quinta-feira, 17 de novembro de 2011

Diagnóstico e terapia.


«The sovereign debt crisis, then, is not merely a result of individual states’ irresponsible fiscal decisions but part of a systemic failure in the flow of European credit. 
For Merkel, speaking about the moral hazard of a rescue plan was a short-term strategy to navigate the domestic politics of the crisis. Unfortunately for Europe, it has boxed her into a corner. Playing a game of chicken over bailouts has inflamed bond markets, which exponentially increased the size of the Greek bailout and brought Italy to the brink of default. But the calls for austerity that accompanied Merkel’s politics of moral hazard have little chance of solving the fiscal woes of the peripheral countries. As wages and government spending fall, local recessions deepen further, gutting the potential tax base that could be used to pay off sovereign debt. And for Germany, austerity in other European countries would collapse critical German export markets, guaranteeing a double-dip recession in Europe and Germany. 
On the domestic political front, German voters have been repeatedly warned about irresponsible spending by their neighbors. But now the continent is asking them to be the lenders of last resort. The German people see little justification for their shared sacrifice; bailout fatigue abounds on the streets of Berlin, Cologne, and Hamburg. It is no wonder that the Merkel government has lost a number of regional elections as the crisis continues. 
In recent weeks, however, there have been signs of a shift in Merkel’s approach to the crisis. The chancellor demanded that bondholders take a 50 percent “haircut” in the Greek sovereign debt bailout, meaning they would only receive half of the money they initially invested. For the first time, Merkel acknowledged that individual governments were not solely responsible for their fiscal problems and that the private sector would have to bear part of the costs of the recovery. Then, earlier this week, she called for a stronger political union in Europe, saying that the continent was facing its “most difficult hours since the Second World War.”
This could mark a German about-face toward a response to the crisis premised on shared responsibility. Europe’s leaders could push the private sector to contribute more to the periphery’s rescue and treat the crisis as a systemic failure of the private and public sectors alike.
Drawing on the lessons of the Latin American debt rescheduling of the 1980s, Europe should invoke a kind of Brady plan, the debt restructuring initiative spearheaded by the George H.W. Bush administration that broke a vicious cycle of insurmountable debt and uncertain investments. Under the European plan, countries encumbered with debt would exchange their old debt for new bonds underwritten by core eurozone members through the European Financial Stability Facility. Working with bondholders, the eurozone would negotiate a voluntary reduction on behalf of the banks in exchange for the new debt. 
[...] For investors, this is not merely a Robin Hood scheme. They would lose part of their investment, but in return they would gain the security and liquidity of the new debt collateralized by the eurozone. In order to save the European social market, some private-sector pain will be necessary. Financial services benefited tremendously from and contributed to the bubble during the boom and now cannot run away from the consequences during the bust. Disaster would be averted, and Europe could start to clean up the mess wrought by the crisis.» 
Abraham Newman in Foreign Affairs.

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