A Europe of Solidarity, Not Only Discipline, by George Soros

Originally, the European Union was what psychologists call a “fantastic object,” a desirable goal that inspires people’s imaginations. I saw it as the embodiment of an open society – an association of nation-states that gave up part of their sovereignty for the common good and formed a union dominated by no one nation or nationality.

The euro crisis, however, has turned the EU into something radically different. Member countries are now divided into two classes – creditors and debtors – with the creditors in charge. As the largest and most creditworthy country, Germany occupies a dominant position. Debtor countries pay substantial risk premiums to finance their debt, which is reflected in their high economy-wide borrowing costs. This has pushed them into a deflationary tailspin and put them at a substantial – and potentially permanent – competitive disadvantage vis-à-vis creditor countries.

This outcome does not reflect a deliberate plan, but rather a series of policy mistakes. Germany did not seek to occupy a dominant position in Europe, and it is reluctant to accept the obligations and liabilities that such a position entails. Call this the tragedy of the European Union.

Recent developments seem to offer grounds for optimism. The authorities are taking steps to correct their mistakes, especially with the decision to form a banking union and the outright monetary transactions program, which would allow unlimited intervention by the European Central Bank in the sovereign-bond market. Financial markets have been reassured that the euro is here to stay. That could be a turning point, provided it is adequately reinforced with additional steps toward greater integration.

Unfortunately, the EU’s unfolding tragedy characteristically feeds on such glimmers of hope. Germany remains willing to do the minimum – and nothing more – to hold the euro together, and the EU’s recent steps have merely reinforced German resistance to further concessions. This will perpetuate the division between creditor and debtor countries.

A widening gap in economic performance and political dominance is such a dismal prospect for the EU that it must not be allowed to become permanent. There must be a way to prevent it – after all, history is not predetermined. The EU, originally conceived as an instrument of solidarity, is today held together by grim necessity. That is not conducive to a harmonious partnership. The only way to reverse the trend is to recapture the spirit of solidarity that animated the European project from the start.

To that end, I recently established an Open Society Initiative for Europe (OSIFE). In doing so, I recognized that the best place to start would be where current policies have created the greatest human suffering: Greece. The people who are suffering are not those who abused the system and caused the crisis. The fate of the many migrant and asylum seekers caught in Greece is particularly heart-rending. But their plight cannot be separated from that of the Greeks themselves. An initiative confined to migrants would merely reinforce the growing xenophobia and extremism in Greece.

I could not figure out how to approach this seemingly intractable problem until I recently visited Stockholm to commemorate the centenary of Raoul Wallenberg’s birth. This reawakened my memories of World War II – the calamity that eventually gave birth to the EU.

Wallenberg was a hero who saved the lives of many Jews in my home city of Budapest by establishing Swedish safe houses. During the German occupation, my father was also a heroic figure. He helped to save his family and friends and many others. He taught me to confront harsh reality rather than to submit to it passively. That is what gave me the idea.

We could set up solidarity houses in Greece, which would serve as community centers for the local population and also provide food and shelter to migrants. There are already many soup kitchens and civil-society efforts to help the migrants, but these initiatives cannot cope with the scale of the problem. What I have in mind is to reinforce these efforts.

The EU’s asylum policy has broken down. Refugees must register in the member country where they enter, but the Greek government cannot process the cases. Some 60,000 refugees who sought to register have been put into detention facilities where conditions are inhumane. Migrants who do not register and live on the street are attacked by the hooligans of the neo-fascist Golden Dawn party.

Sweden has made migration and asylum policy a high priority, while Norway is concerned about the fate of migrants in Greece. So both countries would be prime candidates to support solidarity houses. And other better-off countries could join them. OSIFE is ready to provide support for this initiative, and I hope other foundations will be eager to do the same. But this has to be a European project – one that eventually must find its way into the European budget.

Currently, Golden Dawn is making political headway by providing social services to Greeks while attacking migrants. The initiative that I propose would offer a positive alternative, based on solidarity – the solidarity of Europeans with Greeks and of Greeks with migrants. It would provide a practical demonstration of the spirit that ought to infuse the entire EU.

As soon as possible, I will dispatch an OSIFE needs-assessment team to Greece to contact the authorities – and the people and organizations already helping the needy – to work out a plan for which we can generate public support. My goal is to revive the idea of the EU as an instrument of solidarity, not only of discipline.

http://www.project-syndicate.org/commentary/reviving-the-spirit-of-the-european-union-by-george-soros

Hard to be Easing, by Nouriel Roubini

The United States Federal Reserve’s decision to undertake a third round of quantitative easing, or QE3, has raised three important questions. Will QE3 jump-start America’s anemic economic growth? Will it lead to a persistent increase in risky assets, especially in US and other global equity markets? Finally, will its effects on GDP growth and equity markets be similar or different?

Illustration by Jon Krause

CommentsMany now argue that QE3’s effect on risky assets should be as powerful, if not more so, than that of QE1, QE2, and “Operation Twist,” the Fed’s earlier bond-purchase program. After all, while the previous rounds of US monetary easing have been associated with a persistent increase in equity prices, the size and duration of QE3 are more substantial. But, despite the Fed’s impressive commitment to aggressive monetary easing, its effects on the real economy and on US equities could well be smaller and more fleeting than those of previous QE rounds.

CommentsConsider, first, that the previous QE rounds came at times of much lower equity valuations and earnings. In March 2009, the S&P 500 index was down to 660, earnings per share (EPS) of US companies and banks had sunk to a financial-crisis low, and price/earnings ratios were in the single digits. Today, the S&P 500 is more than 100% higher (hovering near 1,430), the average EPS is close to $100, and P/E ratios are above 14.

CommentsEven during QE2, in the summer of 2010, the S&P 500, P/E ratios, and EPS were much lower than they are today. If, as is likely, economic growth in the US remains anemic in spite of QE3, top-line revenues and bottom-line earnings will turn south, with negative effects on equity valuations.

