onsdag 14 december 2011

Vad betyder "europakten"?

"the Dutch and the Austrians will not be persuaded any time soon to merge their tax structures and authorities with those of Greece and Italy. Nor does anyone expect them to adopt common benefit levels or health systems. “Fiscal union” means common rules for budgetary discipline across the eurozone.

Formal constraints on state budgets have been adopted widely. The modern debate began with the Gramm-Rudman-Hollings Act, which Congress approved in 1985. The legislation required that the US federal budget be balanced annually, and imposed automatic expenditure cuts if this aspiration was not fulfilled. The Act had no effect on the behaviour of the US government/.../

Britain and the US lead the world in accountancy, both conscientious and creative. They have an independent judiciary, honest statistical services and relatively honest politicians. But they have been unable to enforce self-imposed rules of budgetary discipline. We are now asked to believe that countries with weaker political structures will reliably implement budgetary disciplines imposed from outside. /.../

rules for imposing budgetary discipline across the EU already exist. The Maastricht criteria require that member states must hold deficits below 3 per cent of GDP and borrowings below 60 per cent of national income. At my last count, this requirement was met in three states among the eurozone’s 17 members – Estonia, Finland and Luxembourg. The sanctions permitted by the treaties have never been enforced and you would have been naive to have imagined otherwise."
John Kay, "Taverna talk of fiscal union will remain just that", FT 14 dec

"the failure of the eurozone’s leaders to devise a credible remedy for the ills of the currency union. They propose, instead, to tighten the screws on fiscal deviants. It may feel good. But it will not work."
Martin Wolf, "A disastrous failure at the summit", FT 13 dec

"What was supposedly agreed in Europe on Friday just ain’t gonna happen."
Paul Murphy, "Fines all around", FT Alphaville 12 dec

Rachman inte imponerad av europakten eller dess betydelse:
"The only relevance that last week’s debate had to the financial crisis is that investors were hoping that the announcement of a “fiscal compact” – involving much tougher supervision of national budgets in the future – might provide cover for the European Central Bank to buy Italian and Spanish bonds until the crack of doom, or at least until more private investors could be persuaded back into the market. "
Gideon Rachman, "The summit will prove a footnote", FT 12 dec

förhindrar europakten keynesiansk politik? Oenighet:
"Mr O’Rourke claims that:

[T]he version [of the “fiscal stability union”] on offer would constitutionalize pro-cyclical adjustment in recession-hit countries, with no countervailing measures to boost demand elsewhere in the eurozone.

Now, a debt brake of the Swiss or German type is supposed to ensure a balanced fiscal policy: expansionary in downturns and (more importantly) contractionary during boom times. In other words, fiscal policy should be neutral on average. Such a debt brake is the attempted constitutionalisation of automatic-stabiliser Keynesianism."



Uppdatering 19 januari 2012
Martin Feldstein, professor i nationalekonomi vid Harvard och tidigare chefsekonom för president Reagan, är inte imponerad av europakten, så som dess utformning diskuteras:
"The European Union’s summit in Brussels in early December was intended to prevent such debt accumulation in the future. The heads of member states’ governments agreed in principle to limit future fiscal deficits by seeking constitutional changes in their countries that would ensure balanced budgets. Specifically, they agreed to cap annual “structural” budget deficits at 0.5% of GDP, with penalties imposed on countries whose total fiscal deficits exceeded 3% of GDP – a limit that would include both structural and cyclical deficits, thus effectively limiting cyclical deficits to 3% of GDP.

Negotiators are now working out the details ahead of another meeting of EU government leaders at the end of January, which is supposed to produce specific language and rules for member states to adopt. An important part of the deficit agreement in December is that member states may run cyclical deficits that exceed 0.5% of GDP – an important tool for offsetting declines in demand. And it is unclear whether the penalties for total deficits that exceed 3% of GDP would be painful enough for countries to sacrifice greater countercyclical fiscal stimulus.

The most frightening recent development is a formal complaint by the European Central Bank that the proposed rules are not tough enough. Jorg Asmussen, a key member of the ECB’s executive board, wrote to the negotiators that countries should be allowed to exceed the 0.5%-of-GDP limit for deficits only in times of “natural catastrophes and serious emergency situations” outside the control of governments.

If this language were adopted, it would eliminate automatic cyclical fiscal adjustments, which could easily lead to a downward spiral of demand and a serious depression. If, for example, conditions in the rest of the world caused a decline in demand for French exports, output and employment in France would fall. That would reduce tax revenue and increase transfer payments, easily pushing the fiscal deficit over 0.5% of GDP.

If France must remove that cyclical deficit, it would have to raise taxes and cut spending. That would reduce demand even more, causing a further fall in revenue and a further increase in transfers – and thus a bigger fiscal deficit and calls for further fiscal tightening. It is not clear what would end this downward spiral of fiscal tightening and falling activity.

If implemented, this proposal could produce very high unemployment rates and no route to recovery – in short, a depression. In practice, the policy might be violated, just as the old Stability and Growth Pact was abandoned when France and Germany defied its rules and faced no penalties.

