non so se è già stato postato...
The Euro Zone Has Little to Smile About
......
More important, the euro-zone leaders persist in two quite erroneous beliefs. The first is that they are confronting a series of liquidity crises. Give Greece, Ireland and Portugal a bit of cash to tide them over while they make the adjustments that will permit them to return to capital markets, and all will be well. It won't. Greece, with a debt:GDP ratio of about 150% has missed its deficit-reduction targets, its economy is shrinking at an annual rate of 3.2%. The markets are demanding an interest rate of 24% to buy Greek two-year bonds.
Germany's finance minister, Wolfgang Schäuble, was the earliest to recognize Greece's insolvency. More recently, Clemens Fuest, president of the German finance ministry's advisory committee, declared that restructuring, the polite word for default, is inevitable. To which the widely respected director of London-based Centre for European Reform, Charles Grant, adds, "Most intelligent people know there has to be a significant restructuring to ease the burden on Greece, and we're not talking about a painless extension of maturities, but wiping away a large portion of the debt."
Such a write-down, estimated by experts to run somewhere between 40% and 70%, would have "consequences … [that] would in all probability be bigger than after the collapse of Lehman Brothers," says José Manuel González-Páramo, a member of the executive board of the ECB. But Mr. McFerrin tells us: "In every life we have some trouble, when you worry you make it double."
Ireland, the other country currently on euro-zone life support, has somewhat better prospects because of a strong export sector and a low—mad-deningly low, according to Germany and France—12.5% corporate tax rate that attracts foreign investment.
Nevertheless, a restructuring is in its future. With general government debt already well above 100%, Ireland has just cut its growth forecast for this year from 1.75% to 0.75%, and for next year from 3.25% to 2.25%, and raised its deficit forecast from 9.75% of GDP to 10%. High debt, falling growth and rising deficits do not ordinarily allow a country to avoid default.
The second erroneous assumption of euro-zone policy makers is that by bailing out Portugal they can prevent "contagion," an attack on Spain by the bond vigilantes. They can't. Spain announced late last week that its unemployment rate in the quarter just ended rose from 20.3% to 21.3%; almost five million are unemployed, the largest number in 14 years. The nine-month-long collapse of retail sales accelerated in March, dropping by 8.6%. The banking system is woefully undercapitalized; Spain's banks hold €70 billion ($104 billion) in Portuguese assets; and its economy is likely grow at "close to zero," according to Citigroup Global Markets. These economists are not happy: "For Spain, we believe risks of fiscal slippage over time are greater than markets currently price in."
If Spain cannot hold the line, the battle will shift to Italy. Italian debt is over 120% of GDP, growth is forecast at a meager 1%, real incomes and domestic demand are falling. The markets noticed last week. Italy did flog more than €10 billion of its bonds, but yields jumped. Not enough to trigger a panic, but enough to make it difficult not to worry, and be happy.
Policy makers deny they have plans for orderly restructurings. Let's hope they are being economical with the truth. Perhaps tiny Finland, a faraway country about which we know nothing, to borrow from Neville Chamberlain, will force a change of course by refusing to go along with a bailout of Portugal.
—Irwin Stelzer is the director of economic policy studies at the Hudson Institute in Washington.
