A postcard from France By Mirino
In view of the last post, this interview from Le Monde seems suitable.
Thorsten Polleit is the head economist of Barclays Capital in Germany. He is very critical of the massive rescue loan of the euro zone States.
'How do you judge the rescue plan of 750 billion euros for the euro zone?
'One cannot solve the problem by additional debt. To support certain countries suffering from a debt crisis, the governments will still have to borrow. It's not a solution. The urgency for the euro zone today, is to announce a credible strategy of reduction of deficits. If the pressure of the markets have become so strong, if the investors are losing confidence, it's precisely because such a concept doesn't exist. It's time to clarify this.
'What should be done?'
'The decisions are the recourse of each government, at national level. One should decide how to reduce expenditure, to reduce the deficits as soon as possible, to engrave these objectives in marble as we did in Germany by establishing a mechanism in our constitution to reduce the debt... One must remember that from the very beginning, had the stability pact been fully respected, this situation would never have occurred.
'Thanks to this plan, wasn't the risk of contagion of the Greek crisis nevertheless countered?'
Yes, with regard to the countries threatened in the immediate future. But it's the quality of credit of notable States which will cause them to suffer from the consequences. The conditions of loan of the lending countries will undoubtedly be degraded. In fact the problem only shifts itself, and in the long term it's likely to worsen.
'Does the decision of the European Central bank (ECB) to buy national debt threaten its credibility?'
'It's clear that if the ECB acts in this way, it's because the European governments wish it. There's an instrument of monetary policy which doesn't seem to be decided in total independence. This decision is very problematic: in the long term such a program is likely to create inflation as well as a lack of confidence of investors.
'What is the situation regarding the long term stability of the euro?'
'If the States don't find the means of reducing their debt which often reaches intolerable levels, the euro is seriously threatened. The creation of the single currency has been a vast experiment of which the result is now uncertain. Especially if things continue in such a way, with certain countries condemned to pay again and again sums increasingly more important.
'Do you believe that Germany will recover the money of the loans made in Greece?'
No, on the contrary, I don't believe that the sums will ever be reimbursed.
(Remarks put together by Marie de Vergès)