CommentsMoreover, fiscal support is absent this time: QE1 and QE2 helped to prevent a deeper recession and avoid a double dip, respectively, because each was associated with a significant fiscal stimulus. In contrast, QE3 will be associated with a fiscal contraction, possibly even a large fiscal cliff.

CommentsEven if the US avoids the full fiscal cliff of 4.5% of GDP that is looming at the end of the year, it is highly likely that a fiscal drag amounting to 1.5% of GDP will hit the economy in 2013. With the US economy currently growing at a 1.6% annual rate, a fiscal drag of even 1% implies near-stagnation in 2013, though a modest recovery in housing and manufacturing, together with QE3, should keep US growth at about its current level in 2013.

CommentsBut there is no broader rebound underway. In both 2010 and 2011, leading economic indicators showed that the first-half slowdown had bottomed out, and that growth was already accelerating before the announcement of monetary easing. Thus, QE nudged along an economy that was already recovering, which prolonged asset reflation.

CommentsBy contrast, the latest data suggest that the US economy is performing as sluggishly now as it was in the first half of the year. Indeed, if anything, weakness in the US labor market, low capital expenditures, and slow income growth have contradicted signals in the early summer that third-quarter growth might be more robust.

CommentsMeanwhile, the main transmission channels of monetary stimulus to the real economy – the bond, credit, currency, and stock markets – remain weak, if not broken. Indeed, the bond-market channel is unlikely to boost growth. Long-term government bond yields are already very low, and a further reduction will not significantly change private agents’ borrowing costs.

CommentsThe credit channel also is not working properly, as banks have hoarded most of the extra liquidity from QE, creating excess reserves rather than increasing lending. Those who can borrow have ample cash and are cautious about spending, while those who want to borrow – highly indebted households and firms (especially small and medium-size enterprises) – face a credit crunch.

CommentsThe currency channel is similarly impaired. With global growth weakening, net exports are unlikely to improve robustly, even with a weaker dollar. Moreover, many major central banks are implementing variants of QE alongside the Fed, dampening the effect of the Fed’s actions on the dollar’s value.

CommentsPerhaps most important, a weaker dollar’s effect on the trade balance, and thus on growth, is limited by two factors. First, a weaker dollar is associated with a higher dollar price for commodities, which implies a drag on the trade balance, because the US is a net commodity-importing country. Second, any improvement in GDP derived from stronger exports leads to an increase in imports. Empirical studies estimate that the overall impact of a weaker US dollar on the trade balance is close to zero.

CommentsThe only other significant channel to transmit QE to the real economy is the wealth effect of an equity-market increase, but there is some circularity in the argument that QE3 will lead to a persistent rise in equity prices. If persistent asset reflation requires a significant GDP growth recovery, it is tautological to say that if equity prices rise enough following QE, the resulting increase in GDP from a wealth effect justifies the rise in asset prices. If monetary policy’s transmission channels to the real economy are broken, one cannot assume that QE will have a significant effect on economic growth.

CommentsFed Chairman Ben Bernanke has recently emphasized the importance of an additional channel: the confidence channel, through which the Fed’s commitment to maintaining generous monetary conditions for longer could improve private spending. The issue is how substantial and durable such effects will be. Confidence is fragile in an environment characterized by ongoing deleveraging, macro uncertainties, weak labor-market growth, and a fiscal drag.

In short, QE3 reduces the tail risk of an outright economic contraction, but is unlikely to lead to a sustained recovery in an economy that is still enduring a painful deleveraging process. In the short run, QE3 will lead investors to take on risk, and will stimulate modest asset reflation. But the equity-price rise is likely to fizzle out over time if economic growth disappoints, as is likely, and drags down expectations about corporate revenues and profitability.

http://www.project-syndicate.org/commentary/why-qe3-is-unlikely-to-help-us-economic-recovery-by-nouriel-roubini

Europe’s Path to Disunity, by Hans-Werner Sinn

The motto of the United States of America is: “E pluribus unum” (Out of many, one). The European Union’s motto is “In varietate concordia,” which is officially translated as “United in diversity.” It is difficult to express the differences between the US and the European model any more clearly than this. The US is a melting pot, whereas Europe is a mosaic of different peoples and cultures that has developed over the course of its long history.

Illustration by Barrie Maguire

CommentsThat difference raises the question of whether it is worth striving for a United States of Europe – a concept that many refuse to accept, because they do not believe in the possibility of a unified European identity. A single political system like that of the US, they insist, presupposes a common language and a single nationality.

CommentsPerhaps the idea of a United States of Europe, the dream of post-war children like me, can never be realized. But I am not so sure. After all, deeper European integration and the creation of a single political system offer solid, practical advantages that do not require a common identity or language. These advantages include the right to move freely across borders, the free movement of goods and services, legal certainty for cross-border economic activities, Europe-wide transportation infrastructure, and, not least, common security arrangements.

CommentsBanking regulation is the most topical area in which collective action makes sense. If banks are regulated at the national level, but do business internationally, national regulatory authorities have a permanent incentive to set lax standards to avoid driving business to other countries and to lure it from them instead. Regulatory competition thus degenerates into a race to the bottom, since the benefits of lax regulation translate into profits at home, while the losses lie with bank creditors around the world.

CommentsThere are many similar examples from the fields of standards, competition policy, and taxation that are applicable here. So, fundamental considerations speak for deeper European integration, extending even to the creation of a single European state.

CommentsThe danger of following such a path always lies in the fact that collective decision-making bodies not only provide services that are useful to everybody, but also may abuse their power to redistribute resources among the participating countries. Even democratic bodies are not immune to this danger. On the contrary, they make it possible for majorities to exploit minorities. To counter this threat, democratic bodies invariably need special rules to protect minorities, such as the requirement of qualified majority voting or unanimous decision-making.

