These are dangerous times

Martin Wolf, hoy

EEUU y Europa están atrapados por sus dos propias utopías: la del Tea Party, verdaderos amhabydeyas de la economía, y ¡como no! el euro:

Yet, astonishingly, many of the Republicans opposed to raising the US debt ceiling do not merely wish to curb federal spending: they enthusiastically desire a default. Either they have no idea how profound would be the shock to their country’s economy and society of a repudiation of debt legally contracted by their state, or they fall into the category of utopian revolutionaries, heedless of all consequences. Meanwhile in Europe, happily, nobody believes that defaults are good. But Europe is trapped in its own utopian project: the single currency. Just as members of the Tea Party hate paying taxes for those they deem unworthy, so, too, do solvent Europeans hate transfers to those they deem irresponsible.

Lo que, sin unión monetaria hubiera acabado con una "simple" crisis cambiaria, con el euro ha terminado en una inmanejable crisis financiera  redoblada por una crisis de deuda, a la que se añade una crisis cambiaria implícita en el euro. Simplemente porque, con una deuda mayor del 80% del PIB y unos tipos de interés reales del 5%, cualquier desviación a la baja sobre ese crecimiento mínimo necesario del 5%, supone aumentar la deuda/PIB. Como se puede ver en la imagen:

Alas, as many have long predicted, what would, in the absence of the currency union, have been a straightforward currency crisis has now morphed, within these constraints, into an agonising fiscal cum financial crisis. Worse, spreads on Spanish and Italian 10-year bonds over German bunds have reached 328 and 296 basis points, respectively.

In slow-growing economies with overvalued real exchange rates, these spreads begin to be dangerous. If they became and remained, say, 400 basis points, the real interest rate on long-term debt would be 5 per cent. These countries would then be slowly shifted from a good equilibrium, with manageable debt, to a bad equilibrium, with close to unmanageable debt. Italy, with the fourth-largest public debt in the world, is probably too big to save: Italians themselves must make the decisive moves needed to restore fiscal credibility. That, in turn, requires both a sharp tightening and measures to raise the growth rate. Can this combination be managed? Only with difficulty, is the answer.

These are dangerous times. The US may be on the verge of making among the biggest and least-necessary financial mistakes in world history. The eurozone might be on the verge of a fiscal cum financial crisis that destroys not just the solvency of important countries but even the currency union and, at worst, much of the European project. These times require wisdom and courage among those in charge of our affairs. In the US, utopians of the right are seeking to smash the state that emerged from the 1930s and the second world war. The US is able to borrow on easy terms, with yields on 10-year bonds close to 3 per cent, as the few non-hysterics predicted. The fiscal challenge is long term, not immediate. A decision not to allow the government to borrow to finance the programmes Congress has already mandated would be insane. As the fiscal expert, Bruce Bartlett, has argued, the law requiring Congressional approval of extra debt might even be unconstitutional.

 In Europe, politicians are dealing with the legacy of a utopian project which requires a degree of solidarity that their peoples do not feel. How will these clashes between utopia and reality end? In late August, when I return from my break, we may know at least some of the answers. 

En europa, tal como se han desarrollado las cosas (ver imagen) hay que hacer un esfuerzo múltiple en todos los sentidos: no sólo en austeridad, sino en generosidad de los países del norte para cubrir la deuda y convertirla en otra de alto nivel que sea apetecible para los acreedores.
En realidad, la comparación USA-Europa, que hizo también Gideon Richman hace poco, no es tan pertinente: EEUU está secuestrado por unos fanáticos, Europa está atrapada en una trampa muy difícil, que exige un concierto de voluntades y unas dosis de solidaridad que no se adivinan. En lo que sí hay paralismo es en las consecuencias catastróficas para todos.