It would be much smarter to focus on the difference between cyclical and structural deficits, and to allow deficits that result from automatic stabilizers. The ECB should be the arbiter of that distinction, publishing estimates of cyclical and structural deficits. That analysis should also recognize the distinction between real (inflation-adjusted) deficits and the nominal deficit increase that would result if higher inflation caused sovereign borrowing costs to rise.

Italy, Spain, and France all have deficits that exceed 3% of GDP. But these are not structural deficits, and financial markets would be better informed and reassured if the ECB indicated the size of the real structural deficits and showed that they are now declining. For investors, that is the essential feature of fiscal solvency."

Feldstein, "How to Create a Depression", Project Syndicate 16 januari

Uppdatering 10 april
Martin Feldstein, "Europe Needs the Bond Vigilantes", Wall Street Journal 9 april

Uppdatering 17 april
C.O. skriver om eurokrisens orsaker och lösningar på Free Exchange-bloggen. Som tidigare konstaterats så var det knappast dålig budgetdisciplin som utlöst eurokrisen utan imbalanser i handel från åren före 2008 förutsäger vilka länder (PIIGS) som hamnat i djupast kris, mycket bättre än vad ländernas budgetpositioner gjort. Framför allt så hade Irland och Spanien "starka statsfinanser" före krisen startade. C.O. vill nu komplicera denna conventional wisdom om krisens orsaker, och återigen föra in budgetbalanserna i ekvationen, om än inte på det simplistiska sätt som Anders Borgismen gör det på. C.O. pekar på att penningpolitiken förlorat (mycket av) sin stabiliserande kraft i eurozonen och att den fiskala politiken därför är ännu viktigare nu; därför måste boomländer ha mycket stora budgetöverskott i eurozonen, och länder som går trögt föra mycket stora underskott. Så även om Tyskland, vars ekonomi gick trögt, hade budgetunderskott i början av 00-talet och Spanien och Irland, vars ekonomier boomade, hade budgetöverskott, så borde Tysklands underskott ha varit ännu större och Spaniens och Irlands överskott ännu större.
"we have a somewhat paradoxical situation here: Ireland and Spain, while living up to the rules of the Stability and Growth Pact, were not fiscally prudent considering the macroeconomics of a currency union, whereas Germany, by violating the deficit limits, did what good economics would prescribe. (Sadly, it seems to have forgotten this lesson.) Two conclusions follow: first, the Stability and Growth Pact was utterly inappropriate for such a monetary union; second, this crisis is also about fiscal policy, even in Spain and Ireland." 
C.O., "Be like Germany, sort of", Free Exchange 16 april

Och Lisa Pollack på FT Alphaville skriver om europaktens första statistik-release ("Alert Mechanism Report" på europaktspråk).
Pollack, "Return of the Stability and Growth Pact", 16 april

Uppdatering 24 april
Att fundera på: vilka är problemen i den nuvarande krisen, vilka är potentiella problem i kommande eurozonskriser, och vilka är då lösningarna? Om problemet är dålig fiskal disciplin är europakten med starka sanktioner som de facto genomförs, förstås en bra idé. Men som vi ser idag så är eurozonen i en kombination av statsskuldskris (utlöst av en kombination av alltför bank-generös politik, och dålig fiskal disciplin, och dålig tillväxt) och finanskris. Den finansiella sidan av krisen - contagion etc - gör europakten ju ingenting åt. Wolfgang Münchau skriver i FT idag om ett potentiellt lösningspaket för eurozonens problem, och betonar vikten av mer koordinerad finansiell sektor och finansiell reglering. Münchau:
"A consensus has gradually emerged among experts about the first necessary step to solve the eurozone crisis: a eurozone-wide system of banking resolution, prudential supervision and deposit insurance. The idea is essentially to take the nation state out of banking and to make the eurozone – or the European Union – responsible for everything. The notion of, say, a Spanish bank would cease to exist.

It is in many respects a very obvious solution to a big part of the crisis – the weakness of eurozone banks and their toxic relationship with national governments. The eurozone still needs solutions to its diverging competitiveness and low growth. But this would be an impressive start.

Economically, it is obvious that a monetary union requires an integrated banking sector. It can otherwise not handle a banking crisis. With such a system in place, it becomes possible for the central regulator to force banks to take losses or fire incompetent directors. It could take equity stakes in banks, force banks to merge, close them or fully nationalise them.

A centralised banking resolution and supervision system is probably only the bare minimum of an economic infrastructure that a monetary union needs. /.../

I am hearing from several advocates of this proposal the view that it would be politically less problematic than a eurozone bond. I disagree. First of all, it would still be costly. A proper resolution authority would require access to some €1tn in funds. This would presumably have to be funded by a debt security, which for all intents and purposes constitutes a eurozone bond. They may call it a financial stability bond, or whatever, but who cares? If you think that a joint and several debt security is unacceptable in principle, then surely so is this proposal.

