Os dois grandes jornais americanos, NYT e WP, publicaram materias analiticas sobre a crise de confiança nos chamados PIGS: Portugal, Irlanda (e Itália), Grécia e Espanha.
Debt Crisis in Euro Zone Is Severe Political Test for Bloc
By STEVEN ERLANGER
The New York Times, February 6, 2010
PARIS — What began with worries about the solvency of Greece in the face of high deficits, fake budget figures and low growth has quickly become the most severe test of the 16-nation euro zone in its 11-year history.
Anxiety about the health of the euro, which has spread from Greece to Portugal, Spain and Italy, is not simply a crisis of debts, rating agencies and volatile markets. The issue has at its heart elements of a political crisis, because it goes to the central dilemma of the European Union: the continuing grip of individual states over economic and fiscal policy, which makes it difficult for the union as a whole to exercise the political leadership needed to deal effectively with a crisis.
A policy of muddling through may be comfortable in political terms, but experts warn it can have dire economic consequences. Jean-Paul Fitoussi, professor of economics at the Institute of Political Studies in Paris, said that European leaders had “handled this crisis very badly,” feeding market speculation and greed.
Greece’s ratio of public debt to gross domestic product is no higher than Germany’s, and Greece has not defaulted, he said, but European leaders have done too little to calm the markets and rating agencies.
While no one expects that the European Union will allow Greece or the others to default or the euro zone to collapse, European leaders and the Central Bank will almost surely have to bend the rules to provide guarantees or loans, if necessary. But even tiding over countries in trouble will not solve the main flaw in the euro: the sharp divergence of national economies that share a common currency without significant fiscal coordination, let alone a single treasury.
“The challenges facing the euro zone are very serious,” said Simon Tilford, chief economist for the Center for European Reform in London. “For countries that have become pretty uncompetitive in the euro zone and have weak public finances, the current environment is very dangerous.”
It does not help matters that the European Union is undergoing a major political transition to new leaders, a new Commission and Parliament, and a new governing treaty, the Lisbon Treaty, which creates a new president and foreign affairs chief. But even if all these positions were filled, serious questions remain about whether the union or its leading member states will take charge before further damage is done.
In some sense, there is a game of chicken being played, with Greece counting on help and other countries holding back until Athens pays a steep price for its profligacy and manipulation of statistics. But the delay is costly, and there are deeper structural problems that few want to discuss.
Greece, Italy, Portugal and Spain — known now as the PIIGS, if Ireland is included — are the weak sisters of Europe, with high structural deficits matched with low prospects for the kind of economic growth and productivity improvements that can bring them back to health.
The north-south split is partly geographic, partly cultural, partly religious and partly historical, but the southerners tend to be poorer and to have less competitive economies.
“The markets are having fun testing the euro,” said Nicolas Véron, a senior fellow at Bruegel, an economic policy research institute in Brussels. But the markets are also increasing pressure on the biggest European economies, like Germany and France, to figure out ways to rescue Greece, which is already facing strikes in light of current austerity measures, and to bolster the others.
But with the European Union undergoing a triple political transition, it is not entirely clear where that leadership will come from.
“Who’s in charge now?” asked Antonio Missoroli, director of studies for the European Policy Center in Brussels. “Nobody yet, and it may still take time.”
There is a newly nominated European Commission and now a new European president, Herman Van Rompuy, and European minister for foreign affairs, Catherine Ashton. The commissioner in charge of this crisis, Joaquín Almunia, is a lame duck, due to switch jobs and become competition commissioner.
Mr. Van Rompuy has announced an informal economic summit meeting for next Thursday, to get the member nations to concentrate on the crisis.
Default for a member of the euro zone is simply unacceptable, European officials and analysts say — a country is not a bank. At the moment, even calling in the International Monetary Fund to help Greece is considered too embarrassing and not yet necessary, given the new Greek government’s apparent determination to deal realistically with its problems.
More likely, they say, is a set of bilateral loans or loan guarantees from richer countries like Germany. Leaders in France, Germany and other European nations have already begun discussing how such aid might be structured, officials said last week.
“It’s highly unlikely Greece will be allowed to default,” Mr. Missoroli said. “But no one wants to say that out loud to take the pressure off the Greek government.”
But it is also unprecedented, and difficult politically, for the European Union, or any member country, to impose conditions for economic adjustment on another member country, which is why some analysts urge the involvement of the International Monetary Fund.
Jacques Mistral, an economist at the French Institute for International Relations, said that the main actors now were Jean-Claude Trichet, president of the European Central Bank, and the leaders and finance ministers of Germany and France.
“That’s the troika, and they’re leading the process to explore different ways and compromises,” Mr. Mistral said. “When there is a will there is a path.”
But summoning that will has proved difficult in the northern tier, which mistrusts the southerners. Greece is a prime example of the disease in the euro zone, said Mr. Tilford, the economist in London, made worse by political mismanagement; the global recession, which has hit tax receipts; and the impossibility of devaluing a shared currency.
Portugal, the poorest country in the euro zone, has been stagnating for years, proving that membership in the euro “is not a panacea,” he added.
In addition, Portugal has something of a political crisis, with Parliament voting down an austerity plan on Friday that was promoted by the minority Socialist government.
Spain has relatively low debt, but high unemployment and weak banks, and after the bursting of the housing bubble it can no longer rely on construction and inflated asset prices to propel growth.
These aspects, together with the larger size of the Spanish economy, had led Nouriel Roubini, a professor at New York University, to suggest this week that Spain is a bigger threat to the euro zone than Greece.
