Economics

البنك المركزي الأوروبي يقفز إلى المجهول

Oct 1, 2014 Jürgen Stark

فرانكفورت ــ يبدو أن البنك المركزي الألماني يمر بتجربة كبيرة ومحفوفة بالمخاطر. فقد ظلت أسعار الفائدة الأساسية قريبة من الصفر لمدة ست سنوات الآن. وأغرقت السيولة الأسواق المالية. وأفضت إدارة الأزمة إلى تشوهات كبرى في الأسواق، حيث لم تعد البيانات الاقتصادية الأساسية تفسر أداء بعض القطاعات. وقد باتت العواقب غير المقصودة التي ترتبت على هذه السياسة واضحة على نحو متزايد ــ وسوف تصبح ملموسة بشكل متزايد مع خروج بنك الاحتياطي الفيدرالي الأميركي من السياسة النقدية المفرطة في التراخي منذ ما بعد 2008.

ولا تزال الأزمة في أوروبا بعيدة عن نهايتها، كما تُظهِر البيانات الصادرة في شهري يونيو/حزيران وسبتمبر/أيلول عن مجلس إدارة البنك المركزي الأوروبي. ويعكس هذا عاملين: النقص الشديد في الرغبة في تنفيذ تصحيحات أساسية للميزانية العمومية، والتقدم البطيء ــ الذي يكاد لا يُذكَر في فرنسا وإيطاليا ــ في إعادة هيكلة الاقتصادات الوطنية في أوروبا.

ومن ثَمّ، فلابد أن ننظر إلى قرار البنك المركزي الأوروبي بمضاعفة الحوافز النقدية باعتباره عملاً يائسا. فقد انخفض سعر الفائدة الرئيسية في البنك إلى 0.05%، وأصبح سعر الفائدة على الودائع سالبا، ومن المفترض أن تعمل عمليات إعادة التمويل الموجهة الأطول أجلاً على دعم الإقراض المصرفي. وعلاوة على ذلك، لابد من إحياء وتنشيط سوق الأوراق المالية المدعومة بالأصول من خلال شراء الأوراق المالية المدعومة بالأصول. والمقصود من كل هذا إغراق الأسواق، وتوسيع الميزانية العمومية لنظام اليورو بنحو 700 مليار يورو (890 مليار دولار أميركي)، والعودة إلى أحجام الميزانية العمومية المسجلة في بداية عام 2012.

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0 Comments on this paragraph, 24 Comments on this article

Adrien HARTEMANN Oct 7, 2014

Those "old political reflex" as you asserts are driven by the fact that in a Eurozone under German economic domination, the monetary policy done by the ECB before the crisis was de facto a monetary policy based on the german monetary policy which fit perfectly to the german industrial structure but can't be translated into different industrial structure as it is the case for France and Italy for example, which rely on lower exchange rates to remain competitive. The structural weaknesses of thoses contrie has been strenghtened by a focus on inflation and no consideration for the unemployment rate, which is not the case for the Fed which take also in considertion this factors.

And in case of overwhelminh debt beared by the society, inflation is a good way to lower the pressure on states-budget.

Thinking that short-terms austerity measures and massive economic reform (which by the way are not designed to enhance the long-term growth but the short-term competitivness) in a time of recession will help the european's economies is a non-sense, and as far as Germany isn't willing to shift from austerity to long-term investment in the whole Eurozone, the only improvement will be an increase into the exports data because of the lowered standards of the workforce due to a narrow supply-side policy which doesn't take in account the desastrous effect of those policies on the mid/long-run welfare of Eurozone's society.
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Adrian Lucas Oct 6, 2014

The EU is suffering the hubris of overexpansion in the 90s. Countries like France and Italy should never have been allowed to join the Eurozone without prior reform of labour regulation. And EU expansion towards the East should not have commenced until the members of the Eurozone had completed structural reforms. That the ECB is now having to resort to monetary policy experimentation is a consequence of austerity policy experimentation having failed to deliver what it promised. As long as Mr. Stark is not capable of coming up with any concrete alternatives to the failed experiment of austerity, and the untried experiment of ECB monetary policy loosening, his contributions to the debate are worthless.
- Jose araujo Oct 7, 2014
  
  Agree 100%, no country should ever be allowed to join the Eurozone.
  