CommentsThe decisions taken by the European Central Bank are a particularly dramatic example of this problem, taken as they are by a simple majority of a body that is not even democratically elected. The ECB’s decisions lead to a massive redistribution of wealth and risk among the eurozone’s member states, as well as from stable countries’ taxpayers, who have little stake in the crisis, to global investors directly affected by it.

CommentsThe ECB has been providing virtually all of its refinancing credit to the eurozone’s five crisis-stricken countries: Italy, Spain, Portugal, Greece, and Ireland. All the money circulating in the eurozone originated in these five countries and was then largely used to buy goods and assets in the northern member countries and redeem foreign debt taken from them.

CommentsThe US Federal Reserve would never be allowed to conduct such a regionally imbalanced policy. The Fed cannot even provide credit to specific regions, let alone states on the verge of bankruptcy (for example, California).

CommentsAnd now European Council President Herman Van Rompuy, backed by most of the troubled eurozone countries, is again proposing Eurobonds and debt-mutualization schemes. These ideas go well beyond the American system. The kind of fiscal integration and centralized power that they would require do not even remotely resemble those in place in the US.

CommentsVan Rompuy’s proposals are extremely dangerous and could destroy Europe. The path toward a union based on joint liabilities, against the wishes of large parts of its population, is not leading to a federal state in the true sense of the term – that is, to an alliance of equals, who freely decide to unite and promise to protect each other.

CommentsNor can this path lead to a United States of Europe, simply because a large part of Europe refuses to follow it. Europe is not identical with the eurozone. It contains many more countries than those that use the euro. As useful as the euro could be for Europe’s prosperity if its obvious flaws were corrected, the way that the eurozone is now developing will split the EU and undermine the idea of unity in diversity.

The assertion that the eurozone could be transformed into a United States of Europe is no longer convincing. The path toward joint liability is far more likely to lead to a deep rift within Europe, because turning the eurozone into a transfer and debt union that can prevent the insolvency of any of its members would require more central power than currently exists in the US.

http://www.project-syndicate.org/commentary/why-a-united-states-of-europe-has-become-impossible-by-hans-werner-sinn

Così il voto spagnolo premia il pericoloso attendismo di Rajoy, di Domenico Lombardi

Risultati elettorali e scudo (a metà) della Bce potrebbero far rinviare una cura choc per il regionalismo iberico

L’esito delle elezioni nelle regioni dei Paesi Baschi e della Galizia riaccende nuovamente i riflettori sulla Spagna e sulla capacità del governo di Mariano Rajoy, leader del Partito popolare, di stabilizzarne l’economia e, soprattutto, di attuare un ambizioso programma di riforme che ancora stenta a partire. Nei Paesi Baschi, come nelle attese, il partito nazionalista basco si è rafforzato conquistando la maggioranza relativa dei seggi, 27 su 75. Il leader del Partito nazionalista basco, Iñigo Urkullu, assumerà a breve la guida dell’amministrazione regionale dopo aver formato una coalizione che probabilmente includerà il Partito socialista e i suoi 16 seggi. In Galizia, invece, il Partito popolare di Rajoy accresce la sua maggioranza assoluta conquistando nella regione nativa del premier 41 seggi su 75, tre in più rispetto alle elezioni precedenti.

La scadenza elettorale ormai alle spalle, secondo alcuni osservatori, accresce l’imminenza di una formale richiesta di aiuto nell’ambito del nuovo programma Outright monetary transactions (Omt) della Banca centrale europea, programma attraverso il quale Mario Draghi si impegnerebbe ad acquisti potenzialmente illimitati di titoli governativi sul mercato secondario per stabilizzarne i corsi e migliorare le condizioni di accesso dei debitori sovrani in difficoltà. Eppure, proprio l’introduzione dell’Omt potrebbe, invece, indurre il primo ministro spagnolo a perseverare in quell’attesa che il recente risultato elettorale sembra quasi aver premiato. D’altro canto, la massiccia liquidità messa già a disposizione dalla Bce e quella appena promessa di un ulteriore, potenzialmente illimitato intervento sotto l’ombrello dell’Omt, congiuntamente alle operazioni non convenzionali annunciate delle Banche centrali di Stati Uniti e Giappone, hanno creato un argine che, per il momento, molti operatori considerano difficile da valicare.

Del resto, la politica regionale in Spagna non sembra offrire scadenze a breve tali da facilitare una svolta proattiva in senso riformista rispetto alla gestione delle vulnerabilità crescenti dell’economia di Madrid. Tra circa un mese, il governo di Mariano Rajoy dovrà affrontare nuove elezioni regionali, questa volta indette dal Parlamento della Catalogna, la regione più ricca del paese. Sullo sfondo, anche in questo caso, c’è un’agenda secessionista che verrà presumibilmente appoggiata dai due terzi del neo eletto Parlamento. Sotto lo spettro di un referendum secessionista che verrebbe indetto non prima del 2014 e che finirebbe con il dominare, in pratica, la dinamica politica nella seconda parte del mandato di Rajoy, non vanno escluse, a breve, ulteriori scadenze elettorali anticipate nelle altre regioni spagnole. Dopo aver tutte mancato gli obiettivi di disavanzo previsti nel 2011, ben otto regioni, sinora, hanno richiesto l’intervento del fondo di liquidità regionale per tamponare le loro asfittiche casse, di fatto drenanondone l’intera capacità finanziaria.

