The Ten Commandments of Renato Brunetta to “ Journal ” , it explains why the reasons for the economic crisis that has affected the whole of Europe are to be attributed to Germany.
1. To begin with, you should explain to Weidmann that the argument that the debt of a country can be reflected on the interest rates of the entire area is based on the assumption that the debt increases the demand for savings and therefore the interest rates which represent the price. But is all the demand for savings, not just the public part, that counts, and it is known that if you look at the total indebtedness of a country, the rankings change in Europe.
2. The story, for example, which has been the demand for savings generated in Germany since reunification, which caused, for a long period, high interest rates in Europe, borne by all other countries. This is not to accuse blame, but to restore scientific truth.
3. Then, from the facts, contrary to what was claimed by Weidmann, it does not seem that the push to rising demand created by high indebtedness has produced inflation and questioned the stability of prices, statutory objective of the ECB. It seems clear, rather, always by the facts that were the policies imposed by Germany on all the other eurozone countries, have caused deflation in which we find ourselves now, and dealt a blow, this time yes, the mandate of the ECB.
4. It follows that the sorties by Weidmann in Rome have been more of an attack on the monetary policy of the Dragons, while fingendone a defense, and the euro’s stability. In fact put into question the safety of government bonds of the euro countries, so their solvency disputing the level of risk, it means giving destabilizing signals to the markets. A central banker should not do it. That of Weidmann in Rome on April 26 last year was a very dangerous action, equal and opposite to the famous “Will do whatever it takes” with which the Dragons from London July 26, 2012 extinguished the fire that was leading to the implosion of the single currency .
5. Especially as the fisherman who realizes “a peach conspicuous as possible without regard to other fishermen or for the future generations of fishermen”, as claimed by Weidmann, it is Germany, that since there is the euro achieved a double gain: on the one hand, the increase in exports at the expense of other European countries thanks to the structurally favorable exchange rate and undervalued over time; secondly, a reduction in interest rates on the resulting debt crisis, when the Bund have become “safe haven”, increasing their value and lowering the yield, and enabling German companies to borrow at lower rates than their competitors in other eurozone countries.
6. It is also necessary to avoid confusion between different issues. There is a theme to find new ways to resolve the “sovereign bankruptcies in Europe ‘? The question is, more than anything else, to ensure that such failures do not occur and that, therefore, the sovereign debt restructuring rules are laid down that one side does not penalize savers, and on the other curb the moral hazard of tempted by governments ‘financial irresponsibility. Another thing is, then, prevent them from being the same rules, or ads on them, determine crisis of confidence from which flow financial instability and debt crises.
7. Arises, therefore, the question of ex ante clear mechanisms for restructuring sovereign debt in the euro area do not pose unsustainable constraints to the economies of the countries concerned, without creating alarm in the markets. In short, you have to get out of the “unsaid.”
8. Also here, an example. Europe is once again faced with the problem of the greek debt and must make important decisions by June. It is known that, to continue to be the game, the International Monetary Fund Europe is being asked to accept a drastic restructuring of the greek debt. In other words, the IMF asked to leave the fiction that you think that Greece, with debt that is found, it can continue to follow the economic recipes given by the Troika. Let’s start, then, from the Greek case to establish general rules that apply to the future.
9. But back on the offensive Weidmann, who more than Greece looks to Italy. And not because of preconceived hostility towards Italians, but because, as we said, this is about the monetary policy of the Eurozone, and with it, inseparably, the fiscal stance. The first, in fact, will remain ineffective without the second. Hence the concentric attacks of recent weeks, which has become the protagonist even the German finance minister, Wolfgang Schäuble, to be fair also motivated by internal difficulties to Germany which, however, it is good to take into account.
10. Italy is not in front of a sovereign default or solvency problem, but rather has a growth problem, like the rest of the eurozone, but in a much more serious, requiring drastic policy stimulus, which combine ad hoc strategies repayment of debt. On the issue of public debt, in the not too distant past discussed various options for action, but today it seems that the problem no longer exists and the government only discusses insignificant filings with short or very short time horizons.
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