 32. Newsweek on Block as Era of the Newsweekly fades, The New York Times by Stephanie Clifford…71 33. Goldman Sachs y Abacus 2007-AC1: Mucho más que cifras, Finanzas e Inversión …74 34. German Banks Will emerge unscathed, from Greek bailout, Spiegel On line …80 35. The Great Depression, Spiegel On Line by Björn Hengst…82 36. Chancellor Merkel Launches PR offensive: Ahead of key vote, Spiegel On Line…86 37. Some really bad news from Greece –Opposition decides to vote against the deal, Eurointelligence…88 38. A Bail-out for Greece is just the beginning, FT.com by Martin Wolf…91 39. Münchau –auf dem weg in die nächste lüge Münchau – on the way in the next lie, Financial Times by Wolfgang Munchau…94 40. Greek end Game, The Conscience of a Liberal by Paul Krugman…97 41. And now?, A dark scenario, Vox by Charles Wyplosz…100 42. The hard work on financial reform, The New York Times …103 43. Merkel’s calls for orderly insolvencies, threaten more disorder, Financial Times by Stacy-Marie Ishmael…105 44. The numbers still do not add up, FT by Wolfgang Münchau…107 45. Entre el rumor y la realidad, El País de L.D…109 46. Zapatero intenta aplacar el castigo de los mercados por sus dudas sobre España, El País de M González y L Doncel…110 47. El Tesoro afronta en julio su mayor necesidad de fondos, El País de L.A.… 111 48. Pacto o insolvencia, El País …113 49. Tarde, mal y nunca: España, una oportunidad perdida, http://www.fedeablogs.net/economica de Tano Santos…115 50. Mantras e indicadores adelantados, http://www.fedeablogs.net/economica de Javier Andres…122 51. Greece and the myth of the easy economic fix, The Washington Post by Steven Pearlstein…125 52. US stocks fall amid Greek crisis, The Washington Post by Dina ElBoghdady and Renae Merle…127 53. Definitely, Maybe, perhaps not: the ECB’s communication strategy on collateral policy in full, Eurointelligence…129 54. La BCE s’affranchit des agencies de notation, Coulisses de Bruxelles, UE de Jean Quatremer…131 55. Many more chapters left in the Greece drama, FT.com by Mohamed El- Erian…132 56. Europe’s choice is to integrate or disintegrate, FT.com by Wolfgang Münchau…134
2 57. Merkel’s moment, Ft.com …136 58. Spain seen as moving slowly on financial reforms, The New York Times by Raphael Minder…137 59. In Greek debt crisis, a window to the German Psyche, The New York Times by Katrin Bennhold…139 60. El BCE aceptará la deuda griega pese a que esté al nivel de bono basura, El País de Andreu Missé…142 61. La trampa del euro, El País de Paul Krugman…144 62. Plan de ayuda a Grecia…146 63. A rare interview with Jurgen Habermas, Ft.com by Stuart Jeffries…149 64. How to avoid a Bailout Bill, The Wall Street Journal by John B Taylor…159 65. Greece takes its bailout, but doubts for the region persist, The New York Times by Dan Bilefsky and Landon Thomas Jr…162 66. Deflation could stall efforts to revive Greece in debt crisis, The New York Times by Steven Erlanger…166 67. A bailout, finally, Eurointelligence …168 68. L’Europe et le fonds monétaire international débloquent 110 milliards d’euros, Les Echos.fr…171 69. In defense of Robert Rubin, Newsweek, by Jacob Weisberg…172 70. No one is to blame for anything, The New York Times by Frank Rich…174 71. Lessons for the Greek crisis from Philip II of Spain, FT.com by Alan Beattie…176 72. Edgar Morin: L’une des tragedies de l’Europe, c’est les nations sont égocentriques, La Tribune.fr…178 73. Turn of the German press in Greece, www.kathimerini.gr …180 74. Greek crisis creates a cultural divide in Europe, www.kathimerini.gr …182 75. The financial industry doesn’t give a Damn about politics, Spiegel On Line…185 76. Will Greek contagion bring Portugal down?, Spiegel On line by Stefan Schultz…188 77. Revenge of the rating agencies, Spiegel On line by Marc Pitzke…191 78. The Euro Zone needs new rules, Spiegel On line by Peter Bofinger…195 79. Speculators will have no chance against the euro, Spiegel On line…198 80. Drilling, disaster, denial, The New York Times by Paul Krugman…201 81. Greek deal, The Conscience of a Liberal …202 82. No lloren por Wall Street, El País de Paul Krugman…204 83. Lenta regulación, El País …205 84. Goldman, el rey del casino, El Pais de Sandro Pozzi…206 85. Hay que controlar los valores sintéticos, El País de George Soros…209 86. ¿Todos para un impuesto y un impuesto para todos?, El País de Kenneth Rogoff…210 87. Una reforma en medio del túnel, El País de Miguel Jiménez…212 88. Reprimenda a las agencias de calificación, El País de Paul Krugman…216 89. Cuidado con pasarse de frenada, El País de David Fernández…218 90. Hay gente para todo, El País de Juan José Millás…220
3 91. Diez interrogantes del sector bancario español, El País de Santiago Carbó y Joaquín Maudos…221 92. No es momento para una guerra comercial, El País de Joseph E Stiglitz…225 93. Humillación griega, altivez alemana, El País de Antón Costas…227 94. Conejillos de Indias, El País de Edward Hadas…229 95. Irlanda pierde su margen de maniobra, El País de Alicia González…230 96. ¿Quiebran los países?, El País de Sara Baliña y Santiago Fernández de Lis…232 97. Continúa la hemorragia del mercado laboral, El País de Ángel Laborda…233 98. Ocio europeo, ahorro coreano, El País de Cristina Delgado…235 99. El negocio exterior salva al Santander, El País de RV…237 100. Reportaje, primer plano, El País de Claudi Pérez…237 101. La primera crisis del euro, El País de Andreu Missé…243 102. No hay comparación posible entre España y Grecia, El País de Lucía Abellán…245 103. La desconfianza se apodera de España, El País, de Fernando Garea…248 104. Nick clegg is the candidate of change, The Observe election 2010 …251 105. Warren Buffett defends Goldman Sachs, Guardian.co.uk by Andrew Clark…254 106. Angus Maddison, Economic Historian dies at 83, The New York Times by 255 107. IMF/EU/Greece agree outlines of a package –but can it stave off insolvency?, Eurointelligence …257 108. The euro trap, The New York Times by Paul Krugman…260 109. Ed whitacre’s battle to save GM from itself, Bloomberg Businessweek by David Welch…263 110. Germany to promote electric cars with massive state aid, Spiegel On Line by Dietmar Hawranek and Alexander Neubachar…269 111. Merkel’s complacency turns to panic, as the eurozone catches fire, Eurointelligence …273 112. Bank runs in Greece –harbinger of another axis of Euromarket Risk?, naked capitalism…275 113. Dramatic revenue shortfall by cutting the 13th and 14 th salary, 2010 H Kathhmepinh by Christina Kopsini…277 114. Radical change brings the kallikartes by Elenis Karanatsi…278 115. 120 billion for three hard years…279 116. Red alert at maxim by Constantine Zoula…280 117. Crisis corresponding Greek expect French…281 118. The crisis in Greek telephone Obama-Merkel…281 119. The irresponsibility of a German chancellor, Eurointelligence by Wolfgang Munchau…283 120. Euro fears force Merkel to act, Spiegel On line by Phillipp Wittrock and Severin Weiland…285 121. Greece will need up to 135 billion euros, Spiegel On Line …288
4 122. German government must stop using Greek crisis for Campaign Fodder, Spiegel On line …290 123. Merkel reaches her overdraft limit Greek bailout could push german debt through the roof, Spiegel On line by Severin Weiland…293 124. Eu debt crisis: German papers whip up anti-Greece fury., Guardian.co.uk by kae Connolly…296 125. Greece’s financial crisis-LIVE, guardian.co.uk…298 126. Greece’s financial crisis-LIVE, guardian.co.uk by Graeme Wearden…305 127. IMF promises more aid for Greece as European crisis grows, The New York Times by Landon Thomas Jr and Nicohlas Kulish…318 128. Already holding junk, Germany hesitates, The New York Times by Jack Ewing…320 129. EU officials irked by Greek downgrade, by James Kanter…322 130. Merkel tested as escalating Greek crisis hurts euro by Nicholas Kulish…323 131. Irish official calls markets “Irrational” by David Jolly…324 132. Stocks resume fall on fears over European debt crisis, The New York Times by Landon Thomas Jr…326 133. Euro area under massive speculative attack, Eurointelligence …330 134. Buiter on Greece and a blueprint for a new Europe, Financial Times by Neil Hume…333 135. Buiter’s back, Financial Times by Neil Hume …335 136. Financial Times ft.com/maverecon, December 1, 2009…337 137. Artikel-Services, La crisis de la deuda griega, se intensifica, Faz. Net…338 138. Stocks plunge, Asis bond risk climbs on Greece, Portugal debt, Bloomberg.com by Patrick Chu and Shani Raja…340 139. Was will Deutschland eigentlich?, What wants Germany, actually?, Financial Times by Wolfgang Munchau…343 140. Greek junk contagion presses EU to Broaden Bailout (Update1), Bloomberg.com by Simon Kennedy and Emma Ross-Thomas…346 141. IMF looks at offering Greece more cash, FT.com by David Oakley, Alan Beatrie and Kerin Hope…349 142. Los politicos quieren dinero en efectivo en los bancos para recibir ayuda griegos, Spiegel On Line…351 143. How Germany made the Greek crisis worse, Spiegel On Line …355 144. The cohesion crisis, The Conscience of a Liberal …358 145. G20 faces its most difficult test yet on financial reform, Centre for International Governance Innovation by Eric Helleiner…360 146. Wall Street’s Mr. Fabu-less, The Washington Post by Dana Milbank…363 147. Goldman Sachs executives face senators investigating role in financial crisis, The Washington Post by Zachary A Goldfarb…365 148. TV debate woke us up to devolution, Guardian.co.uk by Timothy Garton Ash…367 149. The Goldman Drama, The New York Times by David Brooks…368 150. GOP blocks debate on financial oversight bill, The New York Times by David M Herszenhorn and Edward Wyatt…370
5 151. Talks continue as GOP senators block advance of financial overhaul bill, The Washington Post by Brady Dennis and Shailagh Murray…373 152. Presidential commission to address rising national debt, The Washington Post by Lori Montgomery…376 153. Sen. Kaufman of Delaware tests the big-bank theory, The Washington Post …379 154. Fears of crushing debt spread to cities, provinces, The Washington Post by Anthony Faiola…381 155. The Buzz: does the entire Fed eant to keep rates low, Money by Paul R La Monica…384 156. Is Merkel about to push the eurozone over the brink?, Eurointelligence…386 157. Kohl would have done the same thing, Spiegel On Line …388 158. Berating the raters, The New York Times by Paul Krugman…390 159. Epistemic closure in macroeconomics, The Conscience of a Liberal…391 160. The Real chicken-Checkup fallacy…392 161. Pesos, Ponzi, and financial sector profits…393 162. Our Giant banking crisis-what to expect, New York Review Books by Paul Krugman and Robin Wells…395 163. Do you have any reforms in size XL?, The New York Times by Gretchen Morgenson…402 164. Goldman slapped, Bloomberg Business week by Jonathan Weil…404
Período: de 22/04/2010 a 9/05/2010 en orden inverso a la fecha
6 REPORTAJE: Primer plano Acaba la recesión, se agrava la crisis La presión de los mercados sobre España eclipsa la vuelta al crecimiento - La deuda encoge los 'brotes verdes' ALEJANDRO BOLAÑOS 09/05/2010 La peor recesión en medio siglo acaba de terminar en España, que es, además, la última gran economía en retomar el crecimiento. Pocas veces unas palabras tan grandilocuentes se han hecho oír tan poco. El estruendo de los mercados, que ha puesto en la diana a la deuda pública española, y el insoportable ruido de fondo del empleo, ahogan cualquier expresión de júbilo. La peor recesión en medio siglo acaba de terminar en España, que es, además, la última gran economía en retomar el crecimiento. Pocas veces unas palabras tan grandilocuentes se han hecho oír tan poco. El estruendo de los mercados, que ha puesto en la diana a la deuda pública española, y el insoportable ruido de fondo del empleo, con una tasa de paro superior al 20%, ahogan cualquier expresión de júbilo. La recesión se va y apenas alcanza para dar un resoplido de alivio. Casi nadie habla ya de brotes verdes, la expresión traducida del inglés que hizo fortuna en la primavera pasada, cuando se escudriñaban los datos para certificar que las economías avanzadas escapaban del agujero negro del invierno de 2009. La recesión española, medida por la caída del PIB, ha sido menos intensa (-3,6% en 2009), pero más larga. Aquí, la primavera de los brotes verdes ha llegado con retraso. Tan tarde que ha sido barrida por el vendaval de los mercados de deuda pública, donde la inmensa mayoría de los expertos habían situado la siguiente fase de la crisis internacional. El fiasco de las cuentas griegas sólo ha encendido la mecha antes de lo previsto. "En los dos últimos meses, varios indicadores habían mostrado una cierta mejora", certifica Antoni Espasa, director del Instituto Flores de Lemus, de la Universidad Carlos III de Madrid. Pese a todo, la debilidad de la recuperación había polarizado el pronóstico de los expertos, que no se ponían de acuerdo sobre si esta vez se había salido de la recesión. Unas dudas alimentadas porque Rodríguez Zapatero ya había anunciado en otoño que la economía "estaba a punto de comenzar a crecer". Al final, el cuarto trimestre de 2009 se saldó con un retroceso de una décima en el PIB respecto al trimestre anterior. Entre enero y marzo, la décima cayó del lado positivo, según la primera estimación del Banco de España. Y el vaticinio de la vicepresidenta económica, Elena Salgado, resultó certero. "Acertar en si el PIB avanzó o no una décima es como pedirle al hombre del tiempo que nos diga si el 23 de junio a las 10.05 va a llover en una calle de Barcelona", ejemplifica Espasa, quien recalca que los dos resultados (+0,1% o -0,1%) están dentro del margen de error en que incurre cualquier cálculo de probabilidades que se haga sobre la evolución de la tasa trimestral del PIB. Aun así, este catedrático de la Carlos III, cree muy probable que los datos confirmen la primera estimación del Banco de España. "Los últimos datos de producción industrial son esperanzadores, ahí sí que podría hablarse de un brote verde". "El índice de producción industrial de marzo ha sido buenísimo, ni los más optimistas preveíamos algo así", coincide José Carlos Díez, economista jefe de Intermoney, quien destaca que la mejora no sólo se ha notado en la fabricación de automóviles, dopada por las subvenciones a la compra de turismos, sino que se ha extendido a otras ramas (industria
7 alimentaria, textil, fábricas de papel) muy vapuleadas por la crisis. Y ha alcanzado incluso a la industria auxiliar de la construcción, que ya no cae a plomo. La producción industrial registró en marzo la primera subida interanual (5,4%) desde que comenzó la crisis. Es uno de los índices más seguidos por los expertos para tomar la temperatura al crecimiento económico. Y, sin embargo, cuando el Instituto Nacional de Estadística publicó el dato el pasado miércoles, no cosechó ni una línea en los principales periódicos (incluido éste). La tempestad en los mercados de deuda pública lo inunda todo. Los datos de la industria se suman a otros (consumo de energía eléctrica, ventas de comercios, exportaciones, pernoctaciones en hoteles) que cuentan la misma historia. Juan Rubio- Ramírez, profesor de Economía en la Universidad de Duke (Estados Unidos), resalta que "la serie más positiva es la de la afiliación a la Seguridad Social, que frena su evolución negativa". Es una señal de que la destrucción de puestos de trabajo (dos millones en menos de dos años) es cada vez menor. "Quien niegue los síntomas de crecimiento es que está ciego", recalca Josep Oliver, catedrático de la Universidad Autónoma de Barcelona. Dicho esto, todos los expertos creen que se ha prestado demasiada importancia a si los pronósticos del Gobierno eran o no acertados. "Más importa ahora adelantar posibles cambios de futuro con una perspectiva temporal amplia que discutir décimas del PIB", abunda Juan José Méndez, del Centro de Predicciones Económicas. Méndez admite que hay una "mejora del ritmo de crecimiento", pero señala también "un desfase con relación a la eurozona, o más aún, con Estados Unidos". "Lo que los mercados están mirando es la capacidad de crecimiento a medio plazo y si seremos capaces de ajustar el déficit", coincide Manuel Balmaseda, que dirige el servicio de estudios de la multinacional Cemex. Balmaseda opina incluso que dar por terminada la recesión es prematuro: "En Estados Unidos, que llevan tres trimestres con crecimientos superiores al 0,5%, tienen en cuenta otros factores y aún no creen que haya acabado". "Se ha confundido la discusión, nos hemos centrado en qué pasa hoy y lo importante es lo que ocurrirá el día después de la crisis, no hemos interiorizado que nos queda mucho trabajo por hacer en los próximos cinco o seis años", insiste Josep Oliver. Una "asimetría", en palabras del catedrático de Economía, que se ha manifestado en todo su esplendor en las últimas semanas. De golpe, el castigo de los mercados a la deuda pública ha traído al presente más acuciante retos para los que se exige soluciones inmediatas. Ahora, un periodo de uno o dos años para reconducir el déficit o consolidar la creación de empleo y el crecimiento económico se antoja un mundo a los ojos de los inversores. "Tras la crisis griega, es cierto que ha habido mucha especulación sobre determinados países como España, pero también es cierto que si no hay argumentos en los que apoyar las apuestas a la baja, al especulador que lanza el ataque nadie le seguiría", advierte Francisco Pérez, del Instituto Valenciano de Investigaciones Económicas (Ivie). Las reticencias de Alemania a acudir al rescate de Grecia han exacerbado las dudas sobre qué pasaría si otro país de la zona euro pasara dificultades similares. Y, en las últimas semanas, España ha sido protagonista de datos, previsiones y artículos en la prensa internacional, que pasados por el tamiz de la especulación, arrojan un resultado desasogante. Porque al mismo tiempo que varias estadísticas de la economía real daban el banderazo de salida a la recuperación, el mercado laboral daba fe de que el impacto brutal de la crisis en el empleo sigue ahí. "No somos del todo conscientes de que entre octubre de 2008 y marzo de 2009 se perdieron casi 1,4 millones de empleos, es una destrucción de puestos de trabajo de una magnitud histórica", recuerda Josep Oliver. Hace poco más de una semana, el Instituto
8 Nacional de Estadística confirmó que la tasa de paro supera ya el 20% de la población activa, un dato que compromete cualquier pronóstico de crecimiento económico vigoroso en los próximos años y de recuperación de los ingresos públicos vía impuestos. Más aún cuando los vaticinios del Gobierno sobre el mercado laboral -que la tasa de paro ha alcanzado su nivel máximo, que se creará empleo a partir del verano-, no convencen. "Lo más probable es que la tasa de paro quedará estancada alrededor del 19,7% este año y el próximo", sostiene Antoni Espasa. El Instituto Flores de Lemus tampoco predice creación de empleo hasta 2011, un pronóstico en el que coincide con el servicio de estudios del Banco de España. Las últimas proyecciones del organismo supervisor español, divulgadas hace poco más de un mes, son similares a las de los servicios de estudios privados y coinciden a grandes rasgos con lo que el FMI y la Comisión Europea publicarían poco después: Salgado y su equipo habrían hecho un vaticinio ajustado sobre la evolución del PIB este año (un -0,3% en tasa interanual) y del déficit (un recorte del 11,2% al 9,8% del PIB). Pero a partir de 2011, según esta visión, la estimación oficial patina. Donde el Gobierno ve crecimientos del PIB cercanos al 2% el próximo año y al 3% en 2013, el resto ven un avance anémico, que dificulta el recorte del déficit, como también se aprecia en todas las previsiones menos la del Ejecutivo de Rodríguez Zapatero. La agencia de calificación de riesgos Standard&Poor?s llevó esta línea argumental al extremo para rebajar la calificación de la deuda soberana española, lo que puso a los títulos del Tesoro en la línea de fuego de los especuladores. Y las dudas sobre la solvencia del Estado español - pese a que el nivel de deuda pública, aunque creciente, es inferior al de la mayoría de países europeos-, se extendieron como una mancha de aceite. Artículos en The New York Times, Financial Times o el Wall Street Journal, ponían altavoz a la incertidumbre. En suma, en la semana en la que se ha anunciado que la economía española salía de la recesión, la Bolsa perdía más de un 10% y el diferencial de los títulos españoles con los bonos alemanes a 10 años, la referencia para estimar el sobrecoste de colocar la deuda pública, llegaba a su máximo en más de una década. Hasta los gestos delatan qué es ahora lo importante, qué es lo prioritario. Elena Salgado se perdió este viernes buena parte de la primera conferencia de prensa programada tras la publicación de los datos sobre la salida de la recesión, absorbida por los trabajos previos a la reunión del Eurogrupo, que debatió el plan de rescate a Grecia unas horas más tarde. "Creo que las reacciones de los mercados en los últimos días se corresponden más a un efecto contagio que a una lectura real de la economía española", opina el profesor Juan Rubio- Ramírez, coordinador para la fundación Fedea de un índice que trata de sintetizar los datos más recientes sobre crecimiento económico. "En pocas palabras, España no es Grecia, no va a desembocar en una situación de bancarrota, al menos a corto plazo". Otra cosa, sostiene el profesor de la Universidad de Duke, son "compromisos de gasto a largo plazo, como las pensiones y la sanidad", en su opinión "claramente insostenibles". "No es la solvencia del Estado español lo que se ponía en duda en la primera línea del informe de Standard&Poor?s, sino las consecuencias de un crecimiento muy débil para el pago de la deuda privada. Las familias y empresas españolas han acumulado un nivel de deuda enorme y la mayoría está en manos de acreedores extranjeros", puntualiza Oliver. Sin embargo, Francisco Pérez, del Ivie, cree que aquí, si el ajuste de precios en el sector inmobiliario se acelera, puede haber una tabla de salvación. "No es lo mismo endeudarse para comprar activos financieros dudosos o para financiar el consumo, que para invertir que es lo que ha hecho la economía española, aunque sea cierto que mucho ha ido al ladrillo".
9 Si la desconfianza sobre la deuda pública española sigue creciendo no sólo se encarece el coste de los títulos del Tesoro, también será mucho más difícil refinanciar la deuda acumulada por las empresas o las cédulas hipotecarias en las que los bancos y cajas españoles titulizaron los préstamos de las familias. Según Méndez, las dudas sobre el recorte del déficit aumentan "cuando el ritmo de crecimiento económico es bajo y no hay claras posibilidades de estimularlo", una trampa en la que podría haber caído la economía española. En ese escenario, la lógica de los mercados financieros impone el recorte del gasto público: no hay miramientos para los riesgos de una recaída por la retirada de estímulos públicos y el debate sobre quién originó la crisis y quién se lleva las consecuencias queda arrinconado. "El programa de ajuste que ha presentado el Gobierno español es cuantioso y creíble, pero debe aplicarse ya". Es lo que afirmó esta semana una portavoz del FMI, es lo que ha dejado entrever el comisario de Economía de la Unión Europea, Olli Rehn, es lo que repitió este mismo viernes un informe del banco de inversión Goldman Sachs. Otra vuelta de tuerca que los mercados traducirán en más presión. "Estoy convencido de que habrá más precisión en las medidas de ahorro, de que sindicatos y patronal llegarán a un acuerdo sobre la reforma laboral, de que habrá cambios en la función pública para hacerla más eficaz, cualquier otro camino nos pondría en una situación muy difícil", señala Oliver. Balmaseda pone la cosa más cruda: "A medio plazo, soy optimista sobre la economía española, pero antes habrá que elegir si hacemos nosotros el ajuste, con nuestras prioridades, o dejamos que nos lo haga el Fondo Monetario Internacional, como ha ocurrido con Grecia". Tras el crash de 1929, muchos expertos coinciden en señalar que la decisión de Herbert Hoover, entonces presidente de Estados Unidos, de retirar las ayudas públicas a la economía sólo unos meses después agravó la crisis económica y dio pie a la Gran Depresión. Es pronto para calibrar las consecuencias de la tardanza y las exigencias alemanas respecto al plan de rescate a Grecia o de la resistencia del Banco Central Europeo a fabricar dinero para comprar deuda pública. Lo que sí queda claro es que han acelerado una nueva fase de la Gran Recesión de 2009, la crisis fiscal. Y que a España le ha cogido a contrapié. Francisco Pérez presta una metáfora: "Este río ya no se puede cruzar por un puente, sólo quedan unas pocas piedras y hay que saltar con cuidado". En esa travesía, la ansiada salida de la recesión es ya sólo un bastón en el que apoyarse. - http://www.elpais.com/articulo/primer/plano/Acaba/recesion/agrava/crisis/elpepueconeg/2010 0509elpneglse_2/Tes
REPORTAJE: Primer plano Juicio urgente a la recesión Los historiadores dicen que la salida de otras crisis pasó por reformas pactadas A. B. 09/05/2010 Lo que dice la estadística recién salida del horno es que el crecimiento, tras más de año y medio en paradero desconocido, ha vuelto a la economía española aunque sea de forma testimonial. Pero, ¿cómo de grave ha sido la crisis? ¿Y cómo se sale de ella? Son preguntas que animan a escudriñar en episodios similares, a rastrear las enseñanzas de la historia económica más reciente. Y, aún cuando el abanico de datos disponibles es reducido y la respuesta a bote pronto es un género muy alejado del estudio reposado, tres catedráticos tratan de aportar luz.
10 Después de los años de autarquía que siguieron al franquismo, ¿es ésta la peor etapa de la economía española? Albert Carreras, de la Pompeu Fabra de Barcelona, tras comentar la cuestión con su colega Xavier Tafunell, coautor de Historia económica de la España contemporánea, concluye que sí. "Desde que tenemos contabilidad trimestral (1958) es la peor de todas. Lo es por duración de la recesión, por su profundidad (en ambos casos en términos de PIB), por la intensidad del endeudamiento público (que ha subido mucho más que en las peores de las crisis del siglo XX, retrotrayéndonos peligrosamente a magnitudes del siglo XIX) y por intensidad de la pérdida de puestos de trabajo (proporcionalmente menos que entre 1975-1985, pero con una intensidad temporal y un volumen de destrucción muy superiores)", explica en un correo electrónico. Pablo Martín Aceña, de la Universidad de Alcalá de Henares, y Jordi Palafox, de la Universidad de Valencia, no se atreven a tanto. "No sabría decir si es más o menos profunda que las anteriores, lo que sí creo es que se puede convertir en una crisis más prolongada, de bajo crecimiento, a la japonesa", señala Martín Aceña. "Es pronto, en mi opinión, para realizar afirmaciones taxativas. La situación es compleja", afirma Palafox. A grandes trazos, de la crisis que prendió en la economía española entre 1959 y 1961 se salió con el boom del turismo y la emigración a países centroeuropeos; de la que se alargó entre 1973 y 1985, con una intensa reforma de la banca y los primeros pactos de moderación salarial; de la más reciente (1993-1995), con el fin de la reconversión industrial, las privatizaciones y la internacionalización de las empresas. ¿Dejará esta crisis un cambio de modelo económico (y o social) tan o más drástico? Carreras recuerda una restricción de partida: en episodios precedentes se podía echar mano de la devaluación de la peseta, "tan práctica para salir de las crisis con rapidez y sin conflictos internos. Ahora es como si estuviéramos en el patrón oro: debemos reducir los precios y salarios si queremos ganar competitividad". Los catedráticos de Historia Económica coinciden en destacar que la salida de otras crisis se apoyó en grandes pactos. "En la conocida como primera crisis del petróleo, iniciada en 1973, las dificultades eran incluso superiores a las actuales, al ir unidas a la transición política del cambio de régimen y a una gran debilidad de los gobiernos de UCD. Sin embargo, como los Pactos de la Moncloa, en 1982, afrontaron con rigor los problemas fue posible que la economía experimentara un avance sustancial". En 1959 el pacto tácito para abrir la economía española y realinear el tipo de cambio se hizo entre parte de la élite franquista y los técnicos más cercanos a las tesis de organismos internacionales. En 1995, la voluntad común de cumplir con los requisitos para incorporar a España a la zona euro, hizo posible algunos acuerdos entre los dos grandes partidos como el Pacto de Toledo sobre las pensiones. El consenso es que esas reformas deberían propiciar un cambio de modelo productivo. Y el escepticismo se apodera de los historiadores cuando se plantea si habrá resultados a corto plazo. "Desde la perspectiva del historiador de la economía es una ingenuidad pensar que el cambio de modelo es cuestión de un día o que, para alcanzarlo, querer equivale a poder. Para que la economía salga reforzada de la crisis, debe avanzar hacia tener mayor peso en actividades de mayor valor añadido", prosigue Palafox, "como ha escrito Paul Krugman, la productividad no lo es todo, pero lo es casi todo. Es un avance que habría que buscar, mayoritariamente, en el sector servicios". "Haría falta un gran pacto nacional, y lo que echamos en falta es voluntad de grandes acuerdos. Como mínimo, es indispensable que el Gobierno tenga un diagnóstico realista, explique qué sacrificios hay que hacer, fije un rumbo claro, y administre la lucha contra la crisis. En cambio, las señales que va dando son confusas o, lo que es peor, inadecuadas, cuando no contradictorias. La dirigencia política nos falla", opina Carreras. El catedrático cree
11 imprescindibles reformas en el mercado laboral, la recaudación fiscal (para evitar el fraude), la Administración (para mejorar su eficacia) o el sistema financiero (para desbloquear el crédito). Y pone de ejemplo a la salida de Corea del Sur de su crisis en 1997 para reclamar señales claras en contención salarial o en un drástico recorte de los trámites burocráticos. "Lo que la historia nos enseña es que la resolucion de la crisis es siempre, siempre dolorosa", subraya Martín Aceña, "los ajustes tienen costes sociales, económicos y políticos que deben asumirse con valentía". El catedrático cree que lo conveniente es llevar la contraria a la máxima de san Ignacio: "En tiempos de bonanza no se acometen cambios; hay que hacerlos en tiempos de tribulación". - http://www.elpais.com/articulo/primer/plano/Juicio/urgente/recesion/elpepueconeg/20100509 elpneglse_3/Tes
EDITORIAL Editorial Agencias de 'rafting' 09/05/2010 Las agencias de rating o calificación del riesgo no son culpables de la crisis financiera, pero cunden las sospechas sobre su utilidad. También sobre la oportunidad de sus dictámenes. Los Gobiernos europeos, en especial Alemania, han expuesto con argumentos muy convincentes la necesidad (y la urgencia) de contar con una agencia europea de evaluación de riesgos cuyo funcionamiento y criterios de cálculo sean más objetivos, independientes y fiables que el que hoy es posible atribuir a Moody's, Standard & Poor's o Fitch, por citar a las que hoy constituyen la santísima trinidad del riesgo país o empresa, con un aroma inevitable a oligopolio consentido. Es una excelente idea, cuya utilidad dependerá, como siempre, de concreción. Desde luego, el objetivo de esa calificación europea sería que advirtiese de los riesgos financieros antes de que se produjesen (las S&P, Fitch o Moody's calificaron con triple A casi todos los productos financieros con subprime) en lugar de sumarse a los gritos de alborozo en épocas de prosperidad o a los lamentos de plañidera en periodos de crisis, como es práctica habitual en el universo actual del riesgo. ¿De qué se acusa a las agencias de calificación? Pues, en síntesis, de comportarse como agentes procíclicos que nunca se aventuran cuando se produce en punto de inflexión de las tendencias financieras. Dicho en plata, mientras la economía sigue una tendencia alcista y las Bolsas estallan en beneficios, todo el mundo consigue una calificación triple A. Pero cuando la economía se tuerce, aparece una crisis financiera y afloran las distorsiones financieras que las agencias de calificación no han sido capaces de detectar, el mundo se desploma hacia la calificación general de bono basura. Simplemente se dejan arrastrar por los movimientos de los mercados, hacia la euforia o hacia la depresión. Más que agencias de rating parecen agencias de rafting; se limitan a flotar y maniobrar sobre las turbulencias que son incapaces de prever, orientar o mitigar. Las acusaciones se pueden desarrollar un poco más si fuese necesario. Se les imputa trato de favor a determinados bancos de inversión y de un pecado original para su credibilidad: cobran del emisor de los bonos o productos financieros y no del comprador. No es posible establecer un sistema de arbitraje imparcial sobre la calidad financiera de una emisión sobre la base de que el juez sea retribuido por la entidad que emite el producto. Si Europa pretende erigir una agencia de calificación fiable e independiente, deberá tener en cuenta esta circunstancia.
12 El pecado original se rodea con otras faltas menores, pero importantes. No se conocen con exactitud los algoritmos para calcular el riesgo solicitado y con frecuencia los inversores advierten cambios de opinión bruscos sobre los mismos valores. La probabilidad de impago de la deuda española (esa probabilidad es la que debe medir una agencia de calificación) es hoy la misma que en 2005; sin embargo, S&P ha degradado la calificación de España. ¿Por qué? Pues porque los inversores desconfían de la estabilidad de las finanzas españolas. La volubilidad de las agencias no implica, en todo caso, que la gestión de la política económica española o de la crisis griega sean correctas; no lo son. Pero sí implica que o cambian sus propósitos e instrumentos de análisis de forma que informen y adviertan sobre los cambios de tendencia o no servirán como guías económicos. - http://www.elpais.com/articulo/primer/plano/Agencias/rafting/elpepueconeg/20100509elpneg lse_1/Tes
13 Opinion
May 7, 2010 OP-ED COLUMNIST A Money Too Far By PAUL KRUGMAN So, is Greece the next Lehman? No. It isn’t either big enough or interconnected enough to cause global financial markets to freeze up the way they did in 2008. Whatever caused that brief 1,000-point swoon in the Dow, it wasn’t justified by actual events in Europe. Nor should you take seriously analysts claiming that we’re seeing the start of a run on all government debt. U.S. borrowing costs actually plunged on Thursday to their lowest level in months. And while worriers warned that Britain could be the next Greece, British rates also fell slightly. That’s the good news. The bad news is that Greece’s problems are deeper than Europe’s leaders are willing to acknowledge, even now — and they’re shared, to a lesser degree, by other European countries. Many observers now expect the Greek tragedy to end in default; I’m increasingly convinced that they’re too optimistic, that default will be accompanied or followed by departure from the euro. In some ways, this is a chronicle of a crisis foretold. I remember quipping, back when the Maastricht Treaty setting Europe on the path to the euro was signed, that they chose the wrong Dutch city for the ceremony. It should have taken place in Arnhem, the site of World War II’s infamous “bridge too far,” where an overly ambitious Allied battle plan ended in disaster. The problem, as obvious in prospect as it is now, is that Europe lacks some of the key attributes of a successful currency area. Above all, it lacks a central government. Consider the often-made comparison between Greece and the state of California. Both are in deep fiscal trouble, both have a history of fiscal irresponsibility. And the political deadlock in California is, if anything, worse — after all, despite the demonstrations, Greece’s Parliament has, in fact, approved harsh austerity measures. But California’s fiscal woes just don’t matter as much, even to its own residents, as those of Greece. Why? Because much of the money spent in California comes from Washington, not Sacramento. State funding may be slashed, but Medicare reimbursements, Social Security checks, and payments to defense contractors will keep on coming. What this means, among other things, is that California’s budget woes won’t keep the state from sharing in a broader U.S. economic recovery. Greece’s budget cuts, on the other hand, will have a strong depressing effect on an already depressed economy. So is a debt restructuring — a polite term for partial default — the answer? It wouldn’t help nearly as much as many people imagine, because interest payments only account for part of Greece’s budget deficit. Even if it completely stopped servicing its debt, the Greek government wouldn’t free up enough money to avoid savage budget cuts. The only thing that could seriously reduce Greek pain would be an economic recovery, which would both generate higher revenues, reducing the need for spending cuts, and create jobs. If Greece had its own currency, it could try to engineer such a recovery by devaluing that currency, increasing its export competitiveness. But Greece is on the euro.
14 So how does this end? Logically, I see three ways Greece could stay on the euro. First, Greek workers could redeem themselves through suffering, accepting large wage cuts that make Greece competitive enough to add jobs again. Second, the European Central Bank could engage in much more expansionary policy, among other things buying lots of government debt, and accepting — indeed welcoming — the resulting inflation; this would make adjustment in Greece and other troubled euro-zone nations much easier. Or third, Berlin could become to Athens what Washington is to Sacramento — that is, fiscally stronger European governments could offer their weaker neighbors enough aid to make the crisis bearable. The trouble, of course, is that none of these alternatives seem politically plausible. What remains seems unthinkable: Greece leaving the euro. But when you’ve ruled out everything else, that’s what’s left. If it happens, it will play something like Argentina in 2001, which had a supposedly permanent, unbreakable peg to the dollar. Ending that peg was considered unthinkable for the same reasons leaving the euro seems impossible: even suggesting the possibility would risk crippling bank runs. But the bank runs happened anyway, and the Argentine government imposed emergency restrictions on withdrawals. This left the door open for devaluation, and Argentina eventually walked through that door. If something like that happens in Greece, it will send shock waves through Europe, possibly triggering crises in other countries. But unless European leaders are able and willing to act far more boldly than anything we’ve seen so far, that’s where this is heading. http://www.nytimes.com/2010/05/07/opinion/07krugman.html?th&emc=th
15
07.05.2010 Instead of solving the problem, European leaders play the blame game
It was another hugely depressing day for the euro area. The crisis continued to spread yesterday, as Spanish interest rates rose to 3.58% for two year notes, and 2.84% for five year bonds, about six times as Germany, according to El Pais. There was no indication that the ECB would go beyond the concrete measures of support it announced as part of its contribution for the Greek debt crisis. There will be no quantitative easing in support of European bond markets. Trichet said yesterday that the issue was not even discussed at the ECB’s special council meeting in Lisbon. Jornal de Negocios quotes Trichet saying in an interview: "Portugal, like all others, has no time for complacency. It's very important that all countries, and Portugal in particular, provide credibility to their program of reconstruction of public finances and to do so with total clarity." The Financial Times reports that at his press conference Trichet warned of a small risk of upward price pressures, due to the rise in energy prices. He admitted the ECB’s council was not unanimous on the decision to exempt Greek shares from the collateral rules. Bloomberg called his strategy “playing for time”. What time, we wonder? The euro was down at $1.25, recovered later in overnight trading, after news of a special G7 conference call today to discuss Greece and its consequences. European leaders, meanwhile, in preparation for today’s summit, are focusing squarely on the blame game. While the crisis is spreading to Spain and Portugal, Jose Manuel Barroso, the president of the European Commission, blames “speculators” for the problems of the euro zone, showing once again that he, and those who advise him, have no understanding of the crisis. Der Spiegel reports that Angela Merkel and Nicolas Sarkozy will push for their agenda of banning naked CDS, speculation against the euro, and the set-up of a European rating agency at today’s eurozone summit. (While we support ban on Naked CDS, it is not clear to us what they have to do the sovereign debt crisis in Europe, and it is even less clear to us, what difference a European rating agency would make. The markets are panicking about a spread of the crisis, while Barroso/Merkel/Sarkozy are blaming the markets, and threatening action against them. This is a game they will not win.)
16 The rating agency story is no joke. In fact Germany’s FDP has worked out a concrete proposal. According to FT Deutschland, the European Rating Agency will be co-financed by the European Commission, member states, and the EIB, “to insure its independence” according to an MEP with a pronounced sense of humour. The idea would be for member states to have to rely on two ratings, one from the European agency, and one from one of the private-sector agencies. The long-term financing of the agency would be secured through the sale of rating to investors . The Christian Democrats also support the idea, and even Trichet said it deserves further study. It is going to happen. Extreme market volatility adds to concerns At one time, the Dow Jones was down over 1000, then bounced back, and then down again, to close 3.2 per cent, down. The Financial Times puts this down as signifying fears over a fast spreading debt crisis – that European leaders are not getting under control. The SEC announced an investigation into what it called an “usual” trading activity. It also blanked out the trading screens for a while. The general concern among investors was well expressed in a Bloomberg story, which shows that there is now a general fear that governments had borrowed too much, which is very likely to lead to defaults somewhere in the system, if not in Greece than somewhere else. There are additional technical factors, exacerbating the situation, including disruption in the European interbank markets, which has dried up market liquidity. Greece passes austerity package – but opposition votes No No chance of a unified vote, which investors had so clearly hoped for. The Greek austerity package won approval in the Greek parliament, as expected, but the opposition New Democrats did indeed vote against the package, which was approved by a vote of 172 to 121. Three Socialists voted against, and were immediately expelled from the party. The FT reports that George Papandreou’s approval rating has fallen since the package was negotiated, but remains comfortably above that of opposition leader Antonis Samaras. Joseph Stiglitz’ three solutions to the crisis Joe Stiglitz says there are now three ways out. The first is an internal devaluation by southern European countries – wage and price cuts. He believes this is not going to happen. The second would be an exit of Germany from the eurozone, or split of the eurozone into a northern and southern hemisphere. And his preferred solution is the type of institutional setup the euro area should have had right from the start: a fiscal union. Stephanie Flanders on default Writing in her BBC blog, Stephanie Flanders makes the point that default, especially negotiated default is not as scary as people often think, and defaulting countries often return to the capital markets within months – depending on how the default was handled. The problem for Greece is the country’s reliance on external finance. It budget deficit, minus interest payments it still 8% of GDP, which the Greek government could not finance otherwise. It would mean more austerity, not less. http://www.eurointelligence.com/index.php?id=581&tx_ttnews[tt_news]=2785&tx_ttnews[ba ckPid]=901&cHash=cc93692c08#
17
¿Se puede salvar al euro? Joseph E. Stiglitz 2010-05-05
NUEVA YORK – La crisis financiera griega puso en riesgo la supervivencia misma del euro. En el momento de la creación del euro, a muchos los preocupaba su viabilidad a largo plazo. Cuando todo salió bien, esas preocupaciones pasaron al olvido. Pero el interrogante sobre cómo se aplicarían los ajustes si parte de la eurozona resultara afectada por un fuerte shock adverso perduró. Corregir el tipo de cambio y delegar la política monetaria al Banco Central Europeo eliminó dos recursos primordiales a través de los cuales los gobiernos nacionales estimulan sus economías para evitar la recesión. ¿Qué podía reemplazarlos? El premio Nobel Robert Mundell estableció las condiciones según las cuales una moneda única podía funcionar. Europa no cumplió con esas condiciones en su momento; y sigue sin hacerlo. La eliminación de barreras legales para el movimiento de trabajadores creó un mercado laboral único, pero las diferencias lingüísticas y culturales hacen que la movilidad laboral al estilo norteamericano resulte inalcanzable. Es más, Europa no tiene manera de ayudar a aquellos países que enfrentan problemas serios. Consideremos el caso de España, que tiene una tasa de desempleo del 20% -y más del 40% entre la gente joven-. El país tenía un excedente fiscal antes de la crisis; después de la crisis, su déficit aumentó a más del 11% del PBI. Pero, según las reglas de la Unión Europea, España ahora debe recortar su gasto, lo cual, probablemente, exacerbe el desempleo. Conforme su economía se ralentiza, la mejora de su posición fiscal puede ser mínima. Algunos esperaban que la tragedia griega convenciera a los estrategas políticos de que el euro no puede andar bien sin una mayor cooperación (asistencia fiscal incluida). Pero Alemania (y su Corte Constitucional), en parte a raíz de la opinión popular, se ha opuesto a darle a Grecia la ayuda que necesita. Para muchos, tanto dentro como fuera de Grecia, era una situación peculiar: se habían invertido miles de millones en salvar a los grandes bancos, pero evidentemente salvar a un país de once millones de personas era un tabú. Ni siquiera resultaba claro que la ayuda que Grecia necesitaba debiera ser catalogada como un rescate: si bien resultaba poco probable que los fondos otorgados a instituciones financieras como AIG fueran recuperados, un préstamo a Grecia a una tasa de interés razonable probablemente sería saldado.
18 Una serie de ofertas a medias y de vagas promesas, destinadas a calmar al mercado, resultaron un fracaso. De la misma manera que Estados Unidos había improvisado a toda prisa una asistencia para México 15 años antes combinando ayuda del Fondo Monetario Internacional y el G-7, la UE diseñó un programa de asistencia junto con el FMI. El interrogante era: ¿qué condiciones se le impondrían a Grecia? ¿Cuán grande sería el impacto adverso? Para los países más pequeños de la UE, la lección es clara: si no reducen sus déficits presupuestarios, existe un riesgo elevado de un ataque especulativo, con pocas esperanzas de una ayuda adecuada por parte de sus vecinos, al menos no sin limitaciones presupuestarias pro-cíclicas que resultarán dolorosas y contraproducentes. A medida que los países europeos adopten estas medidas, sus economías probablemente se debiliten –con consecuencias desdichadas para la recuperación global. Puede resultar útil analizar los problemas del euro desde una perspectiva global. Estados Unidos se ha quejado de los superávits (comerciales) de cuenta corriente de China; pero, como porcentaje del PBI, el superávit de Alemania es aún mayor. Supongamos que el euro se creó para que el comercio en la eurozona en su totalidad fuera, en términos generales, equilibrado. En ese caso, el superávit de Alemania implica que el resto de Europa está en déficit. Y el hecho de que estos países importen más de lo que exportan contribuye a sus economías débiles. Estados Unidos se ha quejado de la negativa por parte de China de permitir que se aprecie su tipo de cambio en relación al dólar. Pero el sistema del euro implica que el tipo de cambio de Alemania no puede aumentar en relación a los otros miembros de la eurozona. Si el tipo de cambio aumentara, a Alemania le costaría más exportar, y su modelo económico actual, basado en exportaciones fuertes, enfrentaría un desafío. Al mismo tiempo el resto de Europa exportaría más, el PBI aumentaría y el desempleo se reduciría. Alemania (al igual que China) ve sus ahorros elevados y sus proezas exportadoras como virtudes, no vicios. Pero John Maynard Keynes decía que los superávits conducen a una débil demanda agregada global –los países que tienen superávits ejercen una “externalidad negativa” en sus socios comerciales-. De hecho, Keynes creía que eran los países con superávits, mucho más que los países con déficits, los que planteaban una amenaza a la prosperidad global; incluso llegó a recomendar un impuesto a los países con superávits. Las consecuencias sociales y económicas de los acuerdos actuales deberían ser inaceptables. No debería obligarse a los países cuyos déficits han aumentado como resultado de la recesión global a caer en una espiral mortal –como sucedió con Argentina hace una década Una solución que se propone es que esos países pergeñen el equivalente de una devaluación – una disminución uniforme de los salarios-. En mi opinión, esto es inalcanzable, y sus consecuencias distributivas son inaceptables. Las tensiones sociales serían enormes. Es una fantasía. Existe una segunda solución: la salida de Alemania de la eurozona o la división de la eurozona en dos subregiones. El euro fue un experimento interesante, pero, como el casi olvidado mecanismo de tipo de cambio (MTC) que lo antecedió y se desintegró cuando los especuladores atacaron la libra británica en 1992, carece del respaldo institucional necesario para que funcione. Existe una tercera solución –y tal vez Europa llegue a darse cuenta de eso- que es la más promisoria de todas: implementar las reformas institucionales, incluyendo el marco fiscal necesario, que deberían haberse implementado cuando se creó el euro.
19 No es demasiado tarde para que Europa implemente estas reformas y, así, estar a la altura de los ideales, basados en la solidaridad, que subyacen la creación del euro. Pero si Europa no puede hacerlo, entonces quizá sea mejor admitir el fracaso y pasar a otra cosa en lugar de pagar un precio elevado en materia de desempleo y sufrimiento humano en nombre de un modelo económico fallido. Copyright: Project Syndicate, 2010. www.project-syndicate.org Joseph E. Stiglitz¿Se puede salvar al euro? 2010-05-05 http://www.project- syndicate.org/commentary/stiglitz125/Spanish
20
Trichet Plays for Time as Greek Debt Crisis Spreads (Update2) By Gabi Thesing and Simon Kennedy
May 7 (Bloomberg) -- European Central Bank President Jean- Claude Trichet played for time as Greece’s fiscal crisis spread across the Atlantic to drive stocks down from the U.S. to Asia. The euro slid to a 14-month low yesterday and the Dow Jones Industrial Average dropped the most in a year after Trichet resisted taking any new steps to stem contagion. The ECB hasn’t discussed the option of buying government bonds and the onus is on European politicians to cut budget deficits, he said. The risk for Trichet is that a refusal to act will see contagion worsen in Portugal and Spain, intensifying speculation they will be forced to follow Greece and seek an international bailout. Australia’s Prime Minister Kevin Rudd said markets have judged Europe’s efforts to help Greece “to be inadequate” and a lack of confidence is spreading to other economies in the region. “Today’s price action is a call to arms for the central bankers that we hope they hear,” said Stuart Thomson, who helps manage the equivalent of about $100 billion at Ignis Asset Management in Glasgow. “This isn’t the end of the story.” The extra yield that investors demand to hold Spanish and Portuguese debt yesterday rose to the highest level since the euro’s inception in 1999. The premium on Spain’s 10-year government bonds over German bunds hit 166 basis points. Euro Slides In currency markets, the euro fell as low as $1.2529, taking its slide against the dollar since late November to 16 percent. It traded at $1.2692 as of 12:42 p.m. in Tokyo after Japanese Finance Minister Naoto Kan said the Group of Seven will hold a conference call today to discuss Greece’s fiscal woes. Asian stocks opened lower today, with the Nikkei 225 Stock Average tumbling 3 percent in Tokyo after a 3.3 percent drop yesterday. Australia’s S&P/ASX 200 Index lost 2.2 percent. The Dow average, which at one point plunged the most since the 1987 crash, dropped 3.2 percent, and Brazil’s Bovespa stock index fell to a three-month low. Markets will continue to test the resolve of policy makers by selling the euro and bonds of
21 high-deficit economies, said Marc Chandler, head of currency strategy at Brown Brothers Harriman & Co. in New York. “In sword fighting it is said if you feel mush, push,” he said. “The market feels mush.” Trichet is trying to convince investors that turmoil in euro-region markets will subside once the Greek government draws on its 110 billion-euro ($140 billion) aid package and implements an austerity plan. He urged other European governments to take “decisive” action on deficits. Pressure on ECB “They see this as a political problem and are looking to the politicians to provide a lead, but the point at which the ECB can do nothing and let markets heal themselves is ending,” said Thomson. Rudd, the Australian prime minister, said “markets have judged those arrangements to be inadequate,” referring to the package for Greece in an interview on 3AW radio from Melbourne today. “The problem that’s come from that is that it’s spread a broader lack of confidence into market perceptions of a range of other economies in Europe,” he said. Germany, which will provide the biggest share of Europe’s bilateral loans to Greece, will vote on its contribution today. Euro-area leaders will then meet later in Brussels to sign off on the aid package, which is being co-financed by the International Monetary Fund. Deadly Protests Greece’s parliament yesterday approved the austerity measures demanded in return for the bailout amid public unrest. Three people died in a fire in Athens on May 5 set by protesters during a general strike against wage cuts and tax increases. Investors are concerned that Greece, which had its credit rating cut to junk by Standard & Poor’s last week, won’t be able to make the budget cuts demanded of it and could default on its debts, a fear that is spreading to Europe’s other indebted nations. Moody’s Investors Service put its Aa2 credit rating on Portugal on review for a possible downgrade this week. Trichet’s stance yesterday was “reminiscent of the one we saw during the credit crisis,” when the ECB refused to follow the U.S. Federal Reserve and the Bank of England to buy government bonds, said Nick Kounis, chief European economist at Fortis Bank in Amsterdam. If the crisis persists, the ECB “will probably bring back its full array of liquidity-providing operations” such as unlimited long-term loans to banks, said Kounis. “However, we doubt that the central bank will go into the government-bond buying business.” Bond Purchases While the ECB cannot buy government bonds directly, it could do so in the secondary market. The concern is that directly financing national deficits runs counter to the ECB’s founding treaty and could also fan inflation, the containment of which is the ECB’s main mandate. Floating a proposal to buy government debt could lead to a split on the ECB’s Governing Council, said Carsten Brzeski, an economist at ING Group in Brussels. “I can’t see that Germany would accept it,” he said. “It’s questionable whether the purchase of government bonds would have any positive effect and as long as you can’t guarantee the success, you have to ask whether it’s worth breaking the spirit of the Maastricht Treaty.” Germany’s Axel Weber said May 5 that the threat of a spreading crisis doesn’t merit “using
22 every means.” ‘Nuclear Button’ Trichet “did not explicitly rule out bond buying, rather just replied that it was not discussed today,” said Christoph Rieger, co-head of fixed-income strategy at Commerzbank AG in Frankfurt. “This approach can be considered consistent with the ECB’s principles. But it risks that the market will still force the ECB’s hand before long.” Should further steps be needed, the ECB may take them May 20, when its council meets for a regular mid-month meeting that isn’t followed by a press conference, said Christel Aranda- Hassel, an economist at Credit Suisse Group AG in London. “If the market seizes up, the ECB is likely to implement further unconventional measures,” she said. Trichet made clear yesterday that the ECB always takes the appropriate decisions, even if they’re not conventional, said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London. “That suggests some flexibility,” he said. “Should contagion take on a new dimension, the ECB will be forced to press the nuclear button and buy government bonds.” To contact the reporter on this story: Gabi Thesing in London at [email protected]
Gabi Thesing and Simon Kennedy Trichet Plays for Time as Greek Debt Crisis Spreads (Update2) May 7http://www.bloomberg.com/apps/news?pid=20601085&sid=a1LQ4JAyYmD0#
23
05/06/2010 03:41 PM The World from Berlin 'The Greek Government Shouldn't Panic' Riots in Greece over financial cutbacks turned deadly on Wednesday, with protesters turning their anger on banks, firefighters and police in Athens. There seems to be no way around the cuts, but can the Greek government stand firm in the face of radical opposition? Strikes and protests in Greece over a package of budget cuts designed to turn the troubled nation's financial situation around turned deadly on Wednesday. Protesters in Athens set a bank on fire, then threw rocks at firemen trying to put out the blaze. Three bank employees died in the fire. The anger and violence has only increased doubts that Greece will be able to pull itself out of its downward economic spiral, which involves nation-wide belt-tightening. The austerity measures are the conditions for a massive aid package from the International Monetary Fund and the European Union designed to prevent the country from going bankrupt. Meanwhile, the violence in Athens has unsettled German politicians preparing to approve the country's contribution to the massive bail-out loan package and made the loans a hard sell on the eve of state elections in North-Rhine Westphalia on Sunday. German commentators on Thursday urged Greek and German politicians alike to stand strong, for the sake of Greece and the European Union. The center-right Frankfurter Allgemeine Zeitung writes: "The budget cuts are tough, but the Greeks have themselves to blame. The harsh savings program is a consequence of years of misguided politics that now endanger the stability of the euro. And nothing less than the future of Europe now hangs in the balance." "Germany will take responsibility, the chancellor has said. That's the right course of action. But part of that responsibility -- and this doesn't just go for Germany -- is the need to protect Europe's currency union from damage. For too long, European states have engaged in unrealistic policies that have turned a theoretical possibility into a real danger: First the erosion of trust in the common currency, then the erosion of trust in the European Union itself." The business daily Handelsblatt writes: "In the last few weeks, we've experienced an irresponsible spectacle. Fueled by the Springer Company's newspapers, Greece's financial situation has been used to torpedo a financial rescue package for Greece and with it the euro zone. In the process, Merkel has been styled a new Bismarck -- all with the elections on May 9 in mind. Perhaps headlines like 'We Are the Pope' gave an amusing note to Germany's national pathos, but the euro-populaism of the last few weeks has been hard to deal with. It damages the economic and financial interests of the country." "To prevent the Greek situation from repeating itself and give the euro a stable future, we need to strengthen the Stability and Growth Pact. We also need a European financial regulation system that doesn't just look at budget deficits but at trade deficits, to spot problems early and find solutions. It's clear that Germany shouldn't be the euro zone's
24 accountant. But to avoid that, we need more engagement with Europe, and not less. Put another way: We need more Helmut Kohl and Helmut Schmidt and less Otto von Bismarck." And the center-left Süddeutsche Zeitung writes: "Violent radical anarchists have a long tradition in Greece. … Their anarchy is attracted to violence the way a magnet is attracted to the pole. To say at this point that Greece is a dysfunctional state that doesn't deserve help is irrelevant. The anarchists aren't only about Greece, and the dead serve as a warning for all those firebrands who are playing with people's emotions." "The Greek government shouldn't panic. It needs to stay strong and show that the nation won't succumb to social or financial anarchy. It would be good for it to quickly make a list of the consequences for tax dodgers and subsidy cheats. That would give people more faith in a state governed by laws that's on shaky ground right now. Economic crises and the stability of a country are always closely linked -- that's another lesson from the crisis." -- Andrew Curry, 13:15 CET
URL: “The World from Berlin: 'The Greek Government Shouldn't Panic'” , Spiegel online, 05/06/2010 • http://www.spiegel.de/international/europe/0,1518,693358,00.html RELATED SPIEGEL ONLINE LINKS: • Graphics Gallery: The Euro Crisis in Figures http://www.spiegel.de/fotostrecke/fotostrecke-54629.html • Interview with Portugal's Labor Minister: 'We Want to Get the Budget Under Control' (05/06/2010) http://www.spiegel.de/international/europe/0,1518,693322,00.html • Rampant Skepticism: Aid for Greece Hasn't Stopped Euro's Slide (05/06/2010) http://www.spiegel.de/international/business/0,1518,693352,00.html • The Great Depression: Greeks Struggle with Sick-Man Status (05/05/2010) http://www.spiegel.de/international/europe/0,1518,693115,00.html • The World from Berlin: German Banks 'Will Emerge Unscathed' from Greek Bailout (05/05/2010) http://www.spiegel.de/international/germany/0,1518,693158,00.html • Three Dead in Athens Bank: Greek Protests at IMF Plan Escalate (05/05/2010) http://www.spiegel.de/international/europe/0,1518,693179,00.html
25
05/07/2010 12:39 PM Hoping for Stability Germany Approves Greek Deal Ahead of Euro Summit The German parliament has approved Berlin's massive contribution to Greece's bailout, ahead of a summit of euro-zone countries later on Friday. The bid to steady the euro, however, may not be enough to ease jitters on the markets over Europe's woes. European leaders may be hoping their gamble on a massive bailout for Greece will be enough to shore up a wobbly euro, but the markets have reacted with less than enthusiasm. With Greece having passed a slew of harsh austerity measures, its 15 partners in the common currency area, the euro zone, are to formally agree to the €110 billion bailout at a summit in Brussels on Friday evening. A vote in the German parliament earlier in the day will pave the way for approval of the joint EU-International Monetary Fund rescue package designed to prevent Greece from going bankrupt. Ahead of Friday's summit, German Chancellor Angela Merkel and French President Nicolas Sarkozy wrote an open letter stressing their commitment to preserving "the solidity, stability and unity of the euro zone." The two argue that lessons have to be drawn from the crisis and they called for a "reinforcing fiscal surveillance within the euro area, including providing more effective sanctions" against those who violate the euro zone's strict deficit limits. Little Doubt German Finance Minister Wolfgang Schäuble told the lower house of parliament, the Bundestag, that there was no alternative to approving a rescue package. "It would be disastrous to risk … a member of the European currency union, Greece, now becoming insolvent," he said on Friday ahead of the vote. Sigmar Gabriel, leader of the center-left Social Democrats (SPD) lashed out at Merkel's handling of the crisis. He told parliament that she had "destroyed the trust in the credibility of Germany's European policy." His party opted to abstain from voting on the bill. Yet, there was never much doubt that it would be passed in the Bundestag, where Merkel's center-right ruling coalition has a comfortable majority. Her Christian Demcocrats and coalition partners from the pro-business Free Democrats were joined by the Greens in supporting the aid package. The far-left Left Party was the only party to oppose it. The final result was 390 deputies in favor, 72 against and 139 abstentions. Merkel's government also has a majority in the Bundesrat, Germany's upper legislative chamber, which is due to vote later on Friday. The bill is then to be signed by President Horst Köhler, a former IMF director. The Greek bailout has proved highly unpopular in Germany, which as the euro-zone's biggest country is bearing the brunt of the bailout costs. It will grant as much as €22.4 billion ($28.6 billion) to Athens over the next three years. On Thursday the Greek parliament approved the harsh austerity measures that are a condition of the bailout. Pensions and public sector wages are to be slashed and consumer taxes are to go up in a bid to cut the spiralling budget deficit.
26 Fears of a Ripple Effect European leaders hope the rescue package will now stem the threat to the euro zone as a whole. However, there is much skepticism about whether the current aid package will be enough for Athens. Other euro-zone governments with weak finances, such as Portugal, are also facing debt downgrades and increased borrowing costs. The European Central Bank President Jean-Claude Trichet has tried to play down fears of contagion. "Portugal and Greece are not in the same boat, and this is very visible when you look at the facts and figures," he told reporters on Thursday after the ECB decided not to change interest rates. However, fears of a ripple effect are not being allayed. And Wall Street certainly had the jitters on Thursday over fears the troubles in Europe could hinder a global recovery. At one point the Dow Jones plunged 1,000 points, although there are reports that the sudden drop was due to a typing error by a trader. Nevertheless, the Dow had already dropped by 200 points before the precipitous plunge and the selling spread to Europe and Asia on Friday. Concerns over the possible shock waves from Greece are even prompting the finance ministers of the Group of Seven nations to discuss the bailout later on Friday in a conference call. Federal Reserve officials have expressed concern and the White House has said that US President Barack Obama is watching developments closely. "The Greece debt crisis is reminding investors of what happened after Lehman Brothers' collapsed," Kazuhiro Takahashi, a general manager with Daiwa Securities Capital Markets, told Reuters. "A failure by one financial institution ended up triggering a ripple effect on the global economy." smd -- with wire reports
URL: • http://www.spiegel.de/international/europe/0,1518,693579,00.html RELATED SPIEGEL ONLINE LINKS: • Interview with Portugal's Labor Minister: 'We Want to Get the Budget Under Control' (05/06/2010) http://www.spiegel.de/international/europe/0,1518,693322,00.html • Rampant Skepticism: Aid for Greece Hasn't Stopped Euro's Slide (05/06/2010) http://www.spiegel.de/international/business/0,1518,693352,00.html • The Great Depression: Greeks Struggle with Sick-Man Status (05/05/2010) http://www.spiegel.de/international/europe/0,1518,693115,00.html • The Mother of All Bubbles: Huge National Debts Could Push Euro Zone into Bankruptcy (05/03/2010) http://www.spiegel.de/international/europe/0,1518,692666,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
27
Pimco’s El-Erian, Loomis’s Fuss Say Greek Crisis Going Global By Sree Vidya Bhaktavatsalam and Christopher Condon
May 7 (Bloomberg) -- Pacific Investment Management Co.’s Mohamed El-Erian and Loomis Sayles & Co.’s Dan Fuss said the European debt crisis may spread across the globe because of investor concern that governments have borrowed too much to revive their economies. “After morphing into a regional dislocation, the Greek crisis is now going global,” El-Erian, the chief executive officer of Newport Beach, California-based Pimco, said yesterday in an e- mail. El-Erian shares the title of co-chief investment officer of Pimco with Bill Gross, who runs the world’s biggest bond fund. U.S. stock markets plunged by the most in a year yesterday on concerns that the debt troubles in Europe will bring the global economic recovery to a halt. The Dow average slumped as much as 9.2 percent during the day before paring losses. European Central Bank President Jean-Claude Trichet resisted pressure to take steps to fight the spreading crisis, and said the bank didn’t discuss buying government debt when policy makers met yesterday. Asian stocks fell today after the rout in U.S. equities. The MSCI Asia Pacific Index slid 1.6 percent to 117.88 at 9:22 a.m. in Tokyo, set to close at the lowest level since Feb. 25. Fuss, whose Loomis Sayles Bond Fund beat 96 percent of competitors in the past year, said the euro crisis had reached a “critical” point. “It’s a liquidity issue, so it’s not just over there, it’s over here,” Fuss said in an interview. Dow’s Decline The Dow Jones Industrial Average lost as much as 998.5 points before paring its drop to 347.80 points in New York. The Standard & Poor’s 500 Index fell 3.2 percent to 1128.15. The declines for both gauges were the most since April 20, 2009. “The transmission mechanisms for this latest round include disruptions in European inter-
28 bank lines, a flight to quality, and market illiquidity,” El-Erian said. The euro tumbled the most since the collapse of credit markets in 2008, dropping 1.5 percent to $1.2620 and touching a 14-month low of $1.2529. Amid protests, Greece’s parliament approved austerity measures demanded by the European Union and International Monetary Fund as a condition of its 110 billion euro ($139 billion) bailout. Europe’s debt-ridden nations have to raise almost 2 trillion euros within the next three years to refinance maturing bonds and fund deficits, according to Bank of America Merrill Lynch data. ‘Defaults’ “The issues in Greece are a global issue,” Axel Merk, president and chief investment officer of Merk Investments LLC in Palo Alto, California, said in an interview. “The recovery priced in that access to credit is available, and cheaply.” Italy faces the biggest bill, followed by Spain. Greece needs 152.6 billion euros, while Portugal and Ireland each have to raise about 80 billion euros, the data show. “There may well be some defaults. If not Greece then some other nation,” Merk said. That’s “hitting the banking sector particularly hard.” Europe’s fiscal crisis could threaten banks in Portugal, Spain, Italy, Ireland and the U.K. as the risk of contagion grows, Moody’s Investors Service said in a report yesterday. ‘Dissolution of the Euro’ “If Merkel and Trichet don’t solve this, if they don’t work together, this could potentially mean the dissolution of the euro,” Ron Sloan, chief investment officer at Atlanta-based Invesco Ltd.’s U.S. core equity team, said in a telephone interview, referring to German Chancellor Angela Merkel. Sloan added that there is a danger the debt crisis could spread to municipal debt issued by U.S. states that are struggling to balance their budgets. “It’s the whole issue of risk appetite again,” he said. “If the euro sinks individual U.S. states will be the next step.” The U.S. federal deficit is forecast to reach $1.6 trillion this year, or 10.6 percent of the economy, making it the biggest by that measure since World War II. Sloan manages the $5.5 billion Invesco Charter Fund, which has outperformed 97 percent of similarly managed funds over the past five years. To contact the reporter on this story: Sree Bhaktavatsalam in Boston at [email protected] http://www.bloomberg.com/apps/news?pid=20601085&sid=aNS3MryXueCk#
29
La primera crisis del euro - Las decisiones monetarias Trichet decepciona a los mercados La falta de medidas excepcionales ante la crisis de la deuda agudiza el desplome del euro y de las Bolsas - El BCE señala que no se ha planteado comprar bonos FRANCESC RELEA - Lisboa - 07/05/2010 La reunión del consejo de gobernadores del Banco Central Europeo (BCE) defraudó las expectativas. La cautela presidió las palabras del presidente Jean-Claude Trichet, que confirmó el mantenimiento de los tipos de interés en el 1%, descartó cualquier hipótesis de que el BCE compre títulos de deuda soberana griega. La reunión del consejo de gobernadores del Banco Central Europeo (BCE), celebrada ayer en Lisboa, defraudó las expectativas. La cautela presidió las palabras del presidente de la institución, Jean-Claude Trichet, que confirmó el mantenimiento de los tipos de interés en el 1%, descartó cualquier hipótesis de que el BCE compre títulos de deuda soberana griega, y aseguró que no contempla en absoluto un escenario de suspensión de pagos de Grecia. Ningún anuncio concreto salió de la boca del mandamás del banco emisor, más allá de reiterar los últimos acuerdos adoptados. Durante la mañana, los inversores habían especulado con la adopción de medidas extraordinarias ante la gravedad de la crisis de la deuda. Se apostaba por una rebaja de tipos, más facilidades de financiación a la banca o incluso la apertura del debate sobre la compra de deuda pública por el BCE. Nada de eso sucedió y las Bolsas lo acusaron. El pánico se apoderó de la de Nueva York a poco más de una hora del cierre, con una caída repentina que llegó a superar el 9%. El resto de los mercados, que habían arrancado la mañana algo animados, empezaron a caer tras conocer las decisiones del BCE. El euro entró en barrena y los bonos de los países periféricos sufrieron una nueva oleada de ventas que llevó a máximos sus primas de riesgo. En Lisboa, Trichet puso el mayor énfasis en la unanimidad de los gobernadores del BCE en el apoyo al plan de rescate griego y en el amplio apoyo -esta vez no unánime- a la decisión sin precedentes adoptada el lunes de aceptar los bonos helenos, cualquiera que sea su calificación, como garantía colateral de los préstamos. El presidente del BCE fue algo más explícito, sin enseñar totalmente las cartas, a la hora de abonar la idea de una agencia de calificación financiera europea, que en los últimos días ha ganado apoyos después de las actuaciones recientes de Standard & Poor's en relación a Portugal y España. Trichet dijo que esta cuestión tendría que discutirse "globalmente", aunque adelantó que cuanta más competencia haya en términos de agencias calificadoras, mejor. Tampoco fue ninguna novedad su reiterada afirmación de que "Grecia y Portugal no están en el mismo barco". Que la situación en España y en Portugal no se parece a la de Grecia "es totalmente obvio", apuntó en respuesta a los periodistas lusos. Paradójicamente, Trichet estaba flanqueado en la conferencia de prensa por un griego, Lucas Papademos, vicepresidente saliente del BCE, y un portugués, Vítor Constâncio, vicepresidente entrante. Más allá de las diferencias entre las economías más vulnerables de la zona euro, hubo un mensaje inequívoco del líder del BCE, que sonó a aviso a navegantes: "Queremos que todos los países hagan sus deberes". En este sentido, hizo un nuevo llamamiento a los Gobiernos europeos a aplicar medidas de ajuste fiscal, porque recuperar la
30 confianza depende de las reformas que recorten el gasto y fomenten un sistema de prestaciones sociales a favor del empleo. La declaración del BCE subraya la estabilidad de precios y el control de la inflación cerca del 2% "como el primer mandato" de la institución. Pese a las turbulencias, dijo Trichet, nunca ningún Estado miembro tuvo mejores condiciones de precios que ahora, "ni en los años noventa ni en los ochenta, y mucho menos antes". El BCE está en alerta permanente, concluyó Trichet, que dijo tener una hoja de ruta clara, sin pretender reemplazar a los Gobiernos. Cada uno debe asumir su responsabilidad, dijo, al contestar una pregunta sobre los altos tipos de interés del 5% en los préstamos bilaterales a Grecia. "Es una decisión de los Gobiernos". A medida que avanzaba la rueda de prensa de Trichet, el euro cayó por debajo de los 1,27 dólares por primera vez desde el 11 de marzo de 2009. En cuanto a la deuda, Grecia, Portugal, Irlanda y España, por ese orden, sufrieron el mayor castigo. Pero ayer también Italia, que había capeado mejor las turbulencias, se vio afectada de lleno a raíz de un informe de Moody's sobre el riesgo de contagio de la crisis de deuda a la banca. La llegada a Italia de la palabra "riesgo" produjo inquietud y enfado en el Gobierno y en el Banco de Italia, informa Miguel Mora. El primer ministro, Silvio Berlusconi, despachó el asunto cargando contra las agencias de calificación de riesgo: "No son creíbles", dijo. El banco nacional replicó a Moody's con una frase firme: "El sistema italiano es robusto". Y el ministro de Economía, Giulio Tremonti, confirmó esa impresión, pero matizó: "Nadie está libre de peligro aunque viaje con billete de primera". Según Tremonti, la situación griega es "muy grave" y ha empeorado por "el retraso en el rescate". "La extensión de la crisis es sistémica y la solución sólo puede ser común y política", añadió. La reunión del BCE en Lisboa coincidió con la resaca de la noticia de que la agencia calificadora Moody's planea rebajar la nota a Portugal, que tuvo un impacto negativo inmediato en los mercados. Anthony Thomas, vicepresidente de dicha agencia, precisó ayer que antes de tomar una decisión al respecto, Moody's tendrá en cuenta las medidas del Plan de Estabilidad que el Gobierno portugués pretende adelantar este año. http://www.elpais.com/articulo/economia/Trichet/decepciona/mercados/elpepueco/20100507el pepieco_5/Tes
31 La primera crisis del euro Las máquinas se apoderan de Wall Street y provocan el pánico en el mercado El Dow Jones llegó a caer más del 9,16% por el temor a la crisis griega y un conjunto de operaciones descontroladas SANDRO POZZI | Nueva York 07/05/2010 En cuestión de segundos, las acciones de Accenture pasaron de 40 dólares a un centavo. Las de Lear bajaron de 74 dólares a 0,0001. Varios títulos más se desplomaron sin freno por una serie de órdenes automáticas de venta mientras los sistemas estaban descontrolados en Wall Street. Lo que empezó como una fuerte caída del índice Dow Jones por la amenaza que el contagio de la crisis griega supone para el conjunto de la economía, acabó con momentos de pánico en una Bolsa de Nueva York (NYSE) en manos de los sistemas informáticos de negociación. Las autoridades de la Comisión del Mercado de Valores (SEC), de la NYSE y del mercado electrónico Nasdaq anunciaron anoche que estaban investigando lo ocurrido. Desde los mercados se admitió que hubo una serie de "operaciones potencialmente erróneas" y que buena parte de ellas estaban siendo anuladas. Esas operaciones llevaron a la Bolsa de Nueva York a vivir momentos de pánico similares a los de hace algo más de año y medio, cuando la quiebra de Lehman Brothers desató la mayor crisis financiera desde el crash bursátil de 1929. El índice Dow Jones se desplomó en vertical en sólo unos minutos. En el momento más agudo, la caída fue del 9,16%, la mayor desde el crash de 1987 y superior incluso a la de los días más negros de las semanas posteriores a la caída de Lehman. El mercado, sin embargo, recuperó con gran rapidez buena parte de lo perdido, y al cierre las pérdidas fueron de sólo el 3,2%. Desde la apertura de la sesión, la Bolsa caía con fuerza instalada en el pesimismo por la crisis griega y su contagio a buena parte de Europa. Pero sin que hubiera un detonante concreto, varios valores se desplomaron de golpe y arrastraron a todo el mercado. Entre esos títulos estaban Accenture, Lear, Procter & Gamble y Philip Morris. Sus caídas alimentaron el pánico, las ventas de otros valores y la caída de los índices. El estrangulamiento del mercado se produjo en primer lugar con los títulos de Procter & Gamble, según algunas explicaciones. En el sistema que introduce en el mercado las órdenes de la Bolsa de Nueva York se produjo una ralentización, una pausa de 90 segundos para amortiguar la volatilidad. Sin embargo, en otros mercados como el Nasdaq o el de Chicago no se produjo el freno y las órdenes de venta que entraban por sus plataformas electrónicas no encontraron contrapartida suficiente y tumbaron las cotizaciones. En ese momento, las pérdidas de Wall Street superaban el 3% y los monitores mostraban imágenes de las protestas en Grecia, una coincidencia a la que algunos atribuyeron en el primer momento una relación de causa efecto. Nada nuevo sucedió fuera del mercado a esa hora, las 20.40 (hora peninsular española), cuando arrancó la caída en vertical. Desde ahí y hasta las 20.46, cuando el Dow Jones tocó su mínimo, el pánico y las órdenes automáticas para cortar las pérdidas (stop losses) se apoderaron del mercado. Una de las hipótesis que se maneja para explicar cómo una serie de operaciones pudieron contaminar al conjunto del mercado es que los programas informáticos ejecutaron órdenes de venta en nanosegundos, en lo que se conoce como high frequency trading.
32 La CNBC llegó a asegurar que el origen de las operaciones erróneas estaba en una orden de Citigroup y que se había producido al teclear la tecla b (de billions, miles de millones) en lugar de la m (de millones) con las acciones de Procter, aunque otras fuentes desmintieron esa información. Citi, además, dijo no tener constancia de haberse visto envuelto en ninguna operación errónea. El consejero delegado del NYSE, Duncan Niederauer, señaló que no creía que la caída se debiera a un error al meter una orden de venta en el teclado del ordenador. Según él, con el sistema actual de corretaje electrónico, con operaciones que se ejecutan en milisegundos, "hay que aceptar que cosas así van a pasar en periodos de volatilidad exacerbada". "El ordenador busca liquidez muy rápido, y lo hace sin parar 30 ó 60 segundos como nosotros. La gente está nerviosa", añadió. Un senador aprovechó ayer para reclamar que se ponga coto a las máquinas en las operaciones bursátiles. El demócrata Ted Kaufman denunció que se había puesto de manifiesto una vez más "el potencial de los ordenadores gigantes de alta capacidad para alterar el mercado y crear el caos" en lo que denominó "la batalla de los algoritmos". Kaufman presentará una enmienda a la ley de reforma financiera para que se endurezca la regulación. Los rectores del Nasdaq aseguraron ayer que las "operaciones potencialmente erróneas" se produjeron a partir de las 20.40 y hasta las 20.50, hora peninsular española. Ese fue el momento de máxima volatilidad de los índices. El Nasdaq anunció ayer que anulará todas las transacciones a precios situados un 60% por encima o debajo de la cotización de las 20.40. Antes de que la histeria y el pánico se apoderasen del mercado, el pesimismo ya reinaba entre los inversores. La caída de la apertura se aceleró cuando el fondo Pimco, uno de los mayores y más influyentes de Wall Street, expresó sus temores a que los problemas fiscales en Europa acaben pasando factura a la economía global y echen por tierra la recuperación. "Hemos visto como la crisis que arrancó en un país se ha convertido en un problema regional, con un impacto en toda la zona euro y que está a punto de convertirse en global", indicó el consejero delegado del fondo, El-Erian. Aunque se investigan esos cinco minutos de locura y la recuperación casi igual de vertical de los 10 minutos posteriores, está claro que el origen de los males del mercado está en la crisis fiscal y de confianza que azota el Viejo Continente. La incapacidad de Grecia para hacer frente a su deuda -y la de Europa para articular un rescate efectivo- ha provocado un contagio de la crisis de la deuda que ha golpeado con dureza esta semana a los mercados. El castigo de las Bolsas europeas de ayer, con ser intenso, nada tuvo que ver con lo sufrido en Wall Street, donde el pánico se apoderó del mercado. Las pérdidas fueron casi igual de intensas en el índice Standard & Poor's, que reúne a las 500 principales compañías del mercado y aún mayores (hasta del 10,5%) en el Nasdaq. A pesar del rebote posterior, persiste el miedo y la incertidumbre. Las frías máquinas llevaron la caída al extremo durante unos segundos, pero el miedo de los inversores sigue presente. Sandro Pozzi, 07/05/2010 Las máquinas se apoderan de Wall Street y provocan el pánico en el mercado http://www.elpais.com/articulo/economia/maquinas/apoderan/Wall/Street/provocan/panico/me rcado/elpepueco/20100506elpepueco_20/Tes
33
US shares plunge amid fears over debt By Michael Mackenzie and Francesco Guerrera in New York and Tom Braithwaite in Washington Published: May 6 2010 20:40 | Last updated: May 7 2010 01:23 US equity prices whipsawed in value before closing sharply lower on Thursday during a wild day on Wall Street that prompted leading stock exchanges to cancel some trades amid fears of trader errors and computer malfunctions. Global equity prices were battered all day by worries that Greece would default on its debt, but the bottom fell out of the US market during the New York afternoon, wiping out hundreds of billions of dollars in value. Trading goes wild on Wall Street - May-07 ‘Crash of 2.45’ paralyses market participants - May-07 Senators say volatility makes case for regulation - May-07 Short View: Greed, fear and confusion - May-07 Gapper blog: Watching financial fear - May-06 New York pulls back from turmoil - May-06 The Securities and Exchange Commission and the Commodity Futures Trading Commission said they would “review the unusual trading activity that took place briefly this afternoon” and pledged to work with exchanges to protect investors. The turmoil also affected deliberations on a financial reform bill in the US Senate, where Democrat Ted Kaufman called for a response to “the potential for giant high-speed computers to generate false trades and create market chaos”. The S&P 500 ended off 3.2 per cent, at 1,128.15, after a roller-coaster ride that recalled the dark days of the financial crisis. At 2.38pm in New York, the index was down 4 per cent. Six minutes later, it was down 8.6 per cent at 1,065.79. By 2.54pm it was back at 1,200. The Dow Jones Industrial Average suffered its worst intra-day points fall – 998.5, or 9.2 per cent – before ending down 3.2 per cent. Trading in individual stocks was even more bizarre. Procter & Gamble, the consumer products group, fell 37 per cent before ending 2.3 per cent lower. Some stocks – including Accenture, the consultancy – traded briefly at one cent or less. Nasdaq said it would cancel trades between 2.40pm and 3pm in which prices moved more than 60 per cent. It said: “This decision cannot be appealed.” A spokesman at NYSE Euronext said it would cancel some trades on its NYSE Arca electronic platform that took place between 2.40pm and 3.00pm. As talk circulated of a trading error at a large bank, Citigroup issued a statement that it had “no evidence that Citi was involved in any erroneous transaction”. P&G said: “We aren’t in a position to comment on the details of an individual trade today but we believe the trade was an error.”
34 The stock sell-off sparked tumult in markets for currencies, commodities and Treasury bonds, which are often traded by computer programmes that react to equity moves. Gold surged above $1,200 an ounce, and oil dropped more than $5 a barrel. http://www.ft.com/cms/s/0/1e2cd0ce-5945-11df-adc3-00144feab49a.html
MARKETS US Trading goes wild on Wall Street By Nicole Bullock, Michael Mackenzie and Francesco Guerrera in New York Published: May 7 2010 00:50 | Last updated: May 7 2010 00:50 At mid-afternoon in New York on Thursday traders believed the day’s lows had already been seen, but what followed next revived memories of the dark days of the financial crisis of 2008. At 2:38pm, trading simply went wild. Senators say volatility makes case for regulation - May-07 US shares plunge amid fears over debt - May-07 Immelt attacks backlash against bankers - May-07 ‘Crash of 2.45’ paralyses market participants - May-07 Short View: Greed, fear and confusion - May-07 Gapper blog: Watching financial fear - May-06 The S&P 500 had already fallen 4 per cent to the key level of 1,200, when the market, which is now dominated by rapid-fire computer systems, known as algorithmic or “algos”, suddenly sliced though that threshold and started plunging. Within five minutes the benchmark was down 8.6 per cent at 1,065.79, the S&P’s worst intra- day decline since December 2008 at the height of the financial crisis. Equity volatility soared as much as 60 per cent when the S&P bottomed, a surge not seen since February 2007 when jitters over subprime mortgages roiled markets. Amid a deluge of selling, a number of stocks, including Accenture, the consulting company, traded briefly at the price of 1 cent or less. The price of Procter & Gamble, a blue-chip consumer product group, seen as a safe stock, fell 37 per cent in a matter of minutes. The speed of the descent in stock prices and moves in other markets such as currencies and Treasury bonds, which are highly automated, fuelled suspicion that a computer trading program error had occurred as traders wrestled with the anxiety that Greece could become the first eurozone country to default on its debt. “It feels like someone made a large mistake in selling stock that exacerbated the trade in bonds,” said Tom di Galoma, head of trading at Guggenheim Partners. “In my 25 years in the business I have never seen bonds have that type of move in a 20-minute period.” Within minutes of the market’s precipitous plunge and startling rebound, unconfirmed rumours of a “fat finger” trading error were swirling around Wall Street. The most popular one, which spread rapidly in the echo chamber of gossipy trading rooms, was that a Citigroup trader had typed “billions” instead of “millions” on a sell order, causing an immediate drop in the market and prompting further panic selling.
35 As traders debated how the sophisticated technology systems of a large bank could have failed to spot such an error, Citi issued a statement saying it had “no evidence that [it] was involved in any erroneous transaction”. However, the US bank added that, along with the rest of the financial industry, it was investigating the reasons for the market’s collapse. Nasdaq and NYSE Arca, the electronic trading platform, said late on Thursday that they would cancel certain trades made between 2.40pm and 3pm. For months, regulators have been under pressure to implement tougher guidelines as computerised trading has flourished in recent years. The Securities and Exchange Commission is undertaking a broad overview of the equity market structure in the US. “Any action, whether ‘erroneous’ or not, will likely raise the outcry against high- frequency trading and more than likely accelerate the momentum driving financial reform stateside and worldwide,” said John Stoltzfus, strategist at Triconderoga Securities. “Today is a wake up call that algos can run wild” said James Angel, professor of finance at Georgetown University’s McDonough School of Business. Nicole Bullock, Michael Mackenzie and Francesco Guerrera Trading goes wild on Wall Street May 7 2010 00:50 http://www.ft.com/cms/s/0/0cbdcdc2-5966-11df-99ba-00144feab49a.html
US Senators say volatility makes case for regulation Published: May 7 2010 00:59 | Last updated: May 7 2010 00:59 By Tom Braithwaite in Washington US senators advocating stricter limits on banks and tougher regulation of markets used Thursday’s volatility to demand more sweeping reforms as the financial regulatory bill edged towards a vote. Ted Kaufman, the Democratic senator from Delaware, said the sell-off in the S&P 500 supported his case that high-speed trading needed more regulation and banks needed more limits on their activities and size. US shares plunge amid fears over debt - May-07 Trading goes wild on Wall Street - May-07 Immelt attacks backlash against bankers - May-07 ‘Crash of 2.45’ paralyses market participants - May-07 Short View: Greed, fear and confusion - May-07 Gapper blog: Watching financial fear - May-06 He told the Financial Times that he would try to introduce a proposal requiring the Securities and Exchange Commission to report on high frequency trading “much sooner” than they were due to. “Until today,” he said, he was struggling to get traction on the issue with other senators.
36 In addition to new proposals directly aimed at high-frequency trading, Mr Kaufman said Congress should support his amendment to put size caps on deposit-taking banks. “Banks should not be involved in high-risk/high-return proposals . . . There’s a potential for a meltdown and [then] you’ve got a commercial bank in the crosshairs.” Mr Kaufman’s pet cause appeared to be gathering ground in Congress as the market panic filtered through to the Senate floor. “I have become a believer,” said Mark Warner, a Democrat from Virginia. “Everything in my gut says he’s on to something here. “I think there was a warning sign shot across the bow today,” Mr Warner added. “As we deal with financial re-regulation, if we don’t make sure this is part of the mix, I think we’re not acting appropriately.” The market moves overshadowed a series of amendments, including a failed Republican move to loosen the power of a proposed Consumer Financial Protection Bureau and a bipartisan effort to introduce a sweeping audit of the Federal Reserve. A frantic mobilisation of Fed officials helped modify the audit amendment, which was proposed by Bernie Sanders, the independent senator from Vermont. Eventually, in an attempt to secure passage Mr Sanders agreed to keep a ring-fence around monetary policy, shielding it from congressional audits. A vote on the amendment, which was one of several areas of regulatory reform that has concerned the Fed, was held up last night as Democrats struggled to corral their members on the Senate floor. Earlier senators approved an amendment that would force bigger banks such as Citigroup to pay more to insure deposits, while cutting the cost for smaller institutions. A host of other proposed changes, ranging from capping interest rates on credit cards to reintroducing the prohibition on commercial banks owning an investment bank, will be considered in the next few days. Judd Gregg, the Republican senator from New Hampshire, predicted that the bill was now certain to pass but he hoped to make changes, including removing a provision that would force banks to spin off their derivatives trading desks. The Democrats hope that a final vote can take place next week but Republicans warned that they intended to take as much time as they needed to consider hundreds of amendments, potentially prolonging the process. http://www.ft.com/cms/s/0/04279760-5966-11df-99ba-00144feab49a.html
37 COLUMNISTS Greed, fear and confusion By Michael Mackenzie in New York Published: May 7 2010 01:31 | Last updated: May 7 2010 01:31 The first Friday of the month with the release of the US jobs report is usually a banner trading day, but Thursday will take some beating for volatility and drama. Ahead of Friday’s labour data, trading in New York revisited the kind of massive swings seen at the height of the financial crisis in 2008, with the possibility that a computer trading error compounded the brief plunge on Wall Street. New York pulls back from turmoil - May-06 US shares plunge amid fears over debt - May-07 FT Alphaville: Live chat on market sell-off - May-06 Gapper blog: Watching financial fear - May-06 Debt fears spark plunge across markets - May-06 Contagion fears drive Libor higher - May-06 As the dust settled leaving the S&P 500 down 3.2 per cent, a case can still be made that the sharp moves in commodities, equities, currencies and bonds reflect a correction within the great recovery trade that began 14 months ago. Such a pull-back is something many traders and investors have wanted to see in recent months, so they could climb aboard the recovery trade at cheaper levels. That’s true, except that the threat of “Aegean contagion” and the worrying absence of any soothing measures from the European Central Bank at its policy meeting on Thursday, are not the only red lights flashing on the risk horizon. China’s efforts to tighten policy are not playing out well, as Shanghai’s equity market hit an eight-month low on Thursday. Having been the engine that pulled the global economy out of the financial crisis, investors are carefully watching China’s progress. The slide in commodity prices has pulled crude oil back under $80 a barrel, which until recently was the price ceiling for much of the past year. Then there is the UK election, and with results due early on Friday, the prospects of a hung parliament or a minority government hang over the outlook for sterling – it dropped towards $1.47 from $1.51 on Thursday – gilts and equities. Against this risk-averse backdrop, Friday’s read on the US jobs market could well take a back seat to the current mixture of greed, fear and sheer confusion which is dominating the mindset of investors. http://www.ft.com/cms/s/0/01eb9574-5965-11df-99ba-00144feab49a.html
38
Greece's debt crisis could spread across Europe By Neil Irwin Washington Post Staff Writer Friday, May 7, 2010; A01 MADRID -- A third straight day of decline in world financial markets on Thursday was vivid evidence of a scary proposition: That the fiscal crisis that began in Greece months ago is spreading across Europe like a virus, causing growing doubt even about the fates of nations with far more manageable levels of government debt. It is called the contagion effect, economists' metaphor for the rapid and hard-to-predict spread of a financial crisis, and it's driven by the fragility of investors' perceptions. Contagion is a function of vicious cycles in which confidence in a country's ability to repay its debts falls. If investors lose piles of money on the debt of one country, they assume that owning the debts of other countries with similar finances might cause them to lose even more. So they sell their investment in the second country, which in turn must pay higher and higher interest rates to get any loans, which adds to its debt and creates a fiscal death spiral that can well move on to the next country. Spain is in the path of the storm and at the mercy of global investors, who are operating under the twin pressures of fear and greed. The country has less debt relative to the size of its economy compared with the United States or Britain, but contagion can threaten even countries that have managed their government debt responsibly if investors change their views about the country's future deficits or ability to handle debt. The odds of a full-blown sovereign debt crisis have risen significantly over the past two weeks and especially after the market turmoil Thursday, such that Europe in 2010 looks increasingly like East Asia in 1997 and 1998, when a currency devaluation in Thailand sparked a broad crisis in South Korea, Indonesia and elsewhere. Once a panic starts and contagion is spreading, it often takes dramatic government action to reverse the tide -- including external bailouts and steps to address the underlying cause of the crisis that are more aggressive than those needed in a non-panic situation. In the case of Asia in the late 1990s, it took a wall of money from the International Monetary Fund and the United States to arrest the series of crises, combined with painful austerity measures in the nations involved. Banking panics have similar dynamics, and during the 2008-2009 financial crisis, the U.S. government stepped forward with the $700 billion Troubled Assets Relief Program, a series of unconventional lending efforts from the Federal Reserve, and stress tests for major banks that required many of them to raise more private capital. One lesson that could apply to the current situation is that a large-scale intervention from unaffected countries or the European Central Bank could ultimately be needed. Another is that government officials in the affected countries might need to promise more aggressive budget cuts than they would have if the situation hadn't become a market confidence game. "You have to overdo the fiscal consolidation measures to convince people that you are serious," said Rodolfo G. Campos, an economist at IESE Business School in Madrid.
39 On Thursday, Jean-Claude Trichet, head of the ECB, said there was no discussion at a bank policymaking meeting about buying countries' debt -- a decision that would mean essentially printing money to fund borrowing by Greece and other at-risk countries. That drove up borrowing rates for Greece, Spain, Portugal and other nations viewed as in financial trouble, and it drove the price of the euro down as low as $1.25 -- down from $1.27 Wednesday and $1.35 three weeks ago -- as investors betting on continuing economic turmoil in Europe shifted their money to dollars. European stock markets fell, with the British market off 1.5 percent, France's down 2.2 percent, Spain's down 3 percent and Italy's off 4.3 percent. The Spanish stock market has dropped 11 percent since Monday. Analysts had hoped the ECB might use its essentially limitless ability to create money to stanch the crisis, though doing so could hurt the long-term credibility of the central bank as an inflation fighter that does not yield to politics. "Measures that damage the fundamental principles of the currency union and the trust of the people would be mistaken and more expensive for the economy in the longer term," said Axel Weber, a member of the bank's policymaking council, according to Bloomberg News. Still, Trichet did not explicitly rule out buying countries' debt, saying only that the concept was not discussed. This suggests that the idea is not out of the question if the situation becomes worse. It did grow significantly worse since Trichet made his comments, with the European market sell-off followed by an even more dramatic decline -- and partial rebound -- in the United States. The herd selling seen on both sides of the Atlantic is typical of financial contagion and shows how these crises feed on investor psychology, not just economic fundamentals. In the case of Spain, the country's public debt only adds up to about 70 percent of its annual gross domestic product, compared with 84 percent in Germany, 82 percent in Britain, and 94 percent in the United States. But with 20 percent unemployment and a generous set of social welfare benefits, Spain is running a higher annual budget deficit than those other countries -- 11 percent, compared with 2.3 percent in Germany. So to keep its debt from rising significantly, Spanish leaders need to rein in spending or raise taxes to reduce annual deficits. Normally, they would have years in which to make that transition; after all, the debt wasn't going to explode overnight. But since it became clear to global investors that Greece was more indebted than they realized and that the country may not be able to pay back what it owes, buyers of government bonds have been taking a hard look at countries with debt problems of their own. And they have focused on Spain, Portugal, Italy and Ireland. Thus, while Spain may have more in common with Greece's sunny weather and nice beaches than its level of indebtedness, markets have turned on the nation. "If you look like somebody who is sick, you get sick," Campos said. Once borrowing rates rise -- Spanish 10-year bond yields have risen to 4.2 percent Thursday from 3.8 percent a month ago, though the shift in Greece was far more dramatic -- a vicious cycle is underway. With the price to roll over maturing debt higher, it becomes that much harder to trim the budget deficit.
40 The contrasts -- and increasingly, comparisons -- between Spain and Greece have become a fact of life for Spanish politicians and, increasingly, ordinary citizens. On the streets of Madrid, citizens take umbrage at being compared to the Greeks, whose problems were caused by free spending and hiding their degree of indebtedness. "No, Spain is not like Greece. Our mentality is completely different. We have a different mentality about working and developing things," said Juan Manuel Heranz, 35, a maintenance technician at the airport. "We're not Greece," said Alexandra González, 28. Her mother, Concepción Lima, walking with her in downtown Madrid, chimed in: "But if we continue on like this, we will be." http://www.washingtonpost.com/wp- dyn/content/article/2010/05/06/AR2010050604401.html?wpisrc=nl_headline
Wild day on Wall Street leaves electronic exchanges under scrutiny By David Cho and Jia Lynn Yang, Washington Post Staff Writer, Friday, May 7, 2010; A01 Stock markets went haywire on Thursday. Shares were already falling over fears of fiscal problems in Europe when something, perhaps a structural flaw in U.S. markets, dragged prices into a historic and breathtaking plunge. In the span of minutes, the Dow Jones industrial average plummeted nearly 1,000 points from its previous close -- a record -- and whipsawed back up, creating one of the wildest trading days ever. The Dow still closed down more than 3 percent, and more unrest may be in store for Friday as market officials and regulators try to sort through the aftermath. Rumors about the cause of the chaos were rampant on Wall Street and in Washington. Some traders speculated about human error, such as an electronic trade of stocks entered with the wrong amount. Regulators offered little clarity, saying they would investigate. Some price swings of stocks defied logic. The shares of Accenture, a consulting firm, fell from $40 to a single penny and then back to $40 again. Procter & Gamble traded at $54 on the New York Stock Exchange. But at the same time, Nasdaq was reporting that the company's shares were selling for $39. Thursday's dramatic gyrations added fuel to the biggest policy debate in Washington: how to regulate Wall Street. That billions of dollars in stock-market value could be wiped out so abruptly, with such a lack of certainty about the cause, is a reminder of the high stakes involved in a system that is little understood by average investors. The confusion also highlighted the evolution of stock trading, which some market officials say has happened too fast without adequate safeguards. The NYSE has "circuit breakers" in place to pause the trading of stocks during a panic. But investors can also trade stocks on 10 electronic platforms that have sprung up in the shadows of the NYSE in recent years and generally do not stop unrestrained selling. Senior executives of the NYSE said the Securities and Exchange Commission has given the exchange's competitors too much freedom, not ensuring that these smaller trading platforms have necessary protections.
41 Lou Pastina, the NYSE's executive vice president of operations, said the system set up by the SEC exacerbated problems on Thursday. When the sell-off started, the NYSE paused the electronic trading of several stocks and moved to traditional auctions of stocks with a middleman. The goal was to stem the panic and find rational buyers. While the stocks were paused on the NYSE, sellers moved to other electronic exchanges such as Nasdaq and Instinet. So many sell orders came in at once that some stock prices listed on those platforms fell to near zero. Shortly after, trading of those stocks started up again on the NYSE at the paused prices, leading to wide disparity in costs among exchanges. "How did this happen? You've got to ask the SEC," said Ted Weisberg, president of Seaport Securities and a trader for more than 40 years. "The bottom line is the government created a trading mechanism with a lot of different marketplaces. Now they probably have 40 or 50 different venues where stocks trade. I don't know what their rules are. The public doesn't understand. This is another perfect example of the government changing the ground rules and we end up with unintended consequences." The SEC declined to respond to those comments, saying in a statement that it would "review the unusual trading activity that took place briefly this afternoon." "We are also working with the exchanges to take appropriate steps to protect investors pursuant to market rules," the statement said. In 2007, the SEC put in place new rules for how stocks are traded, led by then-Chairman Christopher Cox. The goal was to give investors more control over how their trades were executed and to guarantee the best price when they buy stocks. When the NYSE received an order for a stock, for instance, the rules required the exchange to route the order to the platform offering the best price. The new SEC rules toppled the dominance of the NYSE. Trading of its own listed stocks dropped from 85 percent to 21 percent, said James Angel, a professor at Georgetown University's McDonough School of Business. As a result, a single entity can no longer put a stop to panicked selling. The markets Thursday were a preview of what happens when other trading venues take over, he said. "We are dangerously unprotected from a real-time meltdown," Angel said. Market officials and regulators are now unwinding millions of the trades that occurred on the electronic exchanges Thursday. As a result, the markets could be in for "an ugly" morning, Pastina said. Nasdaq took the extraordinary measure Thursday of canceling all trades of stocks that occurred from 2:40 to 3 p.m. at prices 60 percent below the price listed prior to that period. The list of stocks affected is on its Web site. Some government officials and market analysts said that even if the massive plunge in the afternoon was the result of technical problems, the chaos intensified the uncertainty over whether a fiscal crisis in Greece could turn viral and spread across Europe, particularly to larger economies such as Spain. News channels flashing in New York showed scenes of protests in Greece, raising doubts about whether the country would adhere to the austerity measures required under a $140 billion financial rescue package offered by the European Union and International Monetary Fund last week. The Dow closed the day down nearly 350 points, or 3.2 percent, its worst single-day drop in more than a year. The Standard & Poor's 500-stock index, a broader measure of U.S. markets,
42 fell 37.75, or 3.2 percent, to 1128.15, while the tech-heavy Nasdaq composite index dropped 82.65, or 3.4 percent, to 2319.64. The sell-off spread to Asia in early trading Friday, with Japan's Nikkei average down as much as 3.8 percent and South Korea's Kospi index off by 2.9 percent. Staff writers Tomoeh Murakami Tse in New York and Zachary A. Goldfarb in Washington contributed to this report. David Cho and Jia Lynn Yang, Washington Post Staff Writer, Friday, May 7, 2010Wild day on Wall Street leaves electronic exchanges under scrutiny, May 7, 2010 http://www.washingtonpost.com/wp- dyn/content/article/2010/05/06/AR2010050601464.html?sid=ST2010050606287
Why Wall Street panicked By David Cho Washington Post Staff Writer, Thursday, May 6, 2010; 3:55 PM For months, the words "financial crisis" seemed antiquated. Wall Street profits were soaring once again. Economic growth returned. Our 401(k)s bulked back up. Massive, triple-digit losses in the Dow Jones Industrial Average seemed a thing of the past, or at least of early 2009. For a day, at least, that optimistic sentiment evaporated. Panicked investors sold off everything they could and snapped up U.S. Treasuries, one of the safest investments on earth. The Dow Jones industrial index nearly dropped 1,000 points before recovering about half of those losses. What happened? In a word, Greece. It seemed to sneak up on us, the issue of Greece indebtedness. The problem isn't complicated: the country borrowed way too much and now is struggling mightily to pay back what it owes. Now, its financiers in Germany and elsewhere in Europe are facing massive losses. The danger had been percolating in Europe for a while. But only this week did it seem to sink in with U.S. investors how closely related Greek's problems were to our own. Some on this side of the Atlantic believed the rest of Europe would step in and provide a bailout to protect the rest of the continent. Now some believe the package that was announced by the European Union and the International Monetary Fund won't work or won't be enough, raising questions about how the European Central Bank has handled the crisis. Greece alone can't take down the world's economy. But if the panic spreads to Spain, a very significant economy which is several times larger, the situation could become far more ominous, which is why so many investors are hitting the "sell" button on their trading desks. Some of the dramatic fall and rise of the Dow today could have been aggravated by technical glitches and weird trading patterns. But officials and market watchers say that the threat from Europe could significantly crimp what has been a fairly good recovery. Some economists say it is akin to the Asian financial crises that gripped the markets more than a decade ago. The question is whether we -- now out of the fire of Wall Street's financial crisis of our country's own making -- are confronting a new peril out of Europe.
43 http://www.washingtonpost.com/wp- dyn/content/article/2010/05/06/AR2010050604545.html?sid=ST2010050606287
Steven Pearlstein: Greek crisis exposes cracks in Europe's foundation By Steven Pearlstein, Friday, May 7, 2010; A20 It is easy to dismiss Thursday's 30-minute, 1,000-point boomerang on the Dow Jones industrial average as a freak event that resulted when everyday human error collided with high-speed, high-volume computerized trading. But it should not be forgotten that that the whole thing was triggered when traders around the world simultaneously pushed the "sell" button as they watched live video of baton-wielding riot police wading into a crowd gathered outside the parliament in Athens to protest the passage of austerity measures foisted upon their government by their European neighbors and creditors. Even after technical glitches were suspected and the trades were unwound, however, the markets and the world confronted the precarious state of the 60-year effort to create a single economy and a unified political system out of Europe's once-warring countries. The Dow has already fallen more than 600 points in three days on fears that a European debt and banking crisis could drag the continent's economy back into recession and put the entire European project in jeopardy. This project has created a massive new bureaucracy in Brussels, a much-ignored new political apparatus in Strasbourg and a central bank in Frankfurt that continues to reflect the Germanic fear of easy money. After the Berlin Wall fell, the once-communist countries to the east were gradually incorporated into the union. And under the financial umbrella of the euro, the smaller, poorer countries at the periphery found they could borrow and attract enough capital to bootstrap themselves into the ranks of wealthy nations. But as C. Fred Bergsten of the Peterson Institute put it this week, the fundamental problem is that even with a single currency and a unified political and bureaucratic structure, the arrangement is only a "halfway house" on the way to genuine political and economic integration, and a rickety one at that. While capital and goods and tourists can move relatively freely across borders, workers and services cannot, and national governments continue to jealously protect their regulatory and fiscal prerogatives. Although the political and economic elites continue to swear allegiance to the European project, their top-down strategy continues to meet strong resistance from voters. It was only a few years ago that, with the United States moving from the world's largest creditor to its largest debtor and Europe enjoying a boost from the rapid growth of its new members in the east, many were predicting the euro would soon rival the dollar as the world's reserve currency. But nobody was saying that Thursday as the euro continued its months-long slide from $1.50 in January to $1.26 at Thursday's close. There is little doubt that Greece's debt crisis is of its own making, the result of corruption and tax avoidance and that seductive Mediterranean coupling of high living and low productivity. Greece now finds itself in a trap where the only way it can refinance its crushing debt load is to drastically cut spending and raise taxes, but doing so will almost certainly plunge the
44 economy into such a deep recession that incomes and tax revenues will fall and the government will be unable to meet its debt service requirements. So deep is this trap that numerous experts in international finance, including Barry Eichengreen of the University of California at Berkeley, now predict that Greece will eventually default on its debt and force creditors to accept less than they are owed. At the same time, however, experts say there was nothing inevitable about the financial contagion sparked by the solvency crisis in a country that represents about 3 percent of the European economy. According to Eichengreen, Bergsten and others, responsibility for that rests squarely with European leaders who for months dithered while markets began to lose confidence not only in Greece but also other countries on Europe's periphery. German Chancellor Angela Merkel was reluctant to commit to a rescue before a key provincial election, knowing full well how her fiscally prudent citizens would recoil at the thought of bailing out the profligate Greeks. And French President Nicolas Sarkozy was reluctant to call in the International Monetary Fund and give a political boost to its managing director, who's been hinting he might want to run against Sarkozy in the next presidential election. By last weekend, when faced with the reality that the impact of a Greek default would fall heaviest on French and German banks, they reluctantly agreed to a $140 billion rescue that, rightly or wrongly, is now viewed by the markets as too little and too late. The problem was further compounded by the European Central Bank, whose first instinct when confronted with the threat of contagion has always been to try to deny its existence in the hope of restoring confidence. At a meeting in Lisbon on Thursday, the bank had a golden opportunity to calm fears by lowering interest rates and assuring markets that it would provide whatever liquidity was necessary to stabilize credit markets, as the U.S. Federal Reserve has done with singular success. Instead, ECB president Jean-Claude Trichet emerged from the meeting to announce that the bank was holding rates steady and would not monetize debt by buying up the bonds of member countries whose markets were under pressure. It remains unclear how much further the euro will have to fall before Trichet is seized by the gravity of the threat from both contagion and the fiscal austerity he continues to preach. The next blow to the European project is likely to come from across the English channel, where voters were set to elect a new government almost certain to be more hostile to political and economic integration than the liberal governments of Gordon Brown and Tony Blair. Conservative Leader David Cameron is an unapologetic euro skeptic who has made it clear he will never give up the pound for the euro. And to deal with Britain's own growing debt problem, Cameron, who studied his economics at Oxford rather than at Keynes's Cambridge, has vowed his own austerity program, which is likely to contribute even further to a European economic slowdown. Back when the global financial crisis began in earnest in 2008, Europeans were quick to blame it all on Americans who lent unwisely and borrowed excessively. So it is more than a bit ironic that, having long denied its own forays into unwise lending and excessive borrowing, it is Europe that seems to be leading the global economy into the second phase of the crisis. http://www.washingtonpost.com/wp- dyn/content/article/2010/05/06/AR2010050606375.html?sid=ST2010050606287
45 Business Day
May 6, 2010 U.S. Markets Plunge, Then Stage a Rebound By GRAHAM BOWLEY A bad day in the stock market turned into one of the most terrifying moments in Wall Street history on Thursday with a brief 1,000-point plunge that recalled the panic of 2008. It lasted just 16 minutes but left Wall Street experts and ordinary investors alike struggling to come to grips with what had happened — and fearful of where the markets might go from here. At least part of the sell-off appeared to be linked to trader error, perhaps an incorrect order routed through one of the nation’s exchanges. Many of those trades may be reversed so investors do not lose money on questionable transactions. But the speed and scale of the plunge — the largest intraday decline on record — seemed to feed fears that the financial troubles gripping Europe were at last reaching across the Atlantic. Amid the rout, new signs of stress emerged in the credit markets. European banks seemed to be growing wary of lending to each other, suggesting the debt crisis was entering a more dangerous phase. Traders and Washington policy makers struggled to keep up as the Dow Jones industrial average fell 1,000 points shortly after 2:30 p.m. and then mostly rebounded in a matter of minutes. For a moment, the sell-off seemed to overwhelm computer and human systems alike, and some traders began referring grimly to the day as “Black Thursday.” But in the end, Thursday was not as black as it had seemed. After briefly sinking below 10,000, the Dow ended down 347.80, or 3.2 percent, at 10,520.32. The Standard & Poor’s 500-stock index dropped 37.75 points, or 3.24 percent, to close at 1,128.15, and the Nasdaq was down 82.65 points, or 3.44 percent, at 2,319.64. But up and down Wall Street, and across the nation, many investors were dumbstruck. Experts groped for explanations as blue-chip stocks like Procter & Gamble, Philip Morris and Accenture plunged. At one point, Accenture fell more than 90 percent to a penny. P.& G. plunged to $39.37 from more than $60 within minutes. The crisis in Greece, high-speed computer program trading, the debate over regulatory reform in Washington, talk of errant trades — all were pointed to as possible catalysts. But most agreed the plunge would not have been as bad had the markets not already been on edge over the debt crisis in Europe. “There is a recognition that the Greek crisis has morphed into not only a European crisis but is going global,” said Mohamed A. El-Erian, chief executive of Pimco, the money manager. On the trading floor of the New York Stock Exchange, traders shouted or watched open- mouthed as the screens lighted up with plummeting prices and as phones rang off the hook. “It was almost like ‘The Twilight Zone.’ ” said Theodore R. Aronson of Aronson, Johnson & Ortiz, a money management firm in Philadelphia.
46 Wall Street managers wandered their trading floors, trying to calm their people and figure out what was going on. They began to notice wild movements in stocks like P.& G. and Philip Morris. Many traders said computer program trades accelerated the slide as market indexes fell through crucial levels. In Washington, Treasury officials began combing market tapes for answers. By the evening they still had not gotten to the bottom of it, but they discovered some aberrations — market blips — in trading coming out of Chicago. The Treasury secretary, Timothy F. Geithner, was returning to the Treasury about 2 p.m. from the Capitol when he saw on his BlackBerry that the market was down 3 percent. He called the Treasury’s market room, which constantly monitors financial exchanges; officials there theorized that the cause was Greece’s and Europe’s financial woes. Minutes later in the Treasury hallway, Mr. Geithner looked again at his BlackBerry and saw that the market was down nearly 9 percent. He told colleagues it had to be a mistake. Mr. Geithner immediately called the market room and then the Federal Reserve. He held a conference call with Fed officials and Mary L. Schapiro, the chairwoman of the Securities and Exchange Commission. About 3:15, Mr. Geithner walked to the Oval Office to brief President Obama. Next Mr. Geithner spoke with European central bankers. After the markets closed, at 4:15 and again at 5:45, he joined conference calls with the heads of the Fed, the New York Fed, the S.E.C. and the Commodity Futures Trading Commission; the calls were expected to continue into the evening. The Group of 7 industrial nations’ ministers and governors, including Mr. Geithner, plan a conference call at 7:30 a.m. Friday Eastern time. As of about 6 p.m., all the officials knew was that there had been what one called “a huge, anomalous, unexplained surge in selling, it looks like in Chicago, at about 2:45.” The source remained unknown, but it had apparently set off algorithmic trading strategies, which in turn rippled across everything, pushing trading out of whack and feeding on itself — until it started to reverse. Federal officials fielded rumors that the culprit was a single stock, a single institution or execution system, a $16 billion trade that should have been $16 million. But they did not know the truth. What happens to the day’s market losers will depend on the nature of the cause and whether it can be identified. That is a question for the S.E.C. The Nasdaq market said in the evening that it would cancel all trades in hundreds of stocks whose prices had swung wildly between 2:40 p.m. and 3 p.m. As Wall Street reeled, anchors on CNBC, Bloomberg and the Fox Business Network turned their attention to the Dow. When the Dow was down more than 900 points and the CNBC anchor Erin Burnett observed that the P.& G. stock had dropped 25 percent, Jim Cramer, the former hedge fund trader and the host of “Mad Money,” seemed to calm the conversation a bit by basically saying, “Buy, buy, buy.” “If that stock is there, you just go and buy it,” he said of P.& G. “That is not a real price. Just go buy Procter & Gamble.”
47 The day’s uncertainty pushed the euro to its lowest level against the dollar in 14 months. It slipped to $1.2529 at one point before closing at $1.2602. The dollar’s rise, and the mounting fear of a slowdown in global growth, sent commodities prices lower. Crude oil fell $2.86 to settle at $77.16 a barrel. By the close, when calm was restored, the focus was on working out what had happened. The S.E.C. and the Commodity Futures Trading Commission said they were reviewing “unusual trading activity.” But already markets were turning attention back to Europe — whether German lawmakers would approve the Greek bailout on Friday, whether warning signals would flash brighter, whether the euro zone would stay together, or whether this was a precursor of more gyrations to come. Eric Dash, Christine Hauser, Nelson D. Schwartz, Jackie Calmes and Binyamin Appelbaum contributed reporting. Graham Bowley U.S. Markets Plunge, Then Stage a Rebound May 6, 2010 http://www.nytimes.com/2010/05/07/business/07markets.html?th&emc=th
48 Rampant Skepticism 05/06/2010 01:24 PM Aid for Greece Hasn't Stopped Euro's Slide By Michael Kröger Despite the 110 billion euro aid package offered to Greece over the weekend, investors still don't believe the country can solve its financial woes. The euro continues to slide and the European Central Bank doesn't have many arrows left in its quiver. Jose Luis Rodriguez Zapatero is not generally considered to be a firebrand. The Spanish prime minister seldom loses his temper. But on Tuesday, he was clearly perturbed as he stepped before reporters' microphones in Brussels. Rumors have been circulating on the financial markets that Spain will soon be making a request to euro-zone countries for aid similar to the kind recently offered Greece. "That is complete madness," Zapatero hissed. But Zapatero's eruption did little to calm the markets -- indeed it may actually have fanned the flames of mistrust. Even the confirmation by the ratings agency Fitch that it was not downgrading Spanish debt did little to calm investors. In just a few hours of trading, risk premiums on credit default swaps for Spanish bonds jumped by 18 percent. A rumor of unknown provenance, a nervous denial from a head of government -- it doesn't take much these days to stir up the financial markets. To make matters worse, the US ratings agency Moody's announced that it may downgrade Portuguese debt yet again. Under Intense Pressure The impression is growing that fewer and fewer investors are prepared to bet even a single cent on European sovereign bonds or on the euro. The mistrust is no longer limited to countries like Greece, Spain and Portugal. The problem has become much bigger: The entire European common currency has come under intense pressure. On Tuesday night, the euro's value dropped below $1.30 for the first time since April 2009. On Thursday morning, it was trading below $1.28 -- and drifting downward. Experts like Ansgar Belke from the German Institute of Economic Research (DIW) predict that it could fall to $1.20, while analysts from the Bank of New York Mellon say it could drop to $1.10. Other forecasts are even more dire. "I can easily imagine the euro reaching parity with the dollar by the end of the year, give the markets' tendency to exaggerate," says Anton Börner, president of the Federation of German Wholesale and Foreign Trade. A devaluation of the euro does not, of course, represent a major problem. On the contrary, many have long been complaining about how expensive the euro had become relative to the dollar. Business in China had also suffered, given that the Chinese yuan is pegged to the dollar. That pressure is now dissipating. Indeed, aside from making trips to the US slightly more expensive for Europeans than they have been in the past, there are few disadvantages to a lower euro exchange rate. Symptomatic But the dropping exchange rate is symptomatic of a phenomenon that does represent significant dangers to the European common currency. "The financial markets simply no longer have faith that Europe will be able to get its debt crisis under control," says Manfred Jäger, a financial market expert at the German Economic Institute in Cologne, says.
49 Mohamed El-Erian, a manager at Pimco, a global leader in the bond market, is even clearer, writing in the Financial Times that, while the €110 billion aid package agreed on by euro- zone countries together with the International Monetary Fund over the weekend may solve Greece's immediate liquidity problems, it will not solve the country's more fundamental solvency issues. Others fear that the money pledged to Athens won't even be enough to bridge the next three years. Athens has announced numerous austerity measures to get Greece's yawning budget deficit under control -- the most recent package will be adopted by the Greek parliament on Thursday. Still, even as the government has said it will be saving up to €10 billion in 2013 and 2014, the Financial Times Deutschland is reporting that concrete plans for where the cuts are to be made have yet to be announced. A gap of €900 million for 2012 also remains to be filled. Whether Greeks will support the draconian savings measures also remains in doubt, given the rising intensity of the protests there. Just how dramatic the situation has become can be seen by the decision of the European Central Bank to discard its own regulations and accept junk-rated government bonds from Greece as collateral for loans. "That is a blatant violation of its own rules," said Belke of the DIW. "Market actors will remember it for a long time." Darkening Clouds The ECB is concerned that the current anxiety on the financial markets could ultimately become an uncontrollable panic threatening the survival of Europe's common currency. Axel Weber, president of Germany's national bank, the Bundesbank, warns that, were Greece to default, it would "represent a serious risk to the stability of the currency union and the financial system, given the current, fragile state of the markets." He says that such a scenario could result in the problem spreading to other euro-zone countries. Many observers think that the ECB, at a regular scheduled meeting on Thursday, could decide to buy up more Greek bonds. Others predict that the ECB might have to come up with a plan to help other euro-zone countries currently facing difficulties -- like Spain. European banks, after all, own huge quantities of bonds from Greece and other wobbly euro-zone members. Should the ECB follow such a path, it would be one of the last weapons available to ward off a Greek bankruptcy. And should it fail, the clouds hanging low over the euro would darken considerably. URL: http://www.spiegel.de/international/business/0,1518,693352,00.html RELATED SPIEGEL ONLINE LINKS: • Graphics Gallery: The Euro Crisis in Figures http://www.spiegel.de/fotostrecke/fotostrecke-54629.html • The Great Depression: Greeks Struggle with Sick-Man Status (05/05/2010) http://www.spiegel.de/international/europe/0,1518,693115,00.html • Three Dead in Athens Bank: Greek Protests at IMF Plan Escalate (05/05/2010) http://www.spiegel.de/international/europe/0,1518,693179,00.html • Opinion: Whether Oil Slick or Financial Crisis, Those Who Cause Catastrophes Should Pay (05/05/2010) http://www.spiegel.de/international/world/0,1518,692320,00.html • Strikes in Greece: Civil Servants Rebel Against Austerity Measures (05/04/2010) http://www.spiegel.de/international/europe/0,1518,692909,00.html • The Mother of All Bubbles: Huge National Debts Could Push Euro Zone into Bankruptcy (05/03/2010) http://www.spiegel.de/international/europe/0,1518,692666,00.html • 110 Billion Euro Package: EU Agrees to Prop Up Greece (05/03/2010) http://www.spiegel.de/international/europe/0,1518,692619,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
50 06/05/2010, 11:35 AM Geldpolitik Die EZB und der nächste Sündenfall Die Europäische Zentralbank springt Griechenland bei - und akzeptiert hellenische Anleihen als Sicherheit. El Banco Central Europeo saltos en Grecia - Grecia y aceptado los bonos como garantía. Die Glaubwürdigkeit der Institution ist deshalb angekratzt. La credibilidad de la institución es tan empañada. Spekuliert wird über den nächsten Schritt: den Kauf von Staatsanleihen. La especulación es el siguiente paso: la compra de bonos del gobierno. Por Tobias Bayer Frankfurt Grecia La crisis podría mover el Banco Central Europeo (BCE), según estimaciones de los observadores del mercado a la compra de bonos del gobierno. "La opción nuclear se discute más en el mercado", escribieron los economistas de Societe Generale en un informe de investigación. "Eso sería una estrategia creíble. Esto aumentaría la liquidez. El desequilibrio de los compradores y vendedores por lo tanto puede ser corregido". La reunión para fijar las tasas el jueves se espera que para el BCE un guante. Desde entonces, el banco central - contra las declaraciones de su Presidente, Jean-Claude Trichet, a principios de este año - para los muy endeudados y excepciones Helénica Grecia cumplió los bonos del gobierno, independientemente de la calificación de crédito aceptados como garantía, nada es más imposible. "Nada parece imposible", escribieron los estrategas de bonos de Commerzbank. Obvio opciones: comprar una deuda pública europea y la reintroducción de la sería de seis y Zwölfmonatstendern para apoyar el sistema bancario. Con un anuncio sobre estas cuestiones no se espera. Trichet mantendrá abiertas todas las opciones, la evaluación de los expertos. La tasa preferencial, el BCE dejará en la opinión unánime de los observadores sobre el mínimo histórico del 1,0 por ciento. • Más información sobre la • crisis de la estrategia del BCE - mcs hoy, mañana hott (Http: / / www. FTD. de / la política / Europa / : Crisis estrategia EZB- hoy en día- matiz mañana hott / 50.110.580 º html) • La capital y el BCE se incline hacia atrás (Http: / / www. FTD. de / / Finanzas Mercados / informes de mercado / : El- capital y la- EZB- es- re- / Tilt 50.110.583 º html) • Beneficios de la conspiración de quiebra contra los griegos (Http: / / www. FTD. de / la política / Europa / : Ventajas- a- busto- conspiración contra- la- / Griego 50.109.845 º html) • Programa de Ahorro para el hambre Grecia (Http: / / www. FTD. de / la política / económico- :-Programa de Ahorro inanición de- grecia / 50.109.603 º html) Más sobre: BCE , la política monetaria , los bancos centrales compras de bonos del Estado para el BCE sería una novedad. Hasta el momento, empezaron a "sólo" las compras de bonos garantizados ("Cédulas") por un importe de 60 millones de euros. Otros bancos centrales con experiencia, sin embargo, y atacaron a raíz de la crisis de este recurso. La Reserva Federal de EE.UU. compró US $ 300 mil millones en bonos del Tesoro de Estados Unidos, el Banco de Inglaterra por 200 mil millones de libras esterlinas marrana. El objetivo de estabilizar los rendimientos y permitir así que el estado de una refinanciación seguro.
