Military Review

Choir of economists: the single European currency is to blame for the crisis

35
Jesus Fernandez-Villaverde, Tano Santos and Luis Garicano from The National Bureau of Economic Research, that is, the National Bureau of Economic Research (Massachusetts), wrote a voluminous composition on the crisis in the eurozone. Scientists have found and guilty: the euro currency. Everything that used to be bad in the economy of Greece or Portugal, with the introduction of the euro in 1999, has become much worse: debts have grown, bubbles have become inflated, dependence on EU saving funds has grown.


Jesús Fernandez-Villaverde - Fellow at the University of Pennsylvania; Luis Garicano - Associate, London School of Economics; Tano Santos is a graduate student at Columbia University Business School (New York).

In the introduction to the text, the authors warn that the opinions expressed on the pages of the report do not necessarily reflect the views of the National Bureau of Economic Research. From the introduction, the authors pass to the summary, where in the very first lines it is said in black and white that the adoption of the euro currency did not advance the economy of the European periphery countries, but only delayed the inevitable crisis and then worsened the situation. The economies of the peripheral countries, which received a prolongation of credits and thus a postponement of the moment when the speculative “bubbles” burst, actually returned to the old bad financial state. To these countries, analysts attributed Greece, Spain, Ireland and Portugal.

The report's authors believe that the mistake of the creators of a monetary union made before 1 January 1999 came on the year was that the least strong prospective participants - especially Greece, Portugal, Spain and Ireland - planned and implemented structural reforms aimed at modernizing their economic systems and institutional improvement. However, everything happened exactly the opposite: due to the impact of the global financial “bubble”, European peripheral countries came to the opposite results: the reforms were forgotten. Moreover, the abandonment of reforms and the new order of things led to an increase in speculative “bubbles” and extension of loans, which ultimately reduced the growth of the economies of these countries and generally made their prospects rather bleak.

In the past, peripheral European countries used devaluation to recover from the effects of adverse business cycles, which, however, did not improve the basic volatility of their economies. With the euro, there has been a deterioration in the sense that it has become impossible to apply the devaluation policy. The single currency, the euro, envisioned a single currency and tax policy, which prompted social agents to change their macroeconomic decisions, which were previously often based on inflation.

Someone in Europe, of course, helped new reality. Germany’s rather stagnant economy at that time, faced with the Maastricht agreements, really embarked on the path of structural reforms, thereby reviving German exports. But what happened in Germany did not work for the peripheral countries.

Instead, their main economic contradictions only intensified. In these countries, credit “bubbles” quickly inflated, their competitiveness decreased, and external debts over the decade of their stay in the eurozone increased by one hundred percent of the gross domestic product. The use of EU resources was combined in pre-crisis countries with domestic bank credit "boom". Future growth began to eat real and past loans. Along with this, ill-conceived government programs were applied in the peripheral countries, which led to higher taxes and even longer working hours. In addition, for these countries was characterized by "Dutch disease", fully transferred, for example, Ireland and Spain. Human resources have ceased from the export-oriented sectors of the economy to real estate and the government sector, which has resulted in the greatest negative consequences for growth. Moreover, participation in the European zone interacted with these specific sectors, in essence creating this very “bubble” in real estate markets - and this instead of giving a proper response to the imminent crisis.

To summarize, the euro, introduced to complete the modernization of the institutions of peripheral Europe, instead turned out to be a “sedative” that helped well against any transformations.

So, for what they fought, they ran into it. The single currency, the euro, made it impossible for the financial game to depreciate its own currency, which once helped in crises better than loans. Apart from the euro, the “ill-considered government programs” are also to blame, the consequences of which go much further than it seems at first glance. A naive belief in a "strong state" and a caring "left" policy in the capitalist system gives rise to universal relaxation, which is fraught with aggravation not only of the country's internal problems, but also of the world economy.

Lars Christensen, founder of Saxo Bank, visited Moscow and talked to a journalist Finmarket about the future of the world economy and the price that Europe pays for the mistakes of its leaders. Mr. Christensen also spoke about inflation - as a way of dealing with crises, which the euro put an end to.

