Financial Times
February 6, 2011
So you think the crisis is over? Some of Europe’s political leaders have always framed the eurozone’s year-long upheaval as an attack by Anglo-Saxon speculators. If that is your view, you can relax. The speculators are moving in the opposite direction. The markets have calmed down. The crisis is over by definition.
That is, of course, intellectually lazy. Equally lazy is the attempt to frame it purely as a fiscal crisis. It was only ever a straightforward fiscal crisis in Greece. Nowhere else. Fiscal regime change is thus logically no solution.
Any serious discussion about a permanent crisis resolution mechanism would have to start with a more precise definition. I would describe it as a crisis of contingent liabilities that arise from undercapitalised and nationally fragmented banking systems, aggravated by a competitiveness gap. On its own, the competitiveness component would be in the “hopeless but not serious” category. But a joint debt and competitiveness problem is serious.
If you agree this is the crisis you need to resolve, a plan to harmonise the pension age or a focus on cross-border labour mobility is daft. But that is what the discussion in Brussels is currently about. A more serious approach to crisis resolution would start with a comprehensive European Union-wide plan to recapitalise and shrink the banking sector. Then, you would restructure whatever sovereign debt needs restructuring. So why dream about policy co-ordination mechanisms in a post-crisis world, instead of solving the crisis we already have?
More
No comments:
Post a Comment