  One country, one currency, that's how it should be.
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Alex Imas Oct 6, 2014

It takes an awful lot of hubris for someone like Mr. Stark, who has been disastrously wrong on more or less every count for the last half decade, to continue spouting destructive advice as if he deserves deference.

The reality is that Europe has a terrible imbalance within the Eurozone between unit-labor costs and prices between northern Europe and southern Europe. This can be solved either by accepting slightly higher inflation in the north or forcing nominal deflation in the south, the latter of which is compounded by household, financial sector, and sovereign indebtedness in southern Europe. Rationally, only one of those makes sense. But Mr. Stark and his ilk have not been rational for a long time.

The German story is a moral story-- they were the "sick man of Europe" in the late 1990s until they cut relative labor costs and prices and began running a trade surplus relative to the rest of the world. Now, they (Mr. Stark is a perfect example of this) think that the solution to every country's problems is to cut relative labor costs and prices and begin running a trade surplus relative to the rest of the world. If you think this through for a second, you realize why this brilliant idea doesn't work.
- Jose araujo Oct 7, 2014
  
  Alex...
  
  Why deflation and not differential VAT taxes on imports....
  
  Are we more interested in proving a theory, or is our conceran the well being of European population.
  
  Transitory ike on VAT from imports, the possibility of deduction of labour VAT would be much better then deflation...
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Stamatis Kavvadias Oct 6, 2014

'Should higher nominal (that is, inflation-driven) growth replace debt-driven growth? [...] The current inflation rate of 0.3% [...]"

Current inflation levels mean *there is no chance* of any inflation-driven (i.e., just nominal) growth that can be problematic in any way! Inflation up to 2% is much more justifiable, to pursue growth targets and reasonable increase of the money supply, than the mad call of the Bundesbank to impose the otherwise "unavoidable adjustment of costs and prices" and the perception of "peripheral countries"!!! And the author goes on, with other mad claims as in "price stability reigns in the eurozone," when no real economy can ever function with 0,3% inflation in a fractional reserve system, and all advanced economies target 2%.

This madness is the undemocratic understanding of economic interests, hunted by means of inexplicable doctrines, as in "de facto economic stagnation". Germany has to accept that *it will* benefit less as part of the monetary policy of the euro, than it could have with the monetary policies of a sovereign currency. The euro cannot be a currency tailored to the prescriptions of Bundesbank/Germany alone, nor their unilateral interests, especially when Germany is not in the same situation as the majority of the eurozone!

The author discusses what he perceives as "impermissible" risk taking by the ECB. But these are yet unrealized risks! The author understands risk resilience only in the balance sheets of banks, which can make sense only for financial entities, and not in any form that makes sense to social entities. This distractive devaluation of social entities, destroys confidence and forces the self fulfilling prophecy of economic stagnation. It is not economics; it is stupidity!

Germany is entitled to demand its losses back, if and when the author's perceived risks materialize. Germany; not Bundesbank. If this comes to happen, maybe Germany will understand the merciless felling it will be raising in Europe. Germany has no right to push for not risking, when it is at the minority of the European Central Bank.

And Germany does not push at the moment --its bankers do. Bundesbank itself would not enforce the suggested contractionary policies to Germany, if Germany had debt problems, only to create another Hitler. If Bundesbank would, we can definitely exclude Bundesbank from any relation to Europe and act accordingly!

Simply put, an inflation rate of less than 1,5% is inexcusable and outside the ECB's mandate. ECB is accountable for this target and not for claims of risk-taking by bankers in Germany, who do not want to pay negative interest rates on excess reserves, even when lending the best performing economy in Europe!

