Europa atravessa o Rubicão

Rodrigo Constantino

Os governos europeus estão aceitando a flexibilização das metas de austeridade acordadas no Tratado de Maastrich. Até a Alemanha, suposto bastião da austeridade fiscal, tem concordado com essa medida. O ministro das Finanças, Wolfgang Schauble, ao menos quer condicionar tal afrouxamento às reformas trabalhistas, mas entende que esse é o caminho, até porque o modelo americano, mais liberal, levaria a uma revolução na Europa, segundo ele.

Pode ser que sim. Afinal, décadas de “welfare state” produzem o nefasto costume de esperar sempre mais benesses estatais. Privilégios são fáceis de garantir, basta uma canetada do governo; mas são difíceis de cumprir no longo prazo, pois como sabia Margaret Thatcher, o socialismo dura até durar o dinheiro dos outros. E nesse modelo, com incentivos inadequados para a produção de riquezas, invariavelmente o dinheiro desaparece, foge para locais mais amigáveis aos negócios.

As regras do Tratado de Maastrich serviam como camisa de força para governos perdulários, algo freqüente na Europa. Mas, com uma visão míope voltada apenas para o curto prazo, as autoridades pretendem ignorar tais amarras e usar os gastos públicos para alavancar o crescimento econômico. Falsa dicotomia: o governo não produz riqueza; ele apenas tira do setor privado e transfere para o setor público, que quase sempre gasta mal, seguindo critérios políticos em vez de econômicos, e muitas vezes com desvios corruptos pela ausência do escrutínio dos donos desses recursos.

Logo, acreditar que a gastança estatal produz crescimento é ignorar as leis econômicas e da natureza humana, além da experiência histórica. Ao rasgar as regras de Maastrich, os países da zona do euro podem estar cruzando seu Rubicão, um caminho sem volta. É mais fácil tirar o gênio da garrafa do que recolocá-lo lá dentro. Os keynesianos sempre lembram as medidas anticíclicas quando é para expandir o governo, nunca para retraí-lo. Mas a conta precisa ser paga, inexoravelmente.

Com impostos absurdamente elevados, inúmeros privilégios para o setor público, déficits fiscais fora de controle, endividamento público extremamente elevado, e leis trabalhistas engessadas, a Europa vive uma espécie de esclerose econômica. Não é à toa que o desemprego, especialmente dos mais jovens inexperientes, está em patamares preocupantes. O tecido social fica esgarçado. É um terreno fértil para aventureiros de plantão, para populistas e demagogos que vendem soluções mágicas – e desastrosas.

A Europa tem um legado fantástico para o mundo, e sérias manchas no currículo também, como o fascismo, o nazismo e o comunismo. Espero que a região consiga atravessar essa crise e sobreviver, sem uma decadência muito acentuada. Para adicionar insulto à injúria, há o grave problema da islamização crescente, alimentada pelo multiculturalismo que segrega em vez de assimilar esses imigrantes.

O modelo de estado de bem-estar social precisa ser drasticamente revisto. Os europeus precisam abandonar a visão de que o estado é um ente abstrato, que obtém seus recursos de Marte e distribui benesses de forma altruísta. Nada mais falso. O caminho necessário é doloroso, mas fundamental para salvar a região. A austeridade não é o inimigo; é um remédio amargo, mas crucial. A Europa precisa de mais setor privado e menos estado. Espero que não seja tarde demais para dar essa guinada. 

Austeridade sim, ora pois!

Rodrigo Constantino

Deu no GLOBO: Milhares de portugueses foram às ruas neste sábado, pedindo a renúncia do governo cujas políticas de austeridade na opinião deles exacerbam a recessão no país. “Fora governo” e “Contra a exploração e o empobrecimento” eram algumas das frases dos manifestantes, no ato convocado pelo principal sindical nacional, a Central Geral dos Trabalhadores de Portugal (CGTP).

- Temos de fazer o que for possível para nos livrar desse governo — disse o secretário-geral da entidade, Armênio Carlos.

Na opinião dos manifestantes, as medidas de austeridade “punem os pobres, mas beneficiam os ricos”. O primeiro-ministro Pedro Passos Coelho era chamado de “ladrão” pelos manifestantes, entre eles servidores públicos, desempregados e aposentados.

   - Viemos a Lisboa dizer ‘chega’. O governo está cortando tudo, até as pensões —disse Antônio Amoreira, da cidade do Porto.

Pesquisa publicada neste sábado no jornal “Público” mostra que 57% dos portugueses desejam a dissolução do Parlamento e novas eleições.

As medidas de austeridade anunciadas no início de maio geraram revolta no país, entre elas a aposentadoria só aos 66 anos, e não aos 65 como hoje, o corte de 30 mil empregos no funcionalismo e a redução da carga horária (e dos salários) de funcionários públicos de 40 horas semanais para 35 horas.

A economia portuguesa recebe desde maio de 2011 um pacote de € 78 bilhões da União Europeia, mas em troca o governo se comprometeu a tomar medidas de austeridade. Neste ano, o Produto Interno Bruto (PIB) português deve encolher 2,3%. O desemprego, por sua vez, deve chegar ao recorde de 18,2%.

Comento: Entendo o sofrimento de nossos queridos patrícios, mas tomem muito cuidado com os sindicatos e com os funcionários públicos. Eles estão a manipular a opinião pública, revoltada com a situação ruim, mas sem a devida compreensão dos problemas. Não adianta culpar os ricos, tampouco é certo transformar o conceito de austeridade em palavrão. O inchaço do governo é o grande responsável pelos problemas, e não é possível ignorar isso para sempre. A escolha dura que os portugueses têm a fazer é sofrer agora e garantir um futuro melhor para os filhos e netos, ou postergar os ajustes necessários e ampliar a dor futura. Fingir que não existe tal escolha é escolher a segunda opção. Os sindicatos vão celebrar no primeiro momento, preservando suas regalias; os funcionários públicos vão continuar gozando de privilégios; o desemprego não vai aumentar no curto prazo. Mas tudo depois será muito pior, com mais desemprego ainda, mais recessão, mais sofrimento. Que os colegas de Portugal saibam tomar a decisão acertada e evitar o sensacionalismo dos políticos demagogos e dos sindicatos poderosos. 

If I were a German

Charles Gave, GaveKal Research

If I were a German, this is how I would analyze the euroland crisis:

The monetary union was supposed to transform the Greeks, Italians, French and Spaniards into solid citizens, who played less and worked more. As a German, I did not believe a word of it, but I was willing to give them a chance. Meanwhile I myself had to keep reforming because the world out there was becoming quite competitive (China, etc). So this is what I did in the post-EMU years; but my fellow members did not, of course. And guess what? They have problems—and apparently, it is my fault?

So what am I to do in such a situation? I have not been that successful historically (nor has anybody else) at telling the other countries in Europe how they should manage themselves. Even if our orders are filtered through a pan-European body, it will look about as independent from Germany as Philippe Petain or Vidkun Quisling.

Plus it will cost a lot to even try. They call it "federalism," I call it theft. The implementation of these reform policies would easily have me transferring €100bn or more of my income to these guys every year during a transition phase...which will probably last forever. This is what the East Germans cost annually during the unification, but at least these guys were Germans and I had let them down big time in the past. Anyway, lending more money to a guy managing himself in a bankruptcy is just not a good idea.

Of course, if the euro project ended today, this too would be expensive. For the last ten years, I have sold €1 trillion more to my neighbors than I have bought from them. During which time, my banks lent the same amount to EMU sovereigns. If the euro breaks now, I could easily lose half of my roughly €1 trillion in claims on the rest of the EMU. These IOUs would be worth at most €500bn—and the capital of my financial system is around €350bn.

So my choice, broadly speaking, is take a big loss up front or pay without hope some 4% to 5% of my annual income forever. I choose the first one. However, I should be careful not to be too tough for quite a while. I am perceived everywhere in Europe as the fellow who destroyed Europe twice in the last century. I do not want a third catastrophe on my head—even if the euro was not our idea, but a stupid French invention which they fed to Helmut Kohl on the idea that otherwise they would refuse the German reunification (as if they could).

It is better, therefore, to bide my time. This allows my companies to diversify their exports while my financial firms write off as much as they can. The price to pay is to go to all these stupid meetings in Brussels and accept some silly plans concocted by a bunch of guys who have never understood what a proper currency is. After accepting in principle, I then hold up the implementation on technicalities—then do it all over again at the next summit.

