2012年6月15日星期五

Global economy: Angela, start the engine | The Economist


Angela, start engine



June 9, 2012 from the print edition


The world economy is at stake. Can safe, depends largely on a woman.

"Lifeboat up!" This is about the global economy in the bond markets are sending a brutal. Investors are eager to snap up the United States, Germany and a handful of a few other "safe" economies of sovereign bonds. When the investor is prepared to pay the German government to biennium bonds privileges, and are willing to lend the U.S. government to get the ten-year nominal rate of return less than 1.5%, they are either the long years of economic recession and deflation is expected, either imminent disaster scared to know what to do. No matter what the reason, the world economy is ailing.

Shortly afterwards, world economic growth faltering, and the growing financial disaster. The weak global economy. Peripheral Eurozone economic recession is deepening. Three consecutive months of weak employment data show that the U.S. economic recovery may be difficult. (See article). And the largest emerging market in economic development seems to be difficult. Brazil (Brazil) GDP growth rate of Japan is also slow. India's trouble (see article). Even the Chinese economy has exacerbated the downward pressure. Quickly on an economic downturn into a global economic recession, its road to recovery is moving in the Japanese stagnant forward.

However, compared with the growing risk of the euro will fall apart, it appears to be a happy ending. The world's largest economic region in the EU (European Union) are drawn into the whirlpool of bank failures, debt defaults and the recession - this financial disaster that dwarfs the confusion caused by bankruptcy of Lehman Brothers in 2008. Greek exit the possibility of the European Union after the election on June 17 this year, the rapid disintegration of the deterioration of the banking sector performance in Spain and the European cross-border capital flows increase the danger. (See article). Moreover, the secondary to deal with financial disaster can be described as difficult. In 2008, central banks and politicians work together to prevent the economy into recession. Today the politicians are all infighting, bickering. And even if the central bank technical experts can (and must) take additional measures, but have a few shells on hand missing gun.

Trouble starting in Athens, made ​​worse in Berlin

No one wants to take a variety of disaster scenarios for the experiment. For the euro, Europe's politicians should be backs against the wall, expand the last round. Even if they put forward a viable solution, but can not ensure that the world economic development will be smooth sailing; but if left unchecked, do not want a countermeasure, the world economy is bound to the apocalyptic. Is striking is that the fate of the world economy rests in the hands of Angela Merkel, German Chancellor Angela Merkel (see article).

In a sense, Mrs Merkel is selected alone to bear this great responsibility does not seem fair. From Delhi to stop before the reform to Washington, the ruling party double fatal blow to the face of the rise by the end of tax revenue and reduced expenses and powerless, the politicians around the world wait to die. Within Europe, as Germany, as always, has pointed out, investors are not worried about the government of Angela Merkel that caution. The government is formed after the restructuring of the economy a decade ago, Merkel's predecessor, experienced hardships. The problem is that those operators are not very good, and not the implementation of the reform countries have lost confidence in the economy.

But do not be too sympathetic. First of all, what it was, the virtues of the past at the moment and treat worn-out shoes: If the euro-zone crash, then Germany would be miserable. This week, the German bank was downgraded is ominous sign. Moreover, in the past three years, the European creditor countries mistakes, Greece (Greece), Ireland (Ireland), Portugal (Portugal), Italy (Italy), Spain (Spain) and other debtor countries is no doubt the error worse. Overly concerned with the austerity policies; to consider the continuation of the rescue plan; refused to set the single currency need to survive the financial and banking integration, a clear line: These is why the euro has been hanging by the front line of reason. Since the move of these responses is determined mostly by the German, it is the primary responsibility should be attributed to the German government.

To move forward

Outside Germany, Mrs. reached Merkel to be taken initiatives in order to sustain the consensus of the single currency. This includes transfer from the austerity policy to pay more attention to economic growth; complementary (to take the euro area-wide deposit insurance, bank regulation and bank Union and single currency on the verge of bankruptcy bank reorganization or debt joint means); and take a limited amount of debt mutual aid form to create a joint security assets and the peripheral economies of gradually reducing the debt burden of the room for maneuver. This is the Washington, Beijing, London and did include measures of euro area most of the government avoided. Why the European continent is the most prudent and careful government do not want to cut the Gordian knot.

Mrs. Merkel's critics think the reason is that dread is not - and they gave away. Mrs Merkel has not really explain clearly to the people in Germany they face the dilemma of tactics to choose: to take the unpopular idea of ​​relief (for those who do not deserve the help of the Allies) or face the harsh reality (the end of the euro). Many Germans opposed to debt mutual aid one reason is that they (wrongly) conceived, not Germany, the euro can survive. Mrs. Merkel also a more courageous two-pronged strategy. She believes that her tight demand and refused to help allies out of the woods is the only way to reform in Europe; Second, once the disaster is truly come, Germany can be a quick fix to save the day.

The first gamble that there will be some chance of winning, especially the removal of Italy Silvio Berlusconi (Silvio Berlusconi) and the entire southern Europe did not pass the reform bill. This reform looks a bit weird. But this strategy costs are rising sharply. Due to excessive tightening of the birth of the recession led to self-defeating. Throughout Europe, the high debt burden, political fanatics go hand in hand. Confusing result of inaccurate causing consumers to lose confidence and increase the risk of the euro crisis.

As for the idea of ​​Germany may turn things around at the last moment, for example, by the European Central Bank (ECB) to a large injection of liquidity idea to look risky. Spain the whole country to a bank run, even if it is the courage and knowledge of Mrs Merkel may also powerless. Once Greece out, the German public will be more convinced that he deserved; However, as the newspaper before the argument, "Greek Exit will lead to fratricide Greek, and bring disaster to the whole of Europe. Throughout the crisis, Mrs. Merkel has refused to introduce bold enough to plan to make the market bow down. This plan should the U.S. troubled asset relief program (Tarp) has the same purpose.

In short, even if its strategy is to pay a price, but the loss of vulnerable and the strategy has come to an end. She should have the latest European summit on June 28, should be earlier than the Greek elections lead to panic panic before the implementation of the single currency to develop a clarity of the plan. The plan shall be in sufficient detail to be able to dispel the people to abide by its commitment to Germany, to save the euro concerns. The plan shall include immediate downpayment for a deeper integration of, for example, to ensure the use of joint funds to recapitalize the Bank of Spain.

In this case, Mrs. Merkel will risk losing the risk of domestic support. However, these risks is the possibility of quick returns. Once Germany is a clear commitment to implement greater integration strategy, the European Central Bank will implement more radical solution - to buy more sovereign debt and provide greater support to the program - to leave room for the bank. As concerns about the scourge of declining, once investors regain confidence, a vicious circle could be transformed into a virtuous circle.

The world economy will still have to go all out to solve the weak and incompetent and weak economy of other countries. However, this move will enable the global economy away from misfortune. Mrs. Merkel, all you had.

From the print version | editorial




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