51 La compra directa de bonos del Estado al BCE y los bancos centrales nacionales €-está prohibido. El artículo 123 del Tratado de Lisboa prohíbe explícitamente préstamos a los países o la compra de su deuda. El BCE podría comprar esos préstamos en el mercado secundario, sin embargo, es decir, aquellos que ya están comercializados.
El presidente del BCE Jean-Claude Trichet, se debe a sus críticas al supuesto en Grecia En el BCE espera que las compras de los bonos se ven de manera crítica. Oficialmente, no se excluyen, sin embargo. Economista jefe del BCE, Juergen Stark dijo que la compra de bonos del griego no era un tema que se está discutiendo. El "momento" fue un pinchazo pocas las orejas. "El BCE podría recurrir a esta" opción nuclear "para evitar un colapso de la deuda en el Sur de Europa", dijo BNP-Paribas experto Ken Wattret. "Una de las principales lecciones de la crisis es que los bancos centrales a menudo tienen que recurrir a una política que no fueron inicialmente como probable. Nada se puede descartar si el paquete de rescate para Grecia demuestra ser inadecuada", dijo Wattret. Schuldenlast Gegen diese Staatspleite-Kandidaten wird gewettet Deuda contra ese candidato apuesta bancarrota del Estado
Desde la perspectiva de Karsten Junius, economista de Dekabank, el BCE aprovecha con la compra de bonos del gobierno griego, "riesgos incalculables" a su propio balance. Mientras que cualquier pérdida de los ingresos monetarios se carga o se carga a los bancos centrales nacionales y los gobiernos. Tampoco puede el BCE para reunir capital, "sin que la política nacional pudo resistir la". "Una decisión políticamente sensibles, sería para determinar qué países serían comprados por los bonos del gobierno en qué medida", dijo Junius. Caso de que el BCE aún se animan, su credibilidad se vería seriamente sacudido: "Una compra de bonos del Tesoro sería una financiación directa de los déficit presupuestarios excesivos, el Bundesbank y el gobierno alemán es una abominación", dijo Marco Annunziata, economista jefe de Unicredit. Una de las posibles consecuencias ver la Société Générale de los expertos en una venta masiva de euros, "Este tipo de flexibilización cuantitativa socavaría la credibilidad del BCE. El euro se desplomaría". Otra opción es la reintroducción de seis y Zwölfmonatstendern. El BCE ha aprobado los préstamos a largo plazo a raíz de la crisis, con el fin de proporcionar a los bancos con liquidez. Mientras tanto, se puso las dos ofertas de nuevo. La reversión es poco probable desde la perspectiva de la Société Générale-expertos, pero posibles: "los personajes que aparecen en las tensiones del mercado monetario de nuevo, se acumulan," escribieron. "¿Por qué no? Sin embargo, esa medida sería prematuro." Como un indicador de estrés en el mercado de dinero es la noche a la mañana Índice diferencial de swap (OIS extensión). Indica en qué medida los bancos confían unos en otros y pedir dinero prestado. Mide la prima de riesgo entre la tasa interbancaria Libor a tres
52 meses y casi sin riesgos de crédito durante la noche. De acuerdo a los corredores de Tullett Prebon y el ICAP la propagación OIS en Europa esta semana subió a su nivel más alto jamás registrado estándar incluso después de la bancarrota de la propagación de Lehman-OIS fue menor. Kursinformationen und Charts Las cotizaciones y gráficos
Euro $ 1.276 [-0.0053] -0,41%
1 día 5 días 3 meses 1 año 3 años
Otro indicio de una tensión recurrente es la extensión de un día para otro. De acuerdo con Tullett Prebon y el ICAP últimos representaban el 90 por ciento de los € 450 000 000 000 el volumen de negocios grandes diarios en el mercado monetario europeo para este tipo de préstamos a corto plazo. "El riesgo de contraparte se ha expandido de manera significativa. Esto hace que sea difícil, incluso los bancos más pequeños en Portugal y España para recaudar capital", dijo Smith, Don, economista en el ICAP, el Financial Times. "No hay pánico como los días de la quiebra de Lehman. Pero hay señales de alerta". "El creciente riesgo de impago de los estados en la periferia de la zona euro empujar el valor de la garantía, los bancos pueden hacer mutuamente disponibles. Esto reduce la liquidez y de valores y precios de los bonos acusado", dijo Lena Komileva, economista de Tullett Prebon. "El mercado está preocupado por la adecuación del capital de los bancos. La situación podría empeorar", dijo Komileva. http://translate.googleusercontent.com/translate_c?hl=es&sl=de&u=http://www.ftd.de/finanze n/maerkte/anleihen-devisen/:geldpolitik-die-ezb-und-der-naechste- suendenfall/50110705.html%3Fmode%3Dprint&prev=/search%3Fq%3DDie%2BEZB%2Bun d%2Bder%2Bn%25C3%25A4chste%2BS%25C3%25BCndenfall%26hl%3Des%26rls%3DG GLD,GGLD:2004-35,GGLD:es&rurl=translate.google.es&usg=ALkJrhgPHNva4GU- GOMXWYaCOaQIBwDykA 05/05/2010, 12:30 Angst vor Domino-Effekt Warum Spanien nicht Griechenland ist rumores que circulan en el mercado de capitales. Necesidad de los griegos, los españoles mil millones de ayuda? Zapatero cree que esto se haya completado "la
53 locura". FTD.de explica las diferencias entre España y Grecia. Por Tobias Bayer Frankfurt • Más información sobre la • Crisis de la deuda en España se llama rumores de quiebra "una locura" • Fortalecidos Instituto se eleva furia sobre las agencias de calificación crediticia • Estos países de riesgo de la deuda los países necesitan miles de millones fresca • Zona-Euro se oscurece sol español Más información sobre: déficit presupuestario , crisis de la deuda , España El primer ministro español José Luis Rodríguez Zapatero está fuera de sí. "Esto es una locura completa". La especulación era "ridículo" y "totalmente infundadas". Gobierno de Madrid se defiende de los rumores de que su país buscará ayuda por un importe de 280 millones de €. Incluso Pedro Solbes, ex comisario en Bruselas y el ministro de Hacienda de España, no considere razonable para llamar a su país en el mismo aliento con Grecia. "No hay maquillaje racional de Portugal y España se diferencian sustancialmente", dijo Solbes, según el periódico portugués Jornal de Necocios "en una conferencia. "Pero los mercados no siempre se comportan racionalmente." ¿Qué son la ansiedad y depresión sacude España
Puesto que el conjunto del euro 110 mil millones de rescate para las grandes Grecia todo parece posible. la atención de los inversores se dirige ahora a España y Portugal. La agencia de calificación (Standard & Poor's S & P baja) la semana pasada, la calificación de España desde "AA +" a "AA". La Comisión Europea espera que en su informe de primavera sobre el hecho de que el déficit presupuestario se volverá a cabo en Madrid en 2010 superior a la de los griegos. Las autoridades de Bruselas llegado a un valor del 9,8 por ciento. El mercado está en problemas. Esto puede ser por ejemplo, en los derivados de crédito (credit default swaps leer, CDS). De acuerdo con el de servicios financieros Markit CDS, los periódicos españoles subieron el miércoles 207 a 230 puntos básicos. Esto significa que cuesta € 230 000 al año para asegurar bonos españoles que ascendían a € 10 millones. FTD.de muestra hasta qué punto España es diferente de Grecia - y que argumenta en contra de un alivio de la inminente pronto para Madrid. La deuda pública - encomiable El Tratado de Maastricht permite una deuda nacional de 60 por ciento del producto interno bruto (PIB). El español no es un problema. Llegan a una tasa de 41,2 por ciento buena. Los griegos por su parte se encuentran en 125,7 por ciento y en aumento. Los economistas de UBS predicen que la deuda griega en los próximos años - plan de ahorro o no - se hincha. "¿Acaso el mercado esté dispuesto a Grecia para financiar a este nivel?",
54 Escribieron en un estudio y advierten que los griegos la prescripción a partir del vencimiento de la operación de socorro para volver al mercado de bonos debido a la excesiva exposición a altas tasas de interés de los inversionistas se mantienen. El déficit presupuestario - alto, pero no tan alta La situación era desesperada para Grecia, ya que el déficit del presupuesto fue revisado a mediados de abril y el 13,6 por ciento del PIB a la cima. Desde esa fecha se mantuvo el primer ministro George Papandreou es otra opción que el paquete de rescate para sacar ventaja. La pérdida de España fue en 2009 con el 11,4 por ciento muy por encima del límite máximo del tres por ciento de Maastricht. Madrid espera reducir el déficit este año al 9,8 por ciento en 2013 a menos del tres por ciento. The Economist Intelligence Unit (EIU), parece dudar de ello, y en lugar de esperar con una expansión en 2009 a 11,5 por ciento. "El gobierno quiere reducir el gasto en un 3,9 por ciento. Sin embargo, se pasa de un ligero aumento", escribieron los expertos en un estudio de EIU Country. S & P también considera que el objetivo de déficit a largo plazo inalcanzables. Las previsiones de crecimiento del gobierno eran demasiado optimistas. La agencia de calificación espera una pérdida neta de cinco por ciento en 2013. "Los ingresos fiscales serán menores de lo esperado. Además, el Estado se verá obligado a aumentar sus gastos." Credibilidad - sanierungserfahren
Primer Ministro español José Luis Rodríguez Zapatero Atenas se hace en la consolidación fiscal ambiciosas metas. Pero este año es reducir el déficit presupuestario en cuatro puntos porcentuales. Pero los mercados de capitales superan el escepticismo: La resistencia de la población es grande. Por otra parte, los economistas y los estrategas de bonos y la moneda punto al pasado. Crítica: Los griegos aún no habían ni siquiera en tiempos de bonanza económica han tenido sus finanzas bajo control. En contraste, sin embargo, los españoles. "Ellos son creíbles en términos de las finanzas estatales", dijo David Forrester. Se conmemora el ahorro de las rondas de gobierno en los años 90. "En ese tiempo logró la consolidación fiscal", dijo Forrester. El Gobierno de Zapatero ya ha anunciado una incisiones. Entre 2011 y 2013 se pueden guardar. También presentó un programa con el que la competitividad del país en los próximos diez años será mejorado. El ministro de Economía, Elena Salgado, reiteró a pegarse a los planes. rondas de ahorro adicionales no fueron planeados. En primer lugar, los objetivos deben previamente anunciados se alcanzan, dijeron el miércoles que la emisora "La SER. Necesitan con urgencia las reformas del mercado de trabajo El resentimiento contra Zapatero en la población crece. Según una encuesta realizada por el Centro de Investigaciones Sociológicas, la oposición obtendría 40 por ciento de los votos en una elección en la actualidad, mientras que el Partido Socialista llegó a sólo el 36 por ciento. La razón es la tasa de desempleo de más del 20 por ciento. Existen grandes diferencias entre los trabajadores permanentes y temporales: De acuerdo con el índice Haciendo Negocios del Banco Mundial, los costos de terminación son tan altos en España
55 que en cualquier otro lugar de Europa. Esto conduce a un mercado laboral de dos niveles en el que para garantizar un trabajo, otros están siempre amenazados por el desempleo. El banco central del país y por lo tanto S & P de prensa para las reformas laborales. Mercado de bonos - significativamente más líquido Los temores sobre España se reflejan en los derivados de crédito. En el mercado de bonos, sin embargo, no hay gran excitación, el rendimiento de los bonos españoles a diez años es de alrededor de 4,1 por ciento. Cinco-y el papel de dos años en 3,18 por ciento y el rendimiento de 2,04 por ciento. A efectos de comparación de dos años de bonos de Grecia se disparó alto en un 18,9 por ciento y que actualmente se negocia con un rendimiento de casi el once por ciento. Podría también debido a la mayor liquidez del mercado de bonos españoles a la presunción de que los economistas de Barclays Capital. Dónde: Cuanto mayor es la liquidez, menor será el riesgo de plomo que las compras y las ventas individuales a la volatilidad de los precios. estadísticas exhaustivas son difíciles de encontrar. es evidencia de esta teoría, pero no. se refiere al sistema de comercio electrónico del banco central griego, HDAT, fue entre el 28 de De abril y 4 De mayo no operaciones liquidadas. Este fue el primer arresto desde la introducción de la plataforma 1999a Sólo el martes fueron de nuevo los títulos negociados por valor de 20 millones de euros. A los operadores primarios pequeños para hacer ventas, sino también del gobierno y el banco central responsable. Así, indican que las normas contra la venta corta afectar la liquidez, la asociación de concesionarios argumentó. En las ventas al descubierto los inversores apuestan por la caída de precios mediante la venta de valores recibidos en préstamo. Refinanciación - menos estrés http://translate.google.es/translate?hl=es&sl=de&u=http://www.ftd.de/finanzen/maerkte/anlei hen-devisen/:angst-vor-domino-effekt-warum-spanien-nicht-griechenland- ist/50110222.html&ei=YqjiS- T_NY6oOIWs4dsN&sa=X&oi=translate&ct=result&resnum=1&ved=0CAgQ7gEwAA&prev =/search%3Fq%3DWarum%2BSpanien%2Bnicht%2BGriechenland%2Bist%26hl%3Des%26 rls%3DGGLD,GGLD:2004-35,GGLD:es 05/05/2010, 20:17 BaFin 05/05/2010 Spekulieren über Spekulanten BaFin-Chef Jochen Sanio wettert gegen Spekulanten, die sich an Griechenland bereichert hätten. BaFin jefe Jochen Sanio arremetió contra los especuladores que se habían enriquecido en Grecia. Seltsam nur, dass es die laut seiner Behörde gar nicht gibt. Extrañamente sólo que es la autoridad fuerte no existe. Por Nina Luttmer y Timo Pache Jochen Sanio una vez más todo lo posible para entretener a su público. El jefe de la supervisión financiera de Alemania BaFin se sabe para mantener sus opiniones a nada bueno detrás de la montaña de. Diplomática Drumherumgerede no es lo suyo para deleite de los oyentes. Aburrido es raramente Sanio. Él es también el miércoles ante el Comité Presupuestario de la prueba Bundestag. El tema de Grecia. Con, como siempre, palabras expresivo, het Sanio sobre codiciosos malabaristas
56 financieros. "Este es el momento de los especuladores encabezó una guerra de agresión contra la zona del euro", dice. Los especuladores podrían apostar con swaps de impago de los llamados de crédito (CDS) - permutas de riesgo crediticio - contra Grecia y así esparcidos en tres o cuatro meses, cerca de 500 beneficios por ciento. "Grecia - un objetivo mejor que no podía elegir", dice con golpes en el ataque general en el sector de sombra no reguladas "financiera", a los fondos especulativos.
El Presidente de la BaFin, Jochen Sanio Muy bien, uno podría pensar. Sanio finalmente no se la molesta primero de los especuladores que han llevado a Grecia, supuestamente fuera del negocio - y ahora ya en el declive de otros países estaban trabajando. Portugal y España estaría en la mira de los "Finanzhasardeure", dice Sanio. El quid de la cuestión: la autoridad Sanios propia tiene hasta el 8 De marzo emitió un comunicado de prensa en la que se rechaza la existencia de especuladores codiciosos Grecia. "El BaFin - encontrado de otro modo contrario a los reportes de prensa - aún no hay pruebas de que se ha utilizado recientemente aumentó los derivados de crédito, los llamados CDS, por la especulación en bonos del gobierno griego," la continuación de Supervisión Financiera. Él continuó: "El BaFin datos de mercado disponibles no sugieren que una especulación masiva." Sanio parece, pues, las conclusiones de su propia autoridad para ser de confianza, no sé. Lo que no es exactamente una señal de confianza al público. El jefe de BaFin deja paso firme, el miércoles también ordenó el estado de quiebras - con sus propias palabras: "Necesitamos innovadoras opciones de funeral", dice. Y después de un desastre y acompañará musicalmente apropiado: "El Réquiem jugamos entonces también, la de Mozart, esto es tan hermoso." • Más información sobre la • Columna Inés Zöttl - héroes de los tiempos modernos (Http: / / www. FTD. de / la política / Europa / : Columna- ines- Zöttl- -Hero la- moderna / 50.110.553 º html) • Crisis de la deuda, los inversionistas temen que la plaga € (Http: / / www. FTD. de / / Finanzas Mercados / : Debáis a la crisis los inversores el miedo la- € - enfermedad / 50.110.248 º html) • Grecia-crisis de la ayuda del FMI no es una panacea para los fracasos del Estado (Http: / / www. FTD. de / la política / Europa / : Grecia por la crisis IWF- SIDA se- no- panacea- contra- / Estado bustos 50.109.013 º html) • La Unión Monetaria Europea, Europa aún tiene una oportunidad (Http: / / www. FTD. de / la política / Europa / : Europa La Unión Monetaria- En Europa ha- ni- a- oportunidad / 50.110.298 º html) • El temor del "efecto dominó ¿Por qué no Grecia España (Http: / / www. FTD. de / / Finanzas Mercados / -Bonos Lista de cambio : Angst- pre- una ficha de dominó efecto- por qué, España- no- Grecia es / 50.110.222 º html) Más sobre: BaFin
http://translate.googleusercontent.com/translate_c?hl=es&sl=de&u=http://www.ftd.de/politik/deutschland/:b a-fin-spekulieren-ueber- spekulanten/50110579.html%3Fmode%3Dprint&prev=/search%3Fq%3DSpekulieren%2B%25C3%25BCber%2BS pekulanten%26hl%3Des%26rls%3DGGLD,GGLD:2004- 35,GGLD:es&rurl=translate.google.es&usg=ALkJrhhQwDt0gszLKL9MjhuSS91VGNUl7Q
57
El comisario de Comercio dice que se conocían los engaños helenos R. M. DE RITUERTO - Bruselas 06-05-2010 "Sabíamos que Grecia nos estaba engañando". Karel De Gucht, comisario de Comercio, reconoce que las trapacerías contables y estadísticas griegas eran un secreto a voces desde que Atenas ganó en 1999 su entrada en el euro, con datos sobre el cumplimiento de los criterios de Maastricht (inflación, déficit y deuda, esencialmente) aceptados como buenos por Eurostat, la agencia estadística de la Comisión. "Cuando entraron en el euro ya se vio que había problemas" con las cifras griegas, señala el comisario El belga De Gucht no quiere mirar en casa, la Comisión Europea, en busca de responsables por la falta rigor ante aquellas fantasías de proporciones homéricas. "El problema [de la falsificación de datos] no ha hecho más que agravarse desde entonces", dice el comisario, quien recuerda cómo ya "en 2003 y 2004 la Comisión quiso enviar inspectores a Atenas, a lo que se opusieron los Gobiernos" de la Unión. En una entrevista con EL PAÍS y otros cinco periódicos europeos, el responsable comunitario mantiene que el paquete de socorro adoptado el pasado domingo por el Eurogrupo "es muy potente, y como Grecia se ha comprometido a un ahorro descomunal de 30.000 millones, la Comisión vigilará ahora para que se cumpla. Nos hallamos ante una operación muy creíble". Fruta madura De Gucht considera que los sacrificios que impone el plan de salvamento han caído como fruta madura ante las graves circunstancias, aceptados por el Gobierno y, de mejor o peor gana, por los griegos, sin tener que imponerlos precipitadamente. "La población no lo hubiese aceptado antes", señala. "Había que tener cuidado para que no estallara una revolución". Una de las consecuencias de la crisis helena ha sido la pérdida de valor de la moneda única, ahora en el área de los 1,30 euros por dólar, depreciación atractiva para el primer bloque comercial del mundo, que así puede exportar más. "Si no fuese por Grecia, estaríamos muy satisfechos", dice. En esta hora de críticas a Alemania por su resistencia a socorrer a Grecia, De Gucht evita pronunciarse sobre las decisiones de la canciller Angela Merkel y hace un canto a la disciplina germana. "No entiendo las críticas a Alemania", señala. "Ha controlado sus salarios, produce bienes que otros países quieren comprar. Todos deberíamos exportar más". Es un gran contraste con el cuadro de otros socios de la eurozona. "Hay países que llevan años con desequilibrios porque los salarios no se ajustan a la productividad, lo que supone una pérdida de competitividad que daña a la eurozona", apunta. "Tiene que haber disciplina. Si no la hay, antes o después se paga el precio". R. M. de Rituerto, “El comisario de Comercio dice que se conocían los engaños helenos”, El País, 06-05-2010 http://wap.elpais.com/index.php?module=elp_gen&page=elp_gen_noticia&idNoticia=201005 06elpepieco_7.Tes&seccion=eco
58
06.05.2010 “On the brink of the abyss”
“On the brink of the abyss” - these are not our words, but those of the Greek President Karolos Papoulias after the news that three people had been killed in violent protests in Athens. The Greek political classes have reacted with defiance. Prime minister George Papandreou vowed to continue with the austerity programme. The shock may even persuade the opposition New Democracy party to reverse their pledge of a No vote to the IMF/EU programme. But it also raises the question, in Athens and elsewhere, whether the austerity programme is feasible in its current form – economically, socially, and politically. Austerity has not even started. The financial markets got spooked by these events. The euro is at $1.28. The Greek stock market decline by 3.9%, the Spanish markets were down by 1%, and the Portuguese by 1.5%. Greek ten year bonds yield well over 10% again, and Spanish and Portuguese yields also increased, as investors are now pricing in contagion risks. The bond markets were earlier spooked by a statement from Axel Weber, who warned about the threat of “grave contagion” in a deposition to the German parliament. Moody’s preannounces downgrade of Portugal And so it spreads. Moody’s decision to warn of another ratings downgrade for Portugal, to take account of the deterioration in public finances and lower growth, has added to the investors’ uncertainty. The rating agency put Portugal on a review for a possible downgrade, which makes it very likely that the country’s aa2 rating would fall by one or two notches. El Pais has a very good news analysis on the front page economics section, with a detailed report about the spread of the crisis to the Iberian peninsula bond markets. It said most disconcerting is the sharp rise in the yields of short-term debt – Spanish two year notes yield 2.6% against Germany’s 0.6% - which directly reflects risk insurance against default. The paper pointed out that the increase in yields will raise funding costs in future auctions. The article concluded
59 that Germany was the main beneficiary, as investors are seeking refuge in the German bond market, and drive down yields. Merkel under attack from Kohl and Herzog In a front editorial FT Deutschland said it was now essentially that European political leaders found a common position, and that they stop reinterpreting the programme, and hypothesising about how long Greece will need outside help. The paper specifically criticised Angela Merkel, for failing to providing a convincing explanation in the Bundestag yesterday, of why the aid to Greece is necessary. In a separate article, the paper analysed Merkel’s speech, which was full of technical details, and without any overriding political explanation of why the aid package to Greece is both necessary, and in the country’s best interest. Yet another article was a report on Helmut Kohl’s 80th birthday celebration. Kohl told the audience that he had no understanding for how the Greek situation has been handled, and no understanding for people who pretend that this was none of the their business. But you have to act, he told the audience, which included Mrs. Merkel. The former president Roman Herzog said Kohl had turned the CDU into a strong and decisive party, but this was no longer the case, while Merkel was looking on. In other words, the party’s old guard is very unhappy. Waiting for the ECB’s next U-turn... The column “Das Kapital” in FT Deutschland says the ECB is very likely to announce another U-turn very soon – it will almost certainly end up buying government bonds to sustain the European bond market, and depress interest rates, just as the Fed and the Bank of England has done. The only question is why the ECB does not do this right away, since then they at least have a chance to keep the eurozone together. Of course, the article concludes, the reactions in Germany would be even more extreme. ... and here is another U-turn We continue to be amazed by the extent of the editorial U-turn by Germany’s Frankfurter Allgemeine, the paper which had hitherto taken the line that the most important thing in the world was the no bail out clause, and that the Greeks should be left to rot in hell. The paper’s foreign policy chief Klaus-Dieter Frankenberger criticised Germany’s reality-deny approach to the crisis, which turned a theoretical possibility of an existential crisis into a concrete political danger, that erodes the public’s confidence in both monetary union, and the EU in general. (We are very happy to see that the paper is coming back to its senses, or that such views are at least now prominently expressed. The main criticism of Merkel is not that she hesitated, but that she allowed a xenophobic climate to build up in her own party, and in the country at large, from which she benefited initially, and which she now finds hard to contain.) Krugman on Greece – the end game nears Paul Krugman says that Greek default is inevitable, but that is probably not all. Greece will almost certainly have to get out of the euro, if it was to survive economically. The country’s needs something that actually produces growth, and that can only be a devaluation. A mutually agreed fall in the price level, through collective bargain, would have been possible in a country like Austria, but not in a society like Greece. And that leaves exit from the euro as the only alternative.
60
Simon Johnson why there is no restructuring Here is Simon Johnson. He basically says that we are not restructuring because we can’t handle the consequences. “If you want to call for a “rescheduling” of Greece’s debts – a position that is becoming increasingly popular among leading north European intellectuals – that is fine. But you also need to recognize that the policy elite (central banks and ministries of finance) are completely unprepared to handle the consequences, which would be immediate and devastating for other weaker eurozone countries. You simply cannot do a low-cost or small unilateral restructuring of government debt in this kind of situation; the market will at once take that as a signal that Portugal, Spain, Italy and perhaps even Ireland will face difficulties (in fact, this is exactly what spreads in the 2-year European government bond market are saying today). The French may smile upon such outcomes with a feeling of superiority, but they might also consider not throwing bricks in glass houses.” http://www.eurointelligence.com/index.php?id=581&no_cache=1&tx_ttnews[tt_news]=2783 &tx_ttnews[backPid]=901&cHash=a64f38b38b
Kohl usa cumpleaños para revivir desavenencias con CDU Por Gerrit Wiesmann en Berlín Publicado: 02 de abril 2010 20:20 | Última actualización: 02 de abril 2010 20:20 Helmut Kohl, el ex canciller alemán, usó su cumpleaños número 80 el sábado para recordar a la nación de su decepción de que su partido Unión Demócrata Cristiana dio la espalda a él durante un escándalo de financiación hace 10 años. El hombre que ayudó a la reunificación de Alemania y forjar la Unión Europea dijo a Bild, el periódico sensacionalista, que le resultaba difícil entender cómo "la gente que una vez no pudo acercarse lo suficiente repente volvió la espalda, incluso se volvió en su contra". banqueros y aseguradoras alemanas vuelta plan de rescate - May-04 Philip Stephens: la miopía de Merkel - Mar-25 Berlín cambios postura sobre el papel del FMI en Grecia - Mar-18 El hombre en las noticias: Wolfgang Schäuble - Mar-12 Merkel hits a cabo en los bancos más ofertas griega - Feb-17 Berlín, robados para comprar banco de datos de Suiza - Feb-04 Sus palabras parecían revivir un desacuerdo latente desde hacía tiempo con Angela Merkel, la líder de la CDU y canciller, sobre el restablecimiento del Sr. Kohl como presidente honorario del partido en reconocimiento a sus logros. Instrumental para aliviar el Sr. Kohl de su cargo, la Sra. Merkel ha ignorado las peticiones ocasionales de miembros del partido para hacerlo. Consultado sobre el tema en un documental sobre el señor Kohl, dijo: "No es una pregunta que es relevante más."
61 Pero 10 años después de que admitió haber aceptado donaciones secretas del partido, la nación parece ser más indulgente. Una encuesta reciente muestra que la televisión el 59 por ciento de los alemanes le tasa un canciller buena y mejor que su sucesor, Gerhard Schröder, quien anotó el 47 por ciento. Un debate sobre el papel del Sr. Kohl's vería Angela Merkel - el primer grande de la CDU de romper con él en 2000 - apretada entre los que se centran en sus logros y los que recuerdan sus fechorías. Los medios alemanes han utilizado la publicidad que el cumpleaños del Sr. Kohl's para celebrar su registro. Welt, el periódico conservador, elogió "el milagro alemán de la normalidad" que sus políticas producen. Incluso izquierda Spiegel, una revista del Sr. Kohl detestaba, publicó un ensayo que terminó con el respeto a regañadientes por él. Que todos sugerido que el cumpleaños del Sr. Kohl's ofrecería Alemania - una nación que hace hincapié en importantes aniversarios - todas las excusas para un espectáculo apasionante. Pero los acontecimientos con motivo del día grande es el ex canciller son de bajo perfil. La CDU, que dirigió durante un cuarto de siglo, ha pospuesto una celebración pública hasta principios de mayo como el Sr. Kohl está demasiado enfermo para salir de su casa en Oggersheim, al sur de Frankfurt, después de una operación. La CDU lo honra con una página web. "Usted pasará a los libros de historia del siglo 20 como un gran estadista", dijo Merkel en un vídeo - una prudente distancia saludo que refleja su relación todavía difícil. Famoso por gobernantes de Alemania desde 1982 hasta 1998, más que ningún canciller de posguerra otros, y para aprovechar la oportunidad de unificar a Alemania Occidental y Oriental en 1990, el señor Kohl en la jubilación se hizo famosa por el escándalo de los partidos de financiación. Merkel pide a la CDU a "seguir su propio camino". Ella se convirtió en líder del partido unos meses más tarde - y sucesor del señor Kohl como canciller de la CDU en 2005. http://translate.google.es/translate?hl=es&sl=en&u=http://www.ft.com/cms/s/0/305adb4 6-3e84-11df-a706-00144feabdc0,dwp_uuid%3D4b9b2cb6-2285-11dd-93a9- 000077b07658.html&ei=sf7jS5XmEYuNOJbO7dsN&sa=X&oi=translate&ct=result&res num=1&ved=0CAgQ7gEwAA&prev=/search%3Fq%3DKohl%2Buses%2Bbirthday%2 Bto%2Brevive%2Brift%2Bwith%2BCDU%26hl%3Des%26rls%3DGGLD,GGLD:200 4-35,GGLD:es
62
The 'Father of German Reunification' Happy birthday! Former Chancellor Helmut Kohl turns 80
Foto: Daniel Biskup Former Chancellor of Germany Helmut Kohl. 03.04.2010 - 01:00 UHR By Kai Diekmann
Helmut Kohl's book 'Vom Mauerfall zur Wiedervereinigung: Meine Erinnerungen' is out now (Droemer/ Knaur, 426 S., €9.95). BILD: Congratulations Mr. Chancellor. Today you celebrate your 80th birthday. How are you? Helmut Kohl: I am quite well. To say that I feel very well would certainly be an overstatement, but then I am turning 80 years old......
63 BILD: Since your fall you have dramatically reduced your appearances in public. Will we be able to again welcome the Chancellor of Reunification in October to the 20th anniversary of German reunification in Berlin? Kohl: At the moment I plan to do that, but I don’t want to commit myself yet. BILD: When you look back at your life at the age of 80, what moves you most? Kohl: Gratitude and luck. My generation, despite the horror of the Second World War and the privation of the post-war years, had a lot of luck. It could have been much worse, we were not directly involved in the terrible things that were done in the name of Germany. And we boys were given responsibility very early, which above all opened up many chances for us. We were able to do our bit in rebuilding Germany, to cement democracy in our country and integrate it into the community of states in the free world. We were able to contribute to placing our country on a foundation that would allow permanent peace and freedom. So when I look back today, I do it with the feeling: my life had a purpose. I would take all the most important decisions that I did again. It is a great feeling to say that, with regards to my 80th birthday. For that I am very grateful, and I feel very lucky. BILD: Which people had the most impression on your life? Kohl: My parents. I come from a very politically conservative family. I grew up in an environment that was Catholic and at the same time liberal and patriotic. In our home there was no place for totalitarian ideologies like National Socialism. The Christian influence of my childhood home stayed with me for my whole life and always gave me the necessary energy and composure. BILD: Looking back, would you say that you were blessed by God? Kohl: Yes, I was most definitely blessed by our dear Lord. That does not mean to say that my life was easy. Quite the opposite, I always had to fight hard, nothing was gifted to me and I was always underrated. But I never bent away from and always stayed true to my beliefs, and was able for many years to participate in shaping the path of our country in many key places. That was by no means a given. BILD: Was there a point or moment in your life at which you were happiest? Kohl: Let’s put it like this: our dear Lord made it possible for me to have moments, in which I was happy. BILD: Is there something in your life that has left you unfulfilled? Kohl: There is no doubt something which was unfulfilled. But the fact that I can’t think of it straightaway means that it cannot have been serious. BILD: You had to accept serious blows of fate during your life. Were there moments in which you had to wrestle with your fate? Kohl: Yes, I nearly gave up hope after my bad fall two years ago. If my wife had not been at my side and always giving me courage and pushing me with a great sense for what was possible and necessary, my fate would have taken a different turn. The suicide of my wife Hannelore in mid 2001 also belongs to the blows of fate in my life. And of course the so- called party funding scandal. You know, if you work your whole life for a party and a country, and then learn that the people who up until then could not get close enough to you suddenly turn away or even turn against you because you made a mistake, then I
64 must say, I did struggle sometimes, although less with fate – that is really true – but more with the people. BILD: Many in your party have, with regards to your 80th birthday, called for you to be given back the honorary chairmanship which you resigned during the party funding scandal. What do you say about that? Kohl: This is not something that is relevant for me at the moment. BILD: What was the most difficult hour of your life? Kohl: It is as with the happiest moments. There were some difficult hours in my life, and that brings me back to the blows of fate: my serious fall two years ago, the suicide of my late wife Hannelore nine years ago and the so-called party funding scandal certainly belong to those. BILD: In hindsight, what would you have done differently? Kohl: I would, as I said, take all the most important, the existential decisions again, exactly as I took them before. But what I would decide differently on today would be the modality of celebrations on our national holiday. I chose October 3 back then as the day of German reunification with regard to the weather map. I wanted us Germans to be able to celebrate our annual national holiday mainly with good weather if possible. I always admired the French for their national holiday. July 14 is a holiday in the middle of the year, at the best time of year. It is a day on which everyone happily celebrates throughout France. And that is what I wanted for us Germans. A decision was taken back then, which I now see to be a mistake, namely: The decision to hold the main event in a different state each year, according to which state currently holds the chairmanship of the Federal Council. That hasn’t turned out to be a good idea. The German celebration day on October 3 has not managed to become a national celebration; it has become a state celebration. It would have been much cleverer to celebrate the German national holiday on October 3 for the whole of Germanyin our capital, Berlin. BILD: Is that your birthday wish or is that a request to the government? Kohl: Neither, it is just my answer to your question, what I would have done differently with hindsight. BILD: So what is your biggest wish for your birthday? Kohl: That I have many more happy and good years with my wife. BILD: And what do you wish from your wife Maike? Kohl: That she remains as she is. She is an amazing woman. BILD: Which wishes from people could you do without, and which would make you happy? Kohl: Without wanting to name any names: With both I could fill a whole telephone book of Berlin with its many millions. BILD: How will you spend your birthday? Kohl: Privately, at home with friends. BILD: What celebrations are planned for your big day? Kohl: For health reasons I asked for all celebrations to be bundled together. I’m delighted that the federal government, the state of Rheinland-Pfalz and the city of Ludwigshafenn have successfully managed to organise a celebration on May 5 in my hometown.
65 BILD: Some 12 years after the end of your time as Chancellor, the conservatives (CDU) and liberals (FDP) are the ruling government again. Does it remind you of your time in office when you observe the differences within the coalition? Kohl: Some things remind me of before, but some don’t. Times have changed. BILD: What was the last thing that really annoyed you? Kohl (laughs): My gall bladder. It gave me a lot of problems. But seriously: I get annoyed when I see Germany so blatantly squandering its chances. And I don’t just mean politics, I mean our society as a whole. We Germans have all the resources and possibilities, we have proven that we are highly productive – and yet we are losing our way today, especially in lamentations and petty things, something I find impossible to comprehend. I wish that everyone in their place in a reunified Germany takes on a little bit more responsibility again with more seriousness, but also enjoyment and a certain lightness of being. BILD: The unification of Europe stands alongside the reunification of Germany as your life’s work. With regard to the latest developments in Europe and especially in Greece, are you worried about your life’s work? Kohl: No, not at all. But again I would wish for less self-contemplation and more appreciation for the big picture. I would advise the Greeks to do their homework and to take their responsibility as citizens seriously. I would advise Europe as a whole to have more dispassionateness, but also more closeness. There is no alternative to Europefor us, Europe is our future and we should continually remind ourselves of that. BILD: Mr. Chancellor, one last question: What does the German Republic’s longest-serving Chancellor until now wish for his country? Kohl: Peace. I wish peace both internally and externally for our country. For that, Germany needs to remain conscious of its responsibility; it needs to look back at its path both with pride and humility, and go into the future with confidence. BILD: Mr. Chancellor, thank you very much for talking to us. We are aware that you have given us one of the few interviews for your birthday. And we say once again: Congratulations Helmut Kohl! http://www.bild.de/BILD/news/bild-english/world-news/2010/04/03/happy-birthday-helmut- kohl/former-chancellor-father-of-german-reunification-turns-80.html##
66 The Baseline Scenario What happened to the global economy and what we can do about it
Expect Nothing with 75 comments By Simon Johnson, co-author of 13 Bankers: The Wall Street Takeover and The Next Financial Meltdown After months of denial, the European policy elite finally begins to understand that something is seriously wrong in the eurozone. But the prevailing definition of the problem is still too narrow – the consensus in France and, even more, in Germany is that “this is a Greek problem”. Even the most negative still think that Portugal and Spain can easily escape serious damage. This is a major misconception, as we pointed out last week – and as we have been emphasizing, to anyone who would listen, for more than a year. If you want to call for a “rescheduling” of Greece’s debts – a position that is becoming increasingly popular among leading north European intellectuals – that is fine. But you also need to recognize that the policy elite (central banks and ministries of finance) are completely unprepared to handle the consequences, which would be immediate and devastating for other weaker eurozone countries. You simply cannot do a low-cost or small unilateral restructuring of government debt in this kind of situation; the market will at once take that as a signal that Portugal, Spain, Italy and perhaps even Ireland will face difficulties (in fact, this is exactly what spreads in the 2-year European government bond market are saying today). The French may smile upon such outcomes with a feeling of superiority, but they might also consider not throwing bricks in glass houses. It is fine – even appropriate – to emphasize that big European banks have aided and abetted the irresponsible behavior of eurozone authorities. The profound stupidity of these banks-as- organizations is beyond belief, and it is deeply puzzling quite why leading figures in the US Senate would see them as a model for anything other than what we need to euthanize as soon as possible in the global financial system. But do not fall into the trap of thinking just because “megabanks are bad” (undoubtedly true) that you can whack them with losses and not face the consequences – these people are powerful for a reason; they hold a knife to our throats. For all his hubris, missteps, and over- reliance on Goldman group think, Hank Paulson had a point in September 2008: If the choice is chaotic global collapse or unsavory financial rescue, which are you going to choose? The Europeans will do nothing this week or for the foreseeable future. They have not planned for these events, they never gamed this scenario, and their decision-making structures are incapable of updating quickly enough. The incompetence at the level of top European institutions is profound and complete; do not let anyone fool you otherwise. What we need is a new approach, at the G20 level; this can definitely include debt restructuring, but it has to be done in a systematic fashion (and even then there will be a considerable degree of total mess). Such a change in framework for dealing with these issues
67 will not get broad support until after further chaos in Europe, but it now needs to be put into place. The Europeans will not lift a constructive finger. The leading emerging markets are too busy battening down the hatches (and accumulating ever more massive chests of reserves). And the White House still seems determined to sleep through this crisis. Expect nothing. http://baselinescenario.com/2010/05/05/expect-nothing/
Article services Greece Fire sentences The militant among the Greeks are not ready to accept the reorganization of the public finances as a collective aim; they accept rather the death indifferent. One can only hope that deliberation about this civil war mentality prevails. From Klaus-Dieter Frankenberger PrintDispatchStorePrevious side05th May, 2010 Ten thousands demonstrators, fire sentences, the first dead persons - the events in Athens on Wednesday agree with those which doubt that the government Papandreou will be able to put through their policy of austerity. Perhaps the majority of the Greeks knows that it cannot go on like up to now in their government that the country must invent itself a new, be able to come around in the 21st century - and not to pull the European partners in the abyss. But the militant, the radical are not ready to accept the reorganization of the public finances as a collective aim; they accept rather the death indifferent. One can only hope that deliberation about this civil war mentality prevails and that leader of the government Papandreou finds enough support to put through the inevitable. The cuts program is hard, but the Greeks themselves have to ascribe this to itself. The hardness the consequence of wrong policy pursued for years which endangers today even the stability of the Euro. And suddenly be not at stake less than the future of Europe. In their governmental declaration the Federal Chancellor has - this was the Berlin prelude to the Athens riots - a language chosen which swayed between Vorwärtsverteidigung and setting tremolo: Europe in the crossroads; it is about future of Germany. So the parties should be brought naturally in the Bundestag to the agreement with the emergency credits for heavily indebted Greece and the widerwilligen Germans be calmed. Since they see the stability promise given once as far as Euro going along and feel to the European solidarity properly extorted. And for sells stupidly: The Greek mass protest against the cuts program is no particularly good argument for the maintained Alternativlosigkeit of auxiliary credits.
Germany will position itself to his responsibility, has said the chancellor. This is correct so. But to this responsibility - and this not only Germany begins - also belongs the obligation to retain the European monetary union from damage. Too long European governments have pursued policy edging out the reality, from a theoretical possibility a real danger left: only the erosion of the trust in the common currency and then the erosion of the trust in the EU. http://www.faz.net/s/Rub7FC5BF30C45B402F96E964EF8CE790E1/Doc~EEB1FC2E51486 431CA9A87DD943BBA97C~ATpl~Ecommon~Scontent.html
68
Global Business
May 5, 2010 Nikkei Sinks 3 Percent on Worries Over Greek Debt By BETTINA WASSENER HONG KONG — The global market nervousness surrounding Greece’s debt crisis continued to weigh heavily on the euro and hit Japan’s stock market hard on Thursday as trading there reopened for the first time after three days of national holidays. The benchmark Nikkei 225 index slumped 3.3 percent to its lowest level since mid-March, as investors digested the turmoil that has roiled stock markets around the world this week and battered the euro. South Korea, which had been closed for a national holiday on Wednesday, also was playing catch-up with the global declines, falling 2 percent on Thursday. Elsewhere in the Asia-Pacific region, the falls were more muted. By late afternoon, the key indexes in Singapore and Hong Kong were 1.4 percent and 0.9 percent lower, respectively. The Taiex index in Taiwan fell 1.5 percent. The Shanghai market, which was one of the few to see a small rise on Wednesday, dropped 4.1 percent. Economists stressed that Asia’s fundamental economic prospects are sound, as the region has little direct exposure to Greek debt and mostly has much lower debt burdens to contend with. Standard & Poor’s, the ratings agency, said in a report on Wednesday that Asian exports and foreign direct investment in Asia “could be hurt” if the debt crisis leads to a broader economic slump in Europe. But it added that “many Asian countries have healthy government finances and they are likely to be able to mitigate an economic slowdown through further stimulus programs in the short term.” Similarly, policy makers in the Asia-Pacific region largely believe that European debt problems will be contained. Indonesia left its benchmark interest rate steady on Wednesday, and the central bank said it remained optimistic about the strengthening global economy, though it cited the crisis in Greece and Portugal as a risk. And on Tuesday, the Australian central bank raised its interest rate for the sixth time in seven months. Glenn Stevens, the governor of the central bank, said that “to date” there had been “very little contagion outside Europe. “ Still, the global worries have intensified sharply this week, despite an international bailout package for Greece worth 110 billion euros, or $141 billion, which was announced on Sunday.
69 The single European currency has fallen about 10 percent against the U.S. dollar this year as a result of worries about debt levels in Europe. During early European trading, the euro fell below $1.28, its lowest level since March 2009, and to its lowest level against the yen since February 2009, last trading at around 119.7 yen. Among the worries in Europe is the possibility that Spain, a country with a weak economy that nonetheless dwarfs Greece’s in size, may come under pressure. If that happens, Europe could face a banking crisis similar to the months following the collapse of Lehman Brothers in September 2008. Andrew Garthwaite, a strategist at Credit Suisse, wrote in a research report that European banks held up to $1.3 trillion of Greek, Spanish and Portuguese debt that was at risk. In Berlin, Chancellor Angela Merkel hinted at such fears as she defended her decision to support the Greek bailout before Parliament, which was expected to vote on Friday. Germany is contributing the bulk of the money among euro zone countries: 22.4 billion euros in loans over three years. The rescue plan is “about nothing less than the future of Europe and the future of Germany in Europe,” Mrs. Merkel told lawmakers, adding that action was needed to help prevent “a chain reaction that would contaminate the markets.” As for Portugal, the credit rating agency Moody’s said on Wednesday that in the event of a new downgrade, the country’s ratings “would fall by one, or at most two, notches” — meaning they would retain an investment grade. David Jolly contributed reporting from Paris and Landon Thomas Jr. from London. http://www.nytimes.com/2010/05/07/business/global/07markets.html?th&emc=th
70 Media & Advertising
May 5, 2010 Newsweek on Block as Era of the Newsweekly Fades By STEPHANIE CLIFFORD For generations, Time and Newsweek fought to define the national news agenda every Monday on the newsstand. Before the Internet, before cable news, before People magazine, what the newsweeklies put on their covers mattered. As the American conversation has become harder to sum up in a single cover, that era seems to be ending. The Washington Post Company announced Wednesday that it would sell Newsweek, raising questions about the future of the newsweekly, first published 77 years ago. Donald E. Graham, chairman and chief executive of the Washington Post Company, said in an interview that the decision was purely economic. “I did not want to do this, but it is a business,” he said. The magazine would lose money in 2010, he said, and “we don’t see a sustained path to profitability for Newsweek.” The move comes as companies have been sloughing off and revamping other mass magazines. TV Guide was sold for $1 to a private equity firm; Businessweek was sold for $5 million in cash to Bloomberg L.P.; and Reader’s Digest was given an editorial overhaul as it slashed circulation. The circulations of Time and Newsweek now stand about where they were in 1966, according to the Audit Bureau of Circulations. “Those magazines had much more stature in those days,” said Edward Kosner, who began at Newsweek in 1963 and was its editor in the late 1970s. “It was really important what was on the cover of Newsweek and what was on the cover of Time because it was what passed for the national press. They helped set the agenda; they helped make reputations.” “The era of mass is over, in some respect,” said Charles Whitaker, research chairman in magazine journalism at the Northwestern University school of journalism. “The newsweeklies, for so long, have tried to be all things to all people, and that’s just not going to cut it in this highly niche, politically polarized, media-stratified environment that we live in today.” Jon Meacham, Newsweek’s editor since 2006, said the announcement was not a surprise. “In the sense that we are all in an existential crisis, it is not what I would call a stunning decision,” he said in an interview. “You would have to have been hopelessly Pollyanna-ish not to have suspected that there were fundamental shifts ahead.” But, he said, “I decline to accept that Newsweek in some form does not have a role to play going forward.” Potential bidders were unclear. Bloomberg L.P., which just bought Businessweek, was not exploring a purchase, said a spokeswoman, Judith Czelusniak. Mr. Meacham said that he was considering putting together investors to buy the magazine, and that he had received voicemail messages from two billionaires after the sale was announced. Newsweek had operating losses of $28.1 million in 2009, 82.5 percent higher than the previous year’s loss of $15.4 million. Its revenue declined 27.2 percent, to $165.5 million in 2009, from $227.4 million in 2008, hurt by diminished advertising and subscription revenue.
71 Started in 1933, Newsweek was acquired by The Washington Post in 1961 after Benjamin C. Bradlee, then a Newsweek editor and later executive editor of The Post, pitched the Post president Philip L. Graham on it. Newsweek under The Post became a political counterweight to the Republicanism of Time under Henry Luce. While Time took a conservative stance on the Vietnam War and American culture, Newsweek ran more youth oriented covers on the war, civil rights and pop culture stars like the Beatles (though “musically they are a near disaster,” the magazine said). Mr. Kosner, the former editor, recalled weekly bouts of “controlled anxiety” over what Time would put on its cover. “On Monday mornings, on the advertising page of The Times, Time and Newsweek took out sort of quarter-page ads that showed the cover and everyone turned to that page on Monday mornings to see what each of them had done,” Mr. Kosner said. Slowly, though, cable news programs grew in number and popularity, and the instant news of the Internet rendered weekly summaries stale almost by definition. And the notion of a cultural common ground that Americans could all share was changing. Newsweek’s circulation was 3.14 million in the first half of 2000. By the second half of 2009, that dropped to 1.97 million. Time’s circulation declined from 4.07 million to 3.33 million in the same period. U.S. News & World Report, the also-ran newsweekly, abandoned its weekly publication schedule in 2008 to become monthly. Meanwhile, The Economist, which offered British-accented reports on business and economic news, and The Week, an unabashedly middle-brow summary of the weekly news that began publishing in the United States in 2001, were on the rise. Both Time and Newsweek were aggressively redesigned. Time, in 2007, changed its publication date from Monday to Friday and added more analysis. Newsweek, in 2009, more or less ceased original reporting about the week’s events, and instead ran essays from columnists like Fareed Zakaria and opinionated analyses. Mr. Whitaker of Northwestern said that editorially, the magazines’ reinventions had not worked well. “I don’t think Time and Newsweek, in this transformation, had enough of a distinct voice to capture the fancy of anyone in this incredibly polarized political environment,” he said. Richard Stengel, the managing editor of Time, took issue with Mr. Whitaker’s characterization. “Our audience is bigger than the cable audiences,” he said. “What we have embraced is point- of-view journalism.” Mr. Stengel said that Time was “very profitable last year, and we will be even more profitable this year.” Both magazines increased their prices: Newsweek now sells for $5.95 on the newsstand, and Time for $4.95. However, subscribers pay only about 50 cents a copy for either magazine. Both also lowered the circulation guaranteed to advertisers: Time guarantees a 3.25 million circulation, and Newsweek just 1.5 million. In 2009, as the advertising slump hit magazines, Newsweek’s ad pages fell 25.9 percent, about average for the industry, while Time’s fared better, dropping 17.4 percent. “The big factor is just the eroding advertising base — the loss of automotive, financial, technology advertising,” said George Janson, managing partner for the media-buying unit
72 GroupM Print. “It’s not going to go back to where it was anytime soon.” And, he said, many advertisers prefer to run ads in niche publications, not broad ones. “There are increasing challenges to being a single magazine company, particularly one that is targeted toward a general-interest area,” said Jonathan A. Knee, who oversaw the sale of Businessweek as senior managing director at Evercore Partners. But Mr. Meacham said that national coherence was still a worthwhile goal. “I would argue the fragmentation in media makes a place like Newsweek even more important,” Mr. Meacham said. “There are not that many common denominators left.” http://www.nytimes.com/2010/05/06/business/media/06newsweek.html?th&emc=th
73
Boletín de Universia-Knowledge@Wharton http://www.wharton.universia.net 5 - 18 Mayo, 2010 Goldman Sachs y Abacus 2007-AC1: Mucho más que cifras Ahora la reputación de la empresa se empieza a cuestionar a raíz de la demanda por fraude presentada por la SEC (entidad supervisora de los mercados financieros de Estados Unidos) en relación con una transacción de 2007: la venta de un complejo CDO sintético (un vehículo de inversión compuesto por lotes de títulos hipotecarios) llamado Abacus 2007-AC1. Como consecuencia de dicho acuerdo los inversores perdieron 1.000 millones de dólares, cifra que precisamente coincide con los beneficios obtenidos simultáneamente por Paulson & Company, un fondo de inversión colaborador de Goldman que apostaba por el colapso de la burbuja inmobiliaria. Mientras Goldman manifiesta que no hizo nada ilegal o poco ético, la SEC cree que la empresa ocultó “información material” a los inversores, concretamente sobre el papel del fondo de inversión a la hora de seleccionar los valores subyacentes. Con este caso surgen preguntas muy importantes: • Los clientes de Goldman, ¿podrían realmente haber evaluado por sí mismos el riesgo que suponía Abacus, tal y como Goldman sostiene? • Los productos derivados, como los CDO, ¿tienen alguna función útil? • La defensa de Goldman, basada en que no tenía obligación alguna de alertar a sus inversores sobre los especialmente elevados riesgos, ¿no perjudica a su imagen de empresa “centrada en los clientes” y merecedora de su confianza? “Si ves a tus clientes como enemigos, al final es muy probable que acabes teniendo menos clientes”, explica el profesor de Finanzas de Wharton Richard J. Herring, al describir el dilema de Goldman: intentar ser un asesor de confianza pero al mismo tiempo invertir en beneficio propio. Tal y como añade el profesor de Finanzas Franklin Allen, “Da la sensación de que Goldman explotó a los clientes del otro lado del acuerdo, a los clientes de Paulson. Creo que es sólo un ejemplo de cómo hacen las cosas para aprovecharse de la gente; así es como ganan tanto dinero”. Goldman sostiene que sus inversores que compraron Abacus disponían de toda la información necesaria para evaluar los riesgos por sí mismos; sin embargo, tal y como explica Herring, los CDOs sintéticos son muy opacos. “Son tan complicados que, en la práctica, es virtualmente imposible con la información de que dispone la gente llegar al fondo, llegar hasta los valores subyacentes –esto es, hipotecas, deuda de las tarjetas de crédito, etc.- que deberían ser valorados… Tengo la impresión de que, exceptuando los fondos de inversión y tal vez también a Goldman Sachs, prácticamente nadie más se tomó la molestia de hacerlo. Simplemente realizaban sus transacciones de compraventa en base a las calificaciones crediticias (ratings) concedidas por las agencias de calificación”.
74 Goldman insiste en que no ha hecho nada malo en la transacción de Abacus. En unas declaraciones del 16 de abril, después de que la SEC presentase la demanda, la empresa decía: “Las acusaciones de la SEC son completamente infundadas tanto legalmente como en la práctica, y las refutaremos enérgicamente y defenderemos la empresa y su reputación”. Desde entonces la controversia ha crecido al hacer el Subcomité Permanente del Senado públicos documentos y correos electrónicos de Goldman relacionados con otras transacciones. En las interminables vistas del 27 de abril, algunos senadores afirmaban que los documentos demostraban cómo Goldman deliberadamente engatusaba a sus clientes para que aceptasen acuerdos en los que perderían dinero, mientras Goldman secretamente apostaba contra ellos. El caso Goldman ha acelerado la propuesta de los Demócratas para ejercer algún tipo de control sobre la compraventa de los derivados complejos que tanto han contribuido a la crisis financiera. “La evidencia muestra que Goldman reiteradamente ha puesto sus intereses y beneficios por delante de los intereses de sus clientes”, sostenía el Senador Carl Levin, Michigan, en una sesión informativa con la prensa el 26 de abril. Antes de las investigaciones del Subcomité del 27 de abril, el presidente y consejero delegado de Goldman, Lloyd C. Blankfein, daba comienzo a unas declaraciones del siguiente modo: “Aunque estamos totalmente en desacuerdo con la demanda puesta en marcha por la SEC, también me doy cuenta de cómo podría interpretar la gente una transacción tan complicada … Tenemos que mejorar a la hora de encontrar un equilibrio entre lo que un cliente informado cree que es importante para sus objetivos de inversión y lo que el público cree que es demasiado complejo y arriesgado”. La SEC acusa a Goldman de ocultar deliberadamente información material al no decir a los compradores de Abacus que los bonos hipotecarios que conformaban su cartera habían sido elegidos con la ayuda del Paulson & Company, uno de los mayores fondos de inversión del mundo. Paulson iba a apostar por la caída de los mercados inmobiliario e hipotecario. Para ello, Paulson necesitaba un CDO basado en bonos hipotecarios con alta probabilidad de que su valor cayese al dejar los propietarios de las viviendas de realizar los pagos. Paulson no ha sido incluido en la demanda presentada por la SEC y no ha sido acusado de ningún delito. En una transacción con un CDO sintético se necesitan dos partes que adopten puntos de vista opuestos. La parte que apuesta “largo” obtiene beneficios si aumenta el valor de los valores subyacentes; la parte que apuesta “corto” gana si caen. Cada parte hace su apuesta y, efectivamente, las pérdidas del perdedor se convierten en las ganancias del ganador. En el acuerdo de Abacus, finalizado en abril de 2007, Paulson adoptó la posición corta y dos grandes inversores tenían la posición larga: IKB, un gran banco alemán, y ACA Capital Management, una firma de inversión con sede en Nueva York. Paulson trabajó con ACA para elegir los 90 valores hipotecarios subyacentes. Pero existen diversas versiones sobre cuál fue el verdadero papel de Paulson. La SEC sostiene que Goldman dejó que ACA creyese que Paulson estaba adoptando posiciones largas –que apostaba que los valores iban a subir-, cuando Paulson de hecho estaba adoptando la posición contraria. En opinión del SEC, esto provocó que ACA creyese que Paulson pensaba que los valores eran más seguros de lo que en realidad eran, y que sus intereses eran comunes. Sin embargo, Goldman dice que “nunca sugirió ante ACA que Paulson iba a invertir largo”. IKB, el banco alemán, desconocía el papel de Paulson. Para la SEC, si IKB lo hubiese sabido, IKB habría sido consciente del elevado riesgo asociado.
75 En declaraciones del 16 de abril, Goldman sostenía que los inversores con posiciones largas no necesitaban saber cuál era el papel de Paulson, o que Paulson era la parte del acuerdo que adoptaba posiciones cortas. IKB y ACA “disponían de amplia información sobre los valores hipotecarios subyacentes”, decía Goldman. “Los inversores eran conscientes del riesgo asociado con estos valores; estamos hablando de unos de los inversores hipotecarios más sofisticados del mundo. Estos inversores también comprendían que, en una operación con un CDO sintético, necesariamente había posiciones largas y cortas”. Una de las preguntas clave es si los inversores, incluso si son muy sofisticados, podrían valorar con precisión por sí mismos el riesgo de la cartera. RMBS, CDS, CDOs En este caso están presentes cuatro tipos de títulos que han desempeñado un papel importante en la crisis financiera. El primero son los RMBS (bonos de titulización hipotecaria sobre inmuebles residenciales; en inglés residential mortgage-backed securities), que son fondos de hipotecas convertidas en bonos que son vendidos a los inversores, los cuales reciben dinero de las cuotas hipotecarias mensuales de los propietarios de las viviendas. Normalmente los bonos muestran diversos grados o tramos. Los propietarios de los bonos más seguros son los primeros en poder acceder al dinero procedente del fondo. Los propietarios de los más arriesgados son los últimos en la cola, esto es, son los primeros en sufrir las consecuencias si los propietarios dejan de pagar las cuotas. A cambio, disfrutan de tipos de interés más elevados y una mayor participación en caso de que los propietarios paguen sus hipotecas. A continuación están los CDS (credit-default swaps), una especie de póliza de seguro que te compensa si un deudor no realiza sus pagos. Por ejemplo, un inversor podría comprar un CDS que le compensaría si una empresa no fuese capaz de devolver el principal o los intereses de sus bonos. Los CDS se vuelven más valiosos cuando el riesgo de impago aumenta o si la calificación del bono disminuye, ya que eso aumenta las posibilidades de recibir compensación. El especulador que compra un CDS no tiene que ser el propietario del título de deuda que se asegura. En tercer lugar están las obligaciones garantizadas con deuda o CDOs. Existen muchos tipos, pero siempre se trata de fondos creados a partir de otros valores con acciones que luego se venden a los inversores. Por ejemplo, muchos CDOs se crearon juntando carteras de tramos de bonos de titulización hipotecaria de elevado riesgo y bajo rating. Al igual que los valores hipotecarios, los CDOs también presentan tramos. Por últimos tenemos los CDOs sintéticos. Son muy parecidos a los CDOs ordinarios, excepto porque en lugar de poseer títulos reales, los inversores poseen credit-default swaps sobre títulos reales. En el acuerdo de Abacus, los CDOs poseían credit-default swaps que subirían o bajarían dependiendo de la suerte de una lista específica de RMBS, principalmente de las hipotecas subprime de los propietarios que son considerados de mayor riesgo. Evaluar el riesgo y posibles recompensas de un CDO sintético es básicamente lo mismo que evaluar un CDO ordinario, ya que ambos dependen de la calidad de los títulos hipotecarios subyacentes, explica William Frey, presidente de Greenwich Financial Services, una firma de Conneticut especializada en títulos hipotecarios pero que no invierte en CDOs. ¿Puede un inversor evaluar un CDO estudiando los valores de titulización hipotecaria subyacentes? “Teóricamente sí”, dice Frey mientras añade, “Teóricamente es posible evaluar el diseño de ingeniería del puente George Washington
76 antes de pasar sobre él”. Para evaluar un CDO sería necesario estudiar cada título hipotecario subyacente; estamos hablando de varios miles de hipotecas, tal vez cientos de miles, explica Frey. Una evaluación rigurosa estudiaría la relación entre el importe del préstamo y el valor de tasación del inmueble (loan-to-value ratio), la localización de las viviendas, las tasas de desempleo, las tasas de impago y de ejecuciones hipotecarias de la zona, y otros factores determinantes en la probabilidad de impago de los propietarios. “A efectos prácticos, a menos que dispongas del más sofisticado software del mercado, algo que muy pocos inversores tienen, debes confiar en las agencias de calificación”, explica Frey añadiendo que una persona que invierte en CDOs principalmente se basaría en los ratings de los títulos hipotecarios reflejados en el CDO. Las agencias de calificación han sido duramente criticadas por conceder buenas calificaciones a valores cuyo valor se precipitó bruscamente al vacío, tal y como ocurrió con los títulos de Abacus. Los detractores sostienen que el problema fue que las comisiones de las agencias eran –y todavía siguen siendo- abonadas por las empresas que emiten los títulos, y que los modelos informáticos empleados para su análisis empleaban patrones pasados que no reflejan las condiciones de esta década. Para complicar aún más cualquier análisis, dos títulos con la misma calificación pueden tratar a sus propietarios de maneras muy diferentes, explica el profesor de Finanzas de Wharton Marshall E. Blume. “Los ratings son una medida unidimensional del riesgo, pero en la realidad el riesgo adopta muchas formas. Por ejemplo, se pueden tener dos bonos con la misma probabilidad de impago, a los que la agencia de calificación podría haber dado el mismo rating. Pero en caso de impago, con uno de los bonos se podría perder mucho más dinero que con el otro. Por tanto, los ratings por sí mismos no incluyen toda la información sobre el riesgo”. Durante el proceso de germinación de la crisis financiera, muchos CDOs con calificación AAA ofrecían un rendimiento mucho mayor que otro tipo de títulos también AAA, algo que en opinión de Blume sugiere que el mercado comprendió que el riesgo de los CDOs era mucho mayor a pesar de tener idéntico rating. En muchos acuerdos CDO, las partes involucradas no tienen el mismo acceso a la información, añade Kent Smetters, profesor de Gestión de Seguros y Riesgos en Wharton. “El problema es que el vendedor conoce mejor la calidad de los títulos incluidos en el CDO que el comprador. En consecuencia, los bancos incluyen a menudo las hipotecas de mayor riesgo en los CDOs; el banco no vende normalmente las que presentan un buen comportamiento. Este problema se conoce como selección adversa”. Dado que evaluar semejantes riesgos es muy complicado, los compradores de CDOs buscan cualquier información que pueda afectar a lo que están dispuestos a pagar por asumir el riesgo, señala Smetters. “Como inversor sofisticado que invierte en un CDO, querría saber si incluye una cantidad excepcional de basura, esto es, activos que posiblemente se conviertan en impagados. Esta información determinaría cuánto estaría dispuesto a pagar por la cartera de activos, incluso si fuese extremadamente tolerante al riesgo. Para mí, como comprador, resulta complicado ver la suscripción de los títulos. El vendedor debería desvelar información que yo, como comprador razonablemente prudente, querría saber a la hora de decidir el precio”. Las leyes, añade Smetters, “traspasan la obligación de publicar la información a manos de los vendedores”. Dado que evaluar los CDOs compuestos de títulos hipotecarios difíciles de evaluar es una ciencia inexacta, un inversor prudente querría conocer el punto de vista de
77 cualquiera que, como Paulson, estuviese involucrado en la selección de los títulos subyacentes, comenta Herring. “Efectivamente, yo habría estado interesado en saber que uno de los más exitosos gestores de fondos de inversión de la historia estaba ayudando a seleccionar los activos de una cartera para la que él apostaba corto. Si yo fuese el cliente, me habría sentido muy decepcionado y maltratado, incluso aunque Goldman Sachs tuviese a la ley de su lado. Simplemente no es el tipo de negocios que una empresa que quiere ser conocida por su integridad debiera realizar”. En sus declaraciones y testimonio ante el Senado, Goldman alegaba en su defensa que sus clientes son sofisticados inversores que saben evaluar los riesgos por sí mismos. Durante las vistas, Blankfein el consejero delegado de Goldman, repetidamente describía como los clientes acudían a Goldman buscando oportunidades para asumir un tipo particular de riesgo; Goldman simplemente cumplía sus deseos. No obstante, varios senadores sostienen que Goldman ha sido frecuentemente el iniciador, utilizando sus empleados para animar a los inversores a comprar títulos de los que Goldman ya no quería ser propietario. En muchos casos, tal y como decía Levin, presidente del comité, Goldman animaba a los clientes a comprar títulos sin decirles que Goldman estaba apostando contra esos mismos títulos adoptando posiciones cortas. Blankfein por su parte informaba que Goldman no tiene la obligación de revelar a sus clientes sus propios puntos de vista sobre la calidad de cualquier título que venda. Según Herring, este enfoque podría perjudicar la franquicia de Goldman. “Goldman Sachs se ha labrado su reputación como asesor de confianza y excelente gestor de inversiones. Mucha gente compraría un fondo de inversión Goldman Sachs simplemente porque se considera uno de los mejores inversores de este negocio. No obstante, si Goldman quiere jugar al juego del caveat emptor, entonces pondrá fin a una valiosa reputación que se ha ganado duramente durante décadas”. En opinión de Allen, “tienen la reputación de jugar a dos bandas y aprovechar en su favor la información… Creo que les hará mucho daño... En el camino creo que seremos testigos de muchos descubrimientos escabrosos. No creo que Goldman salga muy bien parado de todo esto”. No obstante, en opinión de Blume el caso abierto por la SEC no va a ser un caso de acoso y derribo. La propia SEC estaba dividida (2 votos a 3) a la hora de decidir si interponer una demanda contra Goldman, y normalmente no interviene a no ser que haya unanimidad. Es muy complicado definir qué constituye información material. El casino de Wall Street El caso Goldman surge en un momento en que el Congreso está debatiendo las propuestas de los Demócratas para controlar de algún modo la compraventa de derivados. Algunos son partidarios de crear un sistema de intercambio centralizado y transparente, sustituyendo el opaco sistema over-the-counter (no organizado), de modo que los participantes pudiesen evaluar más fácilmente los precios. Algunos también quieren que las transacciones pasen por una cámara de compensación central. Con dicha cámara garantizando el pago y la entrega de los títulos adquiridos habría menos dudas sobre el buen comportamiento de la parte contraria. Utilizar un agente de intercambio y compensación podría ayudar a incrementar la seguridad de los mercados de derivados, explica Blume. Como estos sistemas, empleados desde hace tiempo para las acciones, reducen las comisiones y las diferencias entre los precios de salida y de adjudicación, los beneficios de las empresas de servicios financieros se verían mermados, lo cual explica su oposición, añade. Un sistema centralizado podría animar a utilizar productos estandarizados, los cuales son más
78 seguros porque son más transparentes, aunque seguiría habiendo cierta compraventa de derivados a la carta fuera del sistema central. La mayoría de los usuarios optaría por productos estandarizados, del mismo modo que los consumidores compran ropa “lista para llevar” en lugar de hacerse ropa a medida: los productos estandarizados son más baratos, explica Blume. Allen está de acuerdo en que el mercado de productos a la carta podría mermar si se establece un mercado de derivados estandarizados. “Sí, eso podría ocurrir”, dice. “Este es un equilibrio muy interesante entre mercados over-the-counter, con muchos títulos a la carta, y mercados con productos estandarizados donde simplemente se ejecutan transacciones”. A medida que se re-evalúa el sistema de intercambio de derivados, algunos detractores se preguntan si ciertos derivados sirven algún objetivo útil o simplemente han convertido a Wall Street en un casino. Frey y los profesores de Wharton entrevistados creen que los derivados vinculados a activos reales, como hipotecas, cumplen una función. Por ejemplo, los bonos de titulización hipotecaria permiten al prestamista convertir los futuros pagos de los propietarios en dinero en efectivo, de manera que el prestamista puede ofrecer dinero a otros compradores de vivienda. Los credit-default swaps permiten a las empresas y a otros agentes económicos protegerse de los riesgos. Por ejemplo, el propietario de un bono puede utilizar un CDS para asegurarse contra el peligro de no recibir los pagos prometidos del principal e intereses. El problema, sostienen algunos críticos, es que el comprador de CDS no tiene por qué ser el propietario del título que está siendo asegurado. Esto permite emplear los swaps con fines meramente especulativos, como si se firmasen 10 seguros sobre la vida de un desconocido, esperando beneficiarse si ese desconocido fallece, algo que sería ilegal con un seguro ordinario. La especulación desenfrenada con credit-default swaps fue la responsable de los 182.000 millones de dólares en ayuda gubernamental para American Internacional Group. Los CDOs pueden tener una función útil cuando reagrupan títulos reales, como los que tienen garantía hipotecaria, dice Smetters. En este caso contribuyen poniendo dinero a disposición de los propietarios de viviendas. Pero los CDOs sintéticos, como los del caso Goldman, no consiguen dinero a la gente o a las empresas con necesidades reales, dice Frey. Los CDOs sintéticos, añade Blume, son más bien apuestas contra los espectadores que están alrededor de las mesas del casino. Aunque la creación de CDOs ordinarios está limitada por la disponibilidad de valores subyacentes como títulos hipotecarios, se puede crear un volumen ilimitado de CDOs sintéticos porque no están vinculados a títulos basados en activos sino a credit default swaps, los cuales pueden crearse en cantidades ilimitadas. Así, los CDOs sintéticos supieron satisfacer la fiebre de principios de siglo por inversiones con altos ratings. Como los ratings estaban mal hechos, el valor de muchos títulos hipotecarios se hundió, y los CDOs sintéticos ampliaron la magnitud de las pérdidas. Tal y como dice Frey: “Cuando se analizan los títulos … hago una pregunta muy sencilla: ¿Existe algún motivo económico para que esta transacción se realice? Y si la respuesta es negativa, entonces ¿en qué consiste esta transacción?” Los CDOs sintéticos no pasan este simple test, dice Frey. “No creo que sean para nada necesarios. No creo que exista una necesidad económica real oculta para este tipo de transacciones. ¿Qué se logra realmente con la transacción, más que mover dinero de un lado para otro? Mover dinero no es una actividad económicamente productiva”. http://www.wharton.universia.net/index.cfm?fa=printArticle&ID=1883
79
05/05/2010 02:34 PM The World from Berlin German Banks 'Will Emerge Unscathed' from Greek Bailout Germany's top banks may have pledged to help out with the Greek bailout, but they shouldn't expect a pay-off, warned Chancellor Merkel on Wednesday. Meanwhile, the German press is dismissive of their contribution, saying it is the taxpayers who are assuming all the risks. As German politicians prepare to approve Germany's massive share of the joint European Union-International Monetary Fund bailout for Greece, Chancellor Angela Merkel has told them that the eyes of Europe are upon them. "It's about nothing more or less than the future of Europe and, with it, the future of Germany in Europe," she told the German parliament, the Bundestag, on Wednesday. The lawmakers are due to vote on the bill on Friday to enable Germany to extend a loan of €22.4 billion ($29 billion) to Greece, the biggest contribution to the €110 billion aid package that is finally going ahead after Berlin gave up its opposition to the bailout. The cabinet signed off on the bill on Monday after Greece agreed to harsh austerity measures with the IMF. The German contribution will be made via the state-controlled KfW bank. The bailout has been particularly unpopular with German taxpayers and, on Tuesday, Finance Minister Wolfgang Schäuble held a meeting with the country's financial institutions to try to persuade them to share the pain. The summit saw the firms agree to keep open lines of credit to Greek banks and not to sell Greek bonds for the duration of the three-year bailout. Schaüble told a press conference that the financial institutions had agreed to buy bonds issued by the KfW as a way to help finance the aid package. It is still not clear exactly which banks are contributing nor how much they plan to give. However, Deutsche Bank CEO Josef Ackermann, who has been leading the efforts to get the private sector to participate in the bailout, said insurers Allianz and Munich Re had responded positively. Governments in other euro-zone countries are also asking domestic banks to help out. On Wednesday, Merkel greeted the banks' willingness to help with the Greek rescue plans. However, she warned the firms that they could not expect any kind of pay-off, such as a dropping of a proposed financial-transaction tax. "If so," she told parliament, "they have deceived themselves." The German press on Wednesday is wary of the plans to involve the banks, and most commentators argue that the financial institutions are taking no great risk in doing so since the German state is guaranteeing the bonds. The center-left Süddeutsche Zeitung writes: "For the finance minister and his EU colleagues, this means that they may only have to contribute a part of the €110 billion. On the other hand, the banks won't have to incur any costs. Quite the opposite: The aid commitments could prove to be a lucrative business because they are buying high-interest bonds that the euro-zone governments are effectively guaranteeing. And the fact that Ackermann and his banking colleagues will maintain credit for the Greek banks in the end serves them more than anyone else: If they were to stop
80 extending credit, German banks would have to write off a substantial part of their outstanding claims." The center-right Frankfurter Allgemeine Zeitung writes: "The Greek drama would be easier to bear if the German government finally stopped playing the public for fools. The hastily prepared agreement on a 'significant, positive contribution,' to aid for Greece by Finance Minister Schäuble and Deutsche Bank boss Ackermann insults the citizens' knowledge of economics. The banks will emerge unscathed as creditors and beneficiaries of high-return Greek government bonds as long as governments in the euro zone try to prevent a bankruptcy of Greece with the help of taxpayer guarantees." "What the banks have agreed on with Schäuble doesn't even serve as a fig leaf. They declare their readiness to keep open the lines of credit to Greece 'wherever possible.' And they want to buy bonds issued by the state-controlled KfW -- and therefore guaranteed by the German government -- to help finance the billion-euro German bailout to the Greeks. It's a generous offer, and one that means that the banks can once again only win since there are no more secure bonds anywhere than these." The mass-circulation tabloid Bild writes: "German banks and insurance companies want to buy Greek and German bonds for a few billion euros and thereby make a 'significant contribution.' Hats off? Respect? Not at all! The banks are buying bonds, but the interest and the amortization are being guaranteed by German taxpayers. It doesn't get more secure than that." "The financial institutions have also earned a great deal from the Greek roulette. As long as things were going well, they wanted a market economy -- and for the governments to keep out of things. But now that the party is over, no one wants to pay the bill." "It has to be urgently clarified how the banks are to be made to do their duty. Either they waive Greece's debts, or they contribute through a levy to the rescue package." The Financial Times Deutschland writes: "The good news is that the banking summit at the Finance Ministry was a flop. If Wolfgang Schäuble or any other member of the government was trying to persuade German financial institutions to buy Greek bonds or to grant other loans to the country, they failed miserably. The only thing that Schäuble could take away from this PR meeting was that the institutions are committed to keeping open the existing lines of credit and bonds 'wherever possible' -- in other words, committed to nothing." "The state has to leave these kinds of business decisions to the financial institutions themselves -- even those that the state has a stake in." "That doesn't mean banks should be allowed to do anything they please. The state can and must make the rules -- and the financial crisis has shown the urgency of this. However, these regulations should only set the framework." "The banks have to make decisions about their own business dealings -- and then also finally take the risks that go with them." The conservative daily Die Welt writes: "For Germany, this is a fateful week. The gigantic aid package that is now being implemented fundamentally changes the conditions within the euro zone. The farthest-reaching decision since the introduction of the euro is happening without public debate, which is just what the German government wants. The involvement of parliament is a pure farce."
81 "Finance Minister Schäuble has repeatedly stated that there is no alternative to providing Greece with aid. It is the only way to ensure the euro's stability, he says. …. Yet no one can seriously promise that the new money will prevent Greek insolvency or a restructuring of its debts. It is pure speculation that is being used to hoodwink citizens and invoke European solidarity as a way to purchase economic and political stability. If the Greeks still go bust after a few months, not only will the taxpayers' money be lost, but trust in politicians will also be permanently damaged." -- Siobhán Dowling
URL: • http://www.spiegel.de/international/germany/0,1518,693158,00.html RELATED SPIEGEL ONLINE LINKS: • The Great Depression: Greeks Struggle with Sick-Man Status (05/05/2010) http://www.spiegel.de/international/europe/0,1518,693115,00.html • Selling Greek Aid: Chancellor Merkel Launches PR Offensive Ahead of Key Vote (05/04/2010) http://www.spiegel.de/international/germany/0,1518,692931,00.html • The World from Berlin: 'Politicans Have Rolled Right over Europe's Central Bankers' (05/04/2010) http://www.spiegel.de/international/europe/0,1518,692966,00.html • The Mother of All Bubbles: Huge National Debts Could Push Euro Zone into Bankruptcy (05/03/2010) http://www.spiegel.de/international/europe/0,1518,692666,00.html • 110 Billion Euro Package: EU Agrees to Prop Up Greece (05/03/2010) http://www.spiegel.de/international/europe/0,1518,692619,00.html
05/05/2010 01:55 PM
The Great Depression
Greeks Struggle with Sick-Man Status
By Björn Hengst in Athens They've emptied their bank accounts, abandoned vacations and started taking the bus. Now, they fear for their jobs: The Greeks bemoan the difficult crisis that has taken over their country. Above all, they feel humiliated by Germany. Ilias Lestaris likes to send his customers out into the great wide world: Thailand, Mauritius, India, Morocco. Right now, though, he'd be happy if any of his Greek compatriots were thinking about travelling. The 65-year-old's telephone has been ominously silent for days, and his office in central Athens has seen few customers walk through its doors. Instead of booking trips, Lestaris spends his time
82 looking at the map of the world on the wall, at his computer monitor and smoking Karelia cigarettes. Lestaris sold his last package vacation the week before last: three days for a couple in Lesbos, that's it. "It is total stagnation, nothing is moving," he says. He also has low-priced vacation packages -- a bus to Istanbul, seven days half-board for €390 -- but there are dozens of spots still available. Lestaris has been in business for a long time, but hasn't seen such a slump in travel bookings in decades. He can barely cover the rent of his office with current revenue. Lestaris has two words for his present attitude towards life and business. Uncertainty is one. The other: rage. What angers Lestaris is that Greek citizens now have to take the fall for the false deficit statistics fabricated by the previous government. It also hurts him that Greece is now widely seen by other EU countries as a nation of lazy people who earn a lot of money, squander it quickly and rely on outside support to stave off national bankruptcy. He himself has paid into a pension fund for 37 years and receives only €617 per month after deductions. "Tell that to Frau Merkel," he tells a German visitor. Although the EU and the International Monetary Fund (IMF) have agreed to float Greece a €110 billion ($145 billion) loan over the next three years so the country can avoid bankruptcy, feelings of self-worth among the Greeks have fallen precipitously. In particular, Greeks were appalled by Merkel's stalling and reluctance prior to the bailout agreement reached last weekend. Sarkozy Celebrates the Greeks -- Merkel Could Let Them Hang "Angela Merkel? No, Thanks," the Greek daily To Vima recently wrote on its front page. The paper also printed a poll ranking international politicians by favorability. In first place was French President Nicolas Sarkozy with 76.6 percent of Greeks polled saying they approved of him. In March, Sarkozy said that France would stand by Greece should the need arise. Following Sarkozy was Russian Prime Minister Vladimir Putin (73.7 percent) and US President Barack Obama (68.2 percent). Merkel brought up the rear, with just 18.4 percent of Greeks surveyed having a positive opinion of her. Even worse for Merkel, more people, 32.9 percent, found Turkish Prime Minister Recep Tayyip Erdogan more favorable. Erdogan is the leader of Greece's arch enemy -- hardly a vote of confidence for Germany. Elena Spilotis, a 39-year-old who works in store that sells women's bags in the tony Athens neighborhood of Kolonaki, is more diplomatic in her dislike of Merkel, saying that she was very surprised by the results. Greece is the cradle of European culture, Spilotis says. "Has Frau Merkel forgotten that?" Every move made by Berlin is closely monitored among Greeks. Many media outlets here picked up on the German business daily Handelsblatt's listing of those who buy Greek bonds. The newspaper has called for Germans to buy Greek government bonds in order to support the heavily indebted state as a sign of joint responsibility "even under indisputable financial risk." Jürgen Grossmann, the CEO of German energy giant RWE, supported the paper's call to arms and wants to buy €100,000 ($130,000) worth of Greek bonds. Grossmann was honored by the conservative newspaper Kathimerini with a large photo. Will Greece Be Able to Deal with the Austerity Measures?
83 But what does the future hold for the country? Some economists doubt that Greece will be able to cope with the rigid austerity measures Athens has imposed. And they also expect the recession to worsen as sinking salaries and rising taxes take their toll on the domestic economy. At the beginning of 2010, the country already agreed on an initial package of austerity measures, including one that raises sales tax from 19 percent to 21 percent. The measures have already had an effect. Greeks are consuming less, and retail outlets are scrambling to boost sales using rebates and special promotions. For example, the Kamoulakos fashion boutique is offering a free purse with every purchase over €70 ($91). And the number of empty storefronts is growing. That is increasingly the case even on Emou Street, Athens' main upscale shopping boulevard. Several of the glass storefronts are plastered with signs reading "Enoikiazetai" -- "For Rent." For years, such a thing would have been unthinkable. "Now I don't buy blouses, even when I'm in the mood," says Marianna M., a 34-year-old saleswoman who has had to cancel her vacation plans. And since the government's most recent packet of saving measures includes a 10 percent increase in the gas tax, she's also chosen to no longer drive to work and to buy a monthly bus pass instead. She's also worried about whether she can hold on to her job in a cosmetics store. "We have fewer customers these days," she says. Hiding Money at Home Many Greeks are worried that things might get a lot worse. For a while now, they haven't placed any trust in the banks, either. In recent months, businesses and private individuals have withdrawn roughly €10 billion from Greek banks, preferring to either hide their money at home or transfer it to foreign banks. There are also more and more protests on the streets. On Tuesday, civil servants went on strike, and demonstrating teachers even clashed with police officers in from of the parliament building in Athens. When protesters started pelting the police with rocks and bottles, the latter responded with teargas. Not far away, roughly 200 communist union members launched an eye-catching protest by unfurling two enormous banners off the side of the Acropolis reading "Peoples of Europe Rise Up" in English and Greek. Some of the security forces are noticeably short-tempered. One police officer seized the camera of a foreign journalist and forced him to erase any photographs including police officers, claiming they were illegal. "Erase it or we'll take you in; those are your options," the officer threatened. For now, it looks like it will be a while before things calm down in Greece. Wednesday's general strike is expected to be the largest seen in recent weeks. With reporting by Ferry Batzoglu
URL:
• http://www.spiegel.de/international/europe/0,1518,693115,00.html
RELATED SPIEGEL ONLINE LINKS:
84 • Opinion: Whether Oil Slick or Financial Crisis, Those Who Cause Catastrophes Should Pay (05/05/2010) http://www.spiegel.de/international/world/0,1518,692320,00.html • Strikes in Greece: Civil Servants Rebel Against Austerity Measures (05/04/2010) http://www.spiegel.de/international/europe/0,1518,692909,00.html • Selling Greek Aid: Chancellor Merkel Launches PR Offensive Ahead of Key Vote (05/04/2010) http://www.spiegel.de/international/germany/0,1518,692931,00.html • The Mother of All Bubbles: Huge National Debts Could Push Euro Zone into Bankruptcy (05/03/2010) http://www.spiegel.de/international/europe/0,1518,692666,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
DER SPIEGEL Graphic: Money owed to German banks by selected European Union members.
85
05/04/2010 02:28 PM
Selling Greek Aid
Chancellor Merkel Launches PR Offensive Ahead of Key Vote
For months, polls have suggested that Germans are firmly against providing aid to Greece. Now, with less than a week to go before a crucial regional election, Merkel's government has backed a 110 billion-euro package anyway. The chancellor is now doing her best to control the political damage. The proposals are coming fast and furious. It seems as though every time German Chancellor Angela Merkel approaches a microphone this week -- and on Monday evening she managed to complete six television interviews -- she demands yet another measure to ensure that a crisis like that in Greece doesn't repeat itself. In an interview with the public television station ZDF, she demanded that a mechanism for "orderly insolvency proceedings for countries" be established. On ARD, she said that banks cannot be allowed to shirk their responsibility and insisted that financial market regulation be strengthened. On RTL, she demanded that financial speculation be reined in. Her finance minister, Wolfgang Schäuble, even got into the act, telling the Rheinische Post newspaper that countries which violate the European Union's stability pact should be punished either with a suspension of EU transfer payments or a suspension of their voting rights. The public relations blast is a calculated one. On Sunday, finance ministers from euro zone countries together with the International Monetary Fund agreed to a €110 billion aid package for Greece to forestall bankruptcy, to be paid out over the next three years. Germany's share is €22.4 billion, €8.4 billion of which is due this year. Already, European governments have begun passing the necessary legislation to make the aid possible, with the French parliament having rubber- stamped the plan on Tuesday. Both houses of German parliament are due to have their say on Friday. But for Merkel, the deal is full of potential political pitfalls. She is well aware that a majority of the German public is against financial aid for Greece. A survey last week by Infratest dimap found that a mere 33 percent of the German populace is in favor of assisting Athens. Stiff Challenge Furthermore, important state elections are looming on Sunday in North Rhine-Westphalia, Germany's most populous state. Merkel's party, the Christian Democratic Union (CDU), which currently governs the state in coalition with the pro-business Free Democrats, is facing a stiff challenge from left and center-left parties. Should the CDU not be returned to power with the FDP, Merkel would lose her majority in the Bundesrat, Germany's upper legislative chamber. Indeed, many have criticized Merkel for her often inconsistent statements on aid to Greece and have accused her of trying to delay any decision until after Sunday's vote. On Monday evening, Merkel was careful to deny the connection. "This was a global event," she said in more than one
86 television interview, in reference to Greece's budgetary difficulties. She insisted that financial markets pay no attention to regional elections. Nevertheless, it is clear that Merkel would like to quickly change the focus of the debate -- from Germany's share of the aid package to possible measures that might prevent such a problem in the future. Her numerous suggestions for strengthening the rules governing Europe's common currency area are a first step in that direction. 'Significant' Contributions A second step was taken on Tuesday, when Schäuble met with representatives of German banks in Berlin in an effort to secure their participation in the aid package. A number of German parliamentarians, including some from the CDU, have voiced opposition to the aid package because it could result in more profits for banks that had bet against Greece. Merkel, on Monday night, threw her support behind Schäuble's effort. The banks, she said, "will now have a variety of possibilities to do their part." One must be careful, she warned further, "to not become too focused on small numbers." On Tuesday afternoon, Schäuble said that an initial agreement had been reached and that Germany's financial institutions would be making "significant" contributions to the aid package. Whether that will help Merkel's party at the polls on Sunday remains to be seen. cgh -- with wire reports
URL:
• http://www.spiegel.de/international/germany/0,1518,692931,00.html
RELATED SPIEGEL ONLINE LINKS:
• The Mother of All Bubbles: Huge National Debts Could Push Euro Zone into Bankruptcy (05/03/2010) http://www.spiegel.de/international/europe/0,1518,692666,00.html • 110 Billion Euro Package: EU Agrees to Prop Up Greece (05/03/2010) http://www.spiegel.de/international/europe/0,1518,692619,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
HOW GERMANS WOULD VOTE TODAY
SPIEGEL ONLINE's Poll Barometer: Shows current German political trends -- at both the federal and state level -- based on the latest surveys. http://www.spiegel.de/flash/flash-21034.html
87
05.05.2010 Some really bad news from Greece – Opposition decides to vote against the deal
The EU/IMF deal will find a majority in the Greek parliament, but last night’s decision by Antonis Samaras, leader of the opposition New Democracy, to vote against the IMF/EU package destroys any hopes of a lasting consensus for reform. It signals a return to the politics as usual at a rather early stage in the adjustment process, and destroys any hope of a national consensus, which is so critical when it comes to the implementation of long-term adjustment programmes. (Remember the IMF said the whole adjustment would take 10 years!) The decision makes it very likely that Greece will not be able to maintain the commitments it made in its negotiations, except in the very short term. See this report in Kathimerini for more details. Yesterday’s earlier big news was the market rout, as investors became more sceptical – about Greece, about the spread of the crisis, and the world economy in general. Equity markets had a rough day, southern European bond spreads were back up, as were CDS ratings of south European sovereigns, and the euro fell towards to $1.30, the weakest level in a year. The latest rout was triggered by comments from Germany’s economics minister, who said that the finance package would last only 18 months, and by Germany’s finance minister, who warned the Greeks that a failure to meet the objectives would lead to bankruptcy. This is not what the market wants to hear now. The Greek two-year yield subsequently rose by 4.2% to 14.5%. The real problem in this Greek crisis is contagion. As our CDS chart on our homepage indicates, Portugese and Spanish credit risk rose sharply yesterday. The crisis is currently spreading to Portugal, the next candidate for a combined IMF/EU programme. A bewildered Jose Luis Zapatero gave an angry response to press reports which alleged that he was preparing a €280bn rescue package for the Spanish economy, according to El Pais. Pointing towards the (still) relatively low level of Spanish debt-to-GDP ratio, he said the speculation was without foundation. (We suspect that investors know the Spanish public deficit- and debt numbers. It is the private debt, and the liabilities of a state-guaranteed banking they are worried about).
88 In an editorial, El Pais makes the point that the problem for Spain is not so much the actual numbers, but the perception that the country is not reforming, especially in the labour market. Also one of the best commentaries today is by Tano Santos in Nada es Gratis, who says that Spain needs to reboot its entire economic strategy to survive this crisis, something that is not possible with the present government, and especially not with Zapatero. He makes the points that Spain needs an increase in potential GDP growth through reforms, the courage to close down banks, and restrictions on the expenditure of municipalities. Yesterday’s market rout also had a global dimension, and was in part influenced by doubts over China’s economic recovery, following the imposition of new restrictions on property investment, the FT reports. The governance debate gets off to a really bad start FT Alphaville had a very perceptive headline this morning: “Merkel’s call for ‘orderly insolvencies’ threaten more disorder’. This is in response to Merkel’s latest reform proposals for the eurozone, which include a tougher stability pact, a state insolvency regime, and the possibility of a suspension of voting rights (something that would require a full-blown change in the European Treaties, and separate ratification). The article quotes from Marco Annunziate at UniCredit, who wrote that “German proposals for an orderly sovereign insolvency framework are dangerously ill-timed, sending the signal that further crises are likely and fueling fears that a Greek debt restructuring may be back on the agenda as soon as it can be managed in an orderly way-this is hardly the way to bolster confidence in the Greek adjustment program, and clashes with claims that Greece is ‘unique’.” Martin Wolf on Greece Martin Wolf, having looked at the Greek figures, concludes that the Greek package probably won’t work. The maths just does not add up. He applauds the IMF/EU agreement only in one respect – that it contained a much more realistic assumption about the growth path during the adjustment, but he thinks it is still too optimistic. He concludes that debt restructuring is very likely. Wolfgang Munchau on another Greek time bomb about to explode Wolfgang Munchau says in his FT Deutschland column that he is not certain about the actual status of the loan to Greece, and criticises the EU and the German government for failing to come clean on this matter, and clarify the implications. The financial markets believe – probably correctly – that the debt is junior. After all, one of the main goals of the package had been to stablise markets. But if the debt is junior – and given a non-trivial probability of debt restructuring down the line – it is virtually guaranteed that only parts of the loan will be paid back. Munchau assumes that the German government is deliberately hiding this fact in order to facilitate passage of the legislation, as the country’s financially illiterate MPs are unlikely to get bogged down in questions about the seniority of debt. But this game of smoke and mirrors is hugely dangerous gamble, and could lead to massive political and legal backlash, once people (and constitutional court justices) realise that this is a fiscal transfer after all, contrary to what Merkel has been saying. Paul Krugman on the Eichengreen argument This is an interesting debate in reference to an argument made by Barry Eichengreen on
89 Eurointelligence – that withdrawal from the eurozone would cause the mother of all financial crises, as the citizens would transfer all of their savings out of the country. Paul Krugman said he himself used to believe that argument, but no longer, because Greece is heading towards a full-blown banking crisis anyway – and that the marginal disincentive to leave the eurozone – large under the Eichengreen scenario would be a lot smaller then.
http://www.eurointelligence.com/index.php?id=581&no_cache=1&tx_ttnews[tt_news]=2782 &tx_ttnews[backPid]=901&cHash=d4f28055e6
90 COLUMNISTS A bail-out for Greece is just the beginning
By Martin Wolf Published: May 4 2010 20:13 | Last updated: May 4 2010 20:13
Desperate times; desperate measures. After months of costly delay, the eurozone has come up with an enormous package of support for Greece. By bringing in the International Monetary Fund, at Germany’s behest, it has obtained some additional resources and a better programme. But is it going to work? Alas, I have huge doubts. Analysis: Italy: Much to play for - May-04 Editorial: Triple A decision - May-04 Opinion: The message from Berlin that Europe failed to grasp - May-04 Wolfgang Münchau: To integrate or disintegrate - May-02 Editorial: Merkel’s moment - May-02 So what is the programme? In outline, it is a package of €110bn ($143bn) (equivalent to slightly more than a third of Greece’s outstanding debt), €30bn of which will come from the IMF (far more than normally permitted) and the rest from the eurozone. This would be enough to take Greece out of the market, if necessary, for more than two years. In return, Greece has promised a fiscal consolidation of 11 per cent of gross domestic product over three years, on top of the measures taken earlier, with the aim of reaching a 3 per cent deficit by 2014, down from 13.6 per cent in 2009. Government spending measures are to yield savings of 5¼ per cent of GDP over three years: pensions and wages will be reduced, and then frozen for three years, with payment of seasonal bonuses abolished. Tax measures are to yield 4 per cent of GDP. Even so, public debt is forecast to peak at 150 per cent of GDP. In important respects, the programme is far less unrealistic than its intra-European predecessor. Gone is the fantasy that there would be a mild economic contraction this year, followed by a return to steady growth. The new programme apparently envisages a cumulative decline in GDP of about 8 per cent, though such forecasts are, of course, highly uncertain. Similarly, the old plan was founded on the assumption that Greece could slash its budget deficit to less than 3 per cent of GDP by the end of 2012. The new plan sets 2014 as the target year. Two other features of what has been decided are noteworthy: first, there is to be no debt restructuring; and, second, the European Central Bank will suspend the minimum credit rating
91 required for the Greek government-backed assets used in its liquidity operations, thereby offering a lifeline to vulnerable Greek banks. So does this programme look sensible, either for Greece or the eurozone? Yes and no in both cases. Let us start with Greece. It has now lost access to the markets (see chart). Thus, the alternative to agreeing to this package (whether or not it can be implemented) would be default. The country would then no longer pay debt interest, but it would have to close its primary fiscal deficit (the deficit before interest payments), of 9-10 per cent of GDP, at once. This would be a far more brutal tightening than Greece has now agreed. Moreover, with default, the banking system would collapse. Greece is right to promise the moon, to gain the time to eliminate its primary deficit more smoothly.
Yet it is hard to believe that Greece can avoid debt restructuring. First, assume, for the moment, that all goes to plan. Assume, too, that Greece’s average interest on long-term debt turns out to be as low as 5 per cent. The country must then run a primary surplus of 4.5 per cent of GDP, with revenue equal to 7.5 per cent of GDP devoted to interest payments. Will the Greek public bear that burden year after weary year? Second, even the IMF’s new forecasts look optimistic to me. Given the huge fiscal retrenchment now planned and the absence of exchange rate or monetary policy offsets, Greece is likely to find itself in a prolonged slump. Would structural reform do the trick? Not unless it delivers a huge fall in nominal unit labour costs, since Greece will need a prolonged surge in net exports to offset the fiscal tightening. The alternative would be a huge expansion in the financial deficit of the Greek private sector. That seems inconceivable. Moreover, if nominal wages did fall, the debt burden would become worse than forecast.
92 Willem Buiter, now chief economist at Citigroup, notes, in a fascinating new paper, that other high-income countries, notably Canada (1994-98), Sweden (1993-98) and New Zealand (1990-94), have succeeded with fiscal consolidation. But initial conditions were much more favourable in these cases. Greece is being asked to do what Latin America did in the 1980s. That led to a lost decade, the beneficiaries being foreign creditors. Moreover, as creditors are now paid to escape, who will replace them? This package will surely fail to return Greece to the market, on manageable terms, in a few years. More money will be needed if debt restructuring is unwisely ruled out. For other eurozone members, the programme prevents an immediate shock to fragile financial systems: it is overtly a rescue of Greece, but covertly a bail-out of banks. But it is far from clear that it will help other members now in the firing line. Investors could well conclude that the scale of the package required for tiny Greece and the overwhelming difficulty of agreeing and ratifying it, particularly in Germany, suggest that further such packages are going to be elusive. Other eurozone members might well end up on their own. None is in as bad a condition as Greece and none has shown the same malfeasance. But several have unsustainable fiscal deficits and rapidly rising debt ratios (see chart). In this, their situation does not differ from that of the UK and US. But they lack the same policy options. This story, in short, is not over. For the eurozone, two lessons are clear: first, it has a choice – either it allows sovereign defaults, however messy, or it creates a true fiscal union, with strong discipline and funds sufficient to cushion adjustment in crushed economies – Mr Buiter recommends a European Monetary Fund of €2,000bn; and, second, adjustment in the eurozone is not going to work without offsetting adjustments in core countries. If the eurozone is willing to live with close to stagnant overall demand, it will become an arena for beggar-my-neighbour competitive disinflation, with growing reliance on world markets as a vent for surplus. Few are going to like this outcome. The crises now unfolding confirm the wisdom of those who saw the euro as a highly risky venture. These shocks are not that surprising. On the contrary, they could have been expected. The fear that yoking together such diverse countries would increase tension, rather than reduce it, also appears vindicated: look at the surge of anti-European sentiment inside Germany. Yet, now that the eurozone has been created, it must work. The attempted rescue of Greece is just the beginning of the story. Much more still needs to be done, in responding to the immediate crisis and in reforming the eurozone itself, in the not too distant future. [email protected] http://www.ft.com/cms/s/0/de21becc-57af-11df-855b-00144feab49a.html
93 05/04/2010 Münchau - Auf dem Weg in die nächste Lüge Münchau - on the way in the next lie El estado del Mediterráneo es guardado en primer lugar. Pero la política europea no dice nada de la importante información pública de la Grecia de ayuda. Por Wolfgang Munchau Amenaza a un escándalo por la nueva Grecia auxilios una vez más como consecuencia de la duplicidad del Gobierno. Los mercados pondrá de manifiesto que los préstamos han puesto de acuerdo a la condición juvenil llamada. Esto significa que están en caso de un estado en bancarrota de Grecia fue secundaria. En primer lugar, los dueños se les pagará con bonos del Estado griego, y entonces algo más debe dejarse que los gobiernos europeos su dinero. Reunión con Schäuble banquero Cumbre termina con "el pacto entre caballeros"
El público esta información, es cierto, entonces, negó. los fondos del FMI tradicionalmente super-senior, que es la tarea prioritaria de la jerarquía. Yo había supuesto inicialmente, el mismo se aplicaría a los préstamos europeos. La idea detrás de esto es que los préstamos son reembolsados en su totalidad cuando se trata de la reestructuración de la deuda. Acabo de oír, sin embargo, que al parecer tanto el FMI y los préstamos de la UE disfrutar en este caso, la condición juvenil. Eso sería un escándalo absoluto. Una deducción es inevitable Otra posibilidad teórica es que los préstamos de los países del euro se pari passu, es decir, pari passu con la deuda pendiente griego. En este caso, los préstamos alemanes no fueron pagados en su totalidad, en caso de llegar a una reestructuración de la deuda - y dado el alto nivel de endeudamiento Griego I contar con ella en los próximos dos o tres años. Thomas Mayer, economista jefe de Deutsche Bank, ha propuesto una reducción del 50 por ciento, un recorte de la llamada. Eso sería una, al menos negociado, la condonación parcial de deudas. Los bonos sería entonces sólo vale la mitad. En el nivel de cortes de pelo se puede discutir. Me han dado un número ligeramente inferior. Pero es el principio. Corte de pelo sin que sufran. Y por lo tanto la cuestión de la antigüedad de la deuda es relevante. Así son nuestros préstamos passu junior, senior o pari? Los miembros del Comité de Presupuesto del Bundestag alemán debería hacer esta pregunta en su audiencia de hoy y absolutamente se niegan a votar, siempre y cuando esta pregunta no se responde con claridad. Si los préstamos son junior, sospecho, es de hecho, no préstamos de bienes raíces, pero al menos en parte, a una transferencia, entonces debería también ser fiscalmente relevantes. Habría una parte de la propuesta € 8400000000 para este año ganó realmente en el
94 presupuesto federal, y probablemente financiados por los ahorros en otras partes del presupuesto, o bien aceptar un déficit presupuestario más alto en la compra. • Más información sobre la • Crisis de la deuda en España se llama rumores de quiebra "una locura" • reunión de la Cumbre en Grecia bancos Schäuble donar cálidas palabras • Eslovaquia negó tema electoral "ricos" griegos ayuda rápida • Beneficios de la conspiración de quiebra contra los griegos • Programa de Ahorro para el hambre Grecia Puedo entender que silencio de Finanzas, bancos centrales y el Fondo Monetario Internacional este tema desagradable. Porque no importa cómo usted responde a la pregunta, podría haber problemas, lo que truncó el plan de rescate conjunto. El Bundestag podría bloquear un préstamo subordinado puede ser. En realidad, incluso el Presidente no debe firmar esa ley. Porque de hecho plantea problemas constitucionales. El Tribunal Constitucional Federal se declarará con referencia al artículo 125 de la UE de Lisboa Tratado, que la ayuda es ilegal, porque un préstamo subordinado con un tipo de interés por debajo de la tasa de mercado es de hecho una ayuda ilegal. Si los préstamos en contra de sus superiores, la situación jurídica y política de Alemania sería mucho menos problemático. Entonces sería freak, sin embargo, los mercados financieros. Los trabajos pendientes griega fueron degradados pero ya oficiales. El programa de emergencia para Grecia habría fracasado en su propósito esencial, a saber, para calmar los mercados y evitar un desbordamiento de la crisis a otros países. El primer ministro eslovaco Robert Fico ha rechazado un rescate de Grecia categóricamente. Apertura, después de las elecciones parlamentarias de junio Eslovaca su país decidirá. "Si usted piensa que mi gobierno compuesto antes del 12 de junio y decidir sobre un préstamo, es el muy equivocados", dijo el jefe de la coalición de izquierda populista. Eslovaca politólogos suponer que este retraso se ha debido a razones políticas, la Grecia de ayuda se ha convertido en uno de los temas de campaña más importante. • Más información sobre la • reunión de la Cumbre en Grecia bancos Schäuble donar cálidas palabras • Beneficios de la conspiración de quiebra contra los griegos • Programa de Ahorro para el hambre Grecia • Helénica bonos Pimco, jefe predice Grecia "década perdida" • protesta griegos deuda pública suben a la superficie • Revista de prensa internacional El mundo se preocupa por el euro Un total de 816 millones de € a Bratislava para contribuir al plan de paquete de ayuda conjunta de la UE para Grecia. Eslovaquia, con sus cinco millones de habitantes, es el miembro más joven de la zona euro, el país ha adoptado la moneda única en enero de 2009. Casi todas las partes del espectro político dicen que está en contra de un pago a Grecia. "¿Por qué los ricos ayudar a los pobres Grecia Eslovaquia?" - Como un político de la oposición conservadora del estado de ánimo llega al punto. periódicos eslovacos han calculado que el salario medio en Grecia es de tres veces mayor que en Eslovaquia, las pensiones son hasta cuatro veces mayor. Cada crédito Eslovaca € 150 matemáticamente le asignan a los griegos, calcula el diario económico Hospodarske Noviny sus lectores. El salario medio en Eslovaquia es casi 750 €.
95 Nueva Visión: Un hombre mira la imagen de un € Eslovaca En general, sin embargo, no queremos excluir el primer ministro Robert Fico a ayudar a los griegos. "Queremos proteger a las personas en Eslovaquia, sus ahorros y el euro", dijo en Bratislava. "Los esfuerzos conjuntos de la zona del euro a la protección del euro, queremos hacer nuestra pequeña contribución - después de todo sólo somos una pequeña economía." Esta disposición, en principio, no debería ser un cheque en blanco para el Gobierno griego. Uno debe asegurarse de que cumplen sus obligaciones, los griegos ", dijo Fico. G de la esfera de la política social que va más allá del ámbito de la economía griega, debería ser establecida. Además, el Primer Ministro pidió una reducción de los salarios griego por 25 por ciento. Una simple promesa por el Gobierno griego no es suficiente. Antes de que su país está dispuesto a pagar, que quería ver a leyes concretas de Atenas - "antes de Eslovaquia no está negociando los préstamos bilaterales para Grecia." http://www.ftd.de/politik/europa/:kolumne-muenchau-auf-dem-weg-in-die-naechste- luege/50109977.html
96
Paul Krugman May 5, 2010, 4:59 pm Greek End Game Many commentators now believe that Greece will end up restructuring its debt — a euphemism for partial repudiation. I agree. But the reasoning seems to stop there, which is wrong. In effect, the consensus that Greece will end up defaulting is probably too optimistic. I’m growing increasingly convinced that Greece will end up leaving the euro, too. I’ve basically laid out the logic already: even with a debt restructuring, Greece will be in deep trouble, forced to engage in severe austerity — and provoke a deep slump — just to close the primary, non-interest deficit. The only thing that could reduce that need for austerity would be something that helped the economy expand, or at least not contract as much. This would reduce the economic pain; it would also increase revenues, reducing the needed amount of fiscal austerity. But the only route to economic expansion is higher exports — which can only be achieved if Greek costs and prices fall sharply relative to the rest of Europe. If Greece were a highly cohesive society with collective wage-setting, a sort of Aegean Austria, it might be possible to do this via a collectively agreed reduction in wages across the board –an “internal devaluation.” But as today’s grim events show, it isn’t. The alternative is a devaluation — which means leaving the euro. Any announcement of plans to leave the euro would, as Eichengreen points out, trigger disastrous bank runs. By the same token, any suggestion by outside players, like the ECB, that the option exists would amount to invoking a speculative attack on Greek banks, and therefore can’t be made. The whole thing is effectively undiscussable. But that doesn’t mean it can’t happen. Greece is already starting to look like Argentina 2001. Again, this isn’t an alternative to debt restructuring; it’s what might be needed in addition to debt restructuring to make the fiscal adjustment possible. I hope that somewhere, deep in the bowels of the ECB and the Greek Ministry of Finance, people are thinking about the unthinkable. Because this awful outcome is starting to look better than the alternatives.
May 4, 2010, 3:27 pm Why Endorse The Tories? Yglesias is right. For sure, Gordon Brown — like the Rubinites here in America — made the great mistake of buying into the promises of high finance. But is there any doubt that a Tory government would have done the same? And I understand the sense that Labour has been in office too long. If I were British, I might well consider voting Lib Dem.
97 But in the current crisis, Brown’s policies have been sensible, whereas the Tories wanted to slash spending in the face of recession, which would have been disastrous. And The Economist agrees — then endorses the Tories. Is The Economist of the belief that there will be no future crises? That this gigantic failure of judgment in the face of a defining moment for economic policy offers no hint about how well the Tories will perform in dealing with other issues? It’s utterly bizarre. May 4, 2010, 3:06 pm The Crazy Returns Hmm. I’ve long been accustomed to receiving a lot of crazy mail, accusing me of being a commie, a traitor, an idiot who doesn’t know any economics, etc.. But the flow peaked a long time ago; after around 2005, as the number of people in major news outlets actually willing to criticize Dear Leader grew, I seemed to stop being Public Enemy #1. Lately, however, it’s been starting to feel like the good old days. Maybe I’m just getting my pro-rata share of the general craziness of Obamaparanoia. But something is definitely going on. May 4, 2010, 3:01 pm Default, Devaluation, Or What? Is there anything more to say about Greece? Actually, I think so. Observers like Charles Wyplosz, who point out that the adjustment being demanded of Greece is extraordinary and hard to see happening, are right. And yet .. one thing I haven’t seen pointed out sufficiently is that a debt restructuring, or even a complete cessation of debt service, wouldn’t do all that much to ease the burden. Consider what Greece would get if it simply stopped paying any interest or principal on its debt. All it would have to do then is run a zero primary deficit — taking in as much in taxes as it spends on things other than interest on its debt. But here’s the thing: Greece is currently running a huge primary deficit — 8.5 percent of GDP in 2009. So even a complete debt default wouldn’t save Greece from the necessity of savage fiscal austerity. It follows, then, that a debt restructuring wouldn’t help all that much — not unless you believe that getting forgiveness on much of Greece’s existing debt would make it possible to take on substantial new debt, which doesn’t seem very likely. The point is that the only way to seriously reduce Greek pain would be to find a way to limit the costs of fiscal austerity to the Greek economy. And debt restructuring wouldn’t do that. Devaluation would, if you could pull it off. I see that Vox has reposted the classic Eichengreen paper on why you can’t. I’ve already written that this argument, which I found extremely persuasive when first made, now seems to me less than watertight. But let me be a little more specific. The way things are going, it looks quite possible that Greece will spiral into domestic as well as debt crisis, and be forced to take emergency measures. And that makes me think of Argentina in 2001. At the time, Argentina had the convertibility law, supposedly permanently pegging the peso to the dollar — and that was supposed to be irreversible for the same reasons the euro is supposed to be irreversible now. Namely, to repeal the law would require extensive legislative discussion, and any such discussion would set off destructive bank runs, hence there was no way to undo the fixed exchange rate. But by late 2001 Argentina was a mess, with many emergency measures in place in an effort to contain the situation. These included the corralito, severe restrictions on bank withdrawals to contain bank runs — and one unintended consequence of all this was that the bank runs argument against suspending convertibility became moot.
98 Is it really impossible to see something similar happening in Greece? And if it does, might not other countries’ membership in the eurozone be called into question? This drama is far from over. May 3, 2010, 4:03 pm Is It The Economy, Stupid? Things are looking up in public perceptions about the economy: CBS From a short-term economic point of view, this may be a self-fulfilling prophecy, as optimism raises consumer spending. Will it have political implications? Is economic optimism arriving just in time to save Democrats from a midterm disaster? I’m not sure. A lot of the anti-Obama sentiment out there seems, um, loosely tethered to reality; arguably it’s about identity politics and fear of change more than actual performance. And it’s always worth remembering that the US economy was adding jobs at a torrid pace before the 1994 election — about 300,000 jobs a month — without Clinton gaining any apparent benefit. On the other hand, Obama isn’t being dragged down by as many fake scandals as Clinton was, in part because there’s a progressive infrastructure to fight back against the VRWC. Oh, and the great southern realignment has already happened. So it’s anyone’s guess. But Democrats have to be happy that the narrative may be about to change from “it could have been worse” to “it’s morning in America.” May 3, 2010, 3:51 pm Bubble Denial Via Ryan Grim and Matthew Yglesias, some seriously disturbing Fed transcripts. Basically, back in 2004 staff members presented data seriously suggesting a housing bubble; not only were the data disregarded, Greenspan wanted no hint of the discussion made public: We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand. Can’t have outsiders joining in on the debate, can we? Hoo boy. A technical note: those charts would have been even more striking if the staffers had differentiated by regions; big contrast between Flatland and the Zoned Zone, with the latter much more clearly in a bubble. May 3, 2010, 10:23 am Bond Vigilantes: Where Are They Now? A little over a month ago the newspapers were full of scare stories about interest rates. Debt Fears Send Rates Up, blared a headline in the WSJ. Ten-year rates had risen from 3.67 percent to 3.9 percent, and this was a signal of huge fears about US solvency. Time to slash spending now! You might want to know that last Friday, the 10-year rate was … back where it started, at 3.69 percent. Somehow, the climbdown wasn’t news. And what’s wonderful about this, from the point of view of the deficit scare-mongers, is that they can keep on doing it, even if there isn’t any actual upward trend: when interest rates rise, they can issue dire warnings, go silent when they drop, then go back to dire warnings as rates rise back to the previous level. Nice work if you can get it.
99 May 3, 2010, 9:53 am The Augustine Economy The good news from the consumer spending release is that consumers are, in fact, spending. The bad news is that they’re not saving: personal savings are now back down to 2.7 percent of income. This can’t go on; American households have to bring their debt levels down. And yet … We’re still in a liquidity trap, with Fed policy constrained by the zero lower bound. And a liquidity trap world is a paradox-of-thrift world, in which the virtuous individual decision to save more is a vice from the point of view of the economy as a whole. For now, it’s actually a good thing that consumers are behaving irresponsibly. So my wish is that we be made chaste, continent, and thrifty — but not yet. May 3, 2010, 9:38 am Where The Debt Is Coming From One of the small side benefits of the economic crisis has been that the IMF’s World Economic Outlook, all too often a somnolent document, has latterly become must-read and really interesting. (Of, course, it’s not just circumstances; Olivier Blanchard, the Fund’s chief economist, has been doing a fine job). The latest edition isn’t quite as pathbreaking as the last two, but still has a lot of interesting stuff. One thing it does it break down the sources of the actual and projected rise in advanced-country debt due to the crisis, measured as a percentage of GDP:
International Monetary Fund What’s striking here is that fiscal stimulus is a small player. It would be even smaller if one took into account the fact that stimulus has made economies stronger than they would otherwise have been, leading to higher revenues and smaller unemployment benefits. What dominates the picture instead is the consequences of the slump, in falling revenues and higher social insurance payments. And what this tells us is that anyone demanding that countries not run such big deficits is, in effect, calling for higher taxes and slashed spending in the face of a deep recession — Hoovernomics. Is that really what they want? Is that their final answer?
vox
Research-based policy analysis and commentary from leading economists And now? A dark scenario
100 Charles Wyplosz 3 May 2010 Eurozone members, the IMF, and the ECB have announced significant commitments to assist debt- laden Greece. This column outlines a dark scenario in which the plan fails and contagion spreads, necessitating further assistance to other indebted Eurozone governments. That could risk high inflation or debt problems for the entire Eurozone.
The weekend announcement of a new plan for Greece, topped by the ECB decision to accept low- grade Greek debt instruments, is commonly seen as a European success. Quite to the contrary, we may have just planted the seeds of an unraveling of the monetary union. Here is a dark scenario.
Bailing out Greece
The plan will not work. Greece is supposed to reduce its deficit by 11% of GDP in three years. This would have been a tall order of requirement if the recovery was going to be strong. The drop in public spending, along with the psychological impact of the crisis, will provoke a profound recession that will deepen the deficit. This, along with the social and political impact of the crisis, will undoubtedly prevent the Greek government from delivering on its commitments. What will be done then? The IMF has the option of suspending its disbursements and forcing a default, as it did with Argentina. The EU governments, facing another loss of face (after letting the IMF into the den), may be tempted by forbearance. If they do, they will eventually to put in more money. If they don’t, the Greek government will default, precisely what the whole plan aims at avoiding.
Once the markets realise this, they will further raise the interest that they request to roll over the maturing debt or simply refuse to refinance the debt. Greece will then depend entirely on the lifeline of the IMF and the European governments. At least, this will clarify the situation: the plan is about bailing out a Eurozone government, in direct violation of Art. 125 of the European Treaty, the so- called no-bail-out clause. The matter will be for judges to decide.
What about the others?
The next headache should be contagion. There was no fundamental reason for markets to run on the Greek debt. But we know that self-fulfilling crises may happen, and that they may be contagious (Obstfeld 1986, Eichengreen et al 1996). Even if it seems unfair, other countries stand to face the same situation. Already we see markets fretting about Portugal and Spain. What has been offered to Greece cannot be refused to other Eurozone governments. So, one more time, a (dwindling) group of deficit-stricken countries will have to provide money to increasingly large debtors. In fact, this process means that ultimately there is no national debt anymore, at least for the next few years. In effect, in the market eyes, there will then be just one Eurozone debt. Could markets run on all Eurozone public debts? Once again, no one would expect all Eurozone governments to be forced to default but markets can and do panic and self-fulfilling crises can occur wherever there is vulnerability. Just imagine that, one by one, each Eurozone country falls in the same trap as Greece. Eventually, Germany could be last one. Could it underwrite all the other public debts, on top of its already own respectable one? Current estimates set the overall Eurozone public debt level at 90% of GDP in 2012. This is reassuringly lower than Greece’s 135%, but it is about the same as Portugal’s and it represents 330% of the German GDP.
An alternative to spreading mutual underwriting is debt monetisation. The Greek debt is about one sixth of the ECB monetary base, already bloated after one year of credit easing. Absorbing part of this debt is doable. In fact, it is being done. The ECB has already on its book a lot of Greek debt as collateral for its lending operations. Having just accepted to continue accumulating more, even though its previous rule would have forbidden doing so after the latest rating downgrades, it would be surprising that much of the debt, now sub-investment grade, does not end up on the book of the ECB.
101 Now assume that the Greek government defaults. The ECB does not buy assets outright, so the loss would be borne by the banks that used the Greek bonds as collateral for repo operations with the ECB. But banks are the ECB’s counterparties; if they default, the loss is the ECB’s. This can be called indirect monetisation of the debt. If the debt crisis stops here, this is manageable. Add Portugal, Spain and others, and you have the seeds of very, very high inflation.
This scenario may never happen, but then it may. Was there no other way? It would have been very easy to let Greece go straight to the IMF months ago and reschedule its debt with IMF’s assistance. This would have been a partial default, and the haircut could have been quite small. Most banks that are exposed to the Greek debt should have been able to withstand such losses. With a grace period of, say, three years, Greece would have had the breathing space that the latest plan tries so hard to organise, but much simpler and much, much less dangerous. Well, it’s not too late.
References
Obstfeld, Maurice, “Rational and Self-Fulfilling Balance of Payments Crises”, American Economic Review 76(1), March 1986, p. 72-81.
Eichengreen, Barry, Andrew Rose and Charles Wyplosz, "Contagious Currency Crises: First Tests", Scandinavian Journal of Economics 98(4), December 1996, p. 463-84. http://www.voxeu.org/index.php?q=node/4987
102 Opinion
May 5, 2010 EDITORIAL The Hard Work on Financial Reform The procedural vote in the Senate last week on financial reform did more than end a Republican filibuster. It set up the real test of the Democrats’ resolve to enact the kind of change that the nation’s financial system so badly needs. Achieving that requires passing amendments to strengthen the bill’s weak areas and defeating efforts to weaken its strong parts. Senate leaders may try to bridge partisan divides by hampering or blocking amendments on divisive issues. That would enable reluctant reformers from both parties to avoid politically difficult votes and appease the banking lobby, but it would not serve the public interest. By the time this bill passes, the public needs to know who stands where on the most important reform issues, starting with these two: TOO BIG TO FAIL Senators said Tuesday that they had reached an agreement on how to pay for seizing and dismantling big banks whose imminent failure could destabilize the system, but that doesn’t confront the more difficult issue of how to cut big banks down to a less threatening size. The Senate bill calls on regulators to impose higher capital requirements on riskier institutions. The aim is to make size and complexity so expensive that banks opt to restrict their size, but the new rules are unlikely to be enough. The Senate bill also imposes needless delays on the enactment of the so-called Volcker rule, which would bar banks from making risky market trades for their own accounts and from owning hedge funds and private equity funds. Senators Carl Levin of Michigan and Jeff Merkley of Oregon, both Democrats, have an amendment to enact the Volcker rule without undue delays or tinkering. Even that may not be enough. Democrats Sherrod Brown of Ohio and Ted Kaufman of Delaware propose size caps on banks that include limiting nondeposit liabilities to no more than 2 percent of gross domestic product. That would provide a necessary backstop against bailouts and decrease the political power of banks. DERIVATIVES The central reform of the multitrillion-dollar derivatives market would move most derivative trades, currently executed as private contracts, onto fully regulated exchanges. Banks have fought the change because it would impair their profits — and they have succeeded in carving out many exemptions. More proposed exemptions are expected, like for pension funds that use derivatives. The Senate needs to pare back the exemptions in the existing bill, not add more. The Senate also should adopt an amendment by Maria Cantwell, a Democrat of Washington, that would make it easier for regulators to crack down on market manipulation in derivatives. One of the most divisive issues in the Senate bill is a provision that could force big banks to spin off their lucrative derivative dealings. The provision was added to the bill late in the game, without hearings. Opponents fear that it would push derivatives deals into hedge funds or other entities that would be harder to regulate. Supporters say that the bill would adequately regulate derivative dealers wherever they are.
