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Straight Talk From Juncker

by afew Fri Feb 12th, 2010 at 01:38:33 PM EST

After the Council meeting yesterday, Jean-Claude Juncker, president of the Euro Group (finance ministers of the Eurozone countries), gave an interview to Jean Quatremer, journalist at Libération and Brussels blogger. The following quotes are taken from Quatremer's blog, Backstage Brussels.

Quatremer asks if the conclusion of the Council meeting is that "if part of the markets go on attacking Greece, the Eurozone member states will step in".

Juncker:

Juncker: "on ne laissera pas tomber la Grèce" - Coulisses de Bruxelles, UE

Donc si une partie des marchés continue à attaquer la Grèce, les Etats de la zone euro interviendront ?

Pas tant que ce pays n’aura pas fait ce qu’elle doit faire. La Grèce doit d’abord tenir ses engagements et répondre à nos attentes. Sans cela, on ne peut pas donner d’argent. Le plan grec doit apparaître comme étant crédible. Si les marchés mettent en cause la crédibilité de la démarche grecque, des mesures additionnelles devront être prises. La zone euro n’interviendra que lorsque cela aura été fait. C’est un appui conditionnel.

"Not as long as the country hasn't done what it must do. Greece must first respect its commitments and measure up to our expectations. Without that, we can't give [Greece] any money. The Greek plan must appear credible. If the markets doubt the credibility of the Greek programme, further steps will have to be taken. The Euro zone will only intervene once that has been done. Our support is conditional." (emphasis mine).

Read on...


Juncker goes on to say there was no debate at the Council meeting. The decisions were worked out during a teleconference of finance ministers he organized on Wednesday, then in a meeting he held on Thursday morning with Jean-Claude Trichet, Herman Van Rompuy, and Jose Manuel Barroso. Their decisions were simply submitted to Council for approval (sic).

Quatremer asks what kind of steps could be taken to support Greece: purchases of Greek debt by each member state or by the ECB on the secondary market?

L’hypothèse que l’on mettrait en place un instrument consistant à échanger des titres est valable. Ce n’est probablement pas la seule initiative que nous pourrions prendre. L’essentiel est que ces instruments bilatéraux, puisque l’Union ne peut intervenir directement, soient coordonnés au niveau de la zone euro. Il faut que cette aide à la Grèce apparaisse comme une mesure cohérente, déterminée et coordonnée de la zone euro. Il est dommage que plusieurs Etats se soient opposés dans le passé à la création d’un instrument qui nous aurait permis d’émettre des euro-obligations, ce qui aurait été plus simple. Mais, au moins, il y aura une réaction coordonnée de la zone euro.

"It's a valid hypothesis that we would set up a securities exchange instrument. This is probably not the only initiative we could take. The main thing is that these bilateral instruments, since the Union can't intervene directly, should be coordinated at Eurozone level. This support for Greece must appear as a coherent, determined, and coordinated step taken by the Eurozone. It's a pity that some countries objected in the past to the creation of an instrument that would have allowed us to emit Eurobonds, which would have been simpler. But, at least, there will be a coordinated response from the Eurozone."

Another question from Quatremer is: Hasn't the Eurozone used the markets to force Greece to carry out reforms that it had always refused to implement?

Juncker:

Comme dernier rédacteur du traité de Maastricht encore en fonction, je peux vous dire que nous avons toujours estimé que si un Etat divergeait en dépit de toutes les mises en garde, il y aurait une sanction des marchés financiers. Nous ne sommes pas dans un monde où la sanction n’existe plus sous prétexte qu’on est membre de la zone euro. Mais je pense que les marchés exagèrent et spéculent désormais sur la probabilité d’une absence de réaction de la zone euro. Ils ont tort : on ne laissera pas tomber la Grèce.

"As the last drafter of the Maastricht treaty still in office, I can tell you that we have always considered that if a member state strayed [from the rules] in spite of all the warnings, there would be a sanction from the financial markets. We are not in a world where there are no sanctions just because one is a member of the Eurozone. But I think the markets exaggerate and are speculating now on an absence of reaction from the Eurozone. They are wrong; we won't abandon Greece."

Quatremer: Doesn't the present crisis show there's a lack of governance of the Eurozone?