Le conseguenze rischiose per l’euro
Proprio la dimensione regionale continua a rimanere il tallone d’Achille di Madrid, sopendo l’impeto riformista di qualsiasi governo di qualsiasi colore. In Spagna le regioni hanno competenze su circa la metà della spesa pubblica non previdenziale. In contrasto, la loro capacità di intervenire sul fronte delle entrate è assai limitata, non avendo competenze in materia di Iva o tassazione sul reddito delle imprese e delle persone fisiche. La composizione della spesa regionale – con scuola, sanità e servizi di pubblica utilità che assorbono, in media, circa l’80-85 per cento dei rispettivi bilanci regionali – rende altamente politicizzato qualsiasi tentativo di razionalizzazione. Di qui, il continuo rinviare la palla al governo centrale, il quale è, a sua volta, esitante nel tagliare i sussidi di disoccupazione o le spese infrastrutturali.
Il risultato è che, nonostante la Spagna abbia mancato l’obiettivo di disavanzo che si era data nel 2011 nella misura di ben tre punti percentuali di pil, il governo ha appena annunciato la decisione di maggiorare le pensioni per compensare l’erosione del potere di acquisto dovuto all’inflazione.
L’incertezza che ne consegue e il pedaggio che essa impone alle sempre più asfittiche prospettive di crescita aggravano il problema minando la sostenibilità del debito a causa di un pil che si restringe inesorabilmente. La catena di trasmissione di una prossima escalation speculativa sul debito spagnolo, pertanto, agirebbe sulle aspettative (stabilmente recessive) di crescita quando diverrà evidente che Madrid non è in grado di attuare una strategia di stabilizzazione di medio periodo.
In un tale contesto, è evidente che la richiesta di attivare l’Omt, quando essa avverrà, aprirà un nuovo, incerto capitolo nella crisi dell’Eurozona, lungi dall’essere quell’intervento risolutivo auspicato da molti. Di fronte a una possibile, anzi probabile, inadempienza di Madrid rispetto alla gamma di condizioni concordate con la Spagna, la Bce si troverà dinanzi a un bivio: sospendere immediatamente il programma di acquisti con la conseguenza di scatenare quello tsunami finanziario che essa intendeva evitare proprio grazie al suo intervento; oppure richiedere, insieme alle autorità europee, il commissariamento economico del paese come condizione necessaria per la continuazione del programma.

Il precedente di Washington e New York
Quest’ultima opzione esporrebbe la Bce a un rischio politico incalcolabile, persino superiore a quella della sua omologa istituzione negli Stati Uniti, la Federal Reserve. Nel salvataggio della città di New York negli anni Settanta e in quello di Washington, negli anni Novanta, il Congresso degli Stati Uniti autorizzò l’intervento federale a condizione che le due città istituissero un “control board” di nomina congressuale con l’incarico di supervisionare le finanze municipali. La Fed, nonostante le enormi pressioni, riuscì a rimanerne fuori. In assenza di un governo europeo, tuttavia, la Bce potrebbe essere chiamata, di nuovo, a svolgere un ruolo (indesiderato) di supplenza. In ogni caso, la Spagna rischia di rappresentare un momento risolutivo, nel bene o nel male, per i futuri assetti dell’Eurozona.

http://www.ilfoglio.it/soloqui/15457

Comprare tempo non basta, di Antonio Pilati

La crisi strutturale non è risolta, forse si dovrà rivedere l’euro

La promessa estiva della Bce di acquistare in quantità debito pubblicodegli Eurostati pericolanti in modo da frenare la corsa dei rendimenti, ormai giunta a soglie disgreganti, ha ottenuto l’effetto richiesto: i mercati si sono raffreddati e, grazie al concorso anche di altri fattori (la sentenza della Corte di Karlsruhe, la vittoria dei partiti europeisti nei Paesi Bassi), si è comprato tempo prezioso. Ma tempo per fare cosa?
A prima vista appaiono almeno tre urgenze alle quali si può applicare il tempo guadagnato. L’urgenza più evidente riguarda la meccanica istituzionale dell’euro: come coordinare la moneta unica sia con un sistema bancario vigilato su scala nazionale e anzi sempre più funzionante – causa crisi – in tale dimensione sia con 17 debiti pubblici differenziati per storia struttura e grado di fiducia ma comunque in crescita. La seconda urgenza è centrata sulle dinamiche dell’economia: gli squilibri fra i diversi paesi aumentano quando i tassi di interesse continuano a divaricarsi e in un solo punto si concentra, togliendo domanda alle altre economie euro, un grande surplus (la Germania genera un avanzo superiore a quello della Cina sia in termini assoluti sia in rapporto al pil: 5,4 per cento contro 2,3 per cento). Tutto ciò porta al risultato controintenzionale di una moneta unica che amplia l’eterogeneità dell’area in cui è utilizzata. La terza urgenza ha valenza politico-istituzionale e si colloca al rango di metalivello: il suo tema è l’articolazione fra elementi e organi del complicato sistema istituzionale europeo (area a 17, area a 27 e poi a 28, Bce, Esm, Commissione, Consiglio), la selezione dei decisori di configurazione (chi stabilisce le modifiche da apportare all’architettura di sistema, come viene scelto, a chi risponde), l’aggancio alle dinamiche di scelta della democrazia.

Per ora corre la liquidità della Bce, ma nel film delle riforme istituzionali cominciano appena a scorrere i titoli di testa. Gli accordi sul funzionamento del fondo salva-stati Esm sono rimessi in discussione poche settimane dopo essere stati varati. La scelta di affidare alla Bce una penetrante vigilanza bancaria non ha ancora definito il proprio raggio d’azione (tutti gli istituti o solo i maggiori), suscita dissenso negli Stati Ue non euro e sembra avere tempi lunghi di rodaggio. La Tobin Tax sconta l’ostilità britannica e introduce una ulteriore differenza nell’assetto delle attività finanziarie in ambito Ue. Il Regno Unito sceglie così di ritirarsi ai margini dei processi di integrazione e marca distanza dalle istituzioni Ue: per farlo nega l’adesione al maxi-budget pluriennale proposto dalla Commissione. Infine il nesso stringente che lega gli aiuti Esm a condizioni vincolanti relative alle strategie di bilancio degli Stati riceventi crea incertezza e aumenta la turbolenza politica: la perdita di sovranità implicita nell’accettazione delle condizioni provoca in Spagna (ma anche a Cipro) instabilità, lacerazioni sociali, traccheggiamenti e tempi lunghi. In Grecia la pièce ha già avuto molte repliche (durano ancora: si discute con quali tempi uno Stato fallito debba applicare misure di rigore), in Italia si sa che prima o poi sarà in cartellone e sotto traccia si ragiona sulla messa in scena (e sull’ampiezza dei guai che l’accompagnano).