103 The Senate debate, and hearings that can be scheduled before the House and Senate produce final legislation, can help settle the issue. One thing is already sure: Unless senators close loopholes in derivatives rules and give regulators more powers to police the markets, they should not even think about removing the provision. There are other big fights in store — on consumer and investor protection, regulation of hedge funds, support for regulatory agencies and reform of credit rating agencies. Each of them will test how serious the Senate, particularly the Democrats, are about this reform effort. http://www.nytimes.com/2010/05/05/opinion/05wed1.html?ref=opinion
104
ft.com/alphaville All times are London time Merkel’s calls for ‘orderly insolvencies’ threaten more disorder Posted by Stacy-Marie Ishmael on May 04 18:54. There’s nothing quite like a crisis to expose the underlying cracks and fissures in both political systems and regulatory frameworks. According to Bloomberg reports, Germany’s coalition government, fronted by chancellor Angela Merkel, has ’stepped up calls for allowing the “orderly” default of euro-region member states burdened with debt to avoid a repeat of the Greek fiscal crisis’: Merkel, who faces elections in Germany’s most populous state on May 9, is seeking to shift focus from the Greek bailout to drawing lessons from the euro’s biggest crisis. An “orderly insolvency” process would ensure that creditors participate in any future rescue, she said on ARD television yesterday. … “We quite urgently need something for the members of European Monetary Union that we also didn’t have during the banking crisis two years ago,” German Finance Minister Wolfgang Schaeuble told reporters yesterday. “Namely the possibility of a restructuring procedure in the event of looming insolvency that helps prevent systemic contagion risks.” Of course, as UniCredit’s Marco Annunziata pointed out in a note published on Tuesday afternoon, while the idea may be excellent, the timing of the suggestion is awful. Emphasis FT Alphaville’s: Sentiment in European markets remains extremely nervous and fragile, with contagion reverberating westward to Spain and Portugal and eastward to emerging European markets—the latter clearly signaling a resurgence in fears of a systemic crisis. German proposals for an orderly sovereign insolvency framework are dangerously ill-timed, sending the signal that further crises are likely and fueling fears that a Greek debt restructuring may be back on the agenda as soon as it can be managed in an orderly way-this is hardly the way to bolster confidence in the Greek adjustment program, and clashes with claims that Greece is “unique”. Efforts to strengthen fiscal discipline mechanisms should instead be accelerated, while the idea of a European agency to rate sovereign debt is not the best way to boost credibility in the Eurozone’s commitment to fiscal discipline. Unfortunately, the overall sense remains one of a rather confused and disjointed reaction by EU policymakers to the complex and serious challenges raised by the Greek crisis—EU authorities will need to do a much better job at showing cohesion and giving a clear sense of direction. … This is an excellent idea communicated at the worst possible time in the worst possible way. Just as the EU and IMF are trying to persuade markets that a Greek debt restructuring is definitely off the table, Merkel and Schauble are implicitly
105 confirming that they would have preferred to let Greece restructure if only there had been a “Chapter 11”-style framework in place to keep the process orderly. This may well fuel investors’ fears that a debt restructuring will be back on the agenda as soon as EU policymakers feel it can be managed in an orderly way. As for contagion, EU policymakers should be aware that a debt restructuring by a member state will inevitably lead investors to reprice risk on other fiscally weak members, even if the restructuring is done orderly, so some degree of contagion should be expected, but disruptive panic could be averted. … Unfortunately, the overall sense remains one of a rather confused and disjointed reaction by EU policymakers to the complex and serious challenges raised by the Greek crisis. Indeed. http://ftalphaville.ft.com/blog/2010/05/04/219066/merkels-calls-for-orderly-insolvencies- threaten-more-disorder/
106
04.05.2010 The numbers still do not add up By Wolfgang Münchau The aim of the rescue package agreed for Greece cannot conceivably have been to prevent a default. For all the daunting austerity and structural reform it requires, the numbers do not add up. The main purpose I can detect is to reverse the rise in Greek bond yields and stop contagion. We should not knock this deal from Athens. The eurozone might not have survived otherwise. This column would have been an obituary. I am also glad to note that those in charge gave a positive answer to a question I posed last week, which was whether the authorities would ever get ahead of the situation. They did, and they deserve credit. But in spite of the readiness to accept extreme austerity, Greece will not get by without some form of debt forgiveness. I can understand why the International Monetary Fund and the European Union did not want to open that can of worms at this point. It would have prolonged the negotiations. In the middle of an acute bond market crisis one has to manage expectations very carefully. A debt restructuring will eventually be necessary, however, because Greece’s debt to gross domestic product ratio is going to rise from its current 125 per cent to about 140-150 per cent during the adjustment period. Without restructuring, Greece will end up austere, compliant, and crippled. The decision to take Greece out of the capital markets for three years will prevent immediate ruin but has only a marginal impact on the country’s future solvency. The underlying assumption of the agreement is that Greece can sustain austerity beyond the time horizon of the accord, without falling into a black hole. The latter is particularly optimistic. Standard & Poor’s, the rating agency, last week estimated that Greece would not return to its 2009 level of nominal GDP until 2017. Last week gave us an inkling of the vicious circles at play in such a crisis. First, a country’s financial situation deteriorates. Then a rating agency downgrades the debt, which in turns triggers a rise in market interest rates. That leads to a further financial deterioration. Another such loop goes via the banking sector. If a government’s solvency is in doubt, so is the solvency of the banks, whose liabilities are guaranteed by the government. Last week, the banking sector in large parts of southern Europe was in effect cut off from the capital markets. Angela Merkel and her inexperienced economic advisers have no idea about the dynamics of sovereign crises. They never bothered to look at the experience of other countries, notably Argentina. Waiting until the moment a country is about to fail – which is how the German chancellor interpreted the political agreement she accepted in February – constitutes an abrogation of leadership that is bound to end in financial ruin. It means that everybody, Germany especially, has to pay billions of euros more than would have been the case if the EU had sealed this in February.
107 On my estimate, the total size of a liquidity backstop for Greece, Portugal, Spain, Ireland and possibly Italy could add up to somewhere between €500bn ($665bn, £435bn) and €1,000bn. All those countries are facing increases in interest rates at a time when they are either in recession or just limping out of one. The private sector in some of those countries is simply not viable at those higher rates. As I have argued before, three things are required if the eurozone is to survive in the medium term: a crisis resolution system, better fiscal policy co-ordination, and policies to reduce intra- eurozone imbalances. But this is only the minimum necessary to get through the next few years. Beyond that, the eurozone will almost certainly need both an embryonic fiscal union and a single European bond. I used to think that such constructions would be desirable, albeit politically unrealistic. Now I believe they are without alternative, as the experiment of a monetary union without political union has failed. The EU is thus about to confront a historic choice between integration and disintegration. Germany can be relied on to resist every one of those measures. In the meantime, European leaders will treat each new crisis with the only instrument they have available: an injection of borrowed liquidity. But this instrument has a finite lifespan. If it is not blocked by popular unrest, it will be blocked by constitutional lawyers. On one level, I agree with those lawyers. There can really be no doubt about what the “no bail- out” rule was intended to mean. It meant that Greece should not be supported. The EU had to resort to some unseemly legal trickery to argue that advancing junior loans at a massive scale to an effectively insolvent country does not constitute a bail-out. The clause – Article 125 of the Lisbon treaty – is irresponsible. If you follow it, you end up breaking the eurozone. So far, the choice has been to break the clause instead, and now would be the right moment to change it. So what is the endgame of the eurozone’s multiple crises? For Greece it will be debt restructuring, a polite term for negotiated default. The broader outcome is more difficult to predict: it will either be deep reform of the system or a break-up. © The Financial Times Limited http://www.eurointelligence.com/index.php?id=581&no_cache=1&tx_ttnews[tt_news]=2781 &tx_ttnews[backPid]=581&cHash=b935ad1315# The conditions forced guardianship
Hidden items for insurance, employment and tax Tight schedule in 2012 Three-year thunderstorm measures overturn everything in labor relations, the social insurance system, pay public servants and pensioners, including the Memorandum of Understanding, known as the Agreement on Greece's support from the IMF and the Eurozone. Among other things, cutting down on unemployment, removal of 13 and 14 pensions for those pensioners aged under 60, regardless of the amount of pension received, raising the ceiling and reduce redundancy compensation, three-year wage freeze, reduced pension and transfer Hundreds of products (incl. food) by low rates of VAT to be higher. It also provides special levy on businesses rather than one, but three years. The memorandum is a roadmap for the exit of the Greek economy, driven by the "troika" and the faithful implementation by the Greek government is a prerequisite for the disbursement of financial aid. Responsible, detail the whole economic policy to be followed this year by the end of 2012, defines the measures to be taken each quarter and fiscal targets to be achieved. The release of 110 billion euro support package from the IMF and the euro area will depend both on the respect of schedules and the achievement of objectives. Overall, this year and by 2014, Greece should make budgetary adjustment; mammoth as is the target of halving the deficit by 30 billion. Among these measures, and overall financial benefit of 10 billion will be two years from 2013 to 2014, not yet determined. Late yesterday, it became known that the Board International Monetary Fund will meet Sunday, May 9 to approve the agreement with Greece. http://translate.google.com/translate?js=y&prev=_t&hl=en&ie=UTF-8&layout=1&eotf=1&u=www.kathimerini.gr&sl=el&tl=en
108
La primera crisis del euro Entre el rumor y la realidad L. D. - Madrid - 05/05/2010 El día que cerró con la segunda mayor caída bursátil del año y que devuelve al Ibex a su nivel de julio del año pasado comenzó con un chorro de agua fría procedente de la prensa extranjera. Los inversores se habían desayunado con las reseñas del Financial Times, del New York Times y del Wall Street Journal en las que se sugería que España podía ser la próxima pieza del dominó europeo que necesitara un rescate, y donde se criticaba la incapacidad del Gobierno para impulsar las reformas que el país necesita con urgencia. A unos mercados hipersensibles ante cualquier revés fueron llegando un sinfín de rumores. Se esparció la idea de que Fitch estaba a punto de rebajar la calidad crediticia española. Una posibilidad aún más dañina después de que Standard & Poor's hiciera lo mismo la semana pasada, precisamente después de un rumor que, esa vez sí, resultó acertado. Fitch lo desmintió poco más tarde y ratificó que mantiene para España pro ahora la calificación en AAA con perspectiva estable, la máxima nota posible. Por si fuera poco, en el mercado empezó a circular el falso rumor de que España había decidido pedir ayuda al Fondo Monetario Internacional (FMI) por un importe que unas versiones situaban en 200.000 millones y otras en 280.000 millones. El bulo corrió por foros de internet y diarios digitales desde la primera hora de negociación. Hacia medidodía, un teletipo de la agencia France Presse citaba a un broker que se hacía eco del rumor, aunque el mercado no pareció darle excesiva credibilidad en ningún momento. En todo caso, el runrún del rescate español tuvo que ser desmentido horas más tarde por el presidente del Gobierno, que lo calificó de "absoluta locura" y por el propio FMI. "No hay nada de verdad en los rumores sobre España", dijo una portavoz del Fondo. Pero ya era tarde. El parqué de Madrid siguió cayendo hasta cerrar en 9.859 puntos Durante toda la jornada gravitó una duda. ¿Es capaz un simple rumor de provocar el desplome de los mercados? En teoría podría hacerlo, pero en esta ocasión ha sido tan sólo un elemento más que ha añadido gasolina al fuego de los mercados, desconfiados ante las posibilidades de los países periféricos de Europa de hacer frente a la crisis fiscal que sufren. Daniel Pingarrón, analista de IG Markets, enumera una serie de factores que contribuyeron a que el día de ayer fuera de bajadas generalizadas: las medidas chinas para enfriar la economía que castigaban a las materias primas; las especulaciones acerca de que el tamaño de la mancha de crudo en el Golfo de México podría ser mayor de lo previsto; el reavivamiento del volcán islandés que perjudica a las aerolíneas y las declaraciones de Moody's, según las cuales el paquete de ayudas a Grecia no supondrían el fin de la crisis. En España, a los problemas europeos generales se unen las dudas sobre la capacidad de sacar adelante las reformas necesarias. "El resto del mundo nos mira y ve que ni se reforma el mercado laboral ni el sector financiero. No es que ayer hubiera noticias negativas, es que faltan las noticias positivas", resume un inversor. http://www.elpais.com/articulo/economia/rumor/realidad/elpepieco/20100505elpepieco_2/Tes/
109 La primera crisis del euro Zapatero intenta aplacar el castigo de los mercados por sus dudas sobre España El presidente tilda de "absoluta locura" el rumor sobre una petición española de rescate al FMI El Ibex cayó el 5,4% y la prima de riesgo española se acercó a máximos
El presidente sugiere que la economía creció en el primer trimestre M. GONZÁLEZ / L. DONCEL - Bruselas / Madrid - 05/05/2010 En pleno desplome de las Bolsas europeas, y en particular de la española, cuyo Ibex 35 retrocedió el 5,4%, Zapatero intentó ayer asumir el papel de cortafuegos para atajar el riesgo de contagio de la crisis griega y contrarrestar los rumores que ponen en la picota la solidez de las cuentas españolas. En pleno desplome de las Bolsas europeas, y en particular de la española, cuyo Ibex 35 retrocedió el 5,4%, Zapatero intentó ayer asumir el papel de cortafuegos para atajar el riesgo de contagio de la crisis griega y contrarrestar los rumores que ponen en la picota la solidez de las cuentas españolas. "No doy crédito, es una absoluta locura, un despropósito monumental", repitió visiblemente enojado ante la prensa internacional, cuando se le preguntó por el rumor de que se preparaba un plan de rescate para España por valor de 280.000 millones de euros. La rueda de prensa con la que concluyó su visita a Bruselas se convirtió así en un ejercicio de relaciones públicas para transmitir tranquilidad a los mercados y poner coto a los ataques especulativos. Zapatero pidió a los inversores que se basen en "hechos y datos reales" y no en "proyecciones o pronósticos" basados en "información insuficiente". Recordó que la deuda pública española está 20 puntos por debajo de la media de la UE y que el pago de intereses no llega al 2% del PIB, al contrario que en Francia o Alemania; esgrimió el incremento de la recaudación y el buen dato del empleo en abril -el número de parados se redujo en 24.000-, al que seguirán otros similares en los próximos meses. La Bolsa de Madrid, que ya había empezado el día a la baja, se mantuvo impertérrita ante el discurso de Zapatero y siguió cayendo, al igual que las plazas más importantes del resto del mundo. El Ibex dejaba lejos los 10.000 puntos en los que llevaba instalado 10 meses. Los bancos fueron los que se llevaron la peor parte: BBVA, Santander y Popular perdieron más del 7%. Y es que la combinación "país periférico + sector financiero" es letal en estos días. Todos los parqués europeos sufrieron fuertes pérdidas, pero la española fue, tras la griega (- 7,35%), la más castigada. Pero las Bolsas no fueron las únicas damnificadas. El mercado de bonos también se llevó lo suyo. La prima de riesgo de la deuda española a 10 años frente a la alemana subió en 20 puntos básicos, hasta 116 puntos, cerca de su máximo. El repunte se debe en parte a que la rentabilidad exigida al bono español subió del 4,02% al 4,1% y en parte porque el dinero buscó refugio en Alemania y rebajó la rentabilidad de su bono hasta el 2,94%. El castigo aún fue mayor en los bonos a dos años, donde la rentabilidad exigida al español (2,16%) ya triplica la del alemán (0,71%). Eso sí, la del bono portugués a dos años (4,48%) duplica la española porque, como ya es habitual en días convulsos, los países más débiles son los que reciben el castigo más duro. La prima de riesgo portuguesa a 10 años subió 45 puntos básicos y la irlandesa, 30.
110 En su intervención, Zapatero también sugirió que la economía española ha crecido en el primer trimestre de este año por primera vez desde 2008, lo que podrá comprobarse en pocos días cuando se haga oficial. Este pronóstico choca con los de institutos de opinión como Flores de Lemus o Analistas Financieros, que anticipan una ligera caída. "Lo importante es que los datos económicos vayan avalando la recuperación y el crecimiento", subrayó Zapatero. "No podemos estar todo el día haciendo caso a las especulaciones". A pesar de ello, tuvo que reconocer que rumores "absolutamente infundados", como el supuesto plan de rescate o la rebaja en la calificación de la deuda española por parte de la agencia Fitch, desmentida de momento por esta, tienen efectos inmediatos sobre los mercados, perjudican los intereses de España e incrementan el diferencial del bono español con respecto al alemán, lo que consideró un "un hecho muy grave, sencillamente intolerable", que el Gobierno se propone "combatir". Tras recordar que desde hace dos años se cuestiona al sistema financiero español por el efecto de la burbuja inmobiliaria, subrayó que es "uno de los que mejor ha resistido" la crisis; y se quejó de que vuelvan a escucharse opiniones "desproporcionadas" sobre su solidez. Zapatero se fajó en defensa de la "fortaleza y solvencia de las cuentas públicas y de la capacidad de recuperación" de la economía española. "Y es la misma confianza que tengo en Portugal", agregó, echando un capote al país vecino, situado como España en primera línea de fuego de los ataques. Zapatero compareció en solitario en la sede del Consejo Europeo, ya que el presidente permanente, el belga Herman Van Rompuy, con quien se reunió previamente, prefirió no hacerlo. Actuó como defensor no sólo de la economía española sino de toda la zona euro. Cualquier especulación sobre la solidez de esta área resulta a su juicio "irresponsable". Y elogió la "valentía" de Grecia, de la que, según dijo, con el plan de rescate de la UE y el Fondo Monetario Internacional (FMI) "ya tiene lo que necesita, para que aquellos que tienen compromisos con ella puedan estar tranquilos". El próximo viernes se reunirán en Bruselas los líderes de los 16 países del Eurogrupo para demostrar que todos "reman en la misma dirección: la de la reducción de los déficits públicos, el crecimiento económico, la ganancia de competitividad y la responsabilidad compartida". Previamente, en su discurso ante un millar de alcaldes de los UE, aseguró que "sólo aquellos que piensan de manera egoísta y con escasa perspectiva de futuro tienen dudas en la fortaleza y en la ambición del proyecto europeo". Aunque no citó a nadie, todas las críticas se han dirigido durante los últimos meses hacia Alemania, la que más se ha resistido a ayudar a Grecia. El presidente recordó que todos los países han sacado ventaja de su pertenencia a la UE: algunos han recibido cuantiosos fondos europeos (como España), otros se han beneficiado de la Política Agraria Común (como Francia) y otros de la apertura de los mercados a sus productos (como Alemania). "Lo mejor que tienen los 27 países que forman parte de la Unión es Europa", concluyó. La divisa europea continuó su lento proceso de depreciación hasta rozar la barrera psicológica de 1,3 dólares, el mínimo de un año. La moneda estadounidense está en el camino opuesto. "Está fuerte contra todas las divisas, no sólo contra el euro. El dólar vive un proceso típico de salida de recesión", señala Juan Ignacio Crespo, de Thompson Reuters. Los números rojos de todas las plazas europeas contagiaron a Nueva York (?perdió un 2,02%). Una prueba más de que los problemas viajan de lado a lado del Atlántico. Crespo atribuye las turbulencias que sacuden a toda Europa a la incapacidad de los Gobiernos de aprobar una ayuda a Grecia en el momento adecuado. "El rescate que hubiera costado 15.000 millones a principios de febrero hay que cuantificarlo ahora en casi diez veces más. Y
111 sin ninguna garantía de que Grecia termine recurriendo a una quita en su deuda. El río se ha desbordado y está incontenible", señala. Juan Luis García Alejo, de Inversis Banco, asegura que la desconfianza en la que está sumida el mercado hace que sea imposible traer la calma en estos momentos. "La prueba es lo que ha pasado con Grecia", señala. "Cuando no tenía un plan de ajuste, se le castigaba; cuando lo aprobó, era demasiado pequeño; y ahora que lo endurecido, los inversores le dicen que no se lo creen". http://www.elpais.com/articulo/economia/Zapatero/intenta/aplacar/castigo/mercados/dudas/Es pana/elpepieco/20100505elpepieco_1/Tes/
La primera crisis del euro
El Tesoro afronta en julio su mayor necesidad de fondos Ese mes vencen bonos, letras y otras deudas por 24.663 millones de euros L. A. - Madrid - 05/05/2010 España afrontará en julio un examen decisivo sobre su credibilidad en los mercados. Ese mes vencen letras, bonos y otros productos de deuda por valor de 24.663 millones de euros, la mayor concentración en lo que queda de año. El Estado tendrá entonces que refinanciar las cantidades que en su momento le prestaron los inversores. España afrontará en julio un examen decisivo sobre su credibilidad en los mercados. Ese mes vencen letras, bonos y otros productos de deuda por valor de 24.663 millones de euros, la mayor concentración en lo que queda de año. El Estado tendrá entonces que refinanciar las cantidades que en su momento le prestaron los inversores. El Gobierno está convencido de poder cumplir ese trámite sin problemas, al igual que ocurrió en enero, cuando el vencimiento de la deuda era aún mayor. Pero entonces los mercados no azotaban con tanta fuerza. El Estado sigue necesitando mucho dinero para hacer frente a sus compromisos. Los vencimientos, por tanto, coincidirán más o menos en el tiempo con nuevas emisiones de deuda por cuantías similares. Así ha ocurrido en los cuatro primeros meses del año, con amortizaciones de deuda por valor de 61.177 millones de euros y emisiones de 73.101. El Ministerio de Economía desarrollará las nuevas subastas según el calendario previsto. El secretario de Estado de Economía, José Manuel Campa, rechazaba recientemente con un rotundo "en absoluto" la posibilidad de que España tenga problemas para hacer frente a esos vencimientos, en declaraciones a la agencia Bloomberg. Todos los meses habrá subastas de bonos y obligaciones (en el caso de julio, en la primera quincena). El producto donde se con-centran los mayores vencimientos ese mes es el bono (a tres y cinco años), con un importe de 16.164 millones de euros. Le siguen las letras, un producto que se coloca a 3, 6, 12 y 18 meses y cuyo importe de vencimiento en julio son 7.643 millones. Más allá de la seguridad de encontrar inversores para colocar la deuda -buena parte de ellos serán los titulares de productos que vencen, que previsiblemente adquirirán otros nuevos-, la duda reside en cuánto tendrá que pagar el Estado en intereses. Hasta ahora, las subastas han transcurrido con mayor demanda que oferta y a intereses históricamente bajos, aunque la desconfianza de los mercados ya ha empezado a pasar factura. A finales de abril se subastaron letras a tres y seis meses con intereses del 0,55% y del 0,76% respectivamente, superiores a los de marzo pero muy inferiores a los de principios de 2009, que rebasaban el 1%. http://www.elpais.com/articulo/economia/Tesoro/afronta/julio/mayor/necesidad/fondos/elpepieco/201 00505elpepieco_3/Tes
112 EDITORIAL Pacto o insolvencia El castigo de los mercados recuerda la urgencia de un acuerdo entre Gobierno y PP sobre cajas y gasto 05/05/2010 La reunión que hoy mantendrán el presidente del Gobierno, José Luis Rodríguez Zapatero, con el presidente del PP, Mariano Rajoy, cobra una importancia crucial a la vista de la complicada situación de las constantes financieras de la economía española. Ayer, como una prueba más de que los inversores no creen en la capacidad de España para recortar el déficit público, el Ibex 35 se hundió estrepitosamente (-5,4%) y el diferencial de la deuda española con el bono alemán superó los 110 puntos básicos. El desplome de los valores empresariales españoles parece no tener fin; el Gobierno está paralizado u ofrece soluciones simbólicas (como el recorte de altos cargos); y, como consecuencia de la torpeza en la gestión de la crisis, los mercados no confían en la solvencia de las finanzas españolas. En estas circunstancias dramáticas, el Gobierno y el primer partido de la oposición volvieron ayer a su política favorita: intercambiar reproches pueriles y retórica vacía. Aseguró Rajoy que hoy le dirá al presidente que "se ha acabado el tiempo de perder el tiempo", como si ese tiempo no se hubiera cumplido ya muchos meses atrás y el PP no tuviera responsabilidad alguna por la demora en varias reformas. Zapatero anunció impávido que "pedirá hoy un compromiso" del PP para acelerar las fusiones de las cajas de ahorros (y para respaldar el rescate a Grecia), como si todavía estuviésemos en el inicio de la crisis y no hubiese perdido un tiempo precioso en decidir la reforma financiera. Pues bien, es imperativo que el Gobierno y el PP lleguen a un acuerdo inmediato sobre un plan de ajuste del gasto que detalle ya de una vez, partida por partida, cómo se va a recortar y en qué condiciones macroeconómicas está fundado el plan de reducción del déficit. A la vista está que el anunciado compromiso de las comunidades autónomas para ahorrar 10.000 millones de euros hasta 2013 se ha quedado en una declaración de intenciones; y que las proyecciones de crecimiento económico que hace el Gobierno son excesivamente optimistas y, por tanto, la predicción de ingreso y de gasto social es insostenible. Es igualmente obligado que Zapatero y Rajoy acuerden la reforma de las cajas de ahorros. Ese pacto tiene que implicar que el PP aceptará las fusiones, inter o intracomunitarias, y las recapitalizaciones forzosas que el Banco de España considere necesarias. La resistencia política de las autonomías está dañando gravemente la solvencia del sistema financiero; y en ese daño las comunidades del PP tienen gran culpa. Un acuerdo en ambas decisiones, de forma que se puedan desarrollar de inmediato, sería el mínimo exigible, dada la pérdida de credibilidad de las finanzas públicas y privadas. Ya no es tiempo de retrasos con la coartada de pactos y declaraciones genéricas. Hay que tomar decisiones drásticas antes de que la deuda española se deslice al nivel de la quiebra griega. No basta con decir que España no es Grecia; Zapatero y Rajoy tienen que demostrarlo. http://www.elpais.com/articulo/opinion/Pacto/insolvencia/elpepipri/20100505elpepiopi_1/Tes /
113
05 - 05 - 2010 04 - 05 - 2010
30 - 04 - 2010
04 - 05 - 2010
EDICIÓN IMPRESA - 05 - 05 – 2010
114 - NADA ES GRATIS - http://www.fedeablogs.net/economia - Tarde, mal y nunca: España, una oportunidad perdida by Tano Santos on 05/05/2010 La rebaja de calificación de la deuda española anunciada la pasada semana por S&P era perfectamente predecible y entendible, mal que le pese a nuestro gobierno. S&P simplemente razona su rebaja con argumentos que muchos otros, incluido el Banco de España, también han utilizado: Que nuestro país no va acrecer con la fuerza necesaria a corto plazo para generar el empleo y los ingresos que se traduzcan a su vez en una mejora de la situación fiscal. Lo que preocupa sobremanera es el desajuste entre la realidad de la situación económica española y la visión que de la misma tiene nuestro gobierno, o más precisamente nuestro presidente, y en cierta forma la rebaja de S&P es un reflejo de que la situación económica española, pudiendo empeorar mucho más, no tiene visos de mejora como consecuencia de la pasividad y empecinamiento de nuestro gobierno. Sus miembros repiten de una forma cansina que nuestros niveles de endeudamiento en porcentaje del PIB son bajos comparados no ya con el resto de los PIIGS, sino también con Francia y Alemania, lo que demuestra de una forma palpable la falta de comprensión que tienen del problema: El problema de España no está en el numerador, la deuda, sino en el denominador, el PIB, punto al que vuelvo más abajo. Nuestro problema es uno de crecimiento y de que el mercado se pregunta de dónde va a venir éste. El retraso inaceptable en lo que se refiere a la adopción de medidas se ha traducido en unas expectativas muy negativas en lo concierne a la capacidad de nuestro ejecutivo de hacer frente a crisis tan tremenda. La sección de negocios de ayer martes 3 de mayo del New York Times abría con una noticia sobre la este retraso (“Spain seen as moving slowly on financial reform”), lo que no hace sino enfatizar que la atención de la comunidad inversora internacional está centrada en nuestro país, nos guste o no, y además parece acertar en el diagnostico: Después de dos años de crisis se siguen sin tomar medidas serias y de calado (y se toman demasiadas de pantomima, como la del pasado viernes.) El mercado, enloquecido o no, con justicia o sin ella, está ahora obsesionado con la viabilidad fiscal de determinados países y cualquier medida que ahora se tome será examinada con lupa. Ahora nos toca bailar al ritmo que imponga el mercado cuando tuvimos la oportunidad en su momento de marcar la música a nuestro gusto; no más. Esa oportunidad ya ha pasado y ahora toca “bailar” al ritmo de este mercado nervioso y preocupado. La mezcla de un mercado volátil y un gobierno desorientado y con tan desastrosa política de comunicación se me antoja explosiva y desgraciadamente los sobresaltos, como los vividos ayer, van a continuar. Quiero enfatizar que en mi opinión hay tiempo y margen para una política económica exitosa (el “no es tan difícil” de Luis del otro día) pero es preciso ponerla en marcha ya. Pero la oportunidad de utilizar la notable capacidad de endeudamiento con la que España entró en esta crisis para financiar un proceso profundo de reformas y fijar las expectativas del mercado alrededor de un futuro económico difícil pero prometedor mucho me temo que no existen ya. La dinámica es muy negativa y ahora las reformas van a tener que realizarse en unas condiciones donde el mercado puede retirar su confianza de forma caprichosa en cualquier momento. El mercado es maestro severo y el paquete aprobado este fin de semana para los griegos no es sino la muestra del miedo que le tienen los gobiernos a la posible crisis fiscal que se avecina. Esperemos que funciones porque si no, … Pero vayamos por partes (los gráficos que siguen,
115 salvo que se indique lo contrario son en billones de euros nominales y me refiero a billones “americanos” esto es un billón son 1,000 millones y no un millón de millones.) Las necesidades de financiación de los PIIGS: Una visión rápida Desgraciadamente el riesgo soberano es la última estación en esta crisis tremenda y es con diferencia la más peligrosa. El motivo es que las crisis graves de deuda sobernas que hemos vivido, pongamos en el último cuarto de siglo, son todas de países en vías de desarrollo, mientras que la crisis presente está más centrada en países desarrollados como los PIIGS (y no es descartable que en su momento “salte” al Reino Unido.) Los niveles de duda son enormes y por tanto, y como comento más abajo, el rescate mediante organismos internacionales no es factible, al menos con los niveles actuales de capitalización de instituciones como el FMI. Para tener una idea de las magnitudes de las que estamos hablando reproduzco abajo una tabla de un informe reciente de Bank of America-Merrill Lynch que muestra las necesidades de financiación de los PIIGS durante los próximos tres años. Como puede verse estas ascienden a casi 2 trillones de euros (trillones americanos, billones españoles.) De esos España requiere 546,220 millones de euros. Sólo este año nuestro país necesita de casi 180,000 millones de euros. Estos cálculos están basados, por cierto, en los datos oficiales facilitados por los distintos ministerios (con la excepción de Italia) y toman como punto de partida las proyecciones de los mismos en lo que a crecimiento de la economía y necesidades de financiación se refiere, lo que probablemente tiene un sesgo al alza en lo anterior y a la baja en esto último.
Gráfico 1: Necesidades de financiación de los PIIGS estimadas, 2010 – 2013, tanto para refinanciaciones como financiación de déficits en billones de euros; anual. Fuente: Bank of America – Merrill Lynch Para tener una idea de la magnitud de las cifras en la tabla y como el énfasis se hace en las necesidades de financiación durante los próximos tres años (2011, 2012, and 2013), el gráfico
116 2 muestra la suma total del incremento adicional de deuda durante un periodo de tres años como porcentaje de la deuda inicial de partida. Así por ejemplo el dato del año 2005 muestra la cantidad de deuda emitida durante los años 2005, 06 y 07 como porcentaje de la deuda inicial en 2005 (que tomo es la deuda al final de 2004). Nótese que a partir de 2007 la cantidad de deuda emitida durante los siguientes tres años dobla el porcentaje en la primera mitad de la muestra. Los PIIGS por tanto esta añadiendo cantidades importantísimas de deuda dado los niveles de deuda existente y que dobla la media en la primera mitad de esta década y esto lo hacemos en un ambiente donde, justificadas o no, hay serias dudas sobre la disciplina fiscal de este grupo de países.
Gráfico 2: Deuda adicional emitida acumulada durante tres años, como porcentaje de la deuda inicial, para los PIIGS; anual. Fuente: Eurostat y Bank of America – Merrill Lynch Es significativo que los bancos “categoricen” a nuestro país en este grupo de una forma ya decidida. Desde un punto de vista meramente de la psicología de las finanzas esto es muy negativo para España e implica severas restricciones en lo que se refiere a la por otro lado desastrosa política de información del gobierno. Quien esto escribe recibe todos los días los correspondientes correos matutinos de los bancos de inversión, uno de ellos titulado “European periphery,” y que no recibía el año pasado dicho sea de paso, donde se comentan las novedades de los PIIGS y sólo de los PIIGS. España está así clasificada y no estaría de más que el gobierno se esforzara en distinguir a nuestro país de este grupo con hechos tangibles y no sólo con palabras. En el caso español, huelga decirlo, esta crisis ha supuesto un notable incremento del endeudamiento que se ha unido al monto de las refinanciaciones para resultar en las emisiones más abultadas en términos nominales del las últimas dos décadas. El gráfico 3, los datos hasta el 2010 son del Tesoro Público, muestra el nivel nominal de variación de la deuda durante los últimos veintidós años (las barras azules). Las barras rojas muestran las emisiones totales proyectadas para los próximos cuatro años (incluye 2010), que suman dos partidas: las
117 emisiones como consecuencia de déficit y las emisiones como consecuencia de vencimientos a refinanciar. Los números son en billones de euros nominales. La crisis ha resultado en unas emisiones sin precedentes en la historia fiscal española y por tanto constituyen una ruptura total con la consolidación fiscal de estos últimos años. El problema que los mercados descuentan es la factibilidad de regresar a una senda más estable de endeudamiento que se base en el crecimiento económico, no solo en el ajuste fiscal brutal y profundamente recesivo.
Gráfico 3: Variación adicional de la deuda nominal española en billones de euros (barras azules) y emisiones totales (financiación de déficits más refinanciaciones para los años 2010 a 2013; barras rojas); anual. Fuente: Tesoro Público y Bank of America – Merrill Lynch El gráfico 4 ofrece una visión histórica de las cantidades emitidas (en billones de euros nominales) para la financiación de los déficits de los PIIGS desde 1988 (esto es, se excluyen del grafico las refinanciaciones), con las proyecciones a partir de la línea discontinua roja hasta 2013 (los datos de la series históricas se pueden extraer del FMI.) Es cierto que otros países están en un fuerte proceso de endeudamiento pero también que entre estos países están (a) los mayores en términos de déficit y (b) los que tienen economías menos flexibles y con fuertes problemas de competitividad.
118
Gráfico 4: Necesidades de financiación neta para los PIIGS (un número negativo significa necesidades de financiación.) Fuente: FMI Crecimiento nominal y ajuste fiscal: Un comentario sobre España El problema de España es uno de falta de crecimiento. Recuérdese lo que se repite hasta la saciedad, que nuestro país tiene un problema de competitividad y que para recuperarla se necesita incrementar la productividad y crecer de una forma más sana de lo que lo hemos hecho recientemente. Puede que nuestro país vuelva a crecer incorporando a gente al mercado de trabajo que es como hemos crecido durante los últimos años, mediante la disminución del desempleo y la continuación de la incorporación de la mujer al mercado de trabajo, pero esto es poco probable dada nuestras instituciones económicas. Pero es más lo que se requiere para una senda fiscal estable es un fuerte crecimiento del PIB nominal que permita generar tasas que hagan factible el pago de los intereses y que impliquen dinámicas no explosivas de la deuda. Este era fundamentalmente el problema griego: No es que los griegos no pudiesen financiarse en el mercado (esto es para un economista algo difícil de entender pues siempre hay un precio, un tipo de interés, al que una contrapartida está dispuesta a aceptar la deuda) sino que los tipos a los que podían financiarse no eran consistentes con el crecimiento del PIB nominal esperado lo que implicaba una dinámica insostenible de la deuda; el mercado, que conserva algo de racionalidad, anticipa todo esto y se produce el colapso griego. Hay algunas similitudes en nuestro caso pero nuestra situación es efectivamente mejor en lo fiscal. En lo fundametal sin embargo no distamos tanto de los griegos: España tiene un problema de competitividad pero puede mejorar mediante (a) un incremento de la productividad a través de las reformas estructurales tan bien resumidas por Luis el otro día, (b) una deflación en los precios de los factores inamovibles, trabajo y bienes inmuebles, y que lo sea relativa a nuestros socios comerciales o (c) una combinación de estas dos. (a) requiere
119 de reformas estructurales, que el gobierno parece reacio a ejecutar, y sus efectos son a largo plazo en lo tangible e inmediatos en lo que se refiere a la fijación de expectativas. (b) está en contradicción con el crecimiento del PIB nominal que se requiere para evitar sendas explosivas de la deuda dados los tipos actuales implica un empobrecimiento del asalariado español y fuertes presiones políticas para aliviar dicho empobrecimiento (mediante la expansión del empleo público con una funcionariado bien pagado, por ejemplo.) (c) es una senda estrecha pero factible. Por cierto que la contribución de nuestro sector exportador al crecimiento de nuestra economía debe estar ya produciéndose pero la cuestión es si va a ser lo suficientemente fuerte para servir de generación significativa del empleo. El papel del BCE Hay por supuesto otra alternativa y es que el Banco Central Europeo inicie la monetización de los déficits de la eurozona mediante una política expansiva de adquisición de activos. Ello provocaría una fuerte bajada del euro, lo que ayudaría al sector exportador y disminuiría la deuda real. Hay dos problemas que vienen a la cabeza cuando se piensa en esta alternativa. El primero es que requiere un cambio fundamental en la estrategia del BCE que tiene en sus estatutos la estabilidad de los precios como único objetivo; un proceso inflacionario, pongamos del cuatro o cinco por ciento durante los próximos años, además requeriría del consentimiento alemán ante tal cambio de política, algo por ahora difícil de imaginar. Un segundo problema, no sé, ni creo que nadie lo sepa, cuán importante es, es que no está nada claro que vaya a funcionar y ello porque por un lado la capacidad instalada durante esta última década ha sido enorme y esto pone una presión a la baja en los precios. Además en lo que se refiere a España esto representaría un problema que pondría aún más presión sobre las familias pues las hipotecas tan alegremente contraídas y emitidas están denominadas en tipos variables y por tanto el proceso inflacionario rebajaría la deuda real del estado pero no la de los hogares, que estarían “pillados” por un proceso deflacionario en los salarios e inflacionario en todo lo demás (aunque, por supuesto, el “principal” real de la deuda hipotecaria bajaría como consecuencia de la inflación.) El BCE, por cierto, ha relajado las reglas sobre el colateral, para mantener la capacidad de descuento de los títulos griegos por parte de los bancos griegos y esto abre una puertecita a dicha monetización. Esto es fundamental y absolutamente necesario: Los bancos centrales nacionales siempre descontaban los títulos emitidos por los estados. El BCE sin embargo no tiene porqué descontar los bonos soberanos si su calidad crediticia es muy baja lo que implica, por diseño, que las crisis fiscales graves como la griega se convierten, casi de forma automática, en crisis bancarias pues por lo general hay una presión considerable sobre los bancos nacionales para el mantenimiento de liquidez en forma de carteras de bonos soberanos (esto es, los bancos griegos sufren la presión por parte del gobierno de comprar bonos emitidos por el estado griego.) Esto no era problema cuando los bancos podían descontar con el correspondiente banco central, con la consiguiente monetización de los deficits pero lo es ahora cuando el BCE no admite bonos soberanos como colateral si su calificación es lo suficientemente baja. Esto es un problema de diseño que imponía una disciplina fiscal férrea pues en su ausencia a la crisis fiscal se uniría la bancaria y financiera. Esto es otra de las derivadas de la crisis griega que ha mostrado con claridad los límites de la zona euro. La crisis continúa: ¿Qué hacer? El rescate griego es un estadio más en esta crisis. Si no funciona, y el que lo haga requiere una disciplina fiscal tremenda aunque hay algún precedente (como comentare en un futuro post si alguien no se adelanta) entonces el problema se convierte en uno donde la restructuración de la deuda sería inevitable. ¿Había alternativa al intento de rescate? Probablemente no: En su ausencia el mercado hubiera entendido que estamos en un nuevo régimen donde la posibilidad
120 de una restructuración de la deuda soberana era una realidad y ello hubiera llevado a un incremento de los rendimientos de los bonos portugueses, españoles, italianos e irlandeses que hubiera hecho muy difícil la refinanciación de los déficits y abierto un agujero considerable en los balances de bancos, fondos de pensiones y demás. Una vez más, y ya van varias, es cierto que España tiene una mejor situación fiscal que muchos otros países y es por ello por lo el gobierno se ha metido en un jardín innecesario con las continuas falsas medidas como la ridícula y perjudicial del pasado viernes. Porque efectivamente las medidas así tomadas perjudican pues transmiten mucho de la inoperancia de nuestro ejecutivo y de que al parecer prefiere las medidas de imagen a la política económica seria. En este sentido sería conveniente tomar los siguientes pasos: 1. Dada la psicología de los mercados, creo sinceramente que sería conveniente que una nueva política económica venga lanzada a su vez por un nuevo equipo económico que ofrezca un renovado liderazgo. Creo que las personas adecuadas deberían cumplir con tres requisitos. Primero, ser personas con experiencia en el mundo de las finanzas internacionales, en particular gente que sepa como comunicar con soltura en Ingles. Segundo, personas con sólidos fundamentos en economía reconocidos fuera de España. Tercero, personas que ya estén vinculadas a la política económica en España para no perder tiempo con la transición. La política de comunicación se concentraría en el nuevo titular de la cartera y se evitaría el voluntarismo que se adivina cada vez que se dice lo de “ya se adivina el final de la crisis’ o “se va a empezar a crear empleo en este mes;” también hay que parar los errores o, si uno es mal pensado, filtraciones sobre los datos de empleo como la vergonzosa de este fin de semana sobre la creación de empleo en Abril. Esto da una impresión horrible, de falta de seriedad y de que todas las consideraciones son a corto plazo y de corte exclusivamente político. 2. Una vez hecho lo anterior se presenta el paquete de reformas detalladas una y otra vez y el presidente da la cobertura política para ejecutar de forma enérgica las mencionadas reformas. 3. El Banco de España se mete con el problema de las cajas en serio, forzando la toma de perdidas cierre y fusión de las que tengan serios problemas de viabilidad y solvencia. 4. Ha de ponerse tope al gasto de las comunidades. Una tentación gravísima por parte de las comunidades va a ser la de expandir el funcionariado autonómico; esto es un paso sin retorno y que hará muy difícil la resolución de la crisis. Recuerdes que el mayor porcentaje de gasto público se encuentra en las comunidades y el control del mismo es crítico si se quiere la resolución de nuestros problemas de gasto. http://www.fedeablogs.net/economia/?p=4083
121 - NADA ES GRATIS - http://www.fedeablogs.net/economia - Mantras e indicadores adelantados by javier.andres on 04/05/2010 En estos tiempos que corren los economistas andamos buscando nuevos métodos de predicción e indicadores adelantados de las crisis, para que el futuro nos pille más prevenidos. Mi modesto consejo a la profesión es que empecemos a considerar en nuestros modelos estadísticos los mantras como indicadores adelantados de lo que el futuro más o menos inmediato nos deparará o, mejor dicho, de lo que no va a ocurrir. En España hemos sido capaces entre todos de crear una floreciente industria de tópicos - algunos de los cuales yo mismo he usado tan alegre como irresponsablemente- que se repiten una y otra vez en declaraciones, editoriales y artículos, como muestra inequívoca de que a nosotros “no nos puede ir tan mal”. En lo superficial estas afirmaciones siempre tienen algo de verdadero, lo que las hace atractivas y fáciles de digerir para la opinión pública. Pasado el tiempo nos encontramos con que sólo han servido para marear la perdiz y para justificar la falta de acción decidida de la política económica. ¿Quién no recuerda aquello de “nuestra posición fiscal es sólida y no debemos temer a una recesión” de 2007, o el brillante “nuestro sistema financiero es el mejor del mundo” de 2008? Pasamos casi sin solución de continuidad de “esto no es una recesión porque no hemos tenido dos trimestres de crecimiento negativo” a creer que “seremos los primeros en salir de la recesión”. Aún provoca un cierto sonrojo recordar nuestra suficiencia al “haber sobrepasado a Italia en renta per cápita e ir a por Francia mal que le pese a Sarkozy”. Pero de todas estas formulas rituales de fabricación nacional mi favorita, porque entre otras cosas fue el resumen de un sesudo documento acordado por gobierno, patronal y sindicatos allá por octubre de 2008, es la que afirmaba que “la culpa de la crisis no es del mercado de trabajo, por lo tanto no hay porqué reformarlo”. Con un par. Todas estas consignas tienen algo en común: nacen, se popularizan y … más adelante se demuestran completamente erróneas. No tengo nada contra de que los políticos busquen un poco de alivio ante los problemas económicos y que traten de poner buena cara ante las malas noticias. Pero estos mantras ya nos han costado bastante, por lo que creo que los economistas debemos plantarnos ante lo que parece va a ser la canción del verano: “España no es Grecia”. Que la economía española es más fuerte que la griega, y que nuestras finanzas están más saneadas, es tan cierto como poca garantía de que España no puede encontrarse con una crisis fiscal en algún momento no muy lejano. El escenario de default en una economía del euro era impensable unos años atrás, cuando las crisis de deuda soberana y los sudden stops parecían ser cosas de países emergentes –o de países nórdicos imprudentemente atrapados en su burbuja inmobiliaria. Hoy sin embargo no podemos despreciar estos riesgos tan alegremente, hay que interpretar las señales adecuadamente y sobre todo a tiempo. La crisis financiera está siguiendo unas pautas que no difieren demasiado de las que hemos conocido en el pasado –véanse diversos trabajos de C. Reinhart y K. Rogoff al respecto. Las diferencias más significativas son su carácter global y el hecho de que los países endeudados y con más problemas son algunos países europeos, y en particular pertenecientes a la UEM. Tras la acumulación de elevadas deudas con el exterior, con el consiguiente boom en la actividad económica, muchos países emergentes sufrieron en los años noventa una severa corrección en su crecimiento a consecuencia de la retirada de la confianza de los inversores extranjeros. De esta situación muchos salieron con fuertes devaluaciones nominales y reales, reorientando sus estrategias de crecimiento hacia la exportación. La abundancia de ahorro
122 mundial resultante llevó a muchos países desarrollados a retrasar los necesarios ajustes para mejorar la competitividad con la consiguiente acumulación de elevados déficits exteriores. Estos son -somos- los que se encuentran hoy en riesgo de algún tipo de crisis de deuda. La excesiva dependencia de la deuda exterior puede suponer un calvario en los próximos años para nuestra economía. En primer lugar tenemos una eleva deuda nacional con el resto del mundo, como ha analizado Tano Santos en NEG (I, II y III), y con ese panorama, cómo dice mi amigo César, somos financieramente como una economía emergente por lo que estamos en buena medida a merced de los mercados. Pero, incluso dejando aparte la deuda de empresas y familias, no hay que olvidar que nuestra deuda pública se ofrece en mercados ya saturados por las necesidades de financiación de los enormes déficits fiscales en buena parte del mundo. En términos de la interpretación, entre otros, de R. Caballero los gobiernos están ofreciendo en el mercado muchos de los activos seguros que antes de la crisis buscaban los fondos soberanos, y otros inversores con aversión al riesgo, en los productos estructurados de máxima calificación. Esto explica la facilidad con la que los mercados absorben la deuda de EEUU, la alemana, o incluso la de países europeos con déficits elevados. Pero no garantiza una fácil colocación de activos que se perciban menos seguros, aunque sólo sea marginalmente. Las primas de riesgo han aumentado en los mercados financieros, y el de duda pública no es una excepción. Por ello los mercados no están, en mi opinión, dilucidando si España es o no Grecia, lo determinante es cómo nos ven en comparación con países como Alemania –por poner un ejemplo- y ahí si salimos claramente perdiendo. Esta tierra de nadie, ni los mejores ni los peores de la clase, dista de ser un lugar seguro. Tener un notable en nuestra calificación cuando hay deuda abundante en el mercado con una calificación de matrícula de honor nos deja expuestos a un futuro incierto. Cada mala noticia, cada paso atrás en nuestra recuperación puede sumar a nuestra prima de riesgo. Lo que hoy son 100 puntos básicos, que ya dificultan nuestra recuperación, puede convertirse en un problema más serio cuando el BCE decida subir los tipos o incluso si se atasca la incipiente recuperación global. La debilidad del crecimiento del PIB, que se señala como causa principal de las dudas que suscita nuestra recuperación, es una posibilidad real a la vista de lo que ha sucedido en países que han pasado por experiencias similares. Y lo será más si no se actúa con urgencia y contundencia para corregir nuestros puntos débiles. Desde 1994 hasta 2007 nuestra economía ha crecido a una tasa promedio del 3 por ciento anual un punto por encima de la media de los principales países de la Unión Europea. Esta tasa coincide más o menos con lo que se ha estimado como nuestro crecimiento potencial, que nos ha permitido reducir nuestro desempleo a razón aproximadamente de un punto porcentual por año. Este rápido crecimiento ha sido impulsado por la disponibilidad de crédito, con el consiguiente el tirón de la demanda interna, factores ambos que sólo se recuperarán –y no en los niveles anteriores a la crisis- tras una reestructuración financiera que no se digiere de la noche a la mañana y cuando el empleo empiece a aumentar significativamente. Nos costará alcanzar el crecimiento potencial, y además este no se recuperará hasta que se complete el reajuste sectorial de la gran cantidad de esfuerzo inversor que se ha desviado hacia la construcción. ¿Cuáles van a ser pues nuestras fuentes de crecimiento en los próximos años? Tenemos cerca el caso de Portugal, cuyos intentos por reducir el déficit exterior no le han permitido mantener las tasas de crecimiento anteriores al año 2000 por lo que ha crecido desde entonces a un ritmo inferior al 1 por ciento anual, sólo ligeramente superior al de Japón. Estas cifras están más lejos de las previsiones del gobierno que de las de quienes rebajan la calificación de nuestra deuda. La experiencia de la costosa reconversión en algunos países emergentes, que vieron alejarse la financiación exterior en condiciones similares a las que hoy sufrimos
123 nosotros, marca la pauta de cómo actuar. Sin la locomotora de la demanda interna necesitamos que la productividad y la demanda externa tomen el relevo. Pero ya sabemos que estas cosas llevan tiempo y que una estrategia basada en la productividad hará lenta la absorción del desempleo –como analizo en un trabajo reciente con J. Boscá, R. Doménech y J. Ferri-, en particular del de menor cualificación. Esto nos lleva inevitablemente a la necesidad de la reforma laboral que no repetiré aquí porque se trata en profundidad en otros posts de NEG. Los mercados van a discriminar cada vez más en función de la calidad macroeconómica de cada país y ahí nuestras perspectivas no son halagüeñas. No sólo tenemos que salir de la recesión, sino que no podemos permitirnos una salida lenta de la misma, porque en ese caso los costes de financiación de nuestra deuda seguirán aumentando y pueden convertir lo que hoy es un serio problema de déficit en uno de deuda acumulada. Vale, España no es Grecia, pero los mantras nos han costado ya algún punto de PIB y miles de empleos. No sigamos repitiendo la nueva jaculatoria no vaya a ser que su efecto anestésico nos lleve a pensar que estamos a salvo de contingencias peores. Es el tiempo de acertar con las reformas y de acelerar su puesta en marcha. http://www.fedeablogs.net/economia/?p=4016
124
Greece and the myth of the easy economic fix By Steven Pearlstein Wednesday, May 5, 2010; A16 For the past year, I've been warning that the imbalances underlying the financial crisis -- the explosive growth of credit, the mispricing of risk, the mispricing of real estate and other assets, the overcapacity in the global economy -- were so huge that a quick and easy economic recovery was highly unlikely. And for much of that time, it has looked as though I was dead wrong. Stocks rebounded, credit markets revived, corporate profits returned and bank balance sheets have been repaired. But the nagging suspicion is that too much of this rebound is the result of the massive fiscal and monetary stimulus that not only did its job of reversing what was a dangerous downward spiral, but also made it possible for many countries to delay dealing with those fundamental economic imbalances. No better proof exists than the financial drama now unfolding in Western Europe, where for many years countries from Ireland to Greece used the financial cover offered by a new continental currency to overspend, overborrow and overexpand. In the case of Greece, the government took on so much debt during the bubble years that there is almost no way out of its predicament. If Athens manages to make good on its promises to cut spending and turn a nation of tax cheats into taxpayers, there's a good chance it will trigger a vicious deflationary spiral -- falling prices, falling employment and falling government revenue -- that will make it impossible to repay debts. Or Greece could renege on its promises and find itself shut off from further borrowing. Either path leads to some sort of default. The story is somewhat different in other countries, albeit with similar consequences. In Spain and Ireland, the problem is not so much government debt but rather all the private debt used to fuel massive real estate bubbles. Now that those bubbles have burst, the banks that lent that money are facing such huge losses that they have had to be bailed out by the government (in the case of Ireland) or may soon have to be (in the case of Spain). And the ensuing recession has now cut so deeply into tax revenue that even the heretofore fiscally responsible governments of these two countries are now finding it difficult and expensive to borrow new money or refinance existing debt when it comes due. Compounding the problem is that much of this troubled debt, both public and private, is now in the hands of Europe's biggest banks, many of which were already too thinly capitalized and weakened by losses from soured U.S. investments. For European leaders, the decision to finally come through with a $145 billion rescue package for Greece represented a calculated decision that it was less painful, financially and politically, to rescue a profligate neighbor than to rescue their own bankers. Indeed, the problem with European leaders' response to this crisis has been that their exaggerated concerns about appearances have led them to reject useful strategies. It was out of concern for appearances that the European Union initially rejected the idea of allowing the International Monetary Fund to offer an early rescue package for Greece, only to finally relent
125 when the run on Greek bonds turned into a rout. It was out of concern for appearances that the European Central Bank announced sternly several weeks back that it would not allow European banks to borrow by using downgraded Greek bonds as collateral, and that it would never use its balance sheet to monetize Greek debt. This week, however, the ECB began accepting Greece's bonds, now junk, as collateral while hinting that it is open to buying even more on the secondary market. It is now with the same misguided determination that some European officials have tried to shut down any discussion of a restructuring of Greece's debt, or that of any other eurozone country, on the theory that a default for one would be a default for them all. In fact, markets are fully capable of distinguishing between the finances of different countries that may use the same currency, just as they can distinguish the bonds of the state of California from those of Utah. And although any country that defaults will surely face the prospect of being shut out of credit markets for years, that punishment is no different than what was meted out in the past to countries such as Greece and Italy, when they were free to escape financial predicaments by repaying their debts in devalued currency. With the Greek credit crisis quickly turning into a eurozone-wide liquidity crisis, European leaders would be well advised to forget about appearances and come up with an acceptable mechanism for the orderly restructuring of sovereign debt. For just as "too big to fail" has proven a lousy strategy for banks, it is just as lousy when applied to countries, in both cases encouraging incaution on the part of lenders and profligacy and risk-taking on the part of borrowers. While a debt restructuring would be painful for Greece and its European bankers, it would surely be less painful than a decade of austerity-induced recession. And while a Greek default would probably lead to higher borrowing costs for some eurozone neighbors, that's precisely the sort of post-bubble repricing of risk that is necessary to restore confidence in global markets, rebalance the global economy and provide the foundation necessary for sustainable long-term growth. http://www.washingtonpost.com/wp- dyn/content/article/2010/05/04/AR2010050405128.html?wpisrc=nl_headline
U.S. stocks fall amid Greek crisis By Dina ElBoghdady and Renae Merle Washington Post Staff Writer Wednesday, May 5, 2010; A01 Fears that the Greek debt crisis might spread to other European countries -- and perhaps across the Atlantic -- pummeled U.S. stocks on Tuesday, just as investor confidence was building that the worst of the economic crisis was over. The markets suffered their worst day since February as the Dow Jones industrial average and the Standard & Poor's 500-stock index both fell more than 2 percent. The sell-off comes on the heels of an upbeat period marked by stronger-than-expected profits for many U.S. companies and favorable reports about consumer spending, housing and manufacturing. But financial troubles in Greece and the threat to other deeply indebted European countries serve as a startling reminder of how quickly gains could unravel.
126 "In general, the American markets have been ignoring a series of headwinds," said Dan Greenhaus, chief economic strategist at Miller Tabak. "To use a catch phrase, they've had their heads in the sand a little bit. . . . This is a reminder that this is not a fully recovered global economy."
The market turmoil reflects investor doubts about whether the Greek government can successfully impose on its people the austerity measures required under a $145 billion financial rescue package, which the European Union and the International Monetary Fund offered Athens last weekend. Some financial analysts have warned that the emergency assistance may not be enough to cover Greece's needs. Investors are also unnerved by the possibility that the E.U. and IMF could be hard pressed to come up with additional aid, perhaps hundreds of billions of dollars more, to stem the financial contagion if it spreads to countries such as Portugal and Spain. The IMF plans to meet Sunday to approve its $40 billion portion of the package for Greece. The deal also requires the approval of the 15 European countries in addition to Greece that use the euro as their common currency. But the austerity measures required by the rescue package -- including slashing public pensions and raising taxes -- sparked protests Tuesday on the streets of Athens. Angry teachers went on strike and Communist Party protesters broke through the gates of the Acropolis and hung "Peoples of Europe Rise Up" banners on the ancient monument, according to news media reports. More protests are expected Wednesday.
The strikes underscore the hurdles Greece's Socialist administration faces as it tries to sell the deal to a public that is used to government largess. "The Greeks are not exactly embracing the bailout and saying thank you to everyone," said Ed Yardeni, chief investment strategist for Yardeni Research. "It is hard to rescue a country that doesn't want to be rescued." Yields on bonds issued by Greece climbed Tuesday, suggesting that investors were afraid the rescue package is not big enough and that the country could default on its debt. Win Thin, senior currency strategist for Brown Brothers Harriman & Co., said that perhaps more important, the market upheaval exposes "the fatal flaws" in the eurozone experiment. The eurozone is a currency union of European countries that have a common central bank but independent budget policies. "Each country is running different fiscal policies, and there's a lack of overall framework to help a country in trouble," Thin said. "The Europeans blew this one. It's become more than a Greece story." As doubts about the health of Europe spiked, the euro came under pressure, falling to its lowest point against the dollar in a year. The drop makes it more difficult for American exports to compete with European products.
127 There is a mounting fear among analysts and investors that if the European Union cannot put together a workable package for a small country like Greece, it would prove even more difficult, should the crisis spill over, to make ambitious changes to government tax and spending policies in nations like Spain with larger economies. Spain's government debt has already been downgraded, as has Portugal's. Thin expects many more downgrades for Spain, as do other analysts, adding to growing speculation that Spain may needs its own bailout. The jitters prompted Spanish Prime Minister Jos? Luis Rodr?guez Zapatero to speak out at a news conference in Brussels, where he dismissed the rumors as "complete madness." Yet European stocks were battered. In Spain, the Ibex 35 Index tumbled 5.4 percent and Euronext Lisbon, the stock exchange of Lisbon, Portugal, fell 6 percent. The interest rates that both countries must pay to borrow money rose Tuesday. U.S. stocks also followed. The Dow, which tracks 30 blue-chip stocks, fell 2 percent, or 225.06 points, to close at 10,926.77. The S&P 500, a broader measure of U.S. stocks, recorded its second-worst sell-off this year, falling 2.4 percent, or 28.66 points, to 1173.60. The tech-heavy Nasdaq composite index took the biggest hit, tumbling 3 percent, or 74.49, to 2424.25. A closely watched measure of stock volatility, the Chicago Board Options Exchange's volatility index, which measures how much investors expect stocks to swing and is commonly known as the "fear index," soared more than 18 percent. "This is not an investment landscape without speed bumps," Greenhaus said. "For the next couple of quarters, I imagine this kind of choppy environment will be the order of the day." http://www.washingtonpost.com/wp- dyn/content/story/2010/05/04/ST2010050405693.html?sid=ST2010050405693
128
04.05.2010 Definitely, Maybe, Perhaps Not: The ECB’s communication strategy on collateral policy in full
The ECB has suspended the minimum credit rating requirements for Greek bonds – and only for Greek bonds - as collateral for its liquidity operations. El Pais called it a decision without precedent. It effectively makes rating agencies irrelevant for the eligibility to central bank money, at least for Greece. It was a huge U-turn for Jean Claude Trichet, who had earlier stated that no exceptions would be allowed. The move fuelled speculation that the central bank may have to extend that to other countries, renew a programme of lending unlimited cash to banks for a year, and even start buying government debt if the €110bn bailout plan for Greece fails to stem the euro’s slide, writes Bloomberg. While the ECB is prohibited from buying assets directly from authorities, it can buy them on the secondary market. In a thundering editorial, FT Deutschland called the decision by the ECB a communication disaster in the making. First, the ECB announced a return to the previous regime by next year, then comes the decision to reduce the minimum collateral requirement to BBB, and now the exemption for Greece only. What will the ECB do if (or rather when ) Portugal’s debt go down? It concludes that the ECB must urgently revise the collateral requirements, and develop its own system. Jean Quatremer makes the point that the ECB now faces the dilemma of having to explain why default is not option, yet lower the rating threshold to below junk status. He said the only logical outcome of this would be a general abandonment of the ratings system.
The doubts return While Greek 10y bond yields came down by 250bp, two- year bonds still yield more than 10%. Portuguese and Spanish yields were little changed and the euro continued to weaken against the dollar. One of the reasons for the market’s uncertainty is the anti-climactic nature of the rescue package. El Pais has analysed that the package will only cover a part of the country’s total financing need over the next three years, which are €150bn. European Commission source
129 were quoted as saying that Greece might return to the capital markets as early as 2011, and that many countries did not fully make use of an entire IMF programme in the past. Writing in the FT, Mohamed El-Erian says despite Sunday’s rescue, the Greek crisis has lots more rounds to run. He doubts the commit by Greek society, and criticises a general lack of ownership over the reform process; he also points to several design and implementation issues that cast doubt on the viability of the aid package. Germany, meanwhile, started its fast track legislative procedure to free €22.4bn as contribution to the €110bn. The contribution is expected to pass end of this week the FT Deutschland reports. Angela Merkel yesterday called for a revision of the stability pact, and notably, the creation of European rating agencies. In Athens, meanwhile, tens of thousands of Greek state workers will extend protests on Tuesday against the country's emergency action plan as the government pushes through legislation to enforce a three-year austerity programme. FT Deutschland interviews the Greek expert Jens Bastian, who said that wages and prices will have to fall, and that this adjustment was occurring too slowly. Bookings for the summer season have fallen, as Greek holidays have lost competitiveness against an increasing number of Mediterranean competitors. The costs of regulation for crisis insurance Tough rules requiring banks to set aside more funds to cope with future crises could cut world economic growth by up to 1pp, Nout Wellink, the Dutch central bank chief, chairman of the Basel Committee on Banking Regulation told the FT. He said that the side effects would be manageable and well worth the risk. The Dutch central bank had calculated that the proposed reforms imply 0.5 pp-1pp less global growth over several years. Wellink considers proposals for a global banking tax as premature.
Draghi for reform of stability pact La Repubblica reports that a consensus is now building for a reform of the stability pact, which is now demanded by both Angela Merkel and Mario Draghi, who said that there were other countries in the world, who with precautionary adjustment, would run a similar risk than Greece. http://www.eurointelligence.com/index.php?id=581&no_cache=1&tx_ttnews[tt_news]=2780 &tx_ttnews[backPid]=901&cHash=d751e6c84b#
130 Coulisses de Bruxelles, UE Jean Quatremer La BCE s’affranchit des agences de notation
C’était prévisible, c’est fait. Ce matin, la Banque centrale européenne a décidé de ne plus tenir compte de la note de la dette souveraine grecque afin de s’émanciper de la tutelle des agences de notation. En effet, Standard&Poor’s avait dégradé de trois crans la dette grecque le 27 avril dernier, de BBB+ à BB+, la reléguant au rang des investissements spéculatifs, les obligations pourries (junks bonds). En apparence technique, cette décision aurait pu avoir un effet catastrophique pour Athènes, la BCE ne prêtant de l’argent aux banques commerciales qu’en échange d’actifs notés au minimum BBB-. Autrement dit, la dette grecque était en passe de ne plus être éligible comme « collatéral » si les autres agences de notation suivaient S&P. Cela aurait eu pour effet de pousser toutes les banques à se débarrasser des titres grecs et, en tout cas, à ne plus les acquérir, ceux-ci devenant inutiles… Un beau cercle vicieux. Cela posait un véritable problème à la BCE, puisqu’il apparaissait que les agences de notation avaient clairement le pouvoir de l’obliger à refuser la dette souveraine d’un État membre de la zone euro, alors même qu’elle affirme que la cessation de paiement n’est pas une option sérieuse et que le plan d’austérité de la Grèce est crédible. Bref, la BCE n’avait guère d’autre choix, comme je l’ai annoncé sur ce blog, que de s’affranchir du jugement des agences de notation. Logiquement, ce matin, la BCE a donc « décidé de suspendre l’application, dans le cas des titres de créance négociables émis ou garantis par l’État grec, du seuil minimum de notation du crédit requis pour l’éligibilité des actifs admis en garantie des opérations de crédit de l’Eurosystème. Cette suspension restera en vigueur jusqu’à nouvel avis ». Francfort donne la clef de son raisonnement : « le gouvernement grec a approuvé un programme d’ajustement économique et financier, qui a été négocié avec la Commission européenne, en liaison avec la BCE, et avec le Fonds monétaire international. Le Conseil des gouverneurs a évalué ce programme et le juge approprié. Cette évaluation positive et l’engagement fort du gouvernement grec d’appliquer intégralement le programme justifient, également du point de vue de la gestion des risques, la suspension annoncée par le présent communiqué. Cette suspension s’applique à tous les titres de créance, existants ou nouveaux, émis ou garantis par l’État grec”. Autrement dit, le jugement de la BCE est supérieur à celui des agences de notation.
131
La logique voudrait que la BCE aille plus loin et accepte en collatéral en toutes circonstances la dette souveraine des États de la zone euro. En effet, ces derniers font partie d’un système, garanti par l’Eurogroupe, la Commission et la BCE qui est censée éviter qu’une dette soit renvoyée au rang de “junk bond". Si tel n’est pas le cas, il revient à la BCE seule de décider quel type de papier elle prend en collatéral sans se préoccuper du jugement des agences de notation qui n’ont pas sa connaissance intime de l’état des finances publiques des membres de la zone euro. Il est donc regrettable que la BCE n’ait pas été plus loin: sa décision est en effet temporaire et est limitée à la seule dette grecque. Mais c’est déjà un premier pas. Le rôle de pompiers pyromanes joué par les agences de notation a aussi convaincu les Européens de créer une agence européenne: Jean-Claude Trichet, le patron de la BCE, Angela Merkel, la chancelière allemande, et Michel Barnier, le commissaire au marché intérieur, viennent de prendre position en ce sens. http://bruxelles.blogs.liberation.fr/coulisses/2010/05/la-bce-saffranchit-des- agences-de-notation.html
Many more chapters left in the Greece drama By Mohamed El-Erian Published: May 3 2010 18:50 | Last updated: May 3 2010 18:50 By any standard, Sunday’s loans announcements on Greece were bold and unprecedented; and understandably so given the high stakes for Greece, Europe and the global economy. But will these announcements mark a turning point in the debt crisis that erupted in Greece and is already contaminating other European economies? Let us start with the good news. The Greek government has committed itself to a massive fiscal effort (in the range of 11 per cent of gross domestic product). Europe and the International Monetary Fund have committed to disburse serious funding (€110bn). And these three parties are finally expressing the vocal solidarity that has been required for a while. Editorial: Merkel’s moment - May-02 Wolfgang Münchau: To integrate or disintegrate - May-02 Lex: Greece - May-02 In depth: Greek debt crisis - May-03 ECB extends financial lifeline to Greece - May-03 Germans urged to buy Greek bonds - May-03
132 This is all necessary; but is it sufficient for long-term effectiveness? That depends on where you come out on a few important design and implementation issues. It has been clear from day one that the design of a successful Greek adjustment programme is inherently complicated as the country has only one macroeconomic instrument – budget austerity. It is a very blunt instrument that can only restore competitiveness through painful prolonged deflation. This fundamental concern is amplified by four other design challenges that still need to be overcome. First, Greece needs timely external financing that is both massive and highly concessional. The funding promised by the EU and the IMF is very large; and it is concessional when compared to the prevailing market rates on Greek bonds. Yet it is not concessional enough in light of Greece’s huge debt burden which, even under draconian fiscal austerity, is programmed to increase to almost 150 per cent of GDP. Second, the programme design assumes that Greece will benefit from a growth and private sector response that anticipates the full effectiveness of the policy measures. Otherwise the contraction in GDP will not be limited to the assumed 7 per cent. Yet Greece faces a significant credibility deficit. As such, the fall in GDP could be a lot larger than programmed, the growth in the debt burden even higher and the losses for the local banks magnitudes greater. Third, as designed, the programme is better at addressing liquidity rather than solvency problems. Consequently, Greece faces the risk of a “lost decade” similar to what Latin America experienced in the 1980s – and this for a simple reason, the programme does little to address the debt overhang. As long as this overhang persists, high country risk will deter investments in Greece, be they financial or in the form of foreign direct investment. Fourth, the programme assumes no new financing from the private sector until 2013. But can it keep existing creditors from trying to exit in mass? The problem here is that Greece needs a quick transition in the composition of its investor base: from those that mistakenly bought bonds on the basis that Greece is a mature European government (“interest rate risk”) to those that are comfortable with more volatile credit risk. Given how over-exposed the first group is, the transition in investor base will entail continuous net selling pressure. So much for design issues; how about the outlook for programme implementation? Understandably, implementation is front-loaded, and appropriately so. After all, the programme must gain traction quickly – by signalling policy seriousness (through “prior actions”) and by accelerated disbursements. Yet both these aspects face considerable execution challenges. The Greek government is already encountering strong street resistance, as well as growing tensions from within the ruling Socialist party. These will only increase as the prior actions are implemented in the next few days. As yet, there are few indications that Greek society has accepted the need for significant fiscal austerity. While you would not expect images from Athens that are reminiscent of Koreans citizens handing in jewellery in 1998 to help their country, there should be more visible domestic ownership at this stage for such an ambitious adjustment effort to succeed. Meanwhile, some components of the external funding package must clear legal hurdles in key creditor countries, including parliamentary approval in Germany. Also, notwithstanding the
133 importance of European solidarity, there is something bizarre about a rescue package that relies on €10bn from two countries (Portugal and Spain) that, themselves, already face funding pressures. These design and implementation issues raise doubts about the longer-term effectiveness. This is not to say that the programme and the financing package are not bold and unprecedented. They are; but they are also incomplete. Sunday’s announcements will not mark the end of the Greek debt crisis; nor will they constitute a much-needed turning point that can be sustained for many months. Instead, they will part of the multi-stage process that still has a few rounds left. If the design and implementation issues detailed above are valid, these future rounds would involve a reopening of negotiations and a recasting of the approach in some areas. The writer is chief executive and co-chief investment officer of Pimco http://www.ft.com/cms/s/0/32c5426e-56c0-11df-aa89-00144feab49a.html
COLUMNISTS Europe’s choice is to integrate or disintegrate By Wolfgang Münchau Published: May 2 2010 19:03 | Last updated: May 2 2010 19:03 The aim of the rescue package agreed for Greece cannot conceivably have been to prevent a default. For all the daunting austerity and structural reform it requires, the numbers do not add up. The main purpose I can detect is to reverse the rise in Greek bond yields and stop contagion. We should not knock this deal from Athens. The eurozone might not have survived otherwise. This column would have been an obituary. I am also glad to note that those in charge gave a positive answer to a question I posed last week, which was whether the authorities would ever get ahead of the situation. They did, and they deserve credit. But in spite of the readiness to accept extreme austerity, Greece will not get by without some form of debt forgiveness. I can understand why the International Monetary Fund and the European Union did not want to open that can of worms at this point. It would have prolonged the negotiations. In the middle of an acute bond market crisis one has to manage expectations very carefully. A debt restructuring will eventually be necessary, however, because Greece’s debt to gross domestic product ratio is going to rise from its current 125 per cent to about 140-150 per cent during the adjustment period. Without restructuring, Greece will end up austere, compliant, and crippled. The decision to take Greece out of the capital markets for three years will prevent immediate ruin but has only a marginal impact on the country’s future solvency. The underlying assumption of the agreement is that Greece can sustain austerity beyond the time horizon of the accord, without falling into a black hole. The latter is particularly optimistic. Standard & Poor’s, the rating agency, last week estimated that Greece would not return to its 2009 level of nominal GDP until 2017.
134 Last week gave us an inkling of the vicious circles at play in such a crisis. First, a country’s financial situation deteriorates. Then a rating agency downgrades the debt, which in turns triggers a rise in market interest rates. That leads to a further financial deterioration. Another such loop goes via the banking sector. If a government’s solvency is in doubt, so is the solvency of the banks, whose liabilities are guaranteed by the government. Last week, the banking sector in large parts of southern Europe was in effect cut off from the capital markets. Angela Merkel and her inexperienced economic advisers have no idea about the dynamics of sovereign crises. They never bothered to look at the experience of other countries, notably Argentina. Waiting until the moment a country is about to fail – which is how the German chancellor interpreted the political agreement she accepted in February – constitutes an abrogation of leadership that is bound to end in financial ruin. It means that everybody, Germany especially, has to pay billions of euros more than would have been the case if the EU had sealed this in February. On my estimate, the total size of a liquidity backstop for Greece, Portugal, Spain, Ireland and possibly Italy could add up to somewhere between €500bn ($665bn, £435bn) and €1,000bn. All those countries are facing increases in interest rates at a time when they are either in recession or just limping out of one. The private sector in some of those countries is simply not viable at those higher rates. As I have argued before, three things are required if the eurozone is to survive in the medium term: a crisis resolution system, better fiscal policy co-ordination, and policies to reduce intra-eurozone imbalances. But this is only the minimum necessary to get through the next few years. Beyond that, the eurozone will almost certainly need both an embryonic fiscal union and a single European bond. I used to think that such constructions would be desirable, albeit politically unrealistic. Now I believe they are without alternative, as the experiment of a monetary union without political union has failed. The EU is thus about to confront a historic choice between integration and disintegration. Germany can be relied on to resist every one of those measures. In the meantime, European leaders will treat each new crisis with the only instrument they have available: an injection of borrowed liquidity. But this instrument has a finite lifespan. If it is not blocked by popular unrest, it will be blocked by constitutional lawyers. On one level, I agree with those lawyers. There can really be no doubt about what the “no bail-out” rule was intended to mean. It meant that Greece should not be supported. The EU had to resort to some unseemly legal trickery to argue that advancing junior loans at a massive scale to an effectively insolvent country does not constitute a bail-out. The clause – Article 125 of the Lisbon treaty – is irresponsible. If you follow it, you end up breaking the eurozone. So far, the choice has been to break the clause instead, and now would be the right moment to change it. So what is the endgame of the eurozone’s multiple crises? For Greece it will be debt restructuring, a polite term for negotiated default. The broader outcome is more difficult to predict: it will either be deep reform of the system or a break-up. [email protected] http://www.ft.com/cms/s/0/461663a0-5613-11df-b835-00144feab49a.html
135
Merkel’s moment Published: May 2 2010 19:13 | Last updated: May 2 2010 19:13 Earlier in the Greek debt woes there was a hope that, with last year’s elections successfully behind her, Angela Merkel would be free to give decisive leadership to the eurozone’s response to the crisis. Yet the German chancellor has not fulfilled this role. Instead, she is assailed on one side for damaging and costly dithering, while conservatives within her own party and country attack her for proposing any financial help at all. Loan fails to sway German state’s voters - May-02 Man in the News: Wolfgang Schäuble - Mar-12 Merkel fails to quell divisions in coalition - Feb-25 Germany shuns US move on banks - Feb-02 Lafontaine to leave German politics - Jan-24 Editorial: Breaking the Linke - Jan-25 The immediate cause hampering her ability to sound a stronger note on Greece looks like the crucial regional election in North Rhine-Westphalia on May 9. In a tight contest, Ms Merkel’s coalition of the CDU and the Free Democrats could lose its majority there. That result would cost the coalition its majority in the Bundesrat, the federal upper house. Important though the North Rhine-Westphalia election is, it is not the core reason why Ms Merkel has seemed so hesitant. Though losing would have a political cost, Ms Merkel might see some silver linings. Losing the coalition’s Bundesrat majority might actually give her greater freedom to strike deals across parties instead of being tied to the FDP. She would also be unlikely to shed a tear over a weakened position for Jürgen Rüttgers, the CDU party leader there and a potential internal challenger. Instead, her hesitation has two causes. The first is that she and Wolfgang Schäuble, the finance minister, have been at odds on the right way to proceed. While he was opposed to bringing the International Monetary Fund into Greece, she is now persuaded that IMF involvement is a part of showing there really is no other option. The second and most compelling is that it genuinely is a hard message to convince the German public that the eurozone requires them to lend billions of euros to Greece. At least two-thirds oppose the plan. The German public has consistently been reassured that the eurozone would be underpinned by Germanic austerity, not the prospect of financial transfers from Berlin. Moreover, the possibility of a challenge in the constitutional court makes it tricky for Ms Merkel to do anything other than to talk in terms of this being the last resort, even if that tactic makes solving the problem more difficult and more expensive. Once the package of aid has been agreed, however, Ms Merkel must sell it with conviction – even though her lack of clear leadership to date will have allowed opinion against it to harden. http://www.ft.com/cms/s/0/1bb241d8-5613-11df-b835-00144feab49a.html
136
Global Business
May 3, 2010 Spain Seen as Moving Slowly on Financial Reforms By RAPHAEL MINDER MADRID — A planned merger has stalled between two weak savings banks in Galicia, in northwestern Spain, illustrating the reluctance of the Spanish government to take a firmer hand to its financial problems. The longer consolidation is delayed among the banks, which are saddled with losses on loans to the construction industry, the more expensive it may be to deal with them. What’s more, regional banks are deteriorating not just in Galicia, but throughout the country. Investors and analysts say the lack of progress in tackling the banking issue underscores the Spanish government’s shortcomings in addressing its broader problem: crushing fiscal deficits arising from high unemployment and a persistent recession. Spain risks falling into the same trap as Greece, these investors say, unless it takes more forceful action. It could find itself unable to raise money on the private markets at acceptable interest rates — even though its government debt burden, as a share of the overall economy, is only half what Greece carries. “Any further wavering could lead to a much more critical situation,” said Xavier Vives, an economics and finance professor at the IESE business school of the University of Navarra. “A year ago, the government didn’t even want to think about reforms. Now, under pressure from financial markets, they are at least talking about reforms. But the government really needs to get going.” So far, the federal government has delayed significant fiscal tightening. It fears that doing so would cause political harm, particularly in regions where elections are coming soon, while also choking off a long-awaited recovery. José Luis Rodríguez Zapatero, the center-left prime minister, presented an austerity plan this year based mostly on measures that would not kick in until next year at the earliest. The measures include spending cuts amounting to a modest 2.5 percent of gross domestic product. But Mr. Zapatero may no longer be able to wait. Just as he has been unable to force the savings banks, Caixanova and Caixa Galicia, to consolidate before the situation deteriorates further, he finds Spain increasingly vulnerable to forces beyond its control. The planned merger of Caixanova and Caixa Galicia — banks known here as cajas and important to local politicians — is caught up in squabbling over who would dominate the combined institution. Desperate to break the deadlock, a Galician government official warned last week that fighting between power brokers from the cities where the banks are headquartered could lead to “self-destruction.”
137 In a broader setback, Spain joined Greece and Portugal last week in being downgraded by Standard & Poor’s, the rating agency. While Spain remains well above the junk level S.& P. gave to Greece and ahead of Portugal’s A- rating, its fall from AA+ to AA was a blow. Among the reasons for its decision, S.& P. highlighted Spain’s private sector indebtedness of 178 percent of G.D.P. and an inflexible labor market that was likely to leave Spain with a jobless rate of 21 percent this year. To date, Mr. Zapatero’s policies have rested on the hope that the economy would begin to recover soon and that the jobless rate would average no more than 19 percent this year. Yet the jobless rate has already reached 20 percent, according to government statistics for the first quarter released Friday, almost double the level when Spain’s recession began in 2008. The bleak outlook makes it difficult to come up with a coherent policy. Mr. Zapatero is now boxed in, experts say, because he failed to adopt changes that challenged existing political interests when he enjoyed greater popularity after his re-election in 2008. The leading Popular Party opposition has rallied against his economic management, often with the backing of trade unions that once supported the Socialists. While the Popular Party’s own credibility is suffering because it is engulfed in a bribery investigation, it now enjoys an advantage over the Socialist government in polls. Perhaps the biggest obstacle to overhauling the economy is a Spanish electoral calendar likely to put regional priorities ahead of national ones. Though Mr. Zapatero has two years remaining as prime minister, most of Spain’s regions will have held their own elections by then, starting with Catalonia this autumn. The regional governments already account for 57 percent of Spain’s public spending, double the level of two decades ago, according to Carlos Sebastián, an economics professor at Complutense University in Madrid. “The two big parties really value their regional strongholds and are not willing to do anything that would risk losing control over one of them,” he said. “Until these regional elections, nobody will want to push for reform.” Federal and regional interests diverge on crucial issues, notably labor legislation, the overhaul of which is seen by economists as essential to reducing unemployment and increasing productivity. For instance, the regions of Andalusia and Extremadura in the southwest apply looser rules on eligibility for unemployment assistance than those in the rest of Spain. That assists the seasonal work forces that underpin their large but fragile farming sector. Both regions have Socialist governments that face tough re-election campaigns and therefore have little incentive to support any proposal from Mr. Zapatero that could upset their workers. Indeed, Mr. Zapatero has shown little inclination to force change on his people. In late January, his government proposed pushing up the retirement age to 67 from 65 to help cope with the costs of a rapidly aging population. After a series of protest marches, the plan was put on the back burner. But now investors are turning their skepticism to Spain as the weakest spots in the country’s economy show little sign of improvement. In a research note last week, analysts at Credit Suisse argued that beyond agreeing on a multiyear rescue package for Greece, Europe needed to set up standby arrangements for Spain and Portugal, allowing them to “fund their ongoing budget deficits while carrying out tough fiscal adjustment programs.”
138 In the first quarter, the Spanish government’s expenditures overshot its income by 8 percent. Again, economists partly blame politics, as the Madrid government maintained its own bloated ministerial structures while delegating more power and authority to regional governments. As for the ailing savings banks — which are worse off than the big name banks like Santander and BBVA, in part because they earn little from lending abroad to offset real estate losses at home — both the Spanish central bank and the government have recently stepped up pressure on them to consolidate. That followed a warning in March from the finance ministry that a third of the 45 cajas faced solvency issues. Another proposed alliance, led by Cajastur and Caja Murcia, could involve as many as eight cajas. While the proposal does not call for a full merger, it is proving even more contentious as its political stakeholders represent different regions. “When politics intervenes in the banking sector, obviously you get a clash,” said Jamie Dannhauser, who covers Spain for Lombard Street Research in London. “I don’t think that the recognition process of bad loans has really got going at all.” http://www.nytimes.com/2010/05/04/business/global/04peseta.html?th&emc=th
Global Business May 3, 2010 In Greek Debt Crisis, a Window to the German Psyche By KATRIN BENNHOLD PARIS — A few weeks after Lehman Brothers went bankrupt and the world plunged into a financial crisis, Chancellor Angela Merkel of Germany offered some common-sense advice to reckless bankers, indebted consumers and profligate governments. “One should simply have asked a Swabian housewife,” Mrs. Merkel said during an address to fellow Christian Democrats in December 2008 in the southwest German region of Swabia, hub of the Protestant work ethic. “She would have told us her worldly wisdom: in the long run, you can’t live beyond your means.” Now, as Europe struggles to avoid its own Lehman experience — saving Greece and thus the euro — the episode says much about the Germans. Led by France, European neighbors have been pressing for months for Germany, which has the Continent’s biggest economy, to throw its financial weight behind a bailout package and a new system of economic governance for the euro zone. In the process, a reluctant Berlin has been called irresponsible, selfish and even un-European. But if France wants Germany to be more European, Germany wants Europe to be more Swabian. To bring Europe to a compromise required a deal between Mrs. Merkel and a Frenchman, Dominique Strauss-Kahn of the International Monetary Fund, who met in Berlin last week to pull Greece and the euro zone back from the brink. The Greek episode has heated up the long culture clash between the European Union’s traditional drivers: federal Germany with its Prussian attachment to rules and an instinctive
139 frugality rooted in past economic traumas, and republican France with its tradition of state intervention and a more Mediterranean attitude toward public debt. Paris and Berlin have had many disagreements in the postwar world, but few are as deep- rooted as those on economic governance, said John C. Kornblum, a former United States ambassador to Germany. “This comes from the gut, it’s emotional,” said Mr. Kornblum, who as assistant secretary of state for Europe in the 1990s watched successive French and German leaders spar over how to govern the future single currency. If there is no political structure in place to safeguard the euro — a weakness exposed in the current debt crisis — Mr. Kornblum said it was because Germany and France could never agree on one. “There are profound philosophical differences between the two sides,” he said. These differences are in many ways personified by Mrs. Merkel, daughter of a Lutheran pastor, and two flamboyant Frenchmen: President Nicolas Sarkozy, a conservative, and Mr. Strauss-Kahn, a Socialist. Mr. Sarkozy and Mr. Strauss-Kahn are rivals and may even run against each other in the 2012 presidential election. But they share a belief in state intervention that unites most of the French political elite. Mr. Sarkozy, a Gaullist whose millionaire friends and taste for expensive brands have not gone unnoticed across the Rhine, first roused German suspicions as finance minister in 2004 when he prevented a takeover by Siemens of Alstom, the French maker of trains. As president, he allowed the budget deficit to rise above the 3 percent euro zone limit even before the economic crisis erupted, and he repeatedly criticized the European Central Bank’s interest rate policy. Mr. Strauss-Kahn, a native of Alsace who speaks German, has been called “Mr. Euro” in France and is credited with steering his country into the euro zone as finance minister in 1997. In Germany, he is also remembered for serving under President Jacques Chirac, a staunch advocate of a political counterweight to the European Central Bank. So when the two men independently revived calls for an “economic government” of the 16 countries that share the euro, resistance in Germany was instinctive. In a country where many lost their savings twice in the 20th century — once to hyperinflation in 1923 and again to currency reform after World War II — central bank independence and budgetary discipline have become part of the German narrative. Fear of inflation and broad-based aversion to debt also help to explain a striking divergence in the perception of Germany’s wealth at home and abroad. At 3.3 percent of gross domestic product, Germany’s budget deficit is low by crisis standards and frequently cited as a justification to appeal to Berlin for solidarity with poorer countries. In contrast, the French budget deficit has widened to 7.5 percent of G.D.P. But Germans, who have absorbed East Germany and face a declining population, do not feel rich. “Germans fear going bankrupt themselves,” said Mr. Kornblum, now a consultant in Berlin. Jean-Pierre Jouyet, a former minister of European affairs who now leads the French stock market regulator, said: “The fundamental difference between France and Germany is that, for the French, budgetary, financial and currency stability is a means to an end. For the Germans it is an end in itself.”
140 Mrs. Merkel, a physicist raised in communist East Germany, has a hard-working, parsimonious lifestyle and an analytical, somewhat bland personality that in many ways reflect the national value system, said Gerd Langguth, author of a 2005 biography of her. While Mr. Sarkozy resides in the majestic Élysée Palace and has an army of staff members, Mrs. Merkel still lives in the central Berlin apartment she occupied before her election in 2005 and has been seen doing her own shopping. There are limits to national stereotyping. Mrs. Merkel’s more outgoing predecessor, Gerhard Schröder, made common cause with the French in breaking the euro zone’s budgetary limit. And no German could have defended the legacy of the Bundesbank more vigorously than the president of the European Central Bank, Jean-Claude Trichet, referred to by some in Paris as “that Frenchman in Frankfurt.” But understanding the radically different contexts in which German and French positions are honed is crucial as Europe’s two foremost powers grapple with the crisis, said Jean Pisani- Ferry, director of Bruegel, a research institute based in Brussels. “Ultimately this is about whether Germany is ready to lead,” he said. “And leading means compromising, rather than only insisting on red lines.” http://www.nytimes.com/2010/05/04/business/global/04iht-euro.html?th&emc=th
141
La primera crisis del euro El BCE aceptará la deuda griega pese a que esté al nivel de 'bono basura' Trichet dará liquidez a la banca con los títulos helenos como garantía - El Gobierno alemán aprueba los 22.300 millones de su parte en el rescate Los países de la eurozona se reúnen este viernes para "extraer las lecciones" de la crisis de Grecia Papaconstantinu: "Con esa decisión, el sistema bancario griego queda completamente restablecido y asegurado ANDREU MISSÉ - Bruselas - 04/05/2010 El Banco Central Europeo (BCE), adoptó ayer una decisión sin precedentes: acordó que aceptará los títulos de deuda griega, cualquiera que sea su calificación como garantía (colateral) de los préstamos que conceda a las instituciones griegas. Hasta ahora, el BCE exigía una calificación mínima de la deuda, fijada por las agencias de calificación, para poder ser aceptada como garantía. El Banco Central Europeo (BCE), adoptó el lunes una decisión sin precedentes: acordó que aceptará los títulos de deuda griega, cualquiera que sea su calificación como garantía (colateral) de los préstamos que conceda a las instituciones griegas. Hasta ahora, el BCE exigía una calificación mínima de la deuda, fijada por las agencias de calificación, para poder ser aceptada como garantía. La medida supone un soporte decisivo para la banca griega. Ésta podrá obtener préstamos del BCE a un coste bajísimo, en torno al 1%, ofreciendo como garantía títulos del Estado griego, incluso aunque algunos de ellos hayan sido degradados recientemente a nivel del bono basura. La semana pasada, la agencia de calificación Standard & Poor's rebajó la calificación de la deuda griega a BB+ y B (bono basura), desde BBB+ y A-2. Ello incapacitaba a la banca griega para acudir al BCE. Porque la entidad, a pesar de haber rebajado sus condiciones a causa de la crisis económica, exigía una calificación mínima de la deuda de BBB- para aceptarla como garantía. La decisión del banco emisor del euro de "suspender la aplicación de un umbral mínimo" de la valoración de la deuda supone una seria advertencia para las agencias de calificación. El ministro de Finanzas de Grecia, Yorgos Papaconstantinu, expresó su satisfacción por la decisión. Y manifestó que "con esa decisión, el sistema bancario griego queda completamente restablecido y asegurado, y esto es muy importante porque anula las acciones de las agencias de calificación". La exigencia de suprimir este tipo de exigencias ya había sido solicitada por algunos economistas. Es el caso de Sony Kapoor, director gerente de Re-Define, quien también ha pedido que se suspenda temporalmente la exigencia de una calificación mínima a los fondos de pensiones. El objetivo es que no se vean obligados a vender títulos cuando se rebaje su calificación.
142 Grecia recibió ayer otra buena noticia con la decisión del Gobierno de Berlín de aprobar su parte en el paquete de ayudas acordado. Alemania contribuirá con préstamos por valor de 22.800 millones, del total de 80.000 millones acordados por los ministros de economía de la zona euro el domingo. El Gobierno de Merkel podría contar con la colaboración de algunos bancos, ya que varias entidades se han ofrecido a colaborar. "Hay vías para que los bancos participen y eso es exactamente de lo que hablaremos mañana", dijo ayer Merkel. Al dinero aportado por la zona euro, se sumarán 30.000 millones del Fondo Monetario Internacional, (FMI). La canciller manifestó que "la reacción en forma de ley significa no sólo que estamos ayudando a Grecia, sino que estamos estabilizando al euro en su conjunto". La canciller señaló que la crisis ha puesto al descubierto que "los mecanismos de regulación no están lo suficientemente desarrollados para ponerse frente a la especulación". Igualmente, Merkel anunció que uno de los objetivos de su Gobierno será reforzar el Pacto de Estabilidad. La operación de ayuda a Grecia se realizará mediante 12 plazos o tramos durante los próximos tres años. Los pagos periódicos estarán sometidos a duras condiciones. Cada trimestre, las instituciones europeas y el FMI examinarán los avances realizados por Grecia. Analizarán los recortes de gasto (30.000 millones hasta 2012) y las reformas estructurales comprometidas, que afectan de manera muy sensible al sistema de pensiones. El primer plazo se pondrá en marcha a mediados de mayo para que Grecia pueda hacer frente a la renovación de un paquete de deuda que vence el próximo día 19 por valor de unos 8.500 millones. El dinero que los restantes 15 países de la zona euro prestarán a Grecia, a un interés de en torno al 5%, deberán buscarlo en los mercados de capitales. Previsiblemente, obtendrán el dinero en condiciones más favorables que Grecia: Alemania a poco más del 3% de interés y España en torno al 4%. Pero quizá algún país tenga que pagar un interés mayor que el pagado por Grecia. Fuentes de la Comisión Europea precisaron que los países que obtengan el dinero más barato compensarán a los que paguen más caro "para que ningún Estado pierda dinero" por participar en la ayuda. El paquete de rescate, que asciende a un total de 110.000 millones, no será suficiente para atender todas las necesidades de Grecia durante los próximos tres años ya que ascienden a unos 150.000 millones. Fuentes de la Comisión estiman, no obstante, que en el plazo de un año y medio o dos años, Grecia podría haber logrado estabilizar la situación y podría volver a los mercados para procurarse recursos. El acuerdo de rescate será valorado el día 7 por los jefes de Estado y de Gobierno de la zona euro y está pendiente de su aprobación por los parlamentos griego y alemán. Los efectos del ajuste exigido a un país que se encuentra en recesión, con una caída del PIB próxima al 5%, este año y de más del 1% en 2011 genera dudas. Algunos economistas plantean "si la medicina no será peor que la enfermedad". Grecia se enfrenta mañana a la tercera huelga general por la dureza del ajuste. http://www.elpais.com/articulo/economia/BCE/aceptara/deuda/griega/pese/nivel/bono/basura/ elpepueco/20100504elpepieco_2/Tes
143
ANÁLISIS: La primera crisis del euro La trampa del euro PAUL KRUGMAN 03/05/2010 No hace tanto, los economistas europeos solían burlarse de sus homólogos estadounidenses por haber cuestionado la sensatez de la marcha de Europa hacia la unión monetaria. "En general", afirmaba un artículo publicado el pasado enero sin ir más lejos, "el euro ha funcionado, hasta ahora, mucho mejor de lo que muchos economistas estadounidenses habían pronosticado". Vaya. El artículo resumía las opiniones de los euroescépticos con la frase: "No puede suceder, no es buena idea, no durará". Bueno, sí que sucedió, pero ahora mismo parece que realmente fue una mala idea por exactamente los mismos motivos expuestos por los escépticos. Y respecto a si durará... De pronto, eso parece una interrogación abierta. Para comprender el lío del euro -y la lección que nos enseña a los demás- hay que ver más allá de los titulares. Ahora mismo, todo el mundo se centra en la deuda pública, lo que puede hacer que esto parezca una simple historia de Gobiernos que no pueden controlar sus gastos. Pero eso es sólo parte de la historia de Grecia, mucho menos en el caso de Portugal, y para nada la historia de España. El hecho es que, hace tres años, ninguno de los países que ahora están en crisis o casi parecían tener problemas fiscales graves. Ni siquiera el déficit presupuestario de Grecia en 2007, expresado como porcentaje del PIB, era mayor que los déficits que registró Estados Unidos a mediados de los ochenta (¡el nuevo amanecer de EE UU!), mientras que España tenía de hecho superávit. Y los tres países atraían grandes flujos de capital extranjero, en gran parte porque los mercados creían que el hecho de pertenecer a la zona euro convertía las obligaciones griegas, portuguesas y españolas en inversiones seguras. Luego, llegó la crisis financiera mundial. Esas entradas de capital se agotaron; los ingresos se hundieron y los déficits se dispararon; y ser miembro de la zona euro, hecho que había animado a los mercados a amar a los países ahora en crisis de forma intensa pero insensata, se convirtió en una trampa. ¿En qué consiste esa trampa? Durante los años del dinero fácil, los salarios y los precios subieron mucho más deprisa en los países ahora en crisis que en el resto de Europa. Ahora que el dinero ya no entra a espuertas, esos países tienen que volver a controlar los costes. Pero es mucho más difícil hacer eso ahora que cuando cada país europeo tenía su propia moneda. En aquel entonces, los costes podían controlarse ajustando los tipos de cambio (por ejemplo, para recortar sus salarios respecto a los salarios alemanes, Grecia no tenía más que reducir el valor del dracma frente al del marco alemán). Sin embargo, ahora que Grecia y Alemania comparten la misma moneda, la única forma de reducir los costes relativos de Grecia es una combinación de inflación alemana y deflación griega. Y dado que Alemania no va a aceptar la inflación, la solución es la deflación. El problema es que la deflación -la bajada de los salarios y los precios- es siempre y en cualquier lugar un proceso tremendamente doloroso. Inevitablemente, conlleva una crisis prolongada con altas tasas de paro. Y también agrava los problemas de la deuda, tanto pública como privada, porque los ingresos se reducen mientras que la carga de la deuda no lo hace.
144 De ahí la crisis. Las desgracias fiscales de Grecia serían graves pero probablemente controlables si las perspectivas de la economía griega para los próximos años pareciesen al menos moderadamente favorables. Pero no es así. A principios de esta semana, cuando rebajó la calificación de la deuda griega, Standard & Poor's indicó que el valor en euros del PIB griego podría no volver a su nivel de 2008 hasta 2017, lo que significa que no hay esperanzas de que el crecimiento saque a Grecia del atolladero. Todo esto es justamente lo que temían los euroescépticos. El hecho de renunciar a la posibilidad de ajustar los tipos de cambio, advertían, propiciará crisis futuras. Y así ha sido. Entonces, ¿qué va a pasar con el euro? Hasta hace poco, la mayoría de los analistas, incluso yo mismo, pensaban que una ruptura del euro era prácticamente imposible, dado que cualquier Gobierno que se atreviese siquiera a insinuar que se estaba planteando abandonar el euro estaría fomentando una retirada masiva de depósitos de sus bancos. Pero si los países en crisis se ven incapaces de pagar sus deudas, probablemente se enfrenten a graves espantadas de los bancos de todos modos, lo que les obligaría a tomar medidas de emergencia como restricciones temporales a la hora de retirar dinero de los bancos. Esto dejaría abierta la puerta a la salida del euro. Así que, ¿está el propio euro en peligro? En una palabra, sí. Si los dirigentes europeos no empiezan a actuar de manera mucho más enérgica, proporcionándole a Grecia la ayuda suficiente para evitar lo peor, es muy posible que se produzca una reacción en cadena que empiece con el impago griego y termine causando muchos más estragos. Mientras tanto, ¿qué lección podemos aprender los demás? Los halcones del déficit ya están tratando de apropiarse de la crisis europea, presentándola como un ejemplo práctico de los peligros de los números rojos en las cuentas públicas. Sin embargo, lo que la crisis realmente demuestra es lo peligroso que es ponerse uno mismo una camisa de fuerza política. Cuando se unieron al euro, los gobiernos de Grecia, Portugal y España se negaron a sí mismos la posibilidad de hacer algunas cosas malas, como imprimir demasiado papel moneda; pero también se privaron de la capacidad de responder con flexibilidad ante los acontecimientos. Y cuando la crisis golpea, los Gobiernos tienen que ser capaces de actuar. Eso es lo que olvidaron los arquitectos del euro, y lo que el resto de nosotros tenemos que recordar. http://www.elpais.com/articulo/economia/trampa/euro/elpepueco/20100503elpepieco_2/Tes
145 Plan de ayuda a Grecia - Los internautas preguntan a Juan Antonio Gimeno Rector de la UNED y Catedrático de Economía. Paconet 1. 03/05/2010 - 16:03h. Buenos dias! Dados los tremendos ajustes sociales que han de afrontar los griegos en los proximos años, ¿no hubiera sido mejor para la poblacion que Grecia hubiera salido del euro y se hubiera devaluado su moneda? Una decisión tan drástica como salir del euro, probablemente, conlleve costes tan importantes o mayores que el plan de ajuste que ahora se promueve. El mercado único y la moneda única suponen una prima de seguridad para los países integrados en ellos. Sin el apoyo del euro y de la Unión Europea, los costes de financiación de la deuda para Grecia habrían sido insoportables y les habrían llevado inevitablemente o a la bancarrota o a ajustes internos igualmente fuertes. Salcon 2. 03/05/2010 - 16:06h. ¿Qué precio cree que va a tener que pagar Grecia por recibir esta ayuda? Lógicamente la Unión Europea y el Fondo Monetario Internacional necesitan garantías de que la ayuda va a permitir, efectivamente, el saneamiento financiero. En otro caso, el riesgo es que la ayuda no sirva para nada y sólo retrase la bancarrota o se convierta en un pozo sin fondo. Otra cosa es si este plan de ajuste es el único posible. Calamaro 3. 03/05/2010 - 16:08h. ¿Por qué piensa usted que en los planes de ajuste fiscal siempre aparecen en primer lugar los recortes salariales de los funcionarios? ¿Es que son tan relevantes? ¿Ocurre igual en España? Muchas gracias No es del todo cierto que esa sea la primera medida. Sí es verdad que es necesario contener el gasto público y, sin duda, el capítulo salarial es el más importante en los presupuestos. Un pequeño ajuste en los salarios de los funcionarios tiene un efecto total mayor que un gran ajuste en otras partidas menos relevantes. Y eso vale para cualquier país. Antoni Vidal 4. 03/05/2010 - 16:12h. ¿Es, realmente, comparable la situación de Grecia con la de España? ¿Existe el riesgo en España de que las estadísticas oficiales estén falseadas? Gracias. Las diferencias son abismales. En España la fiabilidad de las estadísticas no es cuestinada por nadie, el nivel de deuda es de los menores de Europa y las grandes firmas del sistema financiero son robustas. Esta diferencia es reconocida por todos los organismos internacionales y de calificación. No obstante, una caída de Grecia podría estimular movimientos especulativos en cadena que afectarían a Portugal y, después, a otros países como Italia, Irlanda o la propia España. Por eso, es imprescindible el apoyo a Grecia. Trasgu 5. 03/05/2010 - 16:15h. Yo estoy muy preocupado por la situación económica española. ¿Puede realmente España prestar 9000 millones de euros a Grecia sin que eso repercuta en nuestra economía? Prestar a Grecia en realidad es poner un dique para que no nos llegue la ola. Es una inversión de seguridad. Además, significará que no suba el coste de nuestra propia deuda. Y al final, no
146 costará realmente nada al contribuyente español porque España puede obtener préstamos a menor precio que el corresponde a la ayuda pactada para Grecia. Erre 6. 03/05/2010 - 16:20h. ¿Podría explicar en pocas palabras qué es lo que ha ocurrido con Grecia? ¿Qué opina sobre la solución ejecutada? En vez de afrontar los problemas que generaba una política de bajos impuestos y elevado gasto público, Grecia optó por esconder la cabeza, incluso falseando datos a los organismos comunitarios, y no aplicar las medidas correctoras necesarias. Eso hace más dolorosas las medidas que hay que tomar ahora. Sobre la solución ejecutada, hay una parte inevitable. Quizás se echa de menos primero un pacto social que implicara un mejor reparto de los costes, y segundo, un plan paralelo de recuperación de la actividad. Las medidas son muy restrictivas y pueden prolongar la crisis demasiado tiempo por ausencia de crecimiento económico. Ana 7. 03/05/2010 - 16:22h. ¿Haría falta congelar los salarios de los funcionarios en España? ¿por qué cree que no se ha hecho aún? El crecimiento de los salarios de los funcionarios es ya prácticamente nulo. Juan 8. 03/05/2010 - 16:25h. Si Grecia fuera a la bancarrota ¿qué efecto tendría para ellos? ¿y para Europa? La bancarrota significaría, en pocas palabras, la imposibilidad de conseguir préstamos, lo cual exige un plan de austeridad interno incluso más brutal que el que ahora se propone, con una salida de capitales que anularía la capacidad de ahorro e inversión internos. El temor a que lo mismo pudiera pasar en otros países europeos (como los que he citado antes) implicaría un encarecimiento de la deuda muy fuerte para los restantes países y, por lo tanto, un agravamiento de la situación financiera. La salida de la crisis en países como España sería más larga y más costosa. Asaltar los cielos 9. 03/05/2010 - 16:28h. Estimado señor Gimeno, ¿cree usted que hay alguna posibilidad de que algún país de la zona euro se salga de la moneda única, bien sea por decisión propia o por expulsión? Muchas gracias. Me parece poco probable la salida voluntaria porque, como ya he contestado, "fuera hace más frío". Y es también improbable la expulsión porque, como acabo de contestar, el riesgo de que algún país del euro caiga afectaría a todos los demás. Tomás Luís de Victoria 10. 03/05/2010 - 16:33h. ¿No le parece injusto que se rescate a un país que ha mentido? ¿En realidad, no estamos volviendo a salvar a los bancos ? ¿No deberían perder en todo caso los inversores en bonos griegos como pierde cualquier inversor? Injusto o no, creo haber explicado que es absolutamente inevitable acudir al rescate de Grecia. Para los países con más riesgo de contagio, como única forma de intentar evitarlo, y para los de menor riesgo, porque el deterioro del euro nos afecta a todos y, efectivamente, porque sus propios bancos sufrirían buena parte de los daños. Los inversores en bonos griegos sólo perderían realmente en caso de bancarrota. Y con ésta, quienes más ganarían serían los especuladores que vienen apostando por ella y, en parte, cooperando a provocarla con sus movimientos.
147 Alfonso 11. 03/05/2010 - 16:36h. Buenas tardes, quisiera saber por qué el sacrificio es siempre el de las clases medias y bajas, con lo que llevan ya sufrido por la crisis. ¿Por qué no aumentan, por ejemplo, el tipo máximo del impuesto de la renta? Efectivamente, las crisis las pagan sobre todo los más débiles. En la medida en que el grueso de la recaudación fiscal proviene de las clases medias y bajas es lógico que sean las que soporten cualquier ajuste recaudatorio. Elevar el tipo máximo del impuesto de la renta tiene un impacto recaudatorio reducido porque se aplica sobre pocos contribuyentes y, desgraciadamente, porque la mayoría de ellos encuentran mecanismos para eludir esa mayor presión fiscal. No obstante, coincido en que ajustes tan dolorosos deberían exigir un mayor equilibrio en el reparto de la carga. Rubén Crespo 12. 03/05/2010 - 16:40h. Aunque España no es Grecia ¿cómo se explica la situación de Grecia teniendo España mayor porcentaje de desempleo de la población activa? Estamos hablando de solvencia financiera que, en el corto y medio plazo, no tiene por qué guardar relación con el desempleo. España ha tenido tasas elevadas de desempleo (en torno al diez por ciento) en épocas de crecimiento y superávit presupuestario. El coste social del desempleo es más elevado que el del endeudamiento, pero sin capacidad de endeudamiento se condena a un país al desempleo aún más generalizado. Carolvs 13. 03/05/2010 - 16:43h. Parece imposible que Grecia, con un plan de ajuste tan duro pueda devolver los 110.000 millones de euros y bajar su déficit público al 3% en plazo. ¿No estamos firmando planes irreales? El plan de ajuste parece extremadamente fuerte por lo que podría considerarse razonablemente realista. El problema es que puede condenar a la economía griega a un larguísimo estancamiento. Y eso sí que hará más difícil que se cumplan los objetivos. No obstante, sólo si el plan resulta creíble conseguirá apaciguar a los especuladores. Locodelpelorojo 14. 03/05/2010 - 16:46h. ¿Por qué ha de pagar la población el exceso de especuladores y politicos? Gracias Las causas de esta crisis son complejas, pero es cierto que buena parte de la situación griega viene causada fundamentalmente por la especulación financiera irresponsable y la política económica de los gobiernos anteriores. Pero sean quienes sean los culpables de la enfermedad, la terapia la tiene que sufrir el enfermo y no los agentes que la han provocado. Es injusto, pero no hay otra solución. Sin perjuicio de que deberían existir mecanismos para poder exigir responsabilidades. Mensaje de despedida Muchas gracias por todas las preguntas, lamento no poder contestar a todas aunque creo que la mayoría de las pendientes tienen al menos parte de las respuestas en las contestaciones anteriores. Confío en haber contribuido a reducir algunos temores desproporcionados y, a pesar de la necesaria brevedad de las respuestas, a aclarar algunas ideas sobre tan complicada situación. Un saludo a todos y hasta otra ocasión. http://www.elpais.com/edigitales/entrevista.html?encuentro=6650
148
A rare interview with Jürgen Habermas By Stuart Jeffries Published: April 30 2010 12:04 | Last updated: April 30 2010 12:04 Portions of Stuart Jeffries’ interview with Jürgen Habermas can be found below this profile In January, one of the world’s leading intellectuals fell prey to an internet hoax. An anonymous prankster set up a fake Twitter feed purporting to be by Jürgen Habermas, professor emeritus of philosophy at the Johann Wolfgang Goethe University of Frankfurt. “It irritated me because the sender’s identity was a fake,” Habermas told me recently. Like Apple co-founder Steve Jobs, - Zimbabwean president Robert Mugabe and former US secretary of state Condoleezza Rice before him, - Habermas had been “twitterjacked”. Twitter closed down the fake Habermas feed, but not before the philosophy blogosphere had become very excited. Could it be that the 80-year-old German thinker was joining Sarah Brown and Stephen Fry among the Twitterati? Was he really trying to explain his ethico-political theories in 140 characters or fewer? Some were taken in, others dubious. One blogger wrote sceptically: “Firstly, the sentence ‘Sprechen Sie Deutsch, bitte?’ does not seem to be a sentence uttered by a native German speaker – he would have simply asked ‘Sprechen Sie Deutsch?’ or said ‘Sprechen Sie bitte Deutsch?’” But some of the tweets were authentic Habermas. For instance, at 5.38pm on January 29, “Jürgen Habermas” tweeted the following: “It’s true that the internet has reactivated the grass-roots of an egalitarian public sphere of writers and readers.” At 5.40pm: “It also counterbalances the deficits from the impersonal and asymmetrical character of broadcasting insofar as…” At 5.41pm: “…it reintroduces deliberative elements in communication. Besides that, it can undermine the censorship of authoritarian regimes…” At 5.44pm: “But the rise of millions of fragmented discussions across the world tend instead to lead to fragmentation of audiences into isolated publics.” I fed these tweets into Google and found that they were all taken from footnote three to the English translation of Habermas’s 2006 paper “Political Communication in Media Society: Does Democracy Still Enjoy an Epistemic Dimension?” Why would Habermas cut and paste from his own paper? Of course, it turned out that he hadn’t. To find out who had, I posted appeals for information on philosophy blogs from Chicago to Leiden. Would the real creator of the fake Habermas please stand up? After a few weeks, I received an e-mail from someone called Raphael, a Brazilian studying for a PhD in politics in the US, confessing he created the feed. At first he used it to “inform people about [Habermas’s] most recent publications”, as a form of flattery to the man he had admired since he was an undergraduate. But one day, an Austrian professor sent him a message asking if he
149 was the real Habermas. “I thought that it would be funny to pretend a little bit. Then I quoted the passage about the internet and the fragmentation of the public sphere. It was interesting to see people’s reaction.” Raphael doesn’t want to disclose his surname or where he’s studying, out of embarrassment. But in tweeting Habermas’s thoughts on the internet, he succeeded in titillating many philosophers and sociologists. They were intrigued by how one of Habermas’s key concepts, the “public sphere”, which he developed in his classic 1962 book The Structural Transformation of the Public Sphere: An Inquiry into a Category of Bourgeois Society, might apply to the internet age. This isn’t a trivial matter: at a time when disgust for traditional democratic party politics runs deep and when the so-called democratic deficit makes European political integration look like a scheme concocted by self-serving elites, perhaps the internet offers hope for change. Think, after all, of how social networking sites were used during last year’s Iranian elections to mobilise young voters. But what is a public sphere? It’s not as obvious as you might think. “By the ‘public sphere’ we mean first of all the realm of our social life in which something approaching public opinion can be formed,” writes (the real) Habermas. “Citizens behave as a public body when they confer in an unrestricted fashion – that is, with the guarantee of freedom of assembly and association and the freedom to express and publish their opinions – about matters of general interest.” For Habermas, in a Marx-inflected and certainly historically dialectical account of European civilisation, the public sphere briefly flourished at a specific historical moment. Just before the industrial revolution, literary men and women met in London’s coffee houses, Paris’s salons and Germany’s Tischgesellschaften (“table talks”) for what Habermas calls “rational-critical discussion”. “In its clash with the arcane and bureaucratic practices of the absolutist state,” writes Habermas, “the emergent bourgeoisie gradually replaced a public sphere in which the ruler’s power was merely represented before the people with a sphere in which state authority was publicly monitored through informed and critical discourse by the people.”
150 Habermas addressing students in Frankfurt in 1968. He agonised over whether the student protests that swept Europe and the US at the time were ‘left fascism’ or, more hopefully, attempts to ‘politicise the public sphere’
But that 18th-century “public sphere” was killed in its cradle. Habermas found lots of different fingerprints on the murder weapon: the welfare state, mass media, the rise of public relations, the undermining of parliamentary politics by the rise of political parties. The fact that most of us know more about Paris Hilton than post-endogenous growth theory probably doesn’t help either. Habermas’s thinking has a nostalgic tenor: if only we were more like all those well-read, well-informed, critically minded coffee-house - denizens, then democracy might have a chance in the 21st century. * * * * * Isn’t this, one might think, what the internet offers – a hopeful space, unconstrained by status and spin, for critical political discussion? Habermas, when I put these thoughts to him by e- mail during an extremely rare interview, is sceptical. (Even if he has a reputation as a public intellectual, Habermas hardly ever gives press interviews, preferring instead to comment very occasionally in German newspapers such as Die Zeit.) “The internet generates a centrifugal force,” he says. “It releases an anarchic wave of highly fragmented circuits of communication that infrequently overlap. Of course, the spontaneous and egalitarian nature of unlimited communication can have subversive effects under authoritarian regimes. But the web itself does not produce any public spheres. Its structure is not suited to focusing the attention of a dispersed public of citizens who form opinions simultaneously on the same topics and contributions which have been scrutinised and filtered by experts.” Perhaps social networking websites might help create that solidarity? “Since I use the internet only for specific purposes and not very intensively, I have no experience of social networks like Facebook and cannot speak to the solidarising effect of electronic communication, if there is any. “As regards its impact on the public sphere, accelerated communication opens up entirely new possibilities for organising activities and for large-scale political mobilisations of widely dispersed addressees. I still receive at least one e-mail per week from Obama’s election team. These communications refer to issues and events within the political system, which they in turn influence. However, they remain contingent on their relation to the real decision- making processes that take place outside the virtual space of electronically networked monads.” Quite so. Electronically networked monads (or independent units) cannot on their own create a public sphere. But the dream of recreating something akin to that 18th-century public sphere, where citizens of a political community act as more than consumers, by influencing each other through debate, has been central to Habermas’s thinking. That he became so temperamentally idealistic was perhaps a surprise, given the circumstances of his early years. Jürgen Habermas should have been yet another philosophical Cassandra; instead, he is more like its Pollyanna. Born near Düsseldorf in 1929, he came of age in postwar Germany. As his Stanford Encyclopedia of Philosophy entry notes: “The Nuremberg Trials were a key formative moment that brought home to him the depth of Germany’s moral and political failure under National Socialism.” Philosophy, his chosen intellectual discipline, was hardly exempt. Indeed, one of his first acts as a public intellectual came when, in 1953, he challenged the great philosopher and one-time Nazi sympathiser
151 Martin Heidegger to explain what Heidegger meant by an allusion in his Introduction to Metaphysics to the “inner truth and greatness” of National Socialism. Heidegger’s silence confirmed Habermas’s conviction that the German philosophical tradition had failed in its moment of reckoning.
Unlike Heidegger, Habermas never shirked the intellectual’s responsibility of engaging with difficult moral and political issues in public – that, after all, was how the public sphere was supposed to work. Andrew Bowie, professor of philosophy and German at Royal Holloway, University of London, argues: “In many respects, he has been, and remains, the exemplary intellectual figure in the German public sphere since the 1970s, as social theorist, legal theorist, social critic, political actor and as a philosopher concerned to advocate a new direction for German thought after the Nazi period.” Typical of that public engagement in the German press was his intervention in the Historikerstreit, or historians’ quarrel, about how the Holocaust should be interpreted. Ernst Nolte, in 1986, wrote an article arguing that Germany “reasonably” turned to Nazism in the face of the Bolshevik threat. After the war he challenged Habermas took issue with this view and with rightwing Heidegger on his allusion to the ‘inner truth and greatness’ of the historians who contended that Nazism was a breach with Nazis German history by a small criminal clique. Habermas argued that these historians were trying to get a nation off the hook for its responsibility in Nazi atrocities. His role in the Historikerstreit highlighted how he felt intellectuals ought to act to ensure that public debate was an issue of concern to every German citizen. It was perhaps the manifestation of another key concept in his intellectual armoury, namely “communicative rationality” (a term developed in his forbidding 1981 masterpiece The Theory of - Communicative Action), whereby participants in argument learn from others and from themselves and question suppositions typically taken for granted. In the aftermath of one of the most brutal centuries in recorded history and with the threat of worse to come, it sounded welcome – like an ongoing and global version of South Africa’s Truth and Reconciliation Commission. * * * * * Habermas’s new and hopeful direction for German philosophy looks like a rebellious response to the philosophical despair of Theodor Adorno, his greatest teacher. Adorno, philosopher of “negative dialectics”, a style of thinking that scorned method, held out against creating just the kind of rationally achieved consensus that has guided Habermas’s work. Adorno mused with the guilt of a Holocaust survivor on whether “one who escaped [Auschwitz] by accident, one who by rights should have been killed, may go on living”. Habermas went beyond his teacher’s guilt. Unlike Heidegger, he took responsibility; unlike Adorno, he declined to despair. Unlike his teacher, too, he has sought to develop system and method, and to work out how, as he describes it to me, “the citizens of a political community could still exercise collective influence over their social destiny through the democratic process”.
152 But wasn’t Adorno right to despair? True, we may have left behind the Third Reich, but we are in an era in which commitment to democracy appears to be at a low ebb. The notion of a well-functioning public sphere seems the barmy dream of a cock-eyed optimist. “There are good reasons to be alarmed,” retorts Habermas. “Some people already think that authoritarian mass democracies will provide the functionally superior model under conditions of a globalised world economy… Today many people are intimidated by a growing social complexity which is ensnaring individuals in increasingly dense contexts of action and communication.
“My impression is that the whole world has become more conservative and shares the attitude towards life summed up by my colleague Nicholas Luhmann [the German sociologist] in the formula: ‘Everything is changing and nothing works any more.’ Habermas casts the situation in even stronger terms: “In this mood, the notion that the citizens of a political community could still exercise collective influence over their social destiny through the democratic process is also being denounced by intellectuals as a misguided Enlightenment inheritance. Liberal confidence in the idea of an autonomous life is now confined to the individual freedom of choice of consumers who are living off the drip-feed of contingent opportunity structures.”
Drip-fed consumers are unable to discuss effectively serious Unlike Theodor Adorno, who issues that affect their lives. Consider, Habermas suggests, the mused with the guilt of a public debate about Obama’s healthcare reforms. He seethes Holocaust survivor, Habermas did about the “progressive destruction of the infrastructure” that not despair would allow a conversation about the substance of the proposals and their relative merits, rather than the bandying about of ideologies. “If we consider the information on the basis of which a majority of the American population demonises even modest healthcare reforms as an outgrowth of ‘socialism’ or ‘communism’, we cannot assume that the public sphere and political education are still functioning properly in western countries.” Even newspapers are under dire threat: “In our own countries, too, the national press, which until now has been the backbone of democratic discourse, is in severe danger. No one has yet come up with a business model that would ensure the survival of the important national newspapers on the internet.” * * * * * For Habermas, even the grimmest diagnosis does not give licence for despair. He remains committed to the dream of European unification – something that in 2010 looks utopian, given how the Greek debt crisis threatens to destroy the eurozone and thus the foundation of political integration. Why is European unification important to Habermas? In his latest book, Europe: The Faltering Project, he argues that the “monstrous mass crimes of the twentieth century” mean that nations can no longer be presumed to be innocents and thus immune to international law. Petty nationalist pasts should be left behind in a better, more rational organisation based on worldwide consensus. Bertrand Russell had a similar idea, even if he didn’t think it through with Habermas’s thoroughness.