Il n’y a pas eu une absence totale de gouvernance de la zone euro, le pacte de stabilité est là pour le prouver. Mais nous avons désormais décidé, après de mauvaises expériences, de davantage nous concentrer sur les divergences de compétitivité qui existent entre les Etats membres de la zone euro. Si un Etat diverge, nous aurons avec lui un débat viril. De même, il faudra que chaque gouvernement discute d’abord au sein de l’Eurogroupe des mesures de politique économique qu’il compte prendre avant de les annoncer dans son propre pays. Je n’accepterai plus aucun manquement aux obligations inhérentes à l’appartenance à la zone euro. Il faudra que nous soyons plus sévères entre nous.

"There hasn't been a total lack of governance of the Eurozone, the stability pact is there to prove it. But we have now decided, after negative experiences, to focus more on the competitivity gaps that exist between Eurozone member states. If a country slips away, we will have a virile debate with it (sic). Also, each government is going to have to discuss in the Euro Group economic policy measures it intends to take before announcing them within its own country. I will no longer accept any breach of the the obligations that come with belonging to the Euro zone. We must be more severe with each other."

Finally, according to Juncker, there is now agreement between Paris and Berlin. And Trichet is also in full agreement with the decisions taken by the Council.

Display:
Like it, like it not, he's not mincing his words...
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 01:39:42 PM EST
There hasn't been a total lack of governance of the Eurozone, the stability pact is there to prove it

I don't quite know what he is doing to his words here. This is not exactly a ringing endorsement of the works of the financial institutions of the EU. At least he seems to be quite candid.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 12th, 2010 at 08:46:53 PM EST
[ Parent ]
But, does becoming uncompetitive means a country has lost its discipline?

Has he not considered deflationary pressures?

Let's see: how did the IMF do in Argentina? Were they too lax on the Argentines?

by Upstate NY on Fri Feb 12th, 2010 at 01:58:35 PM EST
Shorter Juncker: "the market is always right, we in the Eurogroup have no greater insight into the credibility of Greece's fiscal position than what you can get from looking at market prices".

Why do we put these people in positions of responsibility again if they delegate their judgement to the market?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:29:35 PM EST
I'm not sure that's a fair appreciation of Juncker over his career, even if his line here makes me jump too. Greece certainly seems to have pissed them off (not just Juncker).
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 02:56:34 PM EST
[ Parent ]
If the markets doubt the credibility of the Greek programme, further steps will have to be taken. The Euro zone will only intervene once that has been done

That says the credibility of Greece to the Euro Group is entirely dependent on the credibility to the market.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:03:41 PM EST
[ Parent ]
we'll let the markets react - if they calm down, no need to do anything, if they don't then we'll step in. In other words, Europe will help Greece only after it has suffered some humiliation but will not let it down. You can take it as a warning to markets that they won't manage to break Greece even if they try.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 03:09:47 PM EST
[ Parent ]
Nah, they're hanging Greece out to dry.

Either interpretation is consistent with Juncker's words. It's like Obama, he's a Rorschach test.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:12:33 PM EST
[ Parent ]
Juncker/Obama, what an obvious comparison...

Look, I went to the trouble of presenting this interview because I thought it gave us a more specific picture than anything Merkel, Sarko, or Van Rompuy came out with. Take it as information, not something to go bananas on.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 03:16:49 PM EST
[ Parent ]
Thanks for the information. It makes me go bananas to read such marketista nonsense coming from the president of the Euro group. It confirms my worst expectations about the ideological situation at the top of the EU economic policy apparatus.

I simply cannot believe these people would abdicate their economic judgement to the market.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:23:26 PM EST
[ Parent ]
afew:
even if his line here makes me jump too

Read?

