Choir economists blame for the crisis the European single currency

Jesús Fernández-Villaverde, Tano Santos and Luis Garikano ofThe National Bureau of Economic Research, that is, the National Bureau of Economic Research (MA) wrote a volumeworkon the crisis in the eurozone. Scientists have found and the guilty: currency, the euro. Everything that used to be bad in the economy of Greece or Portugal, with the introduction of the euro in 1999 has made it much worse: increased debt swelled "bubbles", has grown dependent on the EU bailout fund.


Jesús Fernández-Villaverde — at the University of Pennsylvania, Luis Garikano — at the London School of Economics, Tano Santos — graduate business school at Columbia University (New York).

In the introduction to the text of the authors warn that the opinions expressed in the pages of the report do not necessarily reflect the views of the National Bureau of Economic Research. From the entry, the authors move to the summary, where the first lines in black and white it is said that the adoption of the euro currency is not advanced the economies evroperiferii, but only delayed the inevitable crisis, and then led to a deterioration of the situation. The economy of the peripheral countries that received loans prolongation and thus delay the moment when the speculative "bubble" burst, actually went back to the old Fel financial status. For these countries, analysts attributed Greece, Spain, Ireland and Portugal.

The authors of the report believe that a mistake makers of monetary union, admitted before come January 1, 1999, was the expectation that the least strong prospective participants — particularly Greece, Portugal, Spain and Ireland — will plan and implement structural reforms aimed at modernizing its economic systems and improving institutional performance. But it happened the other way around: because of the impact of the global financial "bubble" European peripheral countries came to the opposite result: the reforms were forgotten. Moreover, the failure of the reforms and the new order of things has led to an increase in speculative "bubbles" that extend credit, which ultimately reduced the growth of the economies of these countries, and in general made their prospects bleak.

In the past, the peripheral European countries used the devaluation to recover from the adverse effects of business cycles, which, however, did not improve the basic instability of their economies. With the euro also came impairment in the sense that to apply the policy of devaluation has become impossible. The single currency, the euro, and assumed a common monetary and fiscal policy, which encouraged social agents to change their macro-economic decisions are often based on previous inflation.

Some people in Europe, of course, the new reality has helped. Fairly stagnant while Germany's economy, faced with the Maastricht Treaty, which really took the path of structural reforms, thus reviving German exports. But what happened in Germany, did not work in the peripheral countries.

Instead, their main economic contradictions have intensified. In these countries, quickly swelled credit "bubbles", their competitiveness has declined, the external debt of a decade of stay in the euro zone rose by one per cent of gross domestic product. Use of EU resources combined in the pre-crisis countries with domestic bank credit "boom." The future growth of the economy have to eat these and past loans. In addition, in the peripheral countries were ill-used government programs that have led to higher taxes and even increase the length of the working day. In addition, for these countries was characterized by the "Dutch disease", fully ported, for example, Ireland and Spain. Human Resources permutation of the sectors of the economy, export-oriented, to the real estate sector and the government sector, which gave as a result the greatest negative impact on growth. Moreover, participation in the euro zone to interact with these specific sectors, in essence creating that same "bubble" in real estate — and this is in place in order to give an appropriate response to emerging crises.

To summarize, the euro, introduced for the modernization of the institutions of peripheral Europe, but instead was "sedative" Good help against any change.

So, they fought for it and ran. The single currency, the euro made it impossible to play on the financial depreciation of its currency, which once helped with better credit crises. Still, other than the euro are to blame here and "ill-conceived government programs," the effects of which go much further than it seems at first glance. The naive belief in the "strong state" and caring "left" politics in the capitalist system creates general relaxation, which is fraught with aggravation of not only domestic problems, but also the world economy. Lars Christensen, founder of the «Saxo Bank», visited Moscow and talked with the journalist"Finmarket"about the future of the world economy and the price that Europe is paying for the mistakes of their leaders. Said Mr. Christensen about inflation — as a way to deal with the crisis which put an end to the euro.

Currencies are needed to manage them, he said. If the economy is not competitive, the central bank can reduce the value of the currency — and thus increase the competitiveness of the economy. If Greece, said the expert, could devalue the euro over the past 15 years (5% per year), then there would be no crisis. But this is impossible, and its gap in competitiveness compared to Germany is growing.

There is another way to deal with the crisis. If you can not devalue the currency, said a Swiss banker, you should hold the austerity program and cut wages. Politicians usually try not to do that because of unrest, turmoil and political crises. It is much easier to devalue the currency, than to go through such a meal, says the economist.