153 Habermas’s hope is that a more unified Europe could work closely with the US to build a more stable and equitable international order. Europe, he argues, should be bolstering Obama in his international goals, such as disarmament and securing Middle East peace, as well as encouraging Washington to lead efforts to regulate financial markets and stem climate change. “But as so often is the case, the Europeans lack the political will and the necessary strength. Measured against the expectations which it encounters at the global level, Europe is a major failure on the international stage.” Significantly, the German title of the book is Ach, Europa. Does the recent Greek debt crisis doom that European project? “Greece’s debt crisis has had a welcome political side-effect,” says Habermas, snatching optimism from the jaws of defeat. “At one of its weakest moments, the European Union has been plunged into a discussion concerning the central problem of its future development.” But if Habermas believes the EU is vulnerable, one of its biggest problems, he says, is his homeland’s renewed narcissism. Angela Merkel’s Germany is as nationalistic as Thatcher’s Britain. “The German elites apparently seem to be enjoying the comforts of self-satisfied national normalcy: ‘We can be like the others once again!’… The willingness of a totally defeated people to learn more quickly has disappeared. The narcissistic mentality of a complacent colossus in the middle of Europe is no longer even a guarantee that the unstable status quo in the EU will be preserved.” Worse yet, European unification remains an elite project. Like the internet, Europe has created no public sphere in which citizens can express their views freely and without regard to status. How can this be changed? Habermas argues that “a co-ordination of the economic policies in the eurozone would also lead to an integration of policies in other sectors. Here what has until now tended to be an administratively driven project could also put down roots in the minds and hearts of the national populations.” But that seems remote, especially as Europe’s leaders revel in cross-border sniping. For instance, in March this year Merkel told the Bundestag that it could become necessary to throw debt-addled Greece out of the eurozone. Habermas attacks her, saying: “Such a lack of solidarity would certainly scupper the whole project … There can be no better illustration of the new indifference of the new Federal Republic than her insensitivity to the disastrous impact of her words in the other member states.” Why does Habermas pin so much hope on an integrated Europe? Why not plump for a neo- liberal network of European states, each just one, selfish player in a capitalistic world? “Aside from the insensitivity to the external costs of the social upheavals that [neo-liberal policy] casually takes for granted,” he replies, “what annoys me is the lack of a historical understanding of the shifts in the relationship between the market and political power. “Since the beginning of the modern period, expanding markets and communications networks had an explosive force, with simultaneously individualising and liberating consequences for individual citizens; but each such opening was followed by a reorganisation of the old relations of solidarity within an expanded institutional framework.” This is typical Habermas: instead of wallowing in the hopelessness of a Marxist-inspired philosopher confronted with capitalism – endlessly rampant and utterly destructive of the kind of egalitarian politics he wants to see – he tells a story about the past that seems to suggest things aren’t as hopeless as he fears. “Time and again, a sufficient equilibrium between the market and politics was achieved to ensure that the network of social relations between citizens of a political community was not damaged beyond repair. According to this rhythm, the current phase of financial market-driven
154 globalisation should also be followed by a strengthening of the international community.” Habermas always finds reasons to be positive, to mutate from Cassandra into Pollyanna. And not just a European Pollyanna, but a global one. “Today we need institutions capable of acting on a global scale,” he tells me. “We can see that the noble resolutions of the G20 summit in London on stock market oversight and regulation of the financial markets remain empty words without worldwide political co-ordination. The tentative measures undertaken by individual national governments in this area are condemned to failure for obvious reasons.” There is an Irish story about a driver who asks a passerby how to get to Dublin. “If I wished to go to Dublin,” comes the reply, “I wouldn’t start from here.” But we have to start from here, Habermas realises, even if we are hobbled by egotistical nation states, a trivia-obsessed media, citizens incapable of forming an intelligent public sphere able to monitor political elites. Whether the ideals he yearns for – communicative rationality, European integration, an equitable world order, citizens to share his high-mindedness rather than tweet his thoughts – will materialise is debatable. But even in his ninth decade, Habermas won’t yield to despair.
Demonstrators clash with Athens riot police in March during a protest against government austerity measures
The cost and challenge of the eurozone debt crisis Jürgen Habermas’s responses in full In 2008, you published a book entitled Ach, Europa (published in the UK as Europe: The Faltering Project). How does Greece’s debt crisis deepen the worries you expressed there for the future of the European project? Greece’s debt crisis has had a welcome political side-effect. At one of its weakest moments, the European Union has been plunged into a discussion concerning the central problem of its
155 future development. The crisis shifts the focus of public discussion – and not only in the business sections of our national papers – of an issue that many regard as the birth defect of an incomplete political union stuck in midstream. A common market with a partially shared currency has evolved within an economic zone of continental scale with a huge population; but European-level institutions with sufficient powers to ensure effective co- ordination of the economic policies of the member states have not been created. That the debt crisis and the unstable euro at least touch upon the pivotal question could reflect a trace of the cunning of reason: is a stability pact riddled with holes sufficient to counterbalance the unintended consequences of a planned asymmetry between economic and political unification? The collapse of the Spanish real estate market shows that the problem is more than a matter of cheating by the Greeks. The commissioner for monetary affairs, Olli Rehn, has good reasons to call for rights of consultation and intervention for the European Commission in national budget planning. Germany’s finance minister, Wolfgang Schäuble, has advocated the creation of a European Monetary Fund that could provide aid in future crises. Is that feasible or desirable? Can Europe effectively resist the depredations of speculative capitalism that have threatened to bankrupt Greece and destroy the eurozone? The current threat throws light on a fundamental problem because it affects the deeper conflict within the EU between integrationists and, let me say, market Europeans. At its most recent sitting, the European Council established a “task force” under the leadership of its president Herman Van Rompuy, which is expected to develop proposals for avoiding future state bankruptcies. Schäuble’s plan for a European Monetary Fund will play a role in this process, just as will the insistence of the European Commission on greater influence over the budget planning of the member states. It is important to recognise the ambiguity of both initiatives. In each case the declared intention is only to create instruments within the framework of the treaties to ensure more effective compliance with the stability pact. On the other hand, the enhanced inspection and control rights that would either be attached to loans or permanently exercised by the Commission can also be understood as a starter drug for developing an economic government, at least in the eurozone. The EU finance commissioner would like to inspect the draft budgets of the national governments even before they are submitted to the national parliaments. Since budgetary law is the core of parliamentary democracy, such a prior right of inspection of the Commission would be far from harmless and require a further shift of competences towards the European Parliament. Angela Merkel told the Bundestag that existing EU rules were not strong enough to deal with the crisis triggered by Greece, and that in such circumstances it may be necessary to throw a country out of the eurozone. Is she right? And what would be the consequences for the European project? Such a lack of solidarity would certainly scupper the whole project. Of course, Merkel’s statement was intended at the time for domestic consumption in the run-up to the important regional election in North Rhine-Westphalia. But there can be no better illustration of the new indifference of the new Federal Republic than her insensitivity to the disastrous impact of her words in the other member states. Merkel is a good example of the phenomenon that “gut politicians who were ready to take domestic political risks for Europe are a dying breed”. This is a quotation from Jean-Claude Juncker, himself one of the last pro-European dinosaurs. Admittedly, Angela Merkel grew up in East Germany and the Rhinelander Jürgen Rüttgers [another CDU politician] would not speak like her. But German intransigence has deeper roots. Apart from Joschka Fischer, who ran out
156 of steam too quickly, the generation of rulers in Germany since the chancellorship of Gerhard Schröder has pursued an inward-looking national policy. I don’t want to overestimate the role of Germany in Europe. But the breach in mentalities which set in after Helmut Kohl has major significance for Europe. Within the constellation following the second world war, the cautious pursuit of European unification was in the country’s interests because it wanted to return to the fold of civilised nations in the wake of the Holocaust. It looked like the West Germans would have to come to terms with the partition of the country in any case. Mindful of the consequences of their former nationalistic excesses, they had no difficulty in relinquishing the recovery of sovereignty rights and, if necessary, making concessions that would in any case pay off for the Federal Republic. This perspective has changed since the reunification. The German elites seem to be enjoying the comforts of self-satisfied national normalcy: “We can be like the others once again!” I don’t share Margaret Thatcher’s one-time fear that this “normalisation” of public consciousness entails the return of old dangers. But a total defeat connected with an inconceivable moral corruption also created an opportunity for the following generation to learn more quickly. Looking at our present political elite, this window of opportunity seems to be closed. The narcissistic mentality of a self-satisfied colossus in the middle of Europe is no longer even a guarantee that the unstable status quo in the EU will be preserved. Why is maintaining the eurozone important for the future of Europe as a political project? Economic unification is the core of political unification. On the continent, we already experienced this during the 19th-century processes of national unification. In complete contrast to that time, however, European unification remains to this day an elite project. We have yet to experience a European election in which the outcome turned on anything other than national topics and tickets. Until the Maastricht treaty, the unification process was also, if not primarily, driven by economic interests. Since the interests of the “market Europeans” were satisfied at that time, the economic impulses driving a further deepening of the institutions have lost their dynamism. The eastward enlargement of the EU was an historic achievement. But the arduous repairs undertaken in the Lisbon treaty revealed the limits of an elitist approach to issues of political integration above the heads of the national populations. The financial crisis has reinforced national egoisms even further but, strangely enough, it has not shaken the underlying neo-liberal convictions of the key players. Today, for the first time, the European project has reached an impasse. Imagine the improbable scenario of a co-ordination of the economic policies of the eurozone countries which would also lead to an integration of policies in other sectors. Here what has until now tended to be an administratively driven project would also take root in the hearts and minds of the national populations. The symbolic power of a common foreign policy would certainly promote a cross-border awareness of a shared political fate and bolster a further democratisation of the EU. What is abhorrent to you about a neo-liberal network of European states, each just one selfish player in a capitalistic world? I am no expert concerning the economic controversies over the doctrine of the Chicago School. But what annoys me – aside from the insensitivity of neo-liberal policy to the external costs of the social upheavals that it callously takes for granted – is the lack of a historical understanding of the shifts in the relationship between the market and political power. More than half a century ago, Karl Polanyi described capitalist development as an interplay between a functionally necessitated opening of society followed in each case by an integrative closure at a higher level. Since the beginning of the modern period,
157 expanding markets and communications networks had an explosive force, with individualising and liberating impacts on individual citizens; but each such opening was followed by a reorganisation of the old relations of solidarity within an expanded institutional framework. Time and again, a sufficient equilibrium between the market and politics was achieved to ensure that the network of social relations between citizens of a political community was not damaged beyond repair. According to this rhythm, the current phase of financial-market-driven globalisation should also be followed by a strengthening not only of the European Union but of the international community. Today, we need institutions capable of acting on a global scale. We can see that the noble resolutions of the G20 summit in London on stock market oversight and regulation of the financial markets remain empty words without worldwide political co-ordination. The tentative measures undertaken by individual national governments in this area are condemned to failure for obvious reasons. Stuart Jeffries is a freelance writer http://www.ft.com/cms/s/0/eda3bcd8-5327-11df-813e-00144feab49a.html
158 OPINION MAY 3, 2010 How to Avoid a 'Bailout Bill' A new bankruptcy process is the right way to deal with failing financial institutions. By JOHN B. TAYLOR It's good news there's now bipartisan agreement that the financial reform bill should not be a "bailout bill," and that amendments to Connecticut Sen. Chris Dodd's draft legislation are being proposed and debated with this agreement in mind. The biggest challenge in this bailout reform debate is to avoid giving the federal government more discretionary power, whether by creating a special bailout fund or by providing more ways to bypass proven bankruptcy rules. Experience shows that such power would increase, not decrease, the likelihood of another crisis. Some say that the government did not have enough power to intervene with certain firms during the financial crisis. But it had plenty of power and it used it, beginning with Bear Stearns. This highly discretionary power—to bail out some creditors and not others, to take over some businesses and not others, to let some firms go through bankruptcy and not others—was a major cause of the financial panic in the fall of 2008. The broad justification used for the bailout of Bear Stearns creditors led many to believe the government would again intervene if another similar institution, such as Lehman Brothers, failed. But when the Federal Reserve and the Treasury Department could not persuade private firms to provide funds to Lehman to pay its creditors in September 2008, the Fed surprisingly cut off access to its funds. The examiner's report on Lehman makes it very clear there was no preparation for bankruptcy proceedings before the day the government suddenly cut off the funds. No wonder there was a disruption. Then, the next day, the Fed reopened its balance sheet to make loans to rescue the creditors of AIG, including billions for Goldman Sachs. The funding spigot was then turned off again, and a new program, the Troubled Asset Relief Program (TARP), was proposed. This on-again off- again policy was part of a series of unpredictable and confusing government interventions which led to panic.
Martin Kozlowski This experience demonstrates why it is dangerous for the "orderly liquidation" section of the Dodd bill to institutionalize such a process by giving the government even more discretion and power to take over businesses; the interventions are likely again to cause more harm than good, even with the best of intentions. Many experts doubt the ability of the Federal Deposit
159 Insurance Corp. (FDIC) to take over large, complex financial institutions, as the current bill calls for, without causing disruption. The moral hazard associated with protecting creditors will continue even if the FDIC has the discretionary authority to claw back later some of the funds it provides in the bailout. The proposed liquidation process would have the unintended consequence of increasing the incentive for creditors and other counterparties to run whenever there is a rumor that a government official is thinking about intervening. Who is going to be helped? Who is going to be hurt? It is up to government officials to decide, not the rule of law. Fortunately, it is not necessary to provide this additional discretionary authority. During the past year since the administration proposed its financial reforms, bankruptcy experts have been working on a reform to the bankruptcy law designed especially for nonbank financial institutions. Sometimes called Chapter 11F, the goal is to let a failing financial firm go into bankruptcy in a predictable, rules-based way without causing spillovers to the economy and permitting, if possible, people to continue to use its financial services—just as people flew on United Airlines planes, bought Kmart sundries and tried on Hartmax suits when those firms were in bankruptcy. What would a Chapter 11F amendment look like? It would create a special financial bankruptcy court, or at least a group of "special masters" consisting of judges knowledgeable about financial markets and institutions, which would be responsible for handling the case of a financial firm. In addition to the normal commencement of bankruptcy petitions by creditors or debtors, an involuntary proceeding could be initiated by a government regulatory agency as prescribed by the new bankruptcy law, and the government would be able to propose a reorganization plan—not simply a liquidation. Defining and defending the circumstances for such an initiation—including demonstrating systemic risk using quantitative measures such as interbank credit exposures—is essential. Third, Chapter 11F would handle the complexities of repurchase agreements and derivatives by enabling close-out netting of contracts in which offsetting credit exposures are combined into a single net amount, which would reduce likelihood of runs. Fourth, a wind-down plan, filed in advance by each financial firm with its regulator, would serve as a blueprint for the bankruptcy proceedings. The advantage of this bankruptcy approach is that debtors and creditors negotiate with clear rules and judicial review throughout the process. In contrast, the proposed "orderly liquidation" authority in the current bill is secretive and potentially capricious. Rather than a government official declaring "we will wipe out the shareholders" or "it's unfair for us to claw back so much from creditors," under Chapter 11F the rule of law applies. A discretionary punishment can be just as harmful as a discretionary bailout. As George Shultz puts it in the book "Ending Government Bailouts As We Know Them," recently published by the Hoover Press, "Let's write Chapter 11F into the law so that we have a credible alternative to bailouts in practice." What are the obstacles to following this sensible advice? One is that the proposals are new; much of the creative work was done in the past year since the administration first made its reform proposals. A common perception is that bankruptcy is too slow to deal with systemic risk situations in a large complex institution, but the new proposals would have a team of experts ready to go.
160 Another obstacle is that the Judiciary Committee rather than the Banking Committee has jurisdiction over bankruptcy law, and it is too hard to coordinate. But bureaucratic silos should not get in the way when the stakes are so high. Yet another hurdle to reform is that the current bill was put together by many of the same people who were in government at the time of the bailouts. A typical government excuse for the crisis is that government did not have enough power, but a more likely explanation is that it had too much discretionary power and, as is so often the case, did not use it effectively. You do not prevent bailouts by giving the government more power to intervene in a discretionary manner. You prevent bailouts by requiring adequate capital based on simple, enforceable rules and by making it possible for failing firms to go through bankruptcy without causing disruption to the financial system and the economy. Mr. Taylor, a professor of economics at Stanford and a senior fellow at the Hoover Institution, is co-editor with Kenneth Scott and George Shultz of "Ending Government Bailouts As We Know Them" (Hoover Press, 2010). http://online.wsj.com/article/SB10001424052748703871904575216633061219378.html#print Mode
161 Global Business
May 2, 2010 Greece Takes Its Bailout, but Doubts for the Region Persist By DAN BILEFSKY and LANDON THOMAS Jr. Europe's Web of Debt Banks and governments in these five shaky economies owe each other many billions of euros — converted here to dollars — and have even larger debts to Britain, France and Germany. Arrow widths are proportional to debt amounts.
162 ATHENS — Greece announced on Sunday that it had reached agreement on a long-delayed financial rescue package that would require years of painful belt-tightening, but the deal might not be enough to stop the spread of economic contagion to other European countries with mounting debts and troubled economies. The bailout, which was worked out over weeks of negotiations with the International Monetary Fund and Greece’s European partners, calls for 110 billion euros, or $146 billion, in loans over the next three years intended to avoid a debt default. But analysts warned that Greece had not yet solved its fundamental problems and that other sovereign debt crises could arise as lenders and market speculators turned their attention to a handful of similarly vulnerable nations across southern Europe. “The immediate impact may be soothing, but the inflammation will soon show up again,” said Edward Hugh, an economist in Barcelona who writes for the influential Fistful of Euros blog. “My feeling is the rot has now gone too far.” In Greece, Prime Minister George Papandreou, the scion of a Socialist dynasty whose father helped erect the sprawling Greek welfare state when he was prime minister in the 1980s, sought to prepare Greeks for what was expected to be the greatest overhaul of the state in a generation. “I want to tell Greeks very honestly,” he said, “that we have a big trial ahead of us.” “I have done and will do everything not to let the country go bankrupt,” Mr. Papandreou said in a televised address that urged Greeks to accept “great sacrifices” to avoid “catastrophe.” While the bailout provides a lifeline to the Greek government, similar challenges await other deficit-racked countries like Portugal, Spain and perhaps even Italy. Moreover, nations like Latvia, Hungary and Romania — which are outside the 16-member group that uses the euro as its common currency — are all struggling in their own efforts to meet economic and fiscal goals set in conjunction with the I.M.F. A big test of the rescue plan’s effectiveness will come this week when global markets render a verdict. Until now, efforts to assist Greece have been seen as too little, too late — prompting the upward spiral in interest rates that finally forced Europe and the I.M.F. to act decisively. The fact that the rescue plan has been expected for the better part of a week, and does not address challenges in Portugal and Spain, may well be seen by investors as a sign that the broader issue of Europe’s debt problem remains unresolved. Poul Thomsen, I.M.F. mission chief for Greece, said the austerity measures should help reassure markets. “I think this is a defining moment for Greece; I think it will restore confidence,” he said. “I think you will see a sustained, significant decline of spreads.” He added that the package for Greece was in no way a blueprint for other countries. For Europe, the agreement was an important step toward preserving the credibility of its single currency. It followed weeks of negotiations that created some of the deepest fissures in the move toward European integration that began more than half a century ago. European leaders have bristled at criticism that their halting response to the crisis made things worse and insisted on stringent conditions for the required bailout. “I think that result is fully in line with what we very much wanted,” Jean-Claude Trichet, the president of the European Central Bank, told a news conference in Brussels on Sunday. He added, though, that “democracies have their own particular timetables,” an apparent allusion to the national interests that critics say prevented a quick and coordinated response.
163 The strongest national interests are in Germany, where there is stiff public resistance to a bailout of Greece. The German parliament must still approve the aid package before the loans can start. Chancellor Angela Merkel said on Sunday that she would present draft legislation to her cabinet on Monday and hoped to have the approval of the German contribution through the parliament by Friday. “I’m going to get behind such a path by all means,” she told reporters in Bonn. She said the program was essential to safeguard the stability of the euro. For Greece, the rescue package, which is expected to be approved by the Socialist-controlled legislature later this week, will require years of sacrifice. The finance minister, George Papaconstantinou, said Greece had agreed to raise its value- added tax to 23 percent from 21 percent, to freeze civil servants’ wages and to eliminate public sector annual bonuses amounting to two months’ pay. In addition, members of parliament would no longer receive bonuses. He said special rules allowing for early retirement of civil servants would be tightened and the government intended to increase taxes on fuel, tobacco and alcohol by about 10 percent. But Mr. Papandreou said that in tough negotiations with the I.M.F., the European Union and the European Central Bank, the government had succeeded in avoiding cuts to private sector salaries. Crucially, Mr. Papaconstantinou did not address the critical issue of whether the government would relax rules on laying off public sector workers, whose generous salaries and benefits have been a central cause of Greece’s debt problem. Indicating that the measures would inevitably undermine economic growth, Mr. Papaconstantinou forecast a deeper than expected recession of 4 percent for 2010, with a further fall of 2.6 percent in 2011, before the economy returned to growth of 1.1 percent in 2012. And he conceded that the program, even if successful, would take longer than originally hoped to restore Greece’s fiscal balance. “We will be in recession for the next few years, which means that we have to run faster to reduce the deficit,” he said. Vassilis Papadimitriou, a spokesman for the Greek prime minister’s office, said President Obama had spoken by phone with Mr. Papandreou and had offered his support for the measures taken by the Greek government, calling them “brave.” The bailout begins with 45 billion euros this year, followed by more aid in the next two years. In return, Greece has promised to make budget cuts of 30 billion euros, or $40 billion, over the next three years. Mr. Papaconstantinou said the financing from the rescue plan covered a large part of Greek borrowing needs for the next three years. European Union and I.M.F. officials said the bailout plan also included a support fund for domestic banks, which may face an increase in bad loans as the recession deepens. Mr. Thomsen of the I.M.F. dismissed any suggestions that Greece needed to restructure its debt and require lenders to take a big hit as well. “It has never been discussed, no plans, nothing,” he said. But some economists argued that debt restructuring should not be ruled out as an option for the future. It would reduce the overall debt burden on Greece’s economy, but would also create the heavy risk of pushing spooked investors to deny Greece access to credit markets.
164 For all the effort that has been put into creating the rescue package, doubts remained whether Greece would be able to follow through on what amounts to a cultural revolution in the social contract between state and citizen. In a sign of the challenges ahead, Greece’s largest public sector workers union, ADEDY, said on Sunday night that the harshness of the cuts had prompted it to extend a 24-hour strike previously scheduled for Wednesday to two days beginning on Tuesday. Mr. Papandreou has thus far largely escaped blame for a crisis that has been pinned on the profligacy of his predecessors from the center right. But Yannos Papantoniou, a former finance minister from the ruling Socialist party, said that while Greeks understood the need for sacrifice after years of excessive borrowing, their patience was limited and they would expect to see positive results soon. Yiannis Stournaras, a leading economist and former economic adviser to the ruling Socialist party, argued that the close monitoring by the I.M.F. and the European Union would prevent the Greek government from deviating from the austerity path. “The I.M.F. will be here every few months and will be keeping a close eye on Greece’s every move,” he said. He jokingly conceded that such skepticism was inevitable. “People haven’t trusted the Greeks since the time of the Trojan war,” he said. “So this is nothing new.” Dan Bilefsky reported from Athens, and Landon Thomas Jr. from London. Stelios Bouras contributed reporting from Athens, James Kanter from Brussels. http://www.nytimes.com/2010/05/03/business/global/03drachma.html?th&emc=th
Debt Rising in Europe
Greece is not the only country in Europe with problems with credit and debt. http://www.nytimes.com/interactive/2010/04/06/business/global/european-debt- map.html?ref=global-home
Europe
May 2, 2010 Deflation Could Stall Efforts to Revive Greece in Debt Crisis By STEVEN ERLANGER PARIS — Greece, effectively bankrupt and with a European gun to its head, committed itself to years of austerity on Sunday when it signed a financial bailout deal with the European Union and the International Monetary Fund.
165 But there are serious questions about whether the deep cuts in salaries and benefits the agreement calls for are politically sustainable over time, even as deflation will make it impossible for Greece to grow its way out of debt. There is a consensus that the Greek economy is broken and needs major structural reform, and the deal done on Sunday is intended to give Athens a couple of years of breathing room to change the fundamental pattern of Greek behavior. The government is now committed to whack back the public sector, including pensions and popular social benefits; to raise consumption taxes to record highs; and to promote tax reform, in an effort to shrink the enormous black market, reduce tax evasion and increase government receipts. Some influential economists, however, fear that such harsh measures risk killing the patient, even as they see the intensity of Greek pain as a serious warning to other countries that use the euro to get their own economies in order before the currency union itself is undermined by rampaging market speculation. This new wave of austerity also risks pushing the entire European Union into a period of artificially low growth just as economies are trying to recover from the recession of last year, caused by the huge housing and banking crisis that started in the United States. Negative or low growth will increase already sizable unemployment and put new pressure on government spending, as well as on the banks themselves, and make it harder for everybody to reduce their debts. “How can Greece grow out of its debt if there is deflation?” asked Jean-Paul Fitoussi, a professor of economics at the Institut d’Études Politiques in Paris. “Deflation increases the debt burden, so we are following this virtuous circle that is bringing us toward hell. Economics has nothing to do with virtue, which can kill an economy.” There is also some doubt whether this latest package of 110 billion euros over three years will be enough to calm the markets, which may then turn on other vulnerable countries, like Portugal or Spain. Some countries that use the euro — Germany, in particular — need to pass legislation to come up with the money, although European Union officials said Sunday night that funding would be in place before May 19, when the next major tranche of Greek debt must be rolled over. Embedded in the euro and thus no longer in control of its own currency, Greece cannot take the easy way out of its debt by devaluing. So Greece must either cut its spending sharply or default on its loans — which would badly damage German and French banks carrying a lot of Greek debt. That is considered one reason President Nicolas Sarkozy of France has been so quiet on the Greek crisis, Mr. Fitoussi said. The Greek deal “is an indirect way of bailing out French and German banks,” he said. “The French understood this from the start, but Germany didn’t seem to.” Katinka Barysch, an economist and deputy director of the Center for European Reform in London, said that that realization had hit home in Germany. “It might be unpopular for the Germans and Europeans to bail out Greece, but it will be even more unpopular for them to bail out the banks that owned Greek bonds,” she said. Thomas Piketty, the founder of the Paris School of Economics and a professor there, thinks that the demands on Greece, driven by a market frenzy, are simply too high.
166 “Austerity can be justified, but 8 percent interest rates on a debt that amounts to more than 100 percent of gross domestic product is just crazy,” he said. “They will have to restore their public finances and then pay back this huge debt at the same time — and Greek debt amounts to so little when you compare it to what was needed to bail out the banks” last year. “Not only is this not going to help growth, it’s going to end very badly, politically speaking,” Mr. Piketty said, referring to Greece. “Taxpayers cannot accept this in the long run.” On Sunday, the Greek finance minister, George Papaconstantinou, forecast a deeper than expected recession of 4 percent for 2010 and 2.6 percent in 2011, before the economy supposedly returns to growth of 1.1 percent in 2012. “We will be in recession for the next few years, which means that we have to run faster to reduce the deficit,” he said. But no one really knows what will happen in 2012, or if the Socialist government of Prime Minister George A. Papandreou, elected on a platform of increased prosperity, will still be in office. Standard & Poor’s suggested last week that the euro value of Greece’s gross domestic product may not return to last year’s level until 2017. “Unfortunately for economists, there is democracy,” Mr. Fitoussi said. “If you impose too strict a program, the population will refuse.” Some countries, he acknowledged, have responded quietly so far to deep cuts, like Ireland and Latvia. “But Greeks are not Latvians,” he said, citing serious worker demonstrations already this weekend. Yet the problem is deeper for Greece than for other vulnerable and relatively uncompetitive countries, like Portugal and Spain, where the budget situation before the crisis was fairly good, even if overly reliant on a housing bubble. “If growth stays negative or low in Greece, the fiscal debt will continue to increase, whatever they do,” Ms. Barysch said, while difficult structural reforms to liberalize the economy will take time. The economists she speaks to “don’t really see a solution for Greece in the longer run,” she said. Some argue that Greece should stop using the euro, as Argentina dissociated itself from a peg to the dollar in 2002, devaluing its currency and soon returning to growth, although with high inflation. But others say that since Greek debt is denominated in euros, leaving the euro zone will be too expensive and disruptive for a society in crisis. Greece is functionally bankrupt, Ms. Barysch said. “For most European officials and experts, it’s not about fostering Greek growth, it’s about the stability of the euro zone.” For Nicolas Véron, a senior fellow at Bruegel, an economic policy research organization in Brussels, Greece is paying for its past sins of easy credit and false statistics, and has no choice now but to restore the health of its public finances. “I don’t think there is an economic debate on this, because restoring fiscal sustainability must be the first step,” he said. “They can focus on growth afterward. But at this point, there is no way for Greece to escape this very painful process.” Still, Mr. Fitoussi warns that the crisis is not over — that the market will move against other countries, to see if the Europeans have the will and the funds to protect them, and that the Greek government will not survive the painful adjustment. “There will always be another government,” he said. “But in the process Europe will have lost its credibility, by imposing on a country an unbearable program.” Nadim Audi contributed reporting. http://www.nytimes.com/2010/05/03/world/europe/03austerity.html?ref=global
167
03.05.2010 A bailout, finally
A bit anti-climactic, the deal came in at the lower range of forecasts, both in terms of the deficit reduction and the support effort. But it was still a momentous decision because it saved Greece and the Eurozone. And the story dominates all the front pages this story – along with the story of another bomb did not get off. Here are the main details. The EU and the IMF have agreed a package of €110bn in support for Greece over three years, in exchange for an austerity programme with the following main points: • · Greece is subject to a check by IMF/EU each quarter • · 5pc point reduction in fiscal deficit in 2010 • · Goal is to drive deficit down to 3% of GDP by end-2014 • · Debt-to-GDP ratio is forecast to grow from 115% to 140% (but these are the Maastricht numbers. Add some 10pc point to get the total debt) • · Individual measure include, another increase in VAT from 21 to 23% (plus increase for smaller VAT rates), 10% increase in excise taxes on fuel, cigarettes and drinks, a windfall tax, a property tax, near abolition of 13 and 14th month pay in the public sector, cut of Christmas and Easter bonuses, cuts in pensions, reducing early retirement. For more see this article in Kathimerini. A correspondent from Greece wrote to us, criticising the deal as insufficient. We would not usually list this, but these are arguments very likely to be discussed in the next week or so. • · No public sector layoffs, or change of status of public sector job, • · No complete removal of 13/14th month salary in public sector • · No removal of 13/14th month salary in private sector, meaning more unemployment • · No immediate privatisation of state companies • · No change to rule that caps dismissals to 4% of workforce, and no change to firing costs,
168 • · No anti tax-evasion mechanism. The EU/IMF was clearly pleased with themselves, the Greeks were divided, but Papandreou made it clear that this was a choice between survival and ruin, while acknowledging that most of the burden would be carried by civil servants and pensioners. The FT reports that the loan package also includes €20bn in support for the banking sector, while the Greek government would increase the stock of bank guarantees from by another €40bn. France and Germany show united front here. Merkel in an interview with the influential Bild am Sontag, and Christine Lagarde (Les Echos) called for voluntary contribution of the financial sector. But FT Deutschland writes that Deutsche Bank is pushing ahead, and might offer as much as €500bn in credits to Greece for the same conditions as for the German government. Allianz is in talks about €300bn and Munchner Re €200bn. Among the commentaries, the most interesting has been the 180 degree about-turn from Frankfurter Allgemeine Zeitung, whose most influential political commentator, Gunter Nonnenmacher, has taken over as the lead commentator, totally reversing the paper’s rapidly europhobic commentary during the crisis. In his FT column, Wolfgang Munchau welcomes the agreement, and applauds the EU and IMF for getting ahead of the curve for the first time in this entire crisis. But the deal as it was negotiated will not prevent default. Greece will have to restructure its debt eventually, or risk ending up “austere, compliant, and crippled”. The main purpose of this agreement was to save Greece from imminent collapse, and the eurozone from a contagious crisis that it might not have survived in its current geographical borders. He concludes that the experiment of a monetary union without political union has conclusively failed, and the EU will have to decide between further political integration, or further disintegration. Jürgen Habermas on Greece Of last week’s comments, two are absolutely essential reading. The first is an interview by Jurgen Habermas in the FT. A Habermas interview is a rare enough event in any case, and after reading 1000 words or so, it becomes clear that Germany’s most famous modern philosopher has something very important to do say, about Germany and European monetary union. “The German elites apparently seem to be enjoying the comforts of self-satisfied national normalcy: ‘We can be like the others once again!’… The willingness of a totally defeated people to learn more quickly has disappeared. The narcissistic mentality of a complacent colossus in the middle of Europe is no longer even a guarantee that the unstable status quo in the EU will be preserved... [A] co-ordination of the economic policies in the eurozone would also lead to an integration of policies in other sectors. Here what has until now tended to be an administratively driven project could also put down roots in the minds and hearts of the national populations.” And about Merkel’s handling of Greece: “Such a lack of solidarity would certainly scupper the whole project. Of course, Merkel’s statement was intended at the time for domestic consumption in the run-up to the important regional election in North Rhine-Westphalia. But there can be no better illustration of the new indifference of the new Federal Republic than her insensitivity to the disastrous impact of her words in the other member states. Merkel is a good example of the phenomenon that “gut politicians who were ready to take domestic political risks for Europe are a dying breed”. This
169 is a quotation from Jean-Claude Juncker, himself one of the last pro-European dinosaurs... Apart from Joschka Fischer, who ran out of steam too quickly, the generation of rulers in Germany since the chancellorship of Gerhard Schröder has pursued an inward-looking national policy. I don’t want to overestimate the role of Germany in Europe. But the breach in mentalities which set in after Helmut Kohl has major significance for Europe.” And he continues to make a very detailed case about the significance of the eurozone for European integration. Some of the sharpest commentary we have read in a long time. Edgar Morin on the rise in nationalism In an interview with La Tribune the French sociologist and philosopher Edgar Morin expresses his concern that the financial crisis and the sheer mentioning of the possibility of leaving the euro zone could give further rise to nationalism in Europe with extremely serious social and political consequences. The crisis has once again demonstrated that the future is uncertain and dangerous, provoking anxiety among the people who then prefer to retreat to their roots. The decomposition of Europe could happen, though it is not likely, as the relationship between France and Germany is still solide. Alan Beattie on Philip II Another fascinating comment came from Alan Beattie, also in Saturday’s FT, about Philip II of Spain, who “acceded to the Spanish throne in 1556; defaulted on the national debt in 1557, 1560, 1575 and 1596; died in 1598.” He concludes Greece looks increase like Argentina, and an orderly process of restructuring is the way out for Greece, as indeed it was for Philip II. Merkel propose new governance system: a really hard stability pact The governance debate is not really getting off to a good start, with Angela Merkel pushing for a tougher stability pact, according to Die Welt. This should include a provision to deprive deficit sinners from a temporary loss of voting rights in the EU. One assumes, the lady is carefully targeting her message for domestic consumption – a few days before an important state election. (We find the idea is downright potty. Do we really think that Greece, and Portugal will voluntarily cede the voting rights and, even if they did, do we really think that we can get a unanimous agreement to change a European treaty for such a crazy idea, plus ratification in 27 member states? And besides, has the idea of a strong stability pact not been tried before, as we vaguely recall?) http://www.eurointelligence.com/index.php?id=581&tx_ttnews[tt_news]=2779&tx_ttnews[ba ckPid]=901&cHash=9b810cf24c
170
L'Europe et le Fonds monétaire international débloquent 110 milliards d'euros [ 03/05/10 ] Les ministres des Finances de la zone euro ont adopté hier le plan d'aide à Athènes. Un sommet européen va tirer les premières leçons de la crise le 7 mai. A. C. ET J. D., LES ECHOS DE NOTRE BUREAU DE BRUXELLES. Sur le même sujet La Grèce sera étroitement surveillée en contrepartie d'une aide exceptionnelle Athènes s'engage sur un plan d'austérité de 30 milliards d'euros en trois ans Berlin défend sa gestion de la crise contre des critiques violentes A cure d'austérité exceptionnelle, plan de sauvetage sans précédent. Les ministres des Finances de la zone euro ont respecté leurs engagements. Quelques heures à peine après que le Premier ministre grec, George Papandréou, a annoncé de nouveaux sacrifices, et après le feu vert donné par la Commission européenne à ce nouveau programme, ils ont décidé hier soir de consacrer avec le Fonds monétaire international 110 milliards d'euros sur trois ans pour aider le pays et tenter ainsi de dissuader les marchés de spéculer sur une défaillance d'autres membres de la zone euro. Alors que la veille encore, certains avaient évoqué l'organisation d'une simple téléconférence, les 16 ministres des pays partageant l'euro avaient tous fait le déplacement à Bruxelles. Sans pour autant boucler la dernière étape de cet interminable feuilleton qui menace la crédibilité et la cohésion de la zone euro : comme l'avait exigé dès le départ l'Allemagne, les chefs d'Etat et de gouvernement de la zone euro eux-mêmes se retrouveront à Bruxelles, vendredi, pour faire le bilan des ratifications parlementaires dans les pays où elles sont nécessaires, mais aussi pour tirer les premiers enseignements de cette crise pour la gouvernance de la zone euro dans son ensemble. Les banques interpellées Cette aide sera fournie à hauteur de 80 milliards d'euros par les membres de la zone euro, le solde venant du FMI. Trente milliards d'euros seront débloqués via des prêts bilatéraux des 15 partenaires de la Grèce dès cette année, l'Allemagne y participant à hauteur de 8,4 milliards d'euros et la France pour 6,3 milliards (soit 16 milliards sur trois ans) -la contribution de chacun étant calculée en fonction de son poids dans le capital de la Banque centrale européenne. La ministre française de l'Economie, Christine Lagarde, a lancé hier un appel aux banques pour qu'elles participent à cet « exercice de solidarité » en maintenant leur exposition en Grèce. Le respect du nouveau plan triennal d'austérité accepté par Athènes sera contrôlé chaque trimestre, dont une première fois avant l'été, par la Commission, la BCE et le FMI, comme l'exigeait Berlin. « Il y a des engagements, il faut les tenir et nous vérifierons qu'ils sont tenus », a averti Christine Lagarde. http://www.lesechos.fr/info/inter/020513675460-l-europe-et-le- fonds-monetaire-international-debloquent-110-milliards-d-euros.htm
171
In Defense of Robert Rubin Why he's not to blame for the meltdown. By Jacob Weisberg | NEWSWEEK Published Apr 30, 2010 From the magazine issue dated May 10, 2010 Seldom does a Sunday pass of late without Frank Rich, The New York Times columnist, taking a potshot at Robert Rubin. But I've been having a hard time understanding what Rich and others who are angry at Rubin are angry about. Sometimes they claim he blocked financial regulation when he served as Treasury secretary under Bill Clinton. Sometimes they blame him for not preventing the troubles at Citigroup. Sometimes they argue that he has too many disciples in the Obama administration, that he was overpaid, or that he's not sorry enough for whatever he did. None of these complaints makes much sense in light of Rubin's record and his oft-stated views. Let me stipulate that I'm hardly an unbiased observer. I helped Rubin write a memoir published in 2003, and I continue to think that his philosophy—fiscal responsibility, an appreciation of both the power and limitations of markets, and pragmatism in responding to their periodic failures—remains the right approach to economic policymaking. What follows, however, is my view, not his. To me, the most wrong-headed accusation is that Rubin prevented effective regulation during the Clinton years. His view has always been that the financial system needs to be protected from market excesses. Rubin regarded derivatives as risky because of the way they could magnify market moves and implicate interconnected financial institutions. His answer to the problem was capital, margin, and disclosure requirements—the core of the Senate reform bill. But Rubin thought it would be politically impossible to pass new regulations because of the intensity of the opposition from his former colleagues on Wall Street. He also faced disagreement from Fed chairman Alan Greenspan and skepticism from his own deputy at the Treasury, Larry Summers. Rubin goes into this at length in his book, noting that Summers ridiculed the kind of comprehensive margin requirements Rubin favored as "playing tennis with wooden rackets." I think Rubin deserves criticism for not pushing his accurate view harder, but he was neither wrong about the risk nor opposed to regulation. Rubin took these views back to the private sector. Many a Citi executive sat in Rubin's corner office listening to his apprehensions about the mispricing of risk, the excesses in the credit market, and the danger of relying on mathematical models. But Rubin did not make decisions at Citigroup. His role was as a representative to clients and foreign officials, and as a strategic adviser to CEO Sandy Weill and to Weill's successor, Chuck Prince. After his service in government, Rubin wanted a position that would allow him to stay abreast of what was happening in the financial world while remaining involved in the public-policy issues that animated him. He did not want management authority and had no one reporting to him. Here again, there is a valid criticism that's different from the one most often made. Rubin's problem wasn't power without accountability—it was accountability without power. I'm not sure he fully appreciated the risk, evident in hindsight, that he would be blamed if things went badly wrong. But even with a more conventional kind of authority, it's unrealistic to think he
172 could have prevented the mistakes that necessitated a government bailout of Citi. The assumption that the rating agencies knew their business, a key enabler of the subprime meltdown, is analogous to the view before the Iraq War that Saddam Hussein had WMD. There are a lot of people who now scoff about what an obvious fallacy this was and not many who can point to doubts expressed at the time. While Rubin bears no meaningful responsibility for the financial collapse, he has had significant impact on the recovery. The Obama administration's response has been led by a group of his disciples—Summers, Timothy Geithner, Peter Orszag—who have drawn upon the lessons learned from the Mexican and Asian crises of 1994 and 1997. In those instances, the problem of moral hazard had to take a temporary backseat to stopping financial contagion. Once markets were stabilized, officials could take on systemic issues. That describes the current moment as well, with the Obama team pivoting from what has been its highly effective crisis response to longer-term issues of fiscal balance, future crisis prevention, and establishing the conditions for long-term growth. For a second time, Rubinomics seems to be working. Jacob Weisberg is chairman of the Slate Group and author of The Bush Tragedy and In an Uncertain World: Tough Choices from Wall Street to Washington. Find this article at http://www.newsweek.com/id/237201
173 Opinion April 11, 2010 OP-ED COLUMNIST No One Is to Blame for Anything By FRANK RICH “I was right 70 percent of the time, but I was wrong 30 percent of the time,” said Alan Greenspan as he testified last week on Capitol Hill. Greenspan — a k a the Oracle during his 18-year-plus tenure as Fed chairman — could not have more vividly illustrated how and why geniuses of his stature were out to lunch while Wall Street imploded. No doubt he applied his full brain power to that 70-30 calculation. But the big picture eludes him. If the captain of the Titanic followed the Greenspan model, he could claim he was on course at least 70 percent of the time too. Greenspan was testifying to the commission trying to pry loose the still incomplete story of how the American economy was driven at full speed into its iceberg. He was eager to portray himself as an innocent bystander to forces beyond his control. In his rewriting of history, his clout in Washington was so slight that he was ineffectual at “influencing the Congress.” The “roots” of the crisis, he lectured, dated back to the fall of the Berlin Wall in 1989. In other words: Wherever the buck stops, you had better believe it’s not within several thousand miles of the Oracle. As he has previously said in defending his inability to spot the colossal bubble, “Everybody missed it — academia, the Federal Reserve, all regulators.” That, of course, is not true. In last Sunday’s Times, one of those who predicted the bubble’s burst — Michael Burry, an investor chronicled in “The Big Short” by Michael Lewis — told in detail of how Greenspan and others in power “either willfully or ignorantly aided and abetted” the reckless boom and the ensuing bust. But Greenspan is nothing if not a representative leader of his time. We live in a culture where accountability and responsibility are forgotten values. When “mistakes are made” they are always made by someone else. This syndrome is hardly limited to the financial sector. The Vatican hierarchy and its American apologists blame the press, anti-Catholic bigots and “petty gossip” for a decades-long failure to police the church’s widespread criminal culture of child molestation. Michael Steele, the G.O.P. chairman, has tried to duck criticism for his blunders by talking about his “slimmer margin” of error as a black man. New York’s dynamic Democratic duo of political scandal, David Paterson and Charles Rangel, have both attributed their woes to newspapers like The Times, not their own misbehavior. Such is our current state of national fecklessness that the gold medal for prompt contrition by anyone on the public stage belongs, by default, to David Letterman. He wasted little time in telling a national audience point blank that he had done “something stupid,” hurt those he loved and had a “responsibility” to “try to fix it.” In the land of Rod Blagojevich and Tiger Woods, the candid late-night talk show star is king. Woods’s apologetic Masters press conference last week came only after months of stalling, sponsor defections and well-publicized “rehab.” Along the way he briefly hired Ari Fleischer, the former Bush press secretary, to help manage his mess. Fleischer is not the only Bush spin artist to re-emerge as a hired damage-control hand in the post-Bush era. Dan Bartlett, a former presidential counselor, is a honcho at Public Strategies, the company recently enlisted by Goldman Sachs to help erase the indelible tattoo of “a great vampire squid” imprinted on its image by Matt Taibbi of Rolling Stone. Former Bush propagandists will never lack for work in this climate. It’s remarkable how often apologists for Wall Street’s self-inflicted calamity mirror the apologists for Washington’s self-inflicted calamity of Iraq. In the case of that catastrophic war, its perpetrators and enablers almost always give the same alibi: “Everyone” was misled by the same “bad intelligence” about Saddam Hussein’s W.M.D. Hence, no one is to blame and no one could have prevented the rush to war. That, of course, is no more true than Greenspan’s claim that “everyone” was ignorant of the potentially catastrophic dangers in the securitization of subprime mortgages. There were dissenters in the press, intelligence agencies and Congress who did doubt the W.M.D. evidence and asked tough questions akin to those asked by financial apostates like Michael Burry during the housing bubble. But these dissenting voices were either ignored, ridiculed or censored in the feverish rally to war just as voices like Burry’s were marginalized in the feverish rally of the Dow. In the crash’s aftermath, those who created, sold and hyped mortgage-backed securities and exotic derivatives (“financial weapons of mass destruction,” as Warren Buffett called them) are just as eager to escape accountability as those who peddled Saddam’s nonexistent nukes. In an appearance at the 92nd Street Y in New
174 York last month, the former Citigroup guru Robert Rubin floated the same talking points as Greenspan. He described Wall Street’s meltdown as “a crisis that virtually nobody saw coming,” citing regulators, auditors, analysts and commentators. It seems they were all the passive dupes of AAA ratings from Moody’s and Standard & Poor’s on toxic subprime assets, just as all those Iraq cheerleaders were innocently victimized by the bad C.I.A. intelligence on Saddam’s assets. No top player in the Bush administration has taken responsibility for his or her role in selling faulty intelligence products without exerting proper due diligence. There have been few unequivocal mea culpas from those who failed in their oversight roles during the housing bubble either — whether Greenspan, the Bush Treasury Secretary Henry Paulson or Timothy Geithner in his pre-Obama incarnation leading the New York Fed. In his own testimony before the Financial Crisis Inquiry Commission last week, Rubin took no responsibility for his record, as Clinton Treasury secretary, in opening the floodgates of deregulation that would fatten his wallet in his post-Washington migration to Citigroup. Nor did he own up to his role as a proselytizer for increased risk at that mammoth bank, where the bad bets would ultimately require a $45 billion taxpayers’ bailout. Rubin maintains that he had no significant operational responsibility as chairman of Citigroup’s executive committee — a role that paid him well over $100 million while there. But as Roger Lowenstein writes in his new book, “The End of Wall Street,” Rubin’s responsibilities did include writing a letter to shareholders in early 2007 for the Citigroup annual report. In sharp contrast to Jamie Dimon’s contemporaneous letter to shareholders at JPMorgan Chase — which darkly confronted potential “negative scenarios” from “recent industry excesses” — Rubin glossed over any gathering clouds. Last week Rubin testified he “deeply” regretted what happened, but his invocation of collective guilt — “we all bear responsibility” — deflected any accounting for his own individual actions. Even Blagojevich did better than this in his new role as a contestant on the reality show “Celebrity Apprentice.” When Donald Trump “fired” him a week ago, the former Illinois governor at last said, “I take full responsibility.” Surveying America’s moral landscape in his Inaugural Address, Barack Obama called for “a new era of responsibility.” And he has tried to live up to his own creed. “I’m here on television saying I screwed up and that’s part of the era of responsibility,” he said after Tom Daschle withdrew as a cabinet nominee. The president has also taken responsibility for screw-ups ranging from his administration’s tardy discovery of bonuses given to bailed-out bankers at A.I.G. to its failed surveillance of the Christmas Day bomber. Though the president is never shy about attributing a $1.3 trillion annual deficit to his predecessor, he is usually quick to hold himself accountable as well for the $787 billion in deficit spending added by his stimulus package. Obama has been less forceful in stewarding a new era of responsibility when it comes to adjudicating unresolved misdeeds in the previous White House. “Turn the page” is his style, even if at times to a fault. Many of the Bush national security transgressions, including the manipulation of the case for war, are rapidly receding into history and America’s great memory hole. The president will not have the luxury of mass amnesia when it comes to the recent economic past. The tax-free Iraq war, as cunningly conceived by the Bush White House, directly affected only those American families whose sons and daughters volunteered to fight it. But the Great Recession has affected nearly everyone. Most of its victims are genuinely innocent bystanders who lost their jobs and savings while financial elites cashed in on the crash. Both as policy and politics, a serious reckoning for those who gamed the system is a win-win. Yet the fear that the Obama administration is protecting its friends persists. On the same morning that Rubin testified last week, Eamon Javers of Politico wrote about his continued influence on his many acolytes in the White House. That includes Geithner, whom Rubin talked with repeatedly in the weeks before the president released his financial regulatory reform proposal last June. Americans still waiting on Main Street for the recovery that lifted Wall Street once invested their hopes in Obama. Getting the new era of responsibility only 70 percent right won’t do. http://www.nytimes.com/2010/04/11/opinion/11rich.html
175 COMMENT Lessons for the Greek crisis from Philip II of Spain By Alan Beattie Published: April 30 2010 21:31 | Last updated: April 30 2010 21:31 If you want to go back to the roots of Greece’s financial crisis, you could always start with Philip II of Spain. Born in 1527; acceded to the Spanish throne in 1556; defaulted on the national debt in 1557, 1560, 1575 and 1596; died in 1598. Now there’s a sovereign who knew how to renounce sovereign debt. Philip would leave an Argentine finance minister standing. The path of default he laid down has seen heavy traffic across the centuries from monarchies and republics, democracies and dictatorships. Europe – and increasingly the world – is now watching the chaos in Greece and wondering if this is a Lehman Brothers of the public sector. So it is striking that after all this time the world still treats restructuring, or the rewriting of sovereign debt contracts, as an act of extraordinary calamity. Despite the sounds of garment-rending catastrophe that generally accompany them, defaults are not at all unusual. Outstanding historical research by Ken Rogoff and Carmen Reinhart, which forms part of their drily titled book This Time is Different, shows defaults coming in waves. Some reflect the cost of maintaining armies: there was a flood of defaults during the Napoleonic wars. Others simply reflect a downturn when a sudden stop in capital flows and economic growth makes previously tractable debt burdens unsupportable. The wave of defaults triggered by the Great Depression extended to the 1950s, when nearly half the countries in the world were in default. Even the US in effect repudiated obligations by legislating forcibly to sever a link between Treasury bonds and the gold price. Greece itself built up a rich history of welching on its debts. Crises starting in 1826 shut it out of capital markets for 53 years; its Depression-era external default lasted from 1932 until 1964. In 2010, there are widespread sovereign debt problems. They are unusually concentrated in the advanced world. The proximate cause is governments taking on massive private sector debt as part of their financial sector bail-outs. But that came on top of nearly a decade of underlying fiscal deficits in many rich countries, funded by borrowing and often masked by a short-lived surge in tax revenue pumped up by a housing boom and an asset bubble. So that is how we got here. And there is a big divide between official and private views of how to get out. Most economists and investors think Greece will have to restructure – the fiscal arithmetic is too unpleasant and Greek society too divided to deliver the cuts needed. But European finance ministers and the International Monetary Fund insist that is unthinkable. Public musing about restructuring may indeed incur costs. Yet history suggests that hanging on can make matters worse. On the way to the world’s biggest sovereign default in 2001, Argentina managed to extract misconceived IMF loans with the implied threat that the fund would be blamed if it pulled the plug. In the meantime, Buenos Aires undertook a bond swap,
176 which bought it a few months’ respite at the cost of a rise in the debt burden, worsening the default when it came. Although there are differences, Greece looks increasingly like Argentina on the Aegean. If Athens does start to draw down large amounts from the eurozone-IMF rescue loan package, it could merely throw good (public) resources after bad (private) money. If Greece loads up on IMF and eurozone government debt it will merely push existing creditors further down the pecking order in any restructuring without making much difference to the probability of default. In the case of Greece, it may in fact make sense to delay the inevitable for six months or a year, hoping that the European and global economies will recover and boost Greek exports. The French and German banks that hold much of the Greek debt may be able to prepare for the hit of restructuring. But when the crunch approaches, it is still more likely that big eurozone economies will try to stop Greece defaulting for the sake of pride and their own banks than allowing the country to bow to the inevitable. Defaults, as Profs Rogoff and Reinhart argue, do not have to be disastrous if they are accompanied by a shift in government policy for the better. As long as restructuring is rapid and equitable, capital markets can be forgiving. Yet most attempts to regularise restructuring have foundered on suspicions that their existence would encourage it. A perfectly sensible idea from the IMF in the early 2000s foundered on opposition from banks and investors. Choosing when to restructure is not easy, because the distinction is not always clear between a short-term liquidity crisis, which needs rescue lending, and an insolvency that requires restructuring. In fact, the academics Mauricio Drelichman and Hans-Joachim Voth argue that Philip II’s first three defaults were liquidity shocks arising from fighting wars. Like Greece, he was backed by German financiers – in his case the legendary Fugger banking family of Augsburg. Unlike Greece, he didn’t have the IMF to go to. Yet going into default – even four times in one reign – was not disastrous. The lenders continued to lend. Any decision to restructure should be taken with reason, not as a panicked last resort. Restructuring sovereign debt is not the end of the world. It wasn’t even the end of King Philip’s empire. http://www.ft.com/cms/s/0/e71596d2-5482-11df-8bef-00144feab49a.html
177 La Tribune.fr – INTERVIEW Actualités / France
Edgar Morin : "L'une des tragédies de l'Europe, c'est que les nations sont égocentriques" 02/05/2010 | 16:26 Dans un grand entretien à lire ce lundi dans La Tribune, le sociologue et philosophe français Edgar Morin revient longuement sur la crise grecque et ses conséquences. En voici un extrait... La Tribune : L'impuissance à apporter une solution au problème grec n'est-elle pas la démonstration d'une crise des finalités de l'Europe ? Edgar Morin : La finalité première de l'Europe, c'était d'en finir avec les guerres suicidaires. Face à l'Union soviétique et ses satellites, il fallait créer et sauvegarder un espace de démocratie et de liberté. Donc, l'idée première était fondamentalement politique. Mais la résistance des Etats nationaux à abandonner une parcelle de souveraineté pour créer une entité politique supranationale a bloqué cette évolution. Dans les années 50, les grands courants économiques qui traversaient l'Europe occidentale ont permis de constituer une unité économique qui s'est achevé avec la constitution de l'euro. Mais sans aller au-delà. Nous avons payé cher cette débilité politique, par exemple avec la guerre de Yougoslavie. Et aujourd'hui, dans le cas de la Grèce, on mesure bien l'absence d'une autorité politique légitime. L'Europe est arrivée dans un état d'impuissance. Elle est paralysée par son élargissement et son approfondissement est bloqué par la crise actuelle.
La montée du nationalisme en Europe vous inquiète-t-elle ? Avant même 2008-2009, il y avait déjà des poussées de nationalisme, certes limités à 10 ou 15% des voix, mais qui représentaient quelque chose de nouveau dans le paysage européen. Là-dessus s'est greffée la crise financière et économique, qui favorise ces tendances xénophobes ou racistes. L'Europe est arrivée à une situation « crisique » puisque pour la première fois, l'hypothèse que l'euro puisse être abandonné par un pays comme la Grèce a été émise, même si cela a été pour la rejeter. L'euro que l'on pensait institué de façon irréversible ne l'est pas. En fait, on ne sait pas très bien vers quoi le monde se dirige. Et, bien qu'il s'agisse d'une situation très différente de celle de 1929 ne serait ce que par le contexte européen, il ne faut pas oublier que c'est dans le pays le plus industrialisé d'Europe, l'Allemagne, qu'Hitler est arrivé légalement au pouvoir en 1933. Je ne veux pas dire que nous sommes condamnés à une troisième guerre mondiale, mais l'aggravation de la crise économique peut avoir des conséquences politiques et sociales extrêmement graves. L'Allemagne a pris une position très dure sur la Grèce. Est-elle tentée de faire éclater l'Europe actuelle ? L'une des tragédies de l'Europe, c'est que les nations sont égocentriques. L'Allemagne a une politique germanocentrique et forte de son poids elle essaie de l'imposer aux autres. La décomposition de l'Europe pourrait être une des conséquences de la crise. Mais pour le moment, ce n'est pas l'hypothèse la plus probable. La relation entre la France et l'Allemagne est toujours solide. Il faudrait arriver à une nouvelle phase de la crise avec une montée des nationalismes.. Les partis néo-nationalistes sont à peu près au même stade que le parti hitlérien avant la crise de 1929 mais cela ne veut pas dire qu'ils ne pourraient pas représenter 30% dans des circonstances catastrophiques. Nous avons vécu dans l'illusion que le progrès était une loi de l'histoire. On se rend compte désormais que l'avenir est surtout incertain et
178 dangereux. Cela crée une angoisse qui pousse les gens à se réfugier dans le passé et à se plonger dans les racines. C'est d'ailleurs un phénomène mondial, pas seulement européen parce que la crise du progrès a frappé toute la planète avec dans de nombreux pays l'idée que l'occidentalisation des mœurs allait leur faire perdre leur identité. Nous vivons une situation planétaire régressive. Le test, c'est qu'est arrivé au pouvoir aux Etats-Unis un homme aux qualités intellectuelles exceptionnelles, un américain qui a une vraie expérience de la planète, un politique qui a montré une maturité extraordinaire -le discours sur le racisme, le discours du Caire-, et voilà que cet homme est aussitôt paralysé comme Gulliver. Propos recueillis par Robert Jules et Philippe Mabille
http://www.latribune.fr/actualites/economie/france/20100502trib000504686/edgar-morin-l- une-des-tragedies-de-l-europe-c-est-que-les-nations-sont-egocentriques.html
179 ωωω.κατηιμερινι.γρ Monday, the 3rd May 2010 Turn of the German press in Greece After weeks of criticism and shaming of Greece in the German press, newspapers and magazines in the country now seems to revise their attitudes towards intra-European crisis, Athens and Chancellor Angela Merkel.
Germany has found in recent weeks the focus of criticism from across Europe about the attitude of Mrs Merkel on addressing the "Greek crisis". The reluctance of the German Chancellor and unstable statements and members of the governments have sharpened their minds abroad and domestically. Attack on Greece from the tabloid The populist tonnes initially prevailed in both the benches of parliament in Berlin (Bundestag) and the headlines and articles in the German press. The popular newspaper Bild led to publications and reports from Athens, where it shows the Greeks do not care about the crisis and have fun every night to "Neptunium", Monastiraki and casinos. At the same time, presented evidence that the Greeks are getting pensions luxury, while the headlines of the newspaper came out titled "We do not give money to the Greeks. Indeed, on Thursday, the newspaper commented on the financial assistance of the IMF - EU: 25 million euros! The Greeks want more money from us. Shock for the European taxpayer. We have no money to keep our parks clean. We have no money to repair the holes in our streets ... and we have no money to increase our pensions. But suddenly, our political leaders found billion for the Greeks, who lived for years over the potential and cheated on entry to the euro. Another example was the cover of the magazine Focus, the Venus de Milo to make an offensive gesture. However, the German press in recent days made a shift in the way of addressing the issue. While until a few days, supported the "iron lady" Angela Merkel, an increasing number of columnists and analysts have criticized the dilatory policy of Berlin.
180 Focus itself accused Angela Merkel, that procrastination has led to soaring sprent and Greece can no longer borrow. Particularly stressed that Chancellor Merkel should have spoken out since the beginning German citizens, and outwards, so as not to lead the state ends, as now, and financial assistance to remain at 30 billion instead of 130 billion, as currently envisaged. Turn to magazines and newspapers The magazine Der Spiegel impose on personal responsibility in the chancellor, arguing that because of his reluctance, and the blame and personally led the Chancellor that "Greek crisis" to get out of control. Even accused the coalition of "cowardice." The conservative Frankfurter Allgemeine newspaper, points out that the crisis not only for Greece, noting: "The risk of a chain reaction that can hit Portugal, Spain, Italy or Ireland is not the greatest danger in sight. In the end it is the whole project 'Europe'. In this case, Germany has a great responsibility ... because the economic and monetary union was imposed in order to make the reunified Germany in line with the treaties of the European Union and European integration irreversible. The center-left Sueddeutsche Zeitung commented: "The (German) government plays a gamble by fear and lack of confidence in herself. He plays for the future of North Rhine-Westphalia, the amount of assistance and conditions. The critical approach to such a complex process of saving is something you would expect from one of the largest economies in the world. But we must be credible - credible in the way was the old European, Helmut Kohl. His successors seem designed to dismantle the legacy of. The newspaper complained that "behind the zig-zag and setbacks (the German government) there is a fear that tabloid newspapers will gain control of the situation. The barrage of Bild has already begun. Indeed, the Sueddeutsche Zeitung commented: "The Government's approach is causing great damage. Panicked markets and worsened the crisis. " Critical of the government of Merkel is the financial newspaper Handelsblatt: «Now that the politicians, particularly the chancellor, Angela Merkel, sparked speculation in the markets with half-statements and exhortations, they can still pull the plug and the only way is to catch the bull by the horns. That means agreeing to an aid package large enough for Greece to avoid having to borrow again from the markets. www.kathimerini.gr
http://translate.google.com/translate?js=y&prev=_t&hl=en&ie=UTF- 8&layout=1&eotf=1&u=www.kathimerini.gr&sl=el&tl=en "Free" by the ECB for Greek bonds Suspended limits credit rating for Greek bonds until further notice, move the European Central Bank (ECB) today in a statement. This measure, unprecedented in the history of the ECB allows banks with Greek counterparts to continue to receive funds from the central bank, despite the downgrading of their credit capacity. The central bank in the euro area indicate that inhibition of thresholds ratings on all existing and new securities "issued or guaranteed for which the Greek government. With this move, the central bank reduces the reflection on the market and pressure on banks after the recent downgrades by international firms.
www.kathimerini.gr with information from AP
181 ωωω.κατηιμερινι.γρ The "Greek crisis" creates a cultural divide in Europe The international media note that Greek economic crisis and the dispute over aid to Athens, has created a cultural divide between northern and southern Europe.
Greece is known as the cradle of Western civilization, but in recent weeks is considered by many as an outcast. A nation where the ancient spread in the modern, where bikes and bus passes, near monuments of classical Greece, has become the symbol of the fault on the basis of European unity. On the other side is Germany, the engine of the European economy, where citizens are opposed to economic aid to Greece. The turmoil on the Greek debt hit the market and it seems that it is preparing a new round of international financial crisis, time seemed to have started to appear the end. It also creates fears that he will follow the already problematic Portugal and Spain, thereby promoting the division of Europe into north and south, giving impetus to the unity of the European Union and the common currency. "The cultural rift will remain" However, foreign analysts believe that even if Greece escape bankruptcy with the help of the IMF and the EU, cultural rift will remain. France and Germany are the drive shaft of the European Union, while Greece is generally perceived as problematic, based on tolerance partners and manipulated statistics. The Greeks have handled their money like garbage, "says Ilona Raichelt retired from Berlin and adds:" It's not that experienced an earthquake or a major natural disaster. It is a disaster created by man. " The modern Greeks are proud of their ancient ancestors, pioneers in law and policy, shaping Western society, while enjoying the good life and leisurely eating and early retirement.
182
The Greece of Nikos Dimou The retirement age in Greece is 65 for men and 60 for women, such as Germany, which is in 67 years. However, in a wide range of professions, which are heavy and unhealthy, the workers come out ten years earlier in writing. These occupations periralamvanontai who work in mines, the dockers and hairdressers / barber, because they stand all day and may be exposed to hazardous chemicals, the musicians, the baker, etc. Some try to explain the Greek way of thinking, referring to Zorba. "I would not say that all Greeks are like Zorba, but every Greek loves life and fun" says 75chronos Nikos Dimou, a Greek writer living in Germany, having issued 60 books, and adds: "The Greeks have a rather negative view of Germans, because they work too much. "
The City identifies the differences between southern and northern Europe, the lack of "work ethic of Protestant" that exists in the south and the Mediterranean climate, which slows down the pace of work and encourages people to more easily leave their jobs. By contrast, Scandinavian countries have healthy economies, although the collapse of Iceland in 2008, creates problems in the theory. Indeed, the Municipal Law states that Greece is a special case, and is also in the West and the East. As part of the Byzantine and Ottoman Empire was involved in the Renaissance and the
183 Reformation, was not influenced by the ideas of the French Revolution and the rise of the bourgeoisie. Then in the 19th century tried to fill the gap and reach the rest of Europe. The Germans do not want to be at Club Med Now Greece is asking and will receive financial assistance from the EU and the IMF. The Europe's largest economy, Germany will contribute to one fifth of the amount will be in Athens. However, a German MEP called a meeting of parliament, Greece to sell the island in order to balance its economic problems. In addition, a German analyst, described the crisis as "Greek Tragedy", and stresses that German voters do not want to be dragged in the economy «Club Med» (the club from the Mediterranean countries). "The Germans would not have a problem if the assistance was for a single time," says Dieter Cherimpert the German Institute for International Relations and Security adds: "This restructuring will last for a long time." Some analysts warned Greece that it should abandon the euro zone and Europe will face more problems if you break down Spain, is a much bigger economy. Criticism also admit Germany and European Central Bank, reluctant and took no decision on the Greek crisis. The Pampilon Raphael, an economics professor at the Madrid Business School, said that northern Europe reduces costs, labor market reforms, competitiveness and innovation, areas where Europe falls south. Asian investors do not see Greece, Spain and Portugal as something different, see economies have become bogged down. Moreover, many Europeans point out that when California had financial and economic problems, federal aid has not helped them. Some point out, however, that while there is a reaction to harsh measures, in any case the volume is not enough of these demonstrations of the 1990s, while noting that Germany might work better, but in the end we all want to come to Greece to escape of their problems. www.kathimerini.gr with information from AP http://translate.google.com/translate?js=y&prev=_t&hl=en&ie=UTF- 8&layout=1&eotf=1&u=www.kathimerini.gr&sl=el&tl=en
184
04/30/2010 04:11 PM The World from Berlin 'The Financial Industry Doesn't Give a Damn about Politics' The bailout package for Greece came closer to completion on Friday, but criticism of the handling of the crisis by the European Union and Germany continues to grow. German newspapers on Friday weigh in on apathy, deliberate stalling and irresponsibility in addressing the euro crisis. After two days of intense shuttle diplomacy that saw representatives of the International Monetary Fund and the European Union meet with leaders from Germany, Greece and other euro-zone countries, a lifeline for Athens began to take shape on Friday. European negotiators signalled that a deal had nearly been hammered out. "I am confident that the talks will be concluded in the next (few) days," said European Monetary Affairs Commissioner Olli Rehn, who is part of the team brokering the bailout deal. "The financial support will give Greece sufficient breathing space from the pressures of the financial markets to decisively restore the sustainability of its public finances and to put the economy back on a path of sustainable growth," Rehn said. The movement follows weeks of uncertainty and political procrastination that have created a crisis unprecedented in European Union history. Internationally, German Chancellor Angela Merkel has been accused in recent weeks of seeking to delay a bailout of Greece until after an important state election in North Rhine-Westphalia on May 9. Critics say that, by putting domestic interests first, she exacerbated the crisis and jeopardized the future of the common currency. Ironically, the bailout could now come at a much higher price for German taxpayers. But on Thursday, Merkel pledged swift action. The hard-pressed euro and European stock markets staged a fledgling rally on expectations that the long-awaited deal may soon become reality. Speaking during a press conference in Beijing on Friday, European Commission President Jose Manuel Barroso expressed his confidence that an agreement would be swiftly reached, adding that the planned solution would prevent Greece's problems from spreading to other European countries. But while Greece's euro-zone neighbors weighed up the wisdom of the rescue package, tensions ran high in Athens, where police battled with demonstrators. Greek Prime Minister George Papandreou made an emotional plea for help, saying his country's survival was at stake. 'Billions for Greece: What's in It for Us?' The deal, structured with money from the European Union member states and the IMF, is said to be worth as much as €120 billion ($160 billion) over three years. Germany would be the biggest single contributor to the package -- a fact which has proven deeply unpopular with German taxpayers. The mass-circulation Bild newspaper has fanned the fire, printing a series of banner headlines condemning any rescue plan. Friday's Bild led with a story entitled, "Why Should We Save this Greek Millionaire?," with a photo of the country's richest man, shipping scion Spiros Latsis, who is estimated by Forbes to be worth €4 billion. A second article focused on
185 Germans in dire financial straits in Germany, where poverty has been growing in recent years, alongside the headline: "Billions for Greece: What's In It for Us?" Meanwhile, German President Horst Köhler has also been criticized for not taking a stance on the crisis earlier, at a time when the euro's very survival could be at stake. While his office is largely symbolic, Köhler, as the country's head of state, is expected to act as Germany's moral compass. Köhler made his first substantial remarks on the euro crisis in a speech in Munich on Thursday, nearly a week after Greece submitted its request for a bailout. "Germany should contribute to a stabilization because it is in its own interests," Köhler told the audience. He also took aim at the high-risk banking deals that caused the global economic crisis. "The international finance industry drove its own profits to dizzying heights with so-called financial innovations without asking about the risks," he said. "Only a few people shared in the profits, but the losses must be borne by the general public." Köhler said the kind of financial capitalism which prevails today, which is based on bets and borrowed money, can no longer serve as a model. "It increases its own profits without regard for the well-being of nations," he said. Köhler, who served as chief of the International Monetary Fund (IMF) before being elected as German president, also called on European governments to tighten financial regulations and ban the kind of high-risk securities that launched the global turmoil in the first place. "We need to disarm ourselves of these weapons of mass destruction," he said, adding that financial institutions should be required to back their investments with sufficient capital. He also said that banks and investors should be forced to contribute to the global bailout through a much- debated levy on international financial transactions. German newspapers on Friday take aim at both Bild for its antics and Köhler for what they felt was a tepid response to the crisis. The center-left Süddeutsche Zeitung writes: "There wasn't any particularly intense discussion within the European Union when Greece joined the euro zone. Now, at a time when Greece is gripped with a debt hole that threatens to drag the euro with it into the abyss, it appears, once again, that the rest of the Europeans, and especially the EU apparatus, is reacting with indifference. Europe is tired." "That's a dramatic judgement for a community whose existence is far too often described as destiny. Right now, this actually is about its continuance, about political survival -- and Europe is reacting apathetically. Because there is nothing less at stake right now than the core of the much-vaunted European project: the euro." "The euro, the EU's backbone, could be broken very quickly if political will is lacking. Right now, market forces are stronger than the political will, and that reveals Europe's deficit: The community does not have a strong sense of how to politically fortify the euro. It lacks backbone and muscle. It is not enough to simply impose more monitoring of euro rules and stricter budget controls. The common currency requires more common policies on the economy, investment, taxation and budgets. European countries, particularly Germany and France, will have to forge stronger political integration if they want to avoid losing their currency and community." The Financial Times Deutschland writes: "German President Horst Köhler had a chance to finally do something right. At the Munich Economic Summit, he was to address a conference on the financial crisis, during troubled
186 times where the euro zone faces disintegration and German taxpayers are deeply worried about whether they should lend their money to their bankruptcy-threatened neighbor, Greece." "It is not simply the duty of the president to give people a sense of orientation. As a former director of the IMF, he also has the necessary experience to explain to German citizens why it is in their interest to save Greece and the euro -- and why it is worth risking our tax money for. He could challenge the dumb, jingoistic posturing of the tabloid press by making clear that the biggest problem is not spendthrift Greeks, but rather the poor design of the euro zone." The center-right Frankfurter Allgemeine Zeitung writes: "If Greece's deception was more or less known about at the time it joined the EU, but the other countries looked away, then it is hard to deal with the current situation on the basis of the bloc's rules. But it is still right that, even in times of trouble, the member states are, and will remain, those in charge of drawing up the contracts. Nothing is valid forever and nothing is irreversible simply because it was decided at some previous meeting. And because the sharply divided expanded union has reached an early end of its development and national interests are increasingly emerging: The exclusion of one member would clearly bring about new complications, as indicated in the agreement in the case of a country leaving the bloc. But whoever recalls and uses the existing rules ... doesn't need to call the entire system into question." The center-left Berliner Zeitung writes: "The banking crisis peaked in late 2008 and the governments and parliaments took extraordinary steps to prevent the impending collapse of the global financial system. That provided some comforting knowledge: Finally politics had regained power over the unfettered markets and financial jugglers, gloated politicians like Angela Merkel. It proved that only a competent state, and not the markets, was in a position to provide the economy and finances with a necessary framework. This power was established, for good." "What a disappointment. Now 'the market' is chasing politicians on the Greece issue, and they are running like a flock of frightened sheep. The financial industry does not give a damn about the primacy of politics. Rather, it places profitable bets against politicians' desperate efforts to keep things in hand." -- Jess Smee URL: • http://www.spiegel.de/international/europe/0,1518,692253,00.html RELATED SPIEGEL ONLINE LINKS: • Fears of Euro Zone Domino Effect: Will Greek Contagion Bring Portugal Down? (04/30/2010) http://www.spiegel.de/international/europe/0,1518,692251,00.html • A Greek Test: Euro Fears Force Merkel To Act (04/29/2010) http://www.spiegel.de/international/germany/0,1518,691969,00.html • Opinion: The Euro Zone Needs New Rules (04/29/2010) http://www.spiegel.de/international/europe/0,1518,692030,00.html • The Debt Crisis: Europe Shudders Over Greece Disaster (04/29/2010) http://www.spiegel.de/international/europe/0,1518,692019,00.html
187
04/30/2010 01:43 PM Fears of Euro Zone Domino Effect Will Greek Contagion Bring Portugal Down? By Stefan Schultz Will the Greek malaise spread to Portugal? Fears of a national bankruptcy are now also growing in Lisbon, even though the country is capable of getting its debt under control by itself. The problem is that markets no longer have faith in the Portuguese to fix their own affairs. "Fear defeats more people than any other one thing in the world," wrote the American philosopher Ralph Waldo Emerson. The current crisis in Greece shows that the fear of failure can also bring countries to their knees. Greece's precarious financial situation has brought the state to the brink of bankruptcy in record time. Portugal could be next. The country is under pressure due to fears that it could be sucked into the Greek maelstrom. In the past few days, the government in Lisbon has experienced the power of international markets. On Wednesday, the rating agency Standard & Poor's announced it would downgrade Portugal's credit rating to A- and warned that further downgrades were possible. The devaluation was partly based on technical reasons. As a result of the Greek crisis, nervousness spread on the bond markets. This increased the interest premiums on Portuguese government bonds. Standard & Poor's reacted by giving the country a lower rating. But this only accelerates the downward spiral: Investors become even more nervous, the interest rates on Portugal's bonds rise rapidly and new downgrades become more likely. This panic mechanism has been influencing the bond markets for months, significantly exacerbating the debt problem in countries such as Portugal. In the case of Portugal, however, the fears are hardly justified. Economically and financially, the country is far better off than Greece: • Although Portugal's budget deficit skyrocketed up to 9.4 percent of gross domestic product during the global economic crisis, its national debt, at 77 percent of annual economic output, is only slightly higher than Germany's. Greece's debt, in contrast, is about 125 percent of GDP. • The government in Lisbon will not need very much fresh money in the foreseeable future. In May, they need to refinance around €7 billion ($9.3 billion), with a total of about €21 billion for the whole of 2010. Under normal circumstances, those sums could be raised in the markets. • Even Standard & Poor's had a different opinion about Portugal just a few weeks ago. As recently as March 29, the rating agency decided that it did not need to downgrade Portugal's credit rating. That raises the question of what is supposed to have changed about Portugal's economic situation since then, apart from the fact that interest rates on government bonds have increased as a result of unrest in the market. Government Effective Despite Minority in Parliament Indeed, the crisis that Portugal is facing is mainly a political one. "Early elections and postponed reforms have seriously shaken confidence in the government's ability to act," says
188 Pedro Tadeu of the newspaper Diário de Notícias. In addition, Prime Minister José Socrates of the Socialist Party (PS) is head of a minority government, meaning that the opposition can block its reforms at any time. Currently, however, the government and the largest opposition party, the conservative PSD, are demonstrating unity and determination. On Wednesday, Socrates and opposition leader Pedro Passos Coelho stood side by side at an appearance in the Sao Bento Palace in Lisbon, the seat of the Portuguese parliament, and promised decisive action against the "unjustified speculative attacks." To achieve that end, Socrates' "Program for Stability and Growth" (PEC) will be changed. Austerity measures that were originally planned for the coming years will now be introduced in 2010. Tax increases are also planned. The tax rate on incomes of more than €150,000 will be increased to 45 percent, which will bring the state an extra €1.3 billion by 2012, according to the business newspaper Jornal de Negocios. In addition, the government plans to introduce a stock market tax and new highway tolls, and cut back unemployment benefits, before the end of 2010. Support from the Opposition The chances of Socrates' savings package being implemented are good. Opposition leader Passos Coelho, who has only been in office for a few weeks, said his party would support the legislation in parliament. He is generally regarded as more cooperative than his predecessor, Manuela Ferreira Leite, who for a long time refused to cooperate with Socrates' savings plans. In February, she even supported a regional finance bill, against the will of the government, that allows the autonomous regions of Madeira and the Azores to accumulate up to €400 million in new debt over the next four years. On March 25, however, the PSD finally approved Socrates' austerity package. After the rating agency Fitch downgraded Portugal's credit rating, the PSD supported the goals of the program indirectly by abstaining in a parliamentary vote. Socrates and Passos Coelho want to avoid such wrangling this time around. The government's new savings efforts are expected to be approved by parliament in the next few days. The legislation is considered certain to pass, given that the PS and PSD between them have an almost two-thirds majority in the Portuguese parliament. Austerity Measures 'Will Crush the Middle Class' Socrates is getting less support from the unions, however, as the government wants to freeze civil servants' salaries. There are plans to reduce personnel costs by 10 percent by 2013, which would save the state about €100 million a year. Taxes will also be increased. The only workers who will be exempt are those who earn no more than €518 a month, according to the television station RTP. According to the mass-circulation daily Correio da Manha, Socrates' austerity program "will crush the middle class." Trade unions have therefore let the prime minister feel their power. On Tuesday, Portuguese railway workers went on strike, as did ferry and bus workers. The industrial action led to numerous traffic jams in Lisbon's metropolitan area as commuters were forced to travel to work by car. "The protests will grow," threatened Manuel Carvalho da Silva, the head of the largest union in the country, the CGTP. Observers do not expect many political consequences, however. Angry riots like those in Greece are rather unusual in Portugal.
189 So the political situation is comparably stable. But the question remains: Is Socrates' savings plan realistic? Will he be able to save enough money quickly with his plan? Ultimately, Portugal wants to cuts its record deficit of 9.4 percent of gross domestic product to 2.8 percent by 2013. To do so, the country will need to find savings of €13.5 billion. "It's ambitious," said Francesco Franco, an economics professor at the New University of Lisbon. "But not impossible." Socrates actually has one decisive advantage: He can sell off valuable state holdings to raise money. It would admittedly be a one-time effect, but it would guarantee that the country could quickly eliminate debts. Debt Reform Is Only the Beginning The government has said it wants to sell its holdings in 17 firms, including its shares in the energy firm Galp and Portuguese national airline TAP. The sale of these shares is expected to raise a total of €1.2 billion by the end of 2010. Socrates wants to save further money by delaying previously planned major infrastructure projects. The planned high-speed railway line between Spain and Portugal, for example, is to be delayed by two years. It is also hoped that the economic upswing will increase tax revenues and decrease unemployment and bring further money into the government's coffers. So the government has good chances of regaining control of its debt problems. But one still can't say that the country has been economically reformed. Ever since it joined the euro zone in 1999, Portugal, like Spain and Greece, has had a growing structural problem. "Triggered by the commitment by Portugal to join the euro, a sharp drop in interest rates and expectations of faster growth both led to a decrease in private saving and an increase in investment," MIT economist Oliver Blanchard wrote in his classic analysis, "The Difficult Case of Portugal." For years, this meant that wages grew faster than the economy and consumption also increased. But the growth was deceptive: It was largely driven by an increase in imports. At the same time, Portuguese productivity sank. "Portugal lived beyond its means for decades," says Ricardo Reis, an economics professor at New York's Columbia University. "The crisis has caused this imbalance to become unbearable." He says that as the country embarks on its austerity course, it must also quickly increase its productivity. The Portuguese constitution prohibits making cuts to public sector wages, so other solutions need to be found. The bloated public sector needs to be shrunk, competition needs to be boosted and it needs to be made easier for people to set up companies. "Otherwise consumption will collapse in three to five years and the quality of life will decline," says Reis.
URL: • http://www.spiegel.de/international/europe/0,1518,692251,00.html FORUM: • Fears of Euro Zone Domino Effect http://forum-international.spiegel.de/showthread.php?t=733&goto=newpost
RELATED SPIEGEL ONLINE LINKS: • Photo Gallery: Losing Sleep in Lisbon http://www.spiegel.de/fotostrecke/fotostrecke-54404.html
190 • First Subprime, Now Europe: Revenge of the Rating Agencies (04/29/2010) http://www.spiegel.de/international/business/0,1518,692007,00.html • The Debt Crisis: Europe Shudders Over Greece Disaster (04/29/2010) http://www.spiegel.de/international/europe/0,1518,692019,00.html • Opinion: The Euro Zone Needs New Rules (04/29/2010) http://www.spiegel.de/international/europe/0,1518,692030,00.html • Hesitation and Patronizing Advice: How Germany Made the Greek Crisis Worse (04/27/2010) http://www.spiegel.de/international/europe/0,1518,691650,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
04/29/2010 03:54 PM First Subprime, Now Europe Revenge of the Rating Agencies By Marc Pitzke in New York Many observers assign a large part of the blame for the 2008 financial crisis to the "big three" credit rating agencies, which gave their AAA seal of approval to worthless investments. Now those same agencies are helping to bring the euro zone to its knees -- and no one is trying to stop them. The scandal brewing over Goldman Sachs, Wall Street's biggest bank, has been sucking in more and more players. These include the bankers and traders who sold the infamously risky credit products that helped trigger the subprime crisis, the hedge fund billionaire John Paulson, who cashed in big at the expense of the victims, and the US politicians who condoned the farce for the longest time. One group, however, has so far escaped the grip of the widening affair, although it's embroiled just as deeply. That group is the major credit rating agencies -- the same ones which are now causing Europe to shudder, having downgraded their ratings for Greece, Spain and Portugal. It was Standard & Poor's (S&P) and Moody's, the same two agencies which are now rocking the European boat, which in 2007 had given their seal of approval to "Abacus 2007-AC1," Goldman's ill-fated credit product, by giving it the highest AAA rating -- only to cut it down to "junk" status nine months later. Goldman's investors lost more than $1 billion; the Securities and Exchange Commission (SEC) is suing Goldman for fraud, alleging that it misled investors. Phantoms and Puppet Masters Wherever things blow up in the financial world, the rating agencies' tracks can be found. The anonymous analysts of S&P, Moody's and Fitch (the smallest of the "big three") were center stage during the global crash. They also appear in the SEC fraud complaint against Goldman. And now they're causing financial havoc in Europe. They're the éminences grises of Wall Street, phantoms and puppet masters. They wield enormous power over the fate of loans, deals, companies and even countries. Yet rarely has anyone ever really questioned their actions -- let alone held them accountable.
191 Their role, however, is far from unblemished. In the US, the rating agencies' behavior is now finally being called into question, albeit slowly. New York Times columnist and Nobel Prize- winning economist Paul Krugman accuses them of "a deeply corrupt system." US Senator Carl Levin, a Democrat, sees them as the main culprits in the credit crisis: "If any single event can be identified as the immediate trigger of the 2008 financial crisis, my vote would be for the mass downgrades starting in July 2007," he says. "Those mass downgrades hit the markets like a hammer." From AAA to Junk Levin chairs the Senate Subcommittee on Investigations, which on Tuesday also ripped through Goldman's top management. For 14 months, the committee has investigated the rating agencies. Last week, it published its preliminary findings -- a mountain of files, 581 pages thick. Levin's damning conclusion: "I don't think either of these companies have served their shareholders or the nation well." The agencies "used inaccurate rating models in 2004-2007 that failed to predict how high-risk residential mortgages would perform; allowed competitive pressures to affect their ratings; and failed to reassess past ratings after improving their models in 2006," the inquiry found. "The companies failed to assign adequate staff to examine new and exotic investments, and neglected to take mortgage fraud, lax underwriting and 'unsustainable home price appreciation' into account in their models." The result: Of all the subprime mortgage bundles which in 2006 were AAA-rated, 93 percent are "junk" today. The Agencies Still Carry Carte Blanche These are the same companies which are now messing with Europe's financial present and future. This is how it works: The agencies set the credit ratings for companies, even entire countries, and assess the risk of their investment products. These range from simple bonds to complex constructs like the derivatives and collateralized debt obligations (CDOs) which formed the house of cards that collapsed during the 2008 financial crisis and which are also at the center of the current lawsuit against Goldman Sachs. Despite this dubious track record, the agencies still carry a carte blanche: If they award their highest seal of approval -- an AAA rating -- it means it's safe for investors. Unfortunately, such a rating can also be a trap. An AAA rating snared the Goldman clients -- among them the German bank IKB -- who invested in "Abacus 2007-AC1." The agencies' quasi-monopoly goes back to 1909. That year, the financial analyst and investor John Moody began to categorize and score information about railroad companies, their stocks and their management. Later he added other industries and firms to the mix. Today, Moody's analyzes more than 12,000 companies in 100 countries. S&P, which also maintains the famous S&P stock market indices, has been issuing ratings since 1916. It was bought by the financial and media conglomerate McGraw-Hill in 1966. Fitch, which was founded in 1916 and is now a subsidiary of the French holding company Fimalac, is the smallest member in this elite club. Leading the Economy to Ruin Ratings range from AAA all the way down to D. This traditional system proved to be worthless during the credit crisis. The dubious investment products at its heart defied serious and simple ratings. They were highly overrated by the agencies -- often at the request of the same companies who managed those products, which in return paid the rating agencies.
192 As early as 2006, Angelo Mozilo, then CEO of Countrywide, America's largest mortgage company, called Countrywide's subprime loans "toxic." Yet it took Moody's until the summer of 2007 to downgrade them. All this happened under the watchful eye of the US government. That example was no exception. For years, the agencies gave their blessing to subprime loans which would later become the quicksand of the crisis, even when their risks were already known. This puts much of the responsibility for the collapse that followed onto the agencies' shoulders. Their ratings helped lead the investment banks Lehman Brothers and Bear Stearns into ruin and helped destroy the insurance giant AIG. They also contributed to a trillion-dollar hole in the US budget. "The story of the credit rating agencies is a story of colossal failure," says Representative Henry Waxman, the Democratic chairman of the House Oversight Committee. 'We Sold Our Soul to the Devil for Revenue' For a century, the rating agencies have acted as Wall Street's trusted referees. "But now, that trust has been broken," states Senator Levin's committee. "And they did it for the money." From 2002 to 2007, the three top credit rating agencies doubled their revenues, from less than $3 billion ($2.2 billion) to over $6 billion per year. Most of this increase came from ratings. Their executives got paid "Wall Street-sized salaries," according to the Senate committee. "It's like one of the parties in court paying the judge's salary, or one of the teams in a competition paying the salary of the referee," the report continues. The New York Times put it this way: "It is as if Hollywood studios paid movie critics to review their would-be blockbusters." Not that they weren't aware of it themselves. Back in 2006, an S&P employee wrote in an internal email: "We rate every deal. It could be structured by cows and we would rate it." The next year, one of Moody's executives complained to his superiors that he felt "like we sold our soul to the devil for revenue." The agencies and the banks are not just connected by money, but also by personnel. In 2005, Goldman hired Shin Yukawa, a ratings expert, away from Fitch. Yukawa immediately put his knowledge to good use -- in Goldman's mortgage department, which created "structured" credit products and made sure they got splendid ratings. One of these products was "Abacus 2007-AC1." Little Chance of Reform Yet a reform of the system is not in sight. The Democrats' current proposals to further regulate the US financial industry contain little about the rating agencies, apart from a tepid appeal to "strengthen" their regulation. Some critics are now trying a different approach. A few institutional investors -- among them the state of Ohio -- are suing the agencies for their role in the financial crisis. On Monday, a Manhattan court denied Moody's and S&P's joint motion to dismiss one of those class-action lawsuits. Two days later, S&P's hammer fell on Spain.
URL: http://www.spiegel.de/international/business/0,1518,692007,00.html FORUM: Revenge of the Rating Agencies http://forum-international.spiegel.de/showthread.php?t=735&goto=newpost
193
RELATED SPIEGEL ONLINE LINKS: The Debt Crisis: Europe Shudders Over Greece Disaster (04/29/2010) http://www.spiegel.de/international/europe/0,1518,692019,00.html A Greek Test: Euro Fears Force Merkel To Act (04/29/2010) http://www.spiegel.de/international/germany/0,1518,691969,00.html Opinion: The Euro Zone Needs New Rules (04/29/2010) http://www.spiegel.de/international/europe/0,1518,692030,00.html 'We're on a Slippery Slope': Will the Greek Bailout Destroy the Euro Zone? (04/26/2010) http://www.spiegel.de/international/europe/0,1518,691168,00.html Wall Street vs. Washington: Goldman Sachs Goes on the Offensive (04/22/2010) http://www.spiegel.de/international/business/0,1518,690527,00.html From the Archive: The Power of Rating Agencies (05/06/2009) http://www.spiegel.de/international/business/0,1518,623197,00.html SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
Credit Ratings of Europe's Problem Economies as of April 28
Country Fitch Standard & Poor's Moody's
Portugal AA- A- Aa2
Italy AA- A+ Aa2
Ireland AA- AA Aa1
Greece BBB- BB+ A3
Spain AAA AA Aaa
194
04/29/2010 01:15 PM Opinion
DPA The Parthenon in Athens: The Greek crisis has demonstrated the limitations of the Growth and Stability Pact. The Euro Zone Needs New Rules By Peter Bofinger The current Greek crisis has shown all too starkly the limits of the euro zone's sanction and support mechanisms. If the monetary union is to have a future, it needs new rules to keep members in line and bail them out if necessary. Europe is in the worst crisis of the postwar era. For months, the governments of the European Union member states have proven to be incapable of developing a convincing solution for the serious debt problems of individual countries, as well as for the reduction of imbalances within the monetary union. Uncertainty among investors has grown in recent weeks, which is primarily attributable to the helplessness of political leaders, and only secondarily to the influence of speculators. The banking crisis of the fall of 2008 demonstrated that bailout packages approved in response to market pressures fail to have the desired effect in the event of a massive crisis of confidence. At the time, it took the comprehensive approach of the Financial Market Stabilization Act to finally bring about stabilization in Germany. Today, the euro zone needs a common strategy that successfully combines sound public finances with solidarity between member states. On the one hand, the member states must be protected against the excesses of the financial markets. On the other hand, steps must be taken to ensure that the solidarity of member states doesn't undermine efforts to achieve fiscal consolidation in individual countries. In other words, what is needed is the appropriate balance of support and requirements. A European consolidation pact should serve as the basis of the "requirements" part of the equation. It would obligate all member states to formulate a consolidation strategy designed for the medium term, which would determine, based on concrete and publicly verifiable measures, how the return to a largely balanced budget could be achieved. Instead of deficit
195 targets, which are often difficult for politicians to monitor, spending paths and mandatory timetables for tax increases should be established and, if necessary, the criminal code for tax offences should be tightened. The advantage of such a pact, in addition to enabling the monitoring of national commitments, would be that a coordinated approach for the euro zone would make it possible to determine the extent of the overall negative effect on demand caused by the consolidation. This would make it possible to prevent a collective over-consolidation from leading to yet another economic downturn and, ultimately, to even higher deficits. If necessary, a slower consolidation process ought to be considered for countries in a relatively strong fiscal position, so as to avoid stalling the euro-zone economy. Common Financing Mechanism The basis of the "support" principle should be a common financing mechanism with facilities available to all countries that abide by the measures stipulated under the consolidation pact. To avoid excessive use, funds provided by the mechanism should, as a matter of principle, be disbursed with an interest rate that is 150 basis points higher than the benchmark rate. For a country like Greece, this would represent a significant saving in terms of interest costs. If a country failed to abide by the consolidation requirements, its access to these funds, with their preferential interest rates, would be blocked immediately. To ensure sound fiscal policy in all member states in the long term, an additional sanction mechanism would have to be incorporated into the Stability and Growth Pact. For countries that show an "excessive deficit," the community would have to be granted, in national constitutions, the possibility of adding a surcharge to the national income tax or value-added tax. The advantage of such a measure, as opposed to the sanctions currently provided for under the Stability and Growth Pact, is that it would reduce, rather than increase, an individual country's problems. The future of the monetary union, however, depends on more than just solving the current debt crisis. An improved balance of growth is also needed, and Germany plays an important part in that respect. The fact that domestic consumption in the largest euro-zone member has been stagnant for more than a decade is a state of affairs that is unacceptable for the entire system. Anyone who sees this as a virtue must ask themselves whether Germany's export successes would have been possible if other countries had behaved as "virtuously" as we have. It says a lot about the level of the debate that such simple and fundamental insights are apparently difficult to get across in Berlin. There is no other way to explain the current approach of waiting for an upturn in exports, in the hope that that will revive our economy again. Without massive efforts on our part to create a more dynamic domestic economy in Germany, the euro zone has no future. Anyone in Germany who still believes that losing the euro wouldn't be such a bad thing fails to recognize how important the euro zone is as a market for our industry. But Europe's future is also at stake. A failure of the monetary union would call the whole European project into question. European integration has made it possible to transform a continent devastated by wars into a place of peace and prosperity for over half a century. In other words, it's not just money that is at stake today. It's also a question of political stability in Europe. Translated from the German by Christopher Sultan URL: • http://www.spiegel.de/international/europe/0,1518,692030,00.html RELATED SPIEGEL ONLINE LINKS:
196 • A Greek Test: Euro Fears Force Merkel To Act (04/29/2010) http://www.spiegel.de/international/germany/0,1518,691969,00.html • Hesitation and Patronizing Advice: How Germany Made the Greek Crisis Worse (04/27/2010) http://www.spiegel.de/international/europe/0,1518,691650,00.html • 'We're on a Slippery Slope': Will the Greek Bailout Destroy the Euro Zone? (04/26/2010) http://www.spiegel.de/international/europe/0,1518,691168,00.html • Bringer of Prosperity or Bottomless Pit?: Top German Economists Debate the Euro (03/23/2010) http://www.spiegel.de/international/germany/0,1518,685018,00.html • Interview with German Government Economic Adviser: Euro Zone 'Could Cope with Greek Bankruptcy' (02/05/2010) http://www.spiegel.de/international/world/0,1518,676157,00.html • From the Archive: Parliament Approves Bank Bailout Package (10/17/2008) http://www.spiegel.de/international/germany/0,1518,584781,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html ABOUT PETER BOFINGER DPA Peter Bofinger has been a member of the government-appointed German Council of Economic Experts known colloquially here as the "Five Wise Men" since 2004. He is a professor of monetary policy and international economics at the University of Würzburg. His most recent book, published in German, is called "Ist der Markt noch zu retten?" ("Can the Market Still Be Saved?").
197
04/29/2010 04:11 PM The World From Berlin 'Speculators Will Have No Chance Against the Euro' Which country will be next? That's the question looming over markets as Greece's debt crisis worsens. Rating agencies have fueled fears of a domino effect by lowering their assessments on Spain and Portugal, as well as Greece. German commentators on Thursday asked where the crisis is headed and who is to blame. Right now, politicians across Europe are doing everything in their power to explain just how different their home economies are from Greece, but investors don't always believe them. Instead, jittery markets have focused on Standard & Poor's one-notch downgrade of Spain to an "AA" rating on Wednesday, a day after the agency had lowered Greece's government debt to "junk" status and Portugal's to "A-". The power that the rating agencies exercise over notoriously volatile markets has caused deep consternation in Europe. German Foreign Minister Guido Westerwelle called for the creation of a European rating agency, stressing that the Greek financial crisis threatened to spread across the EU "like the ebola virus." Westerwelle told the Westdeutsche Allgemeine Zeitung newspaper that the European Union "should counter the work of rating agencies with efforts of its own." Peter Bofinger, a prominent economic adviser to the German government, has also spoken out against Standard & Poor's decision to reduce its ratings for Greece and Portugal. With the markets piling on the pressure for clarity on the Greek rescue plan, euro zone governments, especially Germany's, have been under fire for moving too slowly and allowing uncertainty to spread across the monetary bloc. German Chancellor Angela Merkel said on Wednesday that she would step up efforts to respond to the Greek crisis. Meanwhile, the International Monetary Fund confirmed that the unprecedented bailout may cost billions more than initial estimates. In German newspapers on Thursday, most editorialists hone in on the issue of the critical role rating agencies are playing in the current crisis. The Financial Times Deutschland writes: "In the case of the euro crisis, the agencies can hardly be blamed. If economists now criticize Standard & Poor's for lowering the credit rating of Portugal, even though its macroeconomic data are not so bad, they do not understand the agencies' role. Agencies are there to show investors the probability of default on government bonds -- therefore, they cannot look at economic fundamentals alone. Instead, they have to react to events on the markets. If the yield on Portuguese or Greek government bonds increases dramatically, thus translating into higher financing costs and a greater risk of default, then this cannot be overlooked by the agencies. If they didn't respond to that, they could be rightly accused of failure." "The problem is not that the agencies follow the market trends, but that their opinion often has a pro-cyclical effect, meaning the panic among investors is strengthened. It is not S&P, Moody's or Fitch who are at fault, but rather investors and central banks, who often follow the agencies too blindly. After the subprime failure at the very latest, people should be more
198 skeptical. But instead of relying more on their own expertise, both the European Central Bank and big investors are still overly reliant on outside opinion -- it is high time for that to change." The left-leaning Die Tageszeitung writes: "Despite their poor ratings, there is no doubt that the euro countries will rescue Athens from bankruptcy: For the currency, an insolvency would be much more dramatic and more costly than a short-term intervention. So Standard & Poor's is acting against its better knowledge." "The profit-orientated credit analysts have never been an independent arbiter of the financial markets, even if they appear to direct them. The three dominant credit rating agencies were finally discredited when it turned out that they had been giving toxic securities the top AAA rating for years, thus triggering the financial crisis. To date, there is no indication that they can analyze the solvency of debtors any better." "Therefore, the geopolitical dimension should not be underestimated: From the beginning, the United States bitterly opposed creation of the European common currency, which competes with the dollar's role as a global reserve currency. An escalation of the euro crisis is in its interest. It would be politically naive to believe that US rating agencies, that have a market share of 80 percent, remain neutral in this power struggle. Instead of dithering, the euro-zone countries must immediately help Greece and send the financial markets a clear message that speculative attacks will have no chance against largest single currency zone in the world." The center-right Frankfurter Allgemeine Zeitung writes: "Anyone who believes that the Greek crisis is a monetary or technical financial problem is underestimating the situation -- and risks falling into an abyss. It's not just about a country that cheated its way into the economic and monetary union (something everyone knew), and is now unable to survive it. The risk of a market-driven chain reaction, hitting Portugal, Spain, Italy and Ireland in a way that might truly threaten the stability of the euro, is not the greatest danger on the horizon. Ultimately this is about the whole European project, of which the euro zone is an important foundation." "The Greek crisis is a merciless display of what the EU has undertaken in recent decades. Deepening the EU while also expanding it does not work when the differences between the members are widening, including cultural alienation. The result is that the commitment to an 'ever closer union', or yet greater homogenization, is increasingly seen as an imposition from outside. When the current difficulties are finally solved -- one way or another -- Europe needs to sit back and reflect on its future, looking at what it should become, and asking the question of what it is capable of becoming." The center-left daily Süddeutsche Zeitung writes: "Let the Greeks solve their own problems, they shouldn't get our money. This seems to be how most Germans think. This is what the initial polls suggest, and the politicians suspected it before. Just this weekend, German Finance Minister Wolfgang Schäuble called the aid into question, Chancellor Angela Merkel played for time and Foreign Minister Guido Westerwelle went on the attack at a party congress. And this despite the fact all three had approved aid measures at EU level a long time ago." "Behind this zigzag course lies the fear that the tabloids could take control of the issue. The barrage from (the mass-circulation) Bild (newspaper) has already begun. Conservative papers at the very least are toying with the idea of making the Greeks think about exiting the euro."
199 "If Greece becomes insolvent, then it will not only hurt the German banks who have some €45 billion ($60 billion), and possibly more, in Greece. It could also spark a chain reaction which begins with chaos in Greece and then spreads to Portugal and Spain -- and ending up shattering the whole monetary union." "Germany, especially, cannot afford for that to happen. Politically, because the decades it took to build up the bloc would be lost. Economically, because resource-poor and export- strong Germany is dependent on open markets, international rules and the monetary union. The German economy could not withstand a new era of the nation-state. Conversely, Germany could even make money from Greece's salvation if all goes well -- after all, the money is being loaned at a good interest rate, not given away." -- Jess Smee
URL: • http://www.spiegel.de/international/europe/0,1518,692059,00.html FORUM: • Revenge of the Rating Agencies http://forum-international.spiegel.de/showthread.php?t=735&goto=newpost
RELATED SPIEGEL ONLINE LINKS: • Opinion: The Euro Zone Needs New Rules (04/29/2010) http://www.spiegel.de/international/europe/0,1518,692030,00.html • The Debt Crisis: Europe Shudders Over Greece Disaster (04/29/2010) http://www.spiegel.de/international/europe/0,1518,692019,00.html • A Greek Test: Euro Fears Force Merkel To Act (04/29/2010) http://www.spiegel.de/international/germany/0,1518,691969,00.html
200 Opinion
May 3, 2010 OP-ED COLUMNIST Drilling, Disaster, Denial By PAUL KRUGMAN It took futuristic technology to achieve one of the worst ecological disasters on record. Without such technology, after all, BP couldn’t have drilled the Deepwater Horizon well in the first place. Yet for those who remember their environmental history, the catastrophe in the gulf has a strangely old-fashioned feel, reminiscent of the events that led to the first Earth Day, four decades ago. And maybe, just maybe, the disaster will help reverse environmentalism’s long political slide — a slide largely caused by our very success in alleviating highly visible pollution. If so, there may be a small silver lining to a very dark cloud. Environmentalism began as a response to pollution that everyone could see. The spill in the gulf recalls the 1969 blowout that coated the beaches of Santa Barbara in oil. But 1969 was also the year the Cuyahoga River, which flows through Cleveland, caught fire. Meanwhile, Lake Erie was widely declared “dead,” its waters contaminated by algal blooms. And major U.S. cities — especially, but by no means only, Los Angeles — were often cloaked in thick, acrid smog. It wasn’t that hard, under the circumstances, to mobilize political support for action. The Environmental Protection Agency was founded, the Clean Water Act was enacted, and America began making headway against its most visible environmental problems. Air quality improved: smog alerts in Los Angeles, which used to have more than 100 a year, have become rare. Rivers stopped burning, and some became swimmable again. And Lake Erie has come back to life, in part thanks to a ban on laundry detergents containing phosphates. Yet there was a downside to this success story. For one thing, as visible pollution has diminished, so has public concern over environmental issues. According to a recent Gallup survey, “Americans are now less worried about a series of environmental problems than at any time in the past 20 years.” This decline in concern would be fine if visible pollution were all that mattered — but it isn’t, of course. In particular, greenhouse gases pose a greater threat than smog or burning rivers ever did. But it’s hard to get the public focused on a form of pollution that’s invisible, and whose effects unfold over decades rather than days. Nor was a loss of public interest the only negative consequence of the decline in visible pollution. As the photogenic crises of the 1960s and 1970s faded from memory, conservatives began pushing back against environmental regulation. Much of the pushback took the form of demands that environmental restrictions be weakened. But there was also an attempt to construct a narrative in which advocates of strong environmental protection were either extremists — “eco-Nazis,” according to Rush Limbaugh — or effete liberal snobs trying to impose their aesthetic preferences on ordinary Americans. (I’m sorry to say that the long effort to block construction of a wind farm off Cape Cod —
201 which may finally be over thanks to the Obama administration — played right into that caricature.) And let’s admit it: by and large, the anti-environmentalists have been winning the argument, at least as far as public opinion is concerned. Then came the gulf disaster. Suddenly, environmental destruction was photogenic again. For the most part, anti-environmentalists have been silent about the catastrophe. True, Mr. Limbaugh — arguably the Republican Party’s de facto leader — promptly suggested that environmentalists might have blown up the rig to head off further offshore drilling. But that remark probably reflected desperation: Mr. Limbaugh knows that his narrative has just taken a big hit. For the gulf blowout is a pointed reminder that the environment won’t take care of itself, that unless carefully watched and regulated, modern technology and industry can all too easily inflict horrific damage on the planet. Will America take heed? It depends a lot on leadership. In particular, President Obama needs to seize the moment; he needs to take on the “Drill, baby, drill” crowd, telling America that courting irreversible environmental disaster for the sake of a few barrels of oil, an amount that will hardly affect our dependence on imports, is a terrible bargain. It’s true that Mr. Obama isn’t as well positioned to make this a teachable moment as he should be: just a month ago he announced a plan to open much of the Atlantic coast to oil exploration, a move that shocked many of his supporters and makes it hard for him to claim the moral high ground now. But he needs to get beyond that. The catastrophe in the gulf offers an opportunity, a chance to recapture some of the spirit of the original Earth Day. And if that happens, some good may yet come of this ecological nightmare. http://www.nytimes.com/2010/05/03/opinion/03krugman.html?th&emc=th
May 2, 2010, 4:44 pm Greek Deal More serious than I expected. The Greek fiscal problem has been turning into a death spiral, in which fear of default is driving up borrowing costs, making default even more likely. The EU has now, in effect, given up on trying to restore market confidence; instead, it’s going to break the death spiral by main force, providing Greece with all or almost all the financing it needs directly, at an interest rate much lower than the market was demanding. The plan still requires savage austerity on Greece’s part, and ensures a terrible few years for the Greek economy. But it does rise to the scale of the problem, and it might work. May 1, 2010, 9:01 am The Pain In Spain … isn’t nearly as severe as a casual reading of the news might suggest. Or more accurately: Spain’s economy is a mess, with immense unemployment, but there has actually been
202 remarkably little contagion so far from Greek concerns. It comes as a bit of a shock, actually, to discover that the interest rate on Spanish 10-years is only 4.03 percent; it’s up about 25 basis points since Greece went pear-shaped, but that’s not bad, considering. The point is that whatever else is going wrong — and a lot is — Spain is actually doing quite well in terms of maintaining fiscal credibility. May 1, 2010, 8:47 am Why Devalue? As the debate over possible departures from the euro heats up, there seems to a lot of confusion over the possible uses of devaluation. The main argument I’m hearing goes like this: since Greece’s debt is in euros, devaluing won’t relieve the debt burden — so it won’t help. But that’s missing the point. True, devaluation wouldn’t reduce the debt burden. But it would reduce the macroeconomic costs of fiscal austerity. Think for a moment about Greece’s predicament now, even if it were to default on its debt. It’s running a huge primary deficit, so even if it were to stop paying any debt service it would be forced to slash spending and/or raise taxes, to the tune of 8 or 9 percent of GDP. This would have a massively contractionary effect on the Greek economy, leading to a surge in unemployment (and a further fall in revenues, making even more belt-tightening necessary). Now, if Greece had its own currency, it could try to offset this contraction with an expansionary monetary policy — including a devaluation to gain export competitiveness. As long as it’s in the euro, however, Greece can do nothing to limit the macroeconomic costs of fiscal contraction. And that’s why a devaluation would help — it wouldn’t reduce the need for fiscal adjustment, but it would reduce the costs associated with fiscal adjustment. As I argued yesterday, this difference is an important reason why Britain, with a primary deficit as large as Greece’s, isn’t in anything like the same amount of trouble. Or to put it another way, exchange rate flexibility doesn’t solve fiscal problems by itself — but it makes solving such problems much easier. http://krugman.blogs.nytimes.com/2010/05/01/why-devalue/ Lo que no dice es que, tras la devaluación, devolver la deuda contaída en moneda extranjera con moneda interna devaluada resulta mucho más difícil, contrabalanceando la ventaja.
203
No lloren por Wall Street PAUL KRUGMAN 02/05/2010 La semana pasada, el presidente Obama fue a Manhattan, donde instó a una audiencia proveniente en gran parte de Wall Street a respaldar la reforma financiera. "Creo", afirmó, "que estas reformas son, en última instancia, no sólo lo mejor para los intereses de nuestro país, sino también lo mejor para los intereses del sector financiero". Bueno, ojalá que no hubiese dicho eso; y no sólo porque realmente necesite, desde el punto de vista político, adoptar una postura populista, poner alguna distancia visible entre él y los banqueros. El hecho es que Obama debería estar tratando de hacer lo que es bueno para el país, y punto. Si hacerlo perjudica a los banqueros, qué se le va a hacer. Es más aún, la reforma realmente debería perjudicar a los banqueros. Un conjunto cada vez mayor de análisis indica que un sector financiero excesivamente grande es perjudicial para la economía en general. Reducir ese sector excesivamente grande no hará feliz a Wall Street, pero lo que es malo para Wall Street podría ser bueno para Estados Unidos. Ahora bien, las reformas que actualmente están sobre el tapete -y que yo apoyo- podrían terminar siendo buenas para el sector financiero, así como para el resto de nosotros. Pero eso se debe a que sólo abordan una parte del problema: harían las finanzas más seguras, pero podrían no hacerlas más pequeñas. ¿Cuál es el problema con las finanzas? Empecemos por el hecho de que el sector financiero moderno genera enormes ingresos y nóminas, pero proporciona pocos beneficios tangibles. ¿Se acuerdan de la película de 1984 Wall Street, en la que Gordon Gekko afirmaba que "la codicia es buena"? Según los criterios actuales, Gekko sería un pelagatos. En los años que precedieron a la crisis de 2008, el sector financiero representaba un tercio de los ingresos nacionales totales (aproximadamente, el doble de lo que suponía dos décadas antes). Nos decían que estos beneficios estaban justificados porque el sector estaba haciendo grandes cosas por la economía. Canalizaba el capital hacia usos productivos; repartía el riesgo; mejoraba la estabilidad financiera. Ninguna de esas cosas era cierta. El capital no se estaba canalizando hacia los innovadores que crean empleo, sino hacia una burbuja inmobiliaria insostenible; el riesgo estaba concentrado, no repartido; y cuando la burbuja estalló, el supuestamente estable sistema financiero se hundió, con la peor crisis mundial desde la Gran Depresión como daño colateral. Entonces, ¿por qué estaban ganando dinero a paladas los banqueros? Mi interpretación, que refleja los esfuerzos de los economistas financieros por encontrarle sentido a la catástrofe, es que principalmente apostaban con dinero de otra gente. El sector financiero hizo apuestas demasiado grandes y arriesgadas con fondos prestados -apuestas que fueron enormemente rentables hasta que fallaron-, pero fue capaz de conseguir préstamos baratos porque los inversores no comprendían lo frágil que era el sector. ¿Y qué hay de los tan cacareados beneficios de la innovación financiera? Coincido con los economistas Andrei Shleifer y Robert Vishny, que en un artículo reciente sostienen que gran parte de esa innovación consistió en crear la ilusión de seguridad proporcionando a los inversores sustitutos falsos de activos pasados de moda como los depósitos bancarios. Finalmente, la ilusión se vino abajo (y la consecuencia fue una crisis financiera desastrosa).
204 En su discurso de la semana pasada, por cierto, Obama insistió -dos veces- en que la reforma financiera no ahogará la innovación. Es una lástima. Y ésta es la cuestión: tras recibir un duro golpe durante el periodo inmediatamente posterior a la crisis, los beneficios del sector financiero se están disparando otra vez. Parece muy probable que el sector volverá a jugar a los mismos juegos que nos metieron en este lío inicialmente. De modo que, ¿qué tenemos que hacer? Como he dicho, apoyo las propuestas de reforma de la Administración de Obama y sus aliados del Congreso. Entre otras cosas, sería una pena ver que la campaña antirreforma de los dirigentes republicanos -una campaña marcada por una falta de honradez y una hipocresía asombrosas- triunfa. Pero estas reformas deberían ser sólo el primer paso. También tenemos que reducir el tamaño de las finanzas. Y no son sólo los detractores de fuera los que dicen esto (no es que los detractores de fuera críticos tengan nada de malo, ya que han acertado mucho más que los supuestamente buenos conocedores del tema; véase Greenspan, Alan). El Fondo Monerario Internacional ha hecho un llamamiento en favor de un impuesto sobre la actividad financiera -un FAT, o 'gordo', en sus siglas en inglés- que gravaría los beneficios y las remuneraciones del sector financiero. Un impuesto así, sostiene el fondo, podría "atenuar la asunción de riesgos excesivos". También podría "tender a reducir el tamaño del sector financiero", cosa que el fondo presenta como algo bueno. El tema es que la propuesta del FMI es en realidad demasiado blanda. Aun así, si se convierte en una realidad, Wall Street va a estar que trina. Pero el hecho es que hemos estado dedicando una parte demasiado grande de nuestra riqueza, una parte demasiado grande del talento del país, al negocio de diseñar complejos planes financieros y trapichear con ellos; planes que tienen cierta tendencia a destrozar la economía. Poner fin a esta situación perjudicará al sector financiero. ¿Y?
EDITORIAL Lenta regulación 02/05/2010 La crisis financiera desencadenada hace casi tres años desveló importantes anomalías en el funcionamiento de los sistemas financieros más avanzados del mundo. Desde los supervisores estadounidenses hasta las agencias multilaterales convinieron en que la respuesta necesaria a ese amplio repertorio de fallos de mercado, deficiencias en la gestión de riesgos y en las tareas de los supervisores, además de no pocas tropelías e ilegalidades, era el fortalecimiento de la regulación financiera. Se entiende que no se trataba de aumentar el número de regulaciones, sino de imponer normas más acordes con la complejidad operativa de los mercados y, en todo caso, con verdadera proyección global. Que fuera el G-20 la instancia desde la que inicialmente emergieron esas pretensiones reformadoras era un signo de esperanza. En ese grupo concurren las economías más avanzadas, pero también aquellas otras consideradas emergentes que se han revelado esenciales en la gestión de la crisis: China, India, Brasil, entre otras. Los excedentes de
205 divisas de algunos de los emergentes han contribuido a amortiguar los estrangulamientos de liquidez originados por la crisis, además de financiar los déficits de ahorro de algunas grandes economías. Su papel en las finanzas globales seguirá siendo de primer orden. Para la definición de esos propósitos reformistas está siendo también esencial la actitud del Fondo Monetario Internacional, de gran flexibilidad política, capacidad de iniciativa y eficacia sin precedentes. Ha sido la única institución que en la última reunión, la pasada semana, de los ministros de finanzas del G-20 ha llevado propuestas concretas que, lamentablemente, los gobiernos de las economías avanzadas han vuelto a postergar. La tasa bancaria, destinada a constituir un fondo susceptible de financiar los rescates bancarios en próximas crisis, es una de ellas. Entre las actitudes más conservadoras y resistentes a la introducción de reformas (como la tasa comentada), destaca el BCE. La presidencia española no supo vencer las resistencias que Trichet expuso durante el último Ecofin en Madrid. Tratar de evitar que las consecuencias de los errores bancarios los vuelvan a pagar los contribuyentes y, en última instancia, los ciudadanos que sufren las consecuencias de la recesión, es lo mínimo que deben hacer las autoridades. Actuar sobre las políticas de remuneraciones de los directivos de la banca, en especial cuando se benefician de ayudas públicas, es una de las condiciones para evitar que esta crisis no acentúe la desafección que ya existe en no pocos países respecto a las instituciones bancarias y sus supervisores. En economías como la española, una de las más bancarizadas de Europa, esos riesgos son particularmente graves. Las empresas sufren y el paro aumenta porque, entre otras razones, el sistema bancario sigue racionando el crédito. Su reestructuración, en especial la de las cajas de ahorro, está empezando a distanciarse de los criterios de racionalidad técnica que debería imponer el Banco de España. La prolongación de la interinidad abierta hace ya demasiado tiempo se va a convertir en un factor de agravamiento de la crisis y de erosión del respeto a instituciones económicas básicas en nuestro sistema. Liderar la regulación financiera sin hipotecar los intereses de la mayoría de los ciudadanos es una obligación esencial de las autoridades económicas españolas. -
Goldman, el rey del casino Obama intenta capitalizar el descontento popular con Wall Street para cambiar las reglas del juego del sistema financiero SANDRO POZZI 02/05/2010 Imagine un río en el que una empresa vierte sus desechos más tóxicos. Y que luego otra empresa embotella el agua y la vende como buena. Algo así pasó en el negocio hipotecario, epicentro de la mayor crisis desde la Gran Depresión. Los contaminadores fueron firmas como Countrywide, que daba créditos a gente insolvente. Imagine un río en el que una empresa vierte sus desechos más tóxicos. Y que luego otra empresa embotella el agua y la vende como buena. Algo así pasó en el negocio hipotecario, epicentro de la mayor crisis desde la Gran Depresión. Los contaminadores fueron firmas como Countrywide, que daba créditos a gente insolvente. Bancos de inversión como Goldman Sachs empaquetaron esos préstamos envenenados y esparcieron el riesgo sacándolos al mercado. El sello de calidad al producto defectuoso lo pusieron las agencias de rating, como Standard & Poor's y Moody's.
