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Les articles intelligents sont trop rares donc je voulais partager celui-ci. J’en précise pour rajouter qu’on taxe allègrement le Royaume-Uni de pénaliser l’UE en faisant cavalier seul sur la politique fiscale européenne. Néanmoins, ces dernières semaines, le Royaume-Uni s’est montré capable d’adopter une législation fiscale, sinon plus stricte que celle de l’UE, en tout cas plus en accord avec les idées mentionnées dans l’article ci-dessous. Des idées bien justes à mon goût…

Publié le 18/12/2011

Une interview de Vincent Bénard accordée à Atlantico, dans laquelle l’auteur explique pourquoi il aurait (et il faut aujourd’hui) laisser les banques faire faillite.

Vincent Bénard est analyste à l’Institut Turgot (Paris) et, depuis mars 2008, directeur de l’Institut Hayek (Bruxelles). C’est un spécialiste du logement et un observateur attentif de la crise financière de 2007-2008. Il a par ailleurs consacré de nombreux textes à la problématique du changement climatique.

Atlantico : Un peu partout en Europe, les banques sont mises à l’index et désignées comme les grandes responsables de la crise de la dette. Y-a-t-il réellement quelque chose à leur reprocher ?

Vincent Bénard : On ne peut pas désigner les banques comme uniques responsables. Si les États ont autant emprunté, ce n’est pas parce que les banques leur avaient mis un revolver sur la tempe !

Toutefois, les banques, comme les compagnies d’assurance et un certain nombre d’institutions financières, ont mal jugé le crédit qu’elles pouvaient accorder aux États. Elles l’ont surestimé en ne faisant pas attention au fait que les États franchissaient la ligne jaune. Elles ont par conséquent truffé leurs bilans d’obligations d’État qui aujourd’hui menacent de perdre beaucoup de valeur. Les banques sont donc responsables en tant que mauvais prêteurs, puisqu’elles ont mal estimé leurs risques. Elles ont cependant été bien aidées par les États qui ont mis en œuvre des règlementations qui les incitaient très fortement à se garnir d’obligations d’État, via les réglementations Bâle I, II et III.

C’est la poule et l’œuf : les États promeuvent des règlementations approuvées à l’époque par les grandes banques qui y voient des avantages, mais qui les obligent à prendre beaucoup d’obligations souveraines en portefeuille car c’est le seul moyen de ne pas trop augmenter leur niveau de fonds propres règlementaire. Le législateur avait en effet décidé que pour limiter les risques pris par les banques, il fallait que celles-ci disposent d’un niveau minimal de fonds propres. Or si les banques disposaient de tels types d’actifs, elles pouvaient disposer de fonds propres minimaux, alors que si elles avaient des actifs plus risqués, il fallait majorer les fonds propres minimaux d’un certain coefficient. Or les obligations d’État notées AAA étaient les plus sûres possible. C’est pourquoi les banques en ont achetées beaucoup ; tout comme elles ont beaucoup acheté de subprimes aux États-Unis. Il s’agit donc une crise de connivence entre l’État et les banques, les banques trouvant dans les États un allié précieux, et les États trouvant dans les banques des alliés essentiels pour financer par le prêt tout le déficit qu’ils n’osent pas combattre.

Est-ce pour cela que les États sont venus en aide aux banques ? N’aurait-il pas fallu plutôt les laisser tomber en faillite ?

Quand les banques ont été au bord de la faillite, les États sont venus à leur secours, alors que déjà à l’époque, il aurait fallu, selon moi, les laisser tomber. Nous étions alors 2008, avec les grandes faillites bancaires comme AIG ou Lehmann Brothers.

À l’époque, on a d’ailleurs découvert que le sauvetage d’AIG par la Fed avait permis de sauver également quelques grandes banques européennes telles que Deutsche Bank ou la Société Générale.

Un entrepreneur, quand il fait de mauvaises affaires, est mis en faillite puisqu’il est responsable. Les actionnaires perdent alors leur mise et les créanciers se partagent la dépouille et perdent parfois eux-aussi beaucoup d’argent. C’est une règle normale : les gens qui font des erreurs doivent les payer. Le problème c’est que les États ont une peur panique de la faillite des banques car aujourd’hui il n’existe pas dans la plupart des pays du monde un processus de faillite bancaire digne de ce nom.