Price stability in eurozone will get better with transparency of bank balance sheets, but the necessary *structural* reforms that need to be taken are those at the eurozone institutional level, as they have been described by Joseph Stiglitz: a form of debt mutualization to replace lack of sovereign central banks; a (more) realistic bank resolution mechanism; and common deposit insurance.

In addition to these Stiglitz prescriptions, bankers must be made accountable for their losses, so there is meaning to risk taking and lending with interest! There are, at least, two ways about this: making loans up to the amount of their loses without interest over a fixed period of time to the sovereigns that bailed them out; or being forced to share their profits (whenever they have) with the same sovereigns, until they compensate their bail outs plus inflation.
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Davide Mare Oct 5, 2014

Mr Stark, your argument is based on a different inflation target that at the moment it is not in place. The current definition of price stability is "Price stability is defined as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%." The figure for the euro area stands at 0.3% in September 2014 thus we should judge the ECB on these premises, not on a "postuleted" definition of price stability.
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Davide Mare Oct 5, 2014

This is incorrect. Data on HCPI for September 2014 shows that several countries have negative inflation rate, such as Greece, Italy, Spain and Portugal. Anyway Mr Stark is suggesting that the ECB should change its inflation target but unless this is done, loose monetary policy is needed to counter disinflationary pressures.
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Miron Ely Oct 5, 2014

The Euro fall will not affect consumer's and real estate prices in Europe at all.
Seen the inflation is taking place in US and Canada ,the Euro will
recover soon,we will be patient.
Thepurchasing power of the Euro is almost double compared to the dollar
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Derrick Baragwanath Oct 3, 2014

Expansionary monetary policy will help in the short term. But, it is a political, not an economic fix. It gives those European economies that are running fiscal deficits breathing room. by allowing them to borrow more money at low interest rates, but in the long term it will solve nothing. The underlying problem is that the Mediterranean Economies in particular are politically unwilling to expand inflows through taxation, or cut back on the increasing outflows. The outflows especially are a political nightmare, being caused by increasing numbers on the aged pension and generous retirement benefits to government employees (some who retired as early as 50!). Unfortunately, these payments were promised years ago by earlier governments chasing political votes and short term economic stability, with little eye to the future downside. Now the cost of those decisions is coming home to roost and the money is not there. Solving this economic problem will be a political nightmare with powerful and often privileged vested interest groups fighting ruthlessly to protect their privileges. The tragedy is the privileged will probably succeed in this and the tab will be picked up by the least organized, least fortunate and most marginalized.
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Ernest Dautovic Oct 2, 2014

A faltering and confused cry of a pseudo econlmist. And this guy was a goverbor at the ecb? That s a disgrace to say he least. He is always careful not to mention austerity in his opinions but insists on structural reforms. Well them not even the german famous labor market structural reforma led to sustainable growth givem that now they are at zero growth too. This guy is missing so many elements in his analysis that is really surprising that he was part of yhe members of the executive board. So sad and hopeless.
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Ernest Dautovic Oct 2, 2014

"with European taxpayers on the hook in the event of a loss" this is the old german refrain from the 2010/2011. But these guys still don t understand that the ecb can print whatever it takes to recover the loss
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Ernest Dautovic Oct 2, 2014

"Particularly by guaranteeing highly indebted countries’ sovereign bonds, the ECB has actually weakened the willingness to reform, particularly in the larger European Union countries, whose decrepit economic structures are an obstacle to potential growth, and where more room must be given to private initiative." This guy is not only insulting half of europeans but he is making a strong case of being a very poor economist. If the ecb did not step in for the sovereigns there would not be any euro zone today. This is something he does not understand, but this is not surprising give that he is german and they all think to be super heroes nowadays.
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G M Oct 2, 2014

how shocking coming from a German... reading PS today is like taking your first class in "find the agenda 101"
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de Lafayette Oct 2, 2014

{This reflects two factors: too little ambition in carrying out essential balance-sheet corrections,}

Coming from Germany, this comment is not unexpected. Cut your budgets, reduce expenditure, lose debt-weight and (maybe) get better at some uncertain future date.

