Rogoff & Reinhart

Aquí una entrevista con Rogoff y Reinhart (los autores de "This Time si Different"). Sobre la crisis, las causas, hasta donde hemos avanzado unos y otros, etc...

Imprescindible.

Dos o tres apuntes. Las crisis viene de la desregulación (coinciden con Krugman). La política monetaria post crisis debería ser más audaz y permitir más inflación (coinciden con Krugman). Las deudas no se van a pagar, por lo que debería haber más planes de reestructuración de deudas. En cambio, la politica fiscal debeser prudente (difieren de Krugman).

Una selección del texto (énfasis míos).

Rogoff:It is important to have an independent central bank that can resist, when necessary, short-sighted political pressures for lower interest rates, even if that's at the cost of higher inflation. At the onset of this crisis, informed by my work with Carmen, I started writing that this is a once-in-a-100-year event. And, yes, there are a lot of clever ways to try to clean things up, but I'm pretty cynical that we will be able to do it. But having some temporarily elevated inflation would not be such a bad idea for many, many reasons. Of course, it means there will be a transfer of wealth from creditors to debtors. But some of this is inevitable anyway, since not all of the debt is going to get paid. Even then, we will need more restructuring [of debt]. Second, on fiscal policy we have struck a middle ground because we are running a 7% deficit [as a percentage of GDP], and the situation is comparable in the U.K. And there are voices that say, "Well, the deficit should be much higher." Our work suggests caution on that front. There can be very-long-term costs, in terms of growth, to having such elevated debt.

What are some of the key lessons from the financial crisis and the recovery?

Reinhart: The U.S. recovery very much fits the mold of those following any severe financial crisis. The U.S. did not have as sharp an initial decline in output as what you have seen in emerging markets or, in effect, as what you saw in prior crises in U.S. history.—not just the Great Depression, but in the crises of 1907 and 1893, as well. In all of these, there were years where you had massive initial declines in GDP [gross domestic product] of 10% or 12%. In the Depression, it was 30%. We did not have that this time. But all the other developments were the same, including the failure to regain what was lost in income and employment, and how long it has lasted.

Post-war recessions, on average, barely last a year. And here we are having these conversations five years after the onset of the subprime crisis. It attests to the long duration of this type of systemic crisis. In the historical context, the U.S. has had, overall, a pretty good track record in the latest crisis. In terms of income per person and in comparison with other countries that are having similarly severe crises, we are doing pretty well–but not so hot in terms of unemployment.

Rogoff: We have always argued that the right metric for thinking about deep financial crises is to compare the current conditions to where you started. It is a much more robust method, particularly because there are false starts, and you don't know when the recovery starts. It is really getting into semantics to say, "Well, we are not racing ahead that fast." But the flip side of that is that a lot of effort was made to have the economy not fall that fast. There is basically fiscal stimulus being taken out of the economy, for example, as we are consolidating from the initial $800 billion stimulus in 2009. And if we hadn't done that, there would be more room to make the economy grow faster now. But that doesn't mean we would be ahead.

Is there a regulatory framework that would prevent severe financial crises?

Reinhart: Of course there is. But can we get there?

Rogoff: And stay there?

Reinhart: That's the question. Getting there is one thing, staying there is a different matter. And that's where the memory, or the dissolution of memory, kicks in. This comes out very clearly in our chapter in the book about banking crises. Devastated by what happened in the 1930s, the architects of the Bretton Woods System at the end of World War II, including John Maynard Keynes, were very leery of financial markets. This was an era of financial repression. Trade boomed. Not trade in finance, but trade in goods and services. And this very tight system, with all its distortions and problems, still delivered decade after decade of no systemic crisis. Between 1945 and 1980, it was an unusually quiet period. But then, by the late-1990s, the regulations seemed passé. The financial system found ways of circumventing regulation. It was outmoded. It was discarded, and we started anew.

Rogoff: It's important to channel some financing into safer instruments. If banks were to finance themselves like normal firms by raising a significant share of their lendable capital through issuing equity or retained earnings, we would have much, much safer financial system. So that's a very simple change.

In closing, what's your assessment of the financial crisis in Europe?

Reinhart: The short answer is that it is a lot worse there than it is in the U.S. in terms of the financial crisis morphing into an immediate sovereign crisis with a very deep, double-dip recession. But [European Central Bank President] Mario Draghi has tried to be much more accommodative with regard to purchasing the debt of periphery countries. That's a very big step in the right direction.

But it's very clear that the euro zone needs higher inflation. The orders of magnitude are such that fiscal austerity, together with the ECB easing, won't be sufficient to deal with the extreme debt overhangs in places like Spain and Ireland. And so, bottom line, we expect to see more credit events, including the writing off of senior bank debt. Credit events don't end with Greece. This is not a Greek problem. This is a European problem. So be prepared for a lot of volatility surrounding future credit events.