Revenons sur les deux métiers principaux des banques :

  • Elles assurent votre liquidité personnelle (comptes en banque, cartes bleues, chéquiers, billets de banques, etc)
  • Elles assurent le financement de l’économie (particuliers ou entreprises)

Le problème c’est que ces deux activités sont tellement imbriquées que si les banques font faillite sur le volet financement de l’économie – ce qui est en train de se produire – nos comptes en banque seront impactés. Évidemment, aucun État n’a envie de voir une telle source de chaos se produire.

On pourrait envisager des façons de séparer ces deux activités, mais aujourd’hui elles ne le sont pas et il faut faire avec. Pas le temps de faire de la philosophie ! Par conséquent, si demain une banque fait faillite, il faut protéger les déposants. Concrètement, les premières pertes doivent être prises par les actionnaires, si les pertes excèdent le montant des fonds propres, les pertes suivantes doivent être prises par les créanciers. Et à ce moment là, la meilleure des solutions reste de forcer une conversion des dettes en capital, en commençant par les dettes à long terme puis, si ça ne suffit pas, par les dettes à court terme. Évidemment si les créanciers risquent la faillite à cause de cela, on leur applique le même régime. Précisons que pour que le petit épargnant soit impacté par une banqueroute d’une banque, il faudrait tout de même que la faillite soit extraordinairement élevée !

Les États doivent prendre leur responsabilité pour qu’en cas de faillite ce soient les actionnaires et les créanciers obligataires qui « boivent le bouillon ». Malheureusement, ceux-ci appartiennent au monde financier et ne sont pas d’accord : eux préfèrent que les États fassent payer… les contribuables !

Mais certains pays n’ont pas agi ainsi : en 2000, en Serbie, une banque qui se croyait « too big to fail » a fait faillite. Qu’a fait le gouverneur de la Banque centrale ? Il a fermé la banque au nouvel an en indiquant que la Banque centrale prenait le relais pour les opérations courantes, en donnant six mois aux clients pour indiquer dans quelles banques saines ils souhaitaient transférer leurs avoirs. Puis la Banque centrale a transféré à la banque saine en question les avoirs, ainsi que les actifs de la banque qui avaient fait faillite, en prenant en compte la valeur de dépréciation.

Le problème c’est qu’en général les États sont tellement dépendants des banques pour financer leurs déficits qu’ils n’osent pas aller à l’encontre du secteur financier. Le milieu bancaire a les compétences nécessaires pour faire du lobbying efficace auprès des hommes d’État, sans compter qu’on ne sait pas exactement de quoi sont faites toutes ces années de relations incestueuses entre les banques et les politiques, ce qu’ils savent les uns sur les autres, les services qu’ils se sont rendus…

Aujourd’hui, c’est trop tard pour agir ?

Il n’y a pas de faillite sans douleur. Aujourd’hui, il est beaucoup trop tard pour qu’une banque fasse faillite sans douleur. Mais on peut la minimiser. En Islande, ils ont dit « nos banques vont faire faillite, et on verra si on peut rembourser les créanciers ». Suite à un référendum, le Président islandais a indiqué qu’il n’était pas question que ce soit les contribuables qui renflouent les caisses. Résultat : le liquidateur a bien travaillé et a réussi à rembourser les déposants. Mais les Islandais ont des petites banques. Ailleurs, ce pourrait être beaucoup plus difficile…

(Propos recueillis par Aymeric Goetschy)

Source:contrepoints

Introduction :

1) Article: NY Times: climate change too big for current architecture, By JOHN M. BRODER, Published: December 11, 2011

What really is at play here are politics on the broadest scale, the relations among Europe, the United States, Canada, Japan and three rapidly rising economic powers, China, India and Brazil. Those international relations, in turn, are driven by each country’s domestic politics and the strains the global financial crisis has put on all of them. And the question of “climate equity” – the obligations of rich nations to help poor countries cope with a problem they had no part in creating – is more than an “environmental” issue.

Effectively addressing climate change will require over the coming decades a fundamental remaking of energy production, transportation and agriculture around the world – the sinews of modern life. It is simply too big a job for the men and women who have gathered for these talks under the United Nations Framework Convention on Climate Change, the 1992 treaty that began this grinding process.