Currencies are needed to manage them, he said. If the country's economy is uncompetitive, the central bank can reduce the value of the currency - and as a result, the economy will increase competitiveness. If Greece, the expert says, could have devalued the euro over the last 15 years (by 5% per year), then there would have been no crisis. But this is impossible, and its gap in competitiveness is growing compared to Germany.

There is another way to deal with the crisis. If you cannot devalue a currency, says a Swiss banker, you should run savings programs and cut salaries. Politicians usually try not to do this because of social unrest, riots and political crises. It is much easier to devalue the currency than to go through such anguish, the economist believes.

But today's Europe has to go through this - because of the wrong political and financial structure of the EU. One has only to remove the euro, Lars Christensen thinks, and after a while “a great place to live in the place of the current fires” is formed. But "if you believe in the euro and are ready to defend it, things will get worse."

According to Christensen, the collapse of the eurozone will help overcome the crisis. And the exit from the eurozone can help Greece. But the fact is that decision-making requires political will, but for now “politicians are not ready to admit defeat. They still want to spend other people's money in order to achieve their goals. As long as there is a huge political will to keep this project, even if it was initially erroneous. ”

The economist believes that the exit will take place anyway - "sooner or later." Politicians, in his words, “will delay this moment to the last.”

“They will look for money anywhere, just to save the EU as a monetary union. What we see now in Cyprus, for example, is simply amazing. It is not even QE, not OMT, not inflation, not devaluation, or some other relatively objective problem. They just want to take money from hard working people.

It turns out that we are paying big taxes, and now anyone can come and say, “I'm sorry, we need your money again.” He will take them, but nothing can be done about it. This is a very bad signal for everyone. ”


The economist believes that now in the EU there are more and more people who need power.

“... Already now, some of the most important decisions are made without any voting, taken by people whom no one has chosen. Europe is moving in a very bad direction, towards a semi-totalitarian society. This is happening under the slogan "More EU, more United Europe, which must be protected at all costs." It definitely does not work, but politicians continue to do things that do not work. They have one answer to everything: you need to do more. They do more, but it makes everyone worse. ”


These people who have power, these bureaucrats, says Lars Christensen, will lose a lot if the power of the EU is limited. "They will lose their job, big pensions, careers."

What to do? It turns out that all is not lost. The situation can be corrected by people who will demand to give them their countries and freedom. There is a chance, the expert believes that this formidable “give up” will sound in the next 5-10 years.

"And then we will see protests, we will see an increase in anti-European sentiment, we will see riots and revolts: countries will go through a political crisis and leave the euro area, then the problem will finally begin to be resolved."


The analyst recalled that the EU crisis is a crisis of the “welfare state”. After all, today the EU institutions help those people "who are not sick, who have two arms and two legs." People in response expect that the government will help them more and further. In Denmark, an unemployed person receives at least $ 3000 per month for doing nothing!

According to the International Monetary Fund, the total amount of euros in the currency reserves of developing countries decreased 2012 year to 24% (676,6 billion euros), which is the lowest since 2009 year. Last year, the central banks of these countries sold securities denominated in European currency to 44,8 billion. Against this background, investments in dollar assets are growing. The central banks of the BRICS countries, for example, for 2012 a year invested about $ 156 billion in US securities, which corresponds to approximately 120 billion euros.

International rating agency "Standard & Poor's" has just downgraded forecast for the fall of eurozone GDP by 2013 to 0,5%. Previously, it was a decrease in 0,1%. But due to the difficult financial situation, the scale of decline may increase fivefold.

Finishes the situation Cyprus.

At the beginning of the local crisis, the world's largest investment fund PIMCO with assets over 2 trillion. Doll. reduced their investments in eurocurrency. The executive director of the organization, Saumil Parikia, stated that he considers the decision taken (at that time) by the Eurogroup to impose a tax on deposits in exchange for financial assistance not just a mistake, but a kind of recognition that the euro is far from perfect as a key global currency. And Parikia is not alone in her skepticism. His opinion is shared by the central banks of developing countries that are getting rid of the euro. According to the International Monetary Fund, in 2012, they sold a total of 45 billion euros. The favorite is the US dollar, whose share is invariably maintained at the level of 60%.