At the same time, some northern countries, like Germany and the Netherlands, are still playing “beggar thy neighbor” by their reluctance to stimulate their own domestic purchasing, which could help weaker countries to export.
“The southerners can do their best to cut costs and be competitive,” Mr. Tilford said. “But they need the others to create more domestic demand and be less export dependent.”
Critics like Mr. Fitoussi are left wondering why the crisis was ever allowed to expand to this point. “This is much ado about nothing,” he said. “But the nothing can ruin the whole project. I don’t think the euro is in danger. But the leaders are taking too much time.”
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Debt crisis unsettles European economy
By Anthony Faiola
Washington Post Foreign Service
Saturday, February 6, 2010; A01
LONDON -- Governments in Athens, Madrid and Lisbon struggled on Friday to quell fears of a looming debt crisis in Europe that is pummeling the euro and rippling across global markets, as authorities vowed to impose fiscal austerity and plug their yawning budget deficits. The problem, however, is that investors don't appear to believe them.
Senior officials at the major rating agencies on Friday played down the risk of an immediate debt crisis, saying even nations such as Greece have enough reserves to put off for months a day of financial reckoning. Yet investor doubts over the will of Greece, Portugal and other nations to right their accounts have sparked a crisis of confidence that is seeping into stock and corporate bond markets across Europe and beyond. It is especially hitting banks and other institutions with broad exposure to the sovereign debt of the "PIGS" of Europe -- Portugal, Ireland, Greece and Spain.
Investor panic is threatening to drive up the cost of borrowing for myriad nations around the world and to destabilize global currency markets, with the falling euro and strengthening dollar already hitting U.S. exporters by making such items as American beef and U.S. steel more expensive overseas. The euro, the principal European currency, fell Friday to its lowest level in eight months, tumbling almost 1 percent against the dollar.
The crisis unfolding in Europe has some parallels to the debt crises that hit Latin America and Asia in the past, particularly in how Greece's problems have spread so quickly to other countries in the region with similar economic woes.
But there are major differences. Analysts said the healthy, large economies of the "eurozone" -- namely, Germany and France -- are likely to step in to prevent a default in a weaker neighbor, if only to head off the turmoil it might cause in the value of the euro.
Still, analysts remain concerned that the problems in Europe could spread to emerging markets. And although the chances of a default by Greece may be low, its impact would be felt by investors worldwide, including in the United States; roughly 70 percent of Greek bonds are held by foreigners, from pension funds to global commercial banks.
Investors also drove up to fresh highs the cost of insuring against a default in Greece, Spain and Portugal. In some instances, analysts say, those fears may not be wholly misplaced.
Portugal, in recent days, has been swallowed up in the debt market panic that began in Greece late last year. Portuguese officials have pledged to slash spending. Nevertheless, opposition lawmakers on Friday pushed through a controversial bill funneling tens of millions of euros to the Azores and Madeira islands in a move the country's finance minister openly warned could have "grave consequences for Portugal's public accounts."
In Greece and Spain, analysts additionally fear bouts of civil unrest that could roll back attempts to address the fiscal problems. The Greek government's pledge to slash spending and curb public- sector pay sparked protests in Athens on Thursday; customs officials and tax collectors walked off the job in the first of a number of planned mobilizations against government austerity measures set to continue next week.
Though E.U. officials demanding tighter spending have signed off on Greece's plan, they are dispatching a team to review government accounts, which were found late last year to have been grossly underestimating the extent of the country's economic woes.
In Spain, government union leaders on Thursday also vowed a series of protests against planned cuts, while opposition parties have threatened to hold a no-confidence vote on Prime Minister José Luis Rodríguez Zapatero. So far, analysts note, only Ireland, whose bonds have been less hard-hit by the current turmoil, has pushed through the serious cuts that have demonstrated its willingness to deal with its huge deficit.
"The fix of this problem needs to be a political solution, and you can't easily persuade people or politicians to accept this kind of medicine," said Steven Bell, chief economist of GLC, the London-based hedge fund.
Analysts said some institutional holders are dumping Greek bonds in particular because stricter borrowing rules are coming back into effect later this year at the European Central Bank. The ECB has been allowing banks, including those holding significant portions of Greek bonds, to put up riskier investments as collateral for loans to help them through the financial crisis.
But the ECB is tightening those standards later this year, when banks will be allowed to use only top-rated bonds as collateral. Fears that Greek bond ratings may lose their investment-grade status in the coming months have led some banks to sell them at a loss.
"As they see the ratings on these bonds going down, investors can't wait anymore -- they are acting now, liquidating them at huge losses into the market," said Steven Major, head of fixed-income research at London-based HSBC.
A default by Greece or any other country in the 16-nation eurozone would be potentially catastrophic to the region, leading, analysts say, to possible eviction from the monetary union and severely testing the soundness of Europe's integration. Most analysts believe the eurozone's economic powerhouses might ultimately come to the aid of Greece, currently the most troubled nation in the region, in much the way Washington bailed out Mexico in the 1990s. European officials have offered mixed signals about their willingness to do so.
But analysts say the alternative -- having the International Monetary Fund rescue a eurozone country -- would be so deeply embarrassing to Europe's major powers that they would opt to aid Greece.
Analysts are also growing more worried about the U.S. budget deficit, which remains higher than that of most eurozone nations. But Greece, Spain and other troubled countries in Europe do not command the kind of economic clout the United States does and, in many cases, have yet to escape the Great Recession.
Spain, for instance, reported Friday that it has yet to climb out of the recession, announcing that its economy contracted by 0.1 percent in the fourth quarter of 2009. Its unemployment rate is hovering near 20 percent and is still foundering amid a U.S.-style real estate bust.
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