The objective is to wait for the French to follow the Greeks and Spaniards into bankruptcy. I was a little bit worried by the previous French president who did one or two things which were quite sensible. Fortunately, the French electorate took care to replace him with a fellow who is raising taxes and scaring away business—a socialist agenda which almost guarantees to sink the economy (see The Coming French Depression). (This incidentally is very good news for my companies, as a lot of their most dangerous competitors are being destroyed by their own government.)

The French, not known for taking a beating quietly, will be in the streets as soon as the economic demise unfolds. Their long rates will shoot up, sending the primary deficit exploding upwards. By the middle of next year France will be mired in a recession, have an out-of-control budget deficit and also need to raise a huge amount of money. Promises to rein in the budget deficit will be revealed as an absurd fantasy, and the new government will be left with no good options. In the end it will be the French who destroy the euro. Which will lead to a France very much weakened, and a very efficient and productive Germany which will survive the revaluation.

I cannot believe our luck. After all, Kohl was a genius.

Draghi and friends just want your money

By Bill Gross, Financial Times

Psst! Investors – do you wanna know a secret? Do you wanna know what Angela Merkel, François Hollande, Christine Lagarde and Mario Draghi all share in common? They want your money!

They’ve wanted it for years now but you are resisting by holding on to it or investing it at negative interest rates in Switzerland, Germany and a growing number of other countries considered to be European Union havens. They want you to be less frugal and more risk-seeking. They want your money as a substitute for theirs in Spain, Italy and, of course, Greece, but they don’t mention that any more. The example would be too off-putting. “Investors,” they plead, “show us your money!”

The ultimate goal of monetary and fiscal policy in the EU is to re-engage the private sector. The EU needs the private sector as a willing (but not necessarily equal) partner in funding its economy. This often gets lost in the noisy details of all too frequent promises such as the one to defend the euro made by Mr Draghi, European Central Bank president.

Investors get distracted by the hundreds of billions of euros in sovereign policy checks, promises and IOUs that make for media headlines but forget it’s their trillions that are the real objective. Even Mr Hollande in left-leaning France recognises that the private sector is critical for future growth in the EU. He knows that, without its partnership, a one-sided funding via state-controlled banks and central banks will inevitably lead to high debt-to-GDP ratios, rating service downgrades and a downhill vicious cycle of recession.

But private investors are balking – and for what it seems are good reasons – because policy makers’ efforts have been, until now, a day late and a euro short, or more accurately, years late and a trillion euros short. Let’s look at some examples of this.

First, Greek bailouts that included private sector involvement but no official sector involvement, resulting in the inevitable investor conclusion that future programmes for Spain and Italy might resemble the same.

Second, an initial tightening and then a reluctant lowering of ECB policy rates.

Third, a bond purchase programme (securities markets programme or SMP) by the ECB that was too small and prematurely abandoned.

Fourth, fiscal austerity packages for individual countries that accelerated recessionary/depressionary growth paths.

Fifth, public fights among northern and southern EU countries that highlighted the seemingly perpetual dysfunctionality of the eurozone 17 and the EU 27.

Finally, Mr Draghi’s reversal last Thursday. Someone must have got to him between London and Frankfurt.

Policy makers now face an unprecedented expansion of risk spreads and credit agency downgrades which almost guarantee that sickbed countries can never be discharged from intensive care.

Interest rates over and above each country’s nominal GDP growth rate will inevitably add to a country’s debt as a percentage of GDP, even if budgets are in primary balance.Investors misguidedly focus on 7 per cent yields in Spanish and Italian bond markets as some sort of high watermark – below which swimmers can safely touch bottom. But even at 7 per cent deep, the toes cannot stretch. Maybe even 4 per cent is not shallow enough.

At current yields, growth rates, and deficits, the spread may incrementally add 2-3 per cent to Spain and Italy’s tenuous debt ratios every year. While it is true that both countries can shorten maturity offerings and even accept the benefit of prior terming of their debt stock, eventual drowning will occur even at 4 per cent or higher 10-year yields as long as nominal GDP growth is anywhere close to flat.

Policy makers will solicit the private market’s participation in an effort to get there, by attempting to lead via co-ordinated monetary/fiscal efforts involving the SMP from the ECB and hundreds of billions of euros from bailout funds – the European Financial Stability Facility and ultimately the European Stability Mechanism. But without the private sector’s co-operation, the effort may be futile.

The dirty little secret that sovereign debt issuing nations need to remember most of all is that credit and maturity extension is based upon trust. After all, “credere” is a Latin word meaning just that. After trust has been lost due to half-baked policy measures; after credit agencies belatedly have recognised embedded costs of debt that can no longer insure solvency; after marginal investors have been flushed from the system to what appear to be safer return of principal havens; and after policy makers finally appreciate the fragility of their rigged fiscal and monetary system; after all of that – there is no coming home, there is no going back in the water.

Psst investors: Stay dry my friends!

Bill Gross is founder and co-chief investment officer of Pimco

Raios de sol entre nuvens carregadas

Rodrigo Constantino

Junho tinha tudo para ser mais um mês pesado para os mercados. As eleições gregas tiveram resultado positivo pela ótica dos investidores, com a derrota da esquerda radical representada pelo Syriza. Mas a alegria durou pouco e os mercados seguiram estressados. A Espanha anunciou novo pacote de ajuda aos bancos, na casa dos 100 bilhões de euros, mas nem isso foi suficiente para sustentar uma recuperação. Os títulos do governo espanhol de 5 anos chegaram a abrir 50 pontos-base durante o mês. Tudo parecia indicar a continuação do bear market, com os agentes rejeitando até as boas notícias.

Até que aos 45 minutos do segundo tempo a Europa conseguiu marcar um gol importante. O desempenho positivo de junho foi todo feito no último dia útil do mês, após o comunicado do novo (o 19^o) summit dos países do euro. A principal mensagem extraída do novo acordo foi a sinalização de que a Alemanha havia cedido mais do que parecia disposta, ao concordar com a criação de um mecanismo único de supervisão bancária e com o uso do European Stability Mechanism (ESM) para recapitalizar os bancos diretamente.

Com o mercado cansado de cair e leve, a notícia foi a deixa para o rali que salvou o fechamento do primeiro semestre do ano. O petróleo subiu 7% só no dia 29, ainda assim fechando com queda de 4% no mês. O S&P 500 subiu 4% e o DAX 2,5%, quase tudo no último dia de junho.

Mas será que o acordo desta vez foi realmente um game changer? Ou será que estamos diante de “mais do mesmo”, ou seja, um jogo de xadrez em que a Alemanha morde e assopra ao mesmo tempo, sem, entretanto, mergulhar de vez no caminho da união fiscal e dos euro-bonds? Esta parece ser a pergunta mais relevante, pois boa parte do mercado sonha com a emissão de bonds comunitários, enquanto Angela Merkel, poucas horas antes do resultado do summit, ainda afirmava que esta não seria a solução durante o tempo em que ela estivesse viva. São palavras fortes. Será que suas ações contradizem sua retórica?

Analisando o acordo com mais cuidado, talvez não exista motivo para tanto otimismo assim. É preciso lembrar que não houve aumento de capacidade de recursos no ESM, ou seja, a Alemanha não aceitou colocar novos recursos no bolo comum para resgatar bancos periféricos. Além disso, Merkel disse que só aceita recapitalizar esses bancos após um novo regime regulatório organizado pelo ECB, o que deve ocorrer somente no final do ano. Restam vários entraves a este passo, a começar pela Inglaterra aceitar que seus bancos sejam regulados pelo ECB. O diabo, como sempre, está nos detalhes. E estes só serão decididos no summit do dia 9 de julho.

Muitos investidores ainda alimentam a expectativa de que, no final do dia, a Alemanha terá que ceder às principais demandas dos demais e sucumbir ao projeto comunitário que criaria, na prática, os Estados Unidos da Europa. A própria Merkel parece desejar isso, desde que a Alemanha consiga, no processo, impor reformas estruturais que tornariam os outros países mais competitivos e parecidos com a própria Alemanha. Por ela reconhecer que dificilmente isso se dará durante sua gestão, a retórica de que não haverá euro-bonds enquanto ela estiver viva (politicamente) pode fazer sentido. O problema é que a economia não anda no passo lento da política.