206 Wall Street se convirtió así, literalmente, en un casino en el que instrumentos financieros de gran complejidad, construidos con activos que eran literalmente basura, fueron la apuesta a seguir. El derrumbe del sector inmobiliario obligó a cada jugador a enseñar sus cartas. Unos ganaron, como el especulador John Paulson. Pero la mayoría perdió la mano. Fue, según el senador demócrata Carl Levin, un colapso hecho por el hombre, del que Goldman Sachs, en su opinión, fue en gran parte responsable. La firma de Wall Street pasó así a ser el máximo exponente de la cultura que dominó y domina en el mundo de las finanzas. El senador Levin, que preside el subcomité de investigaciones, uno de los más poderosos del Capitolio, se lanzó el martes directamente al cuello del consejero delegado de Goldman Sachs, Lloyd Blankfein, al que acusó de haber tratado a sus clientes como "un objeto para generar beneficio" a base de venderles "mierda". Hasta 11 veces utilizó la palabra preferida de Cartman, uno de los protagonistas de la serie South Park. Y es esa misma acusación la que está en el corazón de la demanda por fraude presentada el 19 de abril por la agencia que regula el mercado financiero en EE UU, la SEC: cuestiona si la firma fue lo suficientemente transparente a la hora de informar a sus inversores sobre las intenciones que había detrás del paquete de deuda conocido como Abacus. Y al mismo tiempo eleva la pregunta sobre un posible conflicto de intereses, una sospecha que persigue desde siempre a la banca de inversión. Carl Levin deja claro que no es su responsabilidad decir si Goldman Sachs hizo algo ilegal. Sin embargo, como señala la senadora republicana Susan Collins, lo que es evidente es que Wall Street aceleró con "prácticas éticamente cuestionables" el boom inmobiliario y desencadenó su caída cuando esos productos exóticos se toparon con la realidad. "Todo estaba basado en una fantasía", dijo la senadora, "y cuando el mercado inmobiliario se vino abajo, nos dimos cuenta de lo frágil que era el sistema". Pero en el ejemplo del agua tóxica embotellada falta una pieza clave, la misma que está también tras del derrumbe del mercado hipotecario. El casino de la deuda basura pudo funcionar gracias a la permisividad de los supervisores financieros en Washington y a que los mismos legisladores que durante más de 10 horas cargaron el martes contra los ejecutivos de Goldman Sachs no fijaron reglas que guiaran y dieran transparencia al juego. El presidente Barack Obama no desaprovecha la oportunidad e intenta, con un lenguaje más suave, capitalizar el revuelo popular para dar un impulso definitivo a la reforma financiera, que lleva atascada un año en el Congreso. Pero los republicanos se oponen en bloque a darle vida en este momento. El demócrata Christopher Dodd, promotor de la reforma en el Senado, pierde la paciencia y ve detrás de todo esto una maniobra de Wall Street para mantener intacto su modelo de negocio, destinando millones a hacer lobby contra la reforma. Lloyd Blankfein, de Goldman Sachs, responde que el cambio en la regulación es necesario y que beneficiará al conjunto del sector financiero. Pero en Washington no se creen del todo sus palabras. Y ponen como ejemplo el ataque contra la iniciativa para limitar la capacidad de las entidades para operar con fondos especulativos, la conocida como Volcker Rule. Hasta el inversor Warren Buffett mira con cautela la idea de crear un mercado que arroje luz sobre la oscura esquina de los derivados, una de las ramas de negocio más lucrativas. JP Morgan Chase, Bank of America, Goldman Sachs, Morgan Stanley y Citigroup manejan contratos por valor de 280 billones de dólares, según la Oficina del Contralor y del Interventor de la Moneda, una cifra que multiplica por 20 el PIB de EE UU. Blankfein explicó ante el Senado que estos productos son necesarios para dar liquidez al mercado y que su banco crea productos para poder diversificar el riesgo que le
207 piden los clientes. "Esto no es un casino", remachó. Sin embargo, los derivados son también su talón de Aquiles. El temor en Wall Street es que las nuevas reglas en su negocio puedan reducir sus beneficios y redirijan a los inversores hacia otros centros financieros en los que no se aplican restricciones. La reforma financiera tiene además otros puntos de vulnerabilidad para Wall Street, como acabar con la existencia de bancos "demasiado grandes para quebrar", la creación de una agencia que proteja al consumidor de productos abusivos y el establecimiento de un sistema de alerta de crisis. Richard Shelby, republicano del comité financiero del Senado, retrasó todo lo que pudo el debate sobre la reforma en el pleno de la Cámara Alta. Antes de desbloquear el proceso, quería tener garantías del lado demócrata de que habrá un intercambio real de opiniones y que se tendrían en cuenta sus enmiendas. Temía que la propuesta del senador Dodd acabara perpetuando las ayudas públicas a Wall Street. El miércoles, las dos partes cedieron. Los republicanos aceptaron que avanzara el proceso legislativo, después de ver que los demócratas mataron literalmente la creación de un superfondo de 50.000 millones de dólares financiado por la banca, al que recurrirían los reguladores para desmantelar las entidades insolventes. Pero sobre todo, porque son conscientes de que los ciudadanos piden un árbitro del sistema. El drama, sin embargo, continuará un par de meses más. La cuestión de la protección del consumidor y de la regulación de los derivados crea aún divisiones ideológicas. Y una vez pactado el texto en el Senado, deberá conciliarse con la versión adoptada por la Cámara de Representantes en diciembre. Barack Obama insiste en que quiere firmar una "reforma robusta". Y por eso advierte que no firmará un texto que huela que beneficia antes los intereses de Wall Street que al ciudadano. Lo que está claro es que el éxito de la reforma no dependerá tanto del papel que jugó Goldman Sachs en el colapso del mercado hipotecario, sino más bien de que los legisladores se pongan de acuerdo sobre los detalles del contenido final. Pero el caso Goldman, a raíz del intercambio visto en el Senado, sí que puede acabar introduciendo cambios en el diseño original de la propuesta que está sobre la mesa, al incorporar cuestiones relacionadas con el conflicto de interés y la transparencia. Y lo que está claro también es que Goldman no crea muchas simpatías. Y que para el ciudadano corriente es difícil entender lo que hace el banco, un desconocimiento que a su vez viene bien para alimentar el ataque político. La firma se encuentra, por tanto, en una situación que a ninguna empresa le gustaría. El banco registró un beneficio espectacular en el primer trimestre de 3.460 millones de dólares, lo que le consolida como una de las compañías más rentables del mundo. Pero esa imagen de prosperidad en Wall Street contrasta con la dura realidad que se vive en el resto del país, donde un paro cercano al 10% y los desahucios inmobiliarios se ceban con millones de familias. Por poner en números ese desfase, los seis grandes del sistema financiero estadounidense se anotaron unas ganancias de 18.700 millones de dólares en el mejor trimestre desde la primavera de 2007. Pero lo que diferencia a Goldman Sachs del resto es que no presta dinero directamente al ciudadano ordinario ni a pequeñas empresas. Sus ejecutivos fueron claros en el Senado al explicar lo que hace la entidad, y eso, según los observadores, restó solidez a la causa por fraude de la SEC. Pero la reputación del titán de Wall Street está seriamente dañada por el fuerte choque populista con Washington. Así que a Blankfein no le queda otra que hacer dos cosas para quitarse la etiqueta de villano: primero,
208 introducir cambios en su modelo de negocio que recuperen la confianza en la entidad, y segundo, zanjar cuanto antes el frente legal. Cuanto más disputa las alegaciones de la SEC, más caen sus acciones, y eso puede irritar a los inversores. Aunque para muchos analistas especializados en este tipo de litigios el caso presentado por el regulador es débil, en esta guerra con tintes propagandísticos, a Goldman Sachs no le queda otra que dar un paso atrás y llegar cuanto antes a un arreglo para evitar ir a juicio y que la situación siga dañando más su imagen. Es una posibilidad que ganó aún más fuerza tras el duro enfrentamiento visto en el Capitolio. Y los pactos extrajudiciales son, además, una práctica muy común seguida en EE UU en litigios de tipo financiero, porque permite, por un lado, terminar con la incertidumbre y evita costosos gastos legales. Pero sobretodo, es la fórmula de finiquitar el expediente sin admitir o negar haber incurrido en una conducta irregular. -
Hay que controlar los valores sintéticos GEORGE SOROS 02/05/2010 Podemos estar seguros de que Goldman Sachs intentará rebatir con todas sus fuerzas la demanda civil entablada en su contra por la Comisión de Valores y Bolsa de EE UU (SEC). Más allá del desenlace, el caso tiene importantes consecuencias para las leyes de reforma financiera que el Congreso está debatiendo en la actualidad. Sea Goldman culpable o no, es claro que la transacción en cuestión no generaba ningún beneficio social. Implicaba un valor sintético complejo que se derivaba de valores que estaban respaldados por préstamos hipotecarios existentes al clonarlos en unidades imaginarias que imitaban a los originales. Esta obligación de deuda colateralizada (CDO) sintética no financiaba la propiedad de ninguna vivienda ni asignaba capitales de manera eficiente; no hacía más que inflar el volumen de valores respaldados por créditos hipotecarios que perdieron valor cuando estalló la burbuja. La finalidad principal de la transacción era generar honorarios y comisiones. Esta es una clara demostración de cómo los derivados y los valores sintéticos se utilizaron para crear valor imaginario de la nada. De hecho, se crearon más valores CDO de calificación triple A que la cantidad de activos triple A sobre los que se basaban. Esto se hizo a gran escala, a pesar del hecho de que todos los actores involucrados eran inversores experimentados. El proceso se prolongó durante años y terminó en un colapso que generó una destrucción de riqueza equivalente a billones de dólares. No es posible permitir que este tipo de actividades continúe. Se debe regular el uso de los derivados y otros tipos de instrumentos sintéticos, incluso si todos los actores son inversores experimentados. Los valores ordinarios se deben registrar ante la SEC antes de poder cotizar. Los valores sintéticos tienen que regularse por criterios similares, aunque la tarea se podría asignar a una entidad diferente, como la Comisión de Comercio en Futuros sobre Mercancías (CFTC). Los derivados pueden ser útiles para muchos fines, pero también tienen riesgos poco evidentes a simple vista. Por ejemplo, pueden acumular desequilibrios ocultos de oferta y demanda, que pueden quedar en evidencia abruptamente al superarse cierto umbral. Esto es así para las llamadas opciones tipo knock-out, que se usan en los fondos de cobertura cambiarios. También es válido para los programas de seguros de carteras que causaron el
209 lunes negro de la Bolsa de Valores de Nueva York en octubre de 1987. La introducción subsiguiente de mecanismos de interrupción de las cotizaciones reconoció tácitamente que los derivados pueden provocar perturbaciones, pero no se llegó a las conclusiones adecuadas. Las permutas de riesgo de crédito (CDS) son instrumentos particularmente sospechosos. Se supone que están para funcionar como una suerte de seguro contra el impago a los tenedores de bonos. Sin embargo, como se pueden transar libremente, se pueden usar para montar ataques a la baja, es decir, un tipo de estrategia bursátil por la cual un agente de Bolsa (o un grupo de ellos) intenta forzar la baja del precio de una acción para cubrir una posición corta. Además de funcionar como un seguro, funcionan como una licencia para matar. Su uso se debería limitar sólo a quienes tengan un interés asegurable en los bonos de un país o una compañía. Será tarea de los reguladores comprender los derivados y los valores sintéticos, y no permitir su creación si no pueden evaluar plenamente los riesgos sistémicos. Esa tarea no se puede dejar en manos de los inversores, contrariamente a lo que dicta el dogma fundamentalista de mercado que ha prevalecido hasta ahora. Los derivados que cotizan en las Bolsas se deben registrar como una clase. Los derivados a medida tendrán que registrarse por separado, y los reguladores deberán tener la obligación de comprender los riesgos que implican. La labor de registro es trabajosa y lenta, por lo que habría de desincentivar el uso de derivados de mercado no organizado (OTC). Los productos a medida se podrían agrupar y distinguir de los instrumentos que cotizan en Bolsa, lo que prevendría la repetición de los abusos que contribuyeron a la crisis financiera de 2008. Exigir el registro de los derivados y los valores sintéticos sería una medida sencilla y eficaz; no obstante, el proyecto de ley que se considera actualmente en el Senado no la contiene. El Comité de Agricultura del Senado propone impedir que los bancos que aceptan depósitos generen mercados de permutas. Se trata de una excelente propuesta que ayudaría mucho a limitar la interconexión de los mercados, evitando así el contagio financiero, pero no regula los derivados. Es más, los cinco grandes bancos que sirven como hacedores de mercados y representan más del 95% de las transacciones de mercado no organizado en EE UU probablemente se opongan a la propuesta, porque afectaría a su cuenta de resultados. Resulta más extraño el que algunas corporaciones multinacionales también lo hagan. La única explicación plausible es que los derivados a medida pueden facilitar la evasión legal de impuestos y la manipulación de las ganancias. Por supuesto, estas consideraciones no deberían influenciar la legislación. - Imprimir
TRIBUNA: KENNETH ROGOFF ¿Todos para un impuesto y un impuesto para todos? KENNETH ROGOFF 02/05/2010 Cuando estalle la próxima crisis financiera global a plena escala, no permitamos que se diga que el Fondo Monetario Internacional nunca se preocupó por prevenirla. Recientemente, el FMI propuso un nuevo impuesto global a las instituciones financieras en relación aproximada a su tamaño, así como un impuesto a las ganancias y bonificaciones de los bancos.
210 La propuesta del FMI ha sido recibida con un desdén y un escarnio predecibles por parte de la industria financiera. Más interesantes y significativas son las opiniones encontradas de los presidentes y ministros de Finanzas del G-20. Los Gobiernos en el epicentro de la reciente crisis financiera, especialmente EE UU y Reino Unido, se muestran absolutamente entusiastas, particularmente respecto del impuesto en proporción al tamaño. Después de todo, ellos quieren implementarlo de cualquier manera. Los países que no experimentaron los recientes colapsos bancarios, como Canadá, Australia, China, Brasil e India, no están tan entusiasmados. ¿Por qué deberían cambiar los sistemas que resultaron ser tan resistentes? Es muy fácil criticar los puntos específicos del plan del FMI. Pero el diagnóstico más general que hace el FMI del problema es muy atinado. Los sistemas financieros están inflados por garantías implícitas de los contribuyentes, que permiten a los bancos, especialmente a los grandes, pedir dinero prestado a tasas de interés que no reflejan plenamente los riesgos que asumen en busca de ganancias sobredimensionadas. Dado que el riesgo luego se transfiere a los contribuyentes, imponer impuestos a las compañías financieras en proporción a sus empréstitos es una manera sencilla de garantizar cierta justicia. "¿Qué riesgos?", quieren saber las compañías financieras. El coste promedio de los rescates fue de apenas unos pocos puntos porcentuales del PBI. Y la crisis fue un acontecimiento único en medio siglo. El FMI correctamente señala que estas argumentaciones son ridículas. Durante la crisis, los contribuyentes respondieron por casi una cuarta parte del ingreso nacional. Tal vez la próxima crisis no resulte tan bien, y las pérdidas que soporte la población sean asombrosas. Incluso con el éxito de los rescates, los países sufrieron pérdidas de producción masivas debido a las recesiones y a un crecimiento sostenido por debajo de lo normal. Sin embargo, si bien la regulación debe ocuparse de los balances sobredimensionados de los bancos que estuvieron en el origen de la crisis, el FMI está en lo cierto al no concentrarse excesivamente en reparar el problema de los bancos demasiado grandes para quebrar. Una cantidad sorprendente de expertos parece pensar que si se pudieran dividir los grandes bancos, los Gobiernos serían mucho más resistentes a los rescates y todo el problema del riesgo moral se acabaría. Esa lógica es dudosa, en vista de cuántas crisis similares han afectado a sistemas sumamente diferentes a lo largo de los siglos. Una crisis sistémica que afecte simultáneamente a una gran cantidad de bancos medianos ejercería igual presión para que los Gobiernos rescaten al sistema que una crisis que afecte a un par de bancos grandes. Hay ideas demasiado complejas flotando en el ambiente que parecen buenas en papel, pero que podrían resultar profundamente erróneas en una crisis importante. Cualquier solución sólida puede ser razonablemente fácil de entender e implementar. La propuesta del FMI parece pasar estas pruebas. Por el contrario, algunos especialistas en finanzas están a favor de obligar a los bancos a depender mucho más de deuda contingente que se pueda convertir por la fuerza en acciones (posiblemente sin valor) en caso de un colapso a nivel de todo el sistema. Ahora bien, cómo se puede implementar esta forma de quiebra preempaquetada en un mundo de sistemas legales, políticos y bancarios tan diferentes, es algo que resulta poco claro. La historia financiera está plagada de dispositivos de red de seguridad que no habían sido sometidos a prueba y que en una crisis fallaron. Mejor controlar el crecimiento del sistema. La postura del FMI, en cambio, no es tan sólida cuando piensa que su sistema de un impuesto global único para todos de alguna manera nivelará el campo de juego internacionalmente. No lo hará. Los países que hoy tienen sistemas regulatorios financieros sólidos ya están gravando
211 de manera efectiva a sus compañías financieras más que, digamos, EE UU y Reino Unido, donde la regulación financiera es casi mínima. Estados Unidos y Reino Unido no quieren debilitar su ventaja competitiva gravando a los bancos mientras que otros países no lo hacen. Pero es en sus sistemas donde existe la necesidad mayor y más urgente de frenos y contrapesos más fuertes. No lleguemos tan lejos a la hora de defender a los países renuentes que rechazan la propuesta del FMI. Estos países necesitan admitir que si EE UU y Reino Unido implementan reformas aunque no fueran más que modestas, una buena cuota de capital fluirá a otra parte, abrumando potencialmente los sistemas regulatorios que parecían funcionar bien hasta ahora. ¿Y qué pasa con el segundo impuesto propuesto por el FMI a las ganancias y bonificaciones de los bancos? Un impuesto de esas características es políticamente atractivo, pero en definitiva tiene poco sentido -excepto, tal vez, en un año de crisis en el que los subsidios bancarios son absolutamente transparentes-. Sería preferible mejorar directamente la regulación del mercado financiero y dejar que los sistemas tributarios nacionales se ocupen del ingreso de los bancos como del de cualquier otra industria. El primer esfuerzo del FMI a la hora de prescribir una cura puede tener defectos, pero su diagnóstico de un sector financiero inflado por el riesgo moral es a las claras acertado. Esperemos que cuando los líderes del G-20 se reúnan más avanzado este año decidan tomarse en serio el problema en lugar de demorar una discusión durante una década o dos hasta que caiga sobre nosotros la próxima crisis.
Una reforma en medio del túnel Las trabajos para fijar las nuevas reglas financieras avanzan muy lentamente MIGUEL JIMÉNEZ 02/05/2010 José Viñals, director de asuntos monetarios y mercados del FMI, sostenía la semana pasada en Washington que el tren de la reforma financiera avanza toda velocidad. "Lo que pasa es que como el tren está en aún esta dentro del túnel, no se ve a la velocidad a la que viaja. Pero cuando salga del túnel, se verá". El repaso de las medidas puestas en marcha por el G-20 muestra que efectivamente, el tren se mueve. Pero los calendarios fijados para que las reformas sean efectivas indican que o bien el túnel es muy largo o bien la velocidad es más propia de un mercancías que de un AVE. La cumbre de Londres del G-20 del 2 de abril de 2009 proclamó que "los grandes fallos en el sector financiero y en la regulación y la supervisión financieras fueron causas fundamentales de la crisis". "La confianza no se recuperará hasta que no reconstruyamos la confianza en nuestro sistema financiero", añadía la declaración final de una reunión que fue el gran estreno internacional del presidente de EE UU, Barack Obama, entonces en pleno apogeo. En Londres, cuando se vivía aún lo más agudo de la crisis, se fijó una agenda de reformas ambiciosa, pero pronto el G-20 chocó con la realidad. En la cumbre de Pittsburgh de septiembre pasado, los dirigentes del grupo de países avanzados y emergentes debían empezar a pasar a limpio los grandes principios esbozados en Londres, pero en lugar de eso, el G-20 echó un borrón. La dimensión del encargo era tal que los organismos financieros internacionales que elaboran las normas y recomendaciones pidieron más tiempo. Así, bajo la apariencia de "un calendario más detallado", lo que ocurrió realmente es que se dilataron los
212 plazos previstos en Londres para la reforma financiera. La cosa va lenta. Y, sin embargo, se mueve. CAPITAL y LIQUIDEZ Una de las reformas más importantes (y que va más despacio) es la que tiene que ver con los requisitos de capital y liquidez de la banca. El comité de Basilea tiene previsto presentar un borrador de su conjunto de propuestas en julio que, tras el paso por diferentes organismos, se convertiría en definitivo a finales de este año, con la venia de la cumbre del G-20 de noviembre. Los elementos clave de las nuevas propuestas son medidas para elevar la calidad y transparencia de la base de capital, nuevos requisitos de liquidez, la posible introducción de una nueva ratio de apalancamiento que contribuya a evitar riesgos excesivos y, la gran aportación española, las reservas anticíclicas, con las que los bancos deberían constituir fondos de capital en tiempos de bonanza que puedan ser usados en periodos de crisis. La reforma no es neutral. Hay una enorme batalla por inclinar la normativa de un lado u otro por las grandes implicaciones que puede tener para las entidades y para las economías, pues algunas normas puedan contribuir a cerrar el grifo del crédito. El diablo está en los detalles, y ahí están las discusiones. Con respecto al capital, la primera pelea es por establecer cuál es la definición de core capital (o capital de máxima calidad) y si se aplica de modo homogéneo en todos los países. La segunda es si se fija un límite mínimo o se deja que sean los mercados los que juzguen. La tercera es sobre cuándo entrarán en vigor las nuevas reglas. En Pittsburgh se acordó que las nuevas exigencias se aplicarán a medida que las condiciones financieras mejoren y la recuperación económica esté asegurada, señalando hacia finales de 2012, lo que en el sector se interpreta como que los ratios no serán exigibles hasta las cuentas de 2013. Pero aunque se retrase la entrada en vigor, los mercados ya van a empezar a juzgar con los nuevos parámetros. Lo que está claro es que las viejas formas de medir el capital están en desuso y que las nuevas van a suponer mayores exigencias, lo que puede poner en dificultad a numerosas entidades. En cuanto a la liquidez, algunas propuestas penalizan a la banca comercial en detrimento de la de inversión, lo que parece un contrasentido. Por eso, también en esta materia hay una batalla soterrada de los grupos de presión tratando de arrimar el ascua a su sardina. RETRIBUCIONES Los grandes principios sobre la reforma de las retribuciones ya están sentados por el Consejo de Estabilidad Financiera (CEF), pero su aplicación es otra cosa. Los mayores avances se realizan por el lado del gobierno corporativo, con obligaciones de supervisión interna y transparencia sobre las retribuciones, pero va más despacio la implementación de la idea de que las políticas de retribución no incentiven el riesgo excesivo. En algunos países, entre ellos España, la aproximación es no sólo aumentar la transparencia mediante nuevas exigencias normativas, sino también reforzar los poderes del supervisor (el Banco de España) para controlar si las políticas retributivas incentivan el riesgo o si son acordes con una fuerte base de capital del banco. Cuando se endurezcan las exigencias de capital, los supervisores tendrán mayor margen de maniobra. Para los bancos con elevada solvencia, no habrá límites a la cuantía de los bonos multimillonarios, pero lo que sí se exige a los países miembros del CEF es que antes de final de año incorporen sus recomendaciones. Habrá un examen en el segundo trimestre de 2011. Las recomendaciones del CEF son, en algunos casos, bastante concretas. Así, se establece que una parte sustancial de la paga variable (entre el 40% y el 60%, según los casos) sea diferida al menos tres años y que, en caso de que los resultados que dieron lugar a su generación empeoren de un modo significativo, se pueda suprimir su pago, algo así como reclamar la devolución del bonus. Además, una parte sustancial de la paga variable, al menos
213 el 50%, debe pagarse en acciones u otros instrumentos ligados a la cotización. También se proscriben los bonus garantizados. El objetivo de todo ello es desincentivar la asunción de riesgos excesivos a corto plazo que no tengan en cuenta las implicaciones que para la entidad puedan tener a medio y largo plazo. De todas formas, es una de las reformas que avanza más rápido, en parte porque es una de las que más réditos puede aportar a la opinión pública. Algunas entidades, como es el caso del Banco Santander en España, han decidido adelantarse y adoptar de inmediato las nuevas políticas de retribución.
DERIVADOS Los líderes del G-20 acordaron en Pittsburgh que todos los contratos de derivados estandarizados over the counter (esto es, negociados ahora fuera de mercados organizados) deben ser negociados a través de plataformas electrónicas o mercados de valores y liquidados a través de cámaras centrales de compensación para finales de 2012. Se trata, con ello, de que haya mayor transparencia y garantías. Un grupo de trabajo está preparando una serie de recomendaciones concretas que presentar al CEF en octubre de este año. Aunque hay algunas iniciativas nacionales ya en marcha, por ahora los derivados over the counter siguen campando a sus anchas. Entre estos tipos de contratos están los famosos credit default swaps (CDS) o seguros contra impago de deuda, un mercado altamente especulativo. Tras la quiebra de Lehman, los CDS llevaron al borde del abismo a AIG y ahora han tenido un papel destacado en la crisis de la deuda soberana. Aunque se trata de mercados menos líquidos y transparentes que los de bonos, los CDS sirven para apostar por el impago o la quiebra de un país. Han recibido enormes críticas porque se puede comprar el seguro (el CDS) sin tener nada que asegurar (el bono), lo que puede crear incentivos perversos: es como permitir contratar un seguro de incendios sobre la casa del vecino, han argumentado algunos. Además, las garantías exigidas son claramente insuficientes y como ocurrió con Lehman y AIG, no está nada claro que si al final se produce el impago eso no tenga consecuencias en cadena, por no estar la cobertura de los riesgos suficientemente garantizada. Los precios de los CDS,
214 además, parecen con frecuencia contradecir la lógica. El mercado de CDS asigna mucha más probabilidad de impago a un país como España (cuya solvencia está entre la AAA y la AA) que a otros con una calificación muy inferior como Colombia, Perú o Indonesia (ésta última con rating de bono basura). DEMASIADO GRANDE PARA CAER Si alguien tenía alguna duda de que hay entidades que eran demasiado grandes para dejarlas caer (too big to fail), la quiebra de Lehman se encargó de despejarlas. El riesgo moral de que si un banco va bien, el beneficio se lo lleven los accionistas y, si va mal, el rescate lo paga el Estado, ha llevado a elaborar políticas para lidiar con las entidades sistémicamente importantes. Hay tres objetivos: reducir la probabilidad y el coste de la caída de una entidad, mejorar la capacidad de afrontar la crisis de un banco sistémico y amortiguar el contagio y las interconexiones con el conjunto del sistema. La mejora de la supervisión de las entidades sistémicas es la vía para prevenir su caída. Para reducir el coste, se estudia fijar un requerimiento extra de capital para las entidades sistémicas. Además, de modo general se plantea una tasa a la banca que contribuya a cubrir el coste del rescate y hay medidas anunciadas en este sentido. De nuevo, aquí hay una batalla entre quienes defienden que hay que penalizar el tamaño y quienes creen que lo que hay que hacer es desincentivar el riesgo. Tanto en lo que se refiere a las exigencias de capital como al modo de calcular el impuesto a los grandes bancos. En cuanto a la gestión de crisis y el riesgo de contagio, hay trabajos para mejorar la coordinación internacional, para establecer cortafuegos. En último término, una de las opciones más llamativas es el llamado testamento bancario, en el que una entidad establece la fórmula legal y societaria para liquidar sus activos de una forma ordenada, de modo que pueda disolverse sin crear un colapso del resto del sistema financiero. Con ese libro de instrucciones, los bancos dejarían de ser demasiado grandes para caer. AGENCIAS DE CALIFICACIÓN Las agencias de calificación crediticia están entre las grandes culpables de la crisis financiera. Asignaron calificación AAA, la máxima posible, a títulos financieros que empaquetaban hipotecas basura o a bonos de la quebrada Lehman Brothers. Ya se habían equivocado antes muchas veces, en la crisis asiática de los noventa, en Enron, en Parmalat... Esta vez, ayudaron a la banca a vender humo. Con ello, facilitaron la diseminación por todo el sistema financiero de activos tóxicos que han puesto a la banca, primero, y a la economía, después, contra las cuerdas. Las sesiones ante el comité del Senado de EE UU han dejado al descubierto las vergüenzas de estas agencias, en las que se dio prioridad a lograr negocio frente a la calidad del examen de riesgos. No se atajaron los conflictos de intereses y eso corrompió su trabajo. Lo curioso es que dichas agencias, que se equivocaron hasta el extremo, han emergido de la crisis con un enorme poder. Basta mencionar el terremoto que han provocado esta semana las rebajas de calificaciones de la deuda soberana de Grecia, Portugal y España por parte de Standard & Poor's, que junto con Moodys y Fitch dominan este mercado como una especie de oligopolio. Sus calificaciones no sólo mueven los mercados de deuda sino que son válidas a la hora de presentar activos como garantía para obtener liquidez del Banco Central Europeo, por ejemplo. En esta materia, los dirigentes del G-20 se limitaron a adoptar en Londres un compromiso genérico de "ampliar la supervisión y el registro regulador a las agencias de calificación crediticia para garantizar que cumplen el código internacional de buenas prácticas, en especial
215 para impedir conflictos de interés inaceptables". Tras esa declaración, tanto en Estados Unidos como en Europa se han dado algunos pasos para regular mejor las agencias, y ellas mismas han hecho algo de autocrítica y han revisado parte de sus métodos. En Europa, la nueva normativa de supervisión de las agencias obliga a éstas a inscribirse en un registro y cumplir una serie de reglas para que las calificaciones no se vean afectadas por conflictos de interés, se asegura la calidad de los métodos de calificación y de las notas otorgadas y se aumenta la transparencia. Además, deben diferenciarse del resto las calificaciones de productos estructurados. HEDGE FUNDS Otro de los acuerdos de la cumbre del G-20 en Londres fue "ampliar la regulación y la vigilancia a todas las instituciones, los instrumentos y los mercados financieros sistémicamente importantes", incluyendo por primera vez a los fondos de alto riesgo (hedge funds) sistémicamente importantes. Este tipo de fondos ha vivido en una especie de limbo regulatorio en buena parte de los países. Ni siquiera la grave crisis desatada por la quiebra del Long Term Capital Management a finales de los noventa sirvió para que se fijasen reglas estrictas para este tipo de entidades. No se puede decir que hayan sido causantes de la actual crisis financiera, pero nadie duda de que han contribuido a agravarla, muchas veces obteniendo con ello enormes beneficios. Tumbaron las acciones financieras con ventas en descubierto y se lucraron con el desplome de los productos estructurados respaldados por hipotecas basura. También se han lanzado a atacar al euro y a algunos países, como Grecia, sobre todo en el mercado de CDS. John Paulson, salpicado por el caso de fraude de que se acusa a Goldman Sachs, ha ganado miles de millones con esas operaciones. En un discurso pronunciado la semana pasada, la consejera de la Comisión el Mercado de Valores de EE UU (la SEC), Elisse Walter, advertía que los hedge funds son entidades "virtualmente sin regular" pese a que gestionan más de un billón de euros. Aunque las leyes de reforma financiera que se tramitan en EE UU pueden dar más poderes al supervisor, Walter advierte que dejan lagunas. En Europa, la presidencia española quiere que se regulen los hedge funds antes de junio. De momento, el Gobierno español accedió a la petición del primer ministro británico, Gordon Brown, de dejar la reforma para después de las elecciones del 6 de mayo. En otros vagones del tren de la reforma financiera se pretende establecer nuevas reglas sobre las titulizaciones, armonizar los principios contables o mejorar la coordinación de los supervisores. Pero, de nuevo, los plazos son largos: el tren sigue en el túnel.
Reprimenda a las agencias de calificación La crisis financiera ha sido, en gran medida, la consecuencia de un sistema corrupto PAUL KRUGMAN 02/05/2010 Un aplauso para el subcomité permanente de investigaciones del Senado de Estados Unidos. Su trabajo con la crisis financiera se parece cada vez más a la versión del siglo XXI de las vistas de Pecora, que ayudaron a marcar el comienzo de la regulación financiera de la era del new deal. En los últimos días, escandalosos correos electrónicos de Wall Street publicados por el subcomité han llegado a los titulares de los periódicos. Esta es la buena noticia. La mala es que la mayoría de los titulares eran sobre los correos equivocados. Cuando los empleados de Goldman Sachs se jactaban del dinero que habían
216 ganado vendiendo al descubierto en el mercado inmobiliario, era feo, pero no podía considerarse un crimen. No, los correos electrónicos en los que deberíamos centrarnos son los de los empleados de los organismos de calificación crediticia, que otorgaron calificaciones Triple A a cientos de miles de millones de dólares en activos sospechosos, casi todos los cuales se han convertido después en basura tóxica. Y no, no es una hipérbole: de los valores respaldados por hipotecas subprime con calificación Triple A emitidos en 2006, el 93% -¡el 93%!- se ha rebajado a la categoría de basura. Lo que esos correos electrónicos revelan es un sistema profundamente corrupto. Y es un sistema que la reforma financiera, según la propuesta actual, no arreglaría. Los organismos de calificación crediticia empezaron como analistas de mercado que vendían tasaciones de deuda corporativa a gente que se estaba planteando comprar esa deuda. Sin embargo, con el tiempo se transformaron en algo bastante diferente: empresas contratadas por gente que vendía deuda para que le dieran a esa deuda el visto bueno. Ese visto bueno llegó a desempeñar un papel primordial en todo nuestro sistema financiero, en especial para los inversores institucionales como los fondos de pensiones, que compraban los bonos sólo en el caso concreto de que recibieran la ansiada calificación Triple A. Era un sistema que parecía digno y respetable a primera vista. Sin embargo, provocaba enormes conflictos de intereses. Los emisores de deuda -que cada vez más eran empresas de Wall Street que vendían valores que creaban troceando cosas como hipotecas subprime- podían elegir entre varios organismos de calificación. Así que podían dirigir su empresa a la entidad que tuviera más probabilidades de emitir un veredicto favorable y amenazar con quitarle negocio a una agencia que se esmerara demasiado en hacer su trabajo. Analizándolo retrospectivamente, está clarísimo cómo podía esto corromper el proceso. Y lo hizo. El subcomité del Senado ha centrado sus investigaciones en las dos principales entidades de calificación crediticia, Moody's y Standard & Poor's; lo que ha encontrado confirma nuestras peores sospechas. En un mensaje de correo electrónico, un empleado de S&P explica que es necesaria una reunión para "hablar de ajustar los criterios" para tasar los valores respaldados por hipotecas "ante la continua amenaza de perder contratos". Otro mensaje se queja de tener que usar recursos "para maquillar las cifras de los préstamos subprime y los alt-A [productos para prestatarios que no cumplen los requisitos para préstamos convencionales] para conservar la cuota de mercado". Está claro que las entidades distorsionaron sus tasaciones para agradar a sus clientes. A su vez, estas tasaciones sesgadas ayudaron al sistema financiero a asumir mucho más riesgo del que podía asumir de forma segura. El inversor de bonos Paul McCulley, que trabaja en Pimco y acuñó el término "bancos en la sombra" para las instituciones liberalizadas que originaron la crisis, lo describía hace poco de esta manera: "El crecimiento explosivo de la banca en la sombra era como si la mano invisible organizara una fiesta, una fiesta con alcohol y sin regulación, en la que los organismos de calificación repartían carnés de identidad falsos". En fin, ¿qué se puede hacer para evitar que ocurra de nuevo? El proyecto de ley que se ha presentado ahora al Senado intenta hacer algo respecto a los organismos de calificación, pero en definitiva se muestra bastante suave con el tema. La única disposición que podría resultar amenazadora es la que facilitaría demandar a los organismos de calificación si incurrieran en "una incapacidad consciente o temeraria" para hacer lo correcto. Pero está claro que con esto
217 no basta, dado el dinero que está en juego, y el hecho de que Wall Street se puede permitir contratar a abogados muy, muy buenos. Lo que de verdad necesitamos es un cambio fundamental en los incentivos de las agencias de calificación. No podemos volver a la época en la que estas entidades ganaban su dinero vendiendo grandes libros de estadística; la información fluye con demasiada libertad en la era de Internet, por lo que nadie compraría los libros. Pero hay que hacer algo para acabar con la naturaleza esencialmente corrupta del sistema en el que el emisor paga. Un ejemplo de algo que podría funcionar es una propuesta de Matthew Richardson y Lawrence White, de la Universidad de Nueva York. Sugieren un sistema en el que las empresas que emitan bonos sigan pagando a los organismos de calificación para que evalúen esos bonos, pero que sea la Comisión del Mercado de Valores, y no la empresa emisora, la que determine qué entidad es la que se lleva el negocio. No me aferro a esa propuesta en concreto. Pero no hacer nada no entra dentro de las opciones. Es reconfortante fingir que la crisis financiera no ha sido más que la consecuencia de unos errores bienintencionados. Pero no lo ha sido; ha sido, en gran medida, la consecuencia de un sistema corrupto. Y los organismos de calificación representaron una gran parte de esa corrupción.
Cuidado con pasarse de frenada Los bancos españoles alertan de los peligros de un exceso de regulación DAVID FERNÁNDEZ 02/05/2010 Si al ciudadano se le pregunta cómo se ha comportado el sistema financiero español durante la crisis, la mayoría de las opiniones serán negativas. En la calle se percibe que mientras las entidades (y sus ejecutivos) siguen ganando mucho dinero, el grifo del crédito se ha cerrado. Sin embargo, los bancos españoles han demostrado una resistencia ante la crisis mayor que la mayoría de sus homólogos. Las turbulencias financieras han obligado al Gobierno a desarrollar algunos mecanismos de ayudas -fondo de adquisición de activos financieros, avales del Estado para las emisiones de bonos o el FROB-, pero en España no se ha tenido que usar dinero público para rescatar de la quiebra a buena parte del sistema como sí ha ocurrido en EE UU, Reino Unido, Francia o Alemania. En este contexto, los actores del sistema financiero español reconocen la necesidad de introducir cambios para que una crisis bancaria no vuelva a poner en jaque nunca más la economía mundial. Pero, amparados por la legitimidad que les otorga haber sobrevivido a las turbulencias en mejores condiciones que el resto, alertan de los peligros que supondría un exceso de regulación. El Banco de España ha sido puesto como ejemplo de cómo hacer las cosas durante la crisis. Su sistema de supervisión y algunos mecanismos conservadores en su normativa, como las provisiones anticíclicas, han sido eficaces. El pasado 13 de abril, el gobernador de la institución, Miguel Ángel Fernández Ordóñez, inauguró unas jornadas en Madrid con un discurso sobre las reformas que se avecinan. "El terremoto regulatorio internacional va a significar un cambio sustancial en el contexto de actuación de los actores del sistema financiero de todos los países", advirtió. Fernández Ordóñez cree que las entidades españolas ya han empezado a prepararse. "Han comenzado a aumentar sus niveles de capital, en particular el de mejor calidad, adelantándose a futuras exigencias regulatorias y fortaleciendo
218 su solvencia. En el ámbito de la liquidez, han prestado siempre atención a este tipo de riesgo, como demuestran sus emisiones de bonos o las titulizaciones a largo plazo". El gobernador cree que no basta llenar el sistema de nuevas normas y es partidario de mejorar la supervisión. "La crisis financiera ha revelado la existencia en algunas jurisdicciones de importantes fallos en la supervisión, con lo cual algunas entidades terminaron acumulando riesgos excesivos", dijo. "Para conseguir una supervisión internacional efectiva, el primer paso es asegurar una supervisión nacional de buena calidad. El segundo paso es promover la convergencia de la mayoría de los países hacia unos estándares supervisores homogéneos". Y terminó su discurso con un aviso para navegantes: "Habrá que admitir que esta nueva banca, por definición, va a estar menos dispuesta a prestar a actividades empresariales con determinado nivel de riesgo. Como se suele decir, no se puede sorber y soplar al mismo tiempo". Por ello, el nuevo sistema debería estudiar, según Fernández Ordóñez, la forma en que los emprendedores puedan contar con financiación para sus proyectos. Quizá el banquero que más claro ha hablado sobre la reforma del sistema haya sido Emilio Botín, presidente del Banco Santander. Botín expuso su opinión durante el discurso que dio en la Conferencia de Banca Internacional, celebrada en Boadilla del Monte (Madrid) el 17 de noviembre de 2009. "Se necesita un equilibrio entre supervisión y regulación. Los sistemas bancarios que han resistido mejor la crisis son aquellos precisamente donde existe una supervisión bancaria más estrecha". Una de las lecciones más importantes de la crisis, según Botín, es que no se debe infravalorar el riesgo. "Pero no por ello debemos pasar al otro lado de la balanza y establecer indiscriminadamente mayores requisitos de capital, que afectarán al coste y accesibilidad del crédito". "Estoy de acuerdo con la idea de a más riesgo, más exigencias de capital". Otra enseñanza es la importancia de la liquidez. Y, de nuevo, el problema no se resuelve necesariamente con más regulación. "Aquí también es clave el papel del supervisor. Los niveles de liquidez deben responder a la estructura de balance y al modelo de negocio de cada entidad. Es importante que la definición de liquidez no responda a criterios meramente cuantitativos", explicó Botín. El Botín más beligerante surge contra la idea de limitar el tamaño de las entidades para evitar el riesgo sistémico. "Limitar o penalizar el tamaño de las entidades con más requisitos de capital no soluciona el problema. Y, sin embargo, puede tener consecuencias adversas como penalizar los flujos financieros a la economía real. Las entidades grandes e internacionales son necesarias". "Lo que hay que vigilar, y en su caso restringir, es el riesgo excesivo, no el tamaño por el tamaño". Francisco González, presidente del BBVA, dio su opinión sobre las reformas en la última junta de accionistas del banco, celebrada el pasado 13 de marzo. "Defendemos una regulación que impulse la transparencia, evite los conflictos de interés, establezca requerimientos de capital más exigentes y limite de manera eficaz el apalancamiento". Las nuevas reglas, según González, deben servir para asegurar una financiación más estable de las entidades y contrarrestar el carácter procíclico del crédito bancario. "Este esquema habrá de ser más exigente que el actual, pero se debe evitar la sobrerregulación", advirtió. Junto con la nueva regulación, González recordó que hay otro problema por solucionar. "Existen entidades que se han beneficiado de ayudas públicas como consecuencia de sus propios errores. Con esos fondos están compitiendo con ventaja con las pocas entidades, como BBVA, que no han cometido errores y no han necesitado ayudas. Por eso es importante que las entidades inviables sin ayudas públicas sean reestructuradas y adjudicarlas a los agentes privados más sólidos". -
219 Más transparencia en los sueldos A la espera de lo que se decida en otros foros internacionales sobre los cambios normativos en el sector financiero, el Gobierno español ha introducido algunas novedades regulatorias, principalmente a través de la Ley de Economía Sostenible. En el capítulo III de este texto, centrado en los mercados financieros, se indica que las entidades de crédito y las empresas de servicios de inversión deberán "aumentar la transparencia" en sus políticas de remuneración y la "coherencia" de las mismas con la promoción de una gestión del riesgo "sólida y efectiva". Otro de los aspectos que quiere reforzar el Gobierno es la mejora de la supervisión financiera por parte del Banco de España y de la Comisión Nacional del Mercado de Valores. En el caso de la protección de los clientes de servicios financieros, la ley señala lo siguiente: "Las entidades de crédito, antes de que se celebre el contrato de crédito o préstamo, deberán evaluar la solvencia del potencial prestatario sobre la base de la información suficiente". Igualmente, las entidades deberán facilitar a sus clientes las "explicaciones adecuadas" para que puedan evaluar si los productos que les ofrecen "se ajustan a sus intereses, necesidades y situación financiera".
JUAN JOSÉ MILLÁS Hay gente para todo
JUAN JOSÉ MILLÁS 02/05/2010 Cristóbal Montoro, ex ministro del PP y ahora portavoz de este partido para temas económicos, pasaba por un sujeto gris. Pero la crisis parece haberle rejuvenecido. Este hombre babea con el número de parados como el avaro saliva con el número de monedas. Uno y otro, después de cenar, sacan la llave del baúl en el que esconden sus tesoros
220 y ponen al día la contabilidad que tanto placer les proporciona. La diferencia entre Montoro y el avaro es que éste oculta sus posesiones y disimula su dicha, mientras que aquél las expone públicamente, sin cortarse un pelo. Baila, literalmente hablando, en las ruedas de prensa en las que puede dar malas noticias. Cada parado nuevo le provoca un orgasmo. También le excitan la caída del PIB o el aumento del déficit, seamos justos, pero lo que de verdad le pone hasta extremos difíciles de entender es el aumento de la cola frente a las oficinas del Inem. Observen a la persona que en el segundo plano, a la derecha de la fotografía, se retira sonriendo, como diciendo "este Montoro". Este Montoro, que durante los años de prosperidad pasaba por un sujeto gris, un funcionario sin gracia, un contable del montón, se ha revelado en el infortunio colectivo como un humorista de primera. Parece que en su propio partido le han recomendado que reprima las manifestaciones de alegría cuando le toque dar malas noticias. Pero no puede, es más fuerte que él, y lo entendemos. Se puede ocultar un grano, una fortuna; se puede disimular una cojera, una gripe, un ardor de estómago, pero no hay forma de encubrir la dicha, que se manifiesta en la mirada, en el cutis, en el modo de andar y de cantar bajo la ducha. La crisis le ha quitado quince años de encima. Hay gente para todo.
Diez interrogantes del sector bancario español SANTIAGO CARBÓ / JOAQUÍN MAUDOS 02/05/2010 El sector bancario español es, en estos días, un hervidero de acuerdos, desacuerdos, encuentros y desencuentros, de estrategias y planes contingentes ante la necesidad de su saneamiento y reestructuración. Resulta paradójico que, casi 20 meses después de que muchos países acometieran el saneamiento y la recapitalización de sus entidades financieras, en España se esté aún en una fase temprana de este proceso. Se ha argumentado que este retraso se debe a que la crisis llegó más tarde (lo cual no es óbice para actuar con celeridad) y que ha tenido menor impacto en el sector bancario (lo que está por ver). Tal vez en agosto de 2007, por ejemplo, y decididamente en octubre de 2008, debieron de saltar algunas alarmas en materia de solvencia al hacer recapitulación de la enorme magnitud del crédito concedido a promotores, constructores y suelo en los años precedentes. Lo que sí está claro es que la economía política de la reestructuración bancaria en España es compleja y, aunque la necesidad de acometerla es urgente, quedan aún muchos interrogantes o retos a los que bancos, cajas y cooperativas deben hacer frente, entre los cuales pueden destacarse, sin afán de exclusividad ni orden de prioridad, 10: 1La elevada concentración del riesgo en la financiación al mercado inmobiliario (construcción, promoción inmobiliaria y compra de vivienda), que a finales de 2009 alcanzó los 1,11 billones de euros (el 105% del PIB). La financiación a este sector ha pasado de representar el 38,8% del total del crédito al sector privado a mediados de la década de los noventa al 60,3% en 2009. Como botón de muestra, la tasa de crecimiento de los créditos a promotores llegó a un máximo del 50,6% en 2006. La elevada concentración del crédito en el ladrillo ha obligado a muchas entidades de depósito a refinanciar a promotores y constructores en una suerte de apuesta por una reactivación del mercado inmobiliario en España (similar al gambling for resurrection en la terminología anglosajona). Esto ha conllevado el riesgo adicional de la adecuada gestión de los activos adjudicados y adquiridos en dación de pago, cuyo valor es incierto, en particular el del suelo.
221 2Un segundo interrogante, ligado al primero, es el inquietante aumento de la morosidad y el deterioro de activos, que alcanzó el 5,39% el pasado mes de febrero y que en crédito a construcción y promoción inmobiliaria alcanza casi el 10%. Esto obliga a las entidades a dotar cuantiosas provisiones, de tal forma que en 2009 se ha tenido que destinar casi el 70% del margen de explotación a pérdidas por deterioro de activos. Además, y con objeto de aliviar los efectos negativos sobre la cuenta de resultados, tanto el Gobierno como el Banco de España han optado por aprobar ciertos cambios. Es el caso de la relajación de la normativa de provisiones adoptada por el Banco de España en julio de 2009 (por la que, para determinados inmuebles, sólo hay que provisionar la parte del préstamo que supere el 70% del valor del inmueble, y no el cien por cien del préstamo, como ocurría antes) y el mantenimiento hasta el 31 de diciembre de 2011 de la regla transitoria de valoración del suelo urbanizable, de acuerdo con las determinaciones previstas en el texto refundido de la Ley del Suelo (aprobada en el Consejo de Ministros del 9 de abril de 2010). Con este último cambio se prorroga de tres a seis años el carácter de terreno urbanizable, aunque no se haya edificado. Esta prórroga es un alivio para el sector, pero puede retrasar el ajuste y aumentar las dudas foráneas sobre la transparencia y la solvencia del sector bancario español. Asimismo, en los próximos meses cabe esperar que la morosidad siga aumentado, y no es descartable que comience a hacerlo de forma más acelerada en los bancos que en las cajas de ahorro. Hasta ahora, la morosidad se ha derivado fundamentalmente del crédito inmobiliario, pero en los próximos meses tomarán el relevo los créditos personales y comerciales, en los que existen escasas o nulas garantías colaterales y a los que los bancos han destinado una mayor proporción de crédito que las cajas. 3 El modelo de negocio bancario está abocado al cambio. El ladrillo no puede ni debe suponer el impulso necesario que la financiación bancaria precisará en los próximos años. La debilidad macroeconómica y la situación de los balances y las cuentas de resultados de los intermediarios financieros no lo van a poner fácil. El sector debe caminar hacia un nuevo modelo, con mayor know-how en financiación de actividades con capacidad de diversificación productiva y tecnológica. ¿Hasta qué punto estamos preparados para impulsar este tipo de financiación en sectores industriales y de servicios con importantes componentes de innovación? Son riesgos menos conocidos por nuestras entidades financieras y es preciso dedicarles recursos, algo complicado en la actual coyuntura, que hace más difícil la transición hacia ese nuevo modelo de negocio bancario. 4 El acceso a la financiación mayorista es un cuarto reto, complicado teniendo en cuenta el estancamiento de los mercados interbancarios, así como los de bonos. En esta situación, las entidades están realizando un esfuerzo por captar depósitos, si bien la guerra del pasivo actual, aun siendo una tendencia competitiva casi natural, puede tener consecuencias desestabilizadoras, con una política de precios muy agresiva por parte de algunas entidades. A ello hay que añadir, además, la progresiva retirada de las medidas de apoyo a la liquidez del Banco Central Europeo. Finalmente, la gestión de la liquidez va a seguir siendo un problema si se tienen en cuenta los importantes vencimientos de deuda previstos para los próximos meses, junto a la finalización en junio de este año del aval del Estado a las emisiones de deuda bancaria. 5 Las fuertes presiones sobre los márgenes de las entidades bancarias son motivo de preocupación, y no parece que vayan a ceder. Las previsiones para 2010 no son nada halagüeñas por varios motivos: las reducidas e incluso negativas tasas de crecimiento de la actividad en un contexto de tasa de crecimiento negativa del PIB (del -0,4%, según el Banco de España), la desaparición del efecto positivo sobre los márgenes de la caída de tipos que tuvo lugar en 2009, la intensa competencia en la captación de depósitos y la necesidad de seguir dotando provisiones para hacer frente al esperado aumento de la morosidad.
222 6 El rating sigue siendo crucial y la evolución reciente no ha sido muy favorable. La crisis de la deuda en Europa ha concedido un mayor papel, si cabe, a las agencias de calificación, que condicionan de forma significativa las decisiones de inversión en los mercados financieros de todo el mundo. Teniendo en cuenta la situación de España, resulta un ejercicio ilustrativo recordar algunos de los criterios que las agencias de rating consideran para adoptar sus calificaciones, como son la resistencia económica del país o la solidez financiera del Estado. La determinación de la calidad de la deuda soberana es fundamental, además, para el rating de cualquier institución financiera. De ahí que el Gobierno se apresure a despejar las dudas que puedan surgir sobre la calidad de la deuda soberana española, más aún cuando el acceso a los fondos del FROB por parte de las entidades de depósito requiere del mantenimiento de un rating elevado. Y sobre todo, tras la rebaja de esta semana por parte de S&P del rating de la deuda española, influenciada por la bajada de la calificación de las deudas griega y portuguesa. 7 Hay un exceso de capacidad instalada en el sector y, aunque el ajuste ya ha comenzado (desde septiembre de 2008 se han cerrado 1.700 oficinas), queda mucho por hacer. Durante muchos años, la extensa red de oficinas bancarias en España ha procurado un elevado nivel de servicio y cercanía al cliente, pero la dimensión de esta red es ya desproporcionada para la demanda y la actividad vigentes, máxime teniendo en cuenta que la oficina es el principal factor generador de costes. 8 El crédito no crece, ni parece que vaya a hacerlo en breve. La vía para lograrlo en cuantía suficiente es a través de las entidades financieras, por lo que cualquier financiación atípica (por ejemplo, del ICO) solamente puede ser un complemento. En un contexto como el actual, el aumento de la financiación crediticia en España no puede conducirse ni impulsarse de forma artificial, algo que llevaría a una mayor morosidad. Por el lado de la oferta, tan sólo la reestructuración y el saneamiento del sector pueden propiciar las condiciones adecuadas para la expansión del crédito. Por el lado de la demanda, a las débiles expectativas de crecimiento se une un exceso de capital con reducida intensidad de uso que disminuirá la inversión en los próximos años y, por tanto, el potencial de demanda de créditos, lo que redundará en la mencionada reducción de la red de oficinas. En cualquier caso, la economía española -muy dependiente de la financiación bancaria- difícilmente puede acometer una recuperación sin crédito (creditless recovery). 9 Se está debatiendo una regulación de solvencia que probablemente será muy exigente en el nuevo marco de Basilea III y que se pretende poner en marcha a finales de 2012. En todo caso, las iniciativas del Banco Internacional de Pagos (BIS) van destinadas a incrementar la cantidad y calidad (menos instrumentos híbridos y más core capital) de capital, ampliar los riesgos cubiertos, penalizar el endeudamiento (introduciendo una ratio de apalancamiento), reducir la prociclicidad y promover la creación de buffers de capital. Estos cambios afectan potencialmente más a las cajas de ahorro, por su propia naturaleza de entidades fundacionales sin capital por acciones. Gana terreno, por tanto, el papel de las cuotas participativas, ya que, en el marco actual, parece la única fuente con la que las cajas pueden aumentar su core capital. 10 Por todo lo anterior, y aunque se ha mencionado colateralmente en algunos de los interrogantes anteriores, aparece con identidad propia la necesidad de acelerar el proceso de reestructuración y recapitalización y de acompañarlo, como parece que se está debatiendo, de otras reformas. El mismo texto que regula el FROB (RDL 9/2009) considera la viabilidad como el principal logro demostrable y exigible a las instituciones financieras, en las que la diligencia de los administradores es fundamental. Es necesario, más aún cuando en ello tercie dinero del erario público, establecer responsabilidades, aplicar disciplina a los gestores que no
223 hayan sido diligentes y establecer mecanismos de acción temprana para que este tipo de problemas de gestión y de supervisión no vuelvan a producirse. La evidencia y la urgencia de reestructuración parecen abocar a las instituciones con mayores problemas de solvencia a la vía de las fusiones puras. En medio de este conjunto de proyectos y rumores de integración - bien mediante fusiones puras o mediante Sistemas Institucionales de Protección (SIP)- se plantea, además, la reforma de la regulación relativa a las cajas de ahorro, que precisan cambios, sobre todo en materia de obtención de recursos propios. La alternativa mencionada de las cuotas participativas es la vía natural de esta mejora, incluso con derechos políticos, lo que les conferiría aún mayor atractivo para su salida al mercado. Puede ser interesante observar la experiencia de otros países, como Noruega, en los que se dio la opción de incorporar los derechos políticos, lo que ha dotado de flexibilidad a un número importante de cajas sin desnaturalizarlas. Cualquier otra reforma destinada a reforzar la profesionalización, a reducir las interferencias políticas y a evitar los actuales conflictos derivados de la regulación compartida entre Estado y comunidades autónomas sería una buena noticia que ninguna caja bien gestionada rehuiría. A estos 10 interrogantes y retos -que pueden leerse con mayor extensión en el número 215 de Cuadernos de información económica de Funcas- podrían añadirse otros, como la oportunidad del ciclo político y sus efectos en la velocidad del proceso de reestructuración. La economía política de las reestructuraciones está condicionada por intereses creados y presiones de diversa índole que en determinadas fases del ciclo político estrechan especialmente el cerco sobre la acción pública. Es preciso, además, contar con más y mejor información y herramientas de diagnóstico. No se puede abogar únicamente por valores de mercado, pero la excesiva dependencia de los valores contables puede generar desconfianza en los mercados sobre la exposición al riesgo y la solvencia de las entidades españolas. Si la transparencia informativa hubiera sido mayor, es posible que los analistas (incluyendo los académicos) hubieran alertado mucho antes de los problemas del sector. Es posible poner a disposición más datos sobre composición de balances y riesgos incurridos sin que ello vulnere políticas de confidencialidad ni suponga alteración competitiva alguna. Esta disponibilidad tan limitada contrasta con la existente en otros países, como es el caso de EE UU con los call reports que exige el FDIC (el equivalente al Fondo de Garantía de Depósitos en España) y que se ponen a libre disposición pública en Internet. Entre la precaución y la transparencia, seguro que existe un camino intermedio. La precisión sobre la valoración es importante también en el reconocimiento de la pérdida esperada en el sector. Mientras que este reconocimiento se hizo expreso en buena medida en otoño del 2008 por la mayor parte de los países que inyectaron capital a sus sistemas financieros, en España existen aún todo tipo de cábalas y estimaciones sobre la principal fuente de nuestros problemas, la exposición al sector inmobiliario y sus consecuencias. Si las cantidades necesarias para resolver el problema de solvencia fueran aquellas que ya se han solicitado de forma más o menos explícita al FROB o las que parece sugerir el FMI en su último informe, el problema no parecería ser muy importante. Pero, frente a esas estimaciones, existe un amplio rango de variación, a juzgar por las cifras aportadas en otros informes. Por tanto, es importante despejar incertidumbres y conocer si la pérdida esperada del sector, bajo determinadas hipótesis, se acerca, iguala o supera al potencial previsto en el FROB de 99.000 millones de euros. La estrategia actual de proponer reformas con un coste fiscal cero o sin un reconocimiento y una resolución explícita de la pérdida por el deterioro de activos parece, cada vez más, insuficiente. El propio marco del FROB podría arbitrar estas soluciones, pero debería contar con más flexibilidad. Este cambio hipotético en el enfoque de las ayudas a la solvencia y el saneamiento no tendría por qué ser más gravoso que la más que probable prórroga de la
224 aplicación del FROB. Sin embargo, algunos países occidentales fueron más allá y asumieron la necesidad de "soluciones menos convencionales" -criticadas por algunas voces autorizadas, como el premio Nobel Joseph Stiglitz-, pero sólo el tiempo dirá si los posibles costes sobre el contribuyente en el corto plazo no hubieran sido mayores sin estas acciones. Lo que sí es cierto es que con las iniciativas que un número importante de países tomaron en otoño de 2008 se ha conseguido eliminar gran parte de la incertidumbre que se cernía sobre sus sectores bancarios. En España, los próximos meses dirán, necesariamente, mucho al respecto. -
TRIBUNA: Laboratorio de ideas JOSEPH E. STIGLITZ No es momento para una guerra comercial JOSEPH E. STIGLITZ 02/05/2010 Sigue la batalla de Estados Unidos contra China por los tipos de cambio. Cuando comenzó la Gran Recesión, muchas personas se preocuparon de que pudiera aparecer el proteccionismo. Es cierto que los líderes del G-20 prometieron que habían aprendido las lecciones de la Gran Depresión. No obstante, 17 de los 20 miembros del grupo introdujeron medidas proteccionistas apenas unos meses después de la primera cumbre en el mes de noviembre de 2008. La disposición para promover la compra de productos estadounidenses ("Buy American") que se incluyó en la ley de estímulo de Estados Unidos fue la que más atención despertó. Sin embargo, el proteccionismo se contuvo debido en parte a la Organización Mundial del Comercio. La debilidad económica sostenida de las economías avanzadas hace que exista el riesgo de una nueva ronda de proteccionismo. En Estados Unidos, por ejemplo, más de uno de cada seis trabajadores que desean un empleo a tiempo completo no logran encontrarlo. Estos fueron algunos de los riesgos relacionados con el estímulo insuficiente de Estados Unidos, que se diseñó tanto para calmar a los miembros del Congreso como para reanimar la economía. En vista de los déficits crecientes, es poco probable que haya un segundo estímulo, y debido a que la política monetaria ha llegado a su límite y a que apenas se puede controlar a los halcones de la inflación, tampoco hay mucha esperanza de obtener ayuda por esa vía. Así pues, el proteccionismo está cobrando un lugar preponderante. El Congreso ha encargado al Tesoro de Estados Unidos que evalúe si China es "manipuladora de divisas". Si bien el presidente Obama ha retrasado durante algunos meses la fecha en la que Timothy Geithner, el secretario del Tesoro, debe publicar su informe, el concepto mismo de "manipulación de divisas" está viciado: todos los gobiernos toman medidas que afectan directa o indirectamente al tipo de cambio. Los déficits presupuestarios imprudentes pueden conducir a que haya una moneda débil, del mismo modo que las tasas de interés bajas. Hasta que estalló la reciente crisis en Grecia, Estados Unidos se beneficiaba de un débil tipo de cambio dólar-euro. ¿Debían los europeos haber acusado a Estados Unidos de "manipular" el tipo de cambio para aumentar las exportaciones a sus expensas? Aunque los políticos estadounidenses se centran en el déficit comercial bilateral con China - que es persistentemente grande-, lo que importa es la balanza multilateral. Cuando comenzaron las exigencias de que China ajustara su tipo de cambio durante la Administración de George W. Bush, su superávit comercial multilateral era pequeño. Sin embargo, más recientemente, China también ha tenido un superávit multilateral importante.
225 Arabia Saudí también tiene superávit bilateral y multilateral: los estadounidenses quieren su petróleo y los sauditas quieren menos productos estadounidenses. Incluso en función del valor absoluto, el superávit multilateral de mercancías de Arabia Saudí, de 212.000 millones de dólares en 2008, fue muy superior al de China, de 175.000 millones de dólares; en función del porcentaje del PIB, el superávit de cuenta corriente de Arabia Saudí, el 11,5, es más del doble del chino. El superávit de Arabia Saudí sería mucho mayor si no fuera por las exportaciones de armamento estadounidenses. En una economía global con una demanda agregada deficiente, los superávits en cuenta corriente son un problema. Pero el superávit en cuenta corriente de China, de hecho, es inferior a la cifra combinada de Japón y Alemania. Como el porcentaje del PIB es del 5%, frente al 5,2% de Alemania. Muchos otros factores, además de los tipos de cambio, afectan a la balanza comercial de un país. Uno de los elementos determinantes clave es el ahorro nacional. El déficit comercial multilateral de Estados Unidos no se reducirá significativamente hasta que el país ahorre mucho más; si bien la Gran Recesión indujo un mayor ahorro doméstico (que era prácticamente de cero), eso se ha visto más que anulado por el creciente déficit gubernamental. Es probable que un ajuste del tipo de cambio únicamente haga que varíe el lugar donde los estadounidenses compran sus textiles y prendas de vestir -en Bangladesh o Sri Lanka, en lugar de en China-. Mientras tanto, un aumento del tipo de cambio probablemente contribuirá a la desigualdad en China, puesto que los agricultores pobres se enfrentan a una creciente competencia de las granjas altamente subsidiadas de Estados Unidos. Esta es la verdadera distorsión comercial de la economía global, por la que millones de pobres en los países en desarrollo resultan perjudicados mientras Estados Unidos ayuda a los agricultores más ricos del mundo. Durante la crisis financiera asiática de 1997-1998, la estabilidad del renminbi [denominación oficial de la moneda china] desempeñó un papel importante para estabilizar la región. De la misma forma, la estabilidad del renminbi ha ayudado a que la región mantenga un crecimiento sólido del que se beneficia el mundo en su conjunto. Algunas personas aducen que China debe ajustar su tipo de cambio para evitar la inflación o la formación de burbujas. La inflación sigue estando contenida, pero, lo que es más pertinente, el Gobierno chino tiene a su disposición un arsenal de armas de otro tipo (desde impuestos a las entradas y los beneficios de capital hasta una variedad de instrumentos monetarios). Pero los tipos de cambio sí afectan a los patrones de crecimiento, y es del interés de China reestructurar y alejarse de una alta dependencia del crecimiento impulsado por las exportaciones. China reconoce que su moneda debe apreciarse en el largo plazo, y convertir la velocidad a la que lo debe hacer en un tema político ha resultado contraproducente. (Desde que comenzó a revaluarse el tipo de cambio en julio de 2005, el ajuste ha sido de la mitad o más de lo que la mayoría de los expertos creen que es necesario). Además, iniciar una confrontación bilateral sería imprudente. Puesto que el superávit multilateral de China es la cuestión económica que preocupa a muchos países, Estados Unidos debe buscar una solución multilateral basada en reglas. Imponer derechos unilaterales después de haber calificado unilateralmente a China de "manipuladora de divisas" socavaría el sistema multilateral sin muchos beneficios. China
226 podría responder imponiendo derechos a los productos estadounidenses que se benefician directa o indirectamente de los subsidios otorgados como parte del enorme rescate de los bancos y fabricantes de automóviles. En una guerra comercial no hay ganadores. Por ello, Estados Unidos debe tener mucho cuidado de no iniciar una en medio de una recuperación global incierta -por popular que pueda ser entre los políticos, cuyos electores están preocupados, con razón, por el elevado desempleo y por fácil que sea culpar a los demás-. Desafortunadamente, la crisis global se gestó en Estados Unidos, y el país debe voltear hacia dentro, no sólo para reanimar su economía, sino para evitar una repetición.
TRIBUNA: Laboratorio de ideas ANTÓN COSTAS Humillación griega, altivez alemana ANTÓN COSTAS 02/05/2010 La UE, y más en particular Alemania, están queriendo enfocar la solución al problema financiero griego de forma ejemplarizante. Es decir, como un escarmiento y un aviso a otros países con problemas fiscales, o susceptibles de tenerlos, de forma que viendo las barbas del vecino griego cortar, pongan las suyas a remojar. Angela Merkel está escenificando la ayuda a Grecia utilizando los tres elementos básicos del teatro trágico griego. En primer lugar, trata de dejar claro la "hubris", la "soberbia" o "malversación", griega de atreverse a romper las leyes "divinas" del euro, que prohíben el endeudamiento excesivo. En segundo lugar, aparece la "némesis", el castigo de tres años de penalidades que se le quiere infligir. Por último, está la "catarsis", la purificación que experimentan los espectadores que asisten a la escenificación con sentimientos ambivalentes de piedad y temor por el escarmiento, que ha de servirles para volver al camino de la virtud. No es nunca recomendable enfocar un problema económico como una cuestión moral. Y mucho menos teatralizarla. En este caso, al hacerlo, una arrogante y altiva Alemania no sólo está humillando a un Gobierno, sino a toda una nación. Y quien mejor debería saber que no se puede humillar a todo un país es la propia Alemania, humillada a su vez por los vencedores de la I Guerra Mundial condenándola a pagar todos los costes de una guerra provocada no por sus ciudadanos, sino por los delirios de sus élites. Esa humillación dio alas al nazismo, que buscó en la exacerbación del patriotismo nacionalista el camino para curar esa humillación. Lo que, finalmente, llevó a la II Guerra Mundial. ¿Por qué Merkel adopta este enfoque moral? Una explicación sería exigir responsabilidad a aquel al que vas a ayudar con el dinero de tus contribuyentes. Pero, ¿por qué ser tan exigente con un país en apuros que necesita unas cuantas decenas de miles de millones de euros y tan poco con los banqueros negligentes y defraudadores que han recibido cientos de miles sin castigo ninguno? Hay algo intrigante en esta conducta. Algo que tiene que ver con lo que está ocurriendo en el interior de Alemania. Está replegando de nuevo sobre sí misma, y renacionalizando la idea europea. En ese repliegue está volviendo a la vieja idea del sociólogo alemán del siglo pasado Max Weber sobre la ética protestante y el espíritu del capitalismo. Por un lado, los europeos del norte, protestantes, laboriosos, disciplinados y austeros. Por otro, los del sur (incluyendo
227 ahora a Irlanda), católicos, indisciplinados y manirrotos. Es una tesis falaz, sin fundamento real, pero influyente. Desde Alemania se quiere ahora transmitir la idea de que los problemas financieros de los PIIGS (acrónimo de Portugal, Italia, Irlanda, Grecia y España, pero también 'cerdo' en inglés) son debidos a su falta de disciplina fiscal. Pero eso no es cierto. Puede valer parcialmente para Grecia (sin olvidar que en el encubrimiento de su lenidad fiscal contó con el "colaborador necesario" que fue la propia banca alemana). Pero de ningún modo alguno para Irlanda, España o Italia, que han tenido superávits, y en el caso de España, un bajísimo nivel de deuda pública en relación con su PIB. Si no ha sido el despilfarro previo de los Gobiernos, ¿cuál es la causa de fondo que provoca la situación de urgencia financiera con la que nos enfrentamos? La gran recesión, provocada a su vez por la crisis financiera. Los déficits públicos no son la causa de la crisis, sino su consecuencia. Es importante tenerlo en cuenta, porque si no, la medicina será equivocada. Al confundir causas con consecuencias, Alemania propone para Grecia una medicina que la empobrecerá durante al menos una generación. Y al hacerlo empobrece también al resto de Europa, y a sí misma. Es como escupir al cielo. Déjenme citar una frase del gran economista británico John Maynar Keynes en un opúsculo escrito en 1919, que merece ser vuelto a leer, sobre Las consecuencias económicas de la paz que se derivaban del Tratado de Versalles, que, como dije, humillaba a Alemania. "Si lo que nos proponemos es que, por lo menos durante una generación, Alemania no pueda adquirir siquiera una mediana prosperidad; (...) si deseamos que, año tras año, sea empobrecida y sus hijos se mueran de hambre y enfermen, y que esté rodeada de enemigos, entonces rechacemos todas las proposiciones generosas, y particularmente las que puedan ayudar a Alemania a recuperar una parte de su antigua prosperidad material. Si tal modo de estimar a las naciones y las relaciones de unas con otras fuera adoptado por las democracias de la Europa occidental, entonces, ¡que el cielo nos salve a todos! Si aspiramos deliberadamente al empobrecimiento de la Europa Central, la venganza, no dudo en predecirlo, no tardará" (tomo la cita de Internet). Los soldados aliados que ocuparon Alemania al final de la II Guerra llevaban en sus mochilas -además de cigarrillos- dos cosas. Un "Plan Marshall", de ayuda, no de castigo y empobrecimiento. En segundo lugar, una nueva institución de control de las cuentas alemanas, el Bundesbank. Eso es lo que ahora hay que hacer en Grecia. Ayudarla y exigir responsabilidad. Y controlar sus cuentas desde las nuevas instituciones europeas. ¿Qué enseñanzas útiles se pueden sacar de la tragedia griega actual y de la historia? Dos. La primera es que hay que exigir a Grecia, y a cualquier otro país, honestidad en las cifras sobre su déficit. De lo contrario, la deuda es penalizada. La segunda es que la solución que hay que dar a los déficits públicos es el crecimiento, no la economía de la miseria.
228
REPORTAJE: Laboratorio de ideas - BREAKINGVIEWS. Reuters Conejillos de Indias El rescate de Grecia abre una etapa desconocida en la Unión Europea EDWARD HADAS 02/05/2010 Grecia está a punto de tomar parte en un gran experimento de austeridad. El Gobierno griego y sus socios de la Unión Europea parecen haber aceptado el desafío helénico. Está previsto que el lunes se anuncie un nuevo plan, grande y estricto, de ayuda a cambio de sacrificios. Grecia recibirá entre 100.000 y 120.000 millones de euros a lo largo de tres años, suficiente para financiar las necesidades de financiación del país sin recurrir al mercado. A cambio, el Gobierno griego realizará grandes recortes, y renunciará a gastos equivalentes al 11% de su PIB. La edad de jubilación aumentará de los 53 a los 67 años. La dura postura de Alemania -que la ayuda debería estar condicionada a reformas serias- parece haber tenido éxito. Pero los políticos de la UE deberían haber obligado a Grecia a adoptar una austeridad genuina el pasado noviembre, cuando el déficit presupuestario previsto para 2009 se duplicó hasta el 13% del PIB. La demora ha dado a los inversores tiempo para desarrollar situaciones de contagio por toda la zona euro cada vez más temibles. En cuanto a los griegos, los recortes llegan con una o dos décadas de retraso. No se trata de los tremendos sacrificios económicos necesarios en tiempo de guerra, sino sólo de un esfuerzo para conseguir que el Gobierno y la nación vivan dentro de sus posibilidades. El plan previsto ya está calmando los nervios del mercado. Los miedos a una quiebra bancaria en Grecia y al contagio de la zona euro deberían desaparecer ahora. Pero aunque la crisis inmediata se ha evitado, los problemas de Grecia no se han resuelto. Primero, no está claro que el pueblo griego, en particular los poderosos sindicatos del país, se traguen la medicina. Acabarían siendo mucho más pobres si se rechaza la ayuda financiera del extranjero. Pero los años de política fiscal débil dan a entender que enfrentarse a la realidad económica no es uno de los puntos fuertes del país. Luego está la carga de la deuda, que Standard & Poor's calcula que alcanzará el 124% del PIB para finales de este año. Esta carga podría volverse más pesada a medida que las bajadas de los sueldos necesarias para equilibrar los libros de cuentas del Gobierno reduzcan tanto el PIB como la recaudación de impuestos. Es muy posible que aún sea necesaria una reestructuración de la deuda griega. Pero, incluso si una medida así fuera ineludible, unas reformas fructuosas dejarían al país en mejor forma después.
229
REPORTAJE: Economía global Irlanda pierde su margen de maniobra Tras duros ajustes, Dublín se aleja de Atenas, pero no logra despejar su futuro ALICIA GONZÁLEZ 02/05/2010 A primera vista no hay ni rastro de recesión en Grafton Street, la calle más comercial de Dublín. A media tarde, el bullicio lo llena todo: las tiendas funcionan a pleno rendimiento, todo el mundo lleva alguna bolsa con sus compras y hay bastantes clientes en los cafés. Pero una mirada más experta permite ver señales inequívocas de la crisis. "Hay que ser de aquí para verlo. Ésta solía ser una calle de grandes firmas y buen comercio. Si te fijas, ahora está lleno de camisetas, cadenas de ropa de precios bajos, souvenirs, libros de saldo...", apunta un diplomático irlandés. Y locales vacíos, muchos locales y pisos vacíos por toda la ciudad. Como España, Irlanda vivió un boom de la construcción que estalló al comienzo de la crisis mundial y que se ha traducido en caídas de precios en torno al 40%. "De hecho, mi casera me llamó para bajarme el precio del alquiler sin que yo se lo pidiera. Y no ha sido poco, ahora pago 200 euros menos al mes", explica Jesús Urda, profesor de español en el Instituto de Tecnología de Dublín. La caída de la población ha sido notable con la crisis. Muchos inmigrantes han vuelto a sus países ante la falta de trabajo y eso ha dejado muchas viviendas vacías. "También se nota que han bajado los precios de la comida, algo también los restaurantes y en la calle en general, porque antes Dublín era una fiesta continua", apunta Urda. La combinación de crisis financiera global, colapso inmobiliario y derrumbe de las exportaciones -el motor económico del país- ha tenido efectos letales sobre la economía irlandesa. En tres años, el PIB ha acumulado una caída del 12%; el paro, que rondaba el 4% en 2006, superará este año el 13% de la población activa; los precios llevan ya dos ejercicios de caídas y aún seguirán bajando este año otro 1%, y Eurostat, la oficina estadística europea, acaba de cifrar el déficit de las cuentas públicas en el 14,3% del PIB el año pasado, el mayor de los Veintisiete. Al Gobierno irlandés no le ha temblado la mano a la hora de acometer recortes y no quiere que quede ninguna duda. Tanto que ha organizado un viaje de un grupo de periodistas europeos para explicarlos personalmente. De media, el salario de los funcionarios se ha recortado un 15% en dos años; el propio Gobierno se ha rebajado el sueldo un 25%; los gastos sociales, salvo las pensiones, se han recortado un 5%, y ha abordado de forma decidida la crisis bancaria. Aprendida la lección japonesa, las autoridades han creado un banco malo donde las entidades pueden depositar sus activos de dudoso cobro. Eso sí, por un valor en torno a un 47% menor que el que tienen en sus libros. "Creo que los mercados se estabilizarán alrededor de ese nivel, que es mucho más real que el que tenían en sus libros", admite el gobernador del Banco de Irlanda, Patrick Honohan, mientras el sonido de una protesta de camioneros interrumpe su discurso, que tiene lugar en una sala anexa a su despacho. Ésa es otra de las grandes diferencias entre Irlanda y Grecia. Las protestas sindicales han brillado por su ausencia pese al alcance del ajuste, que también afecta al sector privado. "Entre el año pasado y éste, los salarios del sector privado se habrán reducido un 5% aproximadamente, y calculamos que todavía lo harán otro 1% en 2011", explica el profesor John Fitzgerald, del Instituto de Análisis Económicos y Social. "Los sindicatos saben cómo
230 funciona la economía y saben que sin esos ajustes subirá el diferencial, el coste de la deuda, y será más difícil para todos", explica Fitzgerald. Pero eso no evita que la población lo esté pasando mal y esté enfadada con sus dirigentes. Como Garbhan Doran, arquitecto al que la crisis le ha golpeado de pleno. Fundó su propio despacho hace ahora cuatro años y en los últimos 12 meses apenas ha tenido un par de proyectos. "El Gobierno no ha sabido diferenciar, no ha graduado los recortes, y luego venden que se bajan los salarios, cuando el primer ministro irlandés es el tercer mandatario mejor pagado del mundo", apunta. "Como es un país pequeño, todo el mundo se conoce y aquí funciona mucho el nepotismo, la adjudicación a amigos". Pese a todo, reconoce que la situación ha mejorado "un poco" y que ya empieza a percibir interés por parte de sus clientes en acometer obras. "Con estos precios, ahora sí es un buen momento para construir", asegura. Pero todavía hay demasiada incertidumbre como para entrever una reactivación del sector de la construcción. La mala situación de los bancos irlandeses ha frenado en seco el crédito a empresas y familias. Las exportaciones representan el 18% del PIB, y eso hace que Irlanda dependa en buena medida de la recuperación de sus socios comerciales, principalmente Estados Unidos, Reino Unido y la Unión Europea. Sin una recuperación vigorosa en el exterior, la propia recuperación irlandesa corre peligro. "Lo preocupante es que, pese a todos los ajustes llevados a cabo, el Gobierno aún tendrá un déficit del 11,6% este año", advierte el profesor Fitzgerald, y eso sin contar los 8.300 millones inyectados al Anglo-Irish Bank y que el Gobierno cree que podrá dejar fuera de la contabilidad del déficit. "De lo contrario, eso añadiría otros cinco puntos a los números rojos", admite Michael McGrath, asesor del ministro de Finanzas. Ésa es, sin duda, la clave. Pese a los esfuerzos que han llevado a cabo el Gobierno y la sociedad irlandesa, los desequilibrios están ahí. Los ingresos se han desplomado y el margen de maniobra de las autoridades ya es, a estas alturas, muy reducido. "Es verdad que tenemos poco margen, sólo nos queda actuar sobre la base fiscal. Porque actualmente uno de cada dos irlandeses está exento de pagar impuestos y más de la mitad de los ingresos del impuesto sobre la renta procedente del 4% de los contribuyentes con más ingresos. Hemos sido muy generosos en el pasado y eso ya no es sostenible", admite McGrath. Eso sí, de modificar el tipo del impuesto sobre Sociedades del 12,5% ni hablar. Hay que atraer inversiones como sea y mantener las multinacionales ya instaladas. La deuda no es la preocupación más inmediata del Gobierno, pero es llamativa su rápida progresión. En 2007 apenas rondaba el 25% del PIB -"por el fuerte crecimiento de la economía en los años previos", matiza McGrath- y este año superará el 80% que el Gobierno prometió a Bruselas en el Pacto de Estabilidad. Pero todos los portavoces oficiales insisten en que el 60% de las necesidades de financiación para este año ya están cubiertas y que, gracias a los activos líquidos en manos de la Agencia de Gestión del Tesoro Nacional, podrían estar sin acudir a los mercados hasta enero. "Hace un año éramos nosotros los que centrábamos el interés informativo, no Grecia. Ahora ya nos ha superado Portugal; a ver si pasa lo mismo con España", bromea el ministro de Finanzas, Brian Lenihan. Entre bromas y veras, Lenihan insiste en que no están preocupados por los acontecimientos que rodean a Grecia, pero admite que han retrasado la subasta prevista para el próximo 18 de mayo, justo un día antes del vencimiento de 8.500 millones de euros que tiene Grecia. "Mejor no tentar a los mercados", dice con una sonrisa. -
231
ANÁLISIS: Economía global ¿Quiebran los países? SARA BALIÑA / SANTIAGO FERNÁNDEZ DE LIS 02/05/2010 Cuando los ingresos y los pagos de un país no cuadran y la dinámica de la deuda pública se hace insostenible, hay tres modos posibles de cubrir este desequilibrio financiero: con un paquete de ayuda oficial internacional, con medidas de ajuste interno o con una reestructuración de la deuda. El paquete de ayuda a Grecia anunciado inicialmente por los países de la eurozona y el FMI, por 45.000 millones de euros para 2010, parece insuficiente para restablecer la sostenibilidad de su deuda. Se están barajando importes más elevados, por más del doble, para garantizar los vencimientos de deuda previstos para los próximos tres años. De materializarse este programa, su éxito dependerá del tipo de interés aplicado, su impacto en los mercados y los planes de acompañamiento que se articulen. En todo caso, la activación del apoyo oficial exige la adopción por parte de Grecia de mayores medidas de ajuste. Pero la capacidad de apretarse el cinturón tiene un límite: sin crecimiento no hay manera de reconducir la senda explosiva de la deuda. No es descartable, pues, algún tipo de reestructuración de la deuda griega. Se habla de impago, quiebra, suspensión de pagos... En los últimos años, la experiencia de reestructuraciones soberanas es amplia y con una variada tipología (Ecuador, Rusia, Pakistán, Ucrania, Uruguay, Argentina). Sin embargo, el caso de Grecia es especial porque pertenece a una unión monetaria que emite moneda de reserva. La modalidad más amigable para los acreedores son los acuerdos de renovación de vencimientos (rollover). Se han aplicado a casos de deuda interbancaria y a corto plazo, no tanto a deuda soberana, donde el problema es la fragmentación de los acreedores y las condiciones para la renovación de vencimientos. Su aplicación en el caso griego parece muy complicada. La moratoria del servicio de la deuda, unilateral o acordada, es una medida temporal, mientras se gana tiempo para una solución más permanente. Otra posibilidad es un intercambio de deuda negociado, con alargamiento de plazos. Puede implicar una quita sobre el principal de la deuda, aunque, en general, cuanto mayor es la quita, menor es la posibilidad de que los acreedores la acepten voluntariamente. Si la quita necesaria es alta, suelen ser procesos largos, penosos, que generan numerosos litigios en los tribunales internacionales. Los intercambios de deuda pueden ser previos o posteriores a la suspensión de pagos. Aquéllos tienden a ser más rápidos que éstos, pero suponen una quita menor, por lo que puede que no devuelvan la deuda a una senda sostenible. La reestructuración de la deuda griega sería muy distinta si existe un paquete de ayuda previo del FMI. Si un país bajo programa del FMI reestructura su deuda, éste, como acreedor privilegiado, exigirá que negocie de buena fe con los acreedores, y podría incluso suspender el programa si esto no se cumple. En fin, la casuística es amplia, y las implicaciones sobre el euro, aunque siempre negativas, muy diferentes.
232
ANÁLISIS: Economía global - Coyuntura nacional Continúa la hemorragia del mercado laboral ÁNGEL LABORDA 02/05/2010 La semana acabó con el sabor amargo que nos dejó la EPA del primer trimestre del año: 286.200 parados más, hasta situar la tasa de paro en el 20% (19,5% en términos desestacionalizados). Era de esperar un aumento notable del paro, aunque no fuera más que por razones estacionales, pero el dato fue peor de lo previsto. Si no hubiera sido por eso, el resto de indicadores publicados hubieran dado pie a un cierto optimismo sobre el comportamiento de la economía española. Así, las ventas al por menor de marzo registraron un aumento notable, aunque quizá estén algo sesgadas por el efecto Semana Santa. Con el dato de marzo, la media del primer trimestre da un aumento del orden del 3% anualizado sobre el trimestre anterior, la primera tasa trimestral positiva desde el tercer trimestre de 2007, lo que indica que el consumo de los hogares puede estar empezando a recuperarse. Este dato se vio corroborado por los indicadores de confianza que elabora la Comisión Europea, concretamente los de los consumidores y de los comerciantes minoristas, que mejoraron en abril. También continuó mejorando el clima de confianza de los empresarios del sector industrial, aunque no los de la construcción y los servicios. Otros indicadores positivos fueron los crecimientos de las hipotecas de viviendas en febrero y las pernoctaciones en alojamientos turísticos extrahoteleros (apartamentos, campamentos y alojamientos de turismo rural) de marzo. Pero todos estos datos alentadores se vieron empañados por el aumento del paro, aunque la mitad del mismo pueda atribuirse a factores estacionales. Eliminados estos factores, lo que se observa es que el aumento del paro en el primer trimestre ha venido a ser más o menos igual que la media del segundo semestre de 2009, es decir, que llevamos muchos meses sin ver una mejoría en términos tendenciales. La evolución del paro es el resultado del comportamiento de la oferta y demanda de trabajo (población activa y ocupación, respectivamente). Por segundo trimestre consecutivo, la población activa aumentó, rompiendo la tendencia observada en los trimestres precedentes [gráfico superior izquierdo]. Ello es debido a la incorporación neta de mujeres al mercado laboral, ya que la de los hombres disminuye, lo que podría explicarse porque en la actual coyuntura estas tienen más oportunidades de encontrar empleo (servicios). La población activa vuelve a crecer más que la población en edad de trabajar, por lo que la tendencia ligeramente descendente de la tasa de actividad se ha invertido, al contrario de lo que observamos en otros países de nuestro entorno. Pero el factor principal que explica el aumento del paro es la disminución de la ocupación, que en términos desestacionalizados alcanzó la cifra de 122.300. Ello supone una tasa trimestral anualizada de -2,6%, prácticamente igual a la del trimestre anterior [gráfico superior derecho]. La EPA ha venido a corroborar, por tanto, lo que ya nos dijeron los datos de afiliados a la Seguridad Social, que el ritmo de caída del empleo en este primer trimestre del año ha sido similar al del cuarto de 2009, lo que, unido a la información que nos proporcionan el resto de indicadores de producción y demanda, lleva a concluir que el
233 comportamiento del PIB también ha debido ser similar. A nivel sectorial, ha vuelto a acelerarse la caída del empleo en la industria y sobre todo en la construcción y, lo más positivo, vuelve a aumentar en la agricultura y los servicios [gráfico inferior izquierdo]. La crisis de la construcción sigue siendo, pues, la gangrena de la economía española, la que marca la diferencia con el resto de economías de su entorno. La tasa de paro sigue aumentando en todos los colectivos, pero destaca el 40,9% de la población menor de 25 años. También es insostenible el hecho de que haya 1.298.500 hogares en los que todos sus miembros activos están en paro, aunque hay que tener en cuenta que la mayoría de esos hogares son unipersonales. Ante estas cifras, la reforma del mercado laboral es urgente y no caben posiciones numantinas de defensa de aparentes protecciones de los trabajadores que, más que proteger, lo que hacen es condenarlos al ostracismo del paro y el subsidio, especialmente a los más jóvenes.
234
REPORTAJE: Economía global Ocio europeo, ahorro coreano La crisis lleva a los españoles a gastar menos y a consumir más en casa CRISTINA DELGADO 02/05/2010 "España se está europeizando: ir al bar o comer fuera está dejando de ser un hecho cotidiano; se ha hecho más ocasional o se reserva para ocasiones especiales". Esta es una de las principales conclusiones a las que llega José Luis Nueno, economista del IESE, en su último estudio sobre consumo. El acercamiento a las costumbres de países más fríos como Dinamarca o Alemania nada tiene que ver con el cambio climático. La crisis económica, que dura ya tres años, es la culpable de que los hábitos de consumo estén cambiando en España. No es que se coma, se beba o se compre menos. Es que se hace de otra manera, dice Nueno en su estudio, distribuido por la asociación de fabricantes y distribuidores Aecoc. La venta de refrescos o alcohol, explica, cae en los locales de hostelería, pero crece en los supermercados (ha habido un trasvase, por ejemplo, del 6,6% de la cerveza del bar al hogar). También baja la venta de palomitas en el cine, mientras que su consumo en casa ha crecido el 50%. Incluso los cosméticos o los tintes para el pelo se aplican más en el hogar y menos en los salones de belleza. A la hora de comprar, el consumidor es menos impulsivo. Incluso el que sigue disponiendo del mismo salario se frena a la hora de gastar. "La incertidumbre en el empleo impulsa a ahorrar. El paro sigue creciendo", explica Rosa Pascual, directora de la consultora especializada en consumo GfK Emer. Los trabajadores buscan un colchón, y como consecuencia, la tasa de ahorro recuerda a la de los sesenta y los setenta. Ronda el 20%. Es decir, que de cada 100 euros de renta disponible, los españoles guardan en la hucha 20 euros.
235 "Tres veces más que en Reino Unido o en EE UU y casi el 50% más que en Francia", señala Nueno. Los españoles, sentencia el economista del IESE, son los nuevos coreanos. "Además se ha producido un cambio cultural. Había mucha gente viviendo por encima de su renta. No era raro endeudarse para irse de vacaciones", añade Rosa Pascual. Ahora se ajusta más el gasto a la renta, se valora la compra racional y bien informada y se reclama con mayor frecuencia. La Agencia Catalana de Consumo, por ejemplo, recibió 15.500 reclamaciones en 2009, el 41% más que un año antes. De rebote, tanto ahorro ha alimentado la infidelidad de los consumidores. El 14% de los compradores, según datos del IRI, han cambiado de marca durante 2009. Además, la excursión al hipermercado para hacer grandes acopios de comida una o dos veces al mes se sustituye por visitas más frecuentes y con menos gasto al súper del barrio. Ahorro, supermercado, infidelidad a la marca... un combinado que tiene nombre: marca blanca. La marca del distribuidor suponía en 1999 el 20% de las ventas. Ahora acumula hasta el 38% de la facturación de los distribuidores. Si se miran sólo los supermercados, sobrepasa el 40%. "La marca blanca está robando terreno a las segundas y terceras marcas, no a las líderes", subraya Ignacio Larracoechea, presidente de Promarca, asociación que agrupa insignias de fabricantes conocidos. "Se han creado dos grandes grupos: el de las marcas líder y el de la marca del distribuidor. El escalón del medio es el que peor se defiende", explica. En su mano, dossiers llenos de datos para apuntalar su teoría. El volumen de venta de las marcas reconocidas es del 34% este año. Idéntico al de 2002. El de las marcas del distribuidor ha pasado del 23,4% al 35,7%. ¿A costa de quién han crecido? El bocado se lo han llevado "las otras", es decir, segundas marcas de grandes fabricantes o empresas menos reconocidas, que pierden 12 puntos en seis años. En recesión no hay espacio para la clase media de las marcas. Aun así, los fabricantes de las insignias líderes están nerviosos. La pugna con las cadenas de supermercados ha ido calentándose durante la última década. Los tres años de crisis han elevado la temperatura de la batalla. El representante de Promarca insiste en que no tiene nada contra los distribuidores y sus productos. "Simplemente, nos gustaría operar en igualdad de condiciones", apunta. El problema, explica, es que la marca blanca tiene detrás a un distribuidor que también debe vender la marca líder. La balanza a la hora de promocionar unos y otros productos (colocándolos en las estanterías o incluso permitiendo o no la venta de ciertos artículos) no se inclina sólo al ritmo que marca el consumidor, sino que los distribuidores tienen el poder de influir. "Lo que pedimos es que las autoridades velen para que la competencia sea verdaderamente libre", pide. Sea por influencia de los supermercados o por miedo al paro, la cuestión es que el contenido del carro de la compra y el ocio han cambiado. ¿Es reversible? Nueno apunta que hay estudios de comportamiento que indican que los nuevos hábitos han llegado para quedarse. Por ejemplo, en EE UU y Reino Unido el consumo no se está moviendo al ritmo de la recuperación económica. "Cuanto más dure la crisis, más permanentes serán los cambios", vaticina Pascual. Pero puntualiza: "Algunos hábitos como informarse y reclamar perdurarán. Otros, lo dudo. España es un país mediterráneo. El ocio se disfruta en la calle. No nos quedaremos en casa". -
236 Dinero & inversiones - Bolsas El negocio exterior salva al Santander R.V. 02/05/2010 El Banco Santander ha sacado provecho del acierto en la diversificación geográfica de su negocio y ha presentado unos resultados positivos. En el primer trimestre del ejercicio, Santander ha obtenido un beneficio neto de 2.220 millones de euros, el 5,7% más que el año anterior. Las cuentas sorprenden en lo referente a España, donde el beneficio baja el 8,2% en plena guerra del pasivo. La campaña lanzada por Santander le ha reportado un crecimiento del 13% en los depósitos, al tiempo que el crédito baja el 5%. La tasa de morosidad sube el 3,34% y las dotaciones ascienden a 2.440 millones de euros, el 10% más que un año antes. El beneficio obtenido por Santander en Brasil creció el 38%, hasta 603 millones de euros, mientras que en Reino Unido ascendió a 480 millones, con un 17% más. Incluso en Estados Unidos ha remontado el negocio, con 69 millones de euros, tras perder 20 millones en el primer trimestre del ejercicio anterior. Las acciones de Banco Santander, sin embargo, han perdido en esta semana el 4,12% por las tensiones con la deuda europea. -
Versión para imprimir
REPORTAJE: Primer plano • ¿Pero esto es todo? • La reforma financiera no arranca por la presión de la banca y las dificultades para darle la vuelta a 25 años de desregulación • Después de 10 años, nadie suele recordar qué pasó en la crisis anterior • Parece muy probable que el sector vuelva a jugar a los mismos juegos que nos metieron en este lío • La permisividad de los supervisores hizo funcionar el 'casino' de la deuda • Un ejército de grupos de presión combate los cambios • Dos tercios de los estadounidenses quieren la reforma, según las encuestas • Galbraith teme que la reforma sólo funcione a golpe de látigo judicial • Los reguladores piden tranquilidad, no quieren precipitarse • Los problemas de la UE pueden ralentizar los cambios normativos • Basilea admite que la banca notará la reforma en su cuenta de resultados Propuestas como la relativa a paraísos fiscales son de muy bajo calado CLAUDI PÉREZ 02/05/2010 La gran banca internacional -la banca, a secas- es la principal causante de la crisis, de la locura colectiva de los mercados en los últimos años. Eso es algo que ya casi nadie discute. Ni siquiera los propios banqueros, que llevan unos años surrealistas: en Francia, durante los ochenta, los socialistas tomaron los bancos; en España, izquierdas y derechas hicieron poco más o menos lo mismo con las cajas. La gran banca internacional -la banca, a secas- es la principal causante de la crisis, de la locura colectiva de los mercados en los últimos años. Eso es algo que ya casi nadie discute. Ni
237 siquiera los propios banqueros, que llevan unos años surrealistas: en Francia, durante los ochenta, los socialistas tomaron los bancos; en España, izquierdas y derechas hicieron poco más o menos lo mismo con las cajas; en la última década, en Estados Unidos, los bancos tomaron el Gobierno, y una vez llegada la crisis el sector consiguió cerrar una macabra cuadratura del círculo y "combinar lo peor del capitalismo y lo peor del socialismo: socializar las pérdidas y privatizar los beneficios", según la definición acuñada por el sociólogo Nicholas Taleb. En realidad, los chanchullos del sistema financiero están detrás de casi cualquier crisis de calado en los últimos 200 años. Aunque esa, probablemente, sea otra historia. O tal vez no tanto: "No es que el sentido de responsabilidad de la comunidad financiera respecto a la sociedad sea pequeño: es que es prácticamente nulo", escribía tras el crack de 1929 y la Gran Depresión el maestro John K. Galbraith, uno de los grandes economistas del siglo XX. Desde su despacho en la Universidad de Texas, su hijo James K. Galbraith - también brillante economista- se ríe con sorna al otro lado del teléfono cuando se le pregunta por la refundación del capitalismo que prometieron los líderes mundiales hace ya más de dos años, tras el inicio de la Gran Recesión. "Es un espejismo pensar que el sistema puede funcionar tras la reforma financiera. El debate está planteado entre aquellos que son favorables a instaurar esa ilusión (los demócratas en Estados Unidos) y los que prefieren un sistema de rapiña. La tercera fuerza, en realidad la única fuerza efectiva, es el sistema judicial, que apenas ha comenzado a actuar. Que sea de veras efectiva (a través de investigaciones, de demandas y sobre todo de condenas) está por ver". Así funciona Estados Unidos: al final, los grandes y los pequeños problemas empiezan a resolverse por la vía de los tribunales. Y puede que esa también sea la única forma de que funcione el resto del mundo: a golpe de látigo de los juzgados, empezando por la acusación de fraude de Estados Unidos a Goldman Sachs, cuyo presunto fraude (vendían productos montados sobre las nefastas hipotecas basura sin informar a sus clientes de los riesgos) representa el rostro inaceptable del capitalismo. Porque tras montones de cumbres internacionales y centenares de reuniones entre reguladores, banqueros y políticos, la vida sigue igual. A pesar de haber hinchado las expectativas de una reforma profunda del sistema financiero con las habituales declaraciones grandilocuentes -"si quieren guerra, la tendrán" (Barack Obama); "el mundo seguirá siendo un lugar peligroso mientras no llegue la hora de la reforma" (Dominique Strauss-Kahn); "hay que refundar el capitalismo" (Angela Merkel y Nicolas Sarkozy), y así ad infinitum-, no hay apenas nada de aquella tierra prometida. La reforma financiera, la piedra angular del nuevo sistema que debe salir de las cenizas del viejo, no avanza. Y si lo hace es a un ritmo imperceptible para la ciudadanía -una palabra que debería escribirse siempre en cursiva-, incluso para buena parte de los expertos. "La política fracasó al aceptar que los bancos se autorregularan, y la política (y los políticos) vuelve a fracasar con estrépito porque lo único que ve la gente, y es poco probable que la gente se equivoque, es que los Gobiernos han rescatado a las entidades financieras con un cheque en blanco: miles de millones gastados después han vuelto a los beneficios, han vuelto a los bonus y sobre todo empiezan a volver a algunas de las prácticas que nos llevaron a esto: nada o apenas nada ha cambiado", resumía hace unos días el Nobel de Economía Joseph Stiglitz en Barcelona. La ira ciudadana aumenta a la velocidad que sube el paro, a medida que la crisis se prolonga y va dejando cicatrices aquí y allá, al conocerse una pensión multimillonaria de un banquero o cuánto se van a repartir los ejecutivos de otra entidad que en su día fue rescatada por el Estado. Los reguladores piden tranquilidad, aseguran que trabajan a la velocidad adecuada, no quieren prisas, argumentan que es un asunto demasiado delicado para precipitarse. Sólo los
238 tejemanejes de Goldman Sachs que ha denunciado EE UU han podido sacar la reforma de su letargo al otro lado del Atlántico. Obama puede provocar así una respuesta en Europa, que de momento está enfangada en otros problemas. Se supone que estar cerca de la muerte obliga a revisar las prioridades, la escala de valores, esas cosas. El capitalismo, o al menos la peculiar versión conocida como capitalismo financiero desregulado -o a la americana- que se impuso en los últimos 25 años, estuvo al borde del precipicio en algún momento de septiembre de 2008: los líderes mundiales no tardaron en proclamar que impondrán más regulación, más control tras unos años de barra libre, de casi todo vale. Al cabo, había una burbuja (o varias) con muchos padres pero sobre todo uno: la banca y una serie de prácticas basadas en los excesos. O en algo de tan dudoso nombre como el sistema bancario en la sombra. O directamente en el fraude, en algunos casos. Y eso había que cambiarlo para "disciplinar" el sistema financiero, según la definición del Fondo Monetario Internacional (FMI). Pero el olvido. El olvido es quizá uno de los grandes problemas económicos, uno de los más difícilmente solubles. La memoria financiera dura unos 10 años; acabado ese plazo ya nadie suele recordar qué demonios sucedió en la crisis anterior. Hace justo una década explotó una burbuja -la famosa puntocom-, apoyada en manipulaciones contables, en ingenierías financieras, el típico relato del ungüento de serpiente que acabó explotando. También entonces los reguladores prometieron ponerse a trabajar para evitar que eso volviera a repetirse. Casi 10 años después, la siguiente burbuja, inmobiliaria y de deuda, consiguió que los ejecutivos que perpetraron aquella crisis de las puntocom, las Enron, Worldcom y demás parecieran meros aprendices de brujo en comparación con los nuevos Houdinis de las finanzas y las matemáticas financieras. No han pasado ni tres años desde el pinchazo inicial de esa burbuja y los banqueros "ya han perdido la memoria", asegura Paul De Grauwe, de la Universidad de Lovaina. Gobiernos y reguladores aseguran que no, que siguen teniendo entre ceja y ceja la reforma, que habrá cambios tarde o temprano. Pero el lobby financiero es potente; tal vez tan potente ya como el petrolero tras la irresistible evolución del sector bancario a lo largo de los últimos años. En fin, la banca forcejea para mantener sin apenas cambios la desregulación iniciada en tiempos de Reagan y Thatcher, la revolución conservadora que luego continuaron -por cierto- los demócratas durante el mandato de Bill Clinton, y que llegó a convertirse en dogma con el Gobierno de George W. Bush. Un ejército de lobbistas presiona en Washington, en Bruselas, en Basilea y allá donde se negocie la reforma financiera para impedirlo, en un pulso que ha desarrollado una narrativa en la que caben incluso las conspiraciones: algunos de los que impulsaron la desregulación siguen en el puente de mando. "Larry Summers, asesor económico de Obama, fue férreo defensor de la desregulación con Clinton; Timothy Geithner, secretario del Tesoro, procede de Wall Street, y Jaime Caruana, que debe poner en marcha los nuevos requisitos de capital y liquidez en el Banco de Pagos de Basilea, es uno de los responsables de la regulación que está en vigor, y que permitió a los bancos medir sus propios niveles de riesgo, con las consecuencias que después se han visto", ataca José Carlos Díez, economista jefe de Intermoney. Y sin embargo, es cierto que algunos aspectos de la reforma avanzan. Obama ha dado un paso adelante en esa carrera: la reforma acaba de entrar en el Senado y el presidente norteamericano quiere tenerla lista antes del verano o, a más tardar antes del segundo aniversario de la caída de Lehman Brothers, el Waterloo del sector financiero. En Europa se avanzó con rapidez al principio, pero la reforma se encalló y los problemas de Grecia la han dejado aparcada, al menos de momento.
239 Desde el Banco de Pagos de Basilea -una especie de banco central de bancos centrales-, Stephen G. Cecchetti pone el contrapunto a quienes critican los retrasos acumulados: "No estoy de acuerdo con la supuesta lentitud de la reforma. Las cosas van muy, muy deprisa. Hay aspectos técnicos que pueden suponer más tiempo, sobre todo la imprescindible coordinación internacional, pero en menos de dos años hemos avanzado mucho", asegura, en línea con José Viñals, máximo responsable del sector financiero en el FMI. "Puede que la banca presione porque al fin y al cabo los cambios se van a notar en la cuenta de resultados. Pero ni siquiera los bancos se oponen a una mayor regulación, tras unos años en los que en algunos aspectos y en algunos países se iba en la dirección contraria", añade. Y deja claro que básicamente va a haber "más requisitos de capital y de liquidez para los bancos; falta ver exactamente su alcance, pero la filosofía ya está consensuada". Más requisitos de capital y liquidez, naturalmente, es otra forma de decir que la banca debe volver a ser predecible y aburrida: al menos los bancos comerciales. Endeudarse por 20 y hasta 30 veces el capital llegó a ser la regla y no la excepción en los últimos años; y no sólo en la banca de inversión de Wall Street. "Tienen sentido los pasos que se están dando en esa dirección", asegura desde Princeton el ex asesor de Clinton Alan S. Blinder, "pero hay montones de potenciales diablos en los detalles". Blinder afirma que Gobiernos, reguladores y mercados "aún no han olvidado las causas de la crisis (aunque tarde o temprano lo harán), por lo que esta sigue siendo una gran oportunidad". "Eso sí: los lobbies no se van a quedar de brazos cruzados. La presión va a ser intensa, hasta el último suspiro. Hay mucho dinero en juego", añade por correo electrónico. Obama tiene el viento a favor tras la acusación contra Goldman Sachs, que ha aumentado la presión popular para que los cambios normativos salgan adelante pese a las reticencias de los republicanos: dos tercios de los norteamericanos son favorables a atar en corto a los bancos. Pero esa batalla puede tener consecuencias en la Unión Europea. "Hasta ahora no ha habido grandes diferencias entre la cincuentena de propuestas que han salido de Estados Unidos y de Europa: los caminos seguidos son parecidos en hedge funds [fondos especulativos], derivados, agencias de rating y control de riesgo. La diferencia es que Obama ha sabido encontrar el tempo adecuado, a pesar de que algunos le han acusado de utilizar el caso Goldman Sachs para eso, mientras que Europa ha perdido el empuje inicial tanto por la crisis fiscal como por la presión de Reino Unido, que tiene una posición ambivalente porque teme perder la City y actúa siempre en su propio interés", dice Karel Lannoo, experto en regulación financiera del Center for European Policy Studies. Entre la docena de expertos consultados predominan quienes piensan que el proceso va lento e incluso "muy lento", como De Grauwe. Pero eso tampoco es necesariamente malo. El sistema financiero es como el cerebro de la economía: un mecanismo de coordinación que asigna capital para construir fábricas, viviendas y carreteras, según la definición de Keynes. Y a diferencia de lo que ocurre con otros sectores, una mala reforma puede ser muy peligrosa en algo tan delicado. "El proceso se ha ralentizado, pero ese retraso tiene su lado bueno: ha habido propuestas populistas, improvisadas, con el único objetivo de calmar a la opinión pública. Y habría que diseñar los cambios con más calma, con más cabeza. La reforma financiera no nos va a sacar de la crisis: debe dar forma al sistema financiero del futuro, evitar crisis futuras dentro de lo posible. No es nada sencillo. No es bueno improvisar con ella", apunta desde Londres Vicente Cuñat, de la London School of Economics. Ricardo Caballero, profesor del MIT en Cambridge, comparte ese punto de vista. "Europa va a estar concentrada en Grecia, en la deuda pública y en su pérdida de competitividad durante un tiempo. La reforma se postergará, y eso retrasará la estadounidense porque es esencial la coordinación internacional para que la banca no encuentre resquicios por donde librarse de la
240 regulación. Puede que eso no sea del todo malo: muchas de las propuestas que se han hecho no solucionan nada de lo que causó la crisis, y algunos aspectos, como algunas cosas de la regla Volcker [la propuesta estadounidense], son incluso contraproducentes". "Es tan importante lo que se hace como lo que no se hace", añade Caballero, "y hay que tener en cuenta que en esta crisis no sólo cometió errores el sector privado; también los reguladores y los supervisores se equivocaron, crearon una enorme confusión, y es necesario abordar un sistema de garantías públicas para controlar el riesgo sistémico". No es tarea fácil regular un sistema en el que los bancos son el casino, los grandes apostadores, los agentes de los pequeños apostadores y donde casi tienen mano con el croupier. La banca aduce que ha vuelto a los beneficios, que el crédito se recuperará tarde o temprano y que bastaría con ligeros ajustes para que el sector funcione como un reloj. Y mete miedo: asegura que el tsunami regulatorio, las más de 50 propuestas en su conjunto, dejarán menos dinero para prestar y por lo tanto dificultarán la concesión de créditos, y con ello la salida de la recuperación. Javier Suárez, profesor del Cemfi, admite que esos argumentos "pueden llegar a paralizar a los reguladores ante las dificultades para calibrar cuál puede ser el resultado de tocar tantas claves a la vez". Y resume cómo está la situación en cuatro trazos. Uno: "Basilea va a elevar las necesidades de capital y de liquidez, y eso es deseable y sensato porque llevará a una banca más robusta, siempre que se haga con un calendario a varios años vista para no ahogar la recuperación". Dos: "Aún no hay consenso, pero va a haber una regulación para los bancos demasiado grandes o demasiado interconectados para caer. Una forma puede ser trocearlos, como han propuesto Estados Unidos y Reino Unido, aunque es posible que eso no solucione nada. Otra aproximación es gravarlos con impuestos, como ha propuesto el FMI, sobre todo en el caso de las operaciones más especulativas: eso cambiaría el actual sistema de incentivos, que lleva a los bancos a hacerse cada vez más grandes porque saben que así el Estado los salvará si algo sale mal". Tres: hay acuerdo para regular los hedge funds, el capital riesgo y los productos derivados -armas de destrucción masiva en manos de los banqueros, según el inversor Warren Buffet-; es decir, a más presión para los actores y los productos más especulativos del negocio. Y por último, hay varias medidas aún difusas para cambiar la estructura institucional, un cajón de sastre que incluye crear nuevas autoridades y "hacer reglas más claras" para cuando lleguen nuevas crisis, resume Suárez. No se trata de un resumen exhaustivo: hay propuestas para regular también el papel de las agencias de calificación de riesgos, que no vieron venir la crisis, contribuyeron a crear la burbuja e incluso han puesto su granito de arena para que las cosas vayan a peor: suelen hinchar sus notas cuando todo va bien y tienen el gatillo fácil para rebajar los ratings cuando van mal, según sus detractores, lo que supone exacerbar los ciclos. Y hay medidas también para limitar los paraísos fiscales -de muy escaso calado- y para regular los bonus de los banqueros y evitar así comportamientos miopes, cortoplacistas. Se trata de ligar las retribuciones al largo o muy largo plazo para evitar que los ejecutivos asuman riesgos excesivos a corto plazo para llenarse los bolsillos, pase lo que pase después con la cuenta de resultados. "Pero no va a ser sencillo tocar los bonus", avisa Dean Baker, del Centro de Estudios de Política Económica en Estados Unidos. En realidad, no va a ser nada fácil tocar nada. Van casi tres años de crisis desde el estallido de las subprime, y de momento los acuerdos brillan por su ausencia. Un ejemplo: el FMI presentó dos propuestas de impuestos a la banca en la última reunión de los ministros de Finanzas del G-20, en Washington, y se encontró posiciones encontradas. Países como Canadá o Australia, que han capeado bien la crisis y tienen un sistema financiero saneado, no quieren ver ese tipo de gravámenes ni en pintura. Y en cambio, los más golpeados -EE UU y Reino Unido, tradicionalmente contrarios a cualquier cosa que suene a más impuestos,
241 además de los socios de la UE- están a favor porque además, de alguna manera, les puede venir bien ese dinero para sanear sus cuentas públicas, muy castigadas por la crisis. Una de las grandes lecciones de esta crisis es que la economía va por detrás de la economía, salvo cuando es imprescindible acudir en auxilio de la segunda. La innovación financiera siempre ha ido por delante de la regulación necesaria. Al cabo, los políticos suelen prepararse para la batalla que ya se perdió. Aun así, "sería imperdonable que llegara una crisis parecida por uno de los agujeros que ha dejado la regulación en estos años. No volveremos al business as usual. Tal vez no lleguemos lo suficientemente lejos por las presiones del lobby financiero, que es enorme, y sin embargo está más débil de lo que solía. Porque lo que de verdad es enorme es el resentimiento de los Gobiernos contra la industria financiera", cierra Nicolas Verón, de Bruegel. Galbraith, tan agraviado durante años por los neoliberales por demostrar que el rey estaba desnudo, solía decir que los altos ejecutivos del sector financiero suelen vivir tanto del rigor como de la irracionalidad: así se hacen los negocios, y así se cimentan algunos excesos. Sobre todo cuando la regulación no es la adecuada. - Huracanes, tsunamis y mentiras nuevas La banca -el universo económico en general- tiene una extraña relación con las palabras. Hablar de falta de transparencia es, naturalmente, otra manera de decir falta de información, por citar sólo uno de los muchos eufemismos que proliferan en la literatura económica. La nomenclatura es imposible: externalidades, apalancamiento, provisiones, derivados, por no hablar de los acrónimos (RAE, ROE, Ebitdas y demás) y de los abundantes anglicismos (subprime y credit default swaps son quizá dos de los ejemplos más actuales). Todo eso sirve para definir conceptos que suelen ser tan intelectualmente elegantes como difíciles de entender: una de las razones esgrimidas para regular los derivados es que ni el mismo sector financiero sabe exactamente lo que son, dice Joseph Stiglitz en su último libro, Caída Libre . Stiglitz es especialmente crítico con algunos de los hallazgos de la banca que pasan directamente a las páginas de los periódicos: se queja de que cojan vuelo y calen palabras como "tormenta", "terremoto" o incluso " tsunami " para definir lo que el Nobel califica -con cierto aire panfletario- como "el gran atraco estadounidense": "Como al parecer sucede tan a menudo en nuestra sociedad, 'son cosas que pasan'. (...) Pero esta crisis ha sido el resultado de actos, decisiones y razonamientos de los responsables del sector financiero. El sistema que fracasó tan estrepitosamente no se materializó por sí solo. Fue creado. Mucha gente trabajó muy duro (y gastó mucho dinero) para que adoptara la forma que adoptó". No fueron las fuerzas de la naturaleza, no fue una plaga bíblica, no fue un tifón lo que arrasó las finanzas y posteriormente la economía mundial. Esa peculiar forma de moldear el lenguaje sigue en boga. Wall Street se queja de que los medios de comunicación desquicien la realidad denominando "rescate" a lo que se hizo con AIG, con Freddie Mac y Fannie Mae, y con tantos otros, en lugar de conceptos más optimistas: "programa de recuperación", por ejemplo. El Tesoro de Estados Unidos llegó a llamar "activos depreciados" a los activos tóxicos, y después "activos heredados". Sobre la reforma financiera, Stiglitz es conciso y no se anda precisamente con eufemismos: "Wall Street ha utilizado su poder y su dinero para comprar desregulación, seguida rápidamente del rescate más generoso en la historia de la humanidad. Pero aún queda la
242 posibilidad de volver a regular para corregir los errores del pasado". Tomás Baliño, ex subdirector del FMI, asegura que los problemas "están a la vista de todos y han afectado a todos: el hecho de que, además, muchos de los responsables de la crisis ganaran fortunas ha alimentado aún más el resentimiento. Va a haber reformas importantes, eso es seguro; el problema es -como dice Stiglitz- si se llegará lo suficientemente lejos". -
La primera crisis del euro Terapia de choque para Grecia La UE y el FMI exigirán recortes más duros de lo previsto que rondarán los 25.000 millones en dos años - El 80% de los griegos rechaza el plan de austeridad ANDREU MISSÉ - Bruselas - 02/05/2010 Grecia empieza hoy una semana decisiva. En ella se va a decidir la magnitud de los sacrificios que deberá soportar la población para afrontar la crisis de su deuda. El primer ministro, el socialista Yorgos Papandreu, ha convocado a primera hora de hoy domingo un consejo extraordinario para valorar el acuerdo alcanzado con el Fondo Monetario Internacional (FMI) y la UE. Grecia empieza hoy una semana decisiva. En ella se va a decidir la magnitud de los sacrificios que deberá soportar la población para afrontar la crisis de su deuda. El primer ministro, el socialista Yorgos Papandreu, ha convocado a primera hora de hoy domingo un consejo extraordinario para valorar el acuerdo alcanzado con el Fondo Monetario Internacional (FMI) y la UE, -esta representada por el Banco Central Europeo (BCE) y la Comisión Europea-. El FMI y la UE exigen un recorte social mucho más intenso que el aprobado en febrero por la UE y que podría implicar un ajuste (reducción de gastos y aumento de impuestos) de 25.000 millones de euros en dos años. Esta sería la condición para obtener ayudas por valor de hasta 120.000 millones de euros en el próximo trienio. Para Papandreu, el acuerdo es "una cuestión de supervivencia nacional". Tanto las medidas de austeridad como el paquete de ayudas serán analizados por la tarde por los ministros de Economía de la zona euro en Bruselas. Pero la activación de las ayudas no dispondrá de luz verde hasta que sea aprobada por los jefes de Estado y de Gobierno de la zona euro, que podrían reunirse el 7 o el 10 de mayo próximos. Previamente al acuerdo determinante de los líderes, las medidas deberán ser aprobadas a lo largo de la semana por el Parlamento griego y, el viernes, por el alemán. Para el miércoles está prevista una huelga general en Grecia, la tercera en tres meses, contra los recortes salariales y de pensiones y la fuerte subida de impuestos. Las tensas manifestaciones de miles de personas ayer en Atenas y en Salónica son un reflejo del rechazo del plan de austeridad, que cuenta con la oposición del 80% de los ciudadanos, según una encuesta publicada en el periódico To Vima. Las medidas más contestadas son el recorte del 16% de los salarios públicos, mediante la eliminación de dos pagas extraordinarias, reducción de las pensiones, elevación de la edad de jubilación hasta los 67 años. Hay que recordar que el Programa de Estabilidad y Crecimiento de Grecia aprobado por la UE el pasado 16 de febrero, preveía una congelación de los salarios públicos y reducción del 60% en una paga extra. En materia fiscal, la propuesta que ofrece
243 más rechazo es otra subida del IVA de dos o cuatro puntos. El Gobierno griego ya subió el IVA del 19% al 21% el pasado marzo. Costas Lapavitsas, profesor de la Universidad de Londres, califica estas medidas de "desastrosas". Considera que "en medio de una recesión, el Gobierno griego es forzado a cortar el gasto público". Lapavitsas advierte de que las medidas pueden provocar "una caída del 5% de la economía este año" y teme que el desempleo pueda alcanzar hasta el 20%. En su opinión, "las posibilidades de recuperación son lejanas puesto que no es posible devaluar, y la carga de la deuda permanecerá elevada". A su juicio, "si no hay recuperación, Grecia tendrá que reestructura su deuda o declarar default (suspensión de pagos) de su deuda el próximo año". En efecto, prosigue, "la propuesta del paquete de medidas hace que la insolvencia de Grecia sea más probable". Lo cierto es que con independencia de la aprobación del plan, en cuestión de pocas semanas ha ido tomando cuerpo la idea de que Grecia tendrá que reestructurar la deuda. "Si Grecia no asume este paquete de medidas, la suspensión de pagos o la reestructuración de la deuda será inevitable", sostiene Cinzia Alcidi, investigadora del The Centre For European Policy Studies (CEPS). "En las condiciones actuales, Grecia es insolvente", precisa. La reestructuración de la deuda es equivalente a una suspensión de pagos suave, pues supone que los bancos y particulares acreedores deberán asumir una pérdida de valor de sus títulos y aplazar su cobro varios años. El endurecimiento de "las medidas de austeridad exigidas a Grecia es responsabilidad de Alemania", señala Sony Kapoor, director gerente de Re-Define, un centro de análisis dedicado a replantear las relaciones entre el desarrollo y el sistema financiero. Kapoor considera prioritario "modificar la regulación que impide a los fondos de pensiones adquirir deuda pública por debajo de cierta calificación". En su opinión, "la devaluación de la deuda por parte de las agencias empuja a los fondos tenedores de estos títulos a ventas masivas, lo que provoca un hundimiento de los precios". "Esta circunstancia", añade, "es agravada por las prácticas de los especuladores, que apuestan a la baja". El futuro de Grecia sigue pendiente, sin embargo, de las elecciones regionales en Renania Westfalia en Alemania, del próximo 9 de mayo, cuyo resultado puede hacer perder a Angela Merkel su mayoría en el Bundesrat, la cámara alta del Parlamento alemán. El encuentro de una solución europea para Grecia se ha visto bloqueado sistemáticamente durante los últimos cuatro meses por Merkel, quien conocedora del rechazo masivo en su país (más del 85% según las encuestas) no ha querido correr riesgos ante la proximidad de las elecciones regionales en Renania Westfalia y ha optado por aplazar cualquier solución. Con este pasado, no dejó de ser paradójico el comunicado emitido ayer conjuntamente por Merkel y el presidente francés, Nicolas Sarkozy, en el que acordaron "actuar rápidamente". El presidente de los socialistas europeos, Poul Nyrup Rasmussen, destacó también ayer la inconsecuencia de Alemania en retrasar las medidas pues, en su opinión, las medidas de apoyo a Grecia redundarían también a favor de Francia y Alemania. Rasmussen recordó que la exposición de los bancos franceses y alemanes en Grecia asciende a 91.000 millones de euros y en el conjunto de países con problemas (Portugal, Irlanda, España, Italia y Grecia) a 1,2 billones de euros. España y Grecia - PIB. España: 1,051 billones de euros. Grecia: 237.924 millones - Déficit público (% PIB). España: 11,2%. Grecia: 13,6% - Deuda pública (% PIB). España: 53,2%. Grecia: 115,1% - Desempleo. España: 20,05%. Grecia: 13,2%, según Eurostat
244 - Desempleo juvenil. España: 41,2%. Grecia: 27,5% - E Empleo público. España: 13,4%. Grecia: 25% - Exposición banca de Francia y Alemania. En España: 348.800 millones. En Grecia: 91.100 millones
ENTREVISTA: JOSÉ MANUEL CAMPA Secretario de Estado de Economía "No hay comparación posible entre España y Grecia" "La opinión de S&P no coincide con el consenso de los analistas" "Es muy difícil predecir si el paro ha tocado techo con el 20,05%" LUCÍA ABELLÁN - Madrid - 02/05/2010 El terremoto desatado esta semana por la agencia Standard & Poor's (S&P) no ha logrado endurecer el discurso de José Manuel Campa, más dado al temple del profesor que fue que al ardor político. La entrevista sortea con excesiva cautela el ataque a una entidad que ha puesto patas arriba los mercados tras degradar la deuda griega al nivel del bono basura y, de paso, rebajar la portuguesa y la española, que pese a todo conserva un notable. En una sala palaciega del Ministerio de Economía donde los frescos, los cuadros y las puertas enmascaradas distraen fácilmente la atención, el secretario de Estado de Economía desarma asépticamente los argumentos de S&P, cuyo impacto en los mercados soliviantó al portavoz económico de la Comisión Europea, Amadeu Altafaj, que se preguntó sarcásticamente: "¿Quién es Standard & Poor's? Pregunta. ¿Usted también se pregunta quién es S&P para determinar así el futuro de España y de Europa? Respuesta. No creo que esté determinando el futuro de España ni de Europa. Es una empresa que evalúa la calidad de la deuda de empresas y gobiernos. Y según la valoración que hacen los distintos inversores de la opinión que ellos emiten tiene más o menos impacto en los mercados. P. ¿Ese impacto será grande? R. Sí y no. Justo al anunciarse su decisión se vio cómo la Bolsa cayó casi un 2%. Pero al día siguiente recuperó algo más. La opinión de S&P está basada en expectativas que no coinciden con el consenso de los analistas, en particular las perspectivas de crecimiento de la economía española hasta 2015, claramente inferiores a las del resto. Además, su percepción desde febrero, cuando emitieron su última opinión, ha empeorado, mientras que para la mayoría de analistas ha ido mejorando. Lo que tienen que hacer los inversores es valorarlo. No compartimos la opinión de S&P. P. ¿Puede ocurrir en España algo similiar a lo que está pasando en Grecia? R. Las diferencias con Grecia son muchas: tanto en términos de tamaño como de dinamismo empresarial, de la calidad y la estabilidad del sistema institucional, de la competitividad de la economía, de niveles de deuda pública, de ahorro, de inversión... Hay que recordar, además,
245 el largo historial de credibilidad de las cuentas públicas españolas. En suma, no hay comparación posible. P. ¿Cree entonces que son completamente infundados los temores de esta agencia? R. No digo que sean totalmente infundados. Lo que sí es poco razonable es la estimación de crecimiento. Y no lo creo yo solo. P. ¿Tiene previsto hacer otra gira internacional para reunirse con inversores y convencerlos de la solvencia de España? R. Esas giras se hacen regularmente para informar a inversores sobre la evolución de la economía. Es importante mantenerlos informados. La economía española vive una transformación desde un boom en el que gran parte del PIB dependía de la construcción residencial hacia actividades que se deben potenciar en otros sectores. Eso requiere explicación, más aun en épocas de cambio, y sin lugar a dudas, ahora que la sensibilidad de los mercados es más alta. P. ¿Intentará reunirse con Standard & Poor's? R. Lo hacemos habitualmente con ellos y con muchos otros analistas e inversores. P. Una de las objeciones que plantean los analistas de esa agencia es la falta de concreción del ajuste fiscal. ¿Les falta trasladar la austeridad a hechos concretos? R. S&P confirma nuestro objetivo de déficit de 2010 y prevé mayores déficits que nosotros para los próximos años, no porque no se apliquen los ajustes, sino porque al prever mucho menos crecimiento de la economía, la recaudación de impuestos resulta inferior y gastos como el de las prestaciones por desempleo, mayores. P. La agencia se inquieta por la partida de personal, que avanza más de lo que sería lógico en recesión. ¿No cree que ha llegado la hora de mandar un mensaje con el sueldo de los funcionarios? R. El plan de austeridad indica que esa partida tendrá que caer un 4% en cuatro años. El mensaje ya está mandado. Éste es el compromiso que hay que cumplir. P. Sí, pero el compromiso convive con un pacto de mejora salarial según la inflación hasta 2012. R. Lo fundamental es cumplir esa reducción del 4%. Existe un compromiso adicional, una tasa de reemplazo del 10% de las vacantes públicas. Si somos capaces de proveer los mismos servicios con menos personas, eso son ganancias de productividad que se pueden reflejar en mejoras salariales nominales, pero con caídas del coste total de la partida de sueldos y salarios. P. ¿Pero están decididos a cumplir el acuerdo de alza salarial? R. Estamos decididos a cumplir el Programa de Estabilidad. P. S&P habla de rigideces en el mercado laboral. ¿No cree que el ritmo al que camina la negociación entre el Gobierno y los agentes sociales es contrario a la urgencia económica? R. Podemos discutir si es suficientemente rápido. El Gobierno ha hecho una apuesta: conseguir una reforma con amplio consenso social. Eso requiere unos tiempos. Las reformas con consenso resultan más efectivas. Pero la necesidad de hacerlo también es importante. Y cuanto antes, mejor. P. Dentro de esa reforma se propone adaptar el modelo austriaco de financiación del despido a través de un fondo con aportaciones de las empresas. Parece que Economía no lo comparte.