What would Stark have the French, Italians and Spanish do? Squeeze expenditure budgets until there is none whatsoever left for economic expansion?

A word about Keynesian Stimulus Spending is appropriate. Were the Maastricht Treaty debt-limits to be forgot for, say, the next three years, then governments could indeed add debt and spend it, if accommodatingly low interest rates permitted it - which is entirely possible.

The result would be a reprise of economic activity, larger GDP growth, lower unemployment, more consumer spending. All of which is goodness.

This is the bonus: Expanding consumer expenditures means more VAT-revenues with which countries can reduce debt levels. Which is what is needed to get Europe back on a good financial footing for the future.

(Wakey, wakey across the Rhine ... ! ;^)
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Joshua Ioji Konov Oct 2, 2014

And, by the way, the so called "unorthodox" economics has been practiced quite successfully by China, Japan, the US and the UK, thus, the unknown for Mr. Stark is very much questioning his apprehension?
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Joshua Ioji Konov Oct 2, 2014

BS Europe data shows a continuous economic slow down, high unemployment, more like a total slum: this article is a direct reflection of the views that brought such lack of growth in the first place. The QE and other approaches by the ECB could not be the best way for long term improvement, but it is a better way,.... what about inflationary pressures in the modern day globalized marketplace and rising productivity, it is just nonsense! Also the structural reforms in the EU should change from one of austerity and budgetary cuts to one of stopping redistribution of wealth through VATT, low taxation, farming and other subsidies that in most cases subsidize the have by taking wealth from the have nots. It is just incredibly damp how the EU economists could not figure it out after so many years of recession and slow growth, indeed???
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Jose araujo Oct 2, 2014

The attack of the German "cockroaches" Sinn and Stark.

SS would be such a terrible name.... or maybe not....
- Ernest Dautovic Oct 3, 2014
  
  I like the term cockroach attached to these 2 names
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hari naidu Oct 2, 2014

ECB decision today will surely not mitigate Berlin's (conservative) rancor against Draghi's attempt to (indirectly) devalue Euro. May be parity with USD will finally enforce some equilibrium in monetary policy delivery and its current problem of deflation threat...
Stark resigned from ECB, as chief Economist, because his former boss @ Deutsche Bundesbank also resigned from ECB Council. Why?
Lorenzo Bini Smaghi, former ECB Council Member, is writing today in FT that only solution left for ECB is further devaluation of Euro....
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Joshua Soffer Oct 2, 2014

i just had to quote this April 15 blog entry from Paul Krugman:
" Stark begins by asserting that low inflation boosts real disposable income. That’s a zero-credit answer on any undergraduate exam: yes, low inflation makes income gains higher for any given rate of increase in nominal income, but low inflation reduces the rate of nominal income growth one for one. The notion that an influential former monetary official doesn’t understand this is breathtaking.

Now, it’s not true that low inflation has no effect; it increases the real value of debt, which is contractionary because debtors cut spending more than creditors raise it, and it raises real interest rates when nominal rates are near the zero lower bound. But these are both demand-depressing effects.

Oh, and low overall European inflation makes the adjustment problem of debtor countries much worse, which Stark doesn’t even mention."
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Val Samonis Oct 1, 2014

Why call that "leap into the unknown" if we have two decades of the Japanese experience and 6 years of the US experience; and we have a comparative knowledge (e.g. Canada) with which to judge the ECB belated initiatives?

Val Samonis
Vilnius University
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Jose araujo Oct 1, 2014

Its the stagflation Mr. Stark, its the Stagflation..

No wonder Europe is in shambles, with characters such has this at the helm of our institutions...

Who could imagine that after almost 8 years into the crisis there would someone with the nerve of proposing the same ideas,like they were novel...

Balance sheet consolidation and all the garbage that was spurring out of this piece were the reasons why we are here...

Honestly I think people like MR.Stark should be exiled to Mars...
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