The fall of the banking system of Cyprus, the crises in Greece, Spain and other "peripheral" EU countries will finish off the single European currency. Eurozone recessions cannot be avoided. Decisions like Cyprus are now feared in the same Spain. In the same Greece. At any moment, the soft help of a “sick” economy can be replaced by surgery - monetary expropriation. The European bureaucrats, who encroached on deposits in Cypriot banks, actually destroyed the trust in the banking systems of the “peripheral” countries, and at the same time exterminated the remnants of their faith in European institutions. In Greece and Cyprus, German Chancellor Angela Merkel, without whom important decisions in the eurozone can hardly be made, since Germany is the main donor and guardian of the European Union, is portrayed with Nazi mustaches and in Nazi uniform. In Greece, the last parliamentary elections were held three times: the people do not believe politicians for a long time. In this situation, the economic crisis is mixed with the political. The latter is a signal "bell" to the fact that the European Union is reeling, and the forecasts of Lars Christensen, a resident of prosperous Switzerland, may come true very soon.

Observed and translated by Oleg Chuvakin
- especially for topwar.ru
35 comments
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  1. svp67
    svp67 April 4 2013 08: 15 New
    +7
    Yes, it looks like the European Union may well outlive its "Belovezhskaya Agreements". But who will be better from this, another question.
    1. Kolya
      Kolya April 4 2013 09: 32 New
      +5
      It is enough for Russia to introduce a tangible tax on the export of capital from the country, and the European crisis will remain only for the Eurozone itself and their homosexual partner, USA.
  2. treskoed
    treskoed April 4 2013 08: 17 New
    +5
    Do not we step on the same rake, planning to introduce a single currency in the Customs Union?
    1. Oshin
      Oshin April 4 2013 14: 36 New
      0
      We have a little different. They want to make a single Russian ruble for settlements.
  3. korp67
    korp67 April 4 2013 08: 28 New
    +2
    The United States of Europe is originally an artificial entity. What they fought for ... The single currency and various fiscal policies, plus the congenital relaxation of most of the participating countries (especially Greece, Spain, Latvia, Estonia, etc.) The result is logical.
    1. Kolya
      Kolya April 4 2013 09: 41 New
      +1
      In the old days, some countries enslaved other countries with weapons. In the modern world, weapons are a duty. The European Union was created to insure the risks for the lender: if any Greece fails, all the others are added up, and the lender always wins.
      1. Oshin
        Oshin April 4 2013 14: 40 New
        0
        The economies of the EU countries were too different. At the same time, Germany could afford to pay large sums to non-working citizens and support them, while Greece did not. But the people of Greece were indignant, because they are also members of the EU and everyone should have the same rights.
        Here is one of the reasons for the collapse.
  4. zeksus
    zeksus April 4 2013 08: 33 New
    +8
    We need to change, stop infringing on the Russians !!! It is time for other nations to stomp and play on the crisis in Europe as they are during the collapse of the USSR !! We are power and this must be taken into account !!
  5. Parabelum
    Parabelum April 4 2013 08: 36 New
    +1
    The USA is trying in every possible way to undermine the Euro. It is not profitable for the dollar to have direct competitors in the foreign exchange market. The Germans are trying to get rid of dollar dependence in Europe. In the end, I think they want to create a European equivalent of the dollar "the same eggs only in profile."
  6. Predator-74
    Predator-74 April 4 2013 08: 36 New
    0
    Most likely, the days of the life of the European Union are numbered, but the exit of countries from the European Union will be even more painful.
    1. Бондарь
      Бондарь April 4 2013 10: 35 New
      +1
      Good day to all!
      as history shows, the price of exit is blood!
  7. ATATA
    ATATA April 4 2013 08: 58 New
    +2
    Interestingly, US scientists pass the sentence of the euro! laughing
    Very similar to a political order, such as the euro, look for an alternative poorly, and this is the default dollar.
    Although of course the euro is not a tenant, but this is an attempt to delay the collapse of the dollar.
  8. Apollo
    Apollo April 4 2013 08: 59 New
    +1
    Eurozone countries and their credit rating.
    1. Natalia
      Natalia April 4 2013 09: 17 New
      0
      Quote: Apollon
      Eurozone countries and their credit rating.