Also, would Germany, above all member states, really accept such a transfer of power? Would the Germans really like a system where their friendly European regulator shut their neighbourhood Landesbank?"
Münchau, "The sadly unpalatable solution for the eurozone", FT 22 april

se också:
Robert Zoellick, "Europe is distracted by endless firewall talk", FT 16 april
Valentijn van Nieuwenhuijzen, "Don’t let Spain detract from Portugal", FT 16 april
"Economists have long understood that significant labour mobility is not nearly enough, A sustainable currency union requires other country-like features including a centralised fiscal authority that has as at least as much power to collect taxes as the constituent states. A central financial regulator is also essential, at least absent an adequate global regulator. And the centre cannot be endowed with so much power without the legitimacy that can only come from political union. Currency union without political union is an unstable halfway house. /.../
The real lesson of the euro’s grand experiment is that, given the weak state of global governance, the optimal single currency area is probably still a country, at least when two or more large countries are involved."
Kenneth Rogoff, "A euro parable", FT 23 april

Simon Wren-Lewis om hur ECB kan föra en politik som är stand in för eurobonds, när nu tyskarna blockerar införandet av eurobonds:
"At present austerity in non-Germany is being driven by each country’s bond market. If the Eurozone really was one country, which issued Eurozone debt, this would not be happening. Just as savers are happy to buy UK or US debt, they would happily buy Euro debt. (No one buying UK debt is too worried about the widening North-South divide in the UK!) The Euro is highly unlikely to default on its debt because the ECB can print Euros.
Germany has ruled out Eurobonds, so are we back to our previous problem? No, because the ECB can act as if they existed, by (indirectly) buying national governments debt when the market will not. As Jonathan Portes notes, this is why the crisis appeared to go away over the last few months. Buyers of non-German debt are worried about default, and the ECB can rule out default by being the buyer of last resort (through proxies if necessary: for the wisdom or otherwise of this indirect approach, see here and here). The reasons why it chooses to do this in what appears to be an erratic and unpredictable way were discussed by Fred Bergsten and Jacob Kirkegaard at VoxEU, and I commented on this here. While this might have been appropriate for some countries a year or two ago, the strategy is now doing significant harm. My own view (and more important others) is that the ECB is too concerned about moral hazard, and not concerned enough about the impact of austerity on non-German output, with the result that we are seeing much more austerity than is necessary. The ECB could still exercise fiscal discipline by varying the rate at which it capped the interest rate on non-German debt. This could be done on a country by country basis, and perhaps should be (see here and here).
Instead the ECB appears to be using market sentiment as an index of national fiscal discipline. This puts national governments in an impossible position (see, for example, this from John McHale)."
Wren-Lewis, "The Eurozone as One Country", 19 april

FT rapporterar att det finns en del oro om att Hollande, SPD med flera uttalar sig för att europakten ska förhandlas om, medan ratificeringsprocessen av den pakt som utformats pågår, och t ex Irland är på väg till sin folkomröstning om pakten i sin nuvarande form den 31 maj.
Quentin Peel och Jamie Smyth, "Germany fears French threat to EU fiscal pact", FT 23 april

Hollande har sagt att ett Frankrike under hans styre inte skulle skriva under pakten utan revision. Men -- och att retoriken är yvigare och grandiosare än praktiken verkar vara typiskt Hollande -- hans stabschef säger i en intervju med FT att i praktiken så skulle Hollande nöja sig med ett appendix om tillväxt. Hugh Carnegy på FT skriver att Hollandes tillväxt-pakt skulle omfatta fyra delar:
"the creation of commonly issued eurobonds 'not for the mutualisation of debt but to finance' infrastructure, industrial investment and employment; additional financing of investment by the European Investment Bank, the bloc’s long-term lending arm; the imposition of a financial transaction tax by those EU member states willing to use it to find development projects; and the more efficient use of EU structural or regional development funds."
Det är också intressant att Hollande lyfter frågan om ECB:s politik, något som är väldigt komplicerat att göra med tanke på att ECB:s uppdrag är definierat i Maastricht-fördraget och väldigt svårt att ändra, plus att det förstås är den heligaste av heliga kor för många tyska politiker.
"'It is a very delicate subject,' Mr Sapin said. '[Mr Hollande] never has and is not calling into question the independence of the ECB. He is not calling for a modification of the [ECB’s founding] treaty. What he says is that the ECB must take into account this issue of growth in Europe – it has already done so and it should do more.'"
Hugh Carnegy, "Germany must accept growth pact says Hollande", FT 25 april
Hugh Carnegy, "Hollande seeks wider EU fiscal pact", FT 24 april

Uppdatering 4 juni
"What I believe is clear is the overall vision that the Treaty represents. It sees the essential problem with the Eurozone as being public sector indulgence. This is a profound misreading of what happened before the recession. By far the bigger problem for most periphery countries was private sector indulgence fuelled by cheap borrowing. In Ireland, and now in Spain, this transforms itself into a public sector problem because banks are bailed out."
Simon Wren-Lewis, "What if Ireland voted no to the Treaty", 29 maj

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