O tempo joga contra este projeto, pois cada vez as divergências econômicas ficam maiores. O risco de vitória do Syriza na Grécia já foi um efeito disso. As tensões sociais se agravam, os ajustes impostos são muito dolorosos, e partidos radicais terão cada vez mais audiência para suas “soluções mágicas”. Os socialistas liderados por François Hollande tiveram expressiva vitória no Parlamento em junho também, marcando de vez a mudança de rumo na segunda maior economia da região. Em outras palavras, as reformas estruturais e de austeridade já subiram no telhado, e a Alemanha está totalmente isolada. As divergências devem aumentar daqui para frente.

A dúvida surge automaticamente: se a Alemanha tiver que antecipar o projeto comunitário mesmo sem as reformas estruturais dos outros, será que ela aceita? Será que o alemão aceita custos tão explícitos para transferir riqueza aos demais? Será que os alemães, os holandeses e os finlandeses deixarão o nacionalismo para trás e passarão a enxergar somente europeus em volta?

Considero esta hipótese bastante remota. Projetos paridos na elite e impostos de cima para baixo raramente vingam. São vítimas daquilo que Hayek chamou de “arrogância fatal”, e não contam com o apoio legítimo do povo. Não podemos esquecer que a Europa ainda possui democracias plenas em seus países membros. O antagonismo entre o euro e a democracia fica evidente quando se chega perto das eleições, principalmente nos elos mais fracos do grupo.

Eventualmente, na própria Alemanha isso poderá ocorrer, quando ficar mais claro o tamanho da conta que seus pagadores de impostos terão de arcar. Por isso muitos defendiam e ainda defendem o ECB como a única saída politicamente viável, ou seja, a rota disfarçada da inflação, que demora mais a escancarar a magnitude da fatura dos que são “convidados” a assumir os rombos.

Minha visão é de que o euro é um projeto fracassado. A questão que surge é a seguinte: insistir em seu salvamento com mais manipulações beneficia a Europa? Penso que não. Assim como a União Soviética, postergar o dia do julgamento faz apenas com que a dor seja maior depois. Quanto mais tempo levar para a ruptura do euro, maiores serão as divergências entre seus membros. E, por tabela, maior será a necessidade de transferências dos mais ricos para os mais pobres. Isso é socialismo. Ele nunca funciona.

Como um viciado em drogas, porém, o mercado celebra euforicamente cada nova rodada de estímulo das autoridades, ainda que a nova onda tenha menor intensidade e duração. Até o dia em que o organismo não agüenta mais.

A crise europeia está muito longe do fim. Haverá momentos de tranqüilidade aparente e até de otimismo. Um futuro sombrio aguarda a Europa. Não vamos nos enganar com alguns raios de sol esporádicos que surgem no horizonte. 

Fim da utopia

João Luiz Mauad, O GLOBO

São inúmeras as explicações para os atuais problemas europeus. Uns apontam para a rigidez com que o BCE administra o Euro, outros para especulação dos mercados ou para a moderna engenharia financeira. Até mesmo o surrado espantalho neoliberal aparece de vez em quando como culpado. Embora evidências saltem aos olhos, essas análises constumam ignorar que, muito além de mera crise monetária ou de crédito, o que está em xeque é o próprio modelo de bem estar social, sob o qual sucessivos governos, tanto à direita quanto à esquerda, têm financiado “direitos” generosos com altos impostos e pilhas enormes de dívidas. Tudo isso sem que as economias do velho continente consigam crescer o bastante para manter a farra.

Malgrado sua concepção eminentemente coletivista, a experiência social-democrata que floresceu na Europa Ocidental após a Segunda Guerra manteve o modelo econômico capitalista, pelo menos no sentido de que a propriedade privada dos meios de produção era permitida, ainda que altamente concentrada nas mãos de poucos. O arquétipo do “capitalismo selvagem” foi substituído por um sistema híbrido, que combina grandes conglomerados industriais e financeiros, freqüentemente patrocinados e tutelados pelo Estado, uma agricultura altamente subsidiada, além de empresas miúdas – quase sempre comerciais ou de prestação de serviços. Para completar, a hipertrofia dos governos formou um enorme contingente de funcionários públicos que, em alguns países, chega perto de 50% da população economicamente ativa.

O apogeu da social-democracia européia ocorreu em meio à Guerra Fria, num período marcado pela limitação à livre movimentação de pessoas, capitais e produtos, quase sempre mediante rígidos controles burocráticos e barreiras tarifárias. Com queda do Muro de Berlim e a aceleração do processo de globalização, conseqüência direta da profusão de novas tecnologias que permitiram a movimentação muito mais dinâmica da informação, dos capitais, dos produtos e do próprio trabalho, as sociedades européias se viram, da noite para o dia, numa sinuca de bico, obrigadas a promover uma reavaliação profunda do modelo, algo até então impensável.

E não é para menos: enquanto a taxa de natalidade não pára de cair e os velhos vivem cada vez mais, os gastos com saúde e aposentadorias ficam cada vez mais caros. Por outro lado, a relação entre trabalhadores ativos e inativos segue diminuindo rapidamente. Tudo isso em meio ao baixo crescimento econômico que já dura décadas. Uma eventual mudança de rumo, entretanto, não deixará de ser traumática, notadamente para aqueles que se acostumaram com privilégios “sociais” abundantes e pouco trabalho.

Uma das primeiras a entender que as políticas da social-democracia precisavam ser revistas foi Margareth Thatcher, que compreendia a natureza daquela armadilha econômica em seus dois aspectos principais. Em primeiro lugar, não é possível manter um mercado de trabalho baseado na estabilidade do emprego, especialmente em vista da evolução tecnológica que cria e destrói ofícios e profissões numa velocidade tremenda. Em segundo lugar, as instituições de proteção social, concebidas fundamentalmente para compensar o fracasso individual, fomentam de modo inexorável a ineficiência, num mundo globalizado cada vez mais competitivo.

Thatcher concluiu, há trinta anos, que as premissas do “marco social” – que imperou a partir da 2ª Guerra – haviam sido derrubadas e, a menos que o modelo então vigente se transformasse profundamente, seria varrido pelo furacão da globalização. As reformas liberais que seu governo produziu, no entanto, se deram algum fôlego à economia britânica por algum tempo, já foram completamente revertidas pelos governos esquerdistas que o sucederam - preocupados, como sempre, não com os baixos índices de crescimento e produtividade, mais com a utopia do “bem comum”.

Evidentemente, a falência do “welfare state” não se dá de forma uniforme. Dependendo das instituições e da cultura de cada país, ela é mais lenta ou mais rápida. O modelo é mais resistente nos países nórdicos, germânicos e anglo-saxãos - ancorados numa ética severa, na primazia da responsabilidade individual e na valorização do trabalho - do que nos países mediterrâneos, mais chegados ao patrimonialismo e à cultura de privilégios. Mas não se iludam: a médio prazo, mesmo esses países precisarão promover mudanças liberalizantes que tornem suas economias mais dinâmicas e competitivas.

Merkel: Just Say Nein to Eurobonds

By MATTHEW WILL, WSJ

The European financial crisis has created an unusual mix of allies. Politicians, hedge fund managers, liberal pundits and the financial press are determined to convince German Chancellor Angela Merkel that economic salvation requires the European Central Bank to issue eurobonds.

Prior to last week's European Union summit in Brussels, the Organization for Economic Cooperation and Development endorsed French President Francois Hollande's plan to do just that and insisted Mrs. Merkel agree. She wouldn't, but at the summit she was all but held captive until relenting to some other bailout.

Meanwhile, money managers have waged their own campaign to get Mrs. Merkel on board. Financier George Soros has predicted dire consequences for Europe if Germany does not acquiesce. Harvard historian Niall Ferguson accused Mrs. Merkel of repeating the mistakes of Weimar Germany that led to the collapse of democracy. He did not use the "N word," but we all know an appeal to German guilt when we see one.

Each faction has its own reason for pressuring Germany but all share a common characteristic: They are wrong.

Historically, nations tax, borrow and spend until there is nothing left to tax and borrow. Because of the risk of riot, insurrection or removal from office, politicians refuse to directly cut spending. Instead, they print money. Unfortunately, the citizenry does not realize printing money and the ensuing inflation amount to a cut in benefits. Then politicians lay the blame for inflation on greedy capitalists who raise prices.

