Wednesday, December 7, 2011

Moral hazard

I would like to highlight several recent article, first is an interview with Juergen Stark, ECB chief economist resign shortly to disagree with the policy of the ECB. The other is the article published by Nobel Prize Stiglitz and a statement (rather than paper) from the French president Giscard d'Estaing on the visit to Europe by U.S. Treasury Secretary Timothy Geithner.

In the first, Stark, says basically that the ECB should ask for help since this is a moral hazard. If allowed to help governments "sinners" will not have his "punishment", so in the future does not adequately correct the imbalances. You may forget that they are special circumstances which have focused on certain countries to this situation, except for Greece, other countries have a growth problem, not debt. The markets believe that they are not paid for what they believe incapable of generating income to the debtor countries, not why your debt is exorbitant.

Stglitz reminds us that debt levels have been caused by an excess of liberalism in the financial markets, taking advantage of deregulation have failed to properly quantify the risks. The states have borrowed to save the financial system from collapse result of the greed (greed is good) of some and the overconfidence of others.

Giscard makes the counterpoint of classical Europe, that of the "grandeur". Who are the Americans to teach us? We know sink alone.

At a time when we discuss the role of the ECB contradistinction precisely with the Federal Reserve and the myth that expansion policies with recession generate long-term inflation. The curve of U.S. 10 years should be through the roof in that case. Why markets continue to provide cheap money to the Americans with current account deficits have? Trust ¿?.

How can we generate in the euro zone that trust?

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