In una fase politica che richiede progetti inclusivi a lungo raggio e rapidità di riflessi decisionali prevale lo stile collaudato della politica europea: tempi diluiti da rinvii e ripensamenti, arabeschi tattici, rimpalli tra istituzioni, dominio degli interessi di breve respiro. Il tempo comperato rischia di sfrangiarsi in una rincorsa di date falsamente cruciali: elezioni americane, avvio formale dell’Esm, elezioni italiane e poi tedesche, avvio operativo dell’Esm. Non è indolenza politica o scarsa visione dei decisori, come spesso si dice con formule consolatorie: al fondo stanno ruvidi grovigli che legano l’azione europea da oltre dieci anni (all’inizio del secolo l’agenda di Lisbona aveva l’ambizione di trasformare quella europea nell’economia più competitiva del mondo entro il 2010). A prima vista si scorgono divergenti interessi geostrategici degli Stati, opinioni pubbliche ripiegate sulla dimensione nazionale o regionale, calcoli di politique politicienne fatti dai partiti e dai leader. A uno sguardo attento si rivelano divaricazioni strutturali nell’assetto dell’area economica definita dalla moneta comune e soprattutto ostacoli demografici di lungo periodo: i modelli di Welfare cui da mezzo secolo è abituata la gran parte dei cittadini europei non hanno chance di mantenersi con gli attuali decorsi della natalità (costante calo) e delle aspettative di vita (esplosiva crescita).

La prima e maggiore divergenza strategica apportata dalla crisi riguarda la Germania:essendo l’unico fra i grandi paesi europei che già prima del 2007 aveva (in parte) messo a posto i conti pubblici e migliorato la produttività, è anche il solo a ottenere vantaggi rilevanti dall’incertezza dei mercati: mentre gli altri stati, soci e/o rivali, finiscono a terra o in gravi difficoltà, la Germania si qualifica come l’unico soggetto forte e affidabile dell’eurozona guadagnando afflussi di capitale (provenienti soprattutto dal dissestato orlo mediterraneo), tassi di interesse azzerati, stabile primato politico nelle istituzioni dell’Unione. Una tale condizione agevola il conseguimento di quell’obiettivo di lungo termine (stabilizzare un’economia quasi-continentale con forte marca germanica) che a Berlino risulta primario da quando la rivoluzione digitale, che minimizza tempi e costi di transazione, e l’emergere dei mercati globali, che ne è l’effetto connesso, hanno reso la dimensione un fattore determinante (come gli Usa anche i Bric hanno, uno per uno, larghissima stazza). Per la Germania, che da tempo focalizza la sua strategia economica su Cina e Russia anche a costo di tensioni con gli Stati Uniti, un’area di comando politico e monetario è un mezzo cruciale per avere peso su scala mondiale e porsi come interlocutore paritario. E’ normale in politica trarre da una situazione favorevole tutti i vantaggi possibili e posporne, per quanto si riesce, la fine; una buona crisi, se si sta dal lato giusto, offre eccezionali opportunità: spezzoni del sistema industriale o finanziario dei Paesi deboli offerti in saldo; guida ideologica rafforzata grazie all’esempio; classi dirigenti estere facilmente fidelizzate. Non è difficile spiegare in una congiuntura di questo tipo i rinvii, gli accordi fatti e poi volatilizzati, i ripensamenti: tutto ciò che prolunga uno stato di sofferenza (per gli altri) e di utile (per sé) ha significato.

Nella divergenza delle strategie la Francia si colloca dallo stesso lato della Germania: l’illusione di un comando continentale alla pari (Hollande, che la sera stessa dell’insediamento vola a Berlino contrastando i fulmini, non è in ciò diverso da Sarkozy) conta più dell’aggravio dei costi da crisi che lo sbilenco assetto dell’eurozona fa pesare anche su Parigi. Dal lato degli svantaggiati si collocano invece, a gradi diversi, il Regno Unito, con la parte non euro del Nord e dell’Est, e i paesi euro del Mediterraneo. L’area non euro patisce su di sé vincoli (vigilanza bancaria) pensati da altri e, in varia misura, ricadute recessive: i britannici, che hanno più chance di reazione, accelerano sulla via del distacco, gli altri si mettono in aspettativa. I paesi del Mediterraneo, che vivono una recessione specialmente pesante a causa di remoti difetti strutturali e la aggravano con misure di rigore da applicare a tempi stretti, sono i principali sconfitti: perdono autonomia e dignità politica, patiscono una rapida contrazione del sistema industriale e finanziario, vedono separarsi dalle classi dirigenti gruppi sempre maggiori di cittadini. Anche qui sono naturali resistenze, diversivi, finzioni: la confusione generale deriva, alla fine, dal divario fra intenti dichiarati (per lo più nobili) e azioni concrete (di egoistico realismo).