Europe's bad boys have played this trick repeatedly, undermining the value of their currency and reducing their citizens' standard of living. From 1980 to the launch of the euro in January 1999, the Italian lira and Portuguese escudo lost 108% and 244% of their value against the U.S. dollar, respectively. Greece devalued the drachma 583% against the dollar from 1981 until its euro entry in January 2001. Meanwhile, the deutsche mark remained remarkably stable against the dollar, gaining a mere 1.74% over 20 years.

Now the people borrowing and spending the money, such as Greece, Italy and Portugal, are not the same people controlling the money supply. This is handled by the European Central Bank, whose policies Germany monitors closely. When spendaholics reach their tax and borrow limits they can no longer print money. Thus the violent convulsions reverberating through countries that must face the music.

Until now, investors saw socialist calls for more borrowing and more spending as ridiculous, since no one will loan them money. The only reason private investors now care is because they were recently forced to take a 70% loss on Greek government bonds.

Then came the stroke of genius that united the forces of socialism and capitalism: Allow the profligate nations such as Greece, Italy, Portugal, etc., to borrow and spend, but require Germany to pay back the loans.

In its November 2011 Green Paper, the European Commission proposed that each eurozone member be fully liable for the entire issuance of eurobonds. Germany, with the highest GDP and good credit, has the most to lose from such an approach.

Therein lies the common ground between investors looking to save their own portfolios and politicians looking to spend their way into office. Who cares what happens to Germany and the other responsible nations?

Unfortunately, the long-term consequence of this approach will be global economic chaos. In the past, patterns of taxing, borrowing, spending and the printing of money destroyed local economies. These collapses occurred over time, and the impact was isolated. If Germany assumes the ultimate obligation of paying the debt of other nations, the bubble grows. When Europe gets to the point of collapse, who will guarantee that debt?

Eventually, money will be printed and the standard of living will fall for citizens of irresponsible nations. This is a historical reality. The only real question is, do we prefer that the entire European bubble burst at once, or mitigate the risk by allowing local bubbles to burst periodically over time? The best possible answer is for Angela Merkel to just say nein to more eurobonds.

Mr. Will is professor of finance at the University of Indianapolis.

Italy's Reform Stall

Editorial do WSJ

If last weekend's bailout of Spain was supposed to reduce the risk of euro-contagion ahead of Sunday's elections in Greece, it hasn't had the desired effect. Yields on Spanish government debt have since hit a high of 6.78% on 10-year bonds. Who would have thought that adding as much as $125 billion in sovereign liabilities would make Madrid more of a credit risk?

Now markets are looking to Italy, where the economy is forecast to shrink by 1.9% this year, and where Mario Monti's reform agenda seems to be stalling. Yields on Italy's 10-year bonds hit 6.29% before falling back a bit Wednesday. Italy also paid 3.97% for 12-month bills Wednesday. A year ago, Italy was paying 4.8% and 2.2%, respectively.

This shouldn't come as a shock. Data released last week showed that value-added-tax revenue fell over the past 12 months, even though—sorry, make that because—Rome raised the rate to 21% last year. The VAT rate is due to rise to 23% in October. A new property tax on primary residences kicks in next week.

Prime Minister Monti says he wants to prevent the VAT hike, and he told the Italian Parliament on Wednesday that "growth is our main worry." That's nice to hear, but the question is whether Mr. Monti has any idea what to do about it.

Not raising VAT would be a good start, but it hardly qualifies as a growth platform. Italians continue to pay a top marginal income-tax rate of 43% that kicks in at €75,000 and rises to 46% for those making more than €300,000. That might help explain why tax evasion is endemic in Italy, and why an astonishing 27.4% of Italian GDP is off the books, according to a recent estimate by an Italian Central Bank official. Some of that is criminal activity, but mostly it's otherwise honest businesses trying to avoid the tax man. Yet Mr. Monti never speaks about lowering these rates.Then there's Italy's notorious Article 18, which imposes severe labor regulations on any company with more than 15 employees. We applauded Mr. Monti when he first sought to change the law. (He demurred at our praise.) Since then, however, he's only retreated in the face of parliamentary opposition.

Now his reform, which would still give workers the right to appeal their dismissals to a judge, may not even have the votes to pass. One leading Italian industrialist recently complained to us that once you factor in "social costs," as he put it, Italians are as expensive to employ as Germans. They are merely a lot less productive. That's Article 18 at work, and so much for reform.

The Prime Minister is hanging his hopes on the next EU summit at the end of the month. Yet Italy's problems will not be solved by any hoped-for Keynesian blowout, even if the Germans could afford—and would agree—to finance that. Rome has been spending more than it collects in taxes for decades, which is how it got its debt to 120% of GDP in the first place.

The solutions to Italy's problems, tax cuts and labor-market reforms above all, aren't any mystery. Whether there's a politician in Italy who can summon the support to implement them is another question.

How the Euro Will End

By GERALD P. O'DRISCOLL JR, WSJ

The euro is the world's first currency invented out of whole cloth. It is a currency without a country. The European Union is not a federal state, like the United States, but an agglomeration of sovereign states. European countries are plagued by rigidities, including those in labor markets—where language differences and the protection of trades and professions in many countries impede labor mobility. That makes it difficult for their economies to adjust to cyclical and structural economic shifts.

For such reasons, when the euro was created in 1999, Milton Friedman famously predicted its demise within a decade. He was wrong about the timing, but he may yet be proven right about the fact.

Greece is the epicenter of a currency and fiscal crisis in the euro zone. Markets fear a "Grexit," or Greek exit from the euro. That exit is almost a foregone conclusion. The endgame for the euro will be played out in Spain.
But first to Greece, which is devolving from a money-using economy. Firms, households and even the government are short on cash. The government isn't paying its suppliers and workers in a timely fashion, so households cannot pay their bills to businesses with whom they transact. Businesses, in turn, cannot pay their suppliers. There is a cascade of cash constraints.

Normally, credit supplements cash in economic transactions. But there is scant credit in Greece. Anyone who can is moving their money out of the country, either to banks in other euro-zone countries, such as Germany, or out of the euro to banks in Switzerland, the United Kingdom and U.S. (the franc, pound and dollar, respectively).

Absent a truly dramatic event, Greece will exit the euro not by choice but by necessity. It will do so not because the drachma (its old currency) is superior to the euro, but because the drachma is superior to barter. Greek standards of living, which have already fallen substantially, will fall further in the short- to medium-term. It will then be up to the Greek people to forge a new future.

While a Greek exit from the euro zone will have substantial repercussions, it won't unleash the doomsday scenario painted by some. A Spanish exit would be an entirely different matter. Unlike Greece, Spain is a major economy. According to the International Monetary Fund, at official exchange rates in 2011 the Spanish economy was more than five times the size of Greece's. And unlike Greece, Spain has numerous banks, some large and global.

The Greek tragedy began with a fiscal crisis—brought on by the government spending more money than it took in—that became a banking crisis. In Spain, there is a fiscal crisis that exacerbates a banking crisis.

Fiscal and banking crises are often linked because in modern economics the state and banking are joined together. Banks purchase government debt, supporting the state, and governments guarantee the liabilities of banks. When one party is weakened, so is the other.

Spanish banks are impaired not only because the Spanish government is running large fiscal deficits, but also because of bad loans to the private sector. Many Spanish banks lent heavily to property developers and to individuals who wanted to purchase homes built by the developers. Spain's construction sector is substantially larger relative to the rest of its economy than is the construction sector in other euro-zone countries or the U.S. And bank debt to finance that sector grew much faster than elsewhere.

Spanish banks have taken huge write downs on their loans, but not enough. Only the exact size of the future write downs is in doubt, not that they will be very large. The Spanish government has effectively nationalized one bank, Bankia—due to threatened insolvency—but will very likely be faced with more takeovers.

The Spanish government has finally admitted that it does not have the funds to recapitalize its banks. EU finance ministers have reportedly committed up to 100 billion euros ($125 billion) for that effort. Experience with banking crises in general suggests that early estimates of losses will prove to be too low. Political leaders start with denial and then offer only belated recognition of the size of banking problems. That was true in the U.S. savings and loan crisis of the 1980s and the 2007-08 bust in housing finance, the banking crisis in Ireland, so far in Spain.

How the Spanish banking situation is handled will determine the future of the euro and possibly of the larger European Union. Will German's taxpayers and those of other solvent countries be willing to fund an even larger bailout of Spanish banks to save impecunious Spaniards? Will the citizens of EU countries outside the euro zone, such as Sweden and the U.K., be asked to chip in? Or will Spain be allowed to descend into a catastrophic 1930s-style banking crisis and Great Depression?