      And Sweden ?, and Norway ?, and Poland ?, and Romania? ...... etc.
      Where did they go, they simply are not here, they must have left the EU.)))
      1. Apollo
        Apollo April 4 2013 09: 30 New
        +1
        Quote: Natalia
        And Sweden ?, and Norway ?, and Poland ?, and Romania? ...... etc.
        Where did they go, they simply are not here, they must have left the EU.)))


        I welcome you Natalia hi
        Eurozone countries, in the previous infographic, the rating of the countries you listed is not displayed.
        1. Natalia
          Natalia April 4 2013 11: 39 New
          0
          Quote: Apollon
          Eurozone countries, in the previous infographic, the rating of the countries you listed is not displayed.

          Hi!)
          Everything's clear with you.)
  9. Natalia
    Natalia April 4 2013 09: 13 New
    +3
    the single European currency is to blame for the crisis

    I would say in the CRISIS democracy is to blame, on par with their capitalism.
  10. igor36
    igor36 April 4 2013 09: 29 New
    +4
    By creating a precedent for the seizure of part of deposits in Cyprus, European liberals have undermined the credibility of the very principle of a bank deposit system, which will only intensify the crisis, since there is no guarantee that this will not happen in any other country. Gentlemen, bankers get ready for the outflow of deposits and rising prices for precious metals.
  11. Apollo
    Apollo April 4 2013 09: 37 New
    0
    Eurozone banking system
  12. Apollo
    Apollo April 4 2013 09: 42 New
    0
    The quote-analyst also recalled that the EU crisis is a crisis of the “welfare state”. Indeed, today the EU institutions also help those people "who are not sick, who have two arms and two legs." People in response expect the government to help them more and more. In Denmark, an unemployed person receives at least 3000 $ per month for idleness!
  13. ziqzaq
    ziqzaq April 4 2013 09: 59 New
    +1
    Jesus Fernandez-Villaverde, Tano Santos and Luis Garicano of The National Bureau of Economic Research, that is, the National Bureau of Economic Research (Massachusetts), wrote a voluminous essay on the crisis in the eurozone - This creation was born in the United States and it is understandable, while the amers want to ruin the crisis in Europe and absorb its markets, thereby improving their affairs.
  14. Vovka levka
    Vovka levka April 4 2013 10: 46 New
    +3
    We must live within our means, that’s the whole crisis. Banks of loans on-handed out under mirages, others scored without thinking how they will give.

    Our desires always run ahead of our possibilities.
  15. Semyon Albertovich
    Semyon Albertovich April 4 2013 10: 55 New
    0
    We need a financial police force that will track the black capital market. The absence of it is very convenient for modern corrupt authorities.
  16. Apollo
    Apollo April 4 2013 11: 02 New
    +1
    Personal data of millions of offshore account holders hit the Internet, UK media reported

    LONDON, April 4. / ITAR-TASS /. Data from millions of bank account holders in offshore zones has hit the Internet. This was reported today by local media.
    According to them, personal correspondence and other documents could be made publicly available. Most of the data came from the British Virgin Islands.

