Describing the the Eurozone debt crisis as a "crisis of confidence" gives us few pointers about the underlying causes and eventual solutions. If anything, the crisis was caused by the over-confidence of creditors who lent too much, too easily, of borrowers who borrowed more than they could afford to repay, and most of all, of the (im)prudential regulators who let the cross-border intra-Eurozone credit bubble grow until it burst.
It's not surprising to hear specialists such as Mr Kopits,a member of of the Conselho de Finanças Públicas http://www.cfp.pt/about-us/composition/board, / speak mostly about fiscal matters. But this narrow focus on the domestic side of the problem, when the turnaround must come from the external sector, hardly boosts our confidence in our ablity to find an eventual positive solution. It is more encouraging to recall Krugman's early academic work on economic geography and the risks of divergence in a single market among trading partners of very different dimmension. Perhaps this analysis could help to focus decision makers on what really needs to be done to recover the fragile perifpheral economies of the Euro.
Getting the analysis right, by focusing on the extenal accounts first and foremost, is paramount. Any doctor will tell you that getting the diagnostic wrong makes very difficult, if not impossible to find the right cure. And we've gotten a lot of the "wrong cure" thus far, with mis-directed and irreponsable austerity in the creditor countries, limiting their potential contributions to the adjustment in the trade balance.
And the excessive credit was fed by the trade surpluses of the net exporting countries, and in turn made possible the trade deficits of the net importing countries. That's why it is surreal to hear one speaker after another talk about the the Eurozone debt crisis with hardly any reference to the balance of payments and the persistent and diverging CAB imbalances . Why is everyone so busy ignoring the financial "elephant in the room", the German record trade surplus?
The over-confidence turns into a crisis when the market concludes that the intra-Eurozone CAB imbalances are neither sustainable nor self-correcting because the traditional automatic stabilizers are no longer functioning.
Unfortunately, the external CAB imbalances seem to be taboo. For every mention of a trade deficit or surplus there are dozens of mentions of the budget deficit which is seen under the analytical microscope, in a collective mis-direction of attention.
It's not surprising to hear specialists such as Mr Kopits,a member of of the Conselho de Finanças Públicas http://www.cfp.pt/about-us/composition/board, / speak mostly about fiscal matters. But this narrow focus on the domestic side of the problem, when the turnaround must come from the external sector, hardly boosts our confidence in our ablity to find an eventual positive solution. It is more encouraging to recall Krugman's early academic work on economic geography and the risks of divergence in a single market among trading partners of very different dimmension. Perhaps this analysis could help to focus decision makers on what really needs to be done to recover the fragile perifpheral economies of the Euro.Getting the analysis right, by focusing on the extenal accounts first and foremost, is paramount. Any doctor will tell you that getting the diagnostic wrong makes very difficult, if not impossible to find the right cure. And we've gotten a lot of the "wrong cure" thus far, with mis-directed and irreponsable austerity in the creditor countries, limiting their potential contributions to the adjustment in the trade balance.
A little, or a lot, more attention, to international trade and finance theory, will be essential if we are to avoid the worst scenarios for peace and cohesion in Europe.
Mariana Abrantes de Sousa
PPP Lusofonia
Kopits speaks at the UNL http://www.novasbe.unl.pt/pt/news-articles/news/581-nova-sbe-recebe-a-visita-de-george-kopits-8-maio
Rompouy speaks at Estoril Conferences http://ppplusofonia.blogspot.pt/2013/05/saving-euro-is-good.html
Causality - external debt and depression http://ppplusofonia.blogspot.pt/2013/04/on-reinhart-and-rogoff-debt-and-growth.html
Causality - external debt and depression http://ppplusofonia.blogspot.pt/2013/04/on-reinhart-and-rogoff-debt-and-growth.html
Conselho de Financças Públicoas http://www.cfp.pt/
From the "crisis of analysis" to the "analysis of the crisis http://ppplusofonia.blogspot.pt/2013/04/da-crise-de-analise-analise-da-crise.html
When austerity is irresponsable http://ppplusofonia.blogspot.pt/2012/11/european-budget-talks-when-austerity-is.html
Crise à Portuguesa no sector externo 2010 http://ppplusofonia.blogspot.pt/2010/10/crise-portuguesa-concentra-se-no-sector.html
From the "crisis of analysis" to the "analysis of the crisis http://ppplusofonia.blogspot.pt/2013/04/da-crise-de-analise-analise-da-crise.html
When austerity is irresponsable http://ppplusofonia.blogspot.pt/2012/11/european-budget-talks-when-austerity-is.html
Crise à Portuguesa no sector externo 2010 http://ppplusofonia.blogspot.pt/2010/10/crise-portuguesa-concentra-se-no-sector.html
Óbvio! O mistério para mim sempre foi perceber porque sempre se ignorou ostensivamente o problema. A explicação estará em que a sua correção impõe alguns sacrifícios pessoais no curto prazo para colher benefícios no longo prazo mas as pessoas só olham para o curto prazo.
ResponderEliminarOu seja, sem líderes com visão, só há gestão de curto prazo; e esta é sempre "estúpida".
Pois, diz-se que a história é escrita pelos vencedores.
ResponderEliminarE a análise financeira é feita pelos credores. Não é isenta, é viciada pelos seus interesses.
Cabe-nos não cair na armadilha, não assumir mais que a nossa quota parte da responsabilidade pela bolha e colapso resultante.
E cabe-nos chamar as coisas pelos nomes. Uma crise de balança de pagamentos é uma coisa muito evidente, muito bem conhecida da história, com causas, consequências e soluções concretas.
Uma crise de confinça nem sem bem o que é.
Mais uma boa dose de "international trade and finance theory" não faria mal aos decisores e supostos conselheiros.
Na verdade faltou o deficit externo em toda a sessão de ontem
ResponderEliminarDada a falta de competitividade externa não há âncora possível no projecto Europa.
Nem mesmo a Alemanha o consegue ser. Ainda que quisesse ou venha a querer ser a âncora.
... a convergência entre os países do Euro foi bem sucedida. A progressiva similitude entre as variáveis das suas economias comprova a existência de catching-up na Europa.
Porém, a competitividade externa da zona euro (com o resto do mundo) não se confunde com o catching-up intra-europeu. A própria Alemanha tem dificuldades externas (com resto do mundo).
Porque só se fala do défice orçamental e não se fala do défice externo (CAB/BTC)?
ResponderEliminarPorque os disequilibrios externos são simetricos, teriamos que analisar também os países superavitários.
Fala-se da decadência de Portugal há 100 anos, para não dizer mais.
ResponderEliminarParém de bater no ceguinho, é dos que não quer ver, mas é nosso. Como devem parar de falar no "Estado Social", o Estado não existe para nos trazer ao colo. Depois de todos os diagnósticos e mobilizações, é tempo de passarmos à acção para que Portugal deixe de ser um país de coitadinhos e passe a ser o "little country that could", tipo Dinamarca.
Não estamos condenados à decadência, não vamos baixar os braços, nem mesmo maneatados dentro da Eurozone.
Good PFM relies on good financial management processes and data reporting.
ResponderEliminarIn-house development of public financial information and management systems and buying off-the-shelf solutions may be at opposite ends of the procurement spectrum, but neither is lilely to deliver the desired results.
Instead, creating mixed internal/external project development teams explicitly recognizes the importance of internal mobilization, of overcoming potential resistance to change and of taking internal responsibility for results by integrating the most appropriate solutions from a variety of suppliers. It may also be better for internalizing and skills transfer, as well as long term project sustainability.