246 R. Economía no está en absoluto en desacuerdo. Una parte esencial de la reforma laboral es atacar la dualidad. Tenemos un mercado en el que el 35% de la población activa oscila entre contratos temporales y paro, y el resto tiene contratos fijos. Esa dualidad no es buena. No fomenta la movilidad, la estabilidad para desarrollar proyectos personales, la formación... Hay aspectos del modelo austriaco que lo fomentan y esto nos gusta. Lo que no tiene sentido es una copia literal de ese modelo. En Austria el desembolso de la empresa al despedir es cero. Eso no se va a aplicar en España. P. ¿Qué aspectos serían trasladables? R. La esencia del modelo: un fondo que el trabajador vaya acumulando a lo largo de su relación laboral y que se lleve si cambia de trabajo, que promueva la movilidad a la vez que incentive la fidelización y la formación... Pero sobre todo que fomente la eliminación de la dualidad. P. ¿Lo pagarían las empresas? R. No tiene por qué. Podrían pagarlo las empresas, los trabajadores o el Estado. P. ¿Van a extender el contrato indefinido más barato [33 días por año trabajado] a los nuevos trabajadores? R. Se trata de generalizarlo para nuevos trabajadores, pero se puede hacer de varias maneras. Una posibilidad es permitirlo para las conversiones de temporales a fijos. Otras, ampliarlo por edad, por formación... P. ¿La reforma laboral es la más urgente de la economía? R. Es una de las fundamentales. P. ¿Se siente cómodo dentro de esta indefinición de propuestas en el ámbito económico: de anuncios, de rectificaciones...? R. No estoy seguro de compartir esa afirmación. En el diálogo social, el Gobierno ha ido poniendo documentos encima de la mesa porque en una discusión tripartita no tiene sentido llegar con propuestas cerradas. P. ¿Ha tocado techo el paro? R. Es muy difícil predecir, pero el 20,05% será una de las cifras más altas que veamos. De hecho, seguimos manteniendo nuestra predicción de la tasa media de paro para 2010 [19%]. P. Tiene que bajar mucho para que esa media se cumpla. R. Bueno, tiene que bajar. Tendrá que haber un trimestre del 18% y dos del 19%, por ejemplo. P. No sé si la situación permite prever un escenario de ese tipo. R. Una vez superada la etapa de descensos en el PIB, ahora vendrán crecimientos suaves intertrimestrales. Habrá industrias que creen empleo y otras que destruyan. En la reasignación, la tasa media anual será el 19%, que tampoco es particularmente buena. P. ¿De verdad fue un error la aparición de los datos del paro en la web del INE días antes de su publicación oficial? R. Por supuesto que fue un error y ya se está trabajando para que no vuelva a ocurrir. Me gustaría dejarlo muy claro porque he escuchado algún comentario sobre una posible intencionalidad de la filtración para evitar que el Gobierno manipulara el dato. El INE tiene
247 una bien merecida reputación a nivel internacional. En el contexto actual de los mercados, lanzar esas insidias me parece gravísimo. Quien piense lo contrario debería presentar pruebas. P. S&P también se preocupa por la banca. Como ocurre con el mercado laboral, tampoco este sector se restructura con rapidez. R. El fondo de ayuda bancaria tiene 10 meses de vida y hay más de 20 cajas -de 47- en restructuración. Actividad hay; otra cosa es que el proceso vaya a ritmos que tienen que ver más con la dinámica de cada empresa.
El clima político en España La desconfianza se apodera de España El 81% desaprueba las medidas anticrisis del Gobierno y el 62%, las de la UE - Crece el pesimismo y surge el temor al contagio griego - Caída de la valoración de Zapatero y Rajoy
FERNANDO GAREA - Madrid - 02/05/2010 José Luis Rodríguez Zapatero ha vuelto a intentar insuflar optimismo y ha proclamado que ha empezado la recuperación, pero los españoles cada vez tienen una impresión más negra del panorama económico. Su mensaje no cala entre los ciudadanos y hasta un 62% teme un efecto contagio del terremoto griego. José Luis Rodríguez Zapatero ha vuelto a intentar insuflar optimismo y ha proclamado que ha empezado la recuperación, pero los españoles cada vez tienen una impresión más negra del
248 panorama económico. Su mensaje no cala entre los ciudadanos y hasta un 62% teme un efecto contagio del terremoto griego. Y lo que es peor: desconfían de la capacidad de las autoridades españolas y europeas para poner freno a la crisis y acabar con el colapso griego, mientras la valoración de los principales líderes políticos es la peor de toda la legislatura. Nunca antes los españoles habían tenido una opinión tan negativa del presidente y del líder de la oposición, especialmente de este último. La encuesta de Metroscopia para EL PAÍS realizada esta semana, con una cifra récord de paro y un convulso panorama económico agitado aún más por Grecia, da como resultado el tono más pesimista, dos años después de iniciarse la crisis económica. El 81% de los encuestados asegura que el Gobierno no ha sabido adoptar medidas para hacer frente a la crisis y el 62% cuestiona las de la Unión Europea. Lo peor para el Gobierno es que hasta un 64% de los votantes del PSOE rechaza la actuación del Ejecutivo. De la encuesta se desprende que no han calado entre los españoles los mensajes de Zapatero que aseguran que la crisis ha tocado fondo y que el Gobierno ha tomado todas las medidas posibles para paliarla. Su falta de credibilidad no ayuda en un momento tan delicado. Desde mayo de 2009, cuando se inició este Barómetro de Clima social, no habían sido tan negativos los tres índices que miden el estado de ánimo de los españoles: el 87% califica negativamente la situación económica; el 80% cree que aún queda mucho para que haya mejora de la crisis a nivel mundial y el 87% ve lejos el final de la crisis española. De la tragedia griega, aparentemente lejana a España, llegan ecos en forma de temor a un contagio, porque el 50% dice que la UE no ha tomado las medidas correctas ante esa crisis y el porcentaje se eleva al 66% en el caso del Gobierno español. Ese temor se refuerza por otra de las noticias de la semana: la bajada de la calificación de la economía española por parte de una de las principales agencias internacionales. Este hecho hace pensar al 71% que se trata de un serio aviso de que si no se toman las medidas adecuadas acabaremos en situación parecida a Grecia y, como queda dicho, no hay confianza en quien tiene que adoptarlas. Los ciudadanos piden que los causantes de la crisis lo paguen y un 84% lamenta que el comportamiento de quienes la provocaron por sus errores y sus comportamientos esté quedando impune. La crisis económica española se convierte en crisis política porque los ciudadanos parecen no encontrar consuelo en ningún líder ni partido. Zapatero y Rajoy están en la valoración más negativa de la legislatura. El peor momento coincide con la peor valoración de los líderes. El 66% desaprueba la gestión de Zapatero; el 83% considera que improvisa sin parar y al 77% le inspira poca o ninguna confianza. Su problema además es que los datos son también negativos entre los votantes del PSOE, que tradicionalmente están menos movilizados y son menos estables que los del PP, aunque éstos sean aún más críticos con su líder. Pero lo mejor que le ha pasado a Zapatero es Rajoy. Es decir, que en una situación de desgaste y crisis como la actual no tenga enfrente a un líder con mejor imagen y posición, capaz de capitalizar ese descontento ciudadano. A Rajoy sólo se salva la movilización y fidelidad de sus votantes, aunque sean implacables en la crítica con el líder del PP. Por ejemplo, al 49% de los votantes del PP Rajoy les inspira poca o ninguna confianza. Según los datos, la marca PP está muy por encima de su líder. Es lo único que le puede permitir ganar las elecciones. El PP mantiene una ventaja de 4,2 puntos, sólo 0,2 más que hace un mes, a pesar de que Rajoy es peor valorado aún que Zapatero. La crisis desgasta aún más al líder de la oposición que al presidente del Gobierno, pero puede facilitar un cambio político en España. El
249 Gobierno no convence y la oposición no consigue ser vista como alternativa, pero le ayuda la fidelidad de los suyos. El 81% de quienes votaron al PP en las generales de 2008 volvería a hacerlo ahora, mientras que sólo el 59% de los que apoyaron al PSOE tiene decidido repetir. Los sociólogos hablan del voto exquisito de la izquierda que, ante las dificultades, da la espalda al PSOE y se decanta por otras opciones o por la abstención, frente al del PP que raramente opta por quedarse en casa y no dispone de otras opciones para castigar a este partido. Ni quiere hacerlo, aunque le disguste su líder. La crisis ha conseguido desgastar al PSOE y los ciudadanos lo perciben claramente. Por eso, en un mes ha subido seis puntos el porcentaje de españoles que creen que el PP ganaría las elecciones si se celebraran ahora. Hasta un 52% de los votantes socialistas da por hecha esa victoria del PP. Este panorama se resume en que tres de cada cuatro españoles califican negativamente la situación política de España. Es también el peor porcentaje desde mayo de 2009, de donde podría concluirse que España vive una doble crisis: política y económica.
250
Nick Clegg is the candidate of change The Liberal Democrats offer a prospect of renewal which has been denied them by a grossly unfair voting system Observer Editorial guardian.co.uk, Saturday 1 May 2010 19.01 BST The rotten parliament is dissolved; this week a new one will be elected. Scores of incumbents who fiddled their expenses will be evicted. Many who did not are standing down anyway, too defeated by the public's loathing of politicians to face the campaign trail. So change is inevitable. Parliament will be full of novice MPs. It might also, if current opinion polls are borne out, be hung. The Conservatives have spent much energy campaigning against that outcome. They have publicised their irritation that voters could deprive David Cameron of a majority much better than they have explained why he deserves one in the first place. Mr Cameron warns portentously that a coalition might lead to instability, economic jeopardy and "more of the old politics". Perversely, he also rejects the need to change the current voting system, which has, he says, the merit of delivering clear results. Except this time it might not. What then? Mr Cameron's view is that the system would work fine, if only everyone voted Conservative. This is sophistry draped in hypocrisy. He backs first past the post, while agitating against one of the outcomes that is hard-wired into it. He is campaigning against the voters instead of pitching for their support. He defines change in politics as the old system preserved – but run by the Tories. The expenses scandal signalled the need for more radical reform. This newspaper has consistently argued that the most effective change would be to introduce a fairer voting system. The current model contains a huge bias towards Labour and the Conservatives, giving them hundreds of safe seats where MPs can complacently ignore voters. Parties then divert money and skew policy towards a handful of tactically important constituencies. Awarding seats in parliament in proportion to votes cast would extend the franchise to millions of people who feel their voices have gone unheard. Deep unfairness radiates out of our voting system and corrupts our politics. This can only be fixed with electoral reform. If a different system yields more coalition governments, so be it. Mr Cameron ought to appreciate how like coalitions the current political parties already are. Conservative policy expresses the party's agonies in recent years as different factions have competed to graft their priorities on to the leader's mutating creed. When Mr Cameron became leader in 2005 he recognised that the party was widely perceived as uncaring and ill-disposed towards 21st-century Britain. He embarked on a campaign of modernisation. He tried to stamp out illiberal views on homosexuality. He sought to promote candidates from minority communities. He shifted rhetoric away from attacks on immigration and the European Union, professing instead enthusiasm for the environment and international
251 aid. That process yielded a rise in opinion poll ratings, but provoked suspicion within the party. In some policy areas, the Conservative party has genuinely changed. The Tories are reconciled to the minimum wage, civil partnerships, the NHS. But the project is incomplete. Modern Conservatives, Mr Cameron says, are open. But the Tories concealed for years the non-domicile tax status of Lord Ashcroft, their deputy chairman and campaign financier. Modern Conservatives are supposed to accept gay rights. But the party is allied in the European parliament with homophobic nationalists. Modern Tories should have jettisoned censorious moralism over single mothers. But Mr Cameron offers a tax break to couples on the condition that they marry, as if lone parents, blind to the virtue of wedlock, must forfeit government help. Marriage aside, the Tory manifesto is defined by suspicion of state intervention. Mr Cameron promises a Big Society, in which charities, businesses and volunteers tackle social problems that Labour's bureaucratic agencies have failed to solve. But the Conservatives offer no credible route map for the transition from state funding. Mr Cameron deploys the language of civic duty to salve patrician Tory consciences over what would really be a Thatcherite assault on public sector jobs and services. Nobody disputes the need to rein in government spending. All three main parties pledge to do so. But only the Conservatives embrace austerity out of an ideological conviction that government is by nature pernicious. That belief, central to Conservative philosophy, left David Cameron and George Osborne ill- equipped to respond when financial crisis struck. Their support for government action to stabilise the banks and stimulate the wider economy was queasy and slow. By contrast, history will recognise Gordon Brown's intellectual acuity and political resolve when the edifice of global capitalism looked liable to fall. Mr Brown would surely like the election to be decided on the basis of the decisions he took in those crucial days. But Labour comes into the campaign defending 13 years of incumbency, the last three of which have passed under a prime minister who has failed to inspire party and country with a coherent agenda for government. As a result, Labour's election offer has been too retrospective, a plea to preserve old achievements with little promise of greater things to come. Even then, Mr Brown has been a weak advocate for the government's record. Labour reversed a generation of Tory under-investment in public services, building new schools, hospitals and children's centres, recruiting thousands of teachers and nurses, subsidising nursery care. Britain's social infrastructure has been upgraded. The Tory assertion that public spending rises under Labour were profligate is false. There was some waste. But mostly, Labour spent to improve the quality of life of ordinary British citizens. Now, however, the money has run out and Labour looks spent, with few ideas and a crumpled leader. There are as many causes for regret as there are for celebration in Labour's record. Tony Blair made peace in Northern Ireland, but he also made war in Iraq. Under Labour, violent crime has fallen substantially, but jails are full and fail to rehabilitate their inmates. In response to terrorism, crime and anti-social behaviour Labour has bought security at an intolerable cost in liberty. In place of community, we have CCTV.
252 Labour government has raised the incomes of the poorest, but not as quickly as it facilitated the transfer of wealth to the richest. Mr Brown was courageous in fixing the financial crisis, but cowardly beforehand in allowing the City's culture of greed and reckless borrowing to colonise the rest of the economy. The vital context for this election is the twin crises in our economy and our politics. On both issues most credit accrues to the Liberal Democrats. Their Treasury spokesman Vince Cable was prescient in warning of an unsustainable debt bubble; Nick Clegg pushed for greater openness about expenses long before the scandal erupted. The Lib Dems have in recent years developed a habit of getting things right. They were first of the big three to embrace environmentalism, first to kick back against the assault on civil liberties, alone in opposing the Iraq war. The conventional riposte to those boasts is that the Lib Dems were free to take idealistic positions because they knew they would never be tested in government. Thus is political courage denigrated as a luxury of eternal opposition. Mr Clegg's mettle cannot be fully tested until he is in office. But he did manage, in the televised leaders' debates, to articulate sensible, liberal positions on immigration and on European integration that many Labour ministers might share but would be afraid to express. He resisted the temptations of casual populism and stated his case with passion and clarity. Not every Lib Dem policy meets that standard. The party's aversion to nuclear power as a low-carbon energy source is misguided. Its unaffordable aspiration to abolish university tuition fees is either naive or disingenuous. But the thrust of Nick Clegg's manifesto is right on political reform, right on tax reform that would redistribute wealth from high finance to ordinary citizen, right on liberty and equality. By advocating these things with refreshing urgency, Mr Clegg has also exposed the vacuity of David Cameron's claim to represent change. The Conservative leader has had four and a half years in which to come up with an offer that might inspire the country. Yet, on the eve of polling he is left recycling populist lines on immigration from the 2005 manifesto and spreading fear of a hung parliament. Tory poll ratings peaked nearly two years ago and have recently dipped as low as levels achieved under Michael Howard. Mr Cameron set himself the twin tasks of irrevocably transforming his party and earning a resounding mandate from voters. Judging by the campaign so far, he has failed. The Tories have misdiagnosed the country's problems and offer the wrong prescriptions. They think society is broken, and think wedding bells can fix it. They say the economy is wounded, and offer cuts to save it. For all the government's failings and mistakes over 13 years, Labour's historic instinct is to protect those most vulnerable in a harsh economic climate. Many voters will want to reward that instinct even if it has been poorly expressed by the party's high command. There are constituencies where the only way to ensure a presence in parliament that might halt a Tory assault on public services is to support the local Labour candidate. But ideally the Conservative proposition should be met with a positive and radical alternative. Nick Clegg's party offers the prospect of political renewal that David Cameron used merely as camouflage. There is a moral imperative to consider in this election, distinct from the old Labour-Tory contest. Opinion polls throughout the campaign suggest that the country wants the Lib Dems to take a place of equal standing alongside the other main parties. A grossly unfair voting system has historically deprived them of that right. It is vital this time that they
253 win a mandate for real change expressed in the overall share of the vote, not just in the discredited distribution of seats in parliament. There is only one party on the ballot paper that, by its record in the old parliament, its manifesto for the new one and its leader's performance in the campaign, can claim to represent an agenda for radical, positive change in politics. That party is the Liberal Democrats. There is only one way clearly to endorse that message and that is to vote Liberal Democrat. http://www.guardian.co.uk/commentisfree/2010/may/01/liberal-democrats-endorsement- observer/print
Warren Buffett defends Goldman Sachs Billionaire investor backs bank over regulator's fraud allegation, saying losers in $1bn trade 'made a dumb credit deal'
Andrew Clark in Omaha, Nebraska guardian.co.uk, Saturday 1 May 2010 17.50 BST
The world's third richest man, Warren Buffett, today declared that he saw nothing wrong in an allegedly fraudulent $1bn mortgage deal by Goldman Sachs and suggested that losers in the transaction, including Royal Bank of Scotland, had only themselves to blame for exercising "dumb" judgment. After weeks of silence on the subject, Buffett delivered a valuable endorsement to the embattled Wall Street bank at Saturday's annual meeting of his Berkshire Hathaway business empire in Nebraska. The 79-year-old billionaire said he "loved" his own $5bn investment in Goldman and offered "100%" support to the bank's chief executive, Lloyd Blankfein. "I do not hold against Goldman at all the fact that an allegation has been made by the Securities and Exchange Commission," Buffett told a gathering of 40,000 of his followers at Omaha's cavernous QWest sports stadium. But if fraud charges were proven, he added, "it's something more serious and we'd look at that at the time". A long-term customer of Goldman, Buffett has enlisted the bank's help in buying scores of businesses. At the height of the financial crisis in September 2008, he lent $5bn to Goldman – a loan that yields annual income of $500m for Berkshire Hathaway, at a rate of $15 a second. "We love the investment," said Buffett, who accepted that the SEC's charges had damaged Goldman's reputation. "There's no question the allegation alone causes the company to lose reputation. Obviously, the past few weeks have hurt the company and hurt morale." The SEC's case against Goldman centres on a 2007 mortgage derivatives deal named Abacus, struck by Fabrice Tourre, a banker now based in London. The SEC contends that Tourre failed to inform participants about the extent of involvement of a hedge fund, Paulson & Co, that had a short position betting on Abacus's failure. Within nine months, more than 99% of the mortgages referenced by Abacus were in default, leaving Royal Bank of Scotland's Dutch subsidiary, ABN Amro, with an $840m bill as it had insured the derivative against failure. Buffett was scornful of this loss, pointing out that ABN voluntarily agreed to insure Abacus for a fee of $1.6m. "It's a little hard for me to get terribly sympathetic with the fact that a bank made a dumb credit deal."
254 The billionaire, who is known as the "sage of Omaha", described Goldman's chief executive as "smart" and "high grade" and brushed aside a question about who could replace him: "If Lloyd had a twin brother, I would vote for him. I've never given it a thought." Buffett's annual meeting entails a vast influx of people into his modestly proportioned home town. Omaha's Eppley airport said it was expecting arrivals from 100 private jets on Friday, 15 times more than usual. Buffett and his business partner, Charlie Munger, spend a day each year dispensing pearls of folksy wisdom in response to investors' questions. Front-row spectators include Bill Gates, a close friend and associate of Buffett. Early in the meeting, Buffett offered thoughts on the impact of Greece's financial crisis on the euro. He described the economic meltdown in Athens as a test case in what happened when a nation made promises to its citizens while it lacked the power to print its own money. Buffett predicted "high drama" in the eurozone, saying: "I don't know how this movie ends. That doesn't mean I'm forecasting disasters. But I try not go to movies like that." With a collection of businesses varying from Dairy Queen cafes to Geico insurance and Fruit of the Loom underwear, Buffett's personal fortune is estimated at $47bn. He is ranked by Forbes magazine as the world's third richest man, behind the Mexican tycoon Carlos Slim and Microsoft's Bill Gates. http://www.guardian.co.uk/business/2010/may/01/warren-buffett-defends-goldman-sachs
Business Day
April 30, 2010 Angus Maddison, Economic Historian, Dies at 83 By CATHERINE RAMPEL Some people try to forecast the future. Angus Maddison devoted his life to forecasting the past. Professor Maddison, a British-born economic historian with a compulsion for quantification, spent many of his 83 years calculating the size of economies over the last three millenniums. In one study he estimated the size of the world economy in A.D. 1 as about one five-hundredth of what it was in 2008. He died on April 24 at a hospital in Paris after a long illness, his daughter, Elizabeth Maddison, said. He lived near Compiègne, about 50 miles northeast of Paris. Professor Maddison held various senior posts at what is now the Organization for Economic Cooperation and Development, an international research and consulting organization based in Paris. Most recently he was a professor at the University of Groningen in the Netherlands. He also spent much of his career studying economic conditions in the developing world firsthand, living for extended periods in Pakistan, Ghana, Brazil, Mongolia and Guinea, among other nations. As an adviser, he helped emerging market governments determine how to measure their economic progress and improve policies.
255 In his research, he tried to reconstruct thousands of years’ worth of economic data, most notably in his 2007 book “Contours of the World Economy 1-2030 A.D..” He argued that per capita income around the globe had remained largely stagnant from about 1000 to 1820, after which the world became exponentially richer and life expectancies surged. In another influential book, “Chinese Economic Performance in the Long Run,” in 1998, he tracked the history of Chinese growth since 960. The book demonstrated that China’s recent rise was merely a return to economic superpowerdom, as the Middle Kingdom had already dominated the world economy for many centuries. In his archaeological excavation of the economies of other eras, he was “trying to explain why some countries achieved faster growth or higher income levels than others,” he wrote in an autobiographical essay, “Confessions of a Chiffrephile” published in 1994. He wanted to know what some countries did right and what others did wrong, and to figure out how growth influenced culture, and was influenced by it. Professor Maddison often referred to himself as a “chiffrephile,” or lover of numbers, a term he invented to characterize economists and economic historians like himself who were prone to quantifying the world. While macroeconomic research in the last few decades was dominated by elegant mathematical models and technical wizardry, his focus on meat-and-potatoes data and cross- country historical comparisons has come back into vogue in recent years, especially in the wake of the financial crisis. Social class and inequality figured greatly in his research and personal memoirs, perhaps reflecting his early childhood in economically depressed Newcastle-upon-Tyne, a shipbuilding and mining town in northeastern England, where he was born on Dec. 6, 1926. His parents both left school at age 12. His father, a railway fitter, and his mother invested in their only child’s intellectual development, taking him to scholarly lectures sponsored by the local cooperative movement. One lecture introduced him to the work of the British economist John Maynard Keynes. Professor Maddison’s first collegiate pursuit was history, but he was drawn to economics because he realized it was a “useful discipline for solving serious problems,” he wrote in his autobiography. He enrolled in Cambridge in 1945, on a scholarship supplemented by a part-time job lecturing to German prisoners of war. He later attended graduate school at McGill University in Montreal and the Johns Hopkins University in Baltimore, then decided to return to Britain. In subsequent years he lectured at universities, including the University of St. Andrews in Scotland, and worked with the what is now the Weatherhead Center for International Affairs at Harvard University. He retired from the University of Groningen in 1996, but he was still pursuing his research until three weeks before he died, his daughter, Elizabeth, said. Besides his daughter, Professor Maddison is survived by his wife, Penelope; two sons, George and Charles, who is also an economist; and five grandchildren. http://www.nytimes.com/2010/05/01/business/01maddison.html?hpw
256
30.04.2010 IMF/EU/Greece agree outlines of a package – but can it stave off insolvency?
They needed to come up with something. While there are still negotiating details of the package, the main components of the package were leaked last night to the Financial Times. Here are the details: The total nominal size of the budgetary adjustments over three years is €24bn – 8.5% of 2009 GDP. The measures include, according to the FT · Two to three percentage points increase in value-added tax · Three-year public sector pay freeze; recruitment frozen · Abolition of ‘13th and 14th monthly salary’ for public sector workers; 5 per cent cut in allowances · No renewals for short-term public sector contracts · Closure of more than 800 out-dated state entities · Opening up of more than 60 ‘closed-shop’ professions · Overhaul of pension system: raising average retirement age to 67 for men and women; cutting state corporation pensions. · Privatisation: sales of state corporations; flotations on Athens stock exchange; sales and leasing of state-owned properties
The question about this package (and indeed probably about any other package) is whether it can stave off insolvency. We will have to see what the growth assumptions are, when the
257 details are announced over the weekend (and also what exactly the headline number of €24bn refers to), but from our own calculations it does not appear that the overall size of the package will be sufficient to produce a primary surplus sufficiently large enough to stabilise the debt- to-GDP ratio. We will attempt a solvency calculation, once we have the details. But even with those headline figure, the budgetary measures are significant, especially the controversial cut in the 13th and 14th monthly payment for state workers, and the general increase in the pension age. In an interview with Die Welt, Moritz Kramer of S&P defended the decision to downgrade Greek debt to junk status, adding that the bailout, while welcome, does not change the rating agency’s medium-term perspective on the country. On past experience, there is a 14% chance that investors lose 50-70% over their investments over 10 years. Prime minister George Papandreou is now starting to sale the package to the Greek people as unions denounce “unjust” budget cuts, Bloomberg reports. “We find ourselves before the most savage, unprovoked and unjust attack,” said Spyros Papaspyros, head of the ADEDY civil servants union, “The answer will be given in the street.” Kathimerini has some more reactions. While signs of an accord ended a bond market selloff in Europe yesterday, Moody’s Investors Service warned that Greece could be vulnerable to a “multi-notch” downgrade if measures don’t go far enough. Is a European banking crisis next? This has the potential of developing into the next crisis: The FT reports that “many European banks have become shut out of the international lending markets because of continuing concerns over Greece, sparking fears that some could collapse as they run out of cash. Greek and Portuguese banks cannot borrow in the international money markets, while weaker European banks are also struggling to raise money as fears of counterparty risk have grown sharply.” Even French and German banks have difficulties because of their exposure to Greek debt. German, French and Spanish banks have had to pay higher premiums for short-term debt. Portugal prepares further austerity measures and is repurchasing debt obligations Portugal, meanwhile, is working on additional austerity measures. The capital gains is raised to 20% and applies not only to investors residing in Portugal, but also traders and investors who sell Portuguese company shares, Jornal de Negocios reports. Another Article in Jornal de Negocios reports that the Portuguese government will test the public debt market next Monday, announcing that it will hold an auction of repurchase about €5.6bn in 10y obligations that expires May 20. Speculation against Spain calmed down for now Markets seem also willing to give Spain a truce, writes El Pais, but investors expects more reforms, especially in the labour market. If the government cannot deliver results soon, speculation against Spain will start again. “The big problem of Spain is unemployment and that requires decisions” and more collaboration between social partners and the government. Trichet increasingly political Jean-Claude Trichet is taking an increasingly political role in the Greece crisis, the FT reports.
258 “What we need most at this time is a strong sense of direction,” he said. Not only did the immediate crisis have to be resolved, but the eurozone needed a “giant step forward” in the way economic policy operated. Weber defends no bank contribution in Greek rescue Bundesbank president Axel Weber, meanwhile, criticized the possible involvement of banking in any recovery plan for the Greek economy, in an Interview with the Bild Zeitung. He said that one can discuss a banking contribution in the future, but it is counterproductive in the current discussion about Greece. We need the conditions to act fast to avoid a detoriation.
Nouriel Roubini and Arnab Das on the desirability of a plan B Obviously written before the agreement, Roubini and Das argue that the austerity approach to the sovereign is fraught with risk, likely to produce deflation, and may ultimately fail. Far better, they argue, to pursue a plan B with the following characteristics. “This would involve a pre-emptive debt restructuring for Greece; a strengthened fiscal adjustment plan in the eurozone periphery; far-reaching structural reforms; a larger IMF/European Union programme to help Greece and prevent contagion to others; further monetary easing by the European Central Bank; fiscal and domestic demand stimulus in Germany; and a co-ordinated effort to address the institutional weaknesses of Europe’s economic and monetary union.” Philip Stephens on Europe Philip Stephens pulls no punches in his latest FT column. He says the EU’s pitiful handling of the crisis suugests that the future of the European Union can no longer be easily ascertained. “Europe no longer carries the stamp of inevitability. Quite suddenly, it has become almost as easy to foresee a future in which the Union fractures. The risk is not so much of a great rupture – though if Greece defaults the immediate shocks will be profound – but of the atrophy that flows from the absence of political leadership.” http://www.eurointelligence.com/article.581+M5d4283ff922.0.html#
259 Opinion
April 30, 2010 OP-ED COLUMNIST The Euro Trap By PAUL KRUGMAN Not that long ago, European economists used to mock their American counterparts for having questioned the wisdom of Europe’s march to monetary union. “On the whole,” declared an article published just this past January, “the euro has, thus far, gone much better than many U.S. economists had predicted.” Oops. The article summarized the euro-skeptics’ views as having been: “It can’t happen, it’s a bad idea, it won’t last.” Well, it did happen, but right now it does seem to have been a bad idea for exactly the reasons the skeptics cited. And as for whether it will last — suddenly, that’s looking like an open question. To understand the euro-mess — and its lessons for the rest of us — you need to see past the headlines. Right now everyone is focused on public debt, which can make it seem as if this is a simple story of governments that couldn’t control their spending. But that’s only part of the story for Greece, much less for Portugal, and not at all the story for Spain. The fact is that three years ago none of the countries now in or near crisis seemed to be in deep fiscal trouble. Even Greece’s 2007 budget deficit was no higher, as a share of G.D.P., than the deficits the United States ran in the mid-1980s (morning in America!), while Spain actually ran a surplus. And all of the countries were attracting large inflows of foreign capital, largely because markets believed that membership in the euro zone made Greek, Portuguese and Spanish bonds safe investments. Then came the global financial crisis. Those inflows of capital dried up; revenues plunged and deficits soared; and membership in the euro, which had encouraged markets to love the crisis countries not wisely but too well, turned into a trap. What’s the nature of the trap? During the years of easy money, wages and prices in the crisis countries rose much faster than in the rest of Europe. Now that the money is no longer rolling in, those countries need to get costs back in line. But that’s a much harder thing to do now than it was when each European nation had its own currency. Back then, costs could be brought in line by adjusting exchange rates — e.g., Greece could cut its wages relative to German wages simply by reducing the value of the drachma in terms of Deutsche marks. Now that Greece and Germany share the same currency, however, the only way to reduce Greek relative costs is through some combination of German inflation and Greek deflation. And since Germany won’t accept inflation, deflation it is. The problem is that deflation — falling wages and prices — is always and everywhere a deeply painful process. It invariably involves a prolonged slump with high unemployment. And it also aggravates debt problems, both public and private, because incomes fall while the debt burden doesn’t. Hence the crisis. Greece’s fiscal woes would be serious but probably manageable if the Greek economy’s prospects for the next few years looked even moderately favorable. But
260 they don’t. Earlier this week, when it downgraded Greek debt, Standard & Poor’s suggested that the euro value of Greek G.D.P. may not return to its 2008 level until 2017, meaning that Greece has no hope of growing out of its troubles. All this is exactly what the euro-skeptics feared. Giving up the ability to adjust exchange rates, they warned, would invite future crises. And it has. So what will happen to the euro? Until recently, most analysts, myself included, considered a euro breakup basically impossible, since any government that even hinted that it was considering leaving the euro would be inviting a catastrophic run on its banks. But if the crisis countries are forced into default, they’ll probably face severe bank runs anyway, forcing them into emergency measures like temporary restrictions on bank withdrawals. This would open the door to euro exit. So is the euro itself in danger? In a word, yes. If European leaders don’t start acting much more forcefully, providing Greece with enough help to avoid the worst, a chain reaction that starts with a Greek default and ends up wreaking much wider havoc looks all too possible. Meanwhile, what are the lessons for the rest of us? The deficit hawks are already trying to appropriate the European crisis, presenting it as an object lesson in the evils of government red ink. What the crisis really demonstrates, however, is the dangers of putting yourself in a policy straitjacket. When they joined the euro, the governments of Greece, Portugal and Spain denied themselves the ability to do some bad things, like printing too much money; but they also denied themselves the ability to respond flexibly to events. And when crisis strikes, governments need to be able to act. That’s what the architects of the euro forgot — and the rest of us need to remember. http://www.nytimes.com/2010/04/30/opinion/30krugman.html?th&emc=th April 29, 2010, 9:32 am The Answer, My Friend … is blowing in the wind off Cape Cod, where an offshore wind farm has been approved. Good — both substantively and in terms of perception. The spectacle of affluent clean-energy advocates getting all worked up at the prospect of actually putting windmills where they might see them played right into right-wing caricatures. Let’s hope that’s now over. And yes, I’d be happy to have wind towers in Princeton — although I don’t think it’s windy enough, unless you can harness the hot air blowing out of certain lectures. April 29, 2010, 9:14 am http://krugman.blogs.nytimes.com/2010/04/29/the-answer-my-friend/ A Catastrophe Delayed I was rereading the spectacularly mistimed Jonung and Drea paper mocking American economists who were skeptical about the euro, and went back to what I wrote in 1998. Here’s how I described the ugly American critique: Here’s how the story has been told: a year or two or three after the introduction of the euro, a recession develops in part – but only part – of Europe. This creates a conflict of interest between countries with weak economies and populist governments – read Italy, or Spain, or anyway someone from Europe’s slovenly south – and those with strong economies and a steely-eyed
261 commitment to disciplined economic policy – read Germany. The weak economies want low interest rates, and wouldn’t mind a bit of inflation; but Germany is dead set on maintaining price stability at all cost. Nor can Europe deal with “asymmetric shocks” the way the United States does, by transferring workers from depressed areas to prosperous ones: Europeans are reluctant to move even within their countries, let alone across the many language barriers. The result is a ferocious political argument, and perhaps a financial crisis, as markets start to discount the bonds of weaker European governments. Make that a decade or so rather than a year or two, and not too far off. To be sure, in that article I went on to predict big near-term trouble that, in fact, didn’t turn out nearly as badly as predicted. But the point is that something like the current crisis has always been an obvious danger — one that the architects of the euro chose to brush off. April 28, 2010, 7:56 pm How Reversible Is The Euro? For a long time my view on the euro has been that it may well have been a mistake, but that bygones were bygones — it could not be undone. I was strongly influenced by the view expressed by Barry Eichengreen in a classic 2007 article (although I had heard that argument — maybe from Barry? — long before that piece was published): as Eichengreen argued, any move to leave the euro would require time and preparation, and during the transition period there would be devastating bank runs. So the idea of a euro breakup was a non-starter. But now I’m reconsidering, for a simple reason: the Eichengreen argument is a reason not to plan on leaving the euro — but what if the bank runs and financial crisis happen anyway? In that case the marginal cost of leaving falls dramatically, and in fact the decision may effectively be taken out of policymakers’ hands. Actually, Argentina’s departure from the convertibility law had some of that aspect. A deliberate decision to change the law would have triggered a banking crisis; but by 2001 a banking crisis was already in full swing, as were emergency restrictions on bank withdrawals. So the infeasible became feasible. Think of it this way: the Greek government cannot announce a policy of leaving the euro — and I’m sure it has no intention of doing that. But at this point it’s all too easy to imagine a default on debt, triggering a crisis of confidence, which forces the government to impose a banking holiday — and at that point the logic of hanging on to the common currency come hell or high water becomes a lot less compelling. And if Greece is in effect forced out of the euro, what happens to other shaky members? I think I’ll go hide under the table now.
262 Monday April 26, 2010 Cover Story April 29, 2010, Ed Whitacre's Battle to Save GM from Itself Brought in by Obama's car czar to help revive the automaker after bankruptcy, "Big Ed" fired CEO Fritz Henderson and took the wheel himself. GM's sales are bouncing back, but Whitacre's redesign is just beginning By David Welch The 15 General Motors dealers who flew to Detroit last September for a dinner with GM management were not an easily rattled bunch. They had endured the worst auto sales slide in 25 years, as well as the bankruptcy of the iconic carmaker on which they had built their businesses. Only three months had passed since GM accepted a $50 billion federal bailout, announcing the retirement of four of its eight brands and the shutting down of 1,900 dealers— a third of its domestic retail network. These dealers were the survivors, some of the more prosperous people in their towns, and they wanted a little reassurance. CEO Fritz Henderson gathered the group in a private conference room at the Westin Detroit Metro Airport and tried to demonstrate that he had a plan, according to an executive in the room who asked not to be named because he was not authorized to describe the dinner. Henderson announced that GM was going on the offensive with better models, new marketing, and a plan to remake its sclerotic corporate culture. Then he introduced the other GM boss in the room, the one the government had sent to keep an eye on the company. Edward E. Whitacre Jr., a laconic, squinty-eyed, six-foot-four-inch Texan, had been GM's nonexecutive chairman for barely two months. He was typically blunt. "We're going to get this turned around," Whitacre promised. And if current leadership can't fix the company, he said, "we'll find someone who can." To Duane Paddock, a dealer in Buffalo whose family has been selling Chevys for 75 years, Whitacre's words weren't menacing, just matter-of-fact. He liked hearing that Whitacre would find a way to win. "We knew the world was going to change," says Paddock, one of Chevy's largest retailers and often the top seller in New York State. "We knew the personnel would change. But you don't know who will be left." Not Henderson, as it turns out. Whitacre and the board fired him on Dec. 1, ending his tryout on day 143. The board, reconstituted in July with Whitacre and seven other new members joining five from the old guard, had been skeptical that Henderson, a GM lifer, was radical enough to change the company. Whitacre—the former telecom executive who turned a broken Baby Bell into the resurgent AT&T (T)—decided he was the man to fix GM. "Fritz was moving to change things," says an executive with direct knowledge of the decision who was not authorized to speak about it. "But a lot more needed to be done." Ed Whitacre, 68, wasn't looking to live in Detroit. He has made his home San Antonio for many years—his office there is crowded with statues of cowboys, cattle, and horses—and is involved in the vital affairs of his home state; he helped his alma mater, Texas Tech University, hire Bobby Knight as its basketball coach. His wife, Linda, stays mostly in Texas, but Whitacre took an apartment in downtown Detroit and got to work. Within three months of Henderson's ouster, he had eased out four other executives, reassigned 20 more, and brought in seven outsiders to fill top jobs—a shock to an insular company that had long been famous for paving over failure while compensating it handsomely. The tide also swept out solid performers allied with the old regime, such as Vice-Chairman Bob Lutz,
263 who had overseen the development of the Chevy Malibu, the Cadillac CTS, and eight other vehicles that were beginning to sell well. Lutz was marginalized by Whitacre and announced his retirement, effective May 1. "In the past," says Lutz, "GM was accused of not enough change. You have to find the balance between the pace of change and trauma to the organization." People close to Whitacre say he would rather cope with trauma than accept the status quo at a company that lost $84.3 million a day in 2008. Three days after taking over, he reorganized sales and marketing, and then, after just three months, let his deputy reorganize the departments again—a restructuring of the restructuring that caused middle managers to fear for their jobs and even question whether Whitacre had the right disposition for his. Some say that fear has made them more cautious when Whitacre wants them to take more risk. Whitacre isn't big on deliberation—or on talking to the press. He refused several requests to comment for this story, though GM did provide access to dozens of employees—from Whitacre's fellow executives to assembly workers. Although some refused to speak on the record, their comments create a detailed portrait of a corporate culture in flux. "Ed's view is that the business is more complicated than it needs to be," says Vice-Chairman Stephen Girsky, a former Wall Street auto analyst who has become Whitacre's right-hand man. Former CEO Rick Wagoner, who lost $88 billion between 2005 and 2009, used a dozen metrics to evaluate his executives. Whitacre, who holds just one meeting per week with his 13-member management team, has boiled it down to six: market share, revenue, operating profit, cash flow, quality, and customer satisfaction. He wants nimble managers who decide fast and correct mistakes faster. Vice-Chairman and CFO Christopher P. Liddell, who arrived from Microsoft (MSFT) in January, recently remarked that 12 of GM's 13-person executive committee are either auto industry rookies or new to their jobs. (The two men at the top, Whitacre and Liddell, are the car company rookies.) The two people tasked with remaking GM's image with consumers, North America President Mark L. Reuss and Marketing Vice- President Susan Docherty, are in their 40s and taking on massive responsibility for the first time in their careers. "He realizes that the biggest change GM needs is cultural," says Jim Kahan, who was senior vice-president for corporate strategy under Whitacre at AT&T. "It was always blaming the union, the government, or the economy." Says Reuss: "What we were doing didn't work. The time of providing for everybody, no matter what their performance, is gone." By all accounts, Whitacre is a tough guy, but his job is easier than Wagoner's was. GM's restructuring wiped out a mountain of debt—from $46 billion before the bankruptcy filing to $17 billion after, saving $1 billion a year in interest payments. GM's 2007 deal with the UAW set up a trust fund to pay for retiree health care, saving $3 billion a year. Add $6.7 billion in savings from chopping brands and cutting plants and staff during bankruptcy, and Whitacre's annual costs base is $10.7 billion lower than Wagoner's. Now Whitacre is rushing to take the company public and recoup most or all of the Treasury Dept.'s $40 billion equity stake in GM. On Apr. 21, Whitacre announced that GM had finished paying off $8.4 billion to the governments of the U.S., Canada, and Ontario five years ahead of schedule. (To do it, he used dollars from the Treasury Dept.'s purchase of GM stock.) The U.S. still owns $2 billion in preferred shares, which GM will buy back, and 61% of the company. Canada owns 11.7%, while the United Auto Workers' retiree health-care fund holds 17.5%, and bondholders 10%. The IPO, possible by yearend according to a GM executive familiar with the plan who asked not to be named, needs to raise roughly $80 billion for these parties to break even. JPMorgan Chase (JPM) analyst Eric Selle estimates GM's current valuation at $68.6 billion—more than the company has ever been worth. With 500 million shares outstanding, that's an equity price
264 of $137 per share. Selle says that's not far-fetched. Whitacre's early payment of the government loans, he says, "shows GM's confidence in a recovery." GM's $3.4 billion fourth-quarter loss masks real progress. It had one-time costs totaling $3.1 billion, meaning that—thanks to Henderson's restructuring and some hot models designed under Lutz—it was within $300 million of breaking even despite North American sales that fell 24% in the quarter. With sales up 18.4% so far this year, even though Hummer, Pontiac, Saab, and Saturn have been sold or closed, Whitacre and Liddell have both hinted about a return to profitability in 2010. Henderson showed a sure hand during bankruptcy proceedings but never had much more than a 50/50 chance of holding on to the CEO job. When New York financier Steven Rattner, the head of President Obama's Auto Task Force, fired Wagoner on Mar. 29 and named Henderson as CEO, the new chief scrambled to avoid being tagged as an interim boss, arguing that he would have no authority if labeled a temp. He got his way, but knew the GM board would select its own chief executive unless his moves blew them away. Whitacre was recruited for the chairman role two years after retiring from AT&T specifically because he had been the leader of a large, consumer- focused, highly regulated company. At first, Rattner says, he only knew Whitacre by reputation as a "strong, no-nonsense guy who is tough and fierce and wants to win. As I got to know him, he was all of those things and a nice guy as well. He is also a man of few words. He believes that we were born with one mouth and two eyes and should use them in that proportion." The new board's first meeting was in September 2009, the month Henderson decided to sell 55% of the Opel unit, which produces 1.1 million small and midsize cars a year in Europe, to Canadian partsmaker Magna International and Sberbank, Russia's largest bank, for $750 million. Before the sale closed, three directors with backgrounds in private equity—Girsky, Texas Pacific Group co-founder David Bonderman, and Carlyle Group Managing Director Daniel Akerson—decided it was a terrible deal for GM. They also argued, and Whitacre agreed, that keeping Opel was essential to GM's compact and midsize car engineering and sales volume. When the board reversed the Opel decision at its November meeting, it was the beginning of the end for Henderson. On Nov. 10, Whitacre told Bloomberg News that "the board is fully behind Fritz; he's working hard." Three weeks later, he told Henderson he was done. With Whitacre as interim chief, the board looked at other CEO candidates, hiring headhunter Spencer Stuart. There were few with industrial backgrounds who were willing to consider the job, so the board looked to Whitacre. Aside from him, three board members had backgrounds in telecom. Akerson was CEO of Nextel; Carol Stephenson was CEO of Lucent Technologies Canada; and Patricia Russo was CEO of Alcatel-Lucent (ALU). They had seen what he could do. The vote was unanimous. When Whitacre became chairman and CEO of Southwestern Bell in 1990 after 26 years at the company, it was as anonymous as a $20-billion-a-year telecom can be. An engineer by training, Whitacre had worked his way up by showing strong results in the company's Kansas operation, later serving in regulatory affairs and finance before getting the top job. Then he set out to make the company matter. Between 1995 and 2006 he spent $200 billion acquiring eight telecom rivals, bolting them together atop Southwestern (one of the seven Baby Bells created when the government broke up the old AT&T) into a new behemoth called SBC Communications. Building his telecom turned Whitacre into an accomplished dealmaker and frontman. In May 1999, he spent $61 billion to acquire Chicago-based Ameritech, one of the most troubled Baby Bells. The company had neglected its phone lines and network to save money, the
265 service had deteriorated, and shortly after the acquisition, the public utility commissions of Illinois, Ohio, Indiana, Michigan, and Wisconsin summoned Whitacre to explain why Ameritech was so unreliable. "It's my responsibility to fix it, and I'll fix it," he told the panel. Whitacre spent billions on upgrades over the next two years. Whitacre's signature move was his February 2004 purchase of AT&T Wireless. (He was running the deal for Cingular Wireless, which was jointly owned by SBC and Bell South.) He had been increasing his offer in 25 cents-per-share increments when AT&T Wireless went silent for five hours. Whitacre got a call at 11 p.m. that night from a deputy, Jim Kahan, who thought they'd lost the bidding war to Vodaphone (VOD). Whitacre told Kahan to increase the bid by a full dollar, to $15 a share—upping the ante by $2.7 billion to $41 billion—and to warn AT&T Wireless that it had an hour to accept. Whitacre called in his board, and by 1 a.m. they had the company. A year later he bought the rest of the old AT&T—landlines, long- distance service, and AT&T labs. Whitacre boosted ad spending as the reconstituted AT&T competed with Sprint (S) and Verizon (VZ) for wireless customers. "He believes in the power of advertising and rightfully so," says Lutz. "He drowned them out with his ads." AT&T's Dallas headquarters is now called Whitacre Tower. Not all of his big telecom moves worked as well. Just before Whitacre retired in 2007, he cut an exclusive deal with Apple (AAPL) to be the sole service provider for the popular iPhone. It was a marketing coup for AT&T, but the company's network lacked the bandwidth to support the iPhone's apps, especially during peak hours in big cities. Now the company is flooded with customer service complaints. "It's painful for Ed to watch this from a distance," says Selim Bingol, GM's new vice-president for communications, who worked with Whitacre at AT&T. Whitacre wants GM to take big risks, too. After the company launches its Chevrolet Volt electric car in November, it hopes to sell 45,000 globally in 2011, a huge number for a $40,000 compact car that needs to be plugged in at night. Demand for electric cars is unproven; less-expensive hybrids have grabbed only 2% of the total market in a decade. Whitacre told GM staff that he thinks the Volt will be a hit and wants them to boost production. If he's wrong, the Volt (which is already unlikely to make money because of its steep development costs and $8,000 battery) will generate even more red ink. "I'm sick of Howie Long," Whitacre drawled in a meeting with Lutz early this year. And with those words, Whitacre waded into one of GM's most intractable problems: marketing. Chevy dropped pitchman Long, a football Hall of Famer, in favor of its audacious "May The Best Car Win" campaign comparing its models to rivals. It's the kind of advertising Whitacre likes. At Cadillac, Don Butler, the new vice-president for marketing, cancelled television spots featuring little flying Cadillacs blasting out of a birdhouse that looks like the brand's crest. Butler is now making ads that show more cars and play up car-magazine accolades. Marketing has been a mess for decades at GM—and Whitacre's accordion-like staffing moves have only added to the churn. Cadillac has had three marketing managers in a year. Buick has had four since last June. Chevy, which accounts for almost 70% of GM's U.S. sales, has had three in a year. In Whitacre's first months on the job he merged marketing and sales—easing out the 78-year- old Lutz, putting Susan Docherty, 47, in charge of both, and handing the North American organization to Reuss. It took Reuss three months to conclude Whitacre's new structure was a flop. Docherty, a stylish hard-charger who raced up GM's ranks while working for Hummer and GMC trucks, often told her staff that the new GM would demand long hours. If anyone didn't like it, they should go, she told Businessweek last year. Yet the job proved too much even for her. After several meetings with Whitacre, Reuss split sales and marketing again on
266 Mar. 2. Docherty went from head of sales to vice-president for marketing. Reuss also shook up staff at the four brands. "Ed didn't make these changes. I did," he says. "People in the company said outsiders would say we don't know what we're doing. Ed backed me." Whitacre realized that all of the change had rattled the workforce, so on Mar. 31 he sent a companywide e-mail, obtained by Bloomberg Businessweek. "A smart company changes and adapts to the needs of the business. So, while there will always be individual moves within GM, I want to reassure you that the major leadership changes are behind us." It will take more than e-mails to prove GM is stable. Few believed Whitacre's letter, says a senior GM product developer who requested anonymity because he doesn't want to anger the boss. Everyone is on pins and needles, he says. From here, Whitacre will likely stick with his team. He doesn't have much choice; GM tried to hire away two high-profile marketers from outside, according to two executives with knowledge of the job search. Between the challenge of shining up battered brands and the pay limits imposed by the government (CFO Liddell makes $750,000 a year, half what his predecessors made) Whitacre couldn't find any takers. So the job is Docherty's. It took her two tries to get the Buick campaign right. Her first attempt, "Take a Look at Me Now," featured a foppish movie director shooting the LaCrosse while a makeup crew fussed over the car. Lutz cancelled the ads, complaining that they told buyers nothing about the cars. "When you're asking for $30,000," says Lutz, "you'd better say something about the product." A new set of ads, brainstormed by Lutz and Docherty and rolled out last fall, calls Buick "the New Class of World Class" and focuses on the latest models, the LaCrosse sedan and Enclave SUV. Scattered marketing aside, the LaCrosse has been a hit, and Buick, with only three models, has seen sales soar 59% this year, compared with a 17% rise for the entire U.S. car market. Chevy sales are up 39%, Cadillac sales are up 25%, and GMC sales have risen 32%, all beating the overall market. With Saturn, Hummer, Pontiac, and Saab gone, those four brands are all GM has in the U.S. (Overseas, it owns Opel/Vauxhall, Holden, and Daewoo.) Whitacre sees Cadillac's CTS as a notable underperformer. On Mar. 3, the day after Reuss shook up sales and marketing, Whitacre phoned Ken Batchelor, a San Antonio Cadillac dealer he has known since they were in the Army Reserve together more than 40 years ago. Whitacre told his quail-hunting buddy that he was not pleased with Cadillac's results, Batchelor says. "Ed is of the belief that the CTS needs to be marketed better. He thinks we should be selling twice as many." That's a tall order for GM's midsize, $36,000-and-up sedan. If Cadillac doubled CTS sales, it would rival competing models from BMW and Mercedes, something no other luxury brand does. The German carmakers lease to about half of their customers; they own their finance companies and can craft attractive lease deals. GM no longer controls GMAC and thus cannot order it or other banks to sacrifice financing profits in order to help Cadillac move cars. GM has a herd of new cars coming. This year, showrooms will see Buick's Regal sedan and the Chevy Cruze compact, a replacement for the Cobalt, which has been outsold by the Ford Focus. "GM didn't reach far enough with the Cruze," says John Wolkonowicz of IHS Global Insight. Next year brings Buick's Verano compact and Chevy's Aveo subcompact. And 2012 sees a new Malibu and, later on, Cadillac's flagship XTS sedan. The new Malibu's styling, according to Wolkonowicz, isn't as sophisticated as the current model's. Whitacre wants to roll out the cars faster, but some product developers say he's naive about how long it takes to bring a product to market. After nine months inside GM, he will still
267 stroll up to a clay model and ask why it can't be in showrooms in a year, griped one designer, who asked not to be named. It typically takes three. Whitacre can't change that—and he knows better than to micromanage the car guys. He doesn't attend Vice-Chairman Tom Stephens' Thursday morning product development meetings; he lets Stephens and chief designer Ed Welburn come up with models, then approves funding. In his race to get GM ready for an IPO, Whitacre has delegated a lot to Reuss. His mission is to build sales without pumping up profit-eating incentives. For years, says Paddock, the Buffalo Chevy dealer, GM built as many cars as it hoped to sell and strong-armed the dealers into taking the inventory. If that didn't work, GM would lay on heavy rebates and give away profit to get the sales volume. At the same time, dealers complained they have to subscribe to an outside service to track the incentives GM is offering on various models. GM gives the dealers that information, but in reports so complex that many dealers have trouble deciphering them. On Whitacre's orders, Reuss is trying to demystify the process. In March embattled Toyota (TM) spent a company record amount on incentives to lure back wary consumers, offering 0% financing and other discounts. Reuss refused to get pulled in, dropping GM's average incentive from last year by $1,200 a car, to $3,500. GM's market share tumbled to 17.6% in March from 19.4% during January and February. But Reuss kept prices up and beat his sales goals. As March was coming to a close, Whitacre looked at the numbers and said: "This looks like we're headed toward growth in a positive way," Reuss recalls. "That's good." Whitacre had his prairie charm working in March, when he paid his first visit to a GM assembly plant. At the Malibu factory in Fairfax, Kan., he walked the assembly line in jeans and a plain black sweatshirt, stopping to shake hands with workers and ask them what they did. He even tried to hang a body panel on a Malibu. "They nearly threw me out of the building," he joked later to workers and reporters. One worker said that in 25 years on the line, he had never seen a GM CEO. Whitacre then held a series of "diagonal slice meetings" with employees from all levels of the factory. Some liked that he didn't come at them with edicts about boosting production. Instead, says Dave Robertson, a 29-year line worker who attended one of the meetings, he just said GM needed to "sell more cars." He told the workers they could help by building quality vehicles, and that if they needed anything, they should say so. "We're all in this together," he said, promising to come back in a month to talk about "the future of the plant." "He seemed like a country guy," Robertson says. The workers liked him even better when he returned to Fairfax as promised on Apr. 21 to announce that GM had paid off its government loans and would be investing $136 million in the plant, making it the primary factory for the redesigned Malibu. That bit of news got Whitacre an ovation. He is pouring $3 billion into the plants, enough to keep the United Auto Workers happy for now. If he can just figure out how to sell more cars—returning GM to long-term profitability, growing its market share for the first time since 2002—the workers will be ready to carve his name on the door of GM headquarters. Then Whitacre could look back at his career and say he had gone two-for-two. Until then, he won't be saying much. Welch is BusinessWeek's Detroit bureau chief. http://www.businessweek.com/print/magazine/content/10_19/b4177048204431.htm
268
04/28/2010 11:41 AM The Great E-llusion Germany to Promote Electric Cars with Massive State Aid
By Dietmar Hawranek and Alexander Neubacher The German government wants to promote the development of electric vehicles on a grand scale. But many industry observers point out that the perceived benefits of e-cars are massively overrated. In some cases, their carbon footprint is even worse than that of conventional autos. When BMW CEO Norbert Reithofer travels to meet with German Chancellor Angela Merkel next week, he won't be sitting in his usual spot, on the back seat of a chauffeured car. This time Reithofer will be driving an electric Mini Cooper, in which a battery weighing up to 300 kilograms (660 lbs.) will occupy the entire back seat area. Nevertheless, Reithofer's ride will still be more comfortable than that of Daimler CEO Dieter Zetsche. He'll be sitting at the wheel of a tiny Smart which has been converted into an electric vehicle. But the two CEOs are only too pleased to put up with such inconveniences, as they introduce their companies' latest showcase products: cars with power sockets instead of gasoline tanks. The chancellor has summoned more than two dozen senior executives, including the managers of energy utilities and technology companies, to a meeting in Berlin next Monday, where they will present the latest advances in the electrification of the automobile. The event is titled: "What needs to be done to finally achieve a breakthrough for the electric car?" There is great concern that Germany's most important industrial sector could be falling behind internationally when it comes to this technology. Economics Minister Rainer Brüderle calls the electric car a "key technology for Germany as an industrial location," while Transport Minister Peter Ramsauer has already defined the subject as "the most important project of this legislative period." Chancellor Merkel, too, is calling it a "national task."
269 Lagging Behind German automakers Daimler, BMW and Volkswagen have been tinkering with battery-driven vehicles for years, but others have already taken the lead worldwide. The most powerful batteries are not made in Germany, but in China and Japan, and Asian automakers have already begun series production of electric cars. Their German competitors, on the other hand, do not expect to be ready for another two years. And while the federal government recently approved billions for its so-called scrapping premium, a cash-for-clunkers program intended to spur sales of new cars, Washington and Beijing have launched programs worth billions to promote electric vehicles. But now, at least according to Merkel's plan, Germany is about to catch up with a vengeance. And the auto company CEOs Norbert Reithofer (BMW), Dieter Zetsche (Daimler) and Martin Winterkorn (VW) already know how. They want the government to help them out by introducing uniform standards for battery charging stations, as well as by providing billions in subsidies, first for research and development and later for the buyers of electric cars. But by making these demands, the auto bosses are raising two important questions: Have they missed the boat on an important development yet again, as they did once before with hybrid engines? And why should the state help pay for their race to catch up with their foreign competitors? Too Good to Be True The development would be worrisome if the electric car were in fact capable of doing what politicians expect of it. The government's documents for the auto summit mention the many potential benefits of electric cars: how they will put an end to the sales crisis in the auto industry in one fell swoop, rid the environment of harmful emissions, guarantee mobility in cities and, last but not least, solve the storage problems associated with the production of alternative energy. The seemingly wondrous properties of the electric car are being touted in Germany and elsewhere. In the United States, it is officially described as a "zero emission vehicle" -- words that reflect a dream too good to be true. Although the electric car has no emissions, the electricity to charge the batteries has to be generated somehow: through solar, wind or hydroelectric power, through nuclear power or in coal power plants. An electric car can be more or less environmentally friendly, depending on what makes up a country's energy mix. "We have a perception problem," says Bosch CEO Franz Fehrenbach. According to Fehrenbach, if the industry says that a mid-range car will consume only 3 liters of diesel per 100 kilometers (77 mpg) in a few years' time, this generates little enthusiasm. For an electric car, however, "you get a massive round of applause," even though the carbon footprint of the 77-mpg car with an internal combustion engine is "smaller than that of an electric car." The German Automobile Club (ADAC) has calculated that a Smart with a diesel engine emits 86 grams of carbon dioxide per kilometer driven. An electric Smart with its battery charged with electricity from coal power plants is responsible for 107 grams of CO2 emissions. In other words, its carbon footprint would be bigger, at least in China, where more than 80 percent of electricity is generated in coal power plants. But if the batteries were charged with electricity from sources based on the current German energy mix, the emissions would drop to only 71 grams. No Other Choice for Carmakers
270 Even in this case, however, the benefits of the electric Smart over the diesel model are relatively modest. On the other hand, the costs of achieving those benefits are enormous. A vehicle in the lower mid-range class with an electric engine costs between €10,000 and 15,000 ($13,300-19,950) more than a comparable car with a gasoline engine. Without government subsidies, electric cars are virtually unmarketable. France offers customers an incentive of €5,000, China offers €6,500 and the United States offers €5,500 (see graphic). Nevertheless, the major carmakers have no other choice. They have to put electric cars on the market. On the one hand, oil supplies are limited, which is why alternatives to the internal combustion engine must be developed. On the other hand, many carmakers will be hard- pressed to achieve the emissions targets planned in the EU for 2020 without electric cars -- "unless we build nothing but small cars with three-cylinder engines," says BMW CEO Reithofer. But such small cars are "not an option" for his company. The German auto companies are latecomers with the electric car. But that doesn't translate into the demise of VW, Daimler and BMW. The e-car will remain a niche model for the foreseeable future, because of its high price and limited range. Disappointing Results Mitsubishi says that its i-MiEV, which is now being sold in Japan for the equivalent of €34,000, can travel 144 kilometers (89 miles) on a single battery charge. An electric Smart supposedly has a range of 135 kilometers. But in a test conducted by the German motoring magazine Auto Motor und Sport, the electric Smart only made it 106 kilometers on a single charge, while the Mitsubishi's battery was empty after 77 kilometers, even though the heating system had already switched itself off automatically 10 kilometers earlier, to save electricity. These ranges are sufficient for most people's daily commute to and from work. But they still need a second car with an internal combustion engine or a hybrid engine for longer distances. This will limit the uptake of electric cars. According to a study by Deutsche Bank, about 5 million electric cars could be registered in the European Union in 2020, which would still only amount to 2 percent of all cars. "But even this proportion can only be attained," the study states, "if the costs of electric cars come down dramatically in the next few years." The Future Is Mixed The great e-llusion creates the impression that the future belongs to this engine technology and that this future is already underway. It is reminiscent of the euphoria surrounding biofuels, which were once touted as a clean alternative to oil. But those hopes were quickly dashed when tortilla prices went up in Mexico because farmland was no longer being used to grow grain and corn, but to produce energy plants instead. It has long been clear in the industry that there will not be a single type of engine to ensure individual mobility in a cost-efficient and environmentally friendly way. Instead, cars will still be powered by classic internal combustion engines, as well as by hybrid engines, natural gas, biofuels and one day perhaps even with hydrogen. And, of course, with electricity. "We want the battery technology, and we're working on it at full speed," says VW CEO Martin Winterkorn, "but it's important to tell people the plain truth." The costs are still too high, the ranges too short and the charging times for batteries too long. Safety is also a concern, at least with the controversial lithium-ion batteries. Laptop and mobile phone makers
271 have already had to recall some of their products because of a risk that the batteries could catch fire and explode. Purchasing Offensive There is still a lot of research to be done. However, the government, in its draft of the closing statement for the summit on May 3, has already committed to paper its ideas on how it intends to promote the electric car. For instance, it plans to support a rule that would allow cars with CO2 emissions of less than 50 grams per kilometer to be credited more than once when the consumption figures for a manufacturer's total fleet is calculated. That way one electric car could be used to offset several gas-guzzlers. In addition, the government wants to start a "purchasing offensive" for cars with very low CO2 emissions for its own vehicle fleets. Whether it will provide additional funds to promote research is still unclear. Some of the top executives invited to Merkel's event, on the other hand, are paying more attention to a more immediate goal, namely securing prestigious positions in the government's circle of advisers. For example, they have been jostling for weeks over the role of spokesperson on the issue of infrastructure. A top manager at E.on was initially slated for the job. But then Siemens claimed the leading position, threatening that otherwise they would not participate. In the end, the Chancellery decided the matter by creating two positions. Both managers, according to the plan, will have the chance to be photographed next to the chancellor. Translated from the German by Christopher Sultan
URL: • http://www.spiegel.de/international/business/0,1518,691457,00.html RELATED SPIEGEL ONLINE LINKS: • Photo Gallery: Electric Dreams http://www.spiegel.de/fotostrecke/fotostrecke-54298.html • Interview with BMW Head Norbert Reithofer: 'We Have Made It Our Mission to Be Sustainable' (02/24/2010) http://www.spiegel.de/international/business/0,1518,679713,00.html • Germany's Pricy Gambit: Will 'Cleantech' Be Next Economic Miracle? (12/10/2009) http://www.spiegel.de/international/business/0,1518,666156,00.html • Not Much Will to Power: Will the Electric Car Ever Make It to the Mass Market? (09/16/2009) http://www.spiegel.de/international/business/0,1518,649260,00.html
272
29.04.2010 Merkel’s complacency turns to panic, as the eurozone catches fire
Angela Merkel’s extraordinary complacency abruptly ended yesterday, when the chiefs of the IMF and the ECB persuaded her that further procrastination would add dramatically to the cost of the crisis, and that the future of the eurozone was now at stake. But it might have been too late as the crisis dramatically spread to Spain, and engulfed large part of the sourthern European banking sector. The seriousness of the situation was underlined by a credit downgrade of Spain, from AA+ to AA with negative outlook, by Standard & Poor’s. The rating agency concluded that Spain’s would be facing years of private sector debt deleveraging and low growth, which would lead to a significant deterioration in the quality of public finances. It also became clear that Spanish banks were no long able to borrow on capital market, which saw their share prices drop sharply. Earlier in the day, S&P also shocked the financial markets yesterday, when they estimated that bondholders will ultimately only recover between 30-50% of their investments in Greece – which is tantamount to a very serious default. Most estimates for haircuts (including our own) were significantly lower. Having risen briefly to the level of 26%, Greek two-year bonds recovered on the news that the IMF is preparing a full three year package. In a conversion with German MPs, that was already being leaked while it was taking place in the Bundestag, Dominique Strauss Kahn outlined some of the details: · The package would be in the order of €100-120bn for three years, during which Greece would be taken off the market. (Germany ‘s economics minister said that Germany contribution would be €8.4bn each year for three year running, with a risk on the upside. The Germans had apparently thought that the €45bn would be the total size of the package)
273 · The package will contain no element of restructuring and rescheduling · The loans will be junior to those of the existing bondholders. These are three extremely tough pills to swallow for MPs who were preparing to vote on a much smaller package of super-senior loans with a haircut from the bondholders. The opposition parties announced yesterday that they would reject the package on the grounds that Merkel had misled the German people throughout this entire process. And there is also opposition within the coalition about the size of the plan. The news, and the figures, have been getting more dramatic overnight. European policy makers may need to stump up as much as €600bn if they are to stamp out the region’s spreading fiscal crisis, Bloomberg quotes economists at JPMorgan Chase and Royal Bank of Scotland. Economists urge policy makers to come up with unprecedented measures. Other steps could see governments guaranteeing bonds and the ECB abandoning collateral rules or reviving unlimited lending to banks. A frong-page editorial in FT Deutschland launched a severe attack on Merkel, criticising a total loss of reality by ignoring the problem, and saying that her procrastination is adding to the cost of the crisis. Martin Schulz head of the Socialists faction in the European Parliament said that the aid should have been decided a long time ago. He accused Merkel of Greek bashing, as she tried to benefit politically from the rising anti-Greek sentiment in Germany. The Italian economist Tito Boeri said that each days of this crisis would cost the German taxpayer dearly. Yves Smith, of Naked Capitalism, made the important point that if government are being seen insolvent, their bank guarantees are no longer credible, as a result of which customers are withdrawing funds. Greece is now effectively subject to a quite bank run. The most concise observation of this crisis, in our view, came in the FT’s Lex column. “The interminable agonising over a rescue package for Greece has allowed a severe but manageable peripheral crisis to morph into a wider crisis of confidence for the bloc itself. The lack of solidarity among eurozone leaders has reached the point where only the International Monetary Fund now has the credibility to lead the bail-out.” Meanwhile in Athens Kathimerini quotes Juergen Stark as ruling out the possibility that the ECB might end up buying Greek bonds. In a separate article, Kathimerini reports that IMF/EU/ECB sought to cut the 13th and 14th salary but labour minister Andreas Loverdos said that this is not acceptable to the Greek government. Pushing retirement age and job cuts in the public sector are other sensitive issues (see Kathimerini). The government still expects to end negotiations on Sunday and to get aid by May 19. Strikes are likely to continue until the summer, but the hard part only starts later. Portuguese employers expressed surprise over the downgrade of Portugal, though admit that the economic situation is not good for Portgual, Jornal de Negocios reports. They call on restraints in wage negotiations, cuts in public investment and if necessary tax increases. Many consider the downgrade as unfair, exaggerating the verdict over Portugal. Yesterday, Prime minister Socrates met with opposition leaders to agree on deficit reduction measures including changes in unemployment and social benefits.
274 EU parliament postpones capital adequacy rules The banking lobby has prevailed in this debate, according to the FT Deutschland, as the European Parliament is about to withdraw attempts to postpone legislation to force banks to adopt striker capital adequacy rules, which under the original plan would have kicked in 2011, which will now be postponed. One of the arguments is that the US is also procrastinating on the same issue, with an early European implementation would have led to an immediate tightening of credit supplies from European banks. http://www.eurointelligence.com/article.581+M53ce1416b72.0.html#
naked capitalism Wednesday, April 28, 2010 Bank Runs in Greece – Harbinger of Another Axis of Euromarket Risk? Sometimes I can miss the blindingly obvious. Like other observers of the widening sovereign debt crisis in Europe, we’ve commented on the fact that the big reason for Germany to work towards a rescue (more likely, the end game is a restructuring) of Greece and other Club Med members at risk is that its own banks, like those of France, are exposed if Greece defaults. Given that Eurobanks were thinly capitalized in the runup to the crisis and have recognized even fewer losses than their US counterparts, they are still fragile and vulnerable to systemic shocks. So the axis of contagion seemed to be through bank holdings of Greece sovereign debt (as well as having written CDS on Greek debt). But we neglected to consider a more direct source of trouble, namely, that of bank runs in the countries at risk. John Mauldin’s latest newsletter tells us that is already underway in Greece: Money is flying from Greek banks, which makes sense, as how can a bankrupt Greek government guarantee Greek bank deposits? I know that Greek bankers may have a different view, but Greek depositors are voting with their feet. And …it is not just Greece. It is fast becoming Portugal. And Spain is not far behind in my opinion. Yves here. Despite all the noise about government debt defaults, the pattern in the Great Depression was selective default (war debt being the big favorite). However, this was also an era before bank deposit insurance was the norm for advanced economies. Moreover, Europeans may be even more quick trigger to pull funds out of banks, given that they have more direct experience of the fragility of governments (World War II memories, the implosion of Yugoslavia on its borders, the impact of general strikes). Recall that in the financial crisis, many US depositors were nervous about bank safety (witness how bank
275 analysis service Institutional Risk Analyst offered a retail bank soundness product to cater to inquiries). So we have a second potential axis of contagion, via impairment of banks in the Club Med countries themselves. That has the potential to affect: 1. Bondholders of banks in Club Med countries (witness the virtual shutdown of bond issuance in Europe) 2. Companies, whether domestic or foreign, who do business in Club Med countries (transactions are normally settled in local banks; finding banks both sides to a commercial deal will find acceptable may loom as a issue) 3. Most important, interbank markets So far, the reaction to the Greece/Club Med crisis seems to be a generalized widening of risk premia (ex the US, where investors seem to believe the eurozone can implode without having any adverse impact here). We may start to see more differentiation, in particular, further widening in exposures that are arguably on the front lines, as the crisis grinds on. More on this topic (What's this?) http://www.nakedcapitalism.com/2010/04/bank-runs-in-greece-%e2%80%93-harbinger-of- another-axis-of-eurobank-risk.html
276 2010 H KATHHMEPINH
"Dramatic revenue shortfall by cutting the 13th and 14th salary" Labour costs do not affect the deterioration of competitiveness, said the troika C. Panagopoulos Thursday, the 29th April 2010 Christina Kopsini While a government meeting "locked" the changes will be made to the law governing labor relations in the private sector while the House of Parliament continued discussion on provisions of a work plan adopted at an earlier time, representatives of the International Monetary Fund (IMF) raised to the President of GSEE whether in his opinion, the society will support or undermine the plan of financial support, "the highest financial aid has never given the Fund" as they mentioned. The meeting was held at a central Athens hotel in the contacts were representatives of the Troika with the presidents of associations of social partners. Showing forth the issues in labor costs in the private sector and the problems of competitiveness and a bit before continuing their contacts with the Secretary General of the Ministry of Labour P. Spyropoulos, five representatives of the IMF, the European Commission (EU ) and the European Central Bank (ECB) asked Mr. G. Panagopoulos is possible if some form of tripartite social agreement (Government, employers, employees). However, during the debate, experts have refrained from expressing judgments, noting however that the figures cited by the President of the Confederation. Mr. Panagopoulos has argued that labor costs did not affect the deterioration of the competitiveness of Greek economy, highlighting examples of how each power cut wages, 13th and 14th, not only helps the competitiveness but also leads to a dramatic shortfall of public revenue and deprivation 4 billion from the fund. Emphasis has, to preserve the role of the Agency for Mediation and Arbitration (OMED) with substantiated examples of how to help balance work conflicts since its founding. However, one day before the meeting, GSEE President called on employers' organizations to continue negotiations on the signing of the National Collective Labor Agreement. Yesterday the Minister of Labour and Social Security statements immediately after the meeting was for the insurance, the Bureau of the Federation expressed its opposition to a cut in the 13th and 14th salary. To a question on what happens next in the final decisions of the government, Mr. Loverdos appeared detached and impose on the main responsibility for the matter to the Treasury. Shortly after the podium of the House, referred again to the proposals of the IMF. These proposals relate to maintaining only 12 salaries in the private and public sectors, the structural problems of contracts, the statutory minimum wage of 740 euros (about which he said Labour Minister, the experts were not aware that incorporates insurance contributions) and the rate of redundancies, which is described below the European average.
277 http://translate.google.com/translate?js=y&prev=_t&hl=de&ie=UTF- 8&layout=1&eotf=1&u=www.kathimerini.gr&sl=el&tl=en Radical change brings the "Kallikrates" One of the surprises in the plan is to transform the office of the Mayor and the Prefect of four to five years Eleni's Karanatsi With some surprises occurred yesterday "Kallikrates, the new architecture of the State in which the government hopes to save hundreds of millions per year. The new aftodioikitikos Map of Greece consists of 333-343 municipalities, and for 14 municipalities are two alternatives, which will be put up for consultation. Also, up 13 elected regional governments and seven state regions. One of the major changes - surprises that brings the "Kallikrates" is the conversion of office of the Mayor and the Prefect of four to five years. The aim of this institutional intervention is to coincide the timing of self-administration of elections under the election for the election to reduce costs. The change will force the elections to the European Parliament (June 2014). The criteria for combinations of municipalities were first populated, but also socially, economically, geographically, development, planning. The minimum population threshold of new municipalities is 10,000 inhabitants, with the exception of metropolitan areas (Athens and Thessaloniki), where 25,000 and the mountain towns (2,000 people). Each island will be a municipality, except in Crete (24 municipalities) and Evia (9). The 14 cases for which municipalities are alternative scenarios are combinations in Aitoloakarnania, Argolida, Achaia, Grevena, Evia, Kavala, Heraklion, Pella, Pieria, Serres Trikala Fthiotida, Greece. It is worth noting that the old "Kapodistrian municipalities' administrative boundaries which do not decompose to form the local communities (replacing the term Dim. Apartment) Kallikrates new municipalities will have the opportunity to transfer, if desired, to another municipality . "This is not combinations of other municipalities are not present in local communities," noted during the press briefing by the Home Secretary, Mr. Ragousis. As regards the electoral system to elect municipal councils, waived the age limit from 21 to 18 years for the proposed municipal or regional director. Also introduces the possibility stafrodotisis, other than advisers in the constituency of the voter, and a candidate coming from the other constituencies of the municipality. In the elections for regional governments, local antiperifereiarches elected directly, while the thematic will be selected by the regional council. Each new city will have a Board of immigrants, while in LA over 10,000 people for the operation of the Consultation Committee. Strongly criticized the proposed "administrative reorganization" filed yesterday afternoon, the field officer of the Interior and Public Administration of LD Ch. Zois, who emphasized inter alia that "the land formed in the closed ministerial and party offices and the consultation was limited to the boundaries of the PASOK party mechanism. He added that there are still unanswered questions about the responsibilities, cost, their time of exercise, while the resources needed to support the project remains an issue.
278 120 billion for three hard years Cover the financing needs of the country until 2012
The Executive Director of the IMF Dominique Strauss-Kahn monitor the handshake of the ECB President Jean-Claude Trichet in the seated German Finance Minister Wolfgang Soimple after the press conference given jointly to Berlin for aid to Greece. The biggest rescue package ever given to a country that Greece will receive from the International Monetary Fund and the Eurozone, and the total amount would range between 120 and 135 billion euros within three years. This amount covers the borrowing needs of the country until 2012. Thus, removing uncertainty about whether Greece would be able to service its debt and the concerns of investors about a possible renegotiation. During those three years, Greece will not be able to borrow from the markets. The loans are probably more than three years, as suggested by the Director General of the International Monetary Fund Dominique Strauss-Kahn, while doses will be disbursed gradually based on borrowing and provided that out the hard measures agreed. The agreement should be finalized immediately, perhaps before the weekend, to be approved subsequently by the national Parliament, the International Monetary Fund and the leaders of the countries - members of the Eurozone on May 10. The new measures the IMF package - EU - Cut the 13th and 14th salary to the Treasury. - Increase percentage of dismissals. - Reduction of damages to cases of termination contract employees. - Multi recruitment freeze to the Treasury. - Non-renewal of contracts. - Privatization or closure of loss-making state institutions. - Increasing indirect taxes by adjusting the lower VAT rates. In dramatic decisions driven by the government to ensure the survival of the Greek economy, accepting the conditions set by the IMF, the European Central Bank and the EU and lead the country in trusteeship system. Yesterday morning at Maximos Mansion sounded red alert and after an emergency meeting with top ministers and Prime Minister George Papandreou has instructed the Finance Minister Giorgos Papakonstantinou to arrive as quickly as possible in agreement with the IMF for the painful measures to be taken. The Prime Minister will report on current social actors and the time to announce the final decision of the Government countdown from tonight until later Monday.
279 Red Alert at Maxim Brought forward the communication on measures attached to the agreement with EU and IMF His Constantine Zoula "We no longer take decisions and I wish others to take for us to realize today that goes far beyond Greece. The desperate words top government agent shows the most eloquent manner unprecedented test passed yesterday by the government. Test will probably accelerate the announcement of the new package of tough measures the IMF and the EU which can not be excluded public even today. This is because according to information brought more heavy pressure from Brussels to rest here and now the Finance Ministry negotiated with foreign technocrats in an apparent effort of our partners do not share the Greek "disease" in other countries. It was 10 am when the rumors about upcoming deadlock in the Greek economy has sounded the alarm at Maxim had been informed of the surge sprent more than 1100 bps. The prime minister called an emergency meeting in parliament which was to defer for two hours a cabinet that was scheduled for a noon. The ambivalent attitude of Germany, but the way the government has to intervene if necessary to protect the banking system were two of the key issues raised directly to the Prime Minister Mr. Theodore Pangalos, C. Pampouki, G. Papakonstantinou and F. Sahinidis who initially participated in the meeting. The heavy atmosphere seems to unload the two successive telephone reassurance that Mr Papandreou by Mr. Jose Thapateto Herman and Rob van that the support mechanism are always ready. However, indicative of the concern still dominates the government is that Prime Minister suddenly asked yesterday by Mr. Fair. Venizelos, G. Ragousis, Mich.. Chrisochoïdis Dimitris Reppas and (in the meantime had come to the meeting) to stand by it jointly with Mr. C. and C. Papaconstantinou Pampouki the coming days. In essence, an informal smaller groups synestime ministerial crisis management committee, which, as suggested will meet in the coming days, if necessary, and occasionally at any time. The involvement of Mr. T. Pangalos attributed solely to the fact that the vice president departed yesterday for an official trip to China, but the coordinating role assigned by the Prime Minister Ch Pampouki interpreted as indirect "guardianship" of the financial staff , and all participants Ministers was responsible for managing and communicating how tough measures to citizens. The duration of the sacrifices The meeting was of course the finance minister informed his colleagues and the negotiations with the IMF stating that the information required by the IMF's new sacrifices not only for 2011 and 2012, but for this year. Mr. T. Pangalos stated that the private sector should be avoided at all costs, the elimination of the 14th salary, but by accepting the waiver of reducing redundancy, and the flexible employment relationships noted in the recent defeat n / a Mr. And . Loverdos. Finally, stressed the need eventually if not announced a package of measures today, the Prime Minister has postponed his tour in Nafplion, to try to delay disclosure on Sunday to have gone to Labour Day.
280 Crisis corresponding Greek expect French For 75% of French people that their country may witness a crisis similar to that of Greece. Three quarters of French people (75%) believe that France might witness a financial crisis such as Greece, according to BVA poll for Canal +, which was published on Thursday. Instead of 24%, the state of the economy to protect France from the serious risk of bankruptcy. 60% of French people agree with the decision by European countries to help Greece and 76% are opposed to the concept of leaving the country from the euro area. However 62% of respondents considered legitimate requirements of Germany from Greece to revive the economy. The poll was conducted over the Internet 27 and April 28 in a sample of 1183 people over 15 years. www.kathimerini.gr with information from ANA-MPA
Date: 10.04.1929 Print | e-mail
The crisis in Greek telephone Obama-Merkel The importance of "timely assistance." The U.S. president, Barack Obama and German Chancellor Angela Merkel discussed the crisis in Greek telephone conversation they had and stressed the importance of 'Early Support' for assistance to Greece, as announced by the White House. "They discussed the importance of decisive action on the part of Greece and timely support from the IMF and Europe to tackle the economic problems of Greece," the statement said the White House. Flash Eurogroup Tuesday Flash Eurogroup, probably by teleconference will be held Tuesday, May 4, according to EU information and Sunday is expected to conclude negotiations by the ECB, the European Commission and the IMF with Greece. On May 10, is determined by the extraordinary summit of eurozone countries. Acceleration of activation mechanism asks Merkel "Accelerate" to activate the mechanism of economic aid to Greece, called the German Chancellor Angela Merkel told a news conference in Berlin. "Obviously, the negotiations between the Greek government, the Brussels Commission and the IMF should be accelerated," reiterated Chancellor Merkel, who also said that there may have been wrong decision on the entry of Greece into the euro zone. Papandreou: No diverting the battle
281 "We take full moral responsibility to go to deep cuts, the bet is national that Greece can and will change. We show that we Greeks are not diverting the battle, "said the cabinet by Prime Minister George Papandreou. Trichet: To decide quickly Germany The ECB President Jean Claude Trichet said that "it is absolutely necessary to decide the German fast" for an aid to Greece and found that the weekend will be a healthy - he said - the result of negotiations. Estimates for the package O Economy Minister German Rainer Brentele said the package will include 135 billion in three-year horizon. The annual expense of Germany was 8.4 billion, however, not exclude the possibility that an increase in the amount. Earlier, a German MEP, leader of the parliamentary Greens Jurgen Tritin, citing statements by Dominique Strauss Kahn, had stated that the amount of aid will amount to 100-120 billion. www.kathimerini.gr with information from ANA-MPA SKAI 100.3
Date: 10.04.1929 Print | e-mail
Bundesbank: «incalculable" consequences of a possible bankruptcy of Greece
Possible bankruptcy of Greece was "incalculable" consequences both in financial markets and in other states, said today the president of the German Bundesbank and the central bank board member of the European Central Bank, Axel Weber, said in an interview to a German newspaper. "Under existing conditions, the impact on financial markets would be immeasurable," said Weber in the current edition of the newspaper Bild. "The financial assistance will be accompanied by harsh conditions is for all parties involved the best solution. Weber also said that Greece can "overcome the hurdle" if implemented reforms in the economy with prompt and reliable manner. He also said that the expulsion from Greece's euro zone would trigger an enormous economic and financial chain reaction and there is no legal basis for such a move. Mr. Weber was also against the possible involvement of banks in the support mechanism of Greece, probably relied on the German government. "Sure we could talk about a share of the financial sector to the cost of economic crisis in its entirety. But so thorough and not hasty, in a debate that will once more the taxation of banks, "said Mr Weber. www.kathimerini.gr with information from ANA-MPA
282
29.04.2010 The irresponsibility of a German chancellor By: Wolfgang Münchau
“They will not allow it to happen.” This is what a German colleague told me a little over a year ago back after I hyperventilated about a possible break-up of the euro. The euro, he said, is politically too important for the EU. There will be crises, but in the end they will do whatever it takes to save the euro area. I recall those words very well: Whatever it takes. That was then. On Thursday, the spread between Greek and German bond yields peak at 25%. Mathematically, it implies an approximate 50% probability of a 50% loss (or a 100% chance of a 25% loss). With money market interest rates well below 1%, and not likely to rise fast within the next two years, such a valuation can only mean that the capital markets are certain of default. Portuguese yields have not quite reached those dizzy heights, but they were also rising sharply. There are investors out there who are putting serious money on a default of the southern European hemisphere, and on a break-up of the euro. While the south of the euro area is now becoming subject to a generalised speculative attack, the Northern part procrastinates. Until Thursday, when the heads of the IMF and the ECB pointed out the seriousness of the situation, Angela Merkel has been invoking the principle of due process. Her plan had been the merely political promise of aid would calm the market, and thus obviate the need to deliver on the promise. The markets have called her bluff. Are her advisers stupid, a correspondent asked me? Perhaps, or perhaps not. The more important point is that this is about the supremacy of domestic politics. She had hoped to avoid a decision taken before an important state election on May 9. To her, and Germany’s political class, the state elections in North-Rhine Westphalia are infinitely more important than the future of the eurozone. The opinion polls seem to support this attitude. Greek aid is unbelievably unpopular, with 86 per cent opposed according to a poll published last Sunday. Come to think of it, there are not many issues in a democracy on which 86 per cent of the people agree on. Perhaps this is because Angela Merkel never went on television to explain why such aid may be necessary, and why its disbursement may be in Germany’s national interest. She is not leading, but following public opinion on this issue. In this leadership vacuum, a new and dangerous consensus has been building up among constitutional lawyers, macroeconomists, and senior members inside her own coalition – that the only way out of this
283 mess is for Greece to leave the euro. The Greeks will, of course, not comply, so the situation has turned into a standoff. In the meantime, the bond markets are melting down, and the crisis is spreading throughout southern Europe, having reached Italy now. So much for: “Whatever it takes.” While it is one thing to criticise a political process as being too slow or otherwise inadequate, Mrs Merkel’s response to this crisis has been irresponsible. While the Greek crisis was caused by irresponsible Greek policy, it was turned into a wider political and economic crisis by her procrastination. The promises of two consecutive European Councils have proved hollow. The financial markets now consider EU leaders, and Mrs Merkel in particular, as liars. After Wednesday’s scare, and the downgrade of Spain, Merkel went from complacency straight into panic. But even now it is not clear whether the Bundestag is going to vote in favour of the aid – which is going to be much, much large than previously reported, about $120bn for three year, without restructuring. There is still at least a week of uncertainty ahead. A week is a long time in politics, a famous English political adage goes, but it is an eternity during a financial market meltdown. The EU needs to take some urgent decisions to resolve this crisis. The universe of options consists of: default; unconditional bailout; conditional bailout; the latter two with or without debt restructuring/rescheduling; creation of a single European bond; creation of a minimally sufficient political and fiscal union, allowing the eurozone to break up. If the EU chooses the conditional bailout, it is essential to remove most of the uncertainty of the process. Neither the conditions, nor the bailout should ever be in doubt. Uncertainty and indecision are pushing us fast into the first option, the default option. I am sticking to my previous forecast that Greece will eventually default. The more worrying development is the resurgence of German nationalism and euroscepticism, a trend Merkel tried to exploit for her own political benefit. This has not yet fully caught on in other parts of the union. If and when it does, I wonder whether politicians and economists in those parts begin to question the wisdom of a monetary union with Germany under such circumstances. [email protected] http://www.eurointelligence.com/index.php?id=581&no_cache=1&tx_ttnews[tt_news]=2776 &tx_ttnews[backPid]=901&cHash=a211c5abe1#
284
04/29/2010 11:32 AM A Greek Test Euro Fears Force Merkel To Act By Philipp Wittrock and Severin Weiland Knowing a bailout for Athens would be unpopular, Chancellor Angela Merkel wanted to postpone taking action on the Greek crisis until a key state election on May 9. But financial markets don't care about domestic German politics. Her delay could end up costing the country billions. After weeks of hesitation over the German response to the Greek crisis, Chancellor Angela Merkel is suddenly calling for swift action. "It is clear that the negotiations must now be accelerated," she said Wednesday at an appearance together with Dominique Strauss-Kahn, the head of the International Monetary Fund (IMF), in Berlin. A serious-looking Merkel called for an agreement on assistance for Greece "within the next few days," adding: "We will not back out." Observers were surprised by Merkel's strong words. Until now, the chancellor has not exactly come across as a driving force when it comes to action on the Greek crisis. Sitting Out the Crisis On the contrary, she has long been reluctant to promise the Greeks billions of euros in European aid, something which has earned her the nickname "Madame Non" in the European Union. At home in Germany, however, she has been feted by the tabloid press as the "Iron Chancellor" because she had rebuffed the "bankrupt Greeks." Merkel thought she could sit out the crisis, postponing any unpopular promise to give aid to the Greeks at least until after key state elections in North Rhine-Westphalia on May 9. The vote is crucial to Merkel because it will determine whether her conservative Christian Democrats and their coalition partner, the business-friendly Free Democrats, are able to maintain their majority in the Bundesrat, Germany's upper legislative chamber which represents the interests of the states. But Merkel's calculation that the markets could be kept calm until then with vague promises did not work out. After all, the forces of globalization do not care about a German state election. Hectic Pace Greece is not only looking shaky; it is positively tumbling. A national bankruptcy is getting closer. And after Portugal's credit rating was downgraded on Tuesday, followed by a downgrade for Spain on Wednesday, the prospects for other euro-zone members are also looking bleak. Observers fear a wildfire could break out in the euro zone. The stability of the European single currency is at stake. Now things are moving at a hectic pace, and the chancellor is acting like there's no tomorrow. The government has drafted a concise law authorizing Berlin to provide cash injections for Athens. Merkel's cabinet could approve the draft as soon as next Monday, and Germany's two legislative chambers, the Bundestag and Bundesrat, could pass it before the North Rhine- Westphalia election.
285 On May 10, an EU summit could formally release the aid and the first billions could be flowing to Athens by May 19, the date on which Greece must float a new bond on the market. Merkel also discussed the Greek debt crisis in a telephone call on Wednesday evening with US President Barack Obama. According to the White House, the two leaders talked about "the importance of resolute actions by Greece and timely support from the IMF and Europe." 'A Problem for Germany' In Berlin on Wednesday, one crisis meeting followed another, as the chancellor, Finance Minister Wolfgang Schäuble and members of parliament met with the heads of the European Central Bank (ECB) and the IMF to get briefed on the seriousness of the situation -- a situation that is indeed very serious. "This is not a problem for Greece, it is a problem for Europe, and therefore also a problem for Germany," Schäuble said Wednesday after his meeting with ECB President Jean-Claude Trichet and IMF Managing Director Dominique Strauss-Kahn. Just a few weeks ago, Schäuble was still publicly stating that Germany should not "pay for Greece's problems." But on Wednesday Schäuble said that action has to be taken "extremely quickly." Strauss-Kahn, standing next to him, noted that the situation in the EU is getting "worse and worse" with "every day which is lost," something that could have "consequences far away." His comments could easily be interpreted as a criticism of the German government's policies in recent weeks. Others were more explicit in their criticism. "The indecisiveness and dithering of the European Union, instigated by the chancellor, have exacerbated the crisis and driven the consolidation requirements sky-high," complained Jürgen Trittin, who leads the Green Party in Germany's parliament. "Angela Merkel's policy of hesitation is in ruins," said Udo Bullmann, a member of the European Parliament for the center-left Social Democrats, referring to the election in North Rhine-Westphalia. Left Party co-leader Oskar Lafontaine accused the chancellor of having acted irresponsibly: "With her tactics ahead of the election in North Rhine-Westphalia, she has driven the Greeks' interest rates way up." In other EU member states, too, some are now angry that the timing and conditions for Greek aid have been dictated by Merkel. Andreas Schieder, a senior official in Austria's Finance Ministry, told the German business daily Handelsblatt that it was a pity that the "forthcoming state elections in Germany are apparently more important than European stability." Meanwhile, sources close to the French government said that "it is clear that Germany's attitude is based on domestic political considerations." Expensive Strategy On Wednesday, Merkel refused to tolerate criticism of her crisis management. But her previous reluctance to act has indeed proved to be an expensive strategy. If the German government had taken an immediate and clear stance in support of Greece and in favor of a speedy implementation of aid, things would not have come so far, said Martin Faust, a professor at the Frankfurt School of Finance and Management. Tito Boeri, an economist at Milan's prestigious Bocconi University, told the Handelsblatt newspaper: "The longer Merkel hesitates, the more expensive the assistance to Greece will be -- especially for the German taxpayer." So far it has been assumed that Germany would shoulder an €8.4 billion ($11.1 billion) credit guarantee for Athens this year. But that will not be the end of the story. Finance Minister Schäuble's draft law already provides for sums in the billions for the next two years -- without, however, specifying exact figures.
286 But on Wednesday, other people were happy to provide concrete numbers. According to Green Party floor leader Jürgen Trittin and senior SPD politician Thomas Oppermann, Strauss-Kahn and Trichet said behind closed doors that Greece could need as much as €120 billion over three years. The EU would provide two-thirds of that sum, with Germany in turn paying 20 percent -- in other words, around €16 billion. Totals Get Higher and Higher Meanwhile, German Economy Minister Rainer Brüderle came up with even higher totals. The aid package for Greece from the EU and IMF will probably amount to €135 billion ($179 billion) over the next three years, Brüderle announced Wednesday while on a visit to the Brazilian city of Sao Paulo. Under the current arrangement, Germany is supposed to contribute €8.4 billion annually to the package. But, according to Brüderle, the figure could go much higher. "I can't exclude the possibility that the amount will be higher," he told reporters. Brüderle said he was in constant telephone contact with Finance Minister Schäuble and Chancellor Merkel regarding the Greek crisis. In which case, he should also have known that his open words would not come across well with Merkel, as she was bound to interpret them as a spanner in the works. It's true that Merkel herself on Monday in a meeting of her party's executive mentioned a possible total of around €24 billion. On Wednesday evening, however, when asked about Brüderle's statement, she made clear with a painful smile that she wants to wait for the ongoing negotiations between the IMF, EU and Greece to be completed. "I have repeatedly asked that numbers not be mentioned, as long as figures are not in conjunction with a completed program," she said. Despite her newfound thirst for speed, the chancellor still doesn't want things to move too quickly, it seems.
URL: • http://www.spiegel.de/international/germany/0,1518,691969,00.html RELATED SPIEGEL ONLINE LINKS: • Aid Package Talks in Berlin: Greece Will Need up to 135 Billion Euros (04/28/2010) http://www.spiegel.de/international/europe/0,1518,691898,00.html • The World From Berlin: German Government 'Must Stop Using Greek Crisis for Campaign Fodder' (04/28/2010) http://www.spiegel.de/international/europe/0,1518,691810,00.html • Merkel Reaches Her Overdraft Limit: Greek Bailout Could Push German Debt Through the Roof (04/28/2010) http://www.spiegel.de/international/germany/0,1518,691802,00.html • Hesitation and Patronizing Advice: How Germany Made the Greek Crisis Worse (04/27/2010) http://www.spiegel.de/international/europe/0,1518,691650,00.html • 'We're on a Slippery Slope': Will the Greek Bailout Destroy the Euro Zone? (04/26/2010) http://www.spiegel.de/international/europe/0,1518,691168,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
287
04/28/2010 06:07 PM Aid Package Talks in Berlin Greece Will Need up to 135 Billion Euros The Greek crisis will cost Europe more than expected. On Wednesday, German Economy Minister Rainer Brüderle said the rescue package could cost 135 billion euros over three years, and that the risks for Germany could be far greater than initially anticipated. The opposition says Chancellor Merkel is partly to blame. The aid package for Greece from the European Union and the International Monetary Fund (IMF) will amount to €135 billion ($179 billion) over the next three years, according to an announcement made Wednesday by German Economy Minister Rainer Brüderle. Under the current arrangement, Germany is supposed to annually contribute €8.4 billion to the package. But, according to Brüderle, the figure could go much higher. "I can't exclude the possibility that the amount will be higher," he told reporters while on a trip in Sao Paulo, Brazil. Germany's opposition had already stated that Greece would need up to €120 billion over three years. This was the figure that Thomas Oppermann, a senior official in the parliamentary faction of the center-left Social Democratic Party (SPD), and Jürgen Trittin, the head of the parliamentary faction for the Green Party, had named after meeting earlier Wednesday in Berlin with European Central Bank (ECB) President Jean-Claude Trichet and International Monetary Fund chief Dominique Strauss-Kahn. Trittin added that the €45 billion in loans for 2010 was just the beginning and that, in the end, everything depended on a consolidation requirement in the order of between €100 billion and €120 billion. For his part, Oppermann stated that this meant that the €8.4 billion that Germany was expected to have to contribute this year will actually be up to €25 billion, calling the situation "dramatic, but not uncontrollable." Merkel Rebukes Charges of Hesitating Trittin also took the occasion to blast Chancellor Angela Merkel. "The indecisiveness and dithering of the European Union, instigated by the chancellor, have exacerbated the crisis and driven the consolidation requirement into the heavens." As he sees it, it's time for immediate action. Oppermann also cited IMF estimates, communicated to him by IMF chief Strauss- Kahn, that suggest that the EU has waited far too long to manage the crisis. Chancellor Merkel vehemently denied the opposition's accusations of hesitancy. Her deputy spokeswoman, Sabine Heimbach, told reporters Wednesday that: "From the very beginning, the chancellor has marked out a clear course of action together with her colleagues in the Eurogroup," referring to the body made up of the finance minister of countries belonging to the euro zone, and that Merkel's behavior had been "absolutely clear and in line with her course of action." And in an obvious reference to the repeated criticism from abroad about Germany's role, Heimbach added that the chancellor had "always given solid assurances" that she would help Greece given certain preconditions. In terms of domestic politics, the question is now when the Bundestag, the lower house of the German parliament, will be able to approve the aid package for Greece and whether the opposition will allow an accelerated process. Oppermann said he could not imagine that "the Bundestag will agree without drastic measures on the currency and financial markets." He assumes that other parliamentary groups will not agree to a "blank check" that could encourage other countries to follow Greece's example.
288 The ECB and the IMF, on the other hand, are urging the Bundestag to approve the aid quickly. Strauss-Kahn said on Wednesday that trust in the euro zone is at stake, and that every day of hesitation only makes the situation worse. Trichet added that a speedy decision by the Bundestag is urgently required. Merkel Waits on IMF Negotiations The IMF and ECB are also putting Greece under massive pressure to pass a three-year savings plan as quickly as possible in order to stave off bankruptcy. It is extremely important that the talks in Athens are concluded within the next few days, Trichet said, adding that he was certain things would end well. He also stated that a rapid decision on the international aid package for Greece was absolutely urgent, given the fact that the country has until May 19 to secure €8.5 billion it owes to investors and thereby avoid insolvency. Chancellor Merkel wants to await the results of the direct negotiations between the IMF and Athens on its savings plan before making any more decisions about the financial crisis. "At the moment, we now have a phase in which the International Monetary Fund and the European Commission have to work out a program with Greece," she said. "I hope that this will happen by the end of the week. Everything else depends on that." Merkel's cabinet will draw up legislation on the German aid package for Greece on Monday at the earliest. The spokeswoman for the Finance Ministry, Jeanette Schwamberger, said that the draft legislation would be discussed on Monday in the cabinet so that the consultations with the Bundesrat, Germany's upper house of parliament, could be concluded by May 7. -- with wire reports
URL: • http://www.spiegel.de/international/europe/0,1518,691898,00.html RELATED SPIEGEL ONLINE LINKS: • The World From Berlin: German Government 'Must Stop Using Greek Crisis for Campaign Fodder' (04/28/2010) http://www.spiegel.de/international/europe/0,1518,691810,00.html • Merkel Reaches Her Overdraft Limit: Greek Bailout Could Push German Debt Through the Roof (04/28/2010) http://www.spiegel.de/international/germany/0,1518,691802,00.html • Hesitation and Patronizing Advice: How Germany Made the Greek Crisis Worse (04/27/2010) http://www.spiegel.de/international/europe/0,1518,691650,00.html • 'We're on a Slippery Slope': Will the Greek Bailout Destroy the Euro Zone? (04/26/2010) http://www.spiegel.de/international/europe/0,1518,691168,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
289
04/28/2010 04:58 PM The World From Berlin German Government 'Must Stop Using Greek Crisis for Campaign Fodder' As the financial crisis in the euro zone worsens and the heads of the IMF and the ECB come to Berlin to persuade Germany to help Greece now, local commentators are calling for speed and decisiveness. As they see it, political jockeying before the May 9 election in North Rhine-Westphalia is no reason for German politicians to endanger the whole euro zone. For the past six months, the Greek financial crisis has been intensifying on a weekly basis. But this week's downgrading of that country's credit worthiness by the Standard and Poor's ratings agency has triggered more heated public and political debate in Germany. The ratings agency also lowered Portuguese bonds two notches Tuesday, fueling fears that the crisis could spread to other euro-zone countries in financial straits, such as Spain and Italy. In principle, Germany has already agreed to be part of any financial measures taken to assist Greece, acknowledging the fact that supporting the Greeks is essentially supporting the continued viability of the euro currency union. Greece urgently needs extra funds by the middle of May, when it is supposed to repay around €8.5 billion ($11.2 billion) in debt to investors. Still, German Chancellor Angela Merkel wants assurances from Greece that it will do its part over the long term by putting its financial house in order with belt-tightening, better administration and more regulation. Likewise, she must sell the idea of providing German financial aid to Greece to her fellow citizens. But a large majority of Germans do not support it, and Merkel's Christian Democratic Union (CDU) party has an important state election coming up in North Rhine-Westphalia on May 9. This could see her ruling coalition -- an alliance between the CDU, its Bavarian sister party, the Christian Social Union (CSU), and the business-friendly Free Democratic Party (FDP), also known collectively as the "black- and-yellow coalition" -- lose its majority in the Bundesrat, Germany's upper house of parliament. German Government Criticized for Stalling All of this has led to hesitation on the part of the German government to make a firm and public commitment to the Greek bailout package. In response to this hesitation, European Central Bank (ECB) President Jean-Claude Trichet and International Monetary Fund (IMF) chief Dominique Strauss-Kahn were in Berlin on Wednesday trying to persuade German politicians to stop dragging their feet on the issue and make a firm decision on whether it will agree to participate in the rescue plan devised by other euro-zone members and the IMF. On Wednesday, commentators in German newspapers criticized the country's government for its hesitant attitude. They pointed out that the slow movement toward a Europe-wide solution and the consideration being given the state election was a large part of the reason why speculators had turned on both the euro and Greek bonds -- and made the situation worse. These commentators called for fast, decisive action, which they believe could prevent things from getting even worse in the euro zone, especially when another member state, Portugal, also looks to be in financial trouble.
290 The Financial Times Deutschland writes: "Anyone listening to German politicians talking about the crisis in the euro zone must be feeling scared and anxious. There are admonishments, delays and a search for scapegoats -- all of which is miles from the economic reality of the situation. Neither the current administration nor its opponents seems to have recognized the seriousness of the situation." "As Portugal becomes the next candidate for financial crisis, the Germans are still fighting about how to get the all-too-comfortable Greeks moving. And all of this is because of a state election whose relative importance pales in comparison to what is actually at stake: preventing the demise of the entire euro zone." "True, the Portuguese and the Spaniards are in a better position than the Greeks, in that they can raise their own capital on the finance markets and their national debt is significantly smaller. However, yesterday's dramatic development in the bond markets gives rise to the fear that the Greek crisis will ignite a European wildfire of speculation." "What is more important, though, is that that the euro nations move quickly and decisively to quell this growing blaze. This means that German politicians must finally stop misusing the Greek crisis as election campaign fodder. Instead, they must send the money set aside for Greece weeks ago to that country as quickly as possible. At the same time, the euro states must unite in declaring their decision to help Portugal, too, should that nation also fall into serious financial difficulties. A solidarity pact like this is really the only chance to stop the euro zone from falling apart -- and it will cost Germany a lot less than if the euro project actually fails." Former German Finance Minister Hans Eichel (1999-2005), of the center-left Social Democratic Party (SPD), writes in the center-left Süddeutsche Zeitung: "Should we Germans help Greece or not? That has been the subject of intense discussion over the past few days -- and with one eye obviously on the state elections in North Rhine- Westphalia. Unfortunately, the chancellor and the foreign minister have allowed these discussions to drag on: They have not done anything to negate the impression that Germany has other options. But the truth has always been this: We will help no matter what happens. For decades, we have helped whenever there has been the threat of a national bankruptcy and whenever the IMF has called upon us to help. And it is not only Germans helping; the citizens of all the countries belonging to the IMF have done the same." "Germany is the second-biggest exporter in the world, and it will remain that way for some time to come. That is the foundation of this country's prosperity. Most of our income comes from the business we do with prosperous and emerging nations. That is why Germany has a vested interest in the ability of its trading partners to pay as well as in the development of emerging nations. But our help has limits, and it also depends on certain conditions. We help others so they can help themselves, and there are conclusions to be drawn from the Greek crisis that apply far further afield as well." "First, the country in question must bring its tax revenues into line with international standards. For example, Greece allows itself a tax and contributions rate 10 percentage points below the European average. If Greece wants our help, it must reconfigure its tax system to match the European average." "Second, Greece must thoroughly review all of its expenses. The administrative apparatus there is too expensive. And, third, Greece must make progress in the fight against what is apparently far-reaching corruption. So no matter whether the IMF or the EU -- or both -- now help Greece to help itself, Germany will be there, too."
291 "Furthermore, we need to take the necessary precautions to make sure that a crisis of these proportions does not repeat itself. The EU must apply the stipulations of the Stability and Growth Pact much more diligently than it have in the past. Tough sanctions don't help when we are in the middle of a catastrophe. Too much movement away from euro standards for fiscal and wage policies should be halted earlier on. And that will only happen when the European political and economic elites in all of the EU member nations learn to think, negotiate and organize in a European manner -- particularly within political parties, trade unions and employer associations. New contracts and procedures alone will not make this happen." "Europe must stand together. In its entirety, the euro zone is still one of the largest economic powers in the world. If the member nations stood alone in the 21st century, they would have no chance against 1.3 billion Chinese, 1.1 billion Indians, the superpower that is the US and the developing Brazilian nation. The constitution makes it a German duty to build Europe up. We should move toward this goal!" The left-leaning daily Die Tageszeitung writes: "Will Greece decide the state elections in North Rhine-Westphalia? Should the black-and- yellow union lose its majority in the Bundesrat, Merkel and Westerwelle will truly have brought this debacle upon themselves. Berlin is playing for time. Just as it did when it came to the issue of ... the financial aid package for banks, it has put off making a decision on whether to support a teetering EU nation until 'after the elections.'" "The German government's hesitation -- in the face of resistance from the French and the European Commission -- has seen Greece accruing an insane amount of interest. A clear vote from the EU indicating that Greece is definitely part of the currency union could have put the brakes on speculative action immediately." "The Greek economy needs a real chance. The euro project robbed smaller nations of the possibility of having their own currencies and developed new export markets for Germany. To find an economic and social balance, the euro currency union needs economic administration. But Merkel is blocking this French suggestion, too." Anton Brender, director of economic studies for Dexia Asset Management, a Belgian-French financial institution very active in public finance, writes in the business daily Handelsblatt: "One of the lessons learned from the recent financial crisis was that the political reaction must be as swift as possible. Otherwise, a wave of speculation gathers strength, and it becomes harder and harder to dam that rising tide. The markets act in real time -- and politicians must do the same. Europe has shown itself unwilling to come up with the support mechanism that troubled nations need for one simple reason: to ensure that the monetary union does not also become a fiscal union." "Everyone from the president of the European Commission to the head of the Eurogroup (eds. note: the gathering of the finance ministers from euro-zone countries), to the president of the ECB has philosophized on what should, could and would happen. Germany has played an important role in this dreadful, serialized novel. The chancellor has been torn between public opinions that indicate that nobody wants to pay 'for the Greeks to retire at the age of 57' and that a suit might be brought up before Germany's constitutional court if the country go to the aid of a euro-zone member. The duty of Germany to act in European interests and to go to the aid of Greece is another conflict for the chancellor."
292 "But instead of acting as an engine to find a solution for these problems, the German government has slammed on the brakes -- with a clear result. At the moment, preconditions for assistance to Greece remain unclear -- and the financial markets have taken note." -- Cathrin Schaer
URL: • http://www.spiegel.de/international/europe/0,1518,691810,00.html RELATED SPIEGEL ONLINE LINKS: • Hesitation and Patronizing Advice: How Germany Made the Greek Crisis Worse (04/27/2010) http://www.spiegel.de/international/europe/0,1518,691650,00.html • The World from Berlin: 'Nothing Justifies Kicking Greece out of the Euro Zone' (04/26/2010) http://www.spiegel.de/international/europe/0,1518,691255,00.html • 'We're on a Slippery Slope': Will the Greek Bailout Destroy the Euro Zone? (04/26/2010) http://www.spiegel.de/international/europe/0,1518,691168,00.html • German Finance Minister Wolfgang Schäuble: 'We Cannot Allow Greece to Turn into a Second Lehman Brothers' (04/19/2010) http://www.spiegel.de/international/europe/0,1518,689766,00.html • An Aid Package in the Billions: Merkel's Bluff Called in Poker over Greece (04/12/2010) http://www.spiegel.de/international/europe/0,1518,688580,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
04/28/2010 03:19 PM Merkel Reaches Her Overdraft Limit Greek Bailout Could Push German Debt Through the Roof By Severin Weiland When Chancellor Angela Merkel's current government came into power, Germany was just emerging from the economic crisis. But despite pledges to curb deficit spending, Merkel's administration has been running up debt at a record pace -- and bailing out Greece will only exacerbate the situation. In the autumn of 2008, German Chancellor Angela Merkel stated clearly: "In the long term, people cannot live beyond their means." At the time, the economic and financial crisis appeared to have reached its peak. Since then, though, the chancellor has lost her iron budget discipline. Fast forward to April 2010. The end of the spiral of debts is nowhere in sight. It just continues to grow -- and soon it will grow further if Germany provides €8.4 billion ($11 billion) in financial aid to Greece. Initially, that assistance will only come in the form of credit guarantees from the federal budget for state development bank KfW, which will then provide the money in the form of loans to Greece. So they aren't technically debts. But what happens
293 if cash-strapped Greece is unable to pay back its loan? Then Germany's deficit would grow in real terms by several billion. Merkel and Vice Chancellor Guido Westerwelle, who is the leader of her coalition partner, the liberal Free Democrats and also Germany's foreign minister, have governed the country for six months now. They have shown little hesitation about running up new debts. "Never in the history of the Federal Republic of Germany has a government accrued debts as fast and as easily as the current government," writes the conservative Frankfurter Allgemeine Zeitung, which is a paper of record in Germany, in an editorial. Now the government is spreading Greece's credit risk to the "expense of the general public," the paper decries, before asking how much deeper the government is going to reach into taxpayers' pockets. Meanwhile, the mass-circulation Bild, noting that Greek people can retire at least two years earlier than Germans, asks on its front page: "Why do we have to pay for Greece's luxury pensions?" Greek Bailout Could Be Far Higher than 8.4 Billion Merkel is in a real fix. She has no "either-or" choice -- all she can do is try to muddle her way through an impossible situation. On Monday, she hinted in a meeting of her party's executive that the Greek bailout could cost Germany billions more than has so far been publicly stated. She told her fellow party members that it had to be assumed the KfW would need to make around €24 billion in credit available to Greece over the next three years. And that would just be Germany's share of the bailout. Merkel's coalition government, which pairs the conservative Christian Democratic Union (CDU) with its Bavarian sister party, the Christian Social Union (CSU), and the business- friendly FDP, has done nothing in terms of the budget-tightening measures it pledged when it came into office. To the contrary. In March, the government agreed on the highest package of new debt in the history of postwar Germany: €80.2 billion in debt. What that means in concrete terms is this: • The German federal budget for 2010 will be close to €320 billion, but only three- quarters of that money will be financed through government revenues; • Per capita, that translates into a further €1,000 in debt for every resident of Germany; • 11.5 percent of the federal budget will go towards interest payments on debt. Extremely Generous When it comes to spending money, Merkel and her coalition have been extremely generous during the financial and economic crisis. Earlier this year, the government approved an €8 billion package of tax cuts, and a further €16 billion is expected to follow by 2012 -- at least that's what the FDP is pushing for. There are always reasons to delay taking action -- like the pivotal state election to be held in North Rhine-Westphalia on May 9. The vote will determine whether Merkel's conservatives and the FDP are able to maintain their majority in the Bundesrat, Germany's upper legislative chamber which represents the interests of the states. In that state election, top politicians from the CDU and FDP are trying to whitewash the situation. They claim they have trimmed around €6 billion from the debt package that had been planned by Merkel's previous finance minister, Peer Steinbrück of the center-left Social Democrats, whose party was voted out of office in 2009. But as pleased with themselves as they may be, most of the savings in the budget plans have come from cyclical economic
294 measures. Unemployment, for example, has been far lower than the government originally anticipated. And yet everyone knows that the pressure to make cuts will grow ever greater in the future. Under an amendment to Germany's constitution, the country's so-called "debt brake" clause will go into effect in 2011, and by 2015 the country will have to eliminate a structural deficit of €67 billion. Starting in 2016, annual deficit spending in Germany will be limited to €10 billion. So how will the country get by with only €10 billion in deficit spending? A Watered-Down Truth Lately, German Finance Minister Wolfgang Schäuble has been murmuring that the "solution to the problem will also include cuts in expenditures as well as only permitting modest increases in some areas." It is a truth that is being slightly watered down. The only problem is that when these cuts do come, their scope is still unknown. • In 1980, 16 percent of the German federal budget was allocated for social spending -- e.g. health care, pensions, etc. • By 2010, that figure had swollen to 54 percent. • The largest single budget items are the €80 billion a year allocated for pensions and the €40 billion spent on welfare payments to the country's long-term unemployed. In June, Schäuble plans to meet with fellow members of Merkel's cabinet and their party's leaders in parliament to discuss savings and possible tax plans. Schäuble has said voters would perceive his plans "as fair." He has already pledged no cuts to pensioners, but also said they will have to live with the fact that "there will be no increases for quite some time to come." The condition of the public sector budgets is clear. Only two years ago, Merkel wrote: "Every billion in new debt further reduces our room for maneuvering in the future."
URL: • http://www.spiegel.de/international/germany/0,1518,691802,00.html RELATED SPIEGEL ONLINE LINKS: • Hesitation and Patronizing Advice: How Germany Made the Greek Crisis Worse (04/27/2010) http://www.spiegel.de/international/europe/0,1518,691650,00.html • 'We're on a Slippery Slope': Will the Greek Bailout Destroy the Euro Zone? (04/26/2010) http://www.spiegel.de/international/europe/0,1518,691168,00.html • German Finance Minister Wolfgang Schäuble: 'We Cannot Allow Greece to Turn into a Second Lehman Brothers' (04/19/2010) http://www.spiegel.de/international/europe/0,1518,689766,00.html • Ahead of Important State Vote: Merkel's Government Pushes Ahead on Tax Cuts (03/18/2010) http://www.spiegel.de/international/germany/0,1518,684335,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html
295
EU debt crisis: German papers whip up anti-Greece fury The papers are voicing Germans' belief that they are being unfairly forced to pay for a nation that has overindulged Kate Connolly in Berlin Thursday 29 April 2010 11.59 BST
EU debt crisis: Germany papers believe they are influencing Angela Merkel's policies. Photograph: Gero Breloer/AP The sense of panic and uncertainty surrounding the Greece debt crisis is captured in the headlines of all of Germany's newspapers this morning. Leading the field is the tabloid Bild, hammering home the alarming message that "The Greeks want even more of our billions!" The headline is crowned by the ominous figure: "25 000000000 Euro!", the proportion of the bailout package Germany can expect to pay. "Will Greece become a bottomless pit for German tax payers?" the paper asks. In an interview Axel Weber, head of the Bundesbank calls the proposed bailout package "the last resort", but "is currently the best means in my mind to prevent the crisis from extending with all its negative consequences, to other member states and the rest of the eurozone". Amid a plethora of articles about how the Greeks are reacting to the crisis, many papers report how the nation is seeking to blame outsiders. Die Welt reports on the growing unrest on the streets of Athens, and suggests that "the Greeks' demands will lead to their self-destruction'. Greek psychologist Kostas Euthimiou, vice president of the Panhellenic Psychologists Union, equates the behaviour of Greeks with that of "spoilt children" and plays on the widespread German belief, that they are being unfairly forced to pay for a nation that has overindulged.
296 In an interview with the paper's Boris Kalnoky, Euthimiou highlights what he calls the nation's collective "seriously warped sense of reality ... which is like that of little children. They're living in a fairy-tale world ... When problems come up, they think a fairy or a mayor will come along and make everything better. They haven't learnt to solve problems for themselves and expect that someone from the outside world will come and solve it for them." Even the usually staid weekly, Die Zeit, headlines its main Greek crisis story with the quite damning headline: "Are the Greeks Potty?" In its lead editorial, the liberal Suddeutsche Zeitung takes a highly critical view of the German reluctance to help out the Greeks, and lays some of the blame for the escalation of the crisis at the feet of Angela Merkel's government. "Leave the Greeks be to solve their own problems, they should not get our money, is the overwhelming attitude of the Germans, according to initial opinion polls," the paper writes. "This helps to explain the puzzling procrastinations of the government," it says, referring to the fact the government has yet to say whether and how much it will pay towards a bailout largely because it still hopes it can hold off making a decision until after state elections in North Rhine Westphalia. "Behind this wishy-washy behaviour is the huge fear of the 'boulevard'... which has control of the debate." Merkel, it suggests, has adjusted her behaviour in line with the headlines in Bild, according to which she has "reacted, manoeuvred and changed her course". Next to the editorial is a cartoon showing Europe in the form of a bull attached via a rope to a pillar from the Acropolis, which is just about to pull Europe off a cliff face. http://www.guardian.co.uk/business/2010/apr/29/eu-debt-crisis-german-papers-whip-up-anti- greek-fury
297
Greece's financial crisis – LIVE • Greek VAT could be hiked to 25% - Reuters • German politicians call for a EU ratings agency • Greek bank shares rally on hopes of €120bn rescue... • ...but economics professor vows to block it in the courts
European and Spanish flags flutter next to the Bank of Spain, which is under pressure following yesterday's S&P downgrade. Photograph: Juan Medina/Reuters 12.20pm: There was a brief flurry of excitement then as reports came in from the Czech Republic about a suspected arson attack on the Greek Embassy in Prague. The Associated Press has details:
A police spokeswoman says a fire caused by an unknown flammable substance that was hurled at the embassy's garden early Thursday damaged the entrance door before it was extinguished by firefighters. The embassy, which was closed at the time, says the damage was not serious. Police say they are investigating. However, the early indications are that this isn't related to the bailout, but was probably the work of an anarchist group. They are protesting about the jailing of Giannis Dimitraki, a fellow activist, for his part in an attack on an Athens bank. Greece's embassy in Argentina was also attacked overnight, in an attempt to put pressure on Greece as it decides whether to release Dimitraki. If this view changes, we'll let you know. This is probably a good moment to flag up Kate Connolly's round-up of today's German newspapers. The prospect of a €120bn bailout for Greece dominates the front pages....