Spanish banking problems are not the end, but only the beginning, of European banking problems. Banks in France, the U.K. and Germany also hold large amounts of the sovereign and private debt of Portugal, Italy, Ireland, Greece and Spain. The government of Cyprus has already made an "exceptionally urgent" request for funds to recapitalize its banks, and markets are now worried about Italy's debt, which limits Rome's ability to deal with banking problems.

The euro zone is in a crisis, in the correct sense of the word, a turning point from which it will either recover or enter a terminal phase. One important factor that may determine the outcome is the degree of leadership in Europe.

By and large, political leaders in Europe are a feckless lot. There are exceptions, particularly in some of the Nordic countries (e.g., Estonia), but the absence of leadership may be the decisive factor leading to the euro's demise. In Spain and elsewhere, leaders have been willing to apply temporary fixes to their banking problems rather than to recognize the true size of the problem. The banks, not fiscal deficits, will be the undoing of the euro.

In the end, I side with Milton Friedman. If Europe had made the political decision for a federal state, a single currency would have been a natural outcome. When 17 states decided to adopt the euro first without political union, they got it backward.

Mr. O'Driscoll is a senior fellow at the Cato Institute. He was formerly a vice president at the Federal Reserve Bank of Dallas and later a vice president at Citigroup.

Eurocopa & eurocrises

JOÃO PEREIRA COUTINHO, Folha de SP

1. Sempre gostei da Eurocopa. O futebol é um pormenor. As minhas razões são políticas. Gosto da Eurocopa porque ela é a expressão tangível (e bem ruidosa) da diversidade nacional europeia que nenhuma construção federal será capaz de suprimir.

Dias atrás, a chanceler Angela Merkel declarou em entrevista: a solução para os problemas do euro passa por mais "integração" dos países da zona do euro. Tradução: é necessária uma estrutura política federal, ou aparentada, com a Alemanha no topo e a Europa transformada numa união semelhante aos Estados Unidos da América.

Angela Merkel, claro, não lê a imprensa portuguesa. Se lesse, veria o que escreveram a respeito do jogo Alemanha x Portugal (que os portugueses, injustamente, perderam por 1 a 0). A retórica antigermânica era violenta, o que se entende: o país está sob resgate financeiro internacional, com a bênção punitiva da Alemanha.

Por isso o jogo não foi um jogo. Antes, o ajuste de contas entre o servo e o capataz. Infelizmente, ganhou o capataz.

Mas as rivalidades que a Eurocopa oferece não são apenas explicadas por crises econômicas momentâneas. Existem também memórias históricas que persistem em retornar à superfície.

Jogos como Polônia x Rússia ou França x Inglaterra são evocações fantasmagóricas de lutas seculares que deixaram a sua pegada arqueológica. Quando essas equipes se voltarem a enfrentar na Eurocopa, não será apenas de futebol que a mídia irá falar.

Que lições ensina a competição? Uma lição simples: nos Estados Unidos, os New York Yankees podem ter uma rivalidade conhecida com os Boston Red Sox. Mas, quando a hora do jogo se aproxima, o estádio enche-se de americanos, não de "new yorkers" ou de "bostonians". E todos eles cantam o único hino que interessa -o hino de um país, forjado com o sangue da Guerra Civil.

Na Europa, não existe um único país; nem sequer, como pretendem os federalistas, diferentes "regiões" que podem fazer parte de um super

Estado com capital em Bruxelas.

O que existe são nações múltiplas que, na hora do confronto desportivo, regressam a um sentimento primordial de pertença: a uma língua, uma cultura, uma identidade. Nações que, mesmo em tempos de paz, conservam ainda na memória afinidades comuns -ou aversões mútuas.

Não é por acaso que um jogo entre Portugal x Inglaterra (dois velhos aliados) nunca tem a carga "bélica" de um Portugal x Espanha.

Nas páginas finais das suas memórias, Jean Monnet, um dos pais fundadores da Comunidade Europeia do Carvão e do Aço, semente da atual União Europeia, escrevia: "A soberania das nações do passado não consegue mais resolver os problemas do presente: não consegue mais garantir a essas nações o progresso e controle do seu futuro. A Comunidade [Europeia do Carvão e do Aço] é apenas um estágio rumo ao novo mundo do futuro".

Jean Monnet, manifestamente, nunca assistiu à Eurocopa.

2. A Espanha vai receber um empréstimo dos restantes países da zona do euro no valor de 100 bilhões de euros. Para recapitalizar o seu setor bancário exaurido. Tudo está bem quando acaba bem?

Longe disso. Um dos melhores estudos que li sobre a crise europeia pertence a Jay Shambaugh. Título: "The Euro's Three Crisis". Tese poderosa: a crise do euro é, na verdade, composta por três crises. Uma crise bancária, uma crise de endividamento e uma crise de crescimento. A Espanha tem as três em proporções avassaladoras. O que significa que resolver a primeira deixa as outras duas intactas.

Pior: de acordo com Jay Shambaugh, as três crises estão tão interligadas que mexer em apenas uma delas muitas vezes piora as restantes. A Irlanda tentou resolver a sua crise bancária -e agravou brutalmente a crise de endividamento. A Grécia tentou corrigir o endividamento com medidas de austeridade -e matou o crescimento.

Enfrentar a crise do euro, avisa Shambaugh, é enfrentar as três crises, não apenas usar remendos para uma delas.

Quem acredita que a Espanha resolve os seus problemas com 100 bilhões de euros para o setor bancário vai ter surpresas desagradáveis a curto prazo.

Euro - o encontro final

Vídeo que mostra como será o último dos encontros da Comunidade Europeia para negociar a saída ou permanência da Grécia no euro.

Sensible Keynesians see no easy way out

By Raghuram Rajan, Financial Times 

In the long run we are not dead, we will still be recovering from the Great Recession. We should therefore weigh stimulus policies not just on their immediate effect but on their consequences over time. Sensible Keynesians recognise this. They bet that reviving growth through government spending today outweighs the future loss of growth as the debt taken on to fund current spending is paid back. Consider two circumstances where this may apply.

The first is in a fully fledged panic where demand collapses, banks and companies fail and organisational capital is destroyed. Save, possibly, for Greece, it is hard to argue any industrial country is there today.

The key question then is whether more government spending can make a real difference to the most severe employment problems. Here the case for a general stimulus becomes less compelling. In the US, demand is weakest in communities where a boom and bust in house prices has left an overhang of household debt. Lower local demand has hit employment in industries such as retail and restaurants. A general increase in government spending may be too blunt – greater demand in New York is not going to help families eat out in Las Vegas (and hence create more restaurant jobs there). Targeted household debt write-offs in Las Vegas could be a better use of stimulus dollars.The second is when persistent high unemployment leads the long term unemployed to lose the habits and skills that make them employable. This is probably the more pertinent case in several industrial countries, such as the US and Spain. Increasing employment in a sustainable way today could more than pay for itself if people who would otherwise drop out of the workforce earn incomes.

However, the past build-up of debt in now depressed areas may suggest that demand was too high relative to incomes. If so, demand, without the dangerous stimulant of borrowing, will stay weak. Policy should instead help workers move where there are suitable jobs – for instance, by helping them offload their homes and the associated debt without the stigma of default.

Employment is also lower in states that experienced a housebuilding bust. In these states, unemployment is higher among construction workers and in related jobs such as real estate brokerage. Could big publicly funded infrastructure projects, modelled on those in the 1930s, re-employ them? Possibly not, since today’s built-up US is less in need of infrastructure on that scale. Moreover, it is not clear that a worker used to putting up drywall can move easily to laying fibre-optic cable. Perhaps it would be better policy to support retraining for private jobs.

Japan, which had a huge property boom and bust in the late 1980s, provides a salutary warning of the difficulties of stimulus through infrastructure spending. Even though Japan covered much of the country with concrete, it never fully emerged from the crisis. For the Japanese, the long run has arrived, and they are older, fewer and have the highest government debt in the G7.

The US government can still spend. The UK is more on the margin. With a huge financial sector dependent on the government’s financial standing, it can take fewer chances with its finances. Austerity is painful, which is why austerity tomorrow is not credible. Yet shared tax increases and spending cuts can instil a sense of national purpose to help a country weather tough times.

