El porridge parisino

Hoy, en el FT, M Wolf. Hay que leerlo. Resumen: esto no es una crisis fiscal, que se arregla con austeridad fiscal. La austeridad fiscal de unos, vía contracción de la demanda total, ha exacerbado los problemas fiscales de otros. 

Venga, tonto, bésame... Na!!! que nos ve Carla

Pues es lo que han acordado en París ayer, durante esta extraña semana española en la que nadie trabaja aunque quiera. Y además, de una manera pintoresca: cada país, por su Tribual Constitucional, vigilará los déficits de sus gobiernos. Payasada. MW lo resume muy bien.
Aquí hay varios problemas superpuestos que se retroalimentan (Y que MW no acierta a ver del todo, aunque en lo que dice tiene razón):
1) un problema global de falta de crecimiento que agrava el problema de la deuda.
2) un problema financiero privado, de riesgo sistémico de la banca, con posible contagio al resto del mundo. Es un problema de acreedores, porque a los deudores no los van a matar por no pagar. MW habla de un problema de desequilibrios comerciales, pero eso me parece de más largo plazo y más ligado a reformas estructurales. Yo quiero separar bien lo urgente de lo necesario. Por eso:
3) los problemas estructurales de cada país, pero que ahora no deberían considerarse, por ser irrelevantes para 1) y 2): la reforma del mercado de trabajo español no va a salvar de la quiebra a corto plazo a la banca eurupea.
Luego nos quedan DOS problemas.
Afortunadamante los dos tienen una solución a corto plazo: una política del BCE de expansión de liquidez. Si, además, esa expansión se instrumenta bien, para que, mediante ella, pueda ser recapitalizada la banca, como propone Vassei (ver en esta blog innovador), tendríamos la inmensa suerte de un recurso para dos problemas, lo que realmente nos deja con un sólo problema, que es el de la liquidez. Problema que generó el mismo BCE con su política dictada desde Alemania. Sí, esto no se lo cree casi nadie, ya lo sé, pero el otro día vi a un catedrático de trabajo decirlo: "mientras esto no crezca porque el BCE no meta dinero, la reforma laboral no aportará nada" (Sagardoy).
Estamos bajo el dogma del euro, y todos lo mencionan con unción, el que más, Rajoy. "Hay que salvar al euro", dicen con la voz temblona, pero amenazante, como si fuera el dogma de la santísima Trinidad en la Edad Media. Pero el euro, amigos opolíticos, lo salva el BCE o se hunde. Así que no esperen nada bueno del día 9, aunque los mercados están muy alegres, pero también lo estuvieron hace tres semanas y luego se hundieron estrepitosamente.

Les dejo con MW.

Merkozy failed to save the eurozone

By Martin Wolf

Two heads, it is said, are better than one. In the case of the meeting between Angela Merkel, Germany’s chancellor, and Nicolas Sarkozy, the French president, that was not the case. If the conclusions give cover to a decision by the European Central Bank to intervene still more in public debt markets, it might offer some relief. But, like the Bourbons, the leaders seem to have learnt nothing and forgotten nothing.

What was agreed? The decisions seem to include: not compelling private bondholders to take losses on eurozone bail-outs, though voluntary restructuring remains possible; greater likelihood, though no automaticity, of sanctions on countries that fail to stay within the limits on budget deficits; inserting a balanced budget requirement into the domestic legislation of members; introduction of the European Stability Mechanism – the permanent rescue instrument – in June 2012, instead of June 2013; and monthly meetings of the European heads of state and governments, during the crisis, to oversee policy co-ordination.