China still is classified as a developing country and is thus exempt from any emissions limits, but it has a vastly larger economy than it had in 1992 and recently surpassed the United States as the world’s largest emitter of greenhouse gases. The United States is determined to sweep away those distinctions and work toward a system where all countries are bound by the same rules.

Two years ago, more than 100 heads of state and leaders of governments, including President Obama, joined the United Nations climate conference in Copenhagen hoping to write a new, legally binding treaty covering all parties. That assignment proved too much even for the leaders, and the meeting collapsed in acrimony and finger-pointing. Few top leaders have shown up at the two subsequent meetings, in Cancún, Mexico, in 2010 and in Durban this year. The agenda has narrowed and expectations have shrunk, yet the ship sails grimly on.

Mary D. Nichols, chairwoman of the California Air Resources Board, which arguably has done more to reduce carbon pollution in the United States than any other body, was in Durban as an observer. Ms. Nichols said that given the inability of the international bureaucracy or the United States Congress to move decisively on global warming, the job would increasingly fall to the states and local governments.

“Instead of waiting for them to negotiate some grand bargain, we have to keep working on the ground,” she said. “Progress is going to come from the bottom up, not the top down. That’s just reality.”
http://cop17insouthafrica.wordpress.com/2011/12/10/ny-times-climate-change-too-big-for-current-architecture/

 

THE moment:

2) Article: U.S. Climate Envoy Seems to Shift Stance on Timetable for New Talks, By JOHN M. BRODER, Published: December 8, 2011

Todd D. Stern, the Obama administration’s special envoy for climate change, was put on the defensive by a narrative developing here that the United States opposed any further action to address global climate disruption until after 2020, when the 1997 Kyoto Protocol, a primary United Nations climate agreement, and voluntary programs negotiated more recently will have run their course. He firmly denied that the United States was dragging its feet and, somewhat ambiguously, endorsed a proposal from the European Union to quickly start negotiating a new international climate change treaty.

Mr. Stern’s statement to delegates from more than 190 nations at the annual climate conference was disrupted by a 21-year-old Middlebury College junior, Abigail Borah, who told the assembly that she would speak for the United States because Mr. Stern had forfeited the right to do so.
“I am speaking on behalf of the United States of America because my negotiators cannot,” said Ms. Borah, who is attending the conference as a representative of the International Youth Climate Movement. “The obstructionist Congress has shackled justice and delayed ambition for far too long. I am scared for my future. 2020 is too late to wait. We need an urgent path to a fair, ambitious and legally binding treaty.”
Scores of delegates and observers gave her a sustained ovation. Then the South African authorities threw her out of the conference. “That’s O.K.,” Ms. Borak, who is from Princeton, N.J., said later by telephone. “I think I got my point across.”

Mr. Stern then seemed to endorse a European Union proposal to adopt a “road map” for future discussions leading to a formal climate change treaty to be completed by 2015 and to take effect in 2020. He had previously given lukewarm support to the plan, saying only that the United States was open to a “process” for a future agreement. His language was somewhat convoluted, but he said that the European Union had called for a road map “that the U.S. supports.”
The Europeans and a large majority of smaller nations are adamant that any future accord be legally binding, while China, India, the United States and several other major emitters of greenhouse gases have attached some difficult conditions to participation in any mandatory agreement.
http://www.nytimes.com/2011/12/09/science/earth/us-climate-envoy-seems-to-shift-position-on-timetable-for-new-international-talks.html?_r=1&ref=johnmbroder

 

The results of the talks:

3) Article : U.N. Climate Talks End With Deal for New Emissions Treaty, By JOHN M. BRODER, Published: December 11, 2011

Two weeks of contentious United Nations talks over climate change concluded Sunday morning with an agreement by more than 190 nations to work toward a future treaty that would require all countries to reduce emissions that contribute to global warming.

The result, coming as the sun rose after nearly 72 hours of continuous wrangling, marked an important but very initial step toward the dismantling of a 20-year-old system that requires advanced industrialized nations to cut emissions while allowing developing countries — including the economic powerhouses China, India and Brazil — to escape binding commitments.

The deal on a future treaty was the most contested element of a package of agreements that emerged from the extended talks here. For now it remains a pledge to move forward, and all the details remain to be negotiated.

The delegates also agreed on the creation of a fund to help poor countries adapt to climate change — though the precise sources of the money have yet to be determined — and to measures involving the preservation of tropical forests and the development of clean-energy technology.