For Greece, government spending is the problem, not the solution. A responsible government would implement judicious austerity, firing the party hacks who were hired in the go-go years, cutting wages and pensions and restructuring itself to collect taxes and provide useful services, even while retaining transfers to the indigent and elderly. As public sector workers share the private sector’s pain, national solidarity could improve. Also, improved government efficiency and other structural reforms will make it easier for Europe to provide the financing that will prevent even more savage cuts to government functions. And it will make it easier to write down Greek debt further and attract private investment, giving people hope of growth.

Targeted government spending, or reduced austerity, along the lines suggested by sensible Keynesians, might be feasible in some countries and helpful in speeding recovery. But we should examine each policy based on a country’s circumstances. We should be particularly wary of populist Keynesians, who parrot “in the long run we are dead” to justify any short-sighted government action. They do the world a disservice by suggesting there are easy ways out. By misleading people and their leaders, they may well precipitate revolution rather than recovery.

Time to plan a velvet divorce for the euro

By Gideon Rachman, Financial Times

As I read the umpteenth article on the “Grexit”, a phrase from the filmMarathon Man ran around my head. In this cult-thriller, Laurence Olivier plays a war criminal turned dentist who tortures Dustin Hoffman by drilling through his dental nerves without anaesthetic. As he does so, he asks repeatedly “Is it safe?”

“Is it safe?” is the question European leaders have been asking themselves for months, as they contemplate Greece leaving the eurozone. Late last year I found myself discussing this very question with a senior European politician. He had noticed that I had written repeatedly that the eurozone was a flawed construction that was likely to collapse. If that was the case, I was asked, would it not be better to break the whole thing up now?

At this point, I heard myself becoming shifty and evasive – “The trouble,” I replied, “is that I keep being told that a break-up would cause a catastrophe. Until I can tell you convincingly why that’s untrue, I can’t responsibly advocate it.”

But prevarication is no longer good enough. In the coming months, Europe may be forced to decide.

So – to answer the question that I dodged back in December – yes, I do think that it would ultimately be better if the eurozone broke up. This might not involve a complete reversion to national currencies. A hard core of euro-users, centred on Germany, might survive. But the current euro will have to go.

It is true that the transition from here to there will be painful and dangerous. My colleague Martin Wolf laid out an updated version of thefull horror scenario in Friday’s FT – involving a breakdown of law and order in Greece, and financial collapse across Europe. How could anyone responsibly run that risk?

The answer is that the alternatives to eurozone break-up are inherently implausible and deeply unattractive. At the weekend G8 leaders called for Greece to stay in the eurozone. Their present plan seems to involve some magical mix of stimulus and austerity that restores both budgetary balance and growth. But even if they can agree a real plan and even if it works – and neither outcome is likely – the eurozone’s structural problems would remain.

Without the option of devaluing their currencies, uncompetitive economies are left with “internal devaluation” – otherwise known as wage cuts and mass unemployment. It is true that countries such as Greece badly need economic reforms. But these reforms – conducted within the straitjacket of monetary union with Germany – are causing political and economic turmoil.

The real problem, however, is political. The euro does not have a political union behind it so it simply lacks the key institutions needed to make monetary union work. There is no strong central government to enforce budgetary discipline and no large federal budget to fund transfers from rich to poor areas. And, as we are discovering, there is no euro-wide bank-deposit insurance scheme.

In theory, the eurozone might rectify this error by moving to a real political union. But the idea of a permanent transfer of sovereignty from Athens to Brussels has been rejected by all sides in Greece. Meanwhile, in Germany, the idea of a transfer union – involving a permanent gush of subsidies from northern to southern Europe – remains anathema.

Even if EU politicians were able to overcome such objections and create a real federal union, this giant new entity would essentially hollow out the powers of national democracies. Sacrificing national self-rule on the altar of the euro is inherently objectionable – and would invite a nationalist backlash across Europe. This “cure” for the ills of the euro would be worse than the disease.

Since the long-term alternatives to the break-up of the eurozone lack credibility, it is necessary to think about how to manage such an event – rather than simply dismissing it as too dangerous to contemplate.

Unfortunately, the break-up plans that Europeans are already drawing up behind closed doors are too limited.

They envisage a Greek exit, followed by a determined effort to throw up a firewall that prevents other countries being sucked into the crisis. This has unfortunate echoes of the past two years, during which the EU has consistently tried and failed to confine the crisis to Greece.

In fact, the exit of Greece would unleash contagion, by making it clear that membership of the euro need not be permanent. Markets would inevitably round on the next vulnerable countries.

Allowing the fate of the euro to be driven by a succession of market panics would be the worst possible way of breaking up the single currency. It would involve the loss of billions of euros of public money as the EU burnt through its firewall. The political and economic turmoil that followed would cause public panic and discredit the politicians in charge.

It would be infinitely preferable if EU leaders were to make a rational assessment of which countries are willing and able to stay in the euro – and announce plans to work on an amicable and orderly divorce between the stayers and the goers. Only by acting in this way might they finally achieve their oft-stated goal of “getting ahead of events”. Almost all euro-users adopted the currency without a referendum, and they could leave the same way.

It is true that even a “velvet divorce” for the eurozone would involve enormous dangers. But at least it would offer a believable exit from the present maze. As a (very) German proverb puts it – “Better an end with horror, than a horror without end.”

O fim do euro

Meu novo artigo para o OrdemLivre.org: “The european single currency is bound to fail, economically, politically, and indeed socially, though the timing, occasion, and full consequences are all necessarily still unclear.” (Margaret Thatcher)

Democracy and the Euro

Editorial do WSJ

One way to look at this week's events in Greece is as George Papandreou's revenge. As Prime Minister last November, he proposed that Greeks vote on whether they could live with the conditions the EU and IMF were imposing in return for a bailout. The idea sent markets into a tizzy, Mr. Papandreou lost his job, and the referendum never occurred.

But Greek voters are having their say anyway. On Tuesday Greek President Karolos Papoulias called a new election for next month, after no party could put together a majority following this month's splintered election.

The far-left Syriza coalition, which finished second in the voting, is rejecting the bailout terms and demanding an end to fiscal restraint and economic reform. Presumably the Greeks will now have a no-holds-barred debate about the consequences of their policy choices, including possible ouster from the euro zone.

The rest of Europe may find this inconvenient, but this strikes us as progress and in any event was inevitable. That was the wisdom behind Mr. Papandreou's stillborn idea. Like every other country in the EU, Greece is still a democracy. Greek voters reserve the right to say no to Brussels, or even to elect those willing to abrogate agreements made in their names by former governments.

For decades, the European conceit has been that voters would gladly cede their national right to democratic accountability in return for Continental peace and prosperity. This worked as long as there was prosperity. But now that pan-European governance includes painful policy choices imposed from afar, the national publics want their franchise to mean something.

Angela Merkel may want to enshrine fiscal rectitude for all time in a fiscal pact. The German Chancellor may even be right as a policy matter to want to do that given that her taxpayers will otherwise have to pay. But the fatal flaw in her vision is that she can't control the course of democratic events outside Germany's borders. All the more so when she has become arguably the main issue in Greek politics, complete with demagogic posters of her in Nazi garb.

In a sense the Greeks are using their elections as a way to renegotiate the terms of their most recent €130 billion bailout by the rest of Europe. They assume that if they refuse to go along, the Germans and the European Central Bank will give in and ease the terms of fiscal retrenchment and reform.

The belief, at least on the Greek left, is that the country will be able both to stay in the euro and keep its generous welfare state, albeit with some mild adjustment. Syriza leader Alexis Tsipras is even proposing to hire 100,000 more public employees.

European leaders will be doing everyone a favor if they make clear that there is no such easy way out. If Greeks want to continue being rescued by the rest of Europe, they must meet European terms. If Greeks can't manage that, then Athens will get no more bailout cash and will have to find the money to pay its own bills.

And if Athens fails to do so, then default and ouster from the euro zone are likely, with all of the predictably terrible consequences for Greek living standards following the return of the drachma and devaluation. Instead of staying as part of modern Europe, Greece will slide toward a Third World future.

European leaders need to deliver this message not as a threat, but as the reality of what Greeks are risking if they reject reform. At least this is a choice Greeks will be making for themselves. The lesson will not be lost on voters elsewhere in the euro zone.