Le opinioni pubbliche pesano: con l’Europa che sempre più nella mentalità collettiva dei vari paesi si associa alla recessione, i programmi di riparazione degli assetti istituzionali, di solito delineati come progresso dei processi di integrazione, sono sempre più difficili da vendere. Giuliano Amato, citando Delors, sostiene che l’Europa è sempre andata avanti “con una maschera sul viso”, ovvero con i leader politici che cedevano sovranità nazionale senza dirlo ai propri elettori (nazionali); ora però l’opinione pubblica, toccata sul vivo, si è fatta attenta e da una benigna indifferenza sta passando a un attivo rigetto. L’astuzia della maschera non funziona più, la pressione sui leader si è fatta acuta e tutti, in vista delle elezioni, difendono solo interessi percepibili nell’immediato.
I grovigli strategici ed elettorali non si risolvono con la buona volontà o con la fantasia: a renderli intricati e intrattabili sono fattori strutturali. Si combinano, intrecciandosi sotto la pressione del debito, i difetti di impianto dell’euro e l’affanno contabile dei sistemi pubblici. L’eurozona si è rivelata, sotto il fuoco della crisi, una costruzione a somma zero, il contrario di un’idea win-win: se guadagnano i tedeschi, che giocano in casa (il modello con cui ci si misura l’hanno montato loro), perdono italiani e spagnoli. In un’area a moneta unica, caratterizzata da forti divari di produttività e di efficienza istituzionale tra i paesi componenti ma priva di una gestione comune del debito sovrano, i paesi debitori, pressati da un cambio troppo alto (trainato dalle economie forti) e compressi da un debito che il mercato rilutta a finanziare (se non a prezzi esosi), vedono le proprie economie precipitare per mancanza di ossigeno in una spirale al ribasso, mentre i paesi creditori allineano afflussi di capitale (in uscita dai debitori), tassi di interesse favorevoli e quindi competitività in crescita. Economie che si divaricano faticano nel tempo a mantenersi in un ambito comune: nell’attuale architettura dell’euro il debito, che nella crisi catalizza sfiducia, diventa il reale fattore disgregante in quanto, amplificando le spinte dei fondamentali, indirizza economie disomogenee, che in tempo di crescita e quindi di fiducia possono muoversi in parallelo, su percorsi divergenti.

Il dato drammatico è che oggi – e ancor più nei prossimi anni – la demografia sospinge il debito pubblico. Sanità e previdenza scricchiolano non solo per l’allungamento della vita e il calo di natalità ma anche per le crescenti differenziate (e costose) chance di cura. I percorsi di vita diventano sempre più variegati e complessi: la taglia unica del Welfare pubblico non è più adatta a una popolazione molteplice e con le sue disfunzioni espande la spesa (in tendenza sempre meno alimentata da lavoratori giovani). Riorganizzare il Welfare, con dosi crescenti di mercato e di scelta individuale, è un’operazione complicata e lunga che nel breve periodo non darà effetti – anzi aumenterà forse il carico del debito.

Il tempo comperato dalla Bce non durerà per molto: a inizio anno l’ingente iniezione di liquidità effettuata con la Ltro ha creato effetti sui mercati, raffreddando i rendimenti, per poco più di tre mesi. La recessione si volgerà, come prevedono al Fmi, in una durevole stagnazione (forse un lustro) che ha nell’eurozona il suo epicentro. Con il debito come variabile cruciale, il gioco combinato dei fattori (meccanica perversa dell’euro, demografia ostile, stagnazione prolungata) tiene i paesi deboli del Mediterraneo sull’orlo del disastro. George Soros, Martin Wolf, Charles Dumas sono convinti che i danni derivanti da una difesa prolungata – e alla fine probabilmente vana – di una moneta sbagliata nell’impianto siano superiori ai costi di una rapida separazione consensuale. Per l’Italia il tema è decisivo e un errore strategico può condizionare i prossimi vent’anni: nel 1992 una difesa del cambio oltre i limiti del ragionevole ebbe esiti drammatici.

http://www.ilfoglio.it/soloqui/15413

A New Year’s Banking Union, by Michel Barnier

Five years after the outbreak of the financial crisis, Europe’s economic and political situation remains fragile. A mild recession is expected in Europe this year, and unemployment is on the rise. Beyond deficit reduction, we need to implement a €120 billion ($155 billion) European investment plan, and deepen the European Single Market to unleash its growth potential.

Illustration by Paul Lachine

CommentsBut we also need other structural measures. The European Union must put an end to the negative feedback loop between individual member states and their national banking systems. Between 2008 and 2011, EU taxpayers granted banks €4.5 trillion in loans and guarantees. In some countries, the threat of bank recapitalization with public funds has resulted in a drop in market confidence and a huge rise in interest rates.

CommentsThe European Central Bank (ECB) has taken decisive action to break this vicious circle. Moreover, there is now a consensus that the 17 eurozone countries need a banking union to accompany their common currency. The European Commission has proposed a single rulebook for banks’ capital requirements; mutual support between national deposit guarantee schemes; and Europe-wide rules for resolving failing banks that place the main burden on bank shareholders and creditors, not on taxpayers.

CommentsOn June 29, European heads of state and government committed themselves to the creation of a single European supervisor for banks in the eurozone. This is good news for both financial stability and public finances: once the single supervisor is in place, supervision will be more credible and impartial, which is important for dealing with ailing banks and managing their return to viability.

CommentsThe European Commission also put forward a set of legislative proposals to establish the single supervisory mechanism and confer key supervisory tasks on the ECB. This proposal must now be amended and approved as soon as possible by the European Parliament and the Council of Ministers if we are to have a chance of activating the European Stability Mechanism (ESM) and proceeding with the other essential pillars of a banking union.

CommentsFurther work, however, is still needed in several areas:

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• The scope of the new supervisory mechanism. Some member states favor restricting European supervision to systemically important banks. But the Commission believes that it should cover all 6,000 banks in the eurozone. After all, “systemically important" is impossible to define. The failures of banks like Northern Rock, Dexia, and Bankia are reminders that small and medium-size banks can endanger the entire financial system. And it would be inherently unstable to have two supervisory mechanisms for banks operating in the same market.