But today's Europe has to go through this — because of improper political and financial structures of the EU. It is necessary to remove the euro, said Lars Christensen, and over time formed "a great place to live at the current location of fires." But "if you believe in euros and are willing to defend it, things will go worse."

According to Christensen, the disintegration of the euro area would help to overcome the crisis. And exit from the euro zone could help Greece. But the fact is that the decision-making requires political will, as long as the "policy is not ready to concede defeat. They still want to spend other people's money to achieve their goals. As long as there is a huge political will to hold this project, even if it was initially mistaken. "

The economist believes that the exit will take place anyway — "sooner or later". Politicians, he said, "will be put off until the last moment."

"They will be looking for money anywhere, just to keep the EU as a monetary union. What we see now in Cyprus, for example, is simply amazing. It's not even QE, not OMT, not inflation, is not a devaluation or some other relatively objective matter. They just want to take money from hard working people.

It turns out that we pay a lot of taxes, and now anyone can come in and say "sorry, we again need your money." It will take them, and do with it nothing can. This is a very bad signal for all. "

The economist believes that now the EU there are more people who need

"… Right now the most important part of the decision is taken without any vote is taken by people who did not choose one. Europe is moving in a very bad direction, in the direction of polutotalitarnogo society. This happens under the slogan "More EU, more united Europe, which must protect at all costs." It definitely does not work, but politicians continue to do what does not work. They have one answer to everything you need to do more. They do more, but that all gets worse. "

These people have the power, these bureaucrats, said Lars Christensen, a lot to lose if the power will be limited to the EU. "They lose their jobs, big pensions, career."

What to do? It turns out that not all is lost. The situation may improve people that will need to give them their country and freedom. There is a chance, the expert said that it is terrible, "give" sound in the next 5-10 years.

"And then we'll see protests, we see the growth of anti-European sentiment, we see riots and revolts: the country will go through a political crisis and leave the euro zone, then the problem is finally resolved will."

The analyst also reminded that the EU crisis — a crisis "of the welfare state." After all, today the EU institutions and help those people "who are not sick, which has two arms and two legs." People are waiting for a response to the government would help them more and more. In Denmark, the unemployed person receiving at least $ 3000 a month for doing nothing!

According to the International Monetary Fund, the total amount of euro in foreign exchange reserves of developing countries in 2012 to 24% (676.6 billion euros), which is the lowest figure since 2009. The central banks of these countries in the past year sold securities denominated in European currencies at 44.8 billion. Against this background, growing investments in dollar-denominated assets. Central banks of the BRICS countries, for example, for 2012 the U.S. invested in securities of about $ 156 billion, or about 120 billion evro.Mezhdunarodnoe rating agency «Standard &Poor's» justdowngradedforecast drop in GDP in the euro area in 2013 to 0.5%. Previously, it was a decline of 0.1%. But because of the difficult financial situation of the scale of reduction could increase fivefold.

Cyprus finishes the situation.

At the beginning of the crisis tamoshnego the world's largest investment fund PIMCO with assets of more than $ 2 trillion. U.S.reducedtheir investments in the European currency. Executive Director of Parikia Saumil said he believes the adopted (at the time) Eurogroup decision to impose tax on deposits in exchange for financial aid is not just a mistake, and the kind of recognition that the euro is far from perfect as a key global currency. And a wig in his skepticism is not alone. His view is shared by the central banks of developing countries, which get rid of the euro. According to the International Monetary Fund, in 2012, they sold a cumulative 45 billion euros. Favorite is the U.S. dollar, the share of which has been maintained at 60%.

The fall of the banking system of Cyprus, the crises in Greece, Spain and other "peripheral" EU countries will finish the single European currency. Eurozone recession is inevitable. Solutions like Cyprus, now fear the same in Spain. In the same Greece. At any time, soft aid "sick" economy may be replaced by surgery — the expropriation of money. European bureaucrats who have encroached on deposits in Cypriot banks, effectively destroyed the credibility of the banking system "peripheral" countries, and at the same time destroyed the remnants of faith in evroinstituty. In Greece and Cyprus, German Chancellor Angela Merkel, without which important decisions in the euro zone unlikely to be accepted as Germany — the main donor and the guardian of the European Union, represented with Hitler mustache and a Nazi uniform. In Greece three times, the last elections were held in Parliament: the people do not trust the politicians long ago. In this situation the economic crisis mixes with the political. The latter — the signal "bell" to ensure that the European Union is reeling, and forecasts Lars Christensen, a resident of a prosperous Switzerland, may soon come true.

Surveyed and translated Oleg Chuvakin

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