Europe's leaders can't repeal democracy on the Continent, and therefore they can't ask countries in the euro zone for more than their politicians can deliver or their populations can take. This means admitting that the bailout model that Europe adopted for Greece two years ago has failed and is increasing political polarization across Europe, and not only in Greece.

The euro zone was conceived as a currency union among countries adhering to certain basic fiscal rules. Had it stuck to that vision in this crisis—rather than turn it into a fiscal or debt union—and let Greece face the consequences of its economic mismanagement from the beginning, Greece might have defaulted and stayed within the euro.

Now so much damage has been done that it's hard to see such an outcome. Trying to turn the euro into a larger political union has put the entire euro zone in jeopardy.

Os alemães devem ser idiotas

Carlos Alberto Sardenberg, O GLOBO

Você precisa reduzir o colesterol e entrar em forma. Um médico recomenda restrição alimentar - tipo peixe levemente grelhado com legumes no vapor, água com gás e o requinte máximo de uma rodela de limão - mais uma carga pesada de exercícios físicos. Diários. O outro diz que você pode chegar ao mesmo resultado comendo o que gosta, talvez reduzindo os doces, e jogando umas partidas de bocha.

Havendo alguma chance de que esta segunda opção funcione, você será um idiota se escolher a primeira. Ou seja, os alemães são uns idiotas. Essa é a conclusão inevitável que se tira do modo como muita gente apresenta as alternativas de política econômica em disputa na Europa.

Dizem: a chanceler Angela Merkel recomenda - mais do que isso, impõe o regime da austeridade, sacrifício e suor do rosto. François Hollande, o presidente eleito da França, admite que é preciso ter algum cuidado com a alimentação, as contas públicas, mas oferece o caminho do crescimento acelerado e, melhor, sem muito trabalho.

Por exemplo, diz que vai reduzir a idade mínima de aposentadoria de 62 para 60 anos. Na Alemanha, é de 63 anos, mas está subindo para 65 e pode chegar a 67, em alguns casos. Hollande também vai garantir a jornada semanal de 35 horas - uma bandeira de seu Partido Socialista. Na Alemanha, a jornada média chega às 41 horas, sendo a mais longa entre os europeus mais ricos. E os salários na França são mais elevados do que na Alemanha.

Como se dizia: é melhor ser rico com saúde do que pobre doente, não é mesmo? Melhor trabalhar menos, ganhar mais, e aposentar-se antes...

Tem uns probleminhas, porém. O desemprego na Alemanha está na faixa dos 5%, um dos níveis mais baixos do mundo. Na França, é o dobro. Na saída da crise, a Alemanha cresceu acima de 3,2% em 2010 e 2011. A França, metade disso.

Hollande alegou, durante a campanha, que a França cresceu pouco justamente por causa da receita de austeridade - redução do gasto público, especialmente - imposta pelo presidente Sarkozy, uma espécie de sub-Merkel.

Não faz sentido. Sarkozy não aplicou a austeridade, de cuja ideia se afastou justamente por medo de perder a eleição, nem fez qualquer reforma estrutural importante. Conseguiu, é verdade, elevar a idade de aposentadoria para 62 anos, mas essa mudança só começaria a valer mais à frente - de modo que ainda não trouxera qualquer efeito antes de ser declarada morta. Também prometera colocar a França de volta ao trabalho, eliminando a jornada de 35 horas, mas conseguiu apenas algumas exceções, caras.

Já a Alemanha fez boa parte dessas reformas estruturais no início dos anos 2000 - e isso, ironia, com um governo de esquerda, do social-democrata Gerhard Schröder. A partir daí, assentou as bases do crescimento da década seguinte e, especialmente, a capacidade de escapar da crise mais rapidamente.

De onde tiraram que a receita alemã não funciona? É um equívoco enorme apresentar a receita Merkel como a da recessão, em oposição à agenda de crescimento de Hollande.

Merkel está dizendo duas coisas: primeiro, que não é possível crescer de maneira sustentada aumentando déficits e dívidas públicas já elevadas; segundo, também não se cresce sem reformas estruturais que devolvam competitividade às economias nacionais.

Ou seja, a França cresce pouco e tem desemprego alto não por causa da austeridade - o governo gasta lá o equivalente a 56% do PIB, recorde europeu - mas pela falta de competitividade e excesso de despesa e impostos.

Como resolver a falta de crescimento? Ora, é simples, diz Hollande: crescendo mais...

E sabe o que deve acontecer? Nada, além da retórica. O governo Hollande acabará sendo muito parecido com o de Sarkozy - nada de mudanças sensíveis. Merkel vai topar algum plano de novos investimentos europeus, com um dinheirinho de algum fundo de desenvolvimento, para o pessoal dizer que se aplicou a agenda do crescimento.

Como as contas públicas francesas não estão em situação dramática, há um estímulo para continuar levando assim: crescimento baixo, desemprego alto - mas uma boa vida para quem está empregado ou aposentado. As futuras gerações que se danem.

O naufrágio da Europa

João Pereira Coutinho, Folha de SP

1. François HOLLANDE ganha as presidenciais francesas e a Europa, ou uma parte dela, respira de alívio: agora, finalmente, será possível abandonar a austeridade e abraçar o crescimento econômico.

O próprio Hollande foi alimentando as expectativas: com ele, a disciplina orçamental imposta pelos alemães aos restantes países da União Europeia seria "renegociada"; a economia francesa iria promover políticas de crescimento econômico a curto prazo; e o Estado social seria preservado, e até reforçado, com mais funcionários públicos, a diminuição da idade da reforma (dos 62 para os 60 anos) e subsídios de todo tipo (para famílias, jovens, empresas etc.).

Infelizmente, faltou a pergunta sacramental: e quem paga todos esses delírios?

Mistério. Verdade que "monsieur" Hollande, para sustentar algumas das suas propostas, acredita que a Europa será capaz de emitir "eurobonds" para financiar grandes projetos industriais ou de infraestruturas; ou até de alterar os estatutos do Banco Central Europeu para que a instituição passe a financiar diretamente os Estados.

O que Hollande desconhece, ou propositadamente ignorou, é que nada disso depende da sua exclusiva vontade. E a Alemanha, que tem a chave do cofre, opõe-se frontalmente às ambições do novo presidente francês. Por questões de princípio, interesse econômico -e eleições em 2013.

Ou muito me engano, ou as expectativas geradas por François Hollande só vão durar até as eleições legislativas de junho. Depois, será a ressaca da realidade.

2. Alguns amigos que trabalham na União Europeia não gostam das minhas posições eurocéticas. A União Europeia é sagrada, o euro, idem, as "políticas de austeridade" impostas pela Alemanha, ibidem.

E eu não passo de um dinossauro, amarrado a noções anacrônicas de "soberania nacional" que não têm mais lugar no mundo globalizado onde vivemos.

Defendo-me como posso. Digo que nada tenho contra a União Europeia. Pelo contrário: reconheço o seu papel como garantia de paz e prosperidade na Europa.

Mas reconhecer isso não me obriga a reconhecer o resto. O euro, por exemplo, foi um erro político grave -e a sua manutenção a qualquer preço, um erro político ainda maior.

Não é possível que uma moeda comum possa servir a países com estruturas econômicas tão distintas. A União Europeia não é uma federação de Estados. É apenas uma coleção de tribos com histórias, vícios e virtudes dissonantes.

O euro, que supostamente acabaria por aproximar as nações do continente, apenas revelou o fosso inultrapassável que existe entre países excedentários (Alemanha) e deficitários (Grécia ou Portugal).

De resto, e sobre as "políticas de austeridade", não me oponho a elas -em teoria: é importante que os Estados tenham controle nos gastos e moderação nos seus níveis de endividamento. A festa do euro, que possibilitou dinheiro fácil a juros baixos, não podia continuar.

O problema é que não é possível realizar ajustamentos brutais nas economias endividadas do continente quando esses países perderam soberania monetária. A austeridade só alimenta ciclos recessivos sem fim que, por sua vez, exigem novas medidas de austeridade.

A Grécia é o melhor exemplo dessa armadilha: depois de dois pacotes de resgate e de um calote negociado da dívida, o país está na mesma: quebrado. E, sem surpresa, com partidos extremistas a crescerem no Parlamento e nas ruas.

3. França, Grécia, Holanda em breve: a grande novidade nos ciclos eleitorais da Europa está no regresso dos extremismos.

No primeiro turno das presidenciais francesas, a extrema-direita da Frente Nacional obteve 17,8% dos votos; Marine Le Pen promete agora repetir o resultado nas legislativas de junho.