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• The participation of non-eurozone countries in the new supervisory scheme. The Commission’s proposal confers powers on the ECB for the supervision of all banks in the eurozone. For non-eurozone countries, the proposals provide for a mechanism to join on a voluntary basis and submit to the ECB’s authority. But the EU treaties make it complicated to give these non-eurozone countries full voting powers. I do not see any political problem with giving these countries a full voice in shaping the decisions of the European supervisor, but creativity will be needed to find a legally sound and fair solution.

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• National supervisors’ role in the new system. Clearly, the European Council has decided on a paradigm shift: powers are moving to the ECB. But national supervisors will be members of the board that will take key decisions, which they will prepare and implement. In the current negotiations, we can still fine-tune the roles of the European and national supervisors, but ultimate authority must rest with the ECB.

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• Non-eurozone EU members that do not want to join the single supervisory mechanism. These countries have expressed concerns about the new powers conferred on the ECB. In particular, they question the ECB's voting rights within the European Banking Authority, which will remain in charge of developing a single rulebook for all 27 countries in the EU’s single market and enhancing convergence of supervisory practices. We need to find ways to preserve fully the influence of non-eurozone countries within the European Banking Authority.

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• Democratic accountability for the ECB’s new supervisory powers. The ECB must, of course, maintain its full monetary-policy independence, despite its new role. So a key question is how, in addition to giving an important role to the European Parliament, national parliaments can play their part in overseeing supervisory decisions.

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• Timing. According to some EU countries, the Commission’s proposal is too ambitious to enter into force at the beginning of 2013. But an effective single banking supervisor is a prerequisite for the ESM’s direct recapitalization of banks. Only with this possibility and strong unified supervision will Europe be in a position to break the vicious circle between banks’ balance-sheet weakness and sovereign debt, and thus resolve the eurozone crisis.

CommentsEntry into force in January 2013 would bring about supervision by the ECB of banks that have received or requested public funding. Only in July 2013 would all banks of major systemic importance be subject to ECB supervision. The remaining banks would be subject to the new mechanism at the start of 2014.

Intense discussions are normal for such a high-stakes project. Countries like Germany, Finland, and the Netherlands are right to argue that rapid progress cannot come at the expense of the new supervisory structure’s quality. But EU countries have to stick to the commitment that they made in June and strike a deal in time for a gradual entry into force in January 2013.

http://www.project-syndicate.org/commentary/european-bank-supervision-by-january-by-michel-barnier

The Eurozone’s Narrowing Window, by Ashoka Mody

Portuguese authorities recently made a preemptive offer to their country’s creditors: Instead of redeeming bonds maturing in September 2013, the government would stretch its repayment commitment out to October 2015. The deal was concluded on October 3, and has been interpreted as a successful market test for Portugal. Ireland’s authorities have conducted similar recent operations, exchanging short-maturity paper for longer-term debt.

Illustration by Tim Brinton

CommentsThese transactions highlight the broader strategy of buying time. Both countries are seeking to create a longer, more manageable repayment profile for their privately-held debt as they begin weaning themselves from dependence on official “bailout” funds provided by the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund). Private investors are acknowledging the reality that repayments will likely be drawn out, because insisting on existing terms could cause an untenable bunching of debt-service payments, with possibly unpleasant consequences.

CommentsThis strategy’s success presupposes that, in the interim, economic growth will strengthen the capacity to repay debt down the line. The debt ratios for both Ireland and Portugal are expected to peak at about 120% of GDP in 2013, after which they are projected to fall. The peak ratio and the subsequent downward trajectory depend crucially on the assumed pace of economic growth.

CommentsBut growth prospects remain grim. The Portuguese economy is now expected to contract by 1% in 2013. In late June, the IMF projected modest growth, and, at the time of the “bailout” agreement in May 2011, GDP in 2013 was expected to grow by 1.25%.

CommentsSuch successive downward forecast revisions have become commonplace. The latest estimates for Italy and Spain project a deeper contraction, prolonged into next year. Ireland is doing better, although its growth forecast has also been revised downward, to just under 0.5% in 2012 and 1.4% next year. Moreover, Irish GNP (the income accruing to its nationals, as distinct from foreign firms operating in Ireland) continues to shrink. Each downward revision implies postponement of the date on which the debt/GDP ratio will peak.

CommentsBeyond 2013, growth must depend on either the elixir of structural reforms, or a strong revival of the global economy. But a revival of economic growth in the short term is unlikely. Crucially for Europe, world trade has been virtually stagnant in recent months. Global trade and economic performance in the eurozone appear to be dragging each other down.

CommentsThe potential consequences are serious. While the IMF’s primary scenario is that Irish and Portuguese debt levels will soon stop rising, it comes with a chilling litany of downside risks. The likelihood that budget deficit and debt targets will be missed is rising.

Thus, the eurozone faces three choices: even more austerity for the heavily-indebted countries, socialization of the debt across Europe, or a creative re-profiling of debt, with investors forced to accept losses sooner or later.

CommentsAusterity alone cannot do it. Some countries face the growing risk of near-perpetual belt-tightening, which would further dampen growth and thus keep debt ratios high. After all, if a country’s debt/GDP ratio is to decline without austerity, the interest rate that it pays on its debt must be lower than its GDP growth rate. If the interest rate is higher than the growth rate, austerity is required; the wider the gap, the more austerity is needed.

CommentsAcknowledging the limits of austerity, several initiatives attempt a European resolution. Special European facilities, along with the IMF, lend money at below-market interest rates, which reduces the extent of austerity required. But the facilities’ resources are dwindling, and they certainly would not be sufficient if Spain and Italy were to seek support. The ECB’s announcement of a new program to purchase sovereign bonds has lowered market interest rates. But, even with that decline, many countries’ long-term interest rates will most likely remain higher than their growth rates for the next several years.

CommentsMore ambitious pan-European efforts are embodied in various Eurobond proposals. These schemes imply socialization of debt – taxpayers elsewhere in Europe would share a country’s debt burden. These proposals, once in great vogue, have receded. Not surprisingly, the political opposition to such debt mutualization was intense.