298 11.51am: We don't have as much breaking news for you today, alas, but we can offer some of the City's best analyst comment. David Owen, chief European Financial Economist at Jefferies, has argued that the European Central Bank might have to learn a lesson from Mervyn King and plunge into quantitative easing:
To help with all the adjustment that is going to be necessary in the next three years (we are talking about a multi-year tightening in fiscal policy in many countries, not just Greece) would first, be a higher inflation rate and second, a much weaker euro. QE might help on both counts as well More from Owen over on FT Alphaville. This is from James Rutherford, chief investment officer at Hermes Sourcecap:
Many would hope that Greece is an isolated incident of a heavily indebted country that is unable to pay its way. Unfortunately, what is very apparent is that many European countries and financial institutions have an unfortunate exposure to the problems through holdings in the Greek bond market. This is not a Greek issue, but an European one. Member countries of the Euro have, in effect, been sponsoring Greece's credit binge which has now brought Greek credit to junk status. Sovereign risk is very real and whilst the threat of member countries leaving the Euro is remote, what I think will happen is that you will now see a reversal in the cost of capital trends that were harmonised with the onset of the Euro. This will weigh on the ratings of stock prices in individual countries as domestic discount rates diverge because of differing levels of credit risk. What the problems in Greece demonstrates is that while currencies might have been harmonized across the region with the introduction of the Euro, it does not mean that other forms of relative financial risk have similarly been eliminated, which should act as a warning to other countries with large levels of national borrowing and fiscal deficits. There remain many great opportunities and times of macro fear brings indiscrimination which in turn throws up anomalies. And Gary Jenkins of Evolution Securities has reflected on yesterday's mayhem:
I did find it quite laughable that Angela Merkel was quoted yesterday saying that the negotiations need to be "sped up". What have they all been doing for the last 4 months? Anyhow, it's not a done deal yet and even if it comes to fruition it does not necessarily cure all ills. It would be a surprise if Greece did not get some kind of assistance although I still think that if they have not already done so the IMF should carry out a thorough investigation of the Greek numbers to clarify exactly what the budget deficit is and how much realistically Greece will need to borrow over the next couple of years, and if it is worth lending more money or whether it would be better to go straight to default. I do not quite understand the point of the likes of Portugal, Ireland, Italy and Spain lending money to Greece unless they are confident that they will be repaid.
299
11.15am: We're getting some flashes from Reuters about the negotiations taking place between Greece and the IMF. From the sound of them, life is about to get rather more austere for your average Athenian. According to a source close to the talks, measures under discussion include: • Hiking VAT to between 23% and 25% (it's 21% at present) • Cuts in the bonuses and wage supplements on offer to state workers • A 10% (or greater) hike in taxes on petrol, tobacco products and alcohol. This would all come on top of the existing measures being pushed through by Greek prime minister George Papandreou, which have prompted widespread strikes across the country in recent weeks. VAT, for example, was raised from 19% to 21% last month. 10.42am: Thousands of readers have already voted in our poll, asking whether Germany should support the Greek bailout or not. You can still have your say too. At the moment, 58% of voters think the Germans should oppose the rescue. 10.27am: There's a lot of anger in Europe towards Standard & Poor's today following its downgrade of Greece, Portugal and Spain this week. Is the solution to have a European ratings agency rather than being bullied by one based in New York? Germany's Foreign Minister thinks so. Guido Westerwelle has just declared that the EU should "counter the work of rating agencies with efforts of its own." His counterpart in the finance ministry, Wolfgang Schaeuble, has also taken a pop at the sector - suggesting that investors shouldn't take too much notice of them.
No market participant is prevented from not taking rating agencies too seriously.
It's not immediately clear that adding another agency alongside Moody's, Fitch and S&P would improve the situation. But Westerwelle also told the WAZ newspaper group that the whole business of ratings should be cleaned up, so that agencies could not develop, sell, and rate financial products all at the same time. He said such conflicts of interest must be ruled out. Back in 2008, Fitch created a new division called Fitch Solutions to handle its non-ratings products - in an effort to avoid accusations of impropriety. But generally, though, the ratings agencies' reputations have not really recovered from the financial crisis that kicked off with the credit crunch. As our American blogger, Richard Adams, pointed out on Twitter:
@richarda: Credit rating agencies quick to downgrade Greece but happy giving AAA+ to Goldman Sachs "Shitty Deal" CDOs. Westerwelle's suggestion raises another thought - what would a European ratings agency be called? Moody & Poor might sum up the feeling in some parts of the Eurozone. 9.59am: Over on Comment is free, my colleague Phillip Inman argues that Germany's insistence on playing hardball with Greece threatens the entire European recovery. Here's a taster of his piece, called Germany is kicking away props of global recovery:
300
The Germans are getting out of hand. First, they play a key role in causing the financial crisis. Then, just as the world starts to claw its way back to some kind of normality, they start kicking the props away. This accusation is not about fighting the second world war again or inciting xenophobia, but a reality check on how those peace-loving, social-democratic Germans are selfishly jettisoning ailing European Union countries, starting with Greece, to maintain probably the richest, most all-embracing cradle-to-grave welfare state on the planet. 9.22am: But even if Angela Merkel's government does agree to rescue the Greek economy, and pushes the deal through the Bundestag next week, it faces another threat - German economist Joachim Starbatty, who has pledged to oppose any deal through the courts. Starbatty, a professor at Tuebingen University, is a leading German eurosceptic. Two weeks ago he declared that an aid package for Athens would breach the European Union's Maastricht Treaty. He has organised an opposition group ready to file a lawsuit in the Constitutional Courts. Today, Starbatty has repeated his vow, telling Czech newspaper Mlada Fronta Dnes that he remains confident that the German courts would throw out the rescue package. He also claims to have support from across the German political spectrum:
We expect that the Federal Constitutional Court will not reject our suit, because our initiative has unbelievably big support. Differences in opinion exist also in the governing CDU/CSU, but over the past weeks the support has strengthened substantially. Starbatty is working with constitutional lawyers, but it is unclear how a court would handle his lawsuit. Given Greece's urgent need for funds, would they allow the bailout to proceed and then try and claw it back (in the event of a Starbatty victory), or block it? Either way, it could destabilise the situation. 8.55am: Over in Athens, Greek bank shares are soaring by an average of 6.3%. That's pushed the overall Athens stock market up by over 3%. There's a real mood of optimism that Greece's bailout will be agreed, especially following the talk of a €120bn bailout. On the bond markets, the yield on Greek two-year government debt has fallen slightly to 17.8%. That's still a farcical rate for a country to be borrowing at, and reflects the likelyhood of either an orderly restructuring or a disorderly default. The five-year bond yield has fallen to 12.7%, and the 10-year is at 10.6%. As David Buik of BGC Partners put it:
Spreads and yield are down – yes! – But they are still at catastrophic levels with little activity. Markets are very nervous. It may be that nothing decisive will be agreed by Germany until 7th May 2010! – That is TOO long!
301 Clearly the crisis is entering a calmer moment, as Bloomberg is now chatting about last night's football. They're concerned that José Mourinho's head will get too big if he wins another Champions League final. 8.38am: "What's going on here?" demands Bloomberg TV as European share prices edge lower, then rally a tad. Isn't this supposed to be a crisis? One factor is that a clutch of major European companies have come out with decent financial results, including BSkyB (thanks to demand for high-definition TV), German giant Siemens, and Spanish banking group Santander (whose profits have risen 6%). So the sovereign debt market may be wobbling, but the corporate world is doing well? All this turbulence is a perfect buying opportunity, according to Michael Amey, UK porfolio manager for Pimco, the world's largest bond investor. Amey was just interviewed on Bloomberg, and he warned that the UK's AAA rating could be under threat if Britain gets a hung parliament after next week's election.
Ratings agencies will look at how the new government behaves. Pimco believes that a solid Cameron victory would reassure the City.
Markets would like a Tory victory as the Tories have the most aggressive fiscal plans, so if you're a fixed bond investor that's what you want to hear. 8.15am: Europe's stock markets are now open. Traders aren't hammering the sell button after the Spanish downgrade, but there's a mood of uncertainty in the City as we all await developments. The FTSE 100 is down by a meagre 2 points at 5585. Spain's IBEX 35, which shed 3% in last-minute trading after S&P struck, rose 0.2% in early trading while the German DAX rose 0.4% before slipping back. Steady as she goes, or traders simply not sure what to do? The euro is hovering around $1.32 today, up from yesterday's one-year low of $1.313. But how stable is the euro anyway? Nobel prize-winning economist Paul Krugman has written that his old faith that the European single currency was unbreakable has been shaken by the Greek crisis.
The Greek government cannot announce a policy of leaving the euro — and I'm sure it has no intention of doing that. But at this point it's all too easy to imagine a default on debt, triggering a crisis of confidence, which forces the government to impose a banking holiday — and at that point the logic of hanging on to the common currency come hell or high water becomes a lot less compelling. And if Greece is in effect forced out of the euro, what happens to other shaky members? I think I'll go hide under the table now. You can read more on Krugman's blog, The Conscience of a Liberal. 7.53am: The Greek Tragedy is fighting for space with Gordon Brown's bigotgate gaffe on today's front pages. The consensus is that the Spanish downgrade shows that the financial contagion is spreading fast from Greece, and quite possibly heading our way.
302 • The Financial Times warned that Greek fire turns to Spanish fever. Like us, they picked up on the warning from the OECD that the crisis could spread like the ebola virus. • The Daily Telegraph went with EMU domino fears as Spain downgraded. One particularly fine quote: "There are some senior figures who would like so see the gangrenous leg of Greece chopped off, to set an example. But they want to avoid leaving any German fingerprints on the blood-stained knife," • The Daily Mail line is that Hung parliament 'could tilt Britain into Greek-style financial turmoil'. • In The Times, the headline was Spain hit as Greek 'illness' spreads over Europe. Their story signed off with a haiku from Herman Van Rompuy, President of the European Council:
The sun is rising/ sleeping yet in Europe/ still the same sun. Translations welcome. 7.27am: Here's a quick recap of yesterday's events to help anyone who is coming to this fresh:
Europe's financial crisis escalated yesterday, after Spain followed Greece and Portugal in seeing its credit rating downgraded by S&P. The mood was particularly dark in Berlin, where the International Monetary Fund and European Central Bank met with Angela Merkel to try and persuade Germany to support a massive rescue package for Greece. Talks ended without agreement, but with Merkel musing that letting Greece into the eurozone in the first place was not the greatest idea in Europe's history. Some of the German people, of course, think the Greeks have far too comfy a life and don't feel they deserve rescuing. The crisis threatens Europe's banks, including the UK's who have €100bn of exposure to Greece, Portugal and Spain. There's now a real danger that Greece will leave the Euro, in an effort to rebuilt through devaluation. As this interactive shows, the big fear is that Europe's more vulnerable economies are going to fall like dominoes. First Ireland, then Italy, then the UK? As for Greece, its borrowing costs are hitting record levels all the time. But as Nils Pratley points out, stock market traders are taking this in their stride.
303 7.20am: Hola! Yes, today's live coverage of the ongoing Greek debt crisis has a distinctly Spanish flavour, after Spain yesterday became the latest company to see its credit rating downgraded. Will another country feel the wrath of Standard & Poor's? Will Germany agree a €120bn bailout for Greece? How will the stock markets react? We're about to find out. http://www.guardian.co.uk/business/blog/2010/apr/29/greece-financial-crisis
304
Greece's financial crisis – LIVE
Posted by Graeme Wearden Wednesday 28 April 2010 07.11 BST guardian.co.uk • Bond yields hit record highs today as markets shun Greek government debt • ECB and IMF leaders gather in Berlin for showdown talks • OECD secretary general compares crisis to the Ebola virus
Greek austerity measures to reduce the budget deficit have sparked demonstrations in the country. Photograph: Milos Bicanski/Getty Images 12.31pm: With the FTSE 100 now breaking into positive territory (must be that rumour of the €90bn package being readied), it's time for a quick recap of events so far and the schedule for the rest of the day.
• After falling early, world stock markets have erased most of their losses • But the yield on Greek bonds has soared, and it is now more expensive to insure Greek government debt than any other country's (10.47am) • German politicians are meeting with the heads of the IMF and the ECB shortly (10.25am) • The OECD's director general has said the crisis needs to be dealt with like the Ebola virus (11.51am) • Alistair Darling has urged his fellow European finance ministers to hurry up (10.05am) • City insiders are speculating that a €90bn rescue package for Greece might be announced today (11.51am) Looking ahead....
305 Europe's financial crisis: as it happened • S&P hits Spain with a credit rating downgrade • Rumours of a €120bn bailout plan for Greece calm the City • Letting Greece join the eurozone may have been a mistake, admits Angela Merkel after talks with the IMF • Bond yields hit record highs today as markets shun Greek government debt • EU debt crisis: live coverage here
Greece desperately needs a bailout, but negotiations over the plan are continuing in Berlin today. Photograph: ARIS MESSINIS/AFP/Getty Images 7.00am: Kalimera! That's 'Good morning' in Greek, although it's probably not a phrase you'd hear much in Athens today as Greece comes to terms with yesterday's alarming developments. To quickly recap, the €45bn IMF/EU rescue plan for Greece hit major problems yesterday when Standard & Poor's downgraded Greek debt to junk bond status. With Germany dragging its feet over supporting the bailout, there are fears that Greece may default on billions of euros of loans. But that's just the start. Portugal is under fire, having also been downgraded by the ratings agency. The talk in the City is of a 'race to default', with indebted nations scrambling to restructure their debt piles. And what would that do for the Euro? This phase of the financial crisis is going to last for months, but today will be a critical day - so we'll be blogging the latest developments and reaction for the next few hours here. Let us know what you think below. 7.17am: The Asian stock markets have taken the Greek junk bond downgrade badly. In Tokyo, the Nikkei index has tumbled 2.4% overnight, shedding 269.27 points to 10,943.39 points. Exporters such as Canon were particularly hammered as investors bailed out of shares. And in Hong Kong, the Hang Seng index has dropped 1.26%. This comes after a heavy selloff on Wall Street, where the Dow lost 1.9% or 213 points to 10,991.99. London was the first market to react to S&P's blow, suffering its biggest fall of the year with a 150 point plunge to 5603. Spread betters we've contacted this morning are anticipating further falls, but probably around 20 points while traders weigh up the situation. As Ben Potter of IG Markets explained: Further modest losses are expected in Europe at the open but it's going to be a case of watching to see if traders can now hold their nerve amidst some reasonable earnings data or whether this is indeed the start of the next correction. 7.27am: My Reuters terminal is flashing that Greece's financial regulator has just banned short selling on the Athens stock market until June 28. This will prevent traders from selling shares they don't own, with the intention of buying them back cheaper in the future. This appears to cover all listed companies, and follows yesterday's 6% drop on the main Athens index.
306 In a brief statement, the Capital Market Commission said it took the decision "having considered the extraordinary conditions in the Greek market". Greek banks have been under the cosh in recent days, losing an average of 9% yesterday. You may remember that the Financial Services Authority brought in a similar ban in the UK in September 2008 following the collapse of Lehman Brothers, in an attempt to protect British banks from attack. The move, which just covered financial stocks, had some success, but couldn't prevent the partial nationalisation of Royal Bank of Scotland and Lloyds a few months later. 7.35am: A quick look at the currency markets, and the euro is trying to clamber back off the mat after hitting a one-year low yesterday. The European single currency is trading around $1.319 as I type. Against sterling, one euro is currently worth 86.5p. 7.42am: What's the mood in Greece? Financial TV channel Bloomberg just went to their Athens correspondent, who declared that: "There really is a sense of fear and apprehension here, even bordering on panic." That should do wonders for nerves in the City this morning ahead of the start of trading. 7.47am: Those of a delicate disposition should probably avoid this article from Reuters star blogger Felix Salmon. If your nerves are steel-tipped, though, plunge in. Salmon has elegently blogged the highlights of a panel discussion in Los Angeles yesterday afternoon. This included noted economist Nouriel Roubini, who illustrated just why he earned the nickname Dr Doom. According to Roubini, Greece is simply incapable of cutting its spending by enough to make a serious debt in ite debt. That makes a default inevitable, along with ejection from the euro, at which point Spain is hauled into the crisis. As Salmon reports:
Nouriel's base case, then, is Argentina 2001: after all, Greece has a much higher debt-to-GDP ratio, much higher deficit-to-GDP ratio, and much higher current-account deficit than Argentina had back then. And if that's the base case, there's no way that Greek debt should be trading anywhere near its current levels. Of course, this being Nouriel, it goes downhill from there: if Greece is worse than Argentina, he says, then Spain is worse than Greece. Its housing bubble and bust has left the banking sector much weaker than Greece's; its unemployment situation, especially with the under-30 crowd, is much worse than Greece's; and the cost of any Spain bailout would be so much more enormous than the cost of a Greek bailout as to be almost unthinkable. The only thing that Spain has going for it is that it isn't quite at the edge of the abyss yet; if it gets its political act together and implements tough fiscal and structural reforms now, it can save itself. But clearly no one saw that happening, given Spain's political history over the past 20 years. Hmmm - huge national debt, a deflated housing bubble, a battered banking sector, high unemployment, calls for tough reform going undeeded at the crucial moment. Does this sound like a certain other country to you? 8.12am: Looks like London traders got most of their panic out of the way yesterday. The FTSE 100 is down just 7 points in the first few minutes of trading at 5596 points, shaving a bit more of the nation's pension pots after yesterday's 150-point fall. Across Europe, though, the picture is darker. Portugal's leading stock index dropped 5.3% at the open, as investors reacted badly to S&P's decision to cut its credit rating by two notches. This is front page news on Portugal's newspapers, with one tabloid raging that the country is under attack by speculators.
307 Spain's IBEX 35 index fell by 1% at the start of trading, reflecting concerns that this crisis could head West from Athens. Worth remembering that last week, the IMF warned that the banking sector would be badly hit by a crisis in the sovereign debt markets. The biggest fallers in London today are the banks, with RBS losing almost 4% to 53.8p and Lloyds Banking Group down 2.6% at 66.4p. Not good news for the taxpayer, which was just getting used to making a (paper) profit on its investments in these nationalised banks. We're probably still just in the black at the prices, though. Our banking correspondent Jill Treanor reminds me that Lloyds said yesterday that its exposure to Greece was 'minimal'. 8.50am: Sorry for the outage there - just crushing a small technical gremlin. We're getting some good analyst comment on the latest developments in Greece. Here's Gary Jenkins from Evolution Securities: The €40-45bn bail out package that has so far been talked about is widely seen as being too small as it only covers Greece's funding needs up till January 2011 although the FT reports today that the IMF may be prepared to increase the size of their portion by some €10bn. Obviously the provision of liquidity is vital for Greece in the short term, and the more they are provided with the longer they have to make the necessary fiscal adjustments. But its still debt that needs to be repaid, and there appears to be growing doubts that Greece will be able to avoid some kind of debt restructuring. My view is that they should be given an amount to get them through the next 3 months, and in that time the IMF carry out a thorough investigation of the Greek numbers to clarify exactly what the budget deficit is and how much realistically Greece will need to borrow over the next couple of years. At least that might allow for an orderly restructuring, if deemed necessary, rather than a complete market meltdown. At the same time the EU might want to circle the wagons around Portugal, as to lose one sovereign would be unfortunate, but to lose two looks like carelessness… City veteran David Buik of BGC Partners has also opined: A very good friend of mine reminded me very succinctly and cogently that the Euro only works if all countries give up financial sovereignty and pool resources for common taxes, budgets and social security. If these boxes are not all ticked, the whole philosophy and ethos of a united Europe crumbles in to dust. It is called make up your mind. Greece will need help for at least 2 more years plus an increased amount of funding. If Greece defaults gargantuan losses could be incurred. Greece is the catalyst, Portugal has been downgraded and who follows – Spain and Italy? Though not in the EU, the UK, with its stubborn refusal to deal with its mountain of debt, looks very vulnerable. 8.58am: The most important action today is going to take place in Germany today. Dominique Strauss-Kahn, the head of the IMF, is in Berlin today to try to persuade parliamentarians to support the bailout. We're expecting high-level talks, including a meeting with Germany's finance minister, Wolfgang Schaeuble. Schaeuble has said previously that Germany will not let Greece fail, although the German government is demanding tough conditions. There's also a rumour that German leader Angela Merkel will meet with Strauss-Kahn and the president of the ECB today. This is helping to maintain optimism in the markets, although the FTSE 100 is now down 21 points at 5581. The German public, though, remain wary of rescuing the Greeks. One headline this morning declared that "We don't want to pay for Greek luxury pensions." With an election looming next month, Merkel may find it hard to ignore such feelings.
308 9.02am: The crisis is also becoming a theme in the UK election campaign. Peter Mandelson just told this morning's Labour press conference that the Greek situation "highlights the fragility of the European, and the global, economic climate." He also insisted that the UK economy was much stronger than Greece's. David Miliband has also taken a pop at Conservative leader David Cameron over the issue. The foreign secretary accused Cameron of 'economic illiteracy' after pointing out that both country's face rocketing borrowing requirements:
I think the way David Cameron is talking about Greece and Britain in the same breath is economic illiteracy. We have a deficit reduction plan to halve the deficit in four years. That's absolutely on the table and it's clear for markets and for voters to see. The credibility we have is based on the published plans we have. Britain ran up a debt of £163bn in the last year, which is around 11% of GDP. Greece's national debt was more than 13% of its GDP, although there is concern that its data may not be reliable. 9.15am: Scratch what we said at 8.12am about the City taking the Greek crisis in its stride. In the last few minutes shares have fallen sharply in London, where the FTSE 100 is now down by 66 points at 5536. That's a 216 point fall since S&P downgraded Greece's credit rating yesterday afternoon.
As my colleague Nick Fletcher reports here, the banks are the biggest fallers, with RBS tumbling up to 7%, Lloyds down by 6.5% and Barclays off 4%. Across Europe share prices are in retreat, with Germany's DAX index down 1% and the French CAC losing 1.2%. It's also turning into a very bad day for Portugal, where the leading index is down almost 6%. And the pound is wobbling, down below $1.52 against the dollar as I type. This just piles more pressure on Europe's politicians, ahead of the showdown talks in Berlin. Traders are looking for the IMF and the European Central Bank to make progress on the details of a bailout for Greece, and reassurance that more countries won't be dragged into the mess. Koen De Leus, economist at KBC Securities, told Reuters that the escalating Greek crisis is the key issue on the financial markets today.
The chances of a default by the Greek government are increasing not by the day but by the hour. If the IMF and European governments don't come up with something quickly, then I see the market going down further quite rapidly. Investors are starting to react emotionally. In the current environment, it's very difficult to impress with better-than-expected earnings.
9.33am: But every crisis is also an opportunity...to crack a few gags. Harry Wallop of the Daily Telegraph is retweeting the best jokes on Twitter (no squinting at a Reuters terminal for @hwallop). Here's a few: @callummay: I'd like to remind journos of opportunity to use the old "making a Drachma out of a crisis" + "come Acropolis" headlines @adamblenford: @callummay Surely there's mileage in 'Losing their marbles' as well?
309 @nicstevenson beware of Greeks bearing gilts? The Liberal Democrat press office also enjoy a good chortle: @LibDemPress: @hwallop The four horsemen of the Acropolis?
Vince Cable is taking a more serious line, though. The Lib Deb Treasury spokesman is quoted as warning that Britain will face the same problems as Greece unless the UK deficit is tackled by the next government. 9.45am: We're now getting prices from the bond markets, and it's looking like blood on the floor for Greece. The yield on Greek two-year bonds has just blown apart to a scarcely believable 38%. It's inconcevable that a country could refinance itself at that level of interest rate, so it indicates that only the gutsiest speculators feel that medium-term Greek debt is worth holding onto. As a comparison, the yield on this debt was just 1.3% last November, and still available at just over 5% at the start of this month. Greek credit default swaps have just hit a new all-time high as well, with the insurance on five-year government bonds hitting 883.8 basis points. That's an alltime high. There's another key measure that everyone in power, and across the City, will be watching and that is the gap between the yield on ten-year Greek government bonds and the German equivalent. That spread just hit its highest level since January 1995, at 995 basis points. Three weeks ago, investors were rushing to sell Greek debt when that spread hit 440 basis points. 10.05am: Chancellor Alistair Darling has now spoken out, calling on the Eurozone to 'urgently' sort out the Greek bailout before the situation spirals out of control. Darling told LBC Radio this morning he spoke to his European counterparts last night to express his views:
They know that they have got to sort it out. They have promised money, and what I would say is they need to make that money available as soon as possible. If we can sort out the problems in Greece quickly, then that will make people more confident. Darling, of course, knows all about the need to maintain public confidence during a crisis, having helped steer the UK through the near-collapse of the entire banking sector in the autumn of 2008 when the cash machines came close to running dry. 10.25am: More details are emerging about the meetings between the heads of the European Central Bank and the IMF, and Angela Merkel's government in Berlin today.
Kate Connolly, our correspondent in Germany, says that Jean-Claude Trichet and Dominque Strauss- Kahn will put German politicians under pressure to agree the bailout by insisting that the rescue package is "a necessity" rather than just a friendly act. Merkel is due to give a statement at 14.45pm GMT after the talks finish, so we should know by then how this pitch went down. But as I mentioned before, the German public will need some convincing. Banner headlines in today's newspapers include "You Greeks are getting nothing from us!", and "We Fear for our money". Senior members of the ECB appear to be conducting a rapid-fire exercise to get Germany onside. Executive board member Juergen Stark told an audience in Berlin that action is needed now. Stark
310 also claimed that Greece is an isolated case, and that it would be wrong to think that Portugal is in the same mess. And Axel Weber, one of the ECB's senior policymakers, has insisted that the bailout is meant to ensure financial stability across the Eurozone rather than just patch up Greece's self-inflicted wounds. Weber also piled on the pressure, saying that while a widespread credit crunch in Germany is unlikely it "cannot be ruled out." 10.47am: Another statistic to underline the scale of the problems facing Greece - the credit default swap on its five-year government bonds has now reached 911.6 basis points. That means it costs more to insure Greek debt today than that of any other country (Venezuela, at 836 basis points, has just been shunted aside). Bloomberg's David Tweed gets a virtual round of applause for this gem of a quote from a (sadly) unnamed official, who compared Greece's woes to "the Ebola virus", saying they need to be rapidly eradicated. SEE UPDATE 11.51am update Sky's Tim Marshall has also predicted that the PIIGS* (his words, not mine!) are off to get slaughtered, with Britain possibly following.
Instability in Europe is hardly conducive to the recovery of the British economy which has its own massive budget deficit. So these PIIGS may go to market, and this British non piggy may go 'We we we are part of this!' all the way home. * - Portugal, Italy, Ireland, Greece, and Spain 11.00am: More news from Berlin - Trichet and Strauss-Kahn will give a press conference at 12.30 GMT to update the world on their talks with the German government. This seems to have brought some calm to the markets, with the FTSE 100 now down 30 points at 5573. Traders may be calculating that these big cheeses must have something positive to tell us. The pound keeps falling, though, to around $1.5173. I've been speaking to Richard Turner, currency dealer at UK Forex. He explained that people are taking all their risky trades off the table before the crisis blows up. Turner speaks to corporate customers every day, and reports that many are trying to "lock" themselves into the prevailing currency rates today. With the general election looming, there is a lot of fear out there. 11.13am: Our banking expert, Jill Treanor, has been crunching the latest data from the Bank for International Settlements to try and work out how much the Greeks owe to overseas lenders:
The data runs to the end of 2009 and shows that about $240bn (£158bn) is owed overseas. France and Germany have the biggest exposures of $75bn and $45bn respectively. The UK is owed $15bn and the US $17bn. You can see the data yourself on the BIS website. 11.21am: You may remember that a few months ago we reported that two rightwing German politicians had insisted that Greece sells its precious art works and historic buildings as the price for a rescue.
311 German politicians suggested Greece could sell off its islands. Photograph: Corbis Josef Schlarmann and Frank Schaeffler even suggested that Athens could throw a couple of Aegean islands into the pot too.
Well, thanks to the magic of Twitter, they now have an offer: @chriskoski Dear Greece, I am willing to pay up to twenty American dollars, in hard cash, for one or more of your islands. (No minotaurs, please.) Do I hear $30? 11.28am: The Greece crisis continues to feature on today's campaigning circuit. This is from our election live blog:
David Cameron is in Ed Balls' consituency (Morley and Outwood), doing a Q&A with workers at the Wakefield Coca-Cola plant. He has just made his own assessment of the Greek debt crisis. He said that if he had not been for the Tories opposing entry into the euro, British taxpayers would now be spending money bailing out Greece. And I'm seeing on my Reuters terminal that Alistair Darling is repeating his warning that there is "no time to lose" for the IMF and ECB to solve the problems. 11.51am: We've got the full details of the "Ebola" quote I mentioned earlier. One correction, we do have the identity of the speaker, and it's a big hitter - OECD director general Angel Gurria. Over to Bloomberg:
"It's not a question of the danger of contagion; contagion has already happened," Gurria said in an interview with Bloomberg television in Berlin today. "This is like Ebola. When you realize you have it you have to cut your leg off in order to survive." You can watch David Tweed's full interview with Gurria here. This is just the kind of talk that gets FT Alphaville reaching for their tin hats. Alphaville has also flagged up a rumour going round the City that a €90bn rescue package might be announced in Berlin this afternoon. This has helped to pull shares back from those early lows (FTSE 100 now down just 20 points at 5583). In other news, Ladbrokes has cut the odds on Greece being booted out of the eurozone before the end of 2010 to 13/8. To be honest, that's only a small change from yesterday's odds of 7/4 on the "sick man of Europe" quitting the single currency. But perhaps more surprisingly, Ladbrokes is only prepared to give 3/1 odds on Portugal quitting the euro before the start of 2011.....
312 12.31pm: With the FTSE 100 now breaking into positive territory (must be that rumour of the €90bn package being readied), it's time for a quick recap of events so far and the schedule for the rest of the day.
• After falling early, world stock markets have erased most of their losses • But the yield on Greek bonds has soared, and it is now more expensive to insure Greek government debt than any other country's (10.47am) • German politicians are meeting with the heads of the IMF and the ECB shortly (10.25am) • The OECD's director general has said the crisis needs to be dealt with like the Ebola virus (11.51am) • Alistair Darling has urged his fellow European finance ministers to hurry up (10.05am) • City insiders are speculating that a €90bn rescue package for Greece might be announced today (11.51am) Looking ahead.... Jean-Claude Trichet of the EBC and Dominic Strauss-Kahn of the IMF should give an update at 12.30pm GMT (so just under an hour's time), although timing may be flexible Angela Merkel is scheduled to hold her own press conference at 14.45 GMT. Wall Street trading begins at 9.30am EST / 2.30 PM BST. The futures market is indicating that shares will rally somewhat following yesterday's heavy losses, with a 36-point rally being predicted on the Dow Jones index. 12.42pm: As this latest panic was caused by Standard & Poor's decision to downgrade Greece to junk bond status, we thought it would be useful to show a full list of S&P's credit ratings. S&P's ratings cover 123 nations. Having been cut to BB+, the highest of the non-investment grades, the Hellenic Republic is in the same group as the Panama, Egypt and Colombia. Of course, there are various degrees of junk. Right at the bottom of the pile is Equador with a CCC+ rating. Eighteen countries have the honour of a triple-A credit rating. Of these just one, the UK, is on negative credit watch. The others are all seen as stable. But according to Simon Hayes of Barclays Capital, there's little risk of Britain being downgraded:
Although there remains a question mark over the UK's sovereign rating we do not expect a downgrade. S&P and Fitch have expressed some concern about the current government plans for fiscal consolidation, but we expect the next government to tighten policy by a little more than is currently projected. Given the broad consensus across the political parties about the need to reduce the public deficit, and the closeness of the main parties' stated consolidation plans, we do not believe that the election outcome will materially change the broad outlook for public borrowing and debt. 1.06pm: Several hours ago, YeeofLittleFaith posted in the comments below that Greece should "tell S&P to bugger off". 233 fellow readers (and counting) agree. But do you think Germany should yield and support the bailout? We've set up a poll where you can have your say - here. 1.47pm: Interesting news from Lisbon, where leaders across the political spectrum have joined forces in an attempt to reassure the financial markets, after its rating was downgraded by S&P yesterday. Prime minister Jose Socrates met with Pedro Passos Coelho, the head of the main opposition earlier today. The pair just announced that they've agreed to bring forward some austerity measures that had been scheduled for 2011. Socrates, who runs the Socialist party, said they were responding to "a speculative attack on the euro and Portugese debt."
313 Passos Coelho, who heads the centre-right Social Democrats, said he was pleased that Socrates had indicated a willingness to consider "additional austerity measures" 2.05pm: We're keeping a firm eye on Berlin (the other one is being distracted by Gordon Brown's little local difficulty in Rochdale) for any signs of progress in the bailout talks. There's no sign of the Trichet/Strauss-Kahn press conference we were expecting, but it appears that the package will - as the City was starting to suspect - be increased. Reuters is flashing that German MP Juergen Trittin, head of the Greens, is briefing journalists that the total package could be as big as €100bn-€120bn. The French PM has also come out and said that the existing €30bn package on offer from the EU should be implemented immediately. This is exciting the financial markets, sending the euro rallying against the dollar, and up above 87p against the pound. Greek bonds have also benefitted - the spread between Greek and German 10 year government bonds is back around 830 basis points. That's unacceptably high, but better than the 1,000bps spread we saw earlier today. The FTSE 100 is also gaining, now up 32 points at 5632. More details when we get 'em.... 2.34pm: Deep breaths, one and all. Jean-Claude Trichet, head of the ECB, has just poured cold water on those rumours that a €120bn rescue plan for Greece has been agreed. He's saying that it's "Important that we have talks going on...... I am confident that we will see a good conclusion." (emphasis mine). In other words, negotiations continue..... German finance minister Wolfgang Schaeuble also told a press conference that the German government wants to reach an agreement "quickly". This could mean reaching an agreement with groups in the German parliament by Friday, and a new law passed next Monday. The FTSE 100 (our local barometer of investor sentiment) has slipped back to 5614, a 10 point rise on the day. Over on Wall Street the trading bell has just been rung, and the Dow Jones index is up 27 points in early trading at 11019 (it takes the Dow around 15 minutes to get properly up to speed)..... 2.42pm: The press conference with Trichet and Strauss-Kahn is now well underway in Berlin. The key news seems to be that we don't have an agreement yet, but htat we might get one soon: Strauss-Kahn also declined to comment on the speculation that the Greek rescue package is being increased to €120bn. Here are some of the key points via Reuters: Trichet first:
I am making a working assumption that we'll have a very good end of this negotiation. It depends on us and it depends on the government of Greece. I make the working assumption that when this green light is given, depending on the programme itself, then we have an absolute necessity to decide very rapidly. It depends on the decision making process in the IMF and in Europe. That is why the fast decision of the German parliament is so important. And some words from Strauss-Kahn:
It was a useful meeting. As you know the IMF has been discussing with the EU Commission for a week. Of course it's difficult because what is being done by the Greek government and the Greek people is very difficult. The international community is here to help them so that they can return to normalcy.
314 What is at stake today is the economic situation of Greece. but it's more than that. it's the confidence that's at stake. That's why we need to act swiftly and strongly. It is a loan and will be repaid in time. It's not grants. It's loans. If all this goes together rapidly, I'm very confident that the problem will be fixed. But if we don't fix it in Greece it may have a lot of consequences on the EU. 3.29pm: We seem to have reached a bit of a pause, ahead of Angela Merkel's press conference (which was scheduled for 14:45 GMT, so in about 15 minutes time). Hopefully she isn't being distracted by live coverage of a closed door in Rochdale. So let's look at the markets, which are also waiting for events. FTSE 100 is up 9 points at 5612, the Dow Jones is up 23 points at 11015, but the German DAX and French CAC markets are both down around 1% - reflecting the uncertainty over how Greece will impact on the eurozone. The markets are also showing a little bit more confidence in Greece's ability to repay its debts, with the credit default swap on the five-year Greek bond now down at 700-710 basis points. And the yield on the two-year Greek bond is back around 16% - still absurdly high, but better than the 38% briefly recorded this morning. 4.14pm: Here we go... Angela Merkel's press conference has begun in Berlin. The German chancellor is appearing with Dominic Strauss-Kahn - in a show of unity at this time of turbulence? The top line is that we don't have a deal yet. But like Strauss-Kahn and Trichet earlier, Merkel is talking tough about the need to act quickly.
Negotiations with Greece must be accelerated. I hope they can be concluded in the coming days. Merkel also suggests that a lot of the blame for the current crisis can be laid at the door of previous European politicians for allowing Greece into the eurozone in the first place:
In 2000 we had a situation when we were confronted with the question of whether Greece should be able to join the eurozone. It turned [out] that the decision may not have been scrutinised closely enough. And that appears to be the sum of her views. No mention of quite how much might be pumped into Greece - Germany, of course, will have to pay a significant slice of any EU package. Also no hint about whether Greece will have to restructure its existing loans. Analysts believe that Greek bondholders face a severe 'haircut' of perhaps 40%. 4.30pm: Standard & Poor's strikes again! This time Spain is its target. S&P has just downgraded Spain's credit rating from AA+ to AA (two rungs away from the AAA top rating), with a Negative outlook. This blow came just moments before the end of trading in London. Some traders managed to fire sell orders through, so the FTSE100 is now down by 16.91 points at 5586. The euro is really feeling the pain, though, hitting a new one-year low of $1.313 against the dollar. S&P said it had decided to downgrade Spain's credit rating by one notch because it believes its economy will suffer "a more protracted period of sluggish growth than previously expected." In another signal that it is the ratings agency and the bond markets who are calling the shots, S&P said it might revise Spain's outlook to Stable if its government "meets or exceeds fiscal objectives in 2010 and 2011". Don't forget we have a full list of world credit ratings here (which we will be updating sharpish!)
315 4.54pm: The Spanish downgrade really does ratchet up the pressure on the European Union. Spain's stock market has just closed 3% lower, and financial companies across Europe were hit by a late wave of selling. This is certainly bad news for Britain's banks. According to research from Credit Suisse, the UK banking sector has around £75bn of exposure to Spanish debt. Most of it is held by Barclays and Royal Bank of Scotland, while Lloyds is said to have 'negligible' exposure. David Buik of BGC Partners was the first City figure to comment:
The longer the EU and the IMF vacillate and remain indecisive, the greater chance of some implosion! GCSE economics! Wake up guys and smell the coffee! The pound has also hit a new low for the day, touching $1.5146. It's lost nearly a cent and a half since dawn..... 5.03pm: We're also hearing from America that Barack Obama is concerned about the Euro debt crisis - and this was before Spain's credit rating was cut by S&P. According to Reuters,White House spokesman Bill Burton told reporters on Air Force One today that the US president is watching affairs closely:
This is something that is of great concern to the president and we're monitoring it very closely...[The US Treasury is] in close contact with folks in Europe about the issue. 5.22pm: Spain's economic minister has tried to reassure the markets, and the Spanish people of course, following S&P's decision to downgrade the country's credit rating. Jose Manuel Campa said that Spain's plans to cut its deficit are 'unchanged'.
"The important thing right now is to underpin measures to establish a stable medium- to long-term growth pattern, which is the basic aim, because in fact the revision does not cast doubt on our deficit consolitation plan." Spain's 2009 deficit (the amount it had to borrow to balance the books last year) came in at 11.2% of GDP (similar to the UK, and significantly less than Greece's 13.6%). It hopes to cut the deficit to 3% of GDP by 2013. S&P's own report explains that it cut Spain's rating because it believes the country's "real GDP growth" will average just 0.7% over the next six years. Worth remembering that Alistair Darling's forecasts are based on some pretty healthy economic growth for the UK, including around 3.25% in 2011. Miss that, and tackling the UK deficit gets even harder..... 5.43pm: Back on Greece, and this note from Gary Jenkins of Evolution Securities is worth a read. It was written just before S&P cut Spain's rating, but the logic is unchanged:
If the rumour is true that the IMF / EU is about to arrange a 3 year €120bn bail out package then clearly that is very good news for Greece, and indeed other Euro sovereigns as they would also have been unable to tap the market if the bond carnage had continued much longer. After months of inaction the imminent collapse of [the Greek] government's ability to borrow has seemingly resulted in the EU /IMF pulling Paulson's bazooka out of the pocket in order to show the market that they are serious about saving Greece from default and stabilising bond yields. Of course
316 the devil will be in the detail and we should not forget that this will still be debt, not some kind of gift, which the Greeks will have to repay at some stage. However, the provision of liquidity for such a period of time should give Greece the opportunity to step out of the spotlight and try and repair their fiscal position over the medium term. It might be churlish to say that if the EU has stepped in 3 months ago they would not have had to lend much more than €30bn and they would have got much the same result with the benefit of a much lower starting point of yields. Maybe leaving the decision to the last minute was to gather political support but it has been a dangerous game to play. Now we await further official detail but it would be a huge shock if any rescue package fell apart at this stage. 6.24pm: Angela Merkel has been answering more questions at a Berlin press conference. But rather than focusing on today's meetings with the EU and IMF, the German chancellor has spoken about the need to rebuild Europe's economy. She told reporters she was is dissatisfied with progress toward new global trade policy agreements, and argued that the G20 group of industrial and developing nations need to agree broad, meaningful financial regulations. Merkel also said that: We agreed today that the exit from state support measures - so-called exit strategies - need to be co- ordinated as much as possible. Merkel, of course, is under fire for her handling of the whole Greek crisis. As Evolution's Gary Jenkins pointed out (see 5.43pm post), if Germany had agreed the bailout a bit faster we might not be looking at a €120bn package. Over on Comment is free, Benjamin Dierks warns that Merkel's gamble of pandering to Germans' fears over a Greek bailout could backfire. Here's a flavour:
Merkel simply reacted to anti-Greek prejudices apparently shared by great numbers in Germany these days, strongly supported by Germany's biggest tabloid, Bild. "You Greeks are getting nothing from us," headlines say. When young policymakers of Merkel's Christian Democrat and Liberal coalition in a newspaper article asked Greece to sell a few of their islands to solve the problem, it was only the beginning of a series of rather unhelpful proposals. 7.10pm: One more interesting comment from Merkel: “I think the handling of the Greece case shows that everyone knows we cannot allow the same situation with countries as with Lehman Brothers.” http://www.guardian.co.uk/business/blog/2010/apr/28/greece-financial-crisis/print
317 Global Business
April 28, 2010 I.M.F. Promises More Aid for Greece as European Crisis Grows By LANDON THOMAS Jr. and NICHOLAS KULISH Hoping to quell its biggest crisis since the Asian woes of 1997, the International Monetary Fund promised on Wednesday to increase the 45 billion-euro aid package for Greece to as much as 120 billion euros over three years. The fund is racing to conclude an agreement for more painful austerity measures from Greece by Monday, clearing the way for the government to receive funding and reassuring investors worldwide that European debt is safe. On Wednesday, Dominique Strauss-Kahn, the I.M.F.’s forceful managing director, made the higher aid pledge in a private meeting with German legislators. The package would be the equivalent of up to $160 billion and would come from both the I.M.F. and from other countries using the euro. But as has frequently been the case during Europe’s debt crisis, the promise of help was overshadowed by more disturbing news — in this case a cut in the debt rating of Spain by a major agency just a day after downgrades for Portugal and Greece. The growing fear is that the fallout from Greece and even Portugal — which together compose just 5 percent of European economic activity — could be a mere sideshow if Spain, with its much larger economy, has difficulty repaying its debt. While major stock markets stabilized after Tuesday’s sell-off and the cost of insuring the debt of Portugal and Spain declined, the euro slid further on the news of Spain’s downgrade by Standard & Poor’s. Banking stocks in some of the smaller European economies were among the biggest losers on the day. Major stock indexes in the United States rose slightly, with the Dow Jones industrial average ending up 53 points, at 11,045.27. In many ways, the current troubles in Europe go to the heart of the fund’s new mission to serve as a firewall in the financial crisis — an objective that was bolstered by $750 billion in fresh capital from Group of 20 countries last year. Unlike its previous efforts in smaller, emerging economies in Asia in 1997, and more recently in Hungary, Romania, Latvia and Iceland, the fund has been hamstrung in its efforts to act quickly and decisively by political concerns within the European Union, which insists on assuming a leading role. “It is a problem,” said Alessandro Leipold, a former acting director of the I.M.F.’s European department. “It should not be that difficult — they did it in Hungary and Latvia. But the egos are different in industrialized countries.” A case can be made that if Greece had sought help from the fund late last year after the forecast for its budget deficit doubled, the amount of support needed to reassure investors would have been much less than the 120 billion euros that even now might not be enough. In that vein, Mr. Leipold said Portugal and Spain should ignore any stigma associated with an I.M.F. program and make the case to the European Commission in Brussels that asking proactively now for aid would soothe skeptical markets and save Europe billions in the future.
318 “The market has seen its worst fears come true,” he said. “What it needs is a surprise on the upside.” Concerns have already surfaced in Congress that the broad demands of the sovereign debt crisis will quickly exhaust the I.M.F.’s reserves and leave the United States, the fund’s largest shareholder, with the bill. Representative Mark Kirk, a Republican from Illinois, said such a drain could occur if Portugal, Ireland and Spain sought I.M.F. aid at the same time. Mr. Kirk worked at the World Bank during the 1982 debt crisis in Mexico, which came close to depleting the fund’s reserves. “We have seen this movie before,” he said. “Spain is five times as big as Greece — that would mean a package of 500 billion.” Mr. Kirk sits on the House Appropriations Committee that oversees I.M.F. funds and said that he had already asked for hearings on the fund’s ability to handle a European collapse. In Athens, the Greek government had no choice but to seek an I.M.F. solution after its costs of borrowing skyrocketed, but that has not made the negotiations for aid any easier. The fund has sent one its most senior staff members, Poul Thomsen, who has overseen complex fund negotiations in Iceland and Russia, to assist Bob Traa, the official responsible for Greece, to work out a solution. According to people who have been briefed on the talks, the aim is to secure from Greece a letter of intent for even deeper budget cuts than the tough measures imposed so far, like reductions in civil service pay, in exchange for emergency funds. Steps being discussed include closing down parts of the little-used Greek railway system, which employs 7,000 people and is estimated to lose a few million euros a day; limiting unions’ ability to impose collective bargaining agreements, which lead to ever-higher public sector pay; cutting out the two months of pay that private-sector workers get on top of their annual pay packages; increasing the retirement age and cutting back on pensions; and opening up the country’s trucking market in an effort to lower extremely high transportation rates that have hindered the country’s competitiveness. With Greece now shut out of the debt markets, it has little leverage to resist — especially in light of the 8 billion euros it needs to repay bondholders on May 19. Analysts expect a deal by next week at the latest. But whether a Greek resolution calms investor fears about the ability of Portugal and Spain to repay their own maturing debt remains unclear. In a recent note to investors, Ray Dalio, founder of Bridgewater Associates, one of the world’s largest hedge funds, described the market concern as intensely focused on Spain. “Spain’s cash flows (current-account and budget deficit) are extremely bad,” Mr. Dalio and his colleagues wrote in a February letter. “Spain’s living standards are reliant on not just the roll of old debt, but also on significant further external lending. For these reasons, we don’t want to hold Spanish debt at these spreads.” Matthew Saltmarsh and Sewell Chan contributed reporting. http://www.nytimes.com/2010/04/29/business/global/29euro.html?th&emc=th
319 See also: Interactive Map (Published: April 6, 2010) Debt Rising in Europe Greece is not the only country in Europe with problems with credit and debt. http://www.nytimes.com/interactive/2010/04/06/business/global/european-debt- map.html?ref=global
Global Business
April 28, 2010 Already Holding Junk, Germany Hesitates By JACK EWING FRANKFURT — Add this to the list of reasons German taxpayers are unhappy about having to lend Greece money to ease its debt crisis: In effect, they already have. Germany’s financial institutions hold some 28 billion euros, or $37 billion, in Greek bonds, according to estimates by Barclays Capital, extrapolating from International Monetary Fund data. Germany’s regulators and many of its banks do not disclose precise figures, but an informal survey on Wednesday of the largest banks indicates that about half of that debt — rated as junk by Standard & Poor’s since Tuesday — appears on the balance sheets of institutions that are owned or controlled by the German government. And so Germany’s exposure to Greek debt already exceeds, by far, the $11 billion the country would lend to Greece as part of an initial European Union plan to help the country avoid default on its debt — though not the $32 billion that may eventually be needed from Germany. One institution, Hypo Real Estate Holding, carries $10.5 billion worth of Greek debt on its books. After a bailout last year, German taxpayers own Hypo Real Estate. Germany’s direct exposure to Greek debt underscores how the country’s problems are very much Europe’s problems. “It’s not just a question of paying for Greece’s luxury pensions. There are intrinsically strong German interests as well,” said Alessandro Leipold, a former acting director of the I.M.F.’s European department. Greece’s fiscal crisis, beyond threatening the credibility of the euro and the stability of the European economy, also could hit government budgets in a very direct way, potentially requiring them to pump even more money into banks they have already rescued. “If the banks take a hit, then the German government will be involved again,” said Jürgen von Hagen, a professor of economics at the University of Bonn.
320 German political leaders have rejected talk of restructuring Greek debt in a way that would force banks to share the pain, Mr. von Hagen said, because they know that their taxpayers would ultimately get the bill. Germany is not the only European country that is exposed to Greek debt. France is Greece’s biggest creditor, with $67 billion in holdings, including $9 billion held by the Bank of France, according to Barclays. Italy holds $27 billion in Greek paper, followed closely by Belgium, the Netherlands and Luxembourg. American banks held about $16.6 billion in Greek debt at the end of 2009, according to the most recent data from the Bank for International Settlements, making their potential liability small by comparison. The European Central Bank also holds Greek debt, which it accepts as collateral when lending to euro area banks. One question is what the central bank would do if the major ratings agencies continue to downgrade Greek debt, making the bonds ineligible as collateral. Some analysts expect that the central bank, which has already adjusted its rules to accommodate lower-rated bonds, would find a way to prevent Greek debt from being completely ineligible. “The E.C.B., in principle, is always free to change its policy in the interests of financial market stability,” said Jörg Krämer, the chief economist at Commerzbank. Standard & Poor downgraded Spanish government debt on Wednesday, in the latest indication that the Greek problem is spreading. Investors “have now moved on to what appears to be a full-blown bond market crash across the periphery,” economists at Royal Bank of Scotland wrote on Wednesday in a note to investors. Even if other governments do not default, downgrades still cut the value of their bonds on open markets and hurt the balance sheets of banks. The case of Hypo Real Estate suggests that exposure to sovereign debt could be concentrated at a few German institutions that acquired too much risk. Hypo Real Estate’s debt holdings of Portugal, Italy, Ireland, Greece and Spain — all countries with fiscal problems — amounts to about $52 billion. Westdeutsche Landesbank, owned by state and local governments in northwestern Germany, had about $16 billion in such holdings. As part of a drastic restructuring after the financial crisis, the bank put all but $1.3 billion of its paper from those five countries into a separate institution formed to dispose of the bad assets. Commerzbank — whose major decisions can be vetoed by the government, which owns 25 percent of the bank — holds about $4 billion in Greek debt. In Spain, where the construction industry has collapsed, midsize banks have suffered the most. They have been struggling to clean up bad real estate loans on their balance sheets and could face another hit if their holdings of Spanish government bonds lose value. “Spanish banks did not have direct exposure to toxic assets like the German landesbanks,” said Xavier Vives, a professor of economics at IESE Business School in Barcelona. “They had their own toxic assets.” Spain’s big banks, which have so far escaped the worst of the financial crisis, could suffer if Portugal goes the way of Greece. Santander, based in Madrid, has assets in Portugal valued at $64 billion, according to analysts at Nomura in London.
321 Even if Europe’s bigger banks are not heavily exposed to Greek debt, they could see a surge in bad loans in Greece if local companies experience a sharp economic downturn. “There is the whole question about what you do about corporate borrowing, and there are implications for Germany as well,” said Leila Heckman, senior managing director at Mesirow Financial in Chicago. Deutsche Bank’s chief financial officer, Stefan Krause, said Tuesday that the bank would feel the effects of a deeper Greek crisis. “We don’t have much exposure to Greece directly. We are not concerned,” Mr. Krause said during a conference call with analysts. He added, “We could not completely isolate ourselves if the situation gets worse.” http://www.nytimes.com/2010/04/29/business/global/29banks.html?th&emc=th
April 28, 2010 E.U. Officials Irked by Greek Downgrade By JAMES KANTER BRUSSELS — European Union officials Wednesday were unable to mask their frustration with the downgrade of Greek debt by Standard & Poor’s to junk status. “Who is Standard & Poor’s by the way?” asked Amadeu Altafaj, the spokesman for Olli Rehn, the E.U. monetary affairs commissioner, as he took the podium at a regular midday news briefing at the European Commission. Mr. Altafaj later appeared to try to counter any perception he had questioned the ratings agency’s decision on Greece. “I was asking myself,” Mr. Altafaj said in explaining his earlier remarks. “I’m not an expert on credit rating agencies.” He noted that the commission did not comment on specific ratings issued by the agencies. Even so, Mr. Altafaj also said there had been “some doubts” in recent years on the part of regulators in Brussels about the work done by some of the credit rating agencies. Chantal Hughes, the spokeswoman for Michel Barnier, the E.U. commissioner for the internal market, then delivered a thinly veiled warning to agencies like Standard & Poor’s at the same news conference. “We would expect that when credit rating agencies assess the Greek risk, they take due account of the fundamentals of the Greek economy and the support package prepared by the E.C.B., I.M.F. and Commission,” Ms. Hughes said. “And we of course expect that credit rating agencies, like other financial players, and in particular during this difficult and sensitive period, act in a responsible and rigorous way.” The E.U. passed new regulations for credit rating agencies last year after blaming them for significantly contributing to problems in the financial markets over the past two years and, in particular, for underestimating risks associated with complex financial instruments. http://www.nytimes.com/2010/04/29/business/global/29rating.html?ref=global
322
April 28, 2010 Merkel Tested as Escalating Greek Crisis Hurts Euro By NICHOLAS KULISH BERLIN — Chancellor Angela Merkel’s strategy for dealing with Greece’s untenable debt problem was to stall and hope the crisis did not demand action until after a critical state election in early May. On Wednesday, the clock finally ran out. Mrs. Merkel’s hand was forced by mistrustful credit markets and the ratings agency that downgraded Spain, Portugal and Greece in a matter of just two days. As the crisis worsened, political calculations had to take a back seat to the more basic task of ensuring the stability of the euro currency that replaced Germany’s beloved mark. Mrs. Merkel said after meeting with Dominique Strauss-Kahn, the managing director of the International Monetary Fund, that negotiations with the Greek government had to be accelerated and that Germany would do its part to safeguard the euro. But she sounded less than happy about it. At a second news conference later the same day, Mrs. Merkel grumbled that Greece’s entry into the euro zone was not based on “sustainable factors,” making the present crisis particularly difficult to deal with. She went on to say that “we cannot allow the same situation with countries as with Lehman Brothers.” Opinion surveys in Germany have for months shown a sizable majority of the population here opposed to any bailout for Greece, with a constant drumbeat of news media coverage about Greek profligacy helping fuel the discontent. “If Merkel said, ‘Today we give the money to Greece,’ this would be the first domino against Europe in Germany,” said Wolfgang Nowak, a former senior adviser to Mrs. Merkel’s predecessor, Gerhard Schröder, and head of Deutsche Bank’s International Forum. “It would invite populists from all sides to attack.” But the costs of not acting have also grown, and the potential risk of the instability’s spreading to the rest of Europe have become clearer as well. “Why the fire department has been scratching its head for weeks instead of operating the pumps, I don’t understand,” said the former German foreign minister, Joschka Fischer, on Wednesday, according to the German news agency DPA. According to Jürgen Trittin, one of the Green Party’s parliamentary leaders who sat in on a meeting with Mr. Strauss-Kahn on Wednesday, the cost of the Greek bailout could reach $160 billion over three years, with Germany’s share up to $32 billion. DPA quoted Economics Minister Rainer Brüderle as saying that the overall cost could be even higher, about $180 billion. Asked about the sum cited by Mr. Brüderle, a minister in her own government, a clearly displeased Mrs. Merkel responded, “I have asked over and over again in the past days that figures not be named, as long as figures are not in conjunction with a completed program.” Throughout the crisis, which broke out earlier this year, Mrs. Merkel has acted with an eye to the crucial local election in North Rhine-Westphalia on May 9.
323 The North Rhine-Westphalia election has the potential to upset the existing balance of power. At stake is not only the state legislature, but also control for Mrs. Merkel’s coalition over the little-watched upper house of Parliament, the Bundesrat, which has to sign off on legislation. Billions of dollars in assistance for Greece may not play well with voters in a state with its own financial problems. “There’s currently a debate on the finances and budgets of local communities,” said Andreas Blätte, a political science professor at the University of Duisburg-Essen in the state of North Rhine-Westphalia. “There’s a sense that money is really scarce. “In many local communities, fountains are not switched on and flowers are not planted in the public parks because of a lack of money,” Mr. Blätte said. “Bridges that need reconstruction work are not renewed.” From the very start of Mrs. Merkel’s second term, strategists from all the major parties were concerned about the spring vote in North Rhine-Westphalia. The state has more eligible voters than Greece’s entire population and produces nearly a quarter of Germany’s economic output. It would not escape the attention of a master tactician like Mrs. Merkel that it was defeat in North Rhine-Westphalia, with its 18 million residents, that led to the special parliamentary election that cost her predecessor his job and cleared the way for her to take power. For months Mrs. Merkel played for time, talking tough on Greek debt and the need for Athens to institute strict austerity measures while hoping to stave off a bailout decision that many believe is inevitable until after voters in North Rhine-Westphalia go to the polls. But some analysts say that the German people’s desire for stability, and particularly a stable currency, will ultimately outweigh their distaste at bailing out the Greeks. Gerd Langguth, professor of political science at the University of Bonn, said the political fallout from joining in the rescue of Greece, including on the election in the state of North Rhine-Westphalia, would be less than many had predicted. “The people in Germany know that if this operation doesn’t work, the whole euro would be damaged and this is damage for Germany,” he said. http://www.nytimes.com/2010/04/29/world/europe/29germany.html?ref=global
April 28, 2010 Irish Official Calls Markets 'Irrational' By DAVID JOLLY PARIS — A top Irish finance official said Wednesday that the soaring borrowing costs many European governments were facing showed that markets had become “irrational,” and he played down any comparison of Ireland’s financial situation to that of Greece. “The blowout that has occurred across the markets indicates I think that we’ve reached an irrational phase in the pricing of bonds generally,” John C. Corrigan, chief executive of the National Treasury Management Agency, said during an interview. “And the situation with Irish bonds” — the yields of which have soared this week as Greece has melted down — “is on the back of a general blowout.”
324 On Wednesday, the yield on the benchmark 10-year Irish government bond rose 35- hundredths of a point, to 5.5 percent. Although that is more than a full point above the recent low of 4.4 percent on April 5, it is less than half of the equivalent Greek yield. Mr. Corrigan, who was in Paris to discuss Ireland’s debt-selling plans with investors, said Ireland had acted aggressively to correct its problems after the economy and financial institutions were walloped by the collapse of its real estate sector. “We’ve set out a clear path for the correction of the public finances,” he said. “That includes very transparent, but painful, reductions in the public pay bill.” Public-sector wages have already fallen 15 percent, on average, he said, and “anecdotal evidence” suggests a similar squeeze on private-sector pay. In contrast to Greece, where austerity measures have brought strikes and protests, the Irish have reacted relatively stoically. Mr. Corrigan said the country’s experience has been tempered by memories of a 1980s downturn that was exacerbated by the government’s failure to act quickly. “The longer you procrastinate, the more painful it is,” he said. According to Eurostat, the European Union’s statistics agency, Ireland’s government debt — at 64 percent of its gross domestic product — was among the lowest in the euro zone last year, below, for example, Germany’s 73.2 percent. But Mr. Corrigan said that figure was likely to reach 80 percent by the end of 2010. The Irish budget deficit last year was 14.3 percent of gross domestic product, according to recently revised Eurostat estimates, above Greece’s 13.6 percent. Mr. Corrigan noted, however, that the Irish figures were “transparently” inflated by the €4 billion, or $5.3 billion, cost of rescuing foundering banks. He predicted the deficit would fall this year to 11.5 percent of G.D.P. The country’s total financing needs for 2010 are about €20 billion, he said, of which the government has already raised €11.3 billion. Ireland also has a €5 billion cash buffer in reserve from auctions last year, he added. Ireland’s actions to resolve its banking-sector problems responsibly have also reassured investors, he said. As a sign of market confidence, he pointed to a share sale Monday by Bank of Ireland, one of the country’s battered private financial institutions. The €500 million rights issue met with demand from institutional investors for more than three times the amount of stock on offer. http://www.nytimes.com/2010/04/29/business/global/29punt.html?ref=europe
325 Global Business
April 28, 2010 Stocks Resume Fall on Fears Over European Debt Crisis By LANDON THOMAS Jr. With Greece inching closer to the brink of financial collapse, fear that the debt crisis will spread rattled markets for a second day Wednesday, while an extraordinary collection of global financial leaders gathered in Berlin to seek a solution.
Unemployed schoolteachers chanted slogans at an anti-government demonstration in Athens on Tuesday. Shares fell 2 percent or more across Europe and parts of Asia as investors increasingly wonder if Portugal, Spain and even Ireland may not be able to borrow the billions of dollars they need to finance their government spending. “It’s like Lehman Brothers and Bear Stearns,” said Philip Lane, a professor of international economics at Trinity College in Ireland, referring to the Wall Street failures that propelled the financial crisis of 2008. “It is not so much the fundamentals as it is the unwillingness of the market to fund you.” Standard & Poor’s cut Greece’s debt to junk level on Tuesday, warning that bondholders could face losses of up to half of their holdings in a restructuring. The agency also downgraded Portugal’s debt by two notches.
326 Markets in Europe and on Wall Street fell sharply on Tuesday, and the trend continued in Asia Wednesday. Japan’s Nikkei index was down 2.6 percent, while the Hang Seng index in Hong Kong was down 1.5 percent. In early trading Wednesday, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down more than 2 percent; it dropped 3.7 percent on Tuesday. The euro fell to $1.3165, its lowest level of 2010, from $1.3175 late Tuesday. Trading in U.S. index futures suggested Wall Street stocks would open lower. The yield on Greece’s benchmark 10-year bonds soared 1.4 percentage points to 11.1 percent — more than three times that of benchmark German bonds and just below those issued by Pakistan. The yield on benchmark bonds issued by Ireland, Spain, Italy and Portugal also rose Wednesday. The cost of insuring Greece’s, Portugal’s and Spain’s debt against a default are also at record levels — a clear sign that investors are shunning them.
Yiorgos Karahalis/Reuters A protest of austerity measures in Athens on Tuesday. Transportation workers have left train stations deserted because of strikes. “The situation is deteriorating rapidly, and it’s not clear who’s in a position to stop the Greeks from going into a default situation,” said Edward Yardeni, president of Yardeni Research. “That creates a spillover effect.” The heads of the International Monetary Fund, the European Central Bank, the World Bank, the World Trade Organization and the International Labor Organization and the Organization for Economic Cooperation and Development were to meet in Berlin late Wednesday with Chancellor Angela Merkel and other German officials to discuss the Greek rescue. Angel Gurria, head of the O.E.C.D., said ahead of the meeting that the euro-zone countries had to act “very fast.”
327 “It’s not a question of the danger of contagion. Contagion has already happened,” he told Bloomberg television on Wednesday. “This is like Ebola. When you realize you have it you have to cut your leg off in order to survive.” The problem is that it is not just Greece, which expects to receive international aid, but Portugal, Spain and other countries that must issue more debt soon. “The issue is roll over risk,” said Jonathan Tepper of Variant Perception, a research group based in London and known for its bearish views on Spain. “Spain has to issue new debt to the tune of 225 billion euros this year. Forty-five percent of their debt is held by foreigners. So they are dependent on the kindness of strangers.” Countries the world over sell bonds, which help cover the costs of things like social services and government workers’ pay. In developed countries, this debt is considered relatively safe because governments can raise taxes or fees to pay their debts. But government revenue has dropped sharply during the recession, and levying higher taxes risks further slowing the economy. With European budget deficits worsening, investors are now worried that — like American homeowners who borrowed too much in the last decade — some countries may have a hard time paying off their debts. As economic growth picks up, the financial pressure should ease. Officials from the Greek finance ministry and staff from the I.M.F. are racing to conclude aid for Greece by May 19, a crucial date for its refinancing efforts. To some extent, Europe’s paralysis in dealing with Greece is driving the unease and highlighting political divisions within Europe. Each step toward additional support for Greece has appeared to be too little too late. The latest proposal, a 45 billion euro package by Europe and the I.M.F., has done little to calm the markets, and Germany’s statement this week that it must first see more deficit reduction from Greece before fulfilling its pledge has only increased concerns that Europe is not united behind Greece. Kenneth Rogoff, a former economist for the I.M.F. who has studied sovereign defaults, calls the latest assistance package puzzling. “They put their wad on the table, but they could have gone further,” he said of the international plan. “I never thought Europe could take the lead on this.” As the European Union and the I.M.F. debate the politics of Greece’s laying off civil servants or persuading its doctors to pay income tax, it is becoming apparent that the international community may need to come up with a much larger sum to backstop not just Greece, but also Portugal and Spain. “The number would be huge,” said Piero Ghezzi, an economist at Barclays Capital. “Ninety billion euros for Greece, 40 billion for Portugal and 350 billion for Spain — now we are talking real money.” Mr. Rogoff says that the I.M.F. could commit as much as $200 billion to aid Greece, Portugal and Spain, but acknowledges that sum alone would not be enough. In fact, analysts at Goldman Sachs suggest that Greece will need 150 billion euros over a three-year period. What a growing number of investors suggest is really needed is a “shock and awe” figure, enough to convince the markets that peripheral European economies will not be left to fail.
328 On Tuesday, a vice president of the European Central Bank said that the euro zone was facing its biggest challenge since the adoption of the Maastricht Treaty in 1997. Austerity measures in Greece and Portugal are already causing unrest there. Transportation workers in both countries protested on Tuesday, leaving train stations deserted because of strikes. Officials from Standard & Poor’s said the main reason for downgrading the debt of Greece and Portugal was the prospect that forced austerity packages would be an even bigger drag on economic growth. It is the most vicious of circles: stagnating economies are forced to cut back more, which reduces their ability to generate revenue and thus pay off their debts. As part of the euro zone, these countries do not have the ability to print their own money to stimulate growth and bolster exports, so increasing debt and an increasing prospect of default result. Though they are under the most immediate pressure, Greece and Portugal are relatively small economies. Given Spain’s size, its debt crisis is seen by many as the looming problem for world markets. On the surface, its debt load appears manageable. Its debt relative to gross domestic product, the broadest measure of its economy, is 54 percent — compared with 120 percent for Greece and 80 percent for Portugal. But what Spain does have is the highest twin deficit, or combined budget and current account deficits, of any country in the world except Iceland, a reflection of how dependent it is on increasingly fickle foreign investors for financing. Spain has 225 billion euros in debt coming due this year — an amount that is about the size of Greece’s economy. The base of investors willing to invest in the bonds of Spain and other distressed European countries is dwindling. Mohamed El-Erian, the chief executive of Pimco, one of the world's largest bond investors, has said publically that Pimco is no longer a buyer of Greek debt. Other Pimco executives have also said they have a negative view of the debt in countries on Europe's periphery. Given the losses that European investors have taken on Greek, Spanish and Portuguese bonds in recent months, it seems doubtful that such investors can be relied on to provide the capital these countries need. Predicting where and when the next ripple will be felt is an inexact science. During the Asian crisis in 1997, Russia’s debt default took the world by surprise. Some even worry that the next debt crisis may materialize in Britain or even the United States, where budget deficits and debt burdens are growing. Both countries are now issuing debt at reasonable levels of 4 percent. The long run of cheap financing may be coming to an end, though, even for the most creditworthy countries. Jack Ewing contributed reporting from Frankfurt, Jack Healy from New York and David Jolly from Paris. http://www.nytimes.com/2010/04/29/business/global/29euro.html?ref=global-home (27-4-2010) http://www.nytimes.com/2010/04/28/business/global/28euro.html?th&emc=th
329
28.04.2010 Euro area under massive speculative attack
A decision by Standard & Poor’s to lower its rating on Greece to junk status and cut Portugal by two steps has triggered near panic among global investors. Yields on the Greek two-year note soared to almost 19% (while yields on the 10 year actually fell, which means that markets are now speculating on a default). Portugal’s two-year yield jumped to 5.7%. See also Bloomberg. Credit default swaps climbed 111bp to 821for Greek bonds and 54bp to 365 for Portugal. The crisis is worsening and spreading at the same time. Standard & Poor’s warned that holders of Greek debt might recover only 30%-50% of their investment in the event of a debt restructuring. If other rating agencies were to follow, Greece stands to lose its capability to raise liquidity with the ECB. Kathimerini expects negotiations between Greece, the IMF and euro area members to be complete within the next days and that then borrowing conditions should normalise. Jean Claude Trichet and Dominique Strauss Kahn have descended on Berlin for emergency talks with Germany’s chancellor. (A clear announcement from Berlin is now needed, or else the crisis might engulf the entire euro area). Wolfgang Munchau, in his column for FT Deutschland, says that Angela Merkel is destroying the eurozone, and acting fundamentally against Germany’s own interest. The view was also echoed by an editorial in that newspaper. How much money does Greece need? Market participants suggest that Greece might need €90bn in loans (an estimate that seems to escalate by the day), but numbers emanating from talks within the euro area were only half that amount, making some investors wonder whether IMF and the EU countries were actually serious about preventing a default, writes the FT. Barclays Capital tabled the refinancing requirements over the next three years with €186bn. In another story the FT reports that the IMF now looks at raising its share in the Greek rescue package by €10bn amid fears that those €45bn will fail to prevent default. Jean-Claude Trichet said a Greek default was “out of the question”. European Commission officials and the Greek finance minister Georges Papaconstantinou said debt restructuring was
330 not under consideration in talks between Greece, the EU and the IMF. Pressure on EU to act is rising Pressure on EU policy makers is intensifying as Portugal’s stock index plunged and risk premia on Italian and Irlsh bonds rose to a 10 month highs. Bloomberg writes that the danger is that the Greek crisis is spinning out of control. There are no concrete plans of how to help other nations than Greece. FT Deutschland writes that difficulties of Portugal only show the damage done by the weeklong back and forth about the rescue package. Portugal has a public debt similar to France, but together with private sector the combined outstanding debt is 236%, which is more than Greece or Italy.
Portugal Greece
Public debt (as % of GDP) 77% 115%
Public deficit (as % og -9.4% -13.6% GDP)
Unemployment 10.1% 10.2%
Growth rate 2010 est. -2.7% -2%
Refinancing need for €81.9bn €186.9bn outstanding bonds until 2014
There are also first signs that the Greek crisis could even have an impact on the global economy. After the Greek downgrade from S&P, the Vix index, a US volatility index, rose by more than 30%, the biggest jump since the height of the financial crisis in October 2008. The FT writes that it highlights investors fear that the Greek crisis could have knock-on effects on the global economy. See also Bloomberg on this. German parties seem intent to push Greece into outright default In Germany meanwhile, political parties still seem not yet have grasped the urgency for action. FT Deutschland reported that the SPD signaled their readiness for negotiations in the second week of May, on the condition that the loans will be part of an ordinary legislation process. The CDU parliamentary leader said they expect the government to verify how the private sector could participate in the effort. The liberals also want a contribution from insurances and pension funds. Calls for private sector contribution are intensifying also according to Spiegel online. According to the Frankfurter Allgemeine, the German finance minister Wolfgang Schauble already handed out the draft legislation to the parliamentary leaders. Schaeuble assured that there will be an ordinary legislation process to be concluded directly after the elections in North Rhine Westphalia.
331 Kathimerini on how to restore Greek credibility The editorial in Kathimerini writes that to restore credibility, the Greek government needs to explain to the Greek people that there is no other solution. Externally, the credibility would be restored when the prime minister demonstrates a serious team, who without calculating the political costs will do what it takes to save the country. Willem Buiter on options for Greece and the euro area Willem Buiter, chief economist of Citigroup, argues that “the only plausible outcome is where Greece does not default unilaterally but adjusts, most likely with restructuring of its debt, where the euro area offers financial support with tough conditionality”. He also argues that the Greek experience can provide a blue print for a European monetary fund that provides mutual fiscal insurance and Financial Recapitalisation Fund (FIRF) ro recapitalise cross border financial institutions. Both institutions could be operational within a couple of years without treaty change. See FT Alphaville for a summary. http://www.eurointelligence.com/article.581+M5e9fd8450a5.0.html#
332 ft.com/alphaville All times are London time Buiter on Greece and a blueprint for a new Europe Posted by Neil Hume on Apr 27 09:50. Citi’s global economist, Willem Buiter, has done some serious, serious thinking on the issue of sovereign debt problems in the eurozone. And here are the fruits of his labour — starting with Greece: In the ‘game’ between Greece and the Euro Area member states (EA) (where EA is shorthand for all the other parties at the other side of a potential conditional financial rescue effort for Greece), we argue that the only plausible outcome is where Greece does not default unilaterally but adjusts, most likely with restructuring of its debt, where the EA offers financial support with tough conditionality (‘tough love’). Any (‘voluntary’) restructuring would, at the very least, smooth out and lengthen the repayment profile for Greece’s sovereign debt, avoiding the lumpy financing needs of more that [sic] €40 bn in both 2011 and 2012, while keeping the NPV of the debt service constant. It is also quite likely that a haircut of, say, 20 to 25 percent (taking late-April secondary market prices as a guide), will be imposed on the creditors as part of the deal. The IMF tends to insist on burden sharing of this kind when it enters into a multi-year structural adjustment program with a highly indebted country. So, a tough bailout with creditors taking a haircut is the most likely outcome for Greece. This solution should also appeal to EA members because it would be cheaper than bailing out their banks. According to Buiter: A Greek sovereign default would not be costless to the rest of the EA. The reason is that most of the exposure to the Greek sovereign and to other Greek borrowers (e.g. the Greek banks) is with the banks from other EA member state. The choice faced by the French and German authorities in particular is to either bail out Greece or to bail out their own banks. Politically, neither financial rescue action would be popular. Which one would be cheaper financially? We believe it is plausible that a bailout of Greece with tough conditionality would be cheaper for the EA member states than a bailout of their own banks, should Greece default unilaterally. The reason is that a tough bailout would discourage recidivism by Greece as well as emulation of its fiscal irresponsibility by other would-be applicants for financial support (e.g. Spain, Portugal, Italy, Ireland etc.). However, a soft bailout of Greece would be more expensive than a bailout of the domestic banks of the other EA members, because it would lead to open-ended and uncapped demand for financial support from all and sundry. As for the eurozone, Buiter thinks the Greek crisis could provide the blue print for the creation of a European monetary fund. This idea is not new, of course, and many economists think it is the wrong solution and an admission of defeat. But not Buiter. Here’s his blueprint for a new eurozone (FT Alphaville warning: it’s long) :
333 The Greek crisis and the other unresolved sovereign debt problems in the Euro Area have made manifest a serious design flaw at the heart of the Economic and Monetary Union: the absence of even a minimal ‘fiscal Europe’ to complement the monetary union. This black hole at the center of the EMU has not led to serious problems before because of the extraordinarily benign global and European macroeconomic climate since the inception of EMU in 1999. This ‘Great Moderation’ came to an end in August 2007, but the fiscal implications did not become clear until late 2008 and 2009. And how it might work: The Greek experience can provide the template or blue print. The EMF can be established by the member states of the Euro Area under the Enhanced Cooperation provisions of the Treaty of Lisbon. It would not require a Treaty amendment. Subscriptions to the fund would be in proportion to the EA member states’ equity stakes in the ECB. The amount subscribed would have to be significant, say €2 trillion, but the amount paid in could be smaller than that, say just €200 bn, provided the body in charge of managing the EMF (the EMF Board) would be able to call for any or all of the subscribed but not paid in funds to be paid in on demand. The EMF Board would consist of representatives of the EA member states, of the European Commission and of the ECB. Should the conditionality attached to the financial support provided by the EMF not be adhered to, in the view of the EMF, the support would be withdrawn. Sovereign default would always remain an option. Financial support provided by the EMF might be contingent on the prior or early restructuring of sovereign debt, and even on burden sharing by creditors, that is, haircuts. In addition to the mutual fiscal insurance provided by the EMF, a wellfunctioning monetary union requires a fund to recapitalize systemically important cross-border financial institutions, either to permit them to continue operating or to allow them to be wound up or liquidated without unnecessary social costs. Let’s call this the Financial Institution Recapitalisation Fund (FIRF). The most important of these systemically important cross- border financial institutions is the ECB or the Eurosystem. We believe that both the EMF and the FIRF could be operational within a couple of years, if the Euro Area member states get sufficiently scared by the fiscal black hole that threatens to absorb and unmake every EU and EMU achievement since 1957. Even more in the usual place. Related link: Is China blowing bubbles? – FT Alphaville Buiter’s back – FT Alphaville This entry was posted by Neil Hume on Tuesday, April 27th, 2010 at 9:50 http://ftalphaville.ft.com/blog/2010/04/27/212871/buiter-on-greece-and-a-blueprint-for-a- new-europe/
334 ft.com/alphaville All times are Londo Buiter’s back Posted by Neil Hume on Feb 25 11:15. We haven’t heard much from the former Maverecon blogger since he moved to Citigroup to take up the role of chief economist. But that changed on Thursday morning. In Citi’s Global Economic Outlook and Strategy note, Willem Buiter, staying true to his academic roots, has penned a 16-page essay complete with a long list of references. The essay lays out his expectations for the US, eurozone and Chinese economies over the next couple of years. He’s lowered his GDP forecasts for the eurozone, revised his 2012 estimate for the US and says the UK lies somewhere between the two, with the risks to the downside, of course: Our global forecast is reasonably positive. Overall global real GDP growth is expected to be 3.5% in 2010 and 3.3% in 2011 (at market exchange rates). Emerging market growth is seen as buoyant and vigorous at 6.3% in 2010 and 6.0% in 2011. Expectations of growth in the US have been revised upwards for the current year to 3.2%, but down to 2.8% in 2011. For the Euro Area we project an even less robust recovery than we did a month ago, with growth rates for 2010 and 2011 of 1.1% and 1.3% respectively. UK economic growth prospects are somewhere between those in the Euro Area and the US, but with the balance of risks firmly on the downside, in view of the country’s fiscalfinancial vulnerability. And Buiter is far from confident in those estimates: Not only are the growth rates we forecast uncertain (with confidence intervals widening as we move further into the future), they are also contingent on worldwide economic and financial policies. In what follows we spell out some of the key decisions facing policy makers in three important countries or regions: the US, China and other key emerging markets, and the EU/euro area. The uncertainty about the choices that will be made by these policy makers is an important driver of the uncertainty surrounding our forecasts of GDP and other key economic and financial variables. Nowhere more so than in China: China’s contribution to a sustained global recovery likely requires policy changes and key relative price changes that are mostly in the opposite direction from those in the US. We believe it needs to reduce the national saving rate and shift resources from the tradable sectors (exporting and importcompeting) towards the production of non-traded goods and services. Maintaining its historical focus on capital-intensive export-led growth would likely, with the Chinese economy steadily increasing in size, cause the Chinese terms of trade to worsen steadily and materially, with the price of exported manufactures declining relative to the prices of Chinese imports, especially of raw materials and luxury consumer goods and services. It could also increase international trade tensions, especially with the growth performance of China and other key emerging markets outstripping that of the EU, the US and Japan.
335 The traditional Chinese growth model of export-driven, capital-intensive, energy-intensive and commodity-hungry production and depressed levels of private and public consumption is unlikely to be environmentally sustainable. The first constraints to bind are unlikely to be the global environmental externalities from Chinese growth, such as global warming and other forms of climate change. Instead local, regional and national environmental constraints are likely to limit China’s future growth if the country persists with its traditional strategy (see e.g. Economy (2007) and Zissis and Bajoria (2008)). Fresh water pollution and under-pricing of water are producing growing shortages of this vital commodity. Air pollution is creating public health and social problems in most urban and industrial areas. Soil pollution, degradation and erosion, including desertification, are a growing economic, social and political problem. As for the eurozone: Even though the overall fiscal position of the euro area is considerably stronger than that of the US, the UK and Japan (see Figure 7), the euro area is also home to a handful of individual nation states whose fiscal balances are in such poisitions that the markets have begun to question the creditworthiness of their sovereigns, as shown by the CDS spreads and the spreads of their 10-year sovereign debts over Bunds. Greece, Portugal, Spain and Ireland are on the usual list of fiscal suspects, with Italy also making an occasional appearance. In the negotiations between the potential ‘donor countries’ (those considering extending conditional financial support) and the ‘recipient country’ (the country facing a fiscal solvency gap that cannot be resolved, given the internal political equilibrium, without external financial support and externally enforced conditionality), there is a small chance of a failure of political will. There is also a small risk of an equally dangerous inability of the bargaining parties to correctly identify each others’ breaking points. The ‘breaking points’ of the recipient country (or countries) is defined as the largest tax increases and spending cuts that can be imposed without a political collapse in the recipient country. The ‘breaking points’ of the donor countries is defined as the smallest tax increases and spending cuts that can be imposed on the recipient country that still makes the programme politically acceptable in the donor countries. We assume that the maximum amount of Greek fiscal tightening that is politically feasible in Greece exceeds the minimum amount of Greek fiscal policy tightening that is acceptable to the donor countries, otherwise a default is unavoidable. The most likely outcome is that, despite some brinkmanship, a Greek default, or indeed any other sovereign default, will be avoided through a coordinated financial support programme with tough, painful fiscal conditionality, put together by the European Commission (EC) and the Euro Area (EA) member states (or the EU) with the technical support of the IMF. That, after all, is the way the fiscal crises in three EU member states that are not in the euro area — Hungary, Latvia and Romania — have been managed. The rest in the usual place. Related link: Πάντα ε - Willem Buiter’s Maverecon This entry was posted by Neil Hume on Thursday, February 25th, 2010 at 11:15 http://ftalphaville.ft.com/blog/2010/02/25/158801/buiters-back/
336 ft.com/maverecon
Πάντα ε December 1, 2009 11:27am | In January 2010 I will, DV, start a new career as Chief Economist at Citi. Unlike my predecessor in that position, Lewis Alexander, who was based in New York City, I shall be based in London. As a consequence of this career move, Maverecon will be mothballed. That is the logical implication of brand integrity and credibility. In Maverecon I wrote under the cover of ‘academic immunity’. Academics have no duty other than to state the truth as they see it - to ’speak truth to power’. This gives them the ability to be undiplomatic, blunt, tactless and outspoken in ways that are unacceptable in the wider world - the world of grown-ups. When I served on the Monetary Policy Committee of the Bank of England (between 1997 and 2000) and during my years as Chief Economist and Special Counsellor to the President of the European Bank for Reconstruction and Development (2000 till 2005), I was constrained in what I could say and write in public by institutional loyalty and the moral and professional obligation not to damage the organisation I served. Unlike my Maverecon blog, my writings and public statements of those years therefore don’t contain words like ‘complete bollocks’. The joys of academic freedom and irresponsibility include the ability to participate in public debate using expressive, forceful language, strong metaphors, analogues and similes, to go over the top from time to time, to overstate the case and over-egg the pudding and not to worry about giving offense to the high and mighty. Because of their sheltered existence, academics can be reckless with impunity in their excursions into the forum of public opinion. Inevitably, during my years with the MPC and the EBRD, both the form and substance of my public statements were more constrained than during my academic episodes before and after. The same will be true during the years to come with Citi. I will continue to write and publish fast and furiously and to speak out in public on the issues of the day. I plan to contribute regularly again to Martin Wolf’s Economists Forum, to write columns left, right and centre and perhaps even to start another blog. But it won’t be Maverecon because it cannot be Maverecon. It’s been fun blogging with you. December 1, 2009 11:27am in Economics | http://blogs.ft.com/maverecon/2009/12/%CF%80%CE%AC%CE%BD%CF%84%CE%B1- %E1%BF%A5%CE%B5%E1%BF%96/ • Maverecon: Willem Buiter Willem Buiter's blog ran until December 2009. You can read his posts on this site. The direct address is www.ft.com/buiter
Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions.
337
Artikel-Services Tema Servicios Staatsanleihen stark verteuert Gobierno más caro de alta bonos
Griechische Schuldenkrise spitzt sich zu crisis de la deuda griega se intensifica Neues Debakel am griechischen Anleihemarkt: An der Sanierung der Staatsfinanzen wird wieder gezweifelt. Nueva debacle en el mercado de bonos griego está en la rehabilitación de la hacienda pública, una vez puesta en duda. Wie die hohe Neuverschuldung finanziert werden soll ist wieder fraglich. A medida que el elevado déficit se financiará es dudosa. Die Renditen für Staatsanleihen schießen nach oben. El rendimiento de los bonos del gobierno se disparan.
A pesar de todas las promesas siguen aumentando, los rendimientos de los bonos del Gobierno griego 06a 04 2010 Wachsende Zweifel an der Sanierung der griechischen Staatsfinanzen und der Finanzierung der hohen Neuverschuldung haben am Dienstag die Renditen griechischer Staatsanleihen außerordentlich stark steigen lassen. las crecientes dudas acerca de la renovación de las finanzas públicas griegas y la financiación del elevado déficit presupuestario puede tener el martes, los rendimientos de bonos del gobierno griego a subir muy fuertemente. Die Rendite zweijähriger Staatsanleihen sprang um bis 143 Basispunkte auf 6,48 Prozent; die Rendite für die zehnjährige Anleihe legte um 64 Basispunkte bis auf 7,16 Prozent zu. El rendimiento de los bonos del gobierno de dos años saltó a 143 puntos básicos a 6,48 por ciento y el rendimiento de los bonos a diez años subieron 64 puntos básicos a 7,16 por ciento. Damit erreichte der Renditeabstand zu deutschen Bundesanleihen seinen höchsten Stand seit zwölf Jahren. Así, la difusión de rendimiento con los bonos del gobierno alemán llegó a su nivel más alto en doce años. Im Abendhandel gingen die Renditen der griechischen Titel wieder ein wenig zurück. En el comercio por la noche fueron las declaraciones del título griego un poco hacia atrás. Die Anleiherenditen und Kreditausfallkosten anderer südeuropäischer Länder veränderten sich nur geringfügig. rendimientos de los bonos y préstamos pérdida económica de otros países del sur de Europa han sufrido apenas variaciones. Am Devisenmarkt fiel der Kurs des Euro um fast 1 Prozent auf unter 1,34 Dollar. El mercado de divisas en el tipo del euro cayó casi un 1 por ciento por debajo de 1,34 dólares. Das Debakel am Anleihemarkt hatte am Vormittag mit einer Meldung der Nachrichtenagentur Market News begonnen. La debacle en el mercado de bonos habían comenzado la mañana
338 con un informe de la agencia de noticias Noticias del mercado. Demnach gäbe es in der Regierung erhebliche Widerstände gegen Hilfen durch den Internationalen Währungsfonds (IWF), da die vom IWF zu erwartenden strengen Auflagen schwere Proteste in der Bevölkerung auslösen könnten. En consecuencia, habría una considerable resistencia contra el gobierno en su apoyo a través del Fondo Monetario Internacional (FMI), como el FMI podría dar lugar a graves protestas espera que las estrictas condiciones en la población. Die griechische Regierung teilte zwar am Nachmittag mit, sie sei unverändert bereit, mit dem IWF zusammenzuarbeiten. El gobierno griego dijo que, aunque por la tarde, se mantuvo sin cambios dispuestos a cooperar con el FMI. Diese Nachricht konnte die Baisse am Anleihemarkt aber nicht mehr bremsen. Este mensaje no se pudo detener el bajista más en el mercado de bonos, sin embargo. Für den Mittwoch ist die Ankunft von Mitarbeitern des IWF in Athen vorgesehen. Para el miércoles la llegada del personal del FMI en Atenas se ha previsto. Dort wollen sie sich ein genaues Bild von der Wirtschafts- und Finanzlage des Landes machen. No quieren tener una visión clara de la situación económica y financiera del país. Parallel bemüht sich Athen um internationale Anleger für eine Dollaranleihe. Paralelo Atenas buscó a los inversores internacionales para un préstamo en dólares. Spekulationen über harte Konditionen bei bilateralen Finanzhilfen La especulación sobre las duras condiciones de las donaciones bilaterales Belastend wirkten auch Spekulationen über harte Konditionen der Bundesregierung für den Fall bilateraler Finanzhilfen. Las ganancias fueron las especulaciones acerca de las duras condiciones de la Administración Nacional para el caso de las donaciones bilaterales. So war zu hören, Berlin wolle für Notkredite einen Zinssatz von 6,5 Prozent in Rechnung stellen. Tal fue escuchado, Berlín quería para préstamos de emergencia, una tasa de 6,5 por ciento en cuenta. Angeblich könnten sich andere Partner mit Zinssätzen um 4,5 Prozent bescheiden. Se alega que los socios de otros tipos de interés podrían modestos en un 4,5 por ciento. Die Bundesregierung wollte diese Spekulationen nicht bestätigen. El gobierno federal no quiso confirmar esta especulación. Nach einer Mitteilung der Commerzbank sind die Guthaben heimischer Einleger bei griechischen Banken zwischen dem Jahreswechsel und Ende Februar 2010 um fast 8 Milliarden Euro auf 237,8 Milliarden Euro zurückgegangen. Según una declaración del Commerzbank, los activos de los depositantes en los bancos nacionales en Grecia entre el año y al final en febrero de 2010 a casi 8 millones de euros a € 237 800 000 000 se han reducido. Die Statistiken der Bank von Griechenland zeigen, dass sich dieser Rückgang vor allem durch die Reduzierung von Festgeldern durch Privatpersonen und von Sichteinlagen durch Unternehmen erklärt. Las estadísticas del Banco de Grecia demuestran que esta caída se explica principalmente por la reducción de los depósitos de los individuos y los depósitos de las empresas. Die Banken des Landes haben in der Vergangenheit eine bedeutende Rolle bei der Finanzierung der Staatsschulden gespielt. Los bancos del país han desempeñado en el pasado un papel importante en la financiación de la deuda nacional. Nach Presseberichten wurde zumindest ein Teil der abgezogenen Mittel im Ausland angelegt. Según informes de prensa, al menos parte de los fondos invertidos en el exterior fueron deducidas. Der Athener ASE-Aktienindex verlor rund 2,5 Prozent. El índice de Atenas ASE acciones perdieron un 2,5 por ciento. Die Einbuße ist vor allem auf Kursrückgänge von Banken wie der National Bank of Greece, Piraeus Bank, Bank of Cyprus, Alphabank und EFG Eurobank zurückzuführen. La pérdida se debe principalmente al descenso de los precios de los bancos como el Banco Nacional de Grecia, Piraeus Bank, Banco de Chipre, el Banco Alfa y EFG Eurobank debido. http://translate.google.es/translate?hl=es&sl=de&u=%20http://www.faz.net/s/Rub3ADB8A210E754E748F42960CC7349BDF/Doc~E2D5C 129CF4A14C539F780699D9A12B37~ATpl~Ecommon~Scontent.html&ei=GvTXS8faJJ6kON28_cUG&sa=X&oi=translate&ct=result&res num=2&ved=0CA8Q7gEwAQ&prev=/search%3Fq%3DGriechenlands%2BSchuldenkrise%2Bspitzt%2Bsich%2Bzu%26hl%3Des%26rls% 3DGGLD,GGLD:2004-35,GGLD:es
339
Stocks Plunge, Asia Bond Risk Climbs on Greece, Portugal Debt By Patrick Chu and Shani Raja April 28 (Bloomberg) -- Stocks worldwide tumbled and the cost to insure against losses in corporate debt increased after credit rating downgrades of Greece and Portugal fueled concern debt-laden nations are moving closer to default. The euro traded near a one-year low versus the dollar. The MSCI Asia Pacific Index declined 1.6 percent to 125.12 at 11:43 a.m. in Tokyo after U.S. stocks had the biggest decline since February. The cost of protecting Asian bonds from default surged to the highest in two months. The euro was at $1.3207, after earlier dropping to $1.3145, the least since April 29, 2009, Standard & Poor’s 500 index futures were little changed. S&P lowered Greek debt to junk and Portugal was cut two steps as contagion from Greece’s debt crisis spreads through the euro region. The downgrades come as German policy makers insist Greece must outline further steps to cut its budget deficit before they will endorse the release of funds from a 45 billion euro ($60 billion) rescue package. European Central Bank President Jean-Claude Trichet and International Monetary Fund Director Dominique Strauss- Kahn will meet German political leaders in Berlin today to promote the financial assistance plan. “People are panicking about the contagion effect,” said Sydney-based Simon Bonouvrie, who helps manage $1.7 billion at Platypus Asset Management. “It’s an overreaction but the risk aversion will remain until these problems are resolved.” Credit-default swaps on European sovereign debt surged to records. Contracts tied to Greek government bonds climbed 111 basis points to 821, according to CMA DataVision. Portugal rose 54 basis points to 365. Yields on 10-year Treasuries tumbled 12 basis points to 3.68 percent. Greek two-year note yields soared to almost 19 percent and Portugal’s jumped to 5.7 percent. Stocks Skid All 10 of the MSCI Asia Pacific Index’s industry groups fell. The MSCI World Index lost 0.5 percent, extending yesterday’s 2.1 percent decline. Japan’s Nikkei 225 Stock Average slumped 2.5 percent and South Korea’s Kospi dropped 1.3 percent. Hong Kong’s Hang Seng Index sank 1.6 percent. Finance companies as a group were the biggest drag on the MSCI Asia Pacific Index amid mounting credit concerns. HSBC Holdings Plc, Europe’s largest lender, lost 2.3 percent to HK$79.60 in Hong Kong. Mitsubishi UFJ Financial Group Inc., which derives about 5 percent of its revenue from Europe and the Middle East, dropped 2.2 percent to 498 yen. Billabong International Ltd., an Australian surfwear maker that gets 23 percent of its revenue in Europe, sank 2 percent to A$11.56. LG Display Co., which got 18 percent of its 2009 sales
340 from Europe, declined 2 percent to 44,300 in Seoul. Exporters Slide Japanese exporters fell as a stronger yen threatened to hurt the value of overseas income. The yen appreciated to 122.37 against the euro today from 125.62 at the 3 p.m. close of stock trading in Tokyo yesterday. The yen strengthened to 92.82 against the dollar from 93.94. Canon Inc., a camera maker that counts Europe as its largest market, slumped 2.7 percent to 4,265 yen. Toyota Motor Corp., which gets 10 percent of its revenue in Europe, fell 2.2 percent to 3,615 yen. A gauge of material producers in the MSCI Asia Pacific Index sank 1.9 percent, the most of 10 industry groups, after the London Metal Exchange Index of six industrial metals tumbled 4.6 percent, the most since June 22. Crude oil dropped to $82.44 a barrel, the lowest settlement price since April 19. BHP Billiton Ltd., the world’s No. 1 mining company, fell 2.4 percent to A$40.98, while Rio Tinto Group, the world’s third-largest mining company, declined 2.6 percent to A$74.40. Mitsubishi Corp., which trades commodities, lost 1.8 percent to 2,260 yen in Tokyo. Asia Bond Risk The Markit iTraxx Asia index of credit-default swaps on 50 investment-grade borrowers outside Japan jumped 10 basis points to 110.5 basis points as of 7:50 a.m. in Singapore, its highest since Feb. 26, according to Deutsche Bank AG and CMA DataVision in New York. The Markit iTraxx Australia index rose 10 basis points to 98 as of 9:06 a.m. in Sydney, the highest since Feb. 19, according to Nomura Holdings Inc. and CMA. The Markit iTraxx Japan index jumped 8 basis points to 106 as of 9:09 a.m. in Tokyo, according to Morgan Stanley. That’s the biggest jump since Feb. 5 and puts the index on track for its highest close since April 1, according to CMA. The euro earlier dropped to $1.3145, the least since April 29, 2009, from $1.3175 in New York yesterday. The 16-nation currency traded at 122.87 yen from 122.88 yen and touched 122.37 yen, the weakest since March 25. Euro Test “With sovereign problems showing signs of contagion, the euro is losing its allure as an alternative currency to the dollar,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Inc. “The currency may test the $1.30 mark sooner rather than later.” The S&P 500 lost 2.3 percent yesterday in New York. The Stoxx Europe 600 Index slid 3.1 percent, the most since November, and the euro dropped below $1.32 for the first time since April 2009. Financial shares led U.S. stocks lower as the Senate’s interrogation of Goldman Sachs Group Inc. executives spurred concern of tighter regulation. Yields on 10-year Portuguese bonds jumped 48 basis points to 5.69 percent and Irish 10-year yields surged 19 basis points to 5.10 percent. Japan’s bonds advanced, pushing 10-year yields to the lowest level in four months. The yield fell 2.5 basis points to 1.28 percent. Ratings Downgrades S&P lowered Greece’s credit rating to BB+ from BBB+ and warned that bondholders could recover as little as 30 percent of their initial investment if the country restructures its debt. The downgraded marked the first time a euro member has lost investment grade rating since
341 the currency’s 1999 debut. S&P also reduced Portugal by two steps to A- from A+. Greece said the downgrade of its rating by S&P doesn’t reflect the “real facts” of the economy, according to an e- mail from the country’s finance ministry. German Chancellor Angela Merkel said yesterday she won’t release funds to help Greece shore up its finances until the nation has a “sustainable” plan to reduce its budget deficit. Germany’s Economy Minister Rainer Bruederle said Greece needs to present a plan to overcome its debt crisis as soon as possible. To contact the reporters for this story: Patrick Chu in Tokyo at [email protected]; Shani Raja in Sydney at Sraja4Wbloomberg.net. http://www.bloomberg.com/apps/news?pid=20601085&sid=a_WFNjXyWxPU#
342
Kolumne Wolfgang Münchau – 27.04.2010, 17:32 Was will Deutschland eigentlich? What wants Germany, actually? Die Griechenland-Strategie der Bundesregierung schadet dem deutschen Interesse. La estrategia de gobierno alemán respecto a Grecia es mala para los intereses alemanes. Kanzlerin Merkel steuert einen gefährlichen Kurs. Canciller Merkel controla un camino peligroso. Por Wolfgang Munchau Puede haber opiniones diferentes en cuanto a la forma de responder, dada la crisis en Grecia. Pero no importa cómo el interés alemán también se define: Es realmente muy difícil con la posición del canciller de conciliar. Políticamente, la estrategia consiste en firmar las declaraciones de solidaridad en Bruselas y luego recomendar en el hogar como "No, señora," tuvo efectos contraproducentes. Angela Merkel, haber tomado más de un beneficio de ella, la decisión de Grecia de ayuda desde la zona del euro hasta después de las elecciones del 9-NRW para satisfacer de mayo, si no las tácticas que han sido tan evidentes. Y económicamente no tiene sentido, pensamos que la historia una vez sus últimas consecuencias. Grecia no escapará a veces sólo fuera de la zona del euro. Los que proponen esa tontería, no sé los tratados europeos. Los países podrán, de conformidad con el artículo 50 del Tratado de Lisboa voluntariamente retirarse de la UE y por tanto también de la unión monetaria, pero una salida de la zona del euro por sí sola no siempre. No voluntariamente y ciertamente no bajo coacción. Se requeriría una modificación del contrato, y una cosa lleva años, incluso si pudiéramos estar de acuerdo. Hasta entonces, Grecia estaría en quiebra hace mucho tiempo - y gran parte del sur de Europa, probablemente lo es. ¿Cuáles son las alternativas? La infección de riesgo del 100 por ciento Podríamos simplemente se niegan a ayudar y poner un veto a todo el paquete con el argumento de que Grecia aún debemos hacer más. Esta parece ser la posición de la FDP. En el caso del estado griego se quiebra en tres semanas. La probabilidad de que los mercados financieros a continuación, Portugal, Irlanda y romper España en el abismo, que, en este escenario, el 100 por ciento. Hemos visto el riesgo de contaminación el lunes cuando los mercados se levantó, los tipos de interés griegos de dos años en 300 puntos básicos, hasta el 13,5 por ciento más que el interés y catapultó portugués. El euro podría sobrevivir, pero sería en un futuro próximo una moneda débil y enferma, con un vencimiento manejable. • Más información sobre la • Los Estados no pueden ayudar a las unidades de busto miedo de tipos de interés griegos a 15 por ciento
343 (Http: / / www. FTD. de / la política / Europa / : Lento- de ayuda busto-angustia unidades- Griego- tasas de interés en 15 - por ciento / 50.106.527 º html) • Rescate paquete de Grecia Dangerous "Corte de pelo" (Http: / / www. FTD. de / / Finanzas Mercados / -Bonos Lista de cambio : Rettungspaket- de- Grecia peligrosamente corte de pelo / 50.106.579 º html) • Las normas de crisis en el futuro de los expertos llamamiento al compromiso a Berlín Grecia (Http: / / www. FTD. de / la política / Europa / : Govern- de- el futuro de cabeza -Crisis expertos - Demand de- -T confesionales a- grecia / 50.106.581 º html) • Grecia-Toda Europa retoques crisis en Hellas-Socorro (Http: / / www. FTD. de / la política / Europa / : Grecia por la crisis toda- En Europa caldereros- uno- Hellas- Hilfsaktion / 50.106.325 º html) • Inminente UE insta a la cadena de la decisión de Grecia (Http: / / www. FTD. de / la política / Europa / : Amenaza- reacción en cadena UE está impulsando- en Grecia decisión / 50.106.377 º html) • Plan de emergencia, Merkel hace los mercados loca (Http: / / www. FTD. de / la política / Europa / : Plan de emergencia Merkel- latido la- mercados loco / 50.106.025 º html) Más información sobre: Angela Merkel , Euro , la Unión Europea , Grecia Sparzwang Wo Griechen Geld suchen Rigor donde el dinero en busca de los griegos
En segundo lugar, podemos rechazar la ayuda de la parte alemana, sin derecho de veto. A continuación, el paquete de rescate de la UE se reducirá en al menos 8,5 millones de euros, probablemente más, porque otros países del norte de Europa probablemente siga el ejemplo alemán. Para que el paquete de rescate de la UE de 30 millones de euros a unos 20 mil millones euro había caído. Incluso el embalaje original no sería probablemente suficiente. Grecia podría financiar a finales del año, la quiebra nacional sería un poco más tarde. El escenario sería que el anterior. Y además, Alemania estaría aislado en la UE y políticamente. ¿Cómo no exacerbado En tercer lugar podría ser junto con el Fondo Monetario Internacional (FMI) y el gobierno griego para negociar una solución, posiblemente con la participación de los acreedores griego. Usted puede reestructurar los préstamos, por lo que lo haría al final la crisis de la deuda se lateinamerkanischen finales de los 80. ¿Cómo entonces podría acortar los pagos de cupones o reducir el valor nominal de los bonos - Los inversores se pierda la llamada un corte de pelo. También sería posible extender los vencimientos de los bonos del gobierno. Esto tendría la ventaja de que Grecia se liberaría de la carga de tener que refinanciar 150 mil millones en deuda que expira en los próximos cinco años. También, como una estrategia de los riesgos asociados a, pero si dicho acuerdo es voluntario, puede limitar el impacto. A la misma hora, Grecia consolidar su presupuesto y se espera que tome a cambio de asistencia financiera de la UE y del Fondo Monetario Internacional para terminar. Esto sólo funciona si todas las partes ponen sus cartas sobre la mesa. En cuarto lugar, usted puede tomar la estrategia de Merkel, reforzando así el problema de Grecia. Si habían acordado en febrero, no habría un paquete de soporte más pequeño que ahora. la política de Merkel de la confusión ha aumentado el daño a Grecia y, por tanto los costes de Alemania. El cuarto escenario se está quedando en el primero, con la diferencia que es más caro. Incluso fuera de la zona euro
344 Quinta: En caso de Grecia quiere deshacerse de forma absoluta, podríamos tomar el artículo 50 del Tratado de Lisboa incluso afirman, dejando la UE, incluida la zona del euro y volver a introducir un nuevo super-D-Mark. O bien, tratar de conseguir un contrato negociado en marcha para salir de la zona del euro de forma voluntaria. Alemania podría salir del euro y que por lo menos seguir siendo miembro de la UE. Dado que Alemania actualmente listas que yo no tenía la menor duda de que se les concedió este deseo. ¿Cómo se determina la función de estas opciones, el interés alemán? Si es históricamente definido y se ancla Alemania en Europa, entonces no hay alternativa a la tercera opción. Si equiparamos el interés de Alemania a la industria, especialmente del sector exportador, a continuación, se llega a exactamente el mismo resultado. Ayuda a Grecia, tal como se acordó, con condiciones, pero sin trucos. Especialmente las empresas alemanas no tienen interés en un euro a la crisis, ya sea en una permanente debilidad del euro en una morbilidad nacional Neuwährung sobrevaluado. Las mejoras minuciosa de la competitividad de Alemania en los últimos años se ha ido. Por lo tanto, la opción tres y sin alternativa. Si nos atenemos a no ser por razones ideológicas, a continuación, pasamos a uno de los escenario extremo, ninguno de los cuales es de interés de Alemania - no importa cómo usted lo definen. Wolfgang Munchau es FTD y columnista de Financial Times. Lidera la Información Eurointelligence . http://www.ftd.de/politik/europa/:kolumne-wolfgang-muenchau-was-will-deutschland- eigentlich/50106768.html http://translate.googleusercontent.com/translate_c?hl=es&sl=de&u=http://www.ftd.de/politik/ europa/:kolumne-wolfgang-muenchau-was-will-deutschland- eigentlich/50106768.html%3Fmode%3Dprint&prev=/search%3Fq%3DFTD- Serie:%2BWolfgang%2BM%25C3%25BCnchau%2B- %2BDie%2BKolumne%26hl%3Des%26rls%3DGGLD,GGLD:2004- 35,GGLD:es&rurl=translate.google.es&usg=ALkJrhjQ-gJce0yG_rD4cTobNYJtAgWuHw
345
Greek Junk Contagion Presses EU to Broaden Bailout (Update1) By Simon Kennedy and Emma Ross-Thomas
April 28 (Bloomberg) -- Europe’s worsening debt crisis is intensifying pressure on policy makers to widen a bailout package beyond Greece after a cut in the nation’s rating to junk drove up borrowing costs from Italy to Portugal and Ireland. As German Chancellor Angela Merkel delays approval of a 45 billion-euro ($59 billion) Greek rescue, the crisis is spreading. Portugal’s benchmark stock index yesterday fell the most since the aftermath of Lehman Brothers Holdings Inc.’s collapse, while the extra yield that investors demand to hold Italian and Irish debt over bunds rose to a 10-month high. The danger for European officials is that the fiscal turmoil which started six months ago with fudged Greek budget data will spin out of their control. As Greece waits for its euro-region partners to disperse funds, the European Union has announced no concrete plans to help other nations should aid be needed. The euro yesterday weakened to the lowest in a year. “Policy makers need to get ahead of the curve,” Eric Fine, who manages Van’s Eck’s G-175 Strategies emerging-market hedge fund. “This is no longer a problem about Greece or Portugal, but about the euro system.” Governments will hold a summit by around May 10 to discuss Greece, EU President Herman Van Rompuy said today in Tokyo. ‘Well on Track’ “Negotiations are going on and they are well on track and there is no question about the restructuring of the debt,” he said at a press conference. The spread on Italy’s debt yesterday rose 30 basis points to 217 points. Portugal’s PSI-20 stock index dropped 5.4 percent, the most since October 2008. The yield on two-year Greek notes surged to more than 21 percent today, and the nation’s securities regulator imposed a two-month ban on short sales on the Athens stock exchange. The euro rebounded today after the Financial Times reported the International Monetary Fund may increase its financial assistance to Greece by 10 billion euros from the current 15 billion euros, citing unidentified bankers and officials in Washington. The currency was trading at
346 $1.3209 at 12:45 p.m. in Tokyo, having earlier traded at $1.3145, the lowest since April 29, 2009. “The biggest risk now is that the market speculates against every single indebted peripheral country, and that could lead to a sovereign debt crisis,” said Axel Botte, a fixed- income strategist at AXA Investment Managers in Paris. “The contagion risk is real.” Bonds Plunge Bonds plunged as Standard & Poor’s lowered its rating on Greece by three steps to BB+ from BBB+ and warned that investors could recover as little as 30 percent of their initial outlay if the country restructures its debt. The shift came minutes after the rating company reduced Portugal by two steps to A- from A+. The moves exacerbated concern that Portugal and other nations trying to cut budgets will be left to fend for themselves by an EU that took two months to agree on a plan for Greece. “As long as there is no Greek solution there will be continuous problems with the other peripheral economies,” said Gilles Moec, an economist at Deutsche Bank AG. “Every week we think we have clarification and then things become murkier.” Portuguese Finance Minister Fernando Teixeira dos Santos said yesterday his country must react to “attacks by markets.” The crisis is deepening as German lawmakers debate whether to put taxpayers’ money at risk in the face of public opposition and an election in the state of North Rhine-Westphalia on May 9. Bild Zeitung, Germany’s biggest-selling tabloid, yesterday ran a front-page headline asking: “Why do we have to pay Greece’s luxury pensions?” Trichet in Germany European Central Bank President Jean-Claude Trichet, who declined to comment to reporters on yesterday’s downgrades, is in Berlin today to brief lawmakers on Greece’s deficit-cutting plans. The country is struggling to convince investors it can push its shortfall below the EU’s limit of 3 percent of gross domestic product from 13.6 percent last year. The yield on the Greek two-year note rose 505 basis points to 18.99 percent yesterday, more than 20 times the comparable German bond and 6 percentage points more than similar- maturity notes from Pakistan. Portugal’s 10-year bond yield jumped 41 basis points to 5.724 percent. Greece, which faces 8.5 billion euros in bonds coming due on May 19, must still agree on terms for its rescue package, which will be co-financed by the euro region and the IMF. Greek Prime Minister George Papandreou last week activated the aid package and is facing fire from investors who say his budget steps need to go further and from voters who are staging strikes to protest further austerity measures. Turbulence As the turbulence exposes the weakness of having a currency area without a single fiscal authority, some economists said policy makers need to create a lending mechanism that will help other euro areas members through fiscal crises. “What is missing in Europe is an authority that can back sovereigns through a crisis,” James Nixon, co-chief European economist at Societe Generale SA in London. “We desperately need this.” The ECB should consider the “nuclear option” of buying government bonds to fight the crisis, said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc. While
347 the central bank is prohibited from buying assets directly from governments, it can do so on the secondary market. “It sends a signal to investors that the ECB is confident member states won’t default,” said Cailloux. “It’s a powerful confidence shock.” ECB officials including Trichet have down played the risk of contagion from Greece, arguing other economies are in better shape even if they need to cut deficits. Still, Ireland’s deficit was 14.3 percent of GDP last year, the highest in the EU. Spain’s was 11.2 percent and Portugal’s 9.4 percent. Marc Faber, the publisher of the Gloom, Boom & Doom report, said the time had come to eject euro members that repeatedly violated the region’s budget rules, even though no mechanism for such steps yet exists. “The best would be to kick out Greece and the countries that abuse the system,” Faber said in an interview. “They didn’t have the fiscal discipline that was essentially imposed by EU.” To contact the reporters on this story: Simon Kennedy in Paris at [email protected] Ross-Thomas in Madrid at [email protected]; Last Updated: April 27, 2010 23:56 EDT http://www.bloomberg.com/apps/news?pid=20601085&sid=azSj68W31xm8#
348
IMF looks at offering Greece more cash By David Oakley in London, Alan Beattie in Washington and Kerin Hope in Athens Published: April 27 2010 17:27 | Last updated: April 28 2010 08:52 The International Monetary Fund is looking at raising its share of Greece’s financial rescue package by €10bn ($13.2bn) amid fears that the planned €45bn bail-out will fail to prevent the country’s debt crisis from spiralling out of control. On Wednesday Greece’s securities regulator banned short-selling in shares on the Athens bourse until June 28 after investors responding to the country’s deepening debt crisis ditched Greek assets a day earlier. In depth: Greece debt crisis - Apr-26 European debt fears weigh on Nikkei - Apr-28 Opinion: Greek crisis begets German backlash - Apr-27 Lex: Greek risk - Apr-27 Confusion over deal’s size upsets markets - Apr-27 Governor tells Athens to act ‘more decisively’ - Apr-27 “The Capital Market Commission, having considered the extraordinary conditions in the Greek market, has decided to ban short selling on the Athens stock exchange. The rule will be in effect from April 28 until June 28,” it said. Stock markets on both sides of the Atlantic tumbled on Tuesday and the euro fell below $1.32 – a key level not breached in more than a year – after Standard & Poor’s downgraded Greece’s long-term credit rating to junk status, the first eurozone member to have its debt cut to junk. S&P said the average recovery for holders of Greek debt was estimated at 30 per cent to 50 per cent in the event of a debt restructuring. The S&P 500 fell 2.4 per cent and leading European indices suffered their heaviest falls this year. Shares in Athens fell 6 per cent as banks plunged more than 9 per cent. And Portugal’s stock market was down nearly 5 per cent. Greek government bonds suffered further heavy falls on growing concern that the country may need to restructure its debts in spite of the proposed eurozone and IMF rescue. Yields on US and German government bonds also fell sharply. The Vix index, a measure of “fear” in the US stock market, rose by more than 30 per cent, its biggest one-day jump since the height of the financial crisis in October 2008. The moves highlighted the potential that the Greek crisis – the result of too large a debt load and expectations that it may default or have to restructure that debt – could spread and have knock-on effects on the global economy. “Contagion is worsening,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. Senior bankers and officials in Washington and Athens told the Financial Times that the IMF was in talks to increase its aid contribution by €10bn. The fund could make that sum available under a planned three-year loan, according to an Athens-based analyst familiar with the talks. Money Supply blog
349 Track the falls in rating from all the major agencies against Greece and Portugal Investors and policy specialists said expectations of the size of the three-year package in Washington had increased to at least €70bn. The EU has so far proposed to provide €30bn and the IMF €15bn. “The fund’s current ceiling for Greece is €25bn and the release of the extra amount is under discussion,” the analyst said. The IMF declined to comment. Jean-Claude Trichet, European Central Bank president, said a Greek default was “out of the question”. European Commission officials said debt restructuring was not under consideration in talks between Greece, the EU and the IMF. Gold rose to a record high in euro and sterling terms, reaching $1,162.20 an ounce in New York. Greek two-year bond yields rose 2 percentage points to 14.96 per cent – a record high since Greece joined the euro. Investors said Greece needed some €100bn in financial support and believe the proposed €45bn is likely only to be enough for a short-term fix, enabling for Greece to fund itself to the end of the year. Reporting by David Oakley, Alan Beattie, Kerin Hope, Aline van Duyn, Tony Barber, Gerrit Wiesmann and Ralph Atkins Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. http://www.ft.com/cms/s/0/7e1cb600-5212-11df-8b09-00144feab49a.html
350
SPIEGEL ONLINE28. 28a April 2010, 07:26 Uhr Abril de 2010, 07:26 reloj Schuldenkrise Crisis de la deuda
Politiker wollen Banken für Griechen-Hilfe abkassieren Los políticos quieren dinero en efectivo en los bancos para recibir ayuda griegos Auch die Banken sollen zahlen - die Forderungen nach einer Beteiligung von Spekulanten und Geldhäusern an der Griechenland-Hilfe werden immer lauter, inzwischen kommen sie sogar aus der FDP. Los bancos deben pagar - La demanda de participación de los especuladores y casas de dinero en la Grecia de ayuda son cada vez más fuerte, ahora vienen incluso de la FDP. Finanzminister Schäuble warnt vor den Folgen. El ministro de Finanzas Schäuble advirtió de las consecuencias. Doch selbst die Deutsche Bank schließt Mithilfe nicht mehr aus. Pero incluso el banco alemán no ayuda más. Frankfurt am Main - Im Ringen um werden in Deutschland die Rufe nach einer Beteiligung der Finanzbranche immer lauter. Frankfurt am Main - La lucha por el alivio para el endeudados muy Grecia , en Alemania las solicitudes de contribución de la industria financiera es cada vez más fuerte. Die Fraktionen von Union und FDP dringen nach einem Bericht der "Frankfurter Rundschau" darauf, Banken und Spekulanten an der Rettungsaktion zu beteiligen. Los grupos parlamentarios de CDU y FDP a escapar de un informe en el "Frankfurter Rundschau" la participación de los bancos y los especuladores en la operación de rescate. "Diejenigen, die hohe Zinsen für -Anleihen kassiert haben, sollten sich auch an den Kosten einer Rettungsaktion beteiligen", sagte der Vorsitzende des Finanzausschusses im Bundestag, Volker Wissing (FDP), der Zeitung. "Los altos tipos de interés de Grecia reconoció Bond debe tener, aun a costa de una operación de rescate involucrados ", dijo el presidente del Comité de Finanzas en el Bundestag, Volker Wissing (FDP), según el diario. Wenn als Ultima Ratio eine Hilfe für Griechenland unvermeidlich sei, könne es nicht darum gehen, "Spekulanten zu belohnen". Si es inevitable como último recurso, la asistencia a Grecia fue que no podría ser la de "premiar a los especuladores. FDP-Fraktionsvize Jürgen Koppelin sagte der "Passauer Neuen Presse", deutsche Geldinstitute müssten "selbstverständlich" an der Hilfe beteiligt werden. FDP diputado Juergen Koppelin hubiera dicho lo Passauer Neue Presse, "los bancos alemanes" por supuesto "estar involucradas en la asistencia. "Wir helfen, die Banken machen den Profit", so seine Kritik. "Ayudamos a los bancos obtener ganancias", dijo su crítica. Ähnlich äußerte sich der finanzpolitische Sprecher der Unionsfraktion, Leo Dautzenberg. Del mismo modo, el portavoz fiscal dijo que el Grupo Unión, Leo Dautzenberg. "Wir müssen die Möglichkeit prüfen, die Gläubiger Griechenlands heranzuziehen", sagte er dem Blatt. "Hemos examinado la posibilidad de utilizar los acreedores de Grecia", dijo al periódico. "Wir brauchen eine Antwort auf die Frage, wie sich die betroffenen Banken an den Kosten der Rettungsaktion beteiligen", sagte der nordrhein-westfälische Ministerpräsident Jürgen Rüttgers (CDU) der in Düsseldorf erscheinenden "Rheinischen Post". "Necesitamos una respuesta a la pregunta de cómo participar en los bancos correspondientes al coste de la operación de rescate", dijo la Renania del Norte-Westfalia primer ministro Jürgen Rüttgers (CDU), que aparece en Düsseldorf "Rheinische Post". Das könne nicht allein "auf Kosten der
351 Steuerzahler geschehen", sagte der CDU-Politiker weiter. Esto podría no sólo "a expensas de los contribuyentes", dijo el político de la CDU. Zugleich forderte er ein "hartes Paket". También hizo un llamado para un paquete de "duro". Der Internationale Währungsfonds müsse dafür sorgen, dass das Geld zurückgezahlt werde und es müsse einen "EU- Haushaltskommissar in Athen geben". El Fondo Monetario Internacional debe garantizar que el dinero sería devuelto y debe haber un "presupuesto de la UE Comisario en Atenas". Schäuble stellt sich quer Schäuble es transversal Auch die Deutsche Bank Die Banken könnten dabei eine bestimmte Höhe des an den griechischen Staat verliehenen Geldes abschreiben, sagte Deutsche-Bank-Chefvolkswirt Thomas Mayer in Brüssel vor Journalisten. El banco alemán había instituciones financieras privadas en el rescate de Grecia no excluye una contribución. Los bancos podrían a cabo una cantidad específica del Estado griego concedió el dinero para cancelar, en Bruselas, dijo economista jefe del Banco Alemán Thomas Mayer delante de los periodistas. "Der Hauptgedanke ist, dass der Geldgeber aus dem Privatsektor eine gewisse Summe zur Restrukturierung der Schulden des Landes beisteuern", sagte Mayer. "La idea principal es que los donantes del sector privado a contribuir con una suma determinada de la reestructuración de la deuda del país", dijo Mayer. Weiterhin drängen die Oppositionsfraktionen scharf auf ein konsequentes Vorgehen der Regierung gegenüber privaten Geldinstituten: "Angela Merkel muss die Vorstände aller Banken, die am griechischen Desaster Geld verdient haben, zum Rapport ins Kanzleramt vorladen", sagte Grünen-Fraktionschefin Renate Künast dem "Hamburger Abendblatt". Por otra parte, los grupos políticos de la oposición instan agudo sobre la coherencia en el gobierno a las instituciones financieras privadas: "Angela Merkel, los directores de todos los bancos que se han ganado el dinero de desastres griego, que le informe un llamamiento a la que el canciller", dijo Green grupo parlamentario del líder Renate Kuenast el "Hamburger Abendblatt . "Die Bundeskanzlerin und ihr Finanzminister sind gegenüber den Deutschen in der Pflicht, einen Weg zu finden, wie Griechenlands Gläubiger an den Finanzhilfen beteiligt werden können." "La canciller Merkel y su ministro de Hacienda están en contra de los alemanes en el deber de encontrar la manera de los acreedores de Grecia pueden estar implicados en las subvenciones." Es könne nicht sein, "dass die Banken weiter zocken wie vor der Finanzkrise, dass sie auf Fälligkeitsdaten verweisen und sich an Griechenlands Notlage eine goldene Nase verdienen - und das alles auf Kosten der Steuerzahler. " No podía ser, "que los bancos mantengan a jugar antes de la crisis financiera que se refieren a la fecha de vencimiento y ganar una fortuna en la situación de Grecia - y todo ello a costa de los contribuyentes." IG-Metall-Chef Berthold Huber sagte: "Man darf die Banken nicht aus der Verantwortung nehmen." Jefe de IG Metall Berthold Huber, dijo: "No se puede tener en los bancos del atolladero". Griechenland sei ein "Paradebeispiel eines Finanzmarktkapitalismus, der nur seinen eigenen Vorteil sieht". Grecia fue un "ejemplo perfecto de capitalismo financiero que sólo ve su propio beneficio." Die Finanzmärkte hätten nichts gelernt. Los mercados financieros no han aprendido nada. Die Befürworter einer Bankenbeteiligung in Politik und Gewerkschaften werden immer zahlreicher - aber Finanzminister Wolfgang Schäuble (CDU) erteilt dem Vorstoß eine klare Absage: "Lassen Sie es mich ganz deutlich sagen: Es geht nicht um Umschuldung, das ist kein Thema, und davon redet auch niemand, der in der Regierung ein Amt hat", sagte er dem "Handelsblatt". Los defensores de la participación de los bancos en la política y los sindicatos son cada vez más numerosos -, pero el ministro de Finanzas, Wolfgang Schäuble (CDU) de previo la cancelación claro: "Déjenme decir claramente que no se trata de reestructuración de
352 la deuda, que no es un problema, y habla bien nadie que tenga una oficina en el gobierno ", dijo el" Handelsblatt ". Es müsse jetzt darum gehen, "das Hilfspaket, das wir am 11. April in der Euro-Gruppe formuliert haben, zu konkretisieren und umzusetzen und damit ein klares Signal zu senden, dass wir Griechenland nicht fallen lassen". Ahora debe ser sobre "el paquete de ayuda, que hemos formulado el 11 de abril en el grupo de euros para idear y poner en práctica, y así enviar una señal clara de que no estamos permitir a Grecia. Börsen gaben nach Herabstufung von Griechenlands Kreditwürdigkeit nach Intercambios dio paso a la rebaja del crédito a Grecia Schäuble äußerte Verständnis für den Wunsch vieler Abgeordneter, die Banken zu beteiligen. Schäuble expresó su comprensión por el deseo de muchos diputados a participar en los bancos. Er wisse allerdings nicht, wie man diesen Wunsch umsetzen könne, ohne über Umschuldung zu reden "und damit die Situation weiter zu destabilisieren". No lo hizo, sin embargo, sobre cómo implementar este deseo, sin hablar de reestructuración de la deuda "y así desestabilizar la situación". Deshalb sei die Umschuldung in den Verhandlungen des Internationalen Währungsfonds (IWF), der EU-Kommission und der Europäischen Zentralbank mit der griechischen Regierung kein Thema. Por ello, la reestructuración de la deuda en las negociaciones del Fondo Monetario Internacional (FMI), la Comisión Europea y el Banco Central Europeo con el gobierno griego no es un problema. Derweil wächst angesichts einer weiteren Herabstufung der Kreditwürdigkeit Griechenlands der Druck auf die Bundesregierung, rasch über mögliche Milliardenhilfen zu entscheiden. Mientras tanto, la cara cada vez mayor de una degradación adicional de la solvencia de Grecia determinar la presión sobre el gobierno federal de forma rápida millones de dólares en asistencia posible. Die Regierung will an diesem Mittwoch das weitere Vorgehen abstimmen. El Gobierno tiene previsto votar este miércoles para continuar. Auch der Chef des Internationalen Währungsfonds (IWF), Dominique Strauss-Kahn, sowie der Präsident der Europäischen Zentralbank (EZB), Jean-Claude Trichet, sind zu Gesprächen mit Bundeskanzlerin Merkel und Finanzminister Schäuble in Berlin. Incluso el director gerente del Fondo Monetario Internacional (FMI), Dominique Strauss-Kahn, y el Presidente del Banco Central Europeo (BCE), Jean-Claude Trichet, han de mantener conversaciones con la canciller Merkel y el ministro de Finanzas, Schäuble en Berlín. Mit Spannung erwartet wird die weitere Reaktion der Börsen. esperado la reacción de las bolsas de valores de otros. Sie gaben bereits am Dienstagabend nach, als das Rating für griechische Staatsanleihen von der Ratingagentur Standard & Poor's auf das Ramschniveau "BB+" gesenkt wurde. Le dieron después de la noche del martes, mientras que la calificación fue para los bonos del gobierno griego por la agencia de calificación Standard & Poor's a nivel de basura "BB +" reducido. Zusätzliche Besorgnis löste die Nachricht aus, dass auch das Euro-Land Portugal, das ebenfalls mit einem großen Defizit zu kämpfen hat, erneut herabgestuft wurde. preocupación adicional ha disparado el mensaje de que incluso el país euro Portugal, que también tiene que lidiar con un déficit considerable, fue degradado de nuevo. Experten warnen vor einer Kettenreaktion. Los expertos advierten de una reacción en cadena. Der Euro fiel mit rund 1,3290 Euro auf einen der niedrigsten Stände seit einem Jahr. El euro cayó a € 1.3290 a alrededor de uno de los niveles más bajos en un año. Der Präsident des Instituts für Wirtschaftsforschung Halle, Ulrich Blum, sieht in der Einstufung der Kreditwürdigkeit Athens auf "Junk" eine Vorentscheidung für eine mögliche Zahlungsunfähigkeit. El Presidente del Instituto de Investigaciones Económicas, Ulrich Blum mira a la clasificación del crédito de Atenas a la "basura" no es un precedente para una posible quiebra. "Die Märkte sind offenbar zur Entscheidung gekommen, dass Griechenland anhand schlechter Fundamentaldaten die Schulden nicht mehr aus eigener Kraft zurück zahlen
353 kann" sagte Blum dem MDR. "Los mercados parecen llegar a la decisión de que Grecia pagar por los fundamentos pobres no, las deudas por su cuenta puede", dijo Blum, la MDR. "Die Gläubiger müssen erkennen, dass die ganzen Ausleihungen von fast 200 Milliarden Euro nicht mehr einbringbar sind", sagte der Ökonom und kam zu dem Fazit: "Der Stab über Griechenland ist damit eigentlich gebrochen." "El acreedor debe reconocer que la totalidad del préstamo de casi € 200 000 000 000 ya no serán recuperables", dijo el economista, y llegó a la conclusión: "El personal de Grecia es realmente tan roto. Alleine deutsche Banken haben mehr als 30 Milliarden Euro an Griechenland ausgeliehen, "Davon werden sie nicht viel wiedersehen", sagte Blum. Los bancos alemanes sólo han prestado más de 30 millones de euros en Grecia, "que no se volverá mucho", dijo Blum. "Es gibt eine Bank, Hypo Real Estate, die dabei sehr gut mitgemischt hat. Wenn die wieder zehn Milliarden Euro benötigt, dann ist es der Bundeshaushalt, aus dem das gezahlt wird." "Hay un banco, Hypo Real Estate, que ha mitgemischt haciendo muy bien. Si los diez mil millones euros necesario de nuevo, es el presupuesto federal, de la cual se paga". Negative Folgen für den Euro erwartet Blum dennoch nicht. Las consecuencias negativas para el euro aún no se espera Blum. Aber es bestehe - auch mit Blick auf Portugal - die Gefahr eines Lawineneffektes. Pero hay - en vista también de Portugal - el peligro de un efecto de avalancha. Die Euro-Länder wollen - wenn Griechenland strenge Auflagen erfüllt - 2010 bis zu 30 Milliarden Euro Kredite geben - davon soll Deutschland 8,4 Milliarden Euro übernehmen. Los países del euro quieren - que Grecia cumple las condiciones estrictas - 2010 renunciar a 30 mil millones de euros de crédito - de que Alemania es tomar € 8400000000. Der soll bis zu 15 Milliarden beisteuern. El FMI tiene como objetivo contribuir a 15 millones de dólares. Athen braucht bis spätestens 19. Atenas no necesita más tardar el 19 Mai an die neun Milliarden Euro, um Anleihen zu bedienen. De mayo, los nueve mil millones de euros para operar bonos. anr/ddp/AFP/apn anr / DDP / AFP apn
URL: URL: http://www.spiegel.de/wirtschaft/soziales/0, 1518,691673,00. html http://translate.googleusercontent.com/translate_c?hl=es&sl=de&u=http://www.spiegel.de/wi rtschaft/soziales/0,1518,druck- 691673,00.html&prev=/search%3Fq%3DPolitiker%2Bwollen%2BBanken%2Bf%25C3%25B Cr%2BGriechen-Hilfe%2Babkassieren%26hl%3Des%26rls%3DGGLD,GGLD:2004- 35,GGLD:es&rurl=translate.google.es&usg=ALkJrhgWoUmpaKOH9qrAePgSCK6pVm3H-g
354
04/27/2010 06:18 PM Hesitation and Patronizing Advice How Germany Made the Greek Crisis Worse DER SPIEGEL Graphic: Planned emergency loans for Greece
A Guest Commentary by Gustav A. Horn The Greeks are mainly responsible for their current predicament. But the German government has made the country's situation worse with its lectures and reluctance to provide assistance. Chancellor Angela Merkel is mainly to blame for the fact that German taxpayers now have to suffer. "Anything that can go wrong will go wrong." This piece of wisdom, known as Murphy's Law, currently applies extraordinarily well to economic policy in the euro zone. On the one side there are the Greeks, who clearly still do not have their financial statistics under control and who produce one false report after another about the country's budget deficit. On the other side are the Germans, who delight in hindering a rapid and unambiguous European response to the Greek crisis -- in the process driving the cost of a solution through the roof. At the same time, it is striking just how many representatives of the parties in Germany's coalition government are giving advice to the Greeks, ranging from drastic pay cuts to an immediate declaration of insolvency right up to a swift withdrawal from the euro zone. These observers base their verbal radicalism on the noble economic argument that Greece needs to be made "fit for the financial markets" once again. Another, less sophisticated, argument goes that the vast majority of Germans are unwilling, after years of limiting their own consumption, to make financial sacrifices to help out Greece. Both Greece's calculation errors and the diva-like reluctance of the German government to help Athens are nothing more than an invitation to speculators to bet on the demise of the southern European country. This also explains why risk premiums on Greek government bonds have shot up to previously unimagined heights in recent days. The Greek government must now pay such high interest rates to refinance its debts that it can no longer get by without foreign assistance, despite recent tax increases and massive wage cuts. The Role of the Rating Agencies In the process, and as a result of the active assistance of the German government, what has happened is exactly the thing that was supposed to be avoided, and what could have been avoided -- namely that Greece has indeed been forced to ask for financial help from other European countries. The problem for the German government is that its arguments are not tenable. That applies first of all to the reference to the financial markets, an argument that is delivered in a tone of utter conviction that the risk premiums seen there accurately represent real risks. It is remarkable that, after all that has happened in the last
355 couple of years, experienced politicians still assume that financial markets produce rational and reliable information.
