http://streetlightblog.blogspot.com/2011/09/moral-judgment-and-bad-economics-from.html
The ECB is following the inappropriate IMF recipe. Privatization is seen as a cure-all, instead of focusing on the loose lending practices that allowed inefficient public services to survive, as we've seen with the rising liabilities of deficit-prone State-owned companies
In fact, the ECB should be more concerned with the funding costs disparities of European banks, and the failure of prudential regulation among the various national central banks which allowed excessive credit growth.
See Excessive SOE debt coming home to roost
http://ppplusofonia
Se os bancos centrais europeus tivessem mais economistas e menos moralistas, talvez tivessem evitado que os bancos imprudentes alimentassem a bolha de crédito que agora rebentou sobre os devedores igualmente tontos.
ResponderEliminarNo crédito mal parado, tanto errou o credor como o devedor.
Writing from Lisbon, it is clear that the causality of the crisis ran from the external CAB imbalances, fed by the avalanche of loose cross-border lending, to the domestic fiscal imbalances. Portugal and Greece both bought German submarines, plus lots of shiny new cars and electronic equipment, not to mention all the Chinese "stuff" that wiped out the local textile industry. (By the way, the submarine "purchases" are the subject of corruption investigations in Germany).
ResponderEliminarMansoori, Krugman and Whitney are certainly on the right track.
In fact, the external surplus/deficits positions of the trading partners are likely to diverge as long as foreign creditors (ex. surplus country banks) are willing to finance them, especially when the surplus countries enjoy huge economies of scale.
Looking out over the Tagus, it appears that the big mistake may have been to allow the huge external debt accumulation when the Single Currency and Single Market had done away with the principal external adjustment mechanisms (import tariffs, FX rates and interest rates), fed by loose lending by foolish German, British and French banks looking for a few extra basis points. This represents a failure of prudential regulation by the national central banks which were lulled into complacency more by Basel than by the Euro.
The way out will certainly have to include debt restructuring, but with special protection for the critical local savers, considering the risks arsing from the freedom of capital movement.
Mariana Abrantes de Sousa, PPP Lusofonia
Jardim com os piores resultados de sempre, mas mesmo assim conseguiu manter maioria absoluta com 48,56% dos votos nas eleições regionais da Madeira, abaixo dos 64,2% dos votos registados em 2007.
ResponderEliminar