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 03:12:57 PM EST
[ Parent ]
What does Juncker's career have to do with anything?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:15:26 PM EST
[ Parent ]
<sigh>

Good evening.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 03:17:29 PM EST
[ Parent ]

(h/t Jerome)

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:26:47 PM EST
[ Parent ]
Quatremer asks what kind of steps could be taken to support Greece: purchases of Greek debt by each member state or by the ECB on the secondary market?
L'hypothèse que l'on mettrait en place un instrument consistant à échanger des titres est valable. Ce n'est probablement pas la seule initiative que nous pourrions prendre. L'essentiel est que ces instruments bilatéraux, puisque l'Union ne peut intervenir directement, soient coordonnés au niveau de la zone euro. Il faut que cette aide à la Grèce apparaisse comme une mesure cohérente, déterminée et coordonnée de la zone euro. Il est dommage que plusieurs Etats se soient opposés dans le passé à la création d'un instrument qui nous aurait permis d'émettre des euro-obligations, ce qui aurait été plus simple. Mais, au moins, il y aura une réaction coordonnée de la zone euro.
"It's a valid hypothesis that we would set up a securities exchange instrument. This is probably not the only initiative we could take. The main thing is that these bilateral instruments, since the Union can't intervene directly, should be coordinated at Eurozone level. This support for Greece must appear as a coherent, determined, and coordinated step taken by the Eurozone. It's a pity that some countries objected in the past to the creation of an instrument that would have allowed us to emit Eurobonds, which would have been simpler. But, at least, there will be a coordinated response from the Eurozone."
Wait, is Juncker claiming the ECB cannot set a floor to Greek bond prices on the secondary market, is he ignoring the issue, or did Quatremer not ask explicitly?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:32:54 PM EST
I think he is saying the Union cannot intervene.

Otherwise he is saying that the Eurozone members and/or the ECB can.

As for Quatremer, see his question.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 02:52:31 PM EST
[ Parent ]
Quels types de mesures peuvent être prises ? Des achats de dette grecque par chaque Etat ou par la BCE sur le marché secondaire ?

Okay, so Juncker totally obviates the role the ECB could play in his reply though the question mentions it explicitly. Which is fair, he can't speak for Trichet, the ECB being independent and all.

But the ECB is an institution of the Union,  the one "responsible for monetary policy".

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:59:26 PM EST
[ Parent ]
This concerns the Eurozone, and the Euro, for which the ECB has particular responsibilty (as does Juncker).

Otherwise, what can the Union do, with its piffling budget?

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 03:08:48 PM EST
[ Parent ]
Juncker: "on ne laissera pas tomber la Grèce" - Coulisses de Bruxelles, UE
Quels types de mesures peuvent être prises ? Des achats de dette grecque par chaque Etat ou par la BCE sur le marché secondaire ?What type of measure can be taken? Purchases of Greek debt by each member state or by the ECB on the secondary market?
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 03:02:43 PM EST
[ Parent ]
Juncker doesn't mention the ECB in his answer unless under "the Union", and if you interpret "the Union" to include the ECB, his answer is wrong on the letter of the Treaties.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:05:46 PM EST
[ Parent ]
There hasn't been a total lack of governance of the Eurozone, the stability pact is there to prove it

What!?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:37:31 PM EST
the stability pact has guided the fiscal policies of most countries. It's not a constraining mechanism, but the shaming and naming part of it does work to push countries towards somewhat better budgetary discipline. Half the European countries had budget surpluses at the top of the boom, which is quite good.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 02:51:23 PM EST
[ Parent ]
the stability pact has misguided the fiscal policies of most countries

There, fixed it for you.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:52:19 PM EST
[ Parent ]
Do you think large budget deficits are always a good thing?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 03:10:42 PM EST
[ Parent ]
I think insufficiently large budget surpluses in the growth phase are a bad thing. The GSP justified complacency on that front.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:13:30 PM EST
[ Parent ]
the GSP was not sufficiently strict?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 03:36:05 PM EST
[ Parent ]
The GSP was too strict in the recession and insufficiently strict in the expansion.

But this is because it failed to properly allow for the business cycle. It is predicated on the assumption that the downward part of the cycle is an outlier.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:45:58 PM EST
[ Parent ]
See here
the GDP growth rate swing between peak and trough can be as much as 8% or more.
So, if the deficit limit is 3% what is the guideline yearly budget surplus governments should be running? 5%? A 3% debt limit assumes the GDP rate swing will be something of the order of 4% and is a consequence of bullshit "great moderation" "we tamed the business cycle" "small government" neoliberal bullshit.

