Perhaps, nothing can excite Europeans so much, like news of a secret dinner in New York, where hedge fund executives discussed coordinated action against the euro.
Europeans have every reason to worry – but not about the conspiracy. They should be concerned about, that some of the smartest investors in the world are convinced, that the euro has only one way – way down. At first sight, this goes against the previous conventional wisdom. In particular, point of view prevails in Europe, что скептики в FED и Банке Англии в конченом счете лопнут от своих долгов, while the ECB can maintain a firm footing. This scenario would lead to a revaluation of the euro.
So what drove these some seasoned investors to the opposite conclusion?? Greece? Вряд ли. This story is not related to her problems.. It would be much easier without political and legal restrictions. Eurozone would come up with a mechanism to deal with the crisis, a procedure for managing internal imbalances and, maybe, would start to strengthen ties between its members. A number of economists have made specific proposals: Director of the Center for European Policy Studies Daniel Gros and Chief Economist at Deutsche Bank Thomas Mayer advocate for the creation of a European Monetary Fund. Belgian Prime Minister Yves Leterme proposed to organize a European debt recovery agency.
Even though all these suggestions seem reasonable, they are not destined to come true due to political and legal restrictions. Some EU member states will talk about how, that a new European treaty would be required to implement such proposals. The process of ratifying the Lisbon Treaty was so painful, that Brussels would rather go to hell and come back, what will negotiate the ratification of another treaty. In any case, German constitutional law imposes such severe restrictions, that even a slight weakening of the clause on financial assistance of the Maastricht Treaty or the ECB's mandate to maintain price stability could provoke Germany's exit from the EU. Maximum, what can you expect in the coming 10 years, – is a voluntary improvement of coordination in the European Council.
so, the question arises: what economic regulation mechanisms will be effective in the political and constitutional arena? Options are limited. One response, in which you can be absolutely sure, will consist in an attempt to reduce budget deficits to the upper limit of the Maastricht Treaty in the amount of 3% from GDP. This will be done, if not to 2012 year, then a year or two later. Meanwhile, Germany has unilaterally set its deficit-to-GDP ceiling at 0.35% beginning with 2016 of the year. Difficulties will also arise with this.. But there is no doubt, that the Eurozone will try, and possibly successfully, consolidate your fiscal policy. The Budget Committee of the German Bundestag has recently taken the first steps towards this., by cutting the Treasury budget by 2010 года почти на 6 billion. euros ($8.2 billion, £ 5.4bn).
Taking fiscal consolidation for granted, how the eurozone economy will change? Known, that the sum of the budgets of the public and private sectors should equal the balance of the current account. In this way, an increase in the public sector budget implies offsetting a decrease in the private sector budget or an increase in the current account balance, or a combination of these two measures. In the first case, the Eurozone current account balance will remain practically unchanged., the private sector budget will be adjusted. Similarly, Greece solved its financial problem., creating a private sector deficit of similar size. If you add up the budgets of the public and private sectors in Greece, the country is just as bankrupt today, what was she like a week ago. It means, what, following the rules of fiscal policy, Eurozone risks provoking private sector downturn, which will be felt especially clearly in the south of Europe. This scenario increases the likelihood of the collapse of the Eurozone in the future.. Investors, who believe in this development of events, are afraid of the euro like fire.
In the second case, the adjustment is carried out at the expense of the Eurozone current account balance, which from slightly negative will become unambiguously positive. Difficult to understand, how to achieve this, avoiding significant depreciation of the euro. Euro will have to join the number of currencies, who solved their problems with competitive devaluation. In this way, the euro will weaken strongly against the dollar and stop growing against the pound sterling. It will make life difficult for the UK. But, what's even more important, it will revive global imbalances. In any case, the euro will weaken. Even if the Eurozone can delay fiscal consolidation for a long time, it won't help the euro, as markets begin to doubt the stability of the monetary union for political reasons. Всем известно, that in the long term, a monetary union cannot exist without political unity. So smart investors from New York believe, that the process has already begun.