Na Grécia, a esquerda radical ficou em segundo lugar -e um partido abertamente neonazista elegeu duas dúzias de deputados. E, na Holanda, a extrema-direita derrubou o governo duas semanas atrás.

Qualquer pessoa que tenha uma noção da história reconhece o que se está a passar: com economia moribunda e desemprego massivo, a Europa regressa à década de 1930.

Os meus amigos euroentusiastas assobiam para o lado e fingem que não se passa nada. Essa atitude também faz parte do "déjà-vu".

Europe's Phony Growth Debate

Editorial do WSJ

Growth or austerity? That's the choice facing Europe these days—or so the Keynesian consensus keeps saying. According to this view, which has dominated world economic councils since the 2008 crisis began, "growth" is mainly a function of government spending.

Spend more and you're for growth, even if a country raises taxes to pay for the spending. But dare to cut spending as the Germans suggest, and you're for austerity and thus opposed to growth.

This is a nonsense debate that misconstrues the real sources of economic prosperity and helps explain Europe's current mess. The real debate ought to be over which policies best produce growth.

In the 1980s, the world learned (or so we thought) that the way out of the malaise of the 1970s were reforms that encourage private investment and risk-taking, labor mobility and flexibility, an end to price controls, tax rates that encouraged capital formation, and what the World Bank now broadly calls "the ease of doing business." Amid this crisis, Europe has tried everything except these policies.

If Reagan or Margaret Thatcher are too déclassé for Europeans to invoke, how about Germany? Throughout the 1990s and the first years of the last decade, Germany was Europe's hobbled giant, with consistently subpar growth rates and unemployment that in 2005 hit 11.3%, nearly at the top of the OECD chart.

Then-Chancellor Gerhard Schröder, a Social Democrat, surprised the world, to say nothing of his own voters, by pushing through the labor-market reforms that paved the way for the current relative prosperity. The changes cut welfare benefits and gave employers more flexibility in reaching agreement with their employees on working time and pay.

The Schröder government, and later the coalition under Angela Merkel, also cut federal corporate income taxes to 15% from 45% in 1998. Include state taxes, and the effective corporate rate today is close to 30%, down from 50% or more in the 1990s. These reforms made Germany more competitive, attracted investment and jobs, and paved the way for the country's economic resurgence and an unemployment rate currently at 5.7%.

Mrs. Merkel's government did the world an additional favor in 2009, amid the financial crisis, by rejecting calls from the International Monetary Fund, then British Prime Minister Gordon Brown, President Obama, Treasury Secretary Tim Geithner and the same dominant Keynesian consensus to join the global spending party.

"They've already pumped endless amounts of money into the economy," said German Finance Minister Wolfgang Schäuble in 2010 about U.S. policy. "The results are dismal." (See our March 12, 2009 editorial, "Old Europe Is Right on Stimulus.")

Germany's resurgence might have been even stronger if Mrs. Merkel and her coalition partners hadn't reneged on their tax-cutting campaign promises and raised VAT and other taxes in a bid to stay close to budget balance. Still, Europe is lucky that its largest economy remains strong and creditworthy.

Yet now Mrs. Merkel is widely berated for avoiding the policy errors that led to the debt crisis and for having the nerve to encourage other countries to emulate the reforms that worked in Germany. The Keynesians will never forgive the Germans for being right.

Another European spending spree is unsustainable in any case. As the nearby chart shows, debt levels have climbed dramatically across the developed world since the crisis began in 2008, and that debt and the current dreary recovery (or double-dip recessions) are all there is to show for the great Keynesian spending blowout.

Now bond yields are ticking back up in the euro zone's periphery economies, European stock indexes are stumbling, and much of the Continent is in recession. Adam Smith's bond vigilantes are telling European governments that without reforms that reduce spending and encourage more growth in the private economy, their countries are increasingly risky bets. As the smarter Germans understand, the bond markets may be the only lobby for genuine pro-growth reform that exists in most of Europe.

Other than an inflation that will create new problems and bring its own crisis, economic growth is the only way out of Europe's debt morass. But it has to be private growth driven by reforms in taxes, labor markets, regulation, pensions and more.

Europe's voters have already swept several governments from office, and they seem ready to sweep out more. But what really needs to be swept away is the dominant and debilitating consensus that government spending can conjure prosperity.

A euro parable: the couple with a joint account

Kenneth Rogoff, Financial Times

Perhaps the following parable is not entirely fair to the euro, but nevertheless the parallels seem striking.

Consider a young couple who is contemplating marriage, but unsure whether to take the big step. So instead they decide to test things out by opening a joint bank account. At first things go remarkably smoothly. Heady with success, they get the inspiration of extending the arrangement to her brother and his sister. Not only do they hope to show their siblings how well they can cooperate, but with four people, the total size of the account reaches the critical threshold needed to receive exorbitant privileges normally accorded to the bank’s larger customers.

Thanks to a cleverly designed constraint to limit imbalances between each sibling’s contributions and withdrawals, the innovative experiment continues to flourish. There is no real enforcement mechanism, but the two sets of siblings are determined to make the arrangement succeed. Forced to interact routinely, the couple and their siblings start becoming closer. They even start having dinners together on a routine basis.

Eventually, the quartet decides that dinners will be even more fun, and the bank will give them an even better deal, if they expand the arrangement. So the siblings persuade a few cousins to join. Pretty soon, their phones are ringing off the hook with family members they have not seen in years. Cousin Kendra, a marginally employed chef with precarious finances, is nevertheless welcomed in hopes she will employ her culinary skills to enrich group meals.

Life is not without its problems. Everyone is irritated at first cousin Nigel, who lives just across the river yet insists on managing his own finances. He is still invited to meals, though his cooking skills are hardly up to Cousin Kendra’s. She, in turn, exhibits little enthusiasm for balancing her chequebook, and the bank sends ever more frequent warnings that her overdrafts would have to be covered by the others. Shortly after joining, a couple other cousins have taken advantage of their new prime customer bank status to buy extravagant apartments with jumbo loans at far lower interest rates than they were ever afforded in the past.

The whole complex scheme seems to survive against all odds until one day things suddenly start to collapse. Despite informal personal imbalance limits, several cousins significantly overdraw their accounts. Others fall behind on mortgage repayments. Panicked, the founding siblings ask themselves whether it might be best simply to kick out the group’s worst behaving members. Unfortunately, the bank informs them this will be very difficult to do without first closing the entire account, wreaking havoc with everyone's finances.

Desperate, the family brings in a well-regarded outside financial advisor. She comes up with the seemingly brilliant idea of a joint credit card, with payments guaranteed unconditionally by all, including the wealthiest cousins. This would allow the impecunious members to pay off bad cheques and mortgages, effectively borrowing against the resources of the others. And it wouldn’t be a gift, the advisor promised. Borrowers would pledge to skip meals. Any savings on ingredients would be used to make loan repayments. This works for a while until cousin Kendra starts to look pale from her diet. She begins missing work and the imbalance between her occasional deposits and frequent withdrawals gets worse. The richest cousins soon find they have to mortgage their houses in order to pledge enough cash to the bank to prevent an immediate collapse.

Of course, this grand experiment ends catastrophically. I will have to leave the reader in suspense as to whether the couple gets married. No doubt, in the film version of this parable, the studio would tape alternate endings and test which one sample audiences liked best.

Perhaps the parable overstates the risks fully independent countries face when sharing the same currency, but then again, maybe not by so much.

Economists have long understood that significant labour mobility is not nearly enough, A sustainable currency union requires other country-like features including a centralised fiscal authority that has as at least as much power to collect taxes as the constituent states. A central financial regulator is also essential, at least absent an adequate global regulator. And the centre cannot be endowed with so much power without the legitimacy that can only come from political union. Currency union without political union is an unstable halfway house.

This is not to say that a future United States of Europe, or part of Europe, needs to take any particular narrowly defined form. There is no one-size-fits-all formula for marriages or currency unions, although a loose bond that is easily broken is obviously not enough.

The real lesson of the euro’s grand experiment is that, given the weak state of global governance, the optimal single currency area is probably still a country, at least when two or more large countries are involved. A pre-nuptial joint bank account is a very unstable route to marriage.

The writer is professor of economics at Harvard University and co-author of “This Time is Different”