The European Union had pushed hard for what it called a “road map” to a new, legally binding treaty against fierce resistance from China and India, whose delegates argued passionately against it. They said that mandatory cuts would slow their growth and condemn millions to poverty.

“Am I to write a blank check and sign away the livelihoods and sustainability of 1.2 billion Indians, without even knowing what the E.U. ‘road map’ contains?” asked India’s environment minister, Jayanthi Natarajan. “Please do not hold us hostage.”

The deal renews the Kyoto Protocol, the fraying 1997 emissions agreement that sets different terms for advanced and developing countries, for several more years. But it also begins a process for replacing it with something that treats all nations equally. The expiration date of the protocol — 2017 or 2020 — and the terms of any agreement that replaces it will be negotiated at future sessions of the governing body, the United Nations Framework Convention on Climate Change.

The United States never signed the Kyoto treaty because it did not accept its division of labor between developed and developing countries.

The conclusion of the meeting was marked by exhaustion and explosions of temper, and the result was muddled and unsatisfying to many. Observers and delegates said that the actions taken at the meeting, while sufficient to keep the negotiating process alive, would not have a significant impact on climate change.

http://www.newschief.com/article/NY/20111211/ZNYT03/112113000/-1/news100?p=all&tc=pgall

 

4) Article: Durban climate change: the agreement explained, By Louise Gray, Environment Correspondent, Durban, South Africa, 11 Dec 2011

What has happened in Durban?
More than 190 countries met for two weeks for the latest round of United Nations climate change negotiations. The aim of the UN Framework Convention on Climate Change (UNFCCC) is to stop global warming by limiting global carbon emissions. The talks dragged on two days longer than expected, making this the longest UNFCCC meeting ever experienced.

What has been achieved?
At the end of the gruelling talks the world decided on the “Durban Platform for Enhanced Action”. The two-page document commits all countries to cutting carbon for the first time. A “road map” will guide countries towards a legal deal to cut carbon in 2015, but it will only come into affect after 2020.
For more details, read Article: U.N. Climate Talks End With Deal for New Emissions Treaty, By JOHN M. BRODER, Published: December 11, 2011

Is this a step forwards for the world or backwards?
It depends who you ask. It is a success in terms of keeping the climate change talks on track after it was feared no decision would be reached, […] especially after the collapse of the Copenhagen Summit in 2009. The EU, who led calls for the so-called “road map” are hailing it as “an historic breakthrough”. The bloc point out that this is the first time that the world’s three biggest emitters: The US, China and India have signed up to a legal treaty to cut carbon.
However it is a failure in terms of the expectations of certain countries, like the small island states, and the charities, who wanted a much stronger agreement. They argue that the legal language needs to be a lot stronger to force countries to act and dates should be brought forward to stop global warming. They point out that carbon emissions will have to peak by 2020 and start to come down for the world to limit temperature rise to 2C.

What about the Kyoto Protocol?
The EU and a few other developed countries have signed up to a second commitment period of the Kyoto Protocol, that ends in 2013. This will ensure that there is still some form of legally binding treaty to cut carbon in place in the interim eight years before the new agreement comes into force at the end of 2020. However most of the developing world and the US remain in voluntary agreements to cut carbon until 2020.

What about the money on the table?
The world has agreed to a help poor countries cope with climate change through a new Green Climate Fund that will hand out around £60bn per annum from 2020. A body will be set up to distribute and manage the funds. It is not yet clear how the money will be raised. Possible plans to raise fund from a tax on shipping or aviation have not been signed off.

What about deforestation?
A scheme to pay poor countries not to chop down trees, Reducing Emissions from Degradation and Deforestation (REDD) has barely moved forward in the meeting as again countries cannot decide how to raise the cash. There are concerns that money from carbon markets could make it too corrupt and that indigenous people will be pushed out. However REDD remains on the table and will be developed over the next few years as part of the new deal alongside rules in the Kyoto Protocol to stop deforestation.

What next?
The next UNFCCC meeting in Quatar next year will start negotiations towards the 2015 deal, including the kind of targets each country will sign up to. There will also be discussion of carbon cuts for the EU and a few other countries under the second commitment period of the Kyoto Protocol. The rest of the world will be pushed to increase their targets to cut carbon through voluntary agreements before 2020 through civil society and political pressure.