CommentsGiven that perpetual austerity is untenable and others in Europe can only do so much, without robust growth the options will narrow quickly. As a result, much now hangs on the ECB’s actions – and how long they will be sufficient to maintain a truce with financial markets.

Perhaps the Portuguese time-buying strategy points the way ahead. But time eventually does run out. If buying time is not enough, will there finally be a greater call on bondholders to share the pain?

http://www.project-syndicate.org/commentary/as-europe-s-growth-forecasts-are-cut--saving-the-euro-becomes-harder-by-ashoka-mody

Africa’s Big Boom, by Jean-Michel Severino and Emilie Debled

Africa is undergoing a period of unprecedented economic growth. According to The Economist, six of the ten fastest-growing countries in 2011 were in Africa. Average external debt on the continent has fallen from 63% of GDP in 2000 to 22.2% this year, while average inflation now stands at 8%, down from 15% in 2000. This positive trend is likely to persist, given that it is based on structural geographic and demographic factors, such as rising exports, improved trade conditions, and steadily increasing domestic consumption.

Illustration by Chris Van Es

CommentsBut Africa’s national governments still face significant challenges, given the wide variety of factors at play in each country. Economic characteristics vary significantly by country, depending on, for example, whether a fixed or floating foreign exchange regime is in place, and which natural resources the country controls.

CommentsAs a result, prospects also differ by country. Although the average annual GDP growth rate for the entire continent has been forecast at roughly 6% in 2012, South Africa’s economy is expected to grow by only 3.6%, while Côte d’Ivoire is expected to grow at a rate of 8.5%. In order to tailor national economic policy effectively, policymakers must identify the drivers of – and barriers to – growth in each country.

CommentsAfrica’s growth potential has caught the attention of foreign investors, who have contributed to a rapid increase in capital expenditure. In 2008-2011, sub-Saharan Africa received on average 4.4% of all funds invested in developing countries worldwide, and 3.1% of investment spending. In fact, foreign direct investment in Africa has been on the rise since the early 2000’s, increasing fivefold in 2000-2010. But foreign investors remain aware of the challenges faced by certain countries. For example, much of the Horn of Africa (particularly Somalia), Mali, and Guinea Bissau carry significant political risk.

CommentsNevertheless, many economic indicators suggest that the bullish trend is sustainable, and that the conditions needed to change Africa’s image and international trade position are finally in place. In 2011, 67% of potential investors interviewed said that they considered Africa attractive, while half of them planned to invest in sub-Saharan Africa before 2013. And a growing number of large corporations count Africa among their primary strategic targets for business development.

CommentsThe growth of small and medium-size enterprises will be a key factor in coping with the risks associated with rapid economic expansion. In fact, SMEs already play a crucial role in African economies, involved as they are in all sectors of rural and urban economies.

CommentsSMEs are open to innovation, technology transfer, and industrialization. They are ideally positioned to make an impact locally, given their willingness to adopt positive environmental and governance practices and their ability to improve living conditions by creating permanent jobs.

CommentsAfrican SMEs also point the way to dynamic, sustainable, and fair growth. They have demonstrated a genuine capacity to withstand the effects of crisis, owing to their flexible capital base and limited involvement in the international financial system.

CommentsAnd yet, despite their potential, African SMEs are subject to significant internal and external pressures, including poor infrastructure, high labor costs, deficient governance, and a dearth of skilled workers. Above all, they lack access to long-term finance.

CommentsLarge enterprises can secure financing from banks and other institutional lenders. And microfinance institutions can help finance small enterprises. But the needs of growing medium-size enterprises cannot be met by microfinance institutions. As a result, medium-size enterprises are the missing link – known as “the missing middle” – in many African countries’ economies.

CommentsIndeed, Africa’s SMEs are often unable to secure long-term financing. High information and transaction costs contribute to the perception that investing in SMEs is complicated and expensive.

CommentsOften young and under-capitalized, these smaller enterprises appear riskier because they are usually found in poorly regulated markets characterized by an uncertain political or economic environment. This supports the view that investments in SMEs take as much – if not more – time to return a profit than less risky investments with a wider scope.

CommentsBut, in recent years, many African governments have worked to reduce administrative and legal obstacles for SMEs. In 2000-2010, the average time needed to register property rights was reduced from 120 days to 65. The time needed to obtain an export license fell from an average of 230 days in 2005 to 212 days in 2010. And, over the same period, the time needed to enforce a contract was reduced by nearly a month.

CommentsAfrican governments know that SMEs help to create new production channels for domestic markets, thereby generating significant added value. A larger domestic market encourages diversification of the national economy, reducing dependence on exports of natural resources and, in turn, exposure to global price fluctuations. This makes economies significantly less vulnerable to external shocks.

CommentsAfrican countries’ drive toward domestic development has been accompanied by accelerating regional integration. Rather than allowing Europe and North America to continue to dominate their economic development, sub-Saharan African countries are increasingly pursuing partnerships with their neighbors.

CommentsAs a result, roughly 15% of sub-Saharan African trade is intra-regional, up from only 7% in 1990. In 2010, South Africa alone accounted for 4% of sub-Saharan imports and 6% of exports. Remarkably, this reflects the emergence of new trade flows, not simply the redirection of existing ones.

CommentsAfrica’s shift toward regional integration encourages competitiveness by distributing more effectively production factors – such as inputs and equipment – and by allowing greater labor mobility. But it still has a long way to go.

African governments should pursue intra-regional trade liberalization, institutional integration, and infrastructure development with greater determination than ever. Their commercial enterprises need to progress in these areas in order to develop further and improve living standards for all.

http://www.project-syndicate.org/commentary/the-challenges-and-opportunities-of-african-economic-growth-by-jean-michel-severino-and-emilie-debled