    http://www.itar-tass.com/c11/696108.html

    now the mess will definitely begin. laughing
    1. USNik
      USNik April 4 2013 12: 33 New
      0
      Again the British are shitting. 100500% of these "millions" will be 999000 depositors from the former CIS. Although against the background of the recently correct relations between Russia and the island, it is possible that the gentlemen from the euro zone will bend over.
  17. Averias
    Averias April 4 2013 11: 51 New
    +1
    Well, whoever said, two peppers from the USA, talk about the Euro. Damn, what about the paradise idyll? As they say in a stranger's eye ..... The head of the Fed, the same story tells, they say everything in the kingdom of the United States is fine, sleep peacefully the glorious inhabitants of Amerikida (rephrased a phrase from the movie Aladdin). And Europe is enough to open your mouth to look at the United States. Where are your brains? Although, it is understandable, the same Germany, gave the gold to the states, but to return the problem. So they bend.
  18. Averias
    Averias April 4 2013 12: 18 New
    0
    Where did the comment go?
  19. revnagan
    revnagan April 4 2013 13: 17 New
    +1
    I want to go to Denmark! I even agree to work for such "grandmas"! laughing
    1. Oshin
      Oshin April 4 2013 14: 52 New
      0
      And for such grandmas it will not be possible to work)))
      They, in the EU, have a problem in that if you work, you lose all the allowance ... It seems logical, but it leads to the fact that the majority is easier not to work and get normal money than to strain)))
  20. T-130
    T-130 April 4 2013 13: 32 New
    0
    Really custom article! Only the dollar will benefit from the disappearance of the euro as a currency! And the soap bubble crisis happens because of the corresponding economy!
  21. O_RUS
    O_RUS April 4 2013 13: 35 New
    +1
    Quote: zeksus
    We are power and this must be taken into account !!


    sorry for unity a little
  22. shurup
    shurup April 4 2013 14: 09 New
    +1
    The Fed's errand boys choir performed the oratorio God Save the Dollar.
    To use the euro, ruble, yuan and, scared to say, gold when calculating energy is a direct threat to US national interests and democracy around the world. Therefore, all the European leaders who are trying to save the euro are dictators, fascists and traditionalists. And Russians are not even suitable for organs, because they have bad blood and temper. All of them must be added to the list, and requisition of money.
  23. IRBIS
    IRBIS April 4 2013 14: 21 New
    +3
    "They just want to take money from hard-working people."

    Here the economist must have shed a tear. But read their labor legislation - according to such a labor code that they had before the crisis, I am ready to work until the victorious ... Relaxed, guys, stopped working. And what about when the EU is still bashing? So we ended up with a crisis created by our own attitude to work! Greeks are genuinely indignant in response to offers to work harder and better. Now also the Cypriots. Forgot, poor fellows, that "there are no free cakes"!
  24. Owl
    Owl April 4 2013 15: 40 New
    0
    Quote: igor36
    By creating a precedent for the seizure of part of deposits in Cyprus, European liberals have undermined the credibility of the very principle of a bank deposit system, which will only intensify the crisis, since there is no guarantee that this will not happen in any other country. Gentlemen, bankers get ready for the outflow of deposits and rising prices for precious metals.

    I would say that trust is undermined western banking system.
    1. Kimeran
      Kimeran April 5 2013 15: 15 New
      -1
      why to the west?
      in any other country can not perform the same actions then in Cyprus? after all, experience is already there.

      for example, in Ukraine, there is constant talk of introducing a tax on deposits or not, this is of course not quite right, but still ...
  25. knn54
    knn54 April 4 2013 18: 09 New
    0
    There are three influential rating agencies in the world and ALL of them are based in the USA and Great Britain - Standard & Poor's, Moody's and FITCH. And the security of Great Britain is determined not within the framework of the European Union, and not so much through NATO, as on the basis of bilateral American-British cooperation ... The surge of isolationist sentiments in Great Britain after Obama's choice, when the Yankees ceased to need the anti-crisis activity of the European Union, recorded this unequivocally.
    The European Union is not MONOLITHIC: with the UK it’s clear that the French and Germans have their own pains. The rest are waiting for infusions ...
    I think that the fate of the Eurozone will be determined after the autumn elections to the Bundestag,
  26. knn54
    knn54 April 4 2013 18: 11 New
    0
    There are three influential rating agencies in the world and ALL of them are based in the USA and Great Britain - Standard & Poor's, Moody's and FITCH. And the security of Great Britain is determined not within the framework of the European Union, and not so much through NATO, as on the basis of bilateral American-British cooperation ... The surge of isolationist sentiments in Great Britain after Obama's choice, when the Yankees ceased to need the anti-crisis activity of the European Union, recorded this unequivocally.
    The European Union is not MONOLITHIC: with the UK it’s clear that the French and Germans have their own pains. The rest are waiting for infusions ...
    I think that the fate of the Eurozone will be determined after the autumn elections to the Bundestag,