What is the gigatonne gap?
There remains a gap between how much the world has pledged to cut carbon and how much carbon emissions need to come down to stop global warming according to the science. The UN estimate there is still a six tonne “gigatonne gap” unless ambitions can be scaled up through voluntary agreements over the next decade.

What was the sticking point that brought the talks to the edge of collapse?
In the closing hours of the meeting it came down to a dispute over legal form. India and China, the world’s two biggest emerging economies, wanted the vaguest “legal outcome” because this would allow a looser treaty on cutting carbon for developing countries. But the EU insisted on “protocol or legal instrument” for all. In the end a compromise was found of “agreed outcome with legal force” that both sides could live with.

Who are the heroes and villains?
India emerged as the villains, after Jayanthi Natarajan, India’s Environment Minister, refused to sign up a deal that would commit the developing world to a strong legal treaty. She was backed by China, who also seemed reluctant to cut carbon at home.
However although the protests by the world’s second and third biggest carbon emitters claimed their concerns are based on “climate justice”. They argue that they need to carry on emitting carbon to bring millions of people out of poverty over the next few decades.
The US, as the world’s biggest emitter, made it clear they were also happy with a weak legal outcome.
The EU rescued the talks from collapsing but it could be a bitter victory as the deal is so vague and fails to cut carbon fast enough.
The South Africans were criticised for letting the conference go into extra time for two days but ultimately it has been a success for them by achieving some sort of a deal.

What does it all mean for ordinary people?
Europe is already cutting carbon but this will increase pressure to increase the target from 20 per cent by 2020 to 30 per cent by 2030. As part of the bloc it will also encourage the UK to increase their targets, although they are already committed to 34 per cent by 2020. The rest of the world will also be encouraged to cut carbon on a voluntary basis at first and as part of the deal in 2020.
It could mean the carbon price increases and carbon markets begin to function better pushing up the price of fossil fuels but ensuring investment in wind and solar. In the UK this could mean ‘green jobs’ for the economy but also costs to the tax payer through energy bills to pay for the new power stations.
The new Green Climate Fund will also be paid for by tax payers.

Didn’t this conference just produce more carbon towards global warming?
Well yes. It has been estimated that the carbon footprint for the event could be in the order of 15,000 tonnes of CO2 equivalent. However this does not include the flights of the 13,000 delegates. Durban City Council is offsetting the footprint by through an ecosystem rehabilitation project in the uMbilo catchment west of Durban. It is expected to offset 16,000 CO2e.
http://www.telegraph.co.uk/earth/environment/climatechange/8949099/Durban-climate-change-the-agreement-explained.html

 

The followings:

5) Article: Canada is first nation to pull out of Kyoto Protocol, By David Ljunggren and Randall Palmer, Reuters, Dec 12 2011
Canada breaks the news upon returning from climate talks in Durban, where countries agreed to extend Kyoto for 5 years and hammer out a new deal.
“To meet the targets under Kyoto for 2012 would be the equivalent of either removing every car truck, all-terrain vehicle, tractor, ambulance, police car and vehicle off every kind of Canadian road,” said Environment Minister Peter Kent.
Canada on Monday became the first country to announce it would withdraw from the Kyoto Protocol on climate change, dealing a symbolic blow to the already troubled global treaty. Canada, a major energy producer which critics complain is becoming a climate renegade, has long complained Kyoto is unworkable precisely because it excludes so many significant emitters.
The right-of-center Conservative government of Prime Minister Stephen Harper, which has close ties to the energy sector, says Canada would be subject to penalties equivalent to $14 billion Canadian dollars ($13.6 billion U.S.) under the terms of the treaty for not cutting emissions by the required amount by 2012. The Conservatives took power in 2006 and quickly made clear they would not stick to Canada’s Kyoto commitments on the grounds it would cripple the economy and the energy sector. Canada is the largest supplier of oil and natural gas to the United States and is keen to boost output of crude from Alberta’s oil sands, which requires large amounts of energy to extract.
Kent said Canada would work toward a new global deal obliging all major nations to cut output of greenhouse gases China and India are not bound by Kyoto’s current targets.

