In a masterfully orchestrated operation, Draghi announced its issuance plan of one billion (million million) euros to buy debt. Enthused bags and stress the devaluation of the euro, thus helping to fight deflation. Above all, reassured Europe for another day. Made easier in political management: managing short-term expectations. Because, after the party, all this is little more than a fantasy and evil proceed who cling to this board, because neither the euro is saved, nor the recovery began.
What is an act of desperation there is no doubt. Maybe he could have resulted in 2008 but now comes late, when we all European inertia failed, and with a clear political message to the Greek people, “there is no monetary policy without austerity.”
In detail, the billion divided into three slices. The first, and largest, to buy sovereign debt, not directly to the States (which treaties prohibit stupidly), but the financial intermediaries, paying them a commission, up to a limit equivalent to the contribution of each country in ECB. The second, to buy debt issued by the banks themselves. The third, and smallest, to buy debt of certain European agencies.
The goal is to fight deflation, assuming that the problem is in the liquidity problems of the financial system. But it is not. Three years ago the ECB opens funding programs at rock bottom interest rates to banks so they can lend to the economy. The last, in September 2014, was a flop . Neither the bank showed interest or credit increased. To be investment loans, it takes before there is investment and consumption. It is for austerity that we must look if we are to understand deflation.
The result (and goal) of the program is no more credit, but ensure long-term low interest rates that value all financial assets whose prices shoot.
This has tremendous redistributive consequences in society. As the Bank of England showed, by analyzing a similar program, shares and financial securities appreciated 26% (€ 800 billion) and 5% more fortunate hold almost half of these values. It was a Bodo to the rich.
Worse, all this is ineffective (investment only increases with profitability expectations of production and therefore more demand) and even dangerous (because this sea of liquidity can feed new speculative bubbles , the stagnation). As some economists have suggested, if Draghi chose distribute 7600 euros to each family, or twice for half of the poorest European population, spent the same money and had more effect on the economy. Increased demand and production, creating employment and annulled the deflation. But that would favor the population and not finance, and Europe is not for these dangerous adventures.
However, for Portugal, monetary bazooka is more to the level of a firecracker carnival. Taking into account the limits already explained, the total public debt that the ECB could buy in the markets would be about 24 billion, that is, as the PUBLIC shown, only another 5 billion more than they already have. But even that could affect the whole amount to buy new issues, which can not, the state could save up to one-twentieth of the interest you pay now and continue to have a debt of 123% of GDP.
In fact, it is more likely to arouse little interest:. Portuguese banks are using the public debt they have the balance sheets to serve as collateral for ECB credits
At the end of the day, Europe uses all means to avoid making the essential. When what’s left is a weapon that fires after all a fantasy and not a solution, we are nearing the end of illusions – because neither Greece nor Portugal can avoid a restructuring of its debt. And instead of financing the finance, the ECB should be required to avoid dependence on markets to make the single structural reform that has never been tested, after all have failed: rekindle investment with the power of public money. But this would require that Europe existed and that was not caught in the trap of thunderous rules, ineffective and dangerous euro. Better that Leonard Cohen song was not only poetry: first Athens, then we take Berlin …
Mariana Mortágua; Francisco Louçã
Economist and member by the Left Bloc; economist and university professor
The authors write according to the Spelling Agreement.
No comments:
Post a Comment