It is a fact that speculators have access to no more information about Greece than the economic experts in Europe's governments. There are, however, many market players such as hedge funds which derive profits from uncertain events. The more chaotic things are, the more they like it. Their biggest enemy is political clarity, which is why they are delighted when politicians indulge in scaremongering. In the case of Greece, this scaremongering has succeeded extremely well, as the skyrocketing risk premiums show. The role of rating agencies can also not be forgotten. It was their downgrading of Greece's creditworthiness that triggered waves of speculation. This is partly because the rating agencies, according to current regulations and despite their total failure during the financial crisis, still have a lot of power over the markets - - power that was given to them by politicians. Every downgrading of Greece's status forces banks to sell Greek government bonds. This in turn accelerates the decline in the value of those bonds, leading to even higher interest rates. The populist argument that the majority of the populace is opposed to financial backing for Greece, is also attributable to the German government -- because Chancellor Angela Merkel, of all people, blocked the only successful path that would have prevented having to pay out billions in aid. Hindering Speculation The path would have looked like this: Early on -- in other words, weeks ago -- the EU should have explained credibly and clearly that it would take a shared common responsibility for an equal member of the common internal market. That would have included the readiness, under certain conditions and in an emergency, to guarantee payments to Greece. That declaration would have made speculation a lot more difficult, and it also could have prevented the associated dramatic collapse of the value of Greek bonds. It also would have increased the chances that Greece could rescue itself on its own. And that would have saved German taxpayers a lot of money. Credibility and clarity pay dividends. That, unfortunately, is not the situation we have now. The German government's submissiveness to the financial markets and its cowardice towards the tabloid press (the mass circulation daily Bild, for example, wrote in a headline: "You Greeks Aren't Getting a Thing from Us") could get very expensive for taxpayers. Now the aid will actually have to be paid out. And the fuss the German government continues to make won't change a thing. The only thing that has been achieved is that the speculators are getting even more encouragement to act. In the worst-case scenario, other countries like Spain, Portugal, Ireland and Italy will sink into the downward spiral of speculation. That would be the end of the monetary union -- and another fine example of Murphy's Law.
356
DER SPIEGEL Graphic: Bonds due for selected European countries URL: http://www.spiegel.de/international/europe/0,1518,691650,00.html FORUM: Should Germany and other EU member states bail Greece out to save the euro? http://forum-international.spiegel.de/showthread.php?t=664&goto=newpost
RELATED SPIEGEL ONLINE LINKS: • 'We're on a Slippery Slope': Will the Greek Bailout Destroy the Euro Zone? (04/26/2010) http://www.spiegel.de/international/europe/0,1518,691168,00.html • The World from Berlin: 'Nothing Justifies Kicking Greece out of the Euro Zone' (04/26/2010) http://www.spiegel.de/international/europe/0,1518,691255,00.html • Multi-Billion Euro Bailout Becomes Reality: Greece Asks for Loans from the EU and IMF (04/23/2010) http://www.spiegel.de/international/europe/0,1518,690817,00.html • SPIEGEL 360: The Euro Crisis http://www.spiegel.de/international/europe/0,1518,k-7612,00.html ABOUT THE AUTHOR Prof. Dr. Gustav A. Horn is the director of the Macroeconomic Policy Institute (IMK) at Germany's Hans-Böckler Foundation, a group that is aligned with the country's trade unions. He is a follower of Keynesian economic theories and teaches at the University of Flensburg.
357
April 27, 2010, 4:47 pm The Cohesion Crisis Enough with the PIIGS, a totally unhelpful acronym. What we’re really seeing now is a crisis of the “cohesion countries” — the countries that entered the EU relatively poor, and for a time received substantial aid in the form of “cohesion funds”. (In Eurospeak, it’s important to know the difference between cohesion and convergence: cohesion means convergence in per capita GDP, while convergence means getting inflation rates in line so that monetary cohesion is possible. Get it?) Greece seems to be spiraling over the edge into default; I just don’t know how it steps back from that edge now. Might it also leave the euro? That would be a total mess, inviting the mother of all bank runs, although as I’ll explain in a moment that may be happening anyway. Now, Portugal. Scary spike in bond yields — with the downgrade more following than causing the trend, I’d say:
Bloomberg Portugal 10-year Portugal’s budget woes aren’t nearly as severe, on the surface, as Greece’s. But it had a big real estate bubble, and now the market thinks the banks are in trouble. Via Business Insider, the CDS spreads on banks:
CMA
358 But if the banks have to be rescued, however, this would hit the budget hard. Incidentally, looking at that picture I wonder if Sovereign should stop highlighting the fact that it’s part of a Spanish bank? The question now is how far this will spread. I’m looking at the spread between Italian and German bonds:
Bloomberg It’s getting a bit scary out there. http://krugman.blogs.nytimes.com/2010/04/27/the-cohesion- crisis/
359 Centre for International Governance Innovation G20 faces its most difficult test yet on financial reform Eric Helleiner TUESDAY, APRIL 27, 2010 In normal times, political leaders show very little interest in the arcane details of international financial regulation. The worst global financial crisis since the 1930s has changed that.
When the G20 leaders held their first meeting, in Washington, in November 2008, they focused almost exclusively on financial regulatory reform issues. This topic has remained at the centre of every G20 leaders’ summit since, and it will be just as important in Toronto in June. Although some important progress has been made, the G20 has yet to tackle some of the most important, but also most difficult, parts of the reform agenda. These relate mostly to the implementation of macroprudential regulation.
Before the crisis, international financial regulation primarily concerned the stability of individual financial institutions. The 2008 crisis highlighted the need to complement these microprudential rules with macroprudential ones that protect the stability of the system as a whole.
One example is the proposal to require banks in good times to build up buffers that can cushion them in times of stress and thus help to minimize self-reinforcing credit booms and busts. The G20 has endorsed the use of such “counter-cyclical” buffers but has yet to agree on how to implement them.
An even more important unresolved area is the treatment of what are now called “systemically important” financial institutions. The crisis highlighted very clearly the social and financial costs, both to the taxpayer and the wider economy, when these institutions collapse. The G20 leaders drew the important lesson that these institutions must be subject to special kinds of regulation. At the Pittsburgh summit in September 2009, they concluded that “our prudential standards for systemically important institutions should be commensurate with the costs of their failure.” They set the end of 2010 as the deadline for reaching agreement on how to regulate them.
The urgency of this task has grown. The post-crisis financial landscape is populated by even larger and more interconnected financial institutions than before. Further, they are more keenly aware than ever that, due to their systemically significant status, they are backed by implicit state support.. The result is a massive “moral hazard” problem in which large financial houses may resume excessively risky activities, expecting taxpayers to pick up the tab for mistakes.
Creating an international consensus on this issue has proven very difficult. Some policy makers favour breaking these institutions up, while others want to restrict large banks from high-risk, casino-like activities. Still others prefer simply to subject these institutions to tighter supervision and regulation. There is also growing support for rules that force these
360 institutions to pay for bailouts and to prepare “living wills” that outline how they will be wound down in times of trouble.
The G20 leaders must ensure that the heated debates on this topic within and between countries do not end up delaying, or even inhibiting altogether, reform in this area. In the areas where consensus is emerging (for example, tighter capital standards, leverage ratios, living wills), detailed international rules should be locked in as quickly as possible.
In other areas, it may be more politically realistic to push for vaguer principles-based standards allowing countries more policy space to choose their own approach, but which still make sure that action is taken. This policy space may include giving national regulators more power to regulate international banks on a “host country” basis. If, for example, consensus cannot be reached on international levies to fund future bailouts, national regulators may prefer to force foreign bank branches to be transformed into subsidiaries regulated by the host and backed by local capital that can be mobilized in times of trouble.
The importance of creating international standards on macroprudential issues – even if only at a principles-based level – cannot be overstated. After the global financial crisis of 1997- 1998, policymakers also expressed their desire to address systemic risks. But once the memories of the crisis faded and the urgency of reform dissipated, regulators lacked the tools and incentives to address the build-up of systemic risks, despite various warnings from bodies such as the Bank for International Settlements..
This mistake can be avoided by hardwiring a focus on systemic risks into the international regulatory architecture. Of course, international financial standards are merely “soft law” without enforcement mechanisms. But they are widely followed and may be even more so in the coming years because the Financial Stability Board (FSB), created by the G20, has developed new mechanisms for encouraging compliance, including a new peer review exercise.
If macroprudential regulations are to be implemented effectively, the G20 must confront a final, and more political, issue more squarely. Macroprudential regulation requires regulators to take a strong stance against market trends, such as cyclical booms or growing concentration and risk-taking within the financial system. If regulators’ relationships with private market actors are too cosy, this role will not be performed well.
In their reform discussions, the G20 leaders have yet to address the risk of private sector “capture” of regulatory policymaking directly. The neglect is odd given how many analysts lay considerable blame for the crisis on this very phenomenon.
International standard-setting should tackle the subject explicitly. For example, standards could be developed to address the problem of “revolving doors” by requiring mandatory public disclosure of all past and present industry ties of regulators, and/or specifying a minimum number of years before regulators can shift to private-sector lobbying and vice versa.
International standards for counter-cyclical buffers could also encourage their adjustment based more on rules rather than discretion in order to help regulators resist private lobbying. Standards that reduce complexity and opacity – such as simple leverage rules, or
361 forcing credit derivatives onto exchanges – will also constrain the ability of market participants to dominate regulatory debates through their expertise. In addition, international regulatory bodies, such as the FSB, could make greater efforts to counter- balance private sector influence by consulting with other societal groups as well.
There is, thus, much to be done on the international regulatory reform agenda at the Toronto G20 summit. 2010 will likely be seen in retrospect as the decisive year that determined whether this post-crisis reform initiative succeeded or failed. Success will only be achieved with strong political leadership coming from the leaders’ level.
Eric Helleiner is CIGI Chair in International Political Economy and co-editor of Global Finance in Crisis: The Politics of International Regulatory Change (2010) and The Financial Stability Board: An Effective Fourth Pillar of Global Economic Governance? (CIGI, forthcoming in May).
http://www.cigionline.org/publications/2010/4/g20-faces-its-most-difficult-test-yet-financial- reform
362
Wall Street's Mr. Fabu-less By Dana Milbank Wednesday, April 28, 2010; A02 Fabulous Fab was having another less-than-fabulous day. Goldman Sachs whiz kid Fabrice Tourre is fast becoming the poster boy of the financial crisis, a Michael Milken for the current times. Last week, the SEC filed fraud charges against Goldman Sachs and the 31-year-old Frenchman who calls himself Fabulous Fab. And on Tuesday, Fabulous sat before a Senate panel that wanted to know how he helped a hedge-fund tycoon make a billion dollars by dumping worthless mortgage securities on unsuspecting Goldman customers and then betting against those same securities -- all the while accelerating the burst of the housing bubble and the downfall of the world economy. "The whole building is about to collapse anytime now," Fabulous wrote in one of the e-mails that have come to light. "Only potential survivor, the fabulous Fab . . . standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!" Fabulous, in an e-mail from 2007, described the mortgage business as "totally dead, and the poor little subprime borrowers will not last too long!!!" Yet two months later, he boasted that he had managed to dump some more of the worthless mortgage securities on "widows and orphans that I ran into at the airport." Now Tourre is a triple-exclamation-point "monstruosity" himself -- and, in true Goldman form, he made few apologies as he testified before the Senate investigators on Tuesday. "I deny categorically the SEC's allegations," said Fabulous, short, slight and looking as though he were on a break from prep school. "I will defend myself in court against these false claims." Yes, the e-mails were problematic. "I regret these. . . . I wish I hadn't sent those." In his French accent, it came out more like "regret zeez" and "sent doze." But that was the extent of Fabulous Fab's regrets. "I firmly believe that my conduct was correct," he testified. Fab's arrogance, and that of his Goldman colleagues who also testified, bested previous displays of hubris by the automotive, oil and tobacco industries. Goldman won't be done in by new congressional regulations or the SEC claims (though both will have more sympathy after Tuesday's performance), but the firm will be in big trouble if customers realize how brazenly Goldman has been abusing them. The testimony was so maddening that Sen. Carl Levin (D-Mich.), chairman of the Senate Permanent Subcommittee on Investigations, was moved to utter phrases not suitable for a general audience. Twelve times he used a word that rhymes with "ditty" and has to do with what would be called "la merde" in Fabulous Fab's native tongue. "Look what your sales team was saying about Timberwolf: 'Boy, that Timberwolf was one [censored] deal,' " Levin quoted. "They sold that [censored] deal. . . . How much of that [censored] deal did you sell to your clients?" Pardon his French.
363 One of the Goldman masters of the universe, Michael Swenson, couldn't even be troubled to learn the pronunciation of the ranking Republican's name. He called Sen. Tom Coburn (Okla.) "Cobourne." Coburn asked who made the decision on one of Goldman's bets against mortgage securities. "We worked as a team," replied former Goldman official Joshua Birnbaum, another insolent young man on the panel. "Who led the team?" Coburn asked -- twice. "Are you implying," Birnbaum said haughtily, "that you can only have one person leading teams?" After another tangle, Coburn told Birnbaum his answer was "inappropriate, and it's also discourteous to us. We're not that stupid." The Goldman men found themselves blameless in the bursting of the bubble they helped to inflate. "I do not think that we did anything wrong," Swenson said. "I don't have regrets about doing things that I think were improper," said Daniel Sparks, head of the mortgage unit. Sen. Jon Tester (D-Mont.) asked when they became "convinced that there was a housing bubble on the verge of collapse." "I don't believe I used those words," Birnbaum replied with disdain. "That's how you put it," he added. Senators on both sides were appalled by Goldman and its witnesses. The usually mild Sen. Susan Collins (R-Maine) spoke of "unscrupulous operators who seek to profit from the public's misfortune." "You think you're so smart?" challenged Sen. Claire McCaskill (D-Mo.). "Any street gambler would never place a bet with a bookie or a house with the record that is revealed in the documents." "I'd like to avoid the betting analogy," Sparks said reproachfully. And Fabulous wanted to avoid the whole thing. The poor misunderstood millionaire complained that "the last week has been challenging for me and my family, as I have been the target of unfounded attacks." Unfounded? Did he tell the clients he sold the worthless mortgage securities to that the portfolio had been designed by somebody who was shorting those same securities? "I don't specifically remember the words I used," Fabulous said. How much of the worthless portfolio was selected by the man who was shorting it? "I don't remember," he said. What about his previous claim that the doomed portfolio had been "selected and mutually agreed" with the client that bought it? "It's not very accurate," he admitted. The SEC probably will not rate that a fabulous answer. http://www.washingtonpost.com/wp- dyn/content/article/2010/04/27/AR2010042704637.html?wpisrc=nl_headline
364
Goldman Sachs executives face senators investigating role in financial crisis By Zachary A. Goldfarb, Washington Post Staff Writer Wednesday, April 28, 2010; A01 It was a day of public flogging for Goldman Sachs. Summoned to a Senate panel examining the firm's role in the financial crisis, Goldman executives endured a 11-hour excoriation that crystallized the wide gulf between Washington's view of the storied investment bank and Goldman's view of itself. The seven men, including chief executive Lloyd C. Blankfein and Executive Director Fabrice Tourre, subject of a fraud lawsuit by the Securities and Exchange Commission, at times struck a humble tone with the committee but gave no ground on the concerns raised by senators, offering technical responses and eating up time looking for documents in a 900-plus-page binder. But for the lawmakers, who seldom engaged the finer points the executives made about the markets, the question of Goldman's conduct on the eve of the financial crisis was not primarily one of law or finance. "The SEC and the courts will resolve the legal question of whether Goldman's actions broke the law. The question for us is one of ethics and policy," said Sen. Carl M. Levin (D-Mich.), chairman of the Senate Permanent Subcommittee on Investigations. "Were Goldman's actions in 2007 appropriate? And if not, should we act to bar similar actions in the future?" But for Goldman's executives, it was a narrower question of what the firm was legally required to do to serve its clients and protect itself as the financial markets declined. Blankfein, the public face of Goldman, began his testimony more than seven hours into the hearing, receiving a more gentle line of questioning than several of his lieutenants. First to testify were four current and former mortgage executives -- Tourre, Daniel Sparks, Michael Swenson and Joshua Birnbaum -- who all wore dark jackets and white shirts and had worked extensively to prepare for questions the committee might ask. Goldman hired lawyers who formerly worked on the committee to prepare the executives; one of those lawyers once told a trade journal that the best strategy is "long, thoughtful pauses followed by rambling non-responsive answers." The executives practiced the technique. At one point, Sen. Susan Collins (R-Maine) asked Tourre about an e-mail he wrote that suggested he was looking to sell mortgage-backed investments only to unsophisticated investors. But, taking his time, he asked her three times to identify which e-mail she meant and to repeat her question. "I cannot help but get the feeling that a strategy of the witnesses is to try to burn through the time of each questioner," Collins responded in an exasperated tone. The Senate panel released a report this week, based on millions of pages of internal Goldman documents, that accuses the firm of assembling risky mortgage-backed investments, making huge and profitable bets against the housing market and acting against the interest of its clients. It was this last charge that provoked the strongest protests from Blankfein as Levin pressed it. Referring to evidence collected by his committee, Levin asked the chief executive how Goldman could sell securities to clients without telling them that it was betting against those very investments on the side.
365 Blankfein was speechless. "You just don't think it's relevant and needs to be disclosed. Is that the bottom line?" Levin asked. "Yes," Blankfein responded. Blankfein attempted to explain to the senator that it is his bank's job to act as a middleman, buying from clients when they want to sell a security and selling them a security when they want to buy. "You're out there looking around for buyers of stuff, whether it's junk or not junk, where you are betting against what you're selling," Levin said. "You're not troubled by that?" "I'm not troubled by the fact that we market-make as principal . . . and that when somebody sells, they sell to us, or when they buy, they buy from us," Blankfein responded. Goldman also faces a suit by the Securities and Exchange Commission that claims the firm and Tourre broke the law and committed fraud when they sold clients a complex investment linked to the value of home loans that was secretly designed to fail. Another firm, Paulson & Co., a hedge fund, helped Goldman create the investment and planned to bet against it. But the SEC claims that relationship was not disclosed to Goldman's clients, ACA Financial Guaranty and the German bank IKB. At the hearing, Goldman executives, including Tourre, continued to deny wrongdoing. But while Tourre said he told ACA that Paulson would bet against the investment, he acknowledged that IKB was not informed. Goldman executives said disclosure was not necessary, because ACA and IKB were sophisticated investors that knew what they were betting on. Throughout the hearing, Levin cited e-mails from Goldman employees disparaging investments they were selling to clients. One e-mail Levin repeatedly referred to described investments Goldman was selling as "shitty." "Do you think Goldman ought to be selling it?" the senator asked David Viniar, Goldman's chief financial officer. Viniar responded: "I think that's a very unfortunate thing to have on an e-mail," drawing a burst of laughter from the hearing room. But, he said, it was fine to sell an investment that was not backed by good loans if a client wanted to bear the risk of buying it for cents on the dollar. "We know it's not a great piece of paper, but it means they think it's worth more than 20 cents," Viniar said. Although they all had harsh words for the Goldman executives, the senators themselves did not agree on everything. One topic of debate: whether the executives were the equivalent of, or worse than, Las Vegas bookies. Sen. Claire McCaskill (D-Mo.) told the executives: "You are the bookie. You are the house. You had less oversight than a pit boss in Las Vegas." The senator from Nevada disagreed. "Most people in Las Vegas would take offense at having Wall Street compared to Las Vegas," said Sen. John Ensign (R). "Because in Las Vegas, actually, people know that the odds are against them. It's almost like somebody was playing a slot machine [as] the guys on Wall Street were in there kind of tweaking the odds." Staff writer Frank Ahrens contributed to this report. http://www.washingtonpost.com/wp- dyn/content/article/2010/04/27/AR2010042702326.html?wpisrc=nl_headline
366
TV debate woke us up to devolution As England starts to realise the amount of power devolved to Scotland, Wales and Northern Ireland, Britain will change
Timothy Garton Ash guardian.co.uk, Friday 16 April 2010 14.00 BST
Nick Clegg may have triumphed in the first debate, but more significant were Alastair Stewart's reminders to viewers of devolved powers. Photograph: Reuters Beyond Nice Nick's personal triumph, there were two things about yesterday's TV debate that may end up changing British politics forever. One is the broad church of the liberal centre-left, or Lib-Lab. Gordon Brown's "I agree with Nick" was tactical, but also often true. When he said Nick Clegg supported him on democratising parliament, what that meant was that Labour is running to catch up with the Liberals on constitutional reform. One reason David Cameron came off worse was that, again and again, this was two against one, Lib-Lab scissors on the Con in the middle. Sooner or later, this convergence of the liberal centre-left will prevail. And it will, to coin a phrase, break the mould. The other mould-breaker was revealed not by any of the three would-be PMs, but by ITV's rather twitchy moderator, Alastair Stewart. As the discussion turned from health to crime to education, he kept reminding viewers that Scotland, Wales and Northern Ireland had their own policies in these areas – and would have their own separate debates. In other words, half of what matters most to most voters has been devolved. This is something 13 years of New Labour really has changed. Immediately afterwards, the leaders of the Scottish National party and Plaid Cymru piled in to point this out. Most people in England have not fully woken up to this yet, but they – we – are waking. A small indication is the fact that English votes for English laws made it into the top five in Power2010's polling on the political reforms people want. As England awakes, Britain will change. Nice Nick's triumph may not last until 6 May, nor translate into more Lib Dem seats under the present electoral system. But if, in 2020, we have a federal Britain with a coalition government, then think back to last night. You first saw it there. http://www.guardian.co.uk/commentisfree/2010/apr/16/election-debate-devolution/print
367 Opinion
April 27, 2010 OP-ED COLUMNIST The Goldman Drama By DAVID BROOKS Between 1997 and 2006, consumers, lenders and builders created a housing bubble, and pretty much the entire establishment missed it. Fannie Mae and Freddie Mac and the people who regulate them missed it. The big commercial banks and the people who regulate them missed it. The Federal Reserve missed it, as did the ratings agencies, the Securities and Exchange Commission and the political class in general. It’s easy to see why this happened. People who make it into the establishment work and play well with others. They are part of the same overlapping social networks, and inevitably begin to perceive the world in similar, conventional ways. They thrive in institutions where people are not rewarded for being cantankerous intellectual bomb-throwers. Outside the establishment herd, on the other hand, there were contrarians who understood the bubble (which was the easy part) and who figured out how to take counteraction (which was hard). Michael Burry worked at a small hedge fund in Northern California. John Paulson ran an obscure fund in New York. Eventually, there were even a few traders at the big investment banks who also foresaw the imminent collapse. One of them was “Fabulous” Fabrice Tourre of Goldman Sachs. If this were a Hollywood movie, the prescient outsiders would be good-looking, just and true, and we could all root for them as they outfoxed the smug establishment. But this is real life, so things are more complicated. According to Gregory Zuckerman’s book, “The Greatest Trade Ever,” Burry was a solitary small-time operator far away. Paulson was cold and diffident. And as for Fabulous Fab, he seems to be the product of the current amoral Wall Street culture in which impersonal trading is more important than personal service to clients, and in which any product you can sell to some poor sucker is deemed to be admirable and O.K. In this drama, in other words, the establishment was pleasant, respectable and stupid, while the contrarians were smart but hard to love, and sometimes sleazy. This week the drama comes to Washington in two different ways. First, as is traditional in our culture, the elected leaders of the clueless establishment have summoned the leaders of Goldman Sachs to a hearing so they can have a post-hoc televised conniption fit on the amorality of Wall Street. This spectacle presents Goldman with an interesting public relations choice. The firm can claim to be dumb but decent, like the rest of the establishment, and emphasize the times it lost money. Or it can present itself as smart and sleazy, and emphasize the times it made money at the expense of its clients. Goldman seems to have chosen dumb but decent, which is probably the smart narrative to get back in the establishment’s good graces, even if it is less accurate. The second big event in Washington this week is the jostling over a financial reform bill. One might have thought that one of the lessons of this episode was that establishments are prone to groupthink, and that it would be smart to decentralize authority in order to head off future bubbles.
368 Both N. Gregory Mankiw of Harvard and Sebastian Mallaby of the Council on Foreign Relations have been promoting a way to do this: Force the big financial institutions to issue bonds that would be converted into equity when a regulator deems them to have insufficient capital. Thousands of traders would buy and sell these bonds as a way to measure and reinforce the stability of the firms. But, alas, we are living in the great age of centralization. Some Democrats regard federal commissions with the same sort of awe and wonder that I feel while watching LeBron James and Alex Ovechkin. The premise of the current financial regulatory reform is that the establishment missed the last bubble and, therefore, more power should be vested in the establishment to foresee and prevent the next one. If you take this as your premise, the Democratic bill is fine and reasonable. It would force derivative trading out into the open. It would create a structure so the government could break down failing firms in an orderly manner. But the bill doesn’t solve the basic epistemic problem, which is that members of the establishment herd are always the last to know when something unexpected happens. If this were a movie, everybody would learn the obvious lessons. The folks in the big investment banks would learn that it’s valuable to have an ethical culture, in which traders’ behavior is restricted by something other than the desire to find the next sucker. The folks in Washington would learn that centralized decision-making is often unimaginative decision- making, and that decentralized markets are often better at anticipating the future. But, again, this is not a Hollywood movie. Those lessons are not being learned. I can’t wait for the sequel. http://www.nytimes.com/2010/04/27/opinion/27brooks.html?th=&emc=th&pagewanted=print
369 Business Day
April 26, 2010 G.O.P. Blocks Debate on Financial Oversight Bill By DAVID M. HERSZENHORN and EDWARD WYATT WASHINGTON — Senate Republicans, united in opposition to the Democrats’ legislation to tighten regulation of the financial system, voted on Monday to block the bill from reaching the floor for debate. As both sides dug in, the battle has huge ramifications for the economy and for their political prospects in this year’s midterm elections. Republicans said they were intent on winning substantive changes to the bill and accused the Democrats of rushing the most far-reaching overhaul of the financial regulatory system since the Great Depression. Both sides say they expect the overhaul eventually will be approved. Democrats charged that Republicans were leaving the country at risk of another financial calamity and siding with wealthy corporate interests. The chief executive of one such firm, Goldman Sachs, the Wall Street powerhouse accused of fraud by federal regulators, is to testify Tuesday before a Senate committee. Sensing political momentum at a time of deep public anger at Wall Street, Democratic leaders said they would keep the regulatory bill on the floor — and delay the rest of their busy legislative agenda — to ratchet up the pressure on the Republicans. Democrats said they believed the fight over financial regulation — and signs of economic recovery in many parts of the country — could help turn the tide of anti-incumbent sentiment that has them bracing for substantial losses in November. President Obama joined in criticizing Republicans for refusing to begin debate, and urged them to “put the interests of the country ahead of party.” “We are as vulnerable as we are today in the waning days of April 2010 as we were in the fall of 2008,” said Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee, who is the primary sponsor of the bill. “Nothing has changed, except, of course, jobs have been lost, homes have gone into foreclosure, retirement incomes have evaporated, housing values have declined.” Republicans, too, see major advantage in their stance, with the Senate minority leader, Mitch McConnell of Kentucky, using the issue to bolster his overarching political argument this year: that the Democrats’ one-party rule in Washington is detrimental. Mr. McConnell, in a floor speech on Monday, rattled off a list of major legislation that he said had not benefited Americans in the ways Democrats had promised, including the economic stimulus measures and the health care legislation. “The days of taking the Democrats’ word for it are over,” he said. The vote on Monday was 57 to 41, as Democrats fell short of the 60 votes needed to cut off a filibuster of a motion to proceed. One Democrat, Senator Ben Nelson of Nebraska, sided with Republicans, apparently out of concern over a provision related to tightening the rules on derivatives trading that was of
370 particular concern to Berkshire Hathaway, the investment company controlled by Warren E. Buffett and based in Omaha. At the last minute, the Senate majority leader, Harry Reid of Nevada, switched his vote to side with the Republicans — a strategic maneuver that would allow him to call a repeat vote, which is expected on Tuesday. Two Republicans senators, Christopher S. Bond of Missouri and Robert F. Bennett of Utah, did not vote. With the exception of Mr. Nelson’s opposition, the result was expected: Republicans had warned for more than a week that they would block floor debate of the legislation. In the days ahead, the fight in the Senate seems likely to hinge on a question raised forcefully in recent days by Mr. McConnell: Does the legislation still contain loopholes that could allow future taxpayer-financed bailouts of failed financial institutions? Democrats say the bill is written specifically to prevent such bailouts, and have accused Republicans of blatantly misrepresenting the measure. But Republicans insist government bailouts are still possible. They pointed to language, for instance, in a chapter on liquidating failed banks that established a “strong presumption” of losses for creditors and shareholders. Some Republicans say those losses should be mandatory. Senator Judd Gregg, Republican of New Hampshire, said Republicans wanted to prevent a collapse like the one in 2008 but warned that Democrats were in danger of strangling the economy with excessive regulation. “We shouldn’t put in place a regulatory regime that overly reacts and, as a result, significantly dampens our capacity to have the most vibrant capital and credit markets in the world,” he said. After meeting briefly on Monday, Mr. Dodd and Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, reported no progress. The bill, developed in months of talks between senators in both parties, would touch every aspect of the financial system. It would authorize the government to shut down a financial institution deemed to pose a threat to stability of the system, using a $50 billion fund financed by big banks to help the failed company meet financial commitments while it is being wound down. The bill would also establish a consumer protection agency intended to end predatory lending practices and require that consumers receive detailed information on mortgages, credit cards and other financing. It would provide new oversight of hedge funds and impose tough rules on the trading of derivatives, the financial instruments at the center of the 2008 economic crisis. It would restructure the federal system of bank regulation, moving many small banks out from under the Federal Reserve, while providing shareholders of public companies with greater say in electing directors and an advisory role on executive pay. The Republicans said there were numerous problems in the Democrats’ legislation — from the omission of provisions dealing with the mortgage giants, Fannie Mae and Freddie Mac, to disputes over the specific language. They said the bill would give too much power to the new consumer protection bureau. Republican aides on the banking committee said they were working to finalize their own version of a financial regulatory bill, but they said it was unclear when, or if, they would release it.
371 Mr. Nelson last week supported the new derivatives rules as a member of the Agriculture Committee, which shares jurisdiction on derivatives because it oversees the Commodity Futures Trading Commission. That bill would have exempted the holders of existing derivatives contracts from posting collateral or margin requirements. But in the deal reached over the weekend among Democrats, that provision was removed, angering Mr. Nelson, Congressional aides said. Carl Hulse contributed reporting. http://www.nytimes.com/2010/04/27/business/27regulate.html?th&emc=th
372
Talks continue as GOP senators block advance of financial overhaul bill By Brady Dennis and Shailagh Murray Washington Post Staff Writer Tuesday, April 27, 2010; A01 Republicans voted unanimously Monday to block an effort to overhaul financial regulations from reaching the Senate floor, pledging to hold out for significant changes to the bill even as they acknowledged the political risk of appearing to obstruct a popular cause. The 57 to 41 vote in favor of beginning debate, short of the 60 needed, was expected, although Democrats did suffer an unanticipated defection when Sen. Ben Nelson (Neb.) joined Republicans as a no. Senate Majority Leader Harry M. Reid (D-Nev.) was prepared to call further votes Tuesday, Wednesday and beyond. "We need to keep the pressure on to get a deal as quickly as possible," Reid spokesman Jim Manley said. About two-thirds of Americans supported stricter regulations on the way banks and other financial institutions conduct their business, according to a Washington Post-ABC News poll. Majorities also backed two main components of pending Senate bill: greater federal oversight of consumer loans, and a proposed fund paid for by the financial industry that would go toward dismantling failed firms that put the broader economy at risk. Given the public support for tougher Wall Street rules, the unanimity that Republicans demonstrated Monday may not endure. GOP negotiators said their goal remains a final bill that includes enough changes that it can win broad support from both parties. But Democrats are looking to limit their concessions and say they will probably win a few conversions among Republicans who have expressed support for the overwhelming majority of the bill in its current form. Democrats say they believe about half a dozen GOP lawmakers are open to switching their votes. They include Sens. Olympia J. Snowe and Susan Collins of Maine, Sen. Scott Brown (Mass.), and Sen. Charles E. Grassley (Iowa). Grassley, a conservative who is up for reelection in November, surprised colleagues recently in voting to support strict new rules for derivatives, one of the most complex but fundamental parts of the legislation. The 1,400-page bill would also create an agency to protect consumers against abusive lending practices, establish a council of regulators to monitor potential risks to the financial system, and give the government authority to shut down large, failing firms before they collapse. Snowe has outlined two main concerns about the current version of the bill, including a proposed $50 billion fund to be used in liquidating distressed financial firms and restrictions on community banks that engage in certain types of small-business lending. "There are some concerns about the legislation, and I want to make sure they're addressed," Snowe said. But she added: "We're not going to have unanimous support for this legislation."
373 Brown said he voted "no" Monday to allow the Senate banking committee's chairman, Christopher J. Dodd (D-Conn.), and the panel's ranking Republican, Sen. Richard C. Shelby (Ala.), more time to rewrite several major provisions. "People want this area addressed," Brown said. "They don't want to have problems like they had before, including me." But even as Reid pledged to hold vote after vote, some Democrats warned privately that the strategy could backfire if he appears to be short-circuiting negotiations. Snowe and Brown, along with other GOP lawmakers, complained that the Monday vote was premature. "It's clear that they're trying to score political points," Brown told reporters after the vote. Nelson said he had opposed starting debate on the bill because he objected to consumer- protection provisions that could harm "Main Street businesses" back home, including dentists, whose patients often borrow to finance major procedures that their insurance policies don't cover, and auto dealers. But after talking with Nelson, Dodd said, "Dentists and auto dealers did not come up." Instead, Dodd said, Nelson had spoken with him about making a change to the derivatives portion of the bill. Nelson favored including a provision that would exempt owners of existing derivatives contracts from having to post additional collateral, as required in the legislation. This requirement could force companies that use derivatives to set aside large sums of money to cover possible losses, and these set-asides could eat into profits by depriving the firms of resources they could use in another way. Critics of the requirement say firms should not have to redo existing contracts. Dodd said he was not willing to insert the exemption Nelson wants in his bill. In the latest Washington Post-ABC News poll, respondents were evenly split on President Obama's handling of financial regulation, with 48 percent of those polled approving of his performance and 48 percent disapproving. But compared with congressional Republicans, Obama has a clear advantage. A slim majority -- 52 percent -- of Americans said they trust Obama over the GOP on the issue; 35 percent favored congressional Republicans. Independents preferred Obama by 47 to 35 percent, with 16 percent trusting neither side on the issue. Dodd and Shelby have said in recent days that they are on the cusp of a bipartisan agreement, and they have expressed optimism that further negotiations will end with consensus. Shelby aides said Monday that although the two men have continued to talk by phone and meet periodically, their staff members have not met to hammer out specifics for more than a week. "We need to be in a room, at the staff level, nailing down the language, and that's not happening," one Shelby staff member said. "They stopped talking to us." To illustrate the work that remains, the aide said that if Dodd and Shelby "met today and resolved every issue, it would still take us days to get it all together." Shelby aides repeated previous criticisms of the Democratic legislation and said Republicans probably would introduce their own version of the bill. "We have been drafting an alternative approach since the very beginning," said one staff member, who like others spoke on the condition of anonymity to discuss the situation more frankly. "It may come to the point where Republicans decide, 'Let's just put out specifically what we're for.' That decision hasn't been made yet."
374 Aides declined to talk in depth about how a Republican alternative bill would differ from the legislation sponsored by Dodd. But they said it almost certainly would include language to overhaul the government-sponsored entities Fannie Mae and Freddie Mac. Staff members on the Senate banking and agriculture committees huddled through the weekend with Obama administration officials to merge competing measures aimed at reining in the $600 trillion derivatives market. Derivatives are private contracts that allow traders to bet on the direction of the prices of stocks, commodities and other assets. Many companies also use such deals to lock in prices for goods, such as oil, which often fluctuate in value. Dodd and Sen. Blanche Lincoln (D-Ark.), who chair the respective committees, said late Monday that an agreement had been reached. Key provisions put forth by Lincoln's committee remained largely intact, including a measure that could force big Wall Street banks to spin off their derivatives operations. The bill also aims to increase transparency by requiring nearly all derivative contracts be traded in public on exchanges and approved by a separate body called a clearinghouse. In addition, the measure imposes a "fiduciary duty" on dealers, like the one required of investment advisers, to look out for the best interests of clients such as municipalities and pension retirement funds. The legislation provides exemptions for commercial businesses and manufacturers that use derivatives to hedge risk, such as an airline seeking certainty on fuel prices. But Dodd and Lincoln said the bill gives regulators the authority to close loopholes so financial firms cannot claim exemptions. The two senators said the measure also gives regulators "broad enforcement authority" to punish bad actors. In the latest poll, support for federal regulations of derivatives draws an even split, with 43 percent supporting federal regulation of the derivatives market and 41 percent opposing. Nearly one in five -- 17 percent -- express no opinion on the complicated topic. Staff writers Renae Merle and Ben Pershing and polling director Jon Cohen contributed to this report. http://www.washingtonpost.com/wp- dyn/content/article/2010/04/26/AR2010042601969.html?wpisrc=nl_headline
375
Presidential commission to address rising national debt By Lori Montgomery Washington Post Staff Writer Tuesday, April 27, 2010; A10 A presidential commission will convene Tuesday at the White House to address what leaders of both parties agree is one of the greatest threats to the country's economic future: the rising national debt. Official forecasts suggest that without sharp changes in federal spending or tax collections, the United States could enter into a downward spiral of indebtedness that by the end of this decade would erode the country's ability to educate its children, care for the elderly or mount a robust national defense. Republicans and Democrats alike say the fiscal challenges have been too long ignored. But with the two parties feuding over health-care reform, Wall Street regulation and a host of other issues -- and the economy still uncertain after a deep recession -- there is considerable doubt that they could join hands to fend off a still-distant potential crisis. "It would take a miracle," agreed Senate Majority Whip Richard J. Durbin (D-Ill.). "But," he said, "I believe in miracles." Durbin is the highest-ranking lawmaker among a dozen members of Congress on the commission, which also includes six presidential appointees. The panel has until Dec. 1 to devise a plan to stop a federal borrowing binge that exploded during the recent recession and will only get worse as retiring baby boomers tap into federal retirement programs. The gulf between the two parties is vast. No budget commission has managed to spur action since 1983. And a host of interest groups is lining up to rally the public against any solution that involves higher taxes or cuts to favored programs -- particularly Social Security, which members of both parties consider the ripest target for compromise. Even supporters of the commission are not optimistic: House Majority Leader Steny H. Hoyer (D-Md.), a vocal advocate, said the most he expects is "a good message with regard to the magnitude of the problem." But panel members from both parties say the recent experience of Greece, deeply in debt and begging other countries to help pay its bills, provides a vivid incentive to set aside ideological differences and work together. "After stopping a terrorist with a weapon of mass destruction, this is the single most important issue we confront as a nation," said Sen. Judd Gregg (R- N.H.), a commission member. Republican Sen. Tom Coburn (Okla.), a physician known as "Dr. No" for relentlessly blocking Democratic initiatives, already has sent fellow commission members a binder full of ideas for cutting wasteful programs -- low-hanging fruit that he said could build public trust before a debate about higher taxes. Coburn also has spoken with Andy Stern, president of the Service Employees International Union and one of the commission's most liberal members, and found "a lot of areas where we think we can work together."
376 "If this commission is even halfway successful, it's a big win for Obama. But I don't think anybody on the commission is going to look at it that way," Coburn said. "The problems are too big. This is about our country." Government's role At the very least, the Commission on Fiscal Responsibility and Reform will mark the beginning of a national conversation about the role of government in American society. Social Security, Medicare and Medicaid -- popular programs that guarantee income support and universal health coverage to people older than 65 -- are growing faster than tax revenue as medical costs rise and the population ages. In the coming decades, the three programs are forecast to dwarf all other spending and force the Treasury to borrow to keep them afloat. That crisis seemed distant until the recession hit, causing tax collections to tank and federal spending to increase as policymakers scrambled to avert an economic collapse. The public debt is forecast to rise from less than 40 percent of the economy to more than 60 percent by the end of this year, its highest level since 1952. The debt will hit 90 percent by 2020 under President Obama's budget, according to the nonpartisan Congressional Budget Office, a level last seen in the aftermath of World War II. Meanwhile, the CBO forecasts that interest payments will rise from less than $200 billion a year to more than $900 billion. At that level, debt service would eat up nearly 20 percent of all federal spending, according to the CBO, and more than 4.5 percent of the economy -- the highest level since the government began tracking net interest payments in 1962. Research by economists Carmen M. Reinhart of the University of Maryland and Kenneth Rogoff of Harvard has found that public debt in excess of 90 percent of the economy is often the tipping point at which nations lose the confidence of their creditors and tumble into crisis. "We're facing a situation that is far worse than we've ever seen in the past," said Charles Konigsberg, director of a separate debt-reduction task force at the Bipartisan Policy Center. "The last time the debt was this high was at the end of World War II. But then we owed the debt to ourselves. Now those interest payments are flowing out of the country" to China and other foreign investors. "Greece is sinking on debt and deficit. Spain's next, Portugal's next. How'd you like to be the United States of America when China pulls the tin cup and says, 'We don't want T-bills, we want money'?" commission co-chairman Alan K. Simpson, a former GOP senator from Wyoming, said on "Fox News Sunday." "Now, that's where we are. This is serious business." Stabilizing borrowing Alarmed by the forecast but unwilling to act without Republican cooperation, Obama formed the commission to stabilize borrowing by 2015. If 14 of 18 members sign on to a plan, congressional leaders have pledged to put it to a vote. To succeed, the commission must overcome deep skepticism among members of both parties. Republicans view the panel both as a delaying tactic to postpone action on the budget until after this fall's midterm elections, and as a stalking horse for higher taxes, particularly a European-style value-added tax. Commission members such as Reps. Paul D. Ryan (R-Wis.) and Jeb Hensarling (R-Tex.) argue that taxes should be kept low and that Medicare and Social Security should be radically restructured, exposing the elderly to greater financial risk. Liberal Democrats, on the other hand, fear the panel will endorse spending cuts to avoid raising taxes far above the historical U.S. average. Commission members such as Reps.
377 Xavier Becerra (D-Calif.) and Jan Schakowsky (D-Ill.) argue that Democrats should not sacrifice the social safety net on the altar of deficit reduction. Becerra was particularly dismissive of Coburn's suggested cuts, which include job-training and education programs. "It's easy to say you're going to reduce the deficit by killing programs that have raised up the middle class," Becerra said, "but that doesn't mean you solve the problem for America." The panelists said they are willing to consider spending cuts and tax increases, however, which budget experts agree is the only responsible solution. At the commission's first meeting, prominent economists from both parties, including Federal Reserve Chairman Ben S. Bernanke, will underscore that message. The White House also hopes to sell that message to the public. In that regard, the commission has gotten off to a slow start. As of Monday, it had no Web site, no plans for public participation in its monthly meetings and no budget for outreach. Executive Director Bruce Reed, who is on leave from the Democratic Leadership Council, said the commission will partner with other groups to get the word out, including the Peter G. Peterson Foundation, which will hold a fiscal summit Wednesday featuring former president Bill Clinton. And in June, commission members plan to participate in a 20-city electronic town hall meeting on the budget organized by the nonprofit America Speaks. But success or failure ultimately lies with the lawmakers. Asked whether the parties can work together, Gregg said: "Who knows?" He added: "We have to wait until we get around the table and start talking to see if it can happen." http://www.washingtonpost.com/wp- dyn/content/article/2010/04/26/AR2010042604189.html?wpisrc=nl_headline
378
Sen. Kaufman of Delaware tests the big- bank theory Tuesday, April 27, 2010; A15 When Congress excluded the public option from its landmark health-care bill, the leading voices in opposition from the left were familiar figures such as Howard Dean, liberal bloggers and members of the Congressional Progressive Caucus. On the other hand, Sen. Ted Kaufman (D-Del.) was virtually unknown until a few months ago. But the debate on financial regulatory reform has turned Kaufman, an appointed senator, into a liberal hero as he seeks to break up the largest banks in the country. Under his proposal, no bank could hold more than 10 percent of the nation's total deposits, and banks could have liabilities up to only 2 percent of the nation's gross domestic product. Such provisions, he says, would force banks such as Bank of America to shrink. Obama administration officials and top Democrats on Capitol Hill have not directly criticized Kaufman's idea. But they say the current version would empower regulators to monitor the size of banks and their risks to the overall economy and break up banks if necessary. And Obama economic adviser Lawrence H. Summers said on PBS last week, "Most observers who study this believe that to try to break banks up into a lot of little pieces would hurt our ability to try to serve large companies, and hurt the competitiveness of the United States." Kaufman said regulators have not used that power and will not do so in the future. His plan, he added, is the best way to prevent bailouts of big banks. "What do we have to do before someone sends the message that these things are too big and that this Congress cannot pass the buck to the regulators who didn't do the job in the past?" he said. "What are we doing now as senators on the floor, passing legislation based on the fact 'I trust my regulators now'? Why aren't we passing legislation that will work over the next two or three generations?" Kaufman, who served as a Senate aide to Joseph R. Biden for more than 20 years, has hammered the issue in speeches for weeks. As the debate on regulatory reform dominates congressional discussion, four other Democratic senators have joined his cause. He is also, at least among liberal activists, no longer anonymous. Arianna Huffington has raved of Kaufman: "What conditions helped turn him into a fearless crusader? And how do we get more like him?" Kaufman is an unusual kind of senator, part of a small club that once included three but is down to two. Paul G. Kirk Jr. was a longtime aide to Sen. Edward M. Kennedy (D-Mass.) and served in his old boss's seat briefly until Republican Scott Brown was elected. George S. LeMieux, a former chief of staff to Florida Gov. Charlie Crist, remains in the Senate as the replacement to Republican Mel Martinez. Kaufman was surprised when Biden, days after being elected vice president, proposed that his former aide should replace him; Kaufman had never held public office. Gov. Ruth Ann Minner (D) made it official by appointing him.
379 Kaufman immediately said he would not seek a full term, and it was widely assumed he was a caretaker of the seat for Beau Biden, the vice president's son and Delaware's attorney general. But Biden opted against a run for the seat in November. Rep. Michael N. Castle (R-Del.) is now the front-runner, but Kaufman, 71, still has no plans to run. "I've never been elected to anything, I was never the class president, not even in third grade," he said. But he added: "It's much easier than I thought it would be. When I taught my courses [at Duke University], I would tell students, 'I would never want to be a senator; that's not what I want to do, and staff is really important.' Now the one message I give to chiefs of staff is 'You could be a senator, too.' " Kaufman, with no need for fundraising or raising his profile, has largely toed the party line on key issues. Before regulatory reform, he was perhaps best known in the Senate for giving a speech every week in praise of a federal employee, reflecting his view of the importance of the much-maligned "Washington bureaucrats." At the same time, the graduate of the University of Pennsylvania's Wharton business school had long been interested in financial issues, and he saw an opening in February and March as much of the Senate remained focused on health care. His strong rhetoric and the obvious populist appeal of his stand may not carry the day, however. No Republican has formally endorsed his proposal. And if the two parties reach a compromise on the legislation, Kaufman's provision may not even come up for a vote: Some Democrats and Republicans who oppose his provision may not want to want to go on record opposing a provision to shrink big banks, an idea likely to be popular with the public. Kaufman, while eager to make his case publicly, has been unwilling to use his ultimate trump card: his long-standing relationship with Biden. He says the two speak regularly, but Kaufman has not asked Biden to back his bank proposal, nor will Kaufman blast the administration in his speeches. "I am a senator; I think this is what a senator does," he said, referring to giving speeches and offering amendments. Referring to Biden, he added: "He is one of my best friends, but he's never called me [since Kaufman entered the Senate] and said, 'I really want you to do this.' And I never call him up." http://www.washingtonpost.com/wp- dyn/content/article/2010/04/26/AR2010042603795.html?wpisrc=nl_headline
380
Fears of crushing debt spread to cities, provinces By Anthony Faiola Tuesday, April 27, 2010; A01 RECANATI, ITALY -- This 12th-century gem, birthplace of the poet Giacomo Leopardi, rests on a lyrical hilltop in the Apennine Mountains. But these days, Recanati is also sitting on something else: a pile of financial trouble. Concern over near-bankrupt countries forced Greece on Thursday to request a huge international bailout. The plight here, however, underscores fears of a new front in the battle against global debt -- at the state and local level. Recanati is one of hundreds of municipalities around the world facing a deepening financial crunch from bad investments, plummeting tax revenue, high debt levels and rampant overspending. In the United States, at least six states have budget gaps bigger than Greece's, with Hawaii shifting to a four-day school week to cope. In Spain, a substantial drop in tax revenue from a bust in construction is battering budgets in the cities of Madrid and Valencia, as well as in the provinces of Catalonia and Andalusia, raising the threat that ratings agencies will downgrade their debt. The picture is particularly bleak in Italy, where many cities and towns invested heavily in complex bets on interest rates. Now deep in the red, Recanati is being forced to sell off parkland, unload a public kindergarten, scale back aid to the elderly and scrap costly repairs on leaking churches and ancient cobblestone streets. "We are in a financial emergency because of our debts; it has become the sword of Damocles hanging over our heads," said Francesco Fiordomo, Recanati's mayor. Experts are not yet predicting cascading bankruptcies, but they warn that increasing problems in heavily indebted municipalities and provinces are creating financial time bombs that could lead to defaults. Those concerns are already raising cities' borrowing costs on both sides of the Atlantic and contributing to budget woes, forcing many struggling jurisdictions to raise taxes and cut services. Analysts are also warning that national coffers could be further strained if heavily indebted countries are forced to spend precious resources to rescue local jurisdictions. Portugal, under fire for allowing its cash-strapped regional governments to assume more debt, was hit by a debt downgrade by Fitch Ratings last month. "We are only now beginning to understand the full scope of the global debt problem. This isn't just about national governments; you're talking about local governments and municipalities," said Eswar Prasad, an international economics expert at the Brookings Institution. "Many of them were engaged in risky investments in the past, and now we are seeing those problems come to a head." * * * Across Italy, budget problems have been severely compounded by growing liabilities on complex bets placed on interest rates during the credit boom of the past decade. Similar bad
381 bets are well documented in the United States. Los Angeles, for instance, is losing $19 million a year off interest rate contracts; a wager by Jefferson County, Ala., has left it struggling to avoid bankruptcy. But problems with these exotic financial instruments are only now emerging in Europe, putting a fresh spotlight on the excesses of borrowers and the ethics of bankers who sold them. Greece has come under scrutiny for using such deals to hide the extent of its debt. In Italy alone, an estimated 519 cities and towns are facing more than $1.3 billion in losses from derivatives deals, according to a report from the Bank of Italy. Such deals were popularized as a way for municipalities to shield themselves from the possibility of higher interest rates. In many cases, analysts say, they have done just that. In the Washington area, for instance, the largest user of interest-rate swaps has traditionally been the District, which now owns $262.2 million worth of such swaps. City officials say they have no complaints about them. But a minority of the deals, critics say, were put together by banks in ways that made it almost impossible for local jurisdictions to service their obligations in the long run without suffering losses. The growing number of problematic contracts has ignited a debate in European capitals and Washington, and on Wall Street, over new oversight and curbs on derivative sales, as well as restrictions on municipal borrowing. Bad deals in Italy are hitting small towns the hardest. Here in Recanati, a town of 22,000, more than a dozen swap contracts were signed between 2001 and 2004. Local officials said they were told they could not lose. The deal worked this way: To guard against sudden surges in interest rates, Recanati agreed to take out special contracts on the city's $106 million in debt. It would pay banks a fixed annual interest rate of about 5 percent on the total. In return, the banks would pay the city back an adjustable rate tied to a key European interest rate index, theoretically ensuring that Recanati would not see wild swings in its interest payments. When European interest rates were high in the mid-2000s, the deal worked out well, allowing Recanati to pocket about $400,000 between 2001 and 2008. When interest rates fell to record lows in 2009, the tables turned dramatically. The city was forced to keep making fixed-rate interest payments to the banks averaging about 5 percent, while receiving adjustable-rate payments of less than 1 percent in return. The deals cost the city $420,000 in just one year and more than wiped its previous gains. With adjustable rates still at rock-bottom levels, Recanati officials calculate that they are set to lose nearly $700,000 this year. City officials here and in other localities across Italy said the possibility of such vast losses was never explained. On top of that, the swap contracts carried hidden fees of more than $650,000, according to Marco Fabio Delzio, a Rome-based partner at Martingale Risk, a firm hired to audit the town's contracts. Given those fees, officials say, Recanati would very likely have lost money in the long run even if interest rates had remained high for years. Yet canceling the swap contracts would cost $2.2 million more, money this town says it does not have. "We would have to sell our crown jewels, important buildings, more land," said Antonio Bravi, financial adviser for Recanati. "And we would have to cut services." * * *
382 Like many municipalities in Italy, Recanati is trying to negotiate a deal to close out the contracts. In the meantime, its fiscal problems are so bad that officials are considering scaling back the city's internationally renowned festival marking the birth of Leopardi, the poet and essayist whose statue looms over the town square. Green spaces on the edge of town are being sold to investors, and Recanati has sought to raise tax revenue by rezoning land for commercial use. At Recanati's senior-care center, Aliandri Franco, 72, said the city's financial problems have delayed plans to build low-cost housing. Officials are also unable to meet their goal of expanding in-home care to some of Recanati's neediest elderly residents. "It was a big mistake, getting involved in all this nonsense," Franco grumbled. "I hope they have learned their lesson." In Italy, the troubles have raised the prospect that bankers may do jail time. Two weeks ago, an Italian court indicted 11 officials at four global banks, including New York-based J.P. Morgan Chase and Germany's Deutsche Bank, on fraud charges linked to the sale of interest rate swaps to the city of Milan. Those swaps, authorities say, have cost Italy's fashion and financial capital $140 million since 2003 and were knowingly misrepresented to city officials. All four banks have denied the charges. "The way these deals were structured, there was just no way any city could win," said Alfredo Robledo, the chief prosecutor in the case. He called it another example of banks "taking advantage" during the 2000s. http://www.washingtonpost.com/wp- dyn/content/article/2010/04/26/AR2010042602348.html?wpisrc=nl_headline
383
The Buzz: Does the entire Fed want to keep rates low? Paul R. La Monica, editor at large, On Monday April 26, 2010, 12:26 pm EDT It's going to be a phenomenally busy week in Washington. The Senate is trying to hammer out a compromise on a Wall Street reform bill and Goldman Sachs executives take center stage at a Senate hearing Tuesday to respond to questions about the SEC's fraud accusations. So it would be easy to forget that there's another big news event coming from the nation's capital: the Federal Reserve's interest-rate setting committee wraps up a two-day meeting on Wednesday. Sure, the Fed announcement may appear to lack the drama of the Senate debate and the appearance of the "fabulous" Fabrice Tourre, the Goldman employee at the heart of the SEC probe. Everybody knows that the Fed is going to once again keep interest rates near zero, which is where they have been since December 2008, and reiterate that rates will remain "exceptionally low ... for an extended period." "The Fed statement is going to be more or less a carbon copy of the March statement. They don't want the market to misinterpret anything," said John Derrick, director of research for U.S. Global Investors, a San Antonio-based money manager. "I don't think they want to make a move yet since they still question how sustainable the recovery is." But while it's tempting to dismiss the Fed announcement as the equivalent of simply following the directions on a shampoo battle (lather, rinse, repeat) that would be a mistake. There is some intrigue surrounding the Fed's latest statement about the economy. Investors will be focused on two key things: how bullish the Fed sounds when discussing the recovery and whether more Fed members dissent with the Fed's decision to keep saying rates will stay "exceptionally low." In the Fed's last statement in March, central bankers did note that the economy "continued to strengthen" and the job market was "stabilizing." Still, that was hardly a glowing assessment of economic conditions. The Fed added that housing starts were "flat at a depressed level" and that companies "remain reluctant" to hire more workers. With that in mind, the Fed noted that it expected the pace of the recovery to be "moderate for a time." So until the Fed is willing to say that the economy really does appear to be picking up a head of steam, it's unlikely that any rate hikes are in the cards just yet. And economists said little has changed since March to suggest that the Fed now has a far more rosy view of the recovery. "The Fed is notching up its outlook for the economy inch by inch," said Kurt Karl, chief U.S. economist with Swiss Re in New York. "There's no inflation at this time so the Fed might be a little more optimistic. But the 'extended period' language about rates is likely to stay until later this year."
384 Stuart Hoffman, chief economist of PNC Financial Services in Pittsburgh, agreed. He said the Fed will probably remain cautious and will offer up another muted outlook. "Their view of the economy might be a little more positive but we're waiting for them to talk about the recovery being self-sustaining. The Fed may still be viewing the economy in shades of gray," he said. Nonetheless, there is a growing chorus of critics who think the Fed is sowing the seeds for another asset bubble or runaway inflation by leaving rates near zero for this long. It appears that this group even includes a member of the Fed's policy-setting committee. Kansas City Federal Reserve president Thomas Hoenig, a so-called inflation hawk, has voted against the Fed keeping in the "extended period" language at the last two meetings. In the March statement, the Fed said Hoenig was worried that the Fed risked "the buildup of financial imbalances" by perpetuating the notion that rates would stay "exceptionally low." Hoffman said that it will be interesting to see whether Hoenig remains the lone dissent or if he is able to recruit any other Fed members to his camp of hawks. (Yes, I've been watching too much "Lost" but I do not mean to imply Hoenig is the Man in Black to Ben Bernanke's Jacob. Or should it be the other way around?) "I wouldn't rule out someone else dissenting," Hoffman said. "If there were another dissent, that would be meaningful since it might mean there's more concern about leaving interest rates this low for this long." Derrick said he wasn't sure if anyone else would join Hoenig in voting against the decision to keep the "exceptionally low/extended period" language. But he agreed that the Fed may soon face more calls to change the statement in order to prepare the markets for an eventual rate hike. "It seems like the economy is stronger than the Fed wants to acknowledge so there may be more pressure to raise rates. There could be a rate hike as soon as September," he said. But Karl said that any talk of a rate increase is way too premature. He argues that as long as the unemployment rate remains as high as it is, the Fed's going to stand pat. After all, the Fed has shown an unwillingness in the past to raise rates in fits and starts. The thing about interest rate hikes, much like Lay's potato chips, is that you can't just have one. "Once the Fed does get moving they probably will move rapidly," Karl said. "So they're not likely to start raising rates until the first quarter of 2011. We need a year of strong employment growth before the Fed should consider hiking interest rates." - The opinions expressed in this commentary are solely those of Paul R. La Monica. http://finance.yahoo.com/news/The-Buzz-Does-the-entire-Fed-hmoney- 2703420407.html?x=0
385
27.04.2010 Is Merkel about to push the eurozone over the brink?
It looks like this crisis is going to go all the way. Angela Merkel’s much trumpeted statement yesterday turned out to be another exercise in procrastination, as her mendacious double-faced strategy over Greece – tough at home, consensual in Brussels – is falling apart. It seems that she is desperate to delay any decision beyond the May 9 state elections in North-Rhine Westphalia. This deadline give the capital markets another days of one-way speculation. Yesterday, as Bloomberg reports, Greek two year bond yields rose 300bp to 13.5%, the highest short-dated yield of any country in the world, writes the FT, higher than those of Argentina (8.8%) and Venezuela (11%). Investors are now in effect pricing in a government default amid concerns that a rescue package co-financed by the euro area and the IMF could still fall apart. Greece has €8.5bn of bonds coming due 10 days after the regional election. It is likely that a solution is hammered out only in the very last moment. Marco Annunziata, chief economist of Unicredit Group, wrote yesterday to his clients: “It is extraordinary that a eurozone member country finds itself a mere three weeks away from a potential default, with a clear possibility that uncertainty will only be resolved at the last minute.” European leaders raised the pressure on Germany to decide quickly whether it would provide its share of aid under the joint eurozone and IMF rescue plan. Dominique Strauss Kahn and Jean Claude Trichet have been asked to brief members of the German parliament on Wednesday to try to win their approval. This will not be an easy task, as all parties except the Greens ask for more conditions attached ahead of an important regional election. See Spiegel online for the parties’ positions on a Greek bailout. Transportation strikes against austerity plan in Greece In Greece, strikes and demonstrations started again on Monday with a 24-hour walk-out by Greece’s shipping unions disrupting ferry services to more than 50 Aegean islands. Public transport in Athens will shut down for six hours on Tuesday when workers stage a protest against pay cuts, the FT reports.
386 Greek contagion to other bond markets There were signs that the Greek crisis was spreading to other countries as Portugal, Ireland and Spain, the FT reports. Portuguese two-year bond yields rose more than three-quarters of a point to 3.985%, Ireland’s jumped by a similar amount to 2.99% and Spain’s increased a quarter of a point to 1.87%.
Sound bites on the Greek rescue The leader in FT Deutschland says that German politicians act irresponsible when they call for a haircut. It would lead the Greek rescue package ad absurdum and could push Greece into insolvency they so desperately want to avoid and prove contagious for other EU countries. Holger Steltzner in the Frankfurter Allgemeine, meanwhile, called Merkel’s argument for a Greek bailout, - not for the sake of Greece but for the euro stability - a fake. He warns that the German government will lose the regional elections if it bows to external pressure and make a bailout that benefits financial institutions at the expense of the German taxpayer. (Steltzer had earlier on Greece to leave the euro). Chief Editor of Kathimerini Alexis Papathelas asks whether his country is up to the task. Greece needs still needs to convince the public of the efforts that need to be undertaken. He is cautiously optimistic that Greece will finally get there but concerned about the poor public dialogue and populist attempts to blame it all on speculators.
Belgian prime minster Yves Leterme resigned Yves Leterme resigned for the third time as Belgium’s prime minister after the government coalition fell apart when the Flemish liberal party withdrew over the dispute of Francophone rights in Flemish regions over the dispute on the separation of the bilingual department Bruxelles-Hal Vilvorde. BBC news writes that the king accepted Leterme’s resignation after Didier Reynders failed to mediate between the coalition parties. Le Soir editorial warns that the crisis could trigger financial risks and that markets will have a go. Jean Quatremer warns that there an agreement is no longer possible as there exists no longer a national party to defend the interest of the Nation. There is a risk that the Flemish will vote unilaterally for a juridical and electoral scission of the department, which would be considered as a causa belli Snap elections could take place in June - just before Belgium is due to begin its six-month presidency of the EU. But new elections will not fix the problem, as it will mainly benefit independent and regionalist parties. http://www.eurointelligence.com/article.581+M56c5aeebd6e.0.html#
387
03/26/2010 06:20 PM The Greece Agreement 'Kohl Would Have Done the Same Thing' Chancellor Angela Merkel got her way with her solution to the Greek crisis. Now she is reaping criticism for her stubborn course. Political scientist Werner Weidenfeld argues that Merkel's predecessors would have done the same thing -- but says that her communication strategy needs an overhaul. SPIEGEL ONLINE: Mr. Weidenfeld, Angela Merkel seems to have gotten her way: The European Union countries will only help Greece in the direst of circumstances. Does Germany now have its own Iron Chancellor? Weidenfeld: That is the wrong impression. Merkel pursued an international solution for the stabilization of Greece. That has nothing to do with a hard-line policy based on national interest. SPIEGEL ONLINE: How would you describe the situation then? Merkel dictated her conditions to her European partners. She has been widely criticized for her uncompromising stance. Weidenfeld: I think that is a faulty interpretation. Merkel, unfortunately, is allowing this to happen. Her ability to explain herself is anything but optimal, and she has major weaknesses in communicating her policies. Perhaps she inadvertently gets a few votes in Germany that way, but her role in this is a European one. Together with others, Angela Merkel has developed a rescue strategy for Greece. One should make that clear. SPIEGEL ONLINE: The opposition accuses her of breaking with the more balanced European policies of her predecessors. Weidenfeld: That is nonsense. There have always been internal struggles -- ever since the days of (former German Chancellor) Konrad Adenauer and (former French President) Charles de Gaulle. When the other European nations didn't want to follow their security policies, they opted for a bilateral, German-French treaty. And when (former German Chancellor) Helmut Schmidt and (former French President) Valery Giscard d'Estaing initiated a common European currency system, they didn't wait for the other nations to start celebrating. On numerous occasions, Helmut Kohl convinced his friend Francois Mitterrand to sell German ideas as French initiatives, because that seemed more promising. SPIEGEL ONLINE: But this time, Merkel stood alone from the beginning ... Weidenfeld: ... and then she convinced the French. These tension-generating attempts at solving conflicts are part of everyday business in Europe. It is part of the game. I mean, we are not exactly facing a history-making split in European relations. SPIEGEL ONLINE: The head of the German government is threatening another country with expulsion from the euro zone as a last resort. Isn't that a whole new level of confrontation? Weidenfeld: No, because this isn't just about the Germans. Everybody shares the ultimate goal of stability in the euro zone. Merkel wants to secure it. Sometimes comments like this, when it comes to expulsion from the euro zone, are necessary. In such difficult situations, a political framework allowing for disciplinary measures is needed -- both at the European and
388 international levels. Without them, we couldn't get a handle on the Greek crisis. If you left the Greeks to their own devices, they would be hopelessly overwhelmed. Athens needs to be pressured, and Merkel is contributing to that. SPIEGEL ONLINE: Do you really think that what Merkel is doing fits with the image that the Germans have been cultivating in Europe over the past 60 years? Weidenfeld: Let me repeat: This is not a rejection of Germany's traditional European policies. Instead, this is about ensuring that no other nations follow Greece's lead. To ensure this, we need to put a lot of pressure on that country. If Ireland, Italy, Spain or Portugal were to follow Greece's lead, then that would constitute a real and serious European problem. Merkel wants to prevent that. SPIEGEL ONLINE: Some in Europe see this differently. European Commission Vice President Viviane Reding has already called for a show of greater financial solidarity with Greece, and has demanded that the German chancellor show more courage. Weidenfeld: Such demands show that Merkel has not explained herself properly. If it looks like national obstinacy, then it represents a breakdown in communications. The central message should be: We will ensure the euro's stability and we will construct a framework that will ensure Greece's security in the future. I call that European solidarity. SPIEGEL ONLINE: The smaller European states in particular seem to feel that former German Chancellor Helmut Kohl understood them better than Merkel does. Weidenfeld: That could be -- but it's just a feeling. The facts do not support it. Merkel must finally fight against this false impression. After all, who was her greatest teacher when it came to Western politics? Helmut Kohl! She learned everything while working in Kohl's slipstream. Which is why, when you consider Merkel, you can also always think: What would Kohl have done? SPIEGEL ONLINE: And what would Kohl have done? Weidenfeld: Kohl would have done exactly the same thing. He too would not have avoid confronting Europe. But he did not have the same inability to explain his policies that is apparent in all areas of Merkel's administration. Her team reacts frantically and on a situation- by-situation basis. SPIEGEL ONLINE: And in Athens in the meantime, they are burning the flags of Europe. Weidenfeld: Clearly that is not a good thing. But in this you can also see the meaningful role that Europe now plays. On one hand some fanatics are incinerating the European flags. On the other hand, others know that only a successful European community can rescue them. Interview conducted by Sebastian Fischer URL: http://www.spiegel.de/international/europe/0,1518,685875,00.html RELATED SPIEGEL ONLINE LINKS: • The World from Berlin: Merkel's Greece Deal 'Betrays the Concept of Europe' (03/26/2010) http://www.spiegel.de/international/europe/0,1518,685840,00.html • The Tumbling Euro: Portugal's Financial Troubles Put More Pressure on EU Leaders (03/25/2010) http://www.spiegel.de/international/europe/0,1518,685643,00.html • The Greek Bailout Plan: Merkel's Risky Hand of Brussels Poker (03/26/2010) http://www.spiegel.de/international/europe/0,1518,685771,00.html • French Support for Berlin: Merkel May Emerge Victorious in EU Battle over Greece (03/24/2010) http://www.spiegel.de/international/europe/0,1518,685415,00.html • Bringer of Prosperity or Bottomless Pit?: Top German Economists Debate the Euro (03/23/2010) http://www.spiegel.de/international/germany/0,1518,685018,00.html
389 Opinion
April 26, 2010 OP-ED COLUMNIST Berating the Raters By PAUL KRUGMAN Let’s hear it for the Senate’s Permanent Subcommittee on Investigations. Its work on the financial crisis is increasingly looking like the 21st-century version of the Pecora hearings, which helped usher in New Deal-era financial regulation. In the past few days scandalous Wall Street e-mail messages released by the subcommittee have made headlines. That’s the good news. The bad news is that most of the headlines were about the wrong e- mails. When Goldman Sachs employees bragged about the money they had made by shorting the housing market, it was ugly, but that didn’t amount to wrongdoing. No, the e-mail messages you should be focusing on are the ones from employees at the credit rating agencies, which bestowed AAA ratings on hundreds of billions of dollars’ worth of dubious assets, nearly all of which have since turned out to be toxic waste. And no, that’s not hyperbole: of AAA-rated subprime-mortgage-backed securities issued in 2006, 93 percent — 93 percent! — have now been downgraded to junk status. What those e-mails reveal is a deeply corrupt system. And it’s a system that financial reform, as currently proposed, wouldn’t fix. The rating agencies began as market researchers, selling assessments of corporate debt to people considering whether to buy that debt. Eventually, however, they morphed into something quite different: companies that were hired by the people selling debt to give that debt a seal of approval. Those seals of approval came to play a central role in our whole financial system, especially for institutional investors like pension funds, which would buy your bonds if and only if they received that coveted AAA rating. It was a system that looked dignified and respectable on the surface. Yet it produced huge conflicts of interest. Issuers of debt — which increasingly meant Wall Street firms selling securities they created by slicing and dicing claims on things like subprime mortgages — could choose among several rating agencies. So they could direct their business to whichever agency was most likely to give a favorable verdict, and threaten to pull business from an agency that tried too hard to do its job. It’s all too obvious, in retrospect, how this could have corrupted the process. And it did. The Senate subcommittee has focused its investigations on the two biggest credit rating agencies, Moody’s and Standard & Poor’s; what it has found confirms our worst suspicions. In one e-mail message, an S.& P. employee explains that a meeting is necessary to “discuss adjusting criteria” for assessing housing-backed securities “because of the ongoing threat of losing deals.” Another message complains of having to use resources “to massage the sub-prime and alt-A numbers to preserve market share.” Clearly, the rating agencies skewed their assessments to please their clients.
390 These skewed assessments, in turn, helped the financial system take on far more risk than it could safely handle. Paul McCulley of Pimco, the bond investor (who coined the term “shadow banks” for the unregulated institutions at the heart of the crisis), recently described it this way: “explosive growth of shadow banking was about the invisible hand having a party, a non-regulated drinking party, with rating agencies handing out fake IDs.” So what can be done to keep it from happening again? The bill now before the Senate tries to do something about the rating agencies, but all in all it’s pretty weak on the subject. The only provision that might have teeth is one that would make it easier to sue rating agencies if they engaged in “knowing or reckless failure” to do the right thing. But that surely isn’t enough, given the money at stake — and the fact that Wall Street can afford to hire very, very good lawyers. What we really need is a fundamental change in the raters’ incentives. We can’t go back to the days when rating agencies made their money by selling big books of statistics; information flows too freely in the Internet age, so nobody would buy the books. Yet something must be done to end the fundamentally corrupt nature of the the issuer-pays system. An example of what might work is a proposal by Matthew Richardson and Lawrence White of New York University. They suggest a system in which firms issuing bonds continue paying rating agencies to assess those bonds — but in which the Securities and Exchange Commission, not the issuing firm, determines which rating agency gets the business. I’m not wedded to that particular proposal. But doing nothing isn’t an option. It’s comforting to pretend that the financial crisis was caused by nothing more than honest errors. But it wasn’t; it was, in large part, the result of a corrupt system. And the rating agencies were a big part of that corruption. http://www.nytimes.com/2010/04/26/opinion/26krugman.html?th&emc=th
April 25, 2010, 3:16 pm Epistemic Closure In Macroeconomics There’s been a huge outpouring of blogospheric discussion about “epistemic closure” on the right: a complete refusal to look at evidence or arguments that don’t come from the like- minded. I don’t have much to say about all that aside from the fact that it’s obvious, and has been going on for years. But I think it’s worth pointing out that something similar has long been true in macroeconomics. And like the political version of epistemic closure, it’s not a “both sides do it” issue. It’s a fresh-water phenomenon; salt-water macro isn’t subject to the same problem. Here’s what I mean: ask a grad student at Princeton or MIT, “How would a new classical macro guy answer this?”, and the student can do it; classes at freshwater departments teach real business cycle theory, and good students can tell you what it says even if their professors have a different view. But students at freshwater schools — or, alas, many of their professors — can’t return the favor. It’s been painfully obvious since the crisis broke that people at Minnesota, or even many people at Chicago, have no idea what New Keynesian economics is all about. I don’t
391 mean they disagree, or think it’s garbage, they literally have no idea what the concepts are. And that’s why they reinvent 80-year-old fallacies when they try to discuss the subject. It’s interesting to ask why this sort of cocooning is a feature of the right but not the left. But it’s very real, and has a dire impact on economic as well as political discourse.
April 25, 2010, 2:51 pm Can’t Anybody Here Play This Game? Bear with me while I vent for a moment. On financial reform, there are clear villains in the political process: Mitch McConnell, the US Chamber of Commerce, etc.. But at this point I’m accustomed to that sort of thing. What’s frustrating is the way people who favor reform keep getting pulled off into side issues and obvious misinterpretations. If you want to push too-big-to-fail as a key issue, fine; but please don’t say that resolution authority is encouraging too-big-to-fail, because we don’t have anything like that for smaller banks. Aside from the fact that you’re lending aid and comfort to Mitch McConnell, it’s just not true: the whole point of resolution authority is to recreate for shadow banks the same kind of authority the FDIC already has for smaller, old-fashioned banks. If you want to argue that Wall Street is corrupt, fine; but don’t use emails showing Goldman employees crowing over their success in shorting housing — which is ugly but doesn’t amount to wrongdoing — to make your point. (Use the rating-agency emails instead; S&P may not be a vampire squid, but it did enormous harm). If you want to condemn Obama administration officials for being too Wall-Street friendly, fine — but don’t charge those officials with outright corruption, of sharing private information with Wall Street, unless you have some real evidence; and don’t pretend that potential Greek default, which has many fathers, proves your point. My sense is that too many people are taking the easy route of going for the cheap slogans instead of thinking things through; and some people are pushing their signature issues even when the evidence clearly shows that they’re wrong. And we can’t afford that kind of self- indulgence.
April 25, 2010, 11:31 am Till Debt Do Us Part Robin Wells and I review Reinhart-Rogoff and the IMF.
April 23, 2010, 6:06 pm The Real Chicken-Checkup Fallacy Everyone’s having fun with the chickens for checkups story, in which Sue Lowden, the leading Republican Senate candidate in Nevada, expressed a desire to return to the good old days in which people who wanted a checkup from their doctor would offer a chicken in exchange. And she’s not backing down!
392 But I think even the mocking critics are missing the main point. Sure, it’s funny to see a 21st- century political candidate pining for the days of a barter economy. But her remarks would have been breathtakingly ignorant even if she had called for payments in cash. The key fact about health care — the central issue in health care economics — is that it’s all about the big-ticket items. Checkups don’t cost much; neither does the treatment of minor illnesses. The money that matters goes to bypasses and dialysis — costs that are highly unpredictable, and that almost nobody can afford to pay out of pocket. Modern health care, if it’s going to be provided at all, has to be paid for mainly out of insurance. Conservatives don’t like this; if few of them propose paying in chickens, there is nonetheless a constant refrain of calls for making the market for health care more like the market for bread, with consumers paying out of medical accounts and engaging in comparison shopping. There is, for example, vast romanticizing of things like Lasik and cosmetic surgery, which are held up as models for health care as a whole — even though they’re actually very poor models. (They’re discretionary and fairly cheap — not at all like the procedures that dominate health costs in the real world.) Why this preference for cash? Because even conservatives know in their hearts that insurance markets are deeply imperfect, which means that standard free-market arguments become very weak once insurers are involved. And so they pretend that we don’t really need all that insurance. The business with the chickens adds an additional level of absurdity. But Ms. Lowden’s perspective is ludicrous even without the feathers.
April 23, 2010, 5:51 pm Pesos, Ponzi, And Financial Sector Profits There’s been an interesting exchange over my suggestion — which is by no means original — that the stability of banks between 1935 and 1980 or so had a lot to do with lack of competition, which gave banks a franchise value that executives didn’t want to endanger with risky strategies. Mike Konczal raises a good point: how do we reconcile loss of franchise value with huge financial-sector profits? And Ryan Avent offers a possible answer: soaring leverage. I’ve been thinking along the same lines, with a bit of a twist. Here’s how I come at the issue: basically, the financial industry has been borrowing vast sums at low interest rates, and investing the funds in higher-yielding assets. But why do those assets yield more? Largely, I’d argue, because of the “peso problem” — a term that came out of the MIT graduate student lunchroom in the mid-70s, with nobody quite sure who invented it. The observation that started it all was the fact that back then Mexico had a fixed exchange rate against the dollar, but Mexican bonds consistently yielded several percentage points more than US bonds. Why? Presumably because there was a significant perceived probability of devaluation. Yet no statistical test would have shown this, because it was a low-probability event that hadn’t happened yet. Instead, crunching the numbers would have shown a clear gain from borrowing in dollars and lending in pesos. That, I’d argue, is what the financial industry has been doing for a long time: borrowing by issuing supposedly safe assets, investing the proceeds in assets that don’t really yield more, but seem to.
393 But why are they able to borrow so cheaply? Here I think Gennaoli, Shleifer, and Vishny (pdf: http://www.economics.harvard.edu/faculty/shleifer/files/financial_innovation_fragility.april12.pdf) have the right idea: financial innovation has created assets — largely asset-backed securities — that for a long time were falsely perceived as safe, and priced accordingly. The one thing I think their paper doesn’t get at is that the low-probability event that revealed the falsity of these perceptions wasn’t exogenous. What has happened instead was that the very growth of the financial sector led to an upward trend in asset prices that masked the real risks — the way the housing bubble masked the true risks of subprime lending is a key example, but not unique. Sooner or later, however, the bubble would run out of room to expand, and the whole thing would collapse. If this sounds Ponzi-ish, it should. Bob Shiller pointed out way back in his book “Irrationa Exuberance” that a bubble is, in effect, a natural Ponzi scheme, which doesn’t actually require a deliberate act of fraud yet has the same effect. So I’d suggest that what we did between 1980 and 2008 was to replace a financial system in which profits were created by lack of competition with a system in which profits were created by misinformation and misperceptions — a giant, if mostly (not entirely) unintentional Ponzi scheme, which finally went bust. And without strong reform, it will happen again. http://krugman.blogs.nytimes.com/2010/04/23/pesos-ponzi-and-financial-sector- profits/#more-8879
394 New York Review Books From the May 13, 2010 issue Our Giant Banking Crisis—What to Expect MAY 13, 2010 by Paul Krugman, Robin Wells
This Time Is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart and Kenneth S. Rogoff Princeton University Press, 463 pp., $35.00 World Economic Outlook, April 2009: Crisis and Recovery by the International Monetary Fund 228 pp., available at [www.imf.org](http://www.imf.org) World Economic Outlook, October 2009: Sustaining the Recovery by the International Monetary Fund 208 pp., available at [www.imf.org](http://www.imf.org)
John Thys/AFP/Getty Images German Chancellor Angela Merkel, Greek Prime Minister George Papandreou, and French President Nicolas Sarkozy at an EU summit in Brussels, where Greece’s debt crisis dominated discussions about broader economic reform, February 11, 2010 Lately, the big concern roiling financial markets has been fear of Greek default. The risks seem obvious: Greek government debt is at levels that have historically signaled deep trouble for middle- income nations, and debt is still rising rapidly thanks to a large deficit. Meanwhile, Greece is suffering a severe recession in large part because costs have gotten far out of line with the rest of Europe. And one more thing: Greece has a long history of default—in fact, the nation has been in arrears on its debt for half its modern history. Yet as recently as last September, nobody seemed worried. Credit default swaps on Greek debt— insurance against a possible default—were fairly cheap; Greece was able to borrow at only modestly higher interest rates than that paragon of fiscal rectitude, Germany. Why were investors so complacent? The answer was that almost everyone believed that historical precedents were irrelevant. Greece was now part of Europe, and even more important, since 2001 part of the eurozone—sharing a currency with its more affluent neighbors. And that changed everything. Except that it didn’t. The Greek crisis came after the publication of This Time Is Different: Eight Centuries of Financial Folly, by Harvard’s Kenneth Rogoff and the University of Maryland’s Carmen Reinhart, but it was a dramatic illustration of the point they make with their sarcastic title: the more things change in the
395 financial world, the more they stay the same. The Greek debt crisis of 2010 bears a strong resemblance to the Mexican debt crisis of 1827; inflation in Zimbabwe is just the latest episode in a history of currency debasement that goes back to ancient Greek city-states; and last but not least, the US subprime crisis of 2008 followed the script of scores of banking crises past, going back at least as far as eighteenth-century Scotland. 1. From an economist’s point of view, there are two striking aspects of This Time Is Different. The first is the sheer range of evidence brought to bear. Reading Reinhart and Rogoff is a reminder of how often economists take the easy road—how much they tend to focus their efforts on times and places for which numbers are readily available, which basically means the recent history of the United States and a few other wealthy nations. When it comes to crises, that means acting like the proverbial drunk who searches for his keys under the lamppost, even though that’s not where he dropped them, because the light is better there: the quarter-century or so preceding the current crisis was an era of relative calm, at least among advanced economies, so to understand what’s happening to us one must reach further back and farther afield. This Time Is Different ventures into the back alleys of economic data, accepting imperfect or fragmentary numbers as the price of looking at a wide range of experience. The second distinguishing feature is the absence of fancy theorizing. It’s not that the authors have anything against elaborate mathematical modeling. Professor Rogoff’s influential 1996 book Foundations of International Macroeconomics, coauthored with Maurice Obstfeld, contains literally hundreds of fairly abstruse equations. But This Time Is Different takes a Sergeant Friday, just-the-facts- ma’am approach: before we start theorizing, let’s take a hard look at what history tells us. One side benefit of this approach is that the current book manages to be both extremely useful to professional economists and accessible to the intelligent lay reader. The Reinhart-Rogoff approach has already paid off handsomely in making sense of current events. In 2007, at a time when the wise men of both Wall Street and Washington were still proclaiming the problems of subprime “contained,” Reinhart and Rogoff circulated a working paper—now largely subsumed into Chapter 13 of This Time Is Different—that compared the US housing bubble with previous episodes in other countries, and concluded that America’s profile resembled those of countries that had suffered severe financial crises. And sure enough, we had one too. Later, when many business forecasters were arguing that the deep recession would be followed by a rapid, “V-shaped” recovery, they circulated another working paper, largely subsumed into Chapter 14, describing the historical aftermath of financial crises, which suggested that we would face a prolonged period of high unemployment—and so we have. So what is the message of This Time Is Different? In a nutshell, it is that too much debt is always dangerous. It’s dangerous when a government borrows heavily from foreigners—but it’s equally dangerous when a government borrows heavily from its own citizens. It’s dangerous, too, when the private sector borrows heavily, whether from foreigners or from itself—for banks are basically institutions that borrow from their depositors, then make loans to others, and banking crises are among the most devastating shocks an economy can face. Yet people—both investors and policymakers—tend to rationalize away these dangers. After any prolonged period of financial calm, they either forget history or invent reasons to believe that historical experience is irrelevant. Encouraged by these rationalizations, people run up ever more debt—and in so doing set the stage for eventual crisis. (One odd omission by Reinhart and Rogoff, by the way, is their failure to mention the late Hyman Minsky, a heterodox economic thinker who made a similar argument and is now experiencing a renaissance in influence.) Debt-driven crisis can take a variety of forms. There are sovereign debt crises, in which investors lose faith in the ability and/or willingness of governments to fulfill their financial obligations. There are inflationary crises, which happen when governments turn to the printing press either to pay their bills or to inflate away the real value of their debts. There are banking crises, in which people lose that trust in private-sector promises that is essential to a fully functioning market economy. And all of these afflictions are often associated with currency crises, in which speculation leads to a sharp fall in a currency’s value in terms of other currencies.
396 What we’re in the middle of right now is what Reinhart and Rogoff call the “second great contraction”—a giant banking crisis afflicting both sides of the Atlantic, with effects that have spilled over to the entire world. The first great contraction was, of course, the Great Depression. In the past, banking crises have often led to sovereign debt crises as well, since banking collapses depress the economy, reducing government revenue, at the same time that they often require large outlays to rescue the financial system. Greece may be only the first of many stories of troubled governments; most obviously, Spain, Portugal, and Italy are all in some danger. It’s worth noting, as an aside, that the Reinhart-Rogoff interpretation of the Great Depression is, implicitly, a critique of other interpretations—most notably, Milton Friedman’s famous claim that the Depression was fundamentally a failure of monetary policy, which could easily have been avoided if only the Fed had prevented a fall in the money supply. Although This Time Is Different doesn’t provide an extensive discussion of events leading up to the Depression, it’s easy to confirm from other sources that the late 1920s looked very much like the prologue to other severe financial crises: irrational exuberance in the stock market, a surge in household debt, and an ever more overextended banking system. There was even a real estate bubble in Florida, memorialized by the Marx Brothers in The Cocoanuts: “You can have any kind of a home you want. You can even get stucco. Oh, how you can get stucco.” That’s not to deny that better policy could have alleviated the pain, a question we’ll return to later. But the Depression looks much more like the product of excessive private-sector debt than like the government failure of monetarist legend. 2. So now we’ve experienced a severe financial crisis, fundamentally similar to those of the past. What does history tell us to expect next? That’s the subject of Reinhart and Rogoff’s Chapter 14, “The Aftermath of Financial Crises.” This chapter can usefully be read in tandem with two studies by the International Monetary Fund that take a similar approach, published as chapters in the April 2009 and October 2009 editions of the semiannual World Economic Outlook. All three studies offer a grim prognosis: the aftermath of financial crises tends to be nasty, brutish, and long. That is, financial crises are typically followed by deep recessions, and these recessions are followed by slow, disappointing recoveries. Consider, for example, the case of Sweden, which experienced a severe banking crisis in 1991, following a major housing bubble. Sweden’s government has been widely praised for its response to the crisis: it stabilized markets by guaranteeing bank debt, and restored faith in the system by temporarily nationalizing and then recapitalizing the weakest banks. Despite these measures, however, Swedish unemployment soared from 3 percent to almost 10 percent; it didn’t start coming down until 1995, and progress was slow and fitful for several more years. It’s true that there have been some “phoenix-like” recoveries from financial crises, to use a term introduced by Columbia University economist Guillermo Calvo. But such recoveries, like South Korea’s bounce-back from the 1997–1998 Asian crisis, have invariably been associated with large depreciations of the afflicted nation’s currencies—the Korean currency, the won, for example, lost more than half its value against the dollar—followed by huge export booms, presumably due to the way a weak currency made that nation’s exports more competitive. Nothing like that can be expected for America now. For one thing, the dollar actually rose in the face of the crisis, as investors sought the safest haven they could find. Beyond that, this is a global crisis, and we can’t all export our way out of it—not unless we can find another planet to trade with. How long does the pain last? According to the second of those IMF studies, the answer, to a first approximation, is “forever”: financial crises appear to depress not just short-term performance but also long-term growth, so that even a decade after the crisis real GDP is substantially lower than it would otherwise have been. Reading these studies, we find ourselves wondering what Obama administration economists were thinking when they circulated their now-infamous prediction that the US unemployment rate would peak at 8 percent in the third quarter of 2009. If that had happened, it would have been an exceptional performance, in that both the rise in unemployment and its duration would have been much less than is normal in these cases. In fact, of course, things have turned out considerably worse than the
397 administration’s prediction, and are running fairly close to the historical norm. As Rogoff told one of us in conversation, the United States is experiencing a “garden-variety severe financial crisis.” 3. History says that the next few years will be difficult. But can anything be done to improve the situation? Unfortunately, This Time Is Different says little on this score.
Alfred Eisenstaedt/Time Life Pictures/Getty Images John Maynard Keynes, right, with US Treasury Secretary Henry Morgenthau Jr. at the Bretton Woods conference on postwar reconstruction, July 1944 In part, that may reflect the limits of a history-based, theory-shy approach. In important ways the Reinhart-Rogoff approach resembles that of Wesley Mitchell, who founded the National Bureau of Economic Research in 1920. Under Mitchell’s direction, the NBER focused on quantitative studies of business cycles, tracking just what happens during booms and busts; to this day the organization is responsible for officially dating the beginnings and ends of recessions. Valuable work—but by itself it offered little guidance to policy: it could tell you what usually happens but not how to change the outcome. It wasn’t until John Maynard Keynes offered a theoretical explanation of how it is that economies come to be persistently depressed—an explanation that was informed by historical experience but went far beyond a simple description of past patterns—that economists could offer useful advice to policymakers about how to fight a slump. That said, history can offer some evidence on the extent to which Keynesian policies work as advertised. As we’ve noted, Reinhart-Rogoff don’t address that question, but others have. Thus the IMF, squinting hard at a relatively limited run of experience (it looks only at advanced countries since 1960), finds evidence that boosting government spending in the face of a financial crisis shortens the slump that follows—but also finds (weak) evidence that such policies might backfire when governments already have a high level of debt, a point we’ll come back to. Interestingly, the IMF also finds that monetary policies, usually the recession-fighting tool of choice, don’t appear effective in the wake of financial crises, perhaps because funds don’t flow easily through a stricken banking system. There has been even more suggestive work from the economic historians Barry Eichengreen of Berkeley and Kevin O’Rourke of Trinity College in Dublin, who have coauthored two hugely influential papers exploiting the similarities between the current slump and the Great Depression. In the first of these papers, they showed that from a global point of view the first year of this slump was every bit as bad as the Depression: world industrial production fell as steeply, world financial markets were if anything more disrupted, and so on. All this suggests that the shock to the system was just as big this time around.
398 In successive updates, however, they have shown current events increasingly diverging from the historical record, with the world experiencing a recovery that may be disappointing, but is far better than the continuing downward spiral between 1929 and 1933. The obvious difference is policy: rather than emulating the grim austerity of policymakers three generations ago, who slashed spending in an effort to balance budgets and raised interest rates in an effort to preserve the gold standard, today’s leaders have been willing to run deficits and pump funds into the economy. The result, arguably, has been a much smaller disaster. An even better test comes from comparing experiences during the 1930s. At the time, nobody was following Keynesian policies in any deliberate way—contrary to legend, the New Deal was deeply cautious about deficit spending until the coming of World War II. There were, however, a number of countries that sharply increased military spending well in advance of the war, in effect delivering Keynesian stimulus as an accidental byproduct. Did these countries exit the Depression sooner than their less aggressive counterparts? Yes, they did. For example, the surge in military spending associated with Italy’s invasion of Abyssinia was followed by rapid growth in the Italian economy and a return to full employment. Since conditions in the 1930s resembled those now in important ways—as Eichengreen and his coauthors put it, now as then we live “in an environment of near-zero interest rates, dysfunctional banking systems and heightened risk aversion”—this seems to suggest that the right course of action now is to spend freely on stimulus and pay for it later.1 But doing so would mean running large budget deficits and adding to debt levels that are already historically high in many countries. How dangerous is doing that? Much of This Time Is Different is devoted to sovereign debt crises, in which governments lose the confidence of lenders, are unable to service their debt, and respond by defaulting, engaging in inflation, or both. Implicitly, then, the book warns against taking it for granted that nations can get away with deficit spending. On the other hand, advanced nations have historically been able to go remarkably deeply into debt without creating a crisis. Britain’s debt, for example, was larger than its gross domestic product for four decades, from World War I until the 1950s, yet the country’s credit remained good. Japan has run large budget deficits for almost twenty years, yet it can still borrow long-term at very low rates. So should we be comforted or worried by the historical record? One reason to worry is that advanced countries today may not be as creditworthy as they once were. Reinhart and Rogoff write of the “debt intolerance” of nations suffering from “weak institutional structures and a problematic political system”; might not that description be applied to America today? In work that postdates This Time Is Different, Reinhart and Rogoff have also argued that there are hidden costs to debt. In a recent working paper they show that even among advanced countries that have not had debt crises, economic growth has historically been lower when government debt exceeds 90 percent of GDP—a threshold the United States might cross in a few years. This result has been widely cited by deficit hawks. A closer look at the data suggests, however, that in this case correlation may not imply causation. In the case of the United States, for example, the years of high debt were all in the immediate post–World War II period. During that period US real GDP did, in fact, fall—but not because of debt. Instead, GDP was falling thanks to postwar demobilization, as Rosie the Riveter became a suburban housewife. In the case of Japan, the high-debt years all followed the financial crisis of the early 1990s, from which Japan has never fully recovered, so that debt is arguably a consequence of slow growth rather than the other way around. The truth is that the historical record on the consequences of government debt is sufficiently ambiguous to admit of different interpretations. We read the evidence as supporting a policy of stimulate now, pay later: spend strongly to promote employment in the crisis, but take measures to curb spending and raise revenue once the crisis has passed. Others will see it differently. The main thing to notice, perhaps, is that there is no safe path: debt has long-term risks, but so does failing to engineer a solid recovery. The IMF’s research suggests that the long-term cost of financial crises is less when
399 countries respond with strong stimulus policies, which means that failing to do so risks damage not just this year but for years to come. 4. Clearly, the best way to deal with debt crises is not to have them. Is there anything in the historical record indicating how we can do that? Reinhart and Rogoff don’t address this question directly, but Chapter 16 of This Time Is Different, which provides an overview of the ups and downs of crises over the course of the twentieth century, is suggestive. What the data show is a dramatic drop in the frequency of crises of all kinds after World War II, then an irregularly rising trend after about 1980, with a series of regional crises in Latin America, Europe, and Asia, finally culminating in the global crisis of 2008–2009. What changed after World War II, and what changed it back? The obvious answer is regulation. By the late 1940s, most important economies had tightly regulated banking systems, preventing a recurrence of old-fashioned banking crises. At the same time, widespread limitations on the international movement of capital made it difficult for nations to run up the kinds of large international debts that had previously led to frequent defaults. (These restrictions took various forms, including limits on purchases of foreign securities and limits on the purchase of foreign currency for investment purposes; even advanced nations like France and Italy retained these restrictions into the 1980s.) Basically, it was a constrained world that may have limited initiative, but also left little room for large- scale irresponsibility. As memories of the 1930s faded, however, these constraints began to be lifted. Private international lending revived in the 1970s, making possible first the Latin American debt crisis of the 1980s, then the Asian crisis of the 1990s. Bank regulation was weakened, enabling the mid-1980s savings and loan debacle in the United States, the Swedish bank crisis of the early 1990s, and so on. By the early twenty-first century, the rapid growth of “shadow banks”—institutions like Lehman Brothers that didn’t accept deposits, and so were not covered by conventional banking regulations, but that in economic terms were carrying out banking functions—had recreated a financial system that was as vulnerable to panic and crisis as the banking system of 1930. As all this happened, proponents of looser regulation extolled the virtues of a more open system. Indeed, there were real advantages to laxer control: without question, some people, businesses, and governments that would not have had access to credit got it, and some used that credit well. Others, however, ran up dangerous levels of debt. And the old cycle of debt, crisis, and default returned. Why didn’t more people see this coming? One answer, of course, lies in Reinhart and Rogoff’s title. There were superficial differences between debt now and debt three generations ago: more elaborate financial instruments, seemingly more sophisticated techniques of assessment, an apparent wider spreading of risks (which turned out to have been an illusion). So financial executives, policymakers, and many economists convinced themselves that the old rules didn’t apply. We should not forget, too, that some people were making a lot of money from the explosive growth both of debt and of the financial industry, and money talks. The world’s two great financial centers, in New York and London, wielded vast influence over their respective governments, regardless of party. The Clinton administration in the US and the Labour government in Britain succumbed alike to the siren song of financial innovation—and were spurred in part by the competition between the two great centers, because politicians were all too easily convinced that having a large financial industry was a wonderful thing. Only when the crisis struck did it become clear that the growth of Wall Street and the City actually exposed their home nations to special risks, and that nations that missed out on the glamour of high finance, like Canada, also missed out on the worst of the crisis. Now that the multiple bubbles have burst, there’s obviously a strong case for a return to much stricter regulation. It’s by no means clear, however, whether this will actually happen. For one thing, the ideology used to justify the dismantling of regulation has proved remarkably resilient. It’s now an article of faith on the right, impervious to contrary evidence, that the crisis was caused not by private- sector excesses but by liberal politicians who forced banks to make loans to the undeserving poor. Less partisan leaders nonetheless fret over the possibility that regulation might crimp financial innovation,
400 even though it’s very hard to find examples of such innovation that were clearly beneficial (ATMs don’t count). Equally important, the financial industry’s political power has not gone away. Banks have waged a fierce campaign against what many expected to be an easily passed reform proposal, the creation of a new agency to protect financial consumers. Despite the steady drumbeat of scandalous revelations— most recently, the discovery that Goldman Sachs helped Greece cook its books, while Lehman cooked its own books—top financial executives continue to have ready access to the corridors of power. And as many have noted, President Obama’s chief economic and financial officials are men closely associated with Clinton-era deregulation and financial triumphalism; they may have revised their views but the continuity remains striking. In that sense, this time really is different: while the first great global financial crisis was followed by major reforms, it’s not clear that anything comparable will happen after the second. And history tells us what will happen if those reforms don’t take place. There will be a resurgence of financial folly, which always flourishes given a chance. And the consequence of that folly will be more and quite possibly worse crises in the years to come. —April 15, 2010 http://www.nybooks.com/articles/archives/2010/apr/19/our-giant-banking- crisis/?pagination=false
401 Economy
April 23, 2010 Do You Have Any Reforms in Size XL? By GRETCHEN MORGENSON EVERY once in a while, Congress awakens from its lobbyist-induced torpor, realizes that the masses are cranky and sets out to appease them. Such a moment occurred last week when lawmakers finally got the message that Main Street is disgusted with Wall Street and wants them to do something about it. Financial reform, which had been stumbling along, suddenly got traction. Bills and proposals began flying around Capitol Hill, and President Obama chided the bankers in an appearance in New York. Unfortunately, the leading proposals would do little to cure the epidemic unleashed on American taxpayers by the lords of finance and their bailout partners. The central problem is that neither the Senate nor House bills would chop down big banks to a more manageable and less threatening size. The bills also don’t eliminate the prospect of future bailouts of interconnected and powerful companies. Too big to fail is alive and well, alas. Indeed, several aspects of the legislative proposals sanction and codify the special status conferred on institutions that are seen as systemically important. Instead of reducing the number of behemoth firms assigned this special status, the bills would encourage smaller companies to grow large and dangerous so that they, too, could have a seat at the bailout buffet. Here’s an example of this special treatment: Both bills would establish a specific process to resolve big-bank failures. Smaller institutions, by contrast, would be allowed to go bankrupt without a new resolution scheme. This special resolution system is not only unfair; it also sends a pernicious signal to the market about large and intertwined institutions. The message is this: Subject as they will be to a newly codified “resolution authority,” these institutions and their investors and lenders can expect to be rescued if they get into trouble. This perception delivers lucrative advantages to these institutions. The main perquisite is lower borrowing costs, a result of lenders’ assumptions that the giants are less risky because they will be in line for government assistance if they become imperiled. Think Fannie Mae and Freddie Mac. And remember all those folks on Capitol Hill and elsewhere who assured taxpayers that we would never lose a dime on those companies? It is disappointing that none of the current proposals call for breaking up institutions that are now too big or on their way there. Such is the view of Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “The social costs associated with these big financial institutions are much greater than any benefits they may provide,” Mr. Fisher said in an interview last week. “We need to find some international convention to limit their size.” Limiting their leverage is another way to begin defanging these monsters, Mr. Fisher said. But he concedes that there is little will to do either. “It takes an enormous amount of political courage to say we are going to limit size and limit leverage,” he said. “But to
402 me it makes the ultimate sense. The misuse of leverage is always the root cause of every financial crisis.” The idea for a special resolution authority appears to rest on the belief that large, troubled institutions cannot be allowed to go bankrupt because their collapse will cause other entities to fail. Again, this seems exactly backward. If imperiled banks are too large and interconnected to go through our nation’s time-honored bankruptcy process, then they are too big to exist. A TWO-TIERED system, where large entities are more equal than others, is also deeply unfair. Smaller banks cannot hope to compete with institutions that have significant cost advantages. “Why should you have a small group of institutions get an advantage simply because they have grown too large?” Mr. Fisher asked. “It’s un-American; it’s not what makes this country great.” Indeed, removing the subsidies awarded to big banks would give Main Street lenders — most of which did not bring the financial system to its knees — a chance to win market share. Mr. Fisher also disputes the view often taken by defenders of the status quo that financial institutions hoping to compete for business in huge global markets must be gigantic. “There are those who say that America has to have the largest financial institutions to be an international player,” he said. “But I don’t think that’s a strong argument. Good companies will always find bankers and investors.” Edward Kane, a finance professor at Boston College and an authority on financial institutions and regulators, said that it was not surprising that substantive changes for both groups are not on the table. After all, powerful banks want to maintain their ability to privatize gains and socialize losses. “To understand why defects in insolvency detection and resolution persist, analysts must acknowledge that large financial institutions invest in building and exercising political clout,” Mr. Kane writes in an article, titled “Defining and Controlling Systemic Risk,” that he is scheduled to present next month at a Federal Reserve conference. But regulators, eager to avoid being blamed for missteps in oversight, also have an interest in the status quo, Mr. Kane argues. “As in a long-running poker game in which one player (here, the taxpayer) is a perennial and relatively clueless loser,” he writes, “other players see little reason to disturb the equilibrium.” It is a shame that Congress is moving forward with financial regulations that do not eliminate the heads-bankers-win, tails-taxpayers-lose mentality that has driven most of the bailouts during this sorry episode. Companies that are too mighty to fail must be broken up. And incentives in the nation’s regulatory system that reward size with subsidies should not be enshrined into law. They should be eliminated. Only then will America be safe from toxic banking practices and the burdensome rescues they require. http://www.nytimes.com/2010/04/25/business/economy/25gret.html?dbk
403
Opening Remarks April 22, 2010, 5:00PM EST Goldman Slapped A civil suit and a Senate scolding won't be enough to make Wall Street's wealthiest firm fly right By Jonathan Weil The satraps of Capitol Hill don't have much taste for aggressive financial reform. They do have a certain talent, however, for the theater of aggressive reform. And when Goldman Sachs (GS) CEO Lloyd Blankfein settles in at the witness table of the Senate Permanent Subcommittee on Investigations on Tuesday, that's what they'll try to deliver: a moment that crystallizes three years of global disgust with the smart money boys who seem to have played the rest of us for fools. When the curtain falls, the case that brought Blankfein to the hot seat—the Securities & Exchange Commission's civil lawsuit alleging that Goldman misled investors when it sold them subprime-mortgage-related investments that were designed to blow up—will still be one small, rotten potato in a large and smelly field. The reforms that might prevent this sort of chicanery will still be elusive. And Goldman, which calls the allegations "completely unfounded" and vows to defend itself "vigorously," will still be the most spectacular cash machine that banking has ever seen. The SEC chose this case because it is comparatively stark. In early 2007, at the request of Paulson & Co., the hedge fund run by billionaire John Paulson, Goldman structured a deal called Abacus 2007-AC1, designed to let Paulson wager that the subprime-mortgage industry would collapse. Goldman lined up two counterparties for a fee of $15 million: ACA, a bond- insurance company, lost about $950 million (with the banks backstopping it), and a German bank called IKB lost $150 million. Goldman's offense, according to the SEC, was telling IKB that the portfolio of mortgage bonds used for the deal was "selected by ACA," when in fact Paulson was deeply involved in the process, cherry-picking the worst bonds it could find. Goldman didn't tell IKB who was on the other side of the trade, or the extent to which Paulson influenced selections. As a result, the SEC claims, Goldman's statement to IKB was false, misleading, and fraudulent. The Abacus case is of course far more complex and nuanced than the SEC complaint lets on. This is a cast of characters without a single hero. Not even the supposed victims are sympathetic. IKB sold commercial-paper IOUs to investors in mid-2007 that were worthless by year's end. Its former CEO, Stefan Ortseifen, went on trial last month in Germany for allegedly lying about IKB's financial condition before its near-collapse. The credit-rating merchants, whose incompetence cannot be overstated, make their usual cameo, as well. And while Paulson didn't get sued, because the SEC said he made no misrepresentations, he did make $1 billion on the deal. Having his name associated with this alleged fleecing carries its own unknowable reputational risk. The SEC, trying to show that it has grown teeth after doing nothing while Bernie Madoff looted and Lehman Brothers fell to dust, doesn't appear pristine either. Its enforcement chief, Robert Khuzami, until last year was a top lawyer at Deutsche Bank (DB), which, like Goldman, structured transactions for hedge funds betting against subprime bonds. While Khuzami has said he would recuse himself from matters involving Deutsche Bank, he's free to
404 probe its competitors. The SEC filed the suit the same day its inspector general released a horrific report on the agency's decade-long failure to catch accused Ponzi artist Allen Stanford. That PR trick relegated what would have been the day's biggest financial story to the inside pages. The IG's report said the enforcement chief in the Fort Worth office quashed his staff's efforts to investigate, then left for private practice—and landed Stanford as a client. The effrontery of that may well supersede anything Goldman and Paulson are alleged to have done. The only players in this game that can't speak up for themselves are the synthetic collateralized debt obligations. Their value was tied to the performance of credit-default swaps, derivatives that can be used to protect a bondholder from losses. They're not evil. The problem is they're barely regulated. What's needed are rules to make sure they're used transparently by investors with the capital to absorb losses. What distinguishes the Abacus case from other doomed subprime deals are the e-mails written by a young Goldman vice-president and now co-defendant, Fabrice Tourre. Had he not typed quite so effusively—"Only potential survivor, the fabulous Fab...standing in the middle of all these complex, highly leveraged, exotic trades"—the SEC might not have had a case and Blankfein might have avoided the hot seat. In one internal Goldman e-mail sent in March 2007, Tourre, now 31, describes the portfolio as "selected by ACA/Paulson." In others, he frets that the housing market might crash before Goldman could close the transaction. Tourre's e-mails may buttress Goldman's basic strategy, which is to cast the SEC's suit as an argument over the conduct of a single employee. "It's all going to be a factual dispute about what he remembers and what the other folks remember on the other side," Greg Palm, Goldman Sachs's co-general counsel, said in a call with reporters on Apr. 20. "If we had evidence that someone here was trying to mislead someone...we'd be the first one to take action." When Tourre tells his story—which he is expected to do before the same Senate panel that grills Blankfein—he can either support or explode this argument. "If Tourre says, 'Goldman's board knew what we were doing,' you can imagine Goldman will want to portray him as disgruntled," says Onnig Dombalagian, a professor at Tulane University Law School and a former SEC attorney. That may not help the firm itself, he added. "Under theories of vicarious liability, if you can find Tourre liable, it's going to be hard for Goldman to escape." When Blankfein arrives in Washington, he will find a panel of lawmakers happily getting in touch with their prosecutorial roots. Investigations subcommittee Chairman Carl Levin (D- Mich.) has been using his subprime probe to dig into the complexities of both financial manipulation and human motivation. If Blankfein argues that the buck stopped with Fab, Levin will skewer him. He is not beholden to Goldman. Of the 10 committee members, four have accepted substantial contributions from the firm: Mark Pryor, Jon Tester, Susan Collins, and John McCain. Levin has subpoena power, and SEC and Justice Dept. personnel detailed to his committee. In addition to Blankfein and Tourre, he is expected to call Goldman executives Craig Broderick, the chief risk officer, and David Viniar, the CFO. One key theme will be inconsistencies between the public record and what Goldman people were saying in private. One defense Blankfein may emphasize this week could surprise people: Goldman says it got sheared on the Abacus deal. Palm, the co-general counsel, said the firm lost more than $100 million, but the red ink looks awfully convenient. Goldman won't reveal the positions in its mortgage trading book, so there's no way to tell what's real.
405 If Goldman seems vulnerable to attack, so does an element of the SEC's case—the notion that Tourre misled ACA into thinking Paulson had planned to place a bullish bet when the two were negotiating which mortgages bonds to pick for the CDO. The Abacus transaction closed on Apr. 26, 2007. By then it was a matter of public record that Paulson had begun profiting on credit derivatives that increased in value as subprime bonds fell. On Mar. 15, Bloomberg News reported that one of Paulson's startup credit funds had gained 67% in eight months. In a letter to his funds' investors quoted by Bloomberg, Paulson wrote: "We believe we are in the early stage of a correction in this market and that the market will eventually implode." The article also quoted him as saying that bad loans made to the riskiest borrowers would "skyrocket" and that "most, if not all, of the independent originators will go bankrupt." Even the most basic due diligence should have made Paulson's trading strategy clear. That article and others like it can be found with a Google search. ACA and Paulson spent weeks negotiating which bonds would be selected. If each knew the other's intentions, that knocks a hole in the idea that ACA got hustled. That's a legal matter. What concerns Goldman this week is politics and public relations. It knows how to make money and how to defend those methods in court. What it hasn't been very good at is getting the world to see it the way it sees itself. When Blankfein settles into his chair in Washington, he's hoping what he says will mark the beginning of a long, slow process of turning that perception around. The timing may not be all bad. Before the SEC's case hit, a certain exuberance had returned to the markets. Big bonuses were back, as was the hot pursuit of risky assets. The spectacle of Blankfein being called upon to explain the actions of an impetuous young man and his bosses should be the spur Wall Street needs to start its own genuine reform process. If ever there were a time to relearn commonsensical standards of behavior and weed out the Fabs before the government comes calling, this is it. With Lorraine Woellert http://www.businessweek.com/magazine/content/10_18/b4176013878154.htm?campaign_id= mag_Apr22&link_position=link21
406