It makes a whole lot more sense to have an over-the-cycle guideline and to force states to run budget surpluses in the growth years instead off saying that a 1% deficit when GDP is growing at 4% is A-OK just because the deficit is less than 3% and the debt less than 60%.

Also this
the neo-liberal ideologues entered the fray, driven in part by political prejudices that go back into time (particularly World War 2), and conjured up the Stability and Growth Pact (SGP). The restrictions imposed by the SGP were claimed to reflect economic sense but there is nothing in any economic theory that tells us that the design principles of the SGP were optimal.

In fact, from the perspective of modern monetary theory (MMT) the 3 per cent budget deficit to GDP rule is nonsensical. It would be an extraordinary coincidence for a 3 per cent ratio to be consistent with full employment - that is, taking into account the saving preferences of the households and the trade accounts for each country.

In a 2006 book I published with Joan Muysken and Tom Van Veen - Growth and cohesion in the European Union: The Impact of Macroeconomic Policy - we showed that it is widely recognised that these figures were highly arbitrary and were without any solid theoretical foundation or internal consistency.

The current crisis is just the last straw in the myth that the SGP would provide a platform for stability and growth in the EMU. In my recent book (published just before the crisis) with Joan Muysken - Full Employment abandoned - we provided evidence to support the thesis that the SGP failed on both counts - it had provided neither stability nor growth. The crisis has echoed that claim very loudly.



En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:21:27 PM EST
[ Parent ]
but there is a counter argument that a simple rule like "no more than 3%" is simpler to police (even if only through naming and shaming) and does have some basic logic (given expected gross growth rates, it avoids runaway debt most of the time).

And in that way it did work to a good extent - and thus fulfilled Juncker's claim of the "beginning" of some economic governance in the eurozone.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 03:39:19 PM EST
[ Parent ]
For how many years has Germany been allowed to breach the 60%-GDP debt limit?

The argument is the 3% limit only allowed for a shallow business cycle.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:47:58 PM EST
[ Parent ]
Federal-level economic governance is not supposed to be geared towards the good years.

Any moron (except, apparently, Silvio Corruptioni) can manage an economy during the good years. Which is what Bush the Lesser and his friends capitalised on.

But I think that the reference to Corruptioni touches the nub of the issue: The reason we have the GSP is that Germany didn't want to hand Italy the power to run €-denominated deficits indefinitely. And while I can't say I blame them for that, I do think that the solution would be to not include Italy in the €-zone, rather than making up some ad hoc criteria with little connection to reality.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 12th, 2010 at 03:55:05 PM EST
[ Parent ]
But, to include or not include countries in the eurozone is the sort of question that makes the eurozone an excellent free trade area but not really a political union. The reality is that it's still going to be incredibly hard for German or French or any taxpayers to pay for Greek taxpayers, even though that kind of solidarity would seem to be required with a convergence of economies, in a totally integrated union.
by Upstate NY on Fri Feb 12th, 2010 at 06:46:40 PM EST
[ Parent ]
Politically it should be easier to do than for Iceland, Greece actually being in the Euro and all, but somehow I doubt it will be.

I wonder how Germany's treatment of Greece will influence Croatian [just to name the presumed next entrant] feelings about EU accession, and whether Germany cares.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Sat Feb 13th, 2010 at 02:29:42 AM EST
[ Parent ]
Half the European countries had budget surpluses at the top of the boom, which is quite good.

Clearly not large enough surpluses to prevent them breaching the 3% deficit limit when the recession came, or the 60% debt-to-GDP limit.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:04:54 PM EST
[ Parent ]
but still leaving them in a better situation today than in the alternative. Spain is seen as a potential target for the markets, but they are wary because its debt level is still quite low. So two years of massive recession and large public spending to limit the damage have been tolerated rather well so far.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 03:12:30 PM EST
[ Parent ]
If you think 1% budget surplus was enough in the bubble phase I have a bridge to sell you.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:14:13 PM EST
[ Parent ]
If the markets doubt the credibility of the Greek programme, further steps will have to be taken [by Greece ?]. The Euro zone will only intervene once that has been done.

That is, the Euro zone will only intervene when intervention is no longer necessary.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:54:06 PM EST
I understand it as further measures by Greece, as you suggest.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 03:04:20 PM EST
[ Parent ]
Time keeps on ticking.