Might this agreement encourage the ECB to intervene more heavily in markets for sovereign debt? Mario Draghi, its new president, told the European parliament last week that an agreement to bind governments on public finances would be “the most important element to start restoring credibility” with financial markets. “Other elements might follow, but the sequencing matters,” he added. The fiscal and reform measures announced by the technocratic government in Rome may help give the ECB the green light for those “other elements”. Markets have responded, in hope: Spain’s 10-year bonds were down to 5.2 per cent, and Italy’s to 6.3 per cent, on Monday. But Standard & Poor’s decided to put the eurozone on negative watch. Fragility remains the watchword. Gone, then, is forced “private sector involvement” in rescheduling of debt, which will delight the ECB. Gone are automatic sanctions on fiscal “sinners” and review of breaches of fiscal rules by the European Court of Justice. This will delight France, which also obtained agreement that an intergovernmental accord among eurozone members might take the place of a new European Union treaty. Germany did not leave quite empty-handed: it managed to rule out “eurobonds” – joint issuance of sovereign debt – once again. But it does not seem to have got much.

The summit on Friday is a huge moment. What we have heard from Mr Sarkozy and Ms Merkel does not create confidence. The problem is that Germany – the eurozone’s hegemon – has a plan, but that plan is also something of a blunder. The good news is that eurozone opposition will prevent its full application. The bad news is that nothing better seems to be on offer.

The German faith is that fiscal malfeasance is the origin of the crisis. It has good reason to believe this. If it accepted the truth, it would have to admit that it played a large part in the unhappy outcome.

Take a look at the average fiscal deficits of 12 significant (or at least revealing) eurozone members from 1999 to 2007, inclusive. Every country, except Greece, fell below the famous 3 per cent of gross domestic product limit. Focusing on this criterion would have missed all today’s crisis-hit members, except Greece. Moreover, the four worst exemplars, after Greece, were Italy and then France, Germany and Austria. Meanwhile, Ireland, Estonia, Spain and Belgium had good performances over these years. After the crisis, the picture changed, with huge (and unexpected) deteriorations in the fiscal positions of Ireland, Portugal and Spain (though not Italy). In all, however, fiscal deficits were useless as indicators of looming crises (see charts).

Now consider public debt. Relying on that criterion would have picked up Greece, Italy, Belgium and Portugal. But Estonia, Ireland and Spain had vastly better public debt positions than Germany. Indeed, on the basis of its deficit and debt performance, pre-crisis Germany even looked vulnerable. Again, after the crisis, the picture transformed swiftly. Ireland’s story is amazing: in just five years it will suffer a 93 percentage point jump in the ratio of its net public debt to GDP.

Now consider average current account deficits over 1999-2007. On this measure, the most vulnerable countries were Estonia, Portugal, Greece, Spain, Ireland and Italy. So we have a useful indicator, at last. This, then, is a balance of payments crisis. In 2008, private financing of external imbalances suffered “sudden stops”: private credit was cut off. Ever since, official sources have been engaged as financiers. The European System of Central Banks has played a huge role as lender of last resort to the banks, as Hans-Werner Sinn of Munich’s Ifo Institute argues.

If the most powerful country in the eurozone refuses to recognise the nature of the crisis, the eurozone has no chance of either remedying it or preventing a recurrence. Yes, the ECB might paper over the cracks. In the short run, such intervention is even indispensable, since time is needed for external adjustments. Ultimately, however, external adjustment is crucial. That is far more important than fiscal austerity.

In the absence of external adjustment, the fiscal cuts imposed on fragile members will just cause prolonged and deep recessions. Once the role of external adjustment is recognised, the core issue becomes not fiscal austerity but needed shifts in competitiveness. If one rules out exits, this requires a buoyant eurozone economy, higher inflation and vigorous credit expansion in surplus countries. All of this now seems inconceivable. That is why markets are right to be so cautious.

The failure to recognise that a currency union is vulnerable to balance of payments crises, in the absence of fiscal and financial integration, makes a recurrence almost certain. Worse, focusing on fiscal austerity guarantees that the response to crises will be fiercely pro-cyclical, as we see so clearly.

Maybe, the porridge agreed in Paris will allow the ECB to act. Maybe, that will also bring a period of peace, though I doubt it. Yet the eurozone is still looking for effective longer-term remedies. I am not sorry that Germany failed to obtain yet more automatic and harsher fiscal disciplines, since that demand is built on a failure to recognise what actually went wrong. This is, at its bottom, a balance of payments crisis. Resolving payments crises inside a large, closed economy requires huge adjustments, on both sides. That is truth. All else is commentary.