Canada’s former Liberal government signed up to Kyoto, which dictated a cut in emissions to 6 percent below 1990 levels by 2012. By 2009 emissions were 17 percent above the 1990 levels, in part because of the expanding tar sands development.

http://www.mnn.com/earth-matters/climate-weather/stories/canada-is-first-nation-to-pull-out-of-kyoto-protocol

 

6) Article: Qatar, a Greenhouse Gas Titan, to Host U.N. Climate Meeting, By JOHN M. BRODER, November 29, 2011

The Persian Gulf nation of Qatar has been selected as the site of the United Nations climate change meeting next year, edging out South Korea. The announcement from the United Nations Framework Convention on Climate Change said Qatar and South Korea would work closely to mold the agenda for next year’s meeting, known as the 18th annual Conference of the Parties, or COP 18. The meetings rotate among regions. The 2009 meeting was held in Copenhagen; last year’s meeting was in Cancún, Mexico.
The press release does not mention that Qatar, which sits atop vast natural gas deposits, has the highest per-capita greenhouse gas emissions in the world, according to the United Nations Statistics Division. Qatar’s 2007 annual per-capita emissions of 55 tons were nearly three times those of the United States.
http://green.blogs.nytimes.com/2011/11/29/qatar-greenhouse-gas-titan-will-host-next-u-n-climate-summit/?ref=johnmbroder

By Steve Gutterman

 

 

 

 

 

 

 

 

 

MOSCOW | Sat Dec 10, 2011 2:43pm EST

In the middle of the crowd on Saturday at Russia’s largest opposition protest in years, a big banner bore a simple message: Putin must go.

Anger over Russia’s December 4 parliamentary election drew a diverse crowd to a cold embankment in Moscow, where they stood for hours under wet snow to demand a rerun of a vote Putin’s foes say was rigged in his ruling United Russia party’s favor.

But while organizers did not include the prime minister’s resignation in their list of demands, much of the ire was directed at Putin.

For Olga, 38, the vote reconfirmed a conviction that as Putin has gained power over more than a decade as president and then prime minister, the people he governs have become increasingly powerless.

“It’s his system,” said Olga, a Muscovite who would not give her last name.

Felix, 68, a retired military officer who remembers the hug demonstrations that accompanied the collapse of the Soviet Union 20 years ago, said he wanted Putin out but had no hope that this could be accomplished through elections.

“There is no way to change those in power within the electoral system they have set up, so we need to use other methods,” he said, waiting for friends on a subway platform before the rally and ignoring a policeman with a megaphone calling for people to leave the station.

“More radical actions are needed, but the people are not ready for that yet … so for now we will protest,” he said. “People must have their say and express their opinion.”

PUTIN ON PATH BACK TO PRESIDENCY

At the protest, one man did so silently. Standing almost motionless for minutes at a stretch, he held a simple A4 size sheet of paper printed with the slogan: “Mr Putin, my civil rights are not your property.”

Most of the protesters were more vocal, mixing shouted calls for a new election with chants of “Down with Putin!” and — one of the standard slogans at much smaller protests held by Kremlin foes before the election — “Russia without Putin!”

That Russia may not come for years, despite nationwide protests whose size — unthinkable even a few weeks ago — prompted one speaker to say that opposition flags would soon fly from the Kremlin’s towers.

Recent opinion polls have shown Putin, president for eight years until 2008 and prime minister since then, remains the most popular politician in Russia.

He can count on millions of votes in a March 4 presidential election in which polls indicate he will win a six-year term. If he does, he could run again and potentially rule until 2024.

“Putin won’t leave and there won’t be any major changes in the country,” said Ernst Klyavitsky, 75, a rewired electrician who said he had “never missed a protest” against Communist rule as the Soviet Union was on the verge of collapse.

“But the authorities need to know how angry we are,” he said.

They know now and are frightened, said Boris Baranov, 36, analyst and translator for a Moscow engineering firm who waited outside a kiosk near the protest site as his friends stocked up on rolls to fortify them during the four-hour rally.

“Authoritarian governments are more sensitive to public opinion than many think,” Baranov said.

On the streets around the protest site at Bolotnaya Square, hundreds of helmeted riot police with truncheons and body armor and trucks full of troops seemed to support his argument.

“You can tell that those in power are worried — they fear this,” Baranov said of the protests.