Nothing Greece can do in the next month is going to make a difference--other than shady bookkeeping.

The bill comes due in April. That's like, 2 months away. Greece is not going to get its pensions in order, cut wages, have any benefit from a hiring freeze, slash health care, etc., in that time.

The plan is there. Parliament has to pass it. They already passed parts of it. Is that enough? Simply to vote austerity in?

Somehow I don't think so.

by Upstate NY on Fri Feb 12th, 2010 at 06:49:32 PM EST
[ Parent ]
What happens in April?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Sat Feb 13th, 2010 at 02:26:27 AM EST
[ Parent ]
Probably the next Greek bond issue.
by afew (afew(a in a circle)eurotrib_dot_com) on Sat Feb 13th, 2010 at 04:58:46 AM EST
[ Parent ]
The bills come due. Greece cannot meet its debt payments in April unless it sells more bonds. There's not enough in the coffers currently for April's bills.
by Upstate NY on Sat Feb 13th, 2010 at 10:43:12 AM EST
[ Parent ]
Maybe, that's why Zapatero is talking about "reforms", King included, with a great business man called Díaz Ferrán and unions: to make decisions that the right-wind would take with the help of tankers for demonstrations. Isn't it?
by kukute on Fri Feb 12th, 2010 at 03:05:00 PM EST
[ Parent ]
Isn't Diaz Ferran a crook who owed millions in social security contributions for his employees, was found in default of a loan by a Caja on whose board he sat because he pledged the same stock as collateral for two loans with different institutions, and so on?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:07:46 PM EST
[ Parent ]
Of course. This shows how serious the business class takes ZP. And Botín has been the main supporter of ZP's pension-system reform. The man who sent home lots of employees of his bank at the age of fifty with the maximum pension.
by kukute on Sat Feb 13th, 2010 at 06:21:24 AM EST
[ Parent ]
And Trichet is also in full agreement with the decisions taken by the Council.

That's not quite what Juncker says.

Et Jean-Claude Trichet ?

Si le président de la BCE n'avait pas été d'accord avec la double décision prise aujourd'hui, compte tenu de sa crédibilité, la réaction des marchés aurait été funeste.

"And JC Trichet?

If the President of the ECB had not agreed with the double decision taken today, given his credibility, the reaction of the markets would have been terrible"

That is "I'm not going to say what Trichet's opinion is, but the market is all knowing and all powerful and they like Trichet so given that the sky hasn't fallen, the Trichet must have indicated to the market that he agrees".

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:02:35 PM EST
That means Juncker says Trichet agreed. What else?
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 03:05:24 PM EST
[ Parent ]
In a circuitous way.

But the way he says it is telling: if Trichet hadn't agreed the markets would have punished us. Since the markets didn't punish us you can draw your own conclusions.

I guess Quatremet didn't need to interview Juncker, he could have gotten the same mileage out of watching the market ticker.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:09:24 PM EST
[ Parent ]
As the last drafter of the Maastricht treaty still in office

Good, there's only one person left to retire before we can reform the Growth and Stability Suicide Pact without anyone losing face.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 03:55:09 PM EST
Do you think they will improve the GSP in said putative "reform"?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 12th, 2010 at 09:02:06 PM EST
[ Parent ]
Greece must resolve crisis itself: ECB chief economist - Yahoo! News UK
Greece must take further austerity measures and resolve its financial crisis by itself, the European Central Bank's chief economist said in an interview released Friday.

The Greek government must "put its own house in order," Juergen Stark told the magazine Der Spiegel in comments released on Friday, a day after European Union leaders expressed support for Greece at an emergency summit in Brussels.

Austerity measures unveiled by Athens until now "are a strict minimum, which must now be put into practice, and more will be needed given the clear deterioration of the situation," Stark added in an interview to appear on Monday.

EU heads of state and government pledged to prevent heavily indebted Greece from default and to defend the 16-nation eurozone from possible fall-out from the crisis but announced no concrete measures.

Those are expected following a meeting of eurozone finance ministers on Monday.

