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مال ومصارف
In fact, globalisation is exercising a high toll on the middle classes of all
advanced economies, as median incomes fall and a growing number of
young adults are forced to continue studying to stand a chance to keep up
with the living standards of prior generations.
When linking the second and third “talking points”, I see a tragedy within
the tragedy: massively diverging youth employment rates between
Europe’s core and her periphery risk actually aggravating the continent’s
lack of a stronger common cultural identity. Indeed, if the “Old Continent” is
to foster a stronger pan- European identity, would it not be wise to start with
the younger generations?
* Fourth talking point: what is today’s Europe’s biggest policy failure?
- It is probably not useful to get into the endless debate about austerity. I
broadly agree with the need for fiscal discipline across all member-states.
I certainly agree with the principles of federalism and subsidiarity, strongly
felt in many core and northern countries. In fact, persistent divergence in
intra-euro youth unemployment is to a large extent not (only) the consequence
of austerity. It is directly fostered by the enduring and massive credit
crunch in periphery economies. So when assessing the fourth “talking
point”, I observe that we are not merely talking about a policy failure, i.e.
the de facto sterilisation of monetary policy in the periphery. Rather, we are
talking about a true market failure, i.e. the non-existence of a single
European credit market.
Today investors discriminate across European banks not on the basis of
their track record and quality of management, as would be the case in any
normal single credit market, but depending on whether they belong or not
to a fiscally stressed country. This not only hampers the recovery in the
periphery, it also results in a massive inefficiency for Europe as a whole. In
fact, the history of the last years shows that there is no positive relation
between the quality of (the management of) a bank and the fiscal conditions
of its country.
So I would like to better understand why core countries are tittering with
banking union, and instead proposing bilateral (through for instance the
German development bank KFW) or multilateral (through the European
Investment Bank) loan programmes to help small- and medium sized companies
in periphery economies to hire people. By doing so, are they not
adding to centralised overhead? Would Spanish and Italian banks not be
better equipped to judge the creditworthiness of enterprises that operate in
their own territory? Would a commonly funded bank resolution scheme – in
addition to a common supervisor – not be both cheaper and provide the
underpinnings for increased efficiency through a genuinely single
European credit market. Or would, maybe, such set-up expose core countries’
own banks to too much external control?
* Fifth talking point: is Europe now less powerful in the international
arena?
- I think that it is way too early to provide an answer to the fifth “talking point”.
One could actually argue that the crisis has forced European countries to unite
on important monetary and financial matters. As such it might have strengthened,
rather than weakened, Europe’s position. Then again, whilst I personally
do not believe that we are today facing massive currency wars, if central bank
liquidity injections can be interpreted as covert currency wars, Europe has certainly
been the less bellicose amongst all advanced economies. I am much
more concerned about (currency wars combined with) trade wars. History, in
fact, shows that it was the combination of competitive devaluations and prohibitive
trade measures that led to the global economic slump of the 30s. In fact,
unlike central bank liquidity injection, trade wars only trigger negative priceeffects,
and no positive income-effects.
After the Doha failure, hopes for further multilateral trade liberalisation have
faded. It is the advanced economies that are now pursuing more regional trade
liberalisation, be it through bilateral deals (such as the Japan-EU trade agreement)
or the Transatlantic Trade and Investment Partnership (TTIP) , be it
through multipolar deals, such as the Trans-Pacific Partnership (TPP). I hope
that these regional efforts will not be at the expense of trade with the emerging
world that is not part to it. They confirm to me, however, that Europe’s role on
the international scene is anything but over. And I am very curious to know if,
within the context of these agreements, the United States will resolve to authorise
exports of gas and oil. That would
be logical. It would also be a real boon for Europe, but less so for energyexporting
emerging markets.
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