(Reuters) – (Additional reporting by Thomas Grove, Editing by Timothy Heritage)

Source: reuters.com

http://planetwatcher.tumblr.com/post/14035174284/protesters-chant-for-a-russia-without-putin

The NY Times titles “Euro Crisis Pits Germany and U.S. in Tactical Fight”.

Even as European leaders put together their latest response to the euro crisis last week, a German-American clash over how best to manage a vast financial crisis and put the world economy back on a sound footing was set in stark relief.

According to the NYTimes’ article, there are basically two positions: The one that says that European countries should do anything to satisfy the markets and the one that condemns all quick action and gives priority to structural changes and profound questioning of the past choices.

– German Chancellor Angela Merkel would be the supporter of the latter:

Chancellor Angela Merkel of Germany defied skeptics and laid the groundwork for a deeper union that she said rights the mistakes of the euro’s birth and puts integration on a stable path for the long term. In the process, she forced German fiscal discipline on Europe as the prescription for combating the ills that afflict the region.”

– And President Obama would be the herald of the first one: “at the heart of the debate is the question of how far governments must bend or even bow to the power of markets. Mr. Obama sees retaining the stability of markets and the confidence of investors as a primary goal of government and a prerequisite for achieving any major changes in public policy.”

And the article to transcribe Almut Möller’ s words who is a European Union Expert at the German Council on Foreign Relations: “It’s a battle of ideas […]. There is a different understanding of how to set up a sustainable economy in a globalizing world. Here there is a major rift.”

To my opinion, it’s not just a difference of strategies but a difference of conceptions, how they consider their duties and how they define financial markets.

Whereas both of them see the market as a source of money to invest in the country, they don’t use it the same way.

It’s clear that the German way is based on the idea that there is no such thing as a market’s will. The market is just the addition of investors (different kinds of investors) just trying to figure out where to invest their money. Basically, there must be two criteria to make a country a safe place for investors.

1) The country has to create value. This may sound obvious but there is value and value. It’s a broad concept and we might need here to return a bit to our manuals of economy. The value is usually associated with the GDP. But there are at least two ways of calculating the GDP: the total of the expenses or the total of the created assets. In the German mind, the value comes naturally from the industry. People’s work aims to produce products and services that will be sold for a certain price and that will count for the revenue of a country. As long as workers keep producing stuff that brings in more than it costs, everything’s fine. The country gets richer and richer and everyone is happy… as long as the fiscal system is efficient enough to guarantee durability.

2) That’s the second element supporting the safeness of country. The fiscal system has to make sure that the state’s treasury will receive a part of the revenue in exchange of the spending for infrastructure. The government asks for money to the financial market, invest in the infrastructure so that the industry can flourish easily and then ask for a return to pay back the debt and hopefully make a profit. It is the government’s duty to manage this fiscal system between the too greedy pole where companies and people are suffocating under the weight of taxes and the too lax extreme keeping the state from the riches while the social subventions increase.

Therefore, the German conception would be that investors will invest in a country where industry is strong because it makes the country’s growth sustainable and where fiscal system is cautious and allows the government to pay its debts without increasing them beyond the no-recovery ceiling. And the government has to invest warily to help the industry without wasting money and use the fiscal policy as a leverage to make its investment work.

On the other hand, we have the American conception, more cicada than ant. Let’s try to summarize this conception in two elements:

1) The Anglo-American approach of the value has much more to do with the addition of the expenses than with the addition of the productions. It is generally admitted in these countries that the West can’t compete with the emerging countries in terms of production costs. The theory of the competitive advantages says that each country should focus on what they do best. The industry has been given up and only survived the stated funded big industries (cars, pharma, and so on), the state funded agriculture, the research and the services. No matter the production, because in these countries the value creation is supported by consumption and consumption is supported by credits and subventions. So the government’s duty is to make sure that its constituents can consume. To do so, the financial system has to be liquid and fluent. And that’s exactly where the financial markets intervene.

2) Financial markets are seen as a whole flow of money going where there is a profit opportunity. All those who work in the financial industry are paid to find a profit… every day. Financial markets are like a big hungry lion looking for investments, credits, in short looking for being placed. Of course, this lion wants a return on invest and as big as possible. Like every starving animal, financial markets think about eating now and just ask for some basic guarantees. In times of economic pressure, they want someone to smooth it up. And that’s the second duty of the State, provide guarantee for its people.

So Anglo-American leaders think that as long as there is consumption, there is growth and growth attracts markets’ money. The government has to reinforce the credibility of its solvency acting of the consumption level in any ways.

The result is that:

Many Germans also view the Anglo-American infatuation with the financial industry as the root of the West’s decline in competitiveness with the rising East. Big banks create and exploit bubbles, requiring huge bailouts, they say, without creating sustainable growth. Meanwhile, German exports will set a record this year, breaching the 1 trillion euro mark, or roughly $1.3 trillion, for the first time.”

Western “Economists have fretted for months that forcing austerity plans on Europe’s troubled economies — while a good long-term solution — could lead to deep recessions in the short term, compromising any chance for effective change.

In anayways, the result is that Germany masters the decision making process in Europe. Well they write the check for the rest of Europe (with the support of France, Netherlands, Finland,…), and, above all, they can borrow money at better costs than all the neighbours. That’s the main point. When no one can really afford a massive rescue, Germany still benefits from credibility to borrow relatively cheap money.

On a political level, Mrs. Merkel could look back on last week’s meeting of leaders in Brussels and declare, “We have succeeded.” Where her mentor, former Chancellor Helmut Kohl, failed, Mrs. Merkel managed to push through enforceable oversight of government spending that would allow the European Court of Justice to strike down national laws that violate fiscal discipline.

No one here is saying that Germany succeeded only thanks to its economic policy. European Union has profited to Germany and its neighbours’ frivolity contributed to the past good results. But as matter a fact, “Mrs. Merkel, the hard-line austerity queen of Europe, has won a hollow victory, one that will unravel like every other solution that was proclaimed as lasting but proved to be fleeting.

In opposition, the NY Times awards Mr. Obama of a victory against the markets: “Mr. Obama is fiercely proud of the record he achieved in keeping not just the United States but the entire world out of an acute financial meltdown after 2008, presiding over enormous stimulus spending in tandem with unrestrained support from the Federal Reserve. Now, the president and his allies say that in doing so, they may well have prevented the world from falling into another Great Depression.”

As we said, what the American way would recommend is to increase the consumption by stimulating the economy. Put it short, Mr. Obama recommends that European countries spend money instead of pressuring people. “Strong governments can borrow cheaply, mainstream economists on both sides of the Atlantic argue, and have an obligation to intervene more aggressively than they would in normal times to make up for the slump of private demand.”

Many observers, as well as many politicians, criticize German’s obsession with inflation. Journalists usually explain that it’s because of history and the traumatism of the 1920’s hyperinflation. “Germans are staunchly opposed to any solution that involves greater debt, but even more so to policies that might court inflation, their historic obsession.”

But the reasons might be found also in today’s situation. German people don’t consume a lot and they save as much as they can. Some theorists explained that trend by the protestant heritage. The consequence is that German constituents hold savings in their banks. Therefore, it’s comprehensible that the German Chancellor doesn’t want anything that would increase inflation and shrink the real value of German’s savings.

But the German Chancellor is not the only one taking care of national interests: “President Obama, of course, faces re-election and sees Europe as one of the biggest threats to his chances, as it could tip the American economy back into recession if austerity worsens the slump there. German officials are well aware of that and complain privately that electoral results are Mr. Obama’s chief concern.

The article describes Germany’s behaviour in a frightening way: “The Germans, for their part, seem almost to welcome the collapse of market confidence: without the rising pressure from markets, Silvio Berlusconi would not have resigned as prime minister of Italy. And most European partners would not have given the European Court of Justice the power to overturn laws inconsistent with fiscal discipline without the incentive of fear.

Implicitly, the article gives to the “financial markets” the power to overthrow governments without people’s consent. Isn’t it naïve? This is actually the result of the American conception of the financial market. From the German perspective, we may consider that Mr. Berlusconi’s administration was not able to deal with the crisis and then took its responsibilities. A change was needed and when it can’t come from inside then it has to come from outside. Moreover, should we be ready to do whatever it takes to calm down the financial markets? But at the same time, can’t we accept that sorting out this crisis requires a change of government? That’s another debate.

The main point here is that the one who pays the bill is usually to claim the right to impose his way.

However, who is going to pay the bill?: “Americans take a far more accommodating approach to the problem of moral hazard than Germans. The time for a reckoning is after financial stability has been restored, Americans say; otherwise, it is ordinary