Stark rejected the idea of bilateral aid from countries like Germany for Greece, deeming it "counter productive or very difficult to reconcile with the principles of monetary union."

He also slammed a proposal for a pan-eurozone bond issue to help Athens roll over debt when it comes due this year, saying it would do nothing to resolve the country's structural problems.

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Feb 13th, 2010 at 06:01:12 AM EST
Seee the full interview (also quoted in the Salon) here.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Feb 13th, 2010 at 06:27:17 AM EST
[ Parent ]
A historic political agreement

FT Deutschland reports that Germany is already considering two concrete types of support operation, the purchase of Greek bonds, and loan guarantees through KfW, the state owned bank.

In another story the paper reported that the aid to Greece has become subject to a huge conflict inside Merkel's coalition, especially  as leading Christian Democrats are outraged at the thought of a bailout, when the country is about to start a programme of domestic financial consolidation.

That Germany be preparing to buy Greek debt corresponds to Juncker's talk of "bilateral" operations, ie purchases by national central banks that would need Eurozone-level coordination.

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Feb 13th, 2010 at 06:06:00 AM EST
You're conflating "national central banks" with "state-owned banks". There is no mention of the Bundesbank here. In fact, the Bundesbank and the ECB are washing their hands here.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Sat Feb 13th, 2010 at 06:12:02 AM EST
[ Parent ]
You are conflating the purchase of bonds and loan guarantees :-)

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Feb 13th, 2010 at 06:28:58 AM EST
[ Parent ]
Upon checking German media, both are mentioned in connection with KfW, as alternatives.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Feb 13th, 2010 at 06:31:41 AM EST
[ Parent ]
Anyway, nobody's talking about the ECB stepping in to curtail bond market volatility.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Sat Feb 13th, 2010 at 06:35:19 AM EST
[ Parent ]
So? Does that justify your assertions that the ECB is going to do nothing? You yourself said operations on the secondary market could be carried out without publicity. Is it a good idea to give publicity to what might be done or what it is planned to do?

I'm not just thinking of the effect on the markets of an open declaration that one is going to intervene in the markets, but of the message as understood by other countries on the list the pundits have drawn up, and what knock-on effects that might have.

How the ECB will implement a policy of quantitative easing

purchases of government debt in the secondary market might interfere with the market's risk pricing mechanism, and might raise fears that the ECB is financing budget deficits
by afew (afew(a in a circle)eurotrib_dot_com) on Sat Feb 13th, 2010 at 07:04:36 AM EST
[ Parent ]
Let's see, it is wrong that secondary-market purchase finance budget deficits. Now, even though it might raise fears because investors are ignorant or because of concern trolling.

As to purchases of government debt in the secondary market might interfere with the market's risk pricing mechanism, the market's "risk pricing mechanism" consists of secondary-market purchases. And a blind belief in the market's risk pricing mechanisms is precisely what brought on the crisis.

I'd like to see some statement by someone in a position of responsibility which is not framed in market worship.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Sat Feb 13th, 2010 at 07:16:19 AM EST
[ Parent ]
Migeru:
I'd like to see some statement by someone in a position of responsibility which is not framed in market worship.

You would like to see the left running the show. So who won the EP elections, who governs most EU countries? What use is it pretending otherwise?

Migeru:

it is wrong that secondary-market purchase finance budget deficits

According to you, it's right?

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Feb 13th, 2010 at 07:40:25 AM EST
[ Parent ]
I mean it is not the case that secondary market purchases finance the issuer.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Sat Feb 13th, 2010 at 07:46:16 AM EST
[ Parent ]
Migeru:
In fact, the Bundesbank and the ECB are washing their hands here.

What evidence do you have for that?

As for the quote (which is a translation/paraphrase), it seems to me to separate bond purchases from "loan guarantees through KfW".

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Feb 13th, 2010 at 06:57:23 AM EST
[ Parent ]
Didn't see DoDo's comment before posting. But evidence that the ECB is washing its hands, I'd still like to see some other than your assertions.
by afew (afew(a in a circle)eurotrib_dot_com) on Sat Feb 13th, 2010 at 07:06:06 AM EST
[ Parent ]
How about their own words?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Sat Feb 13th, 2010 at 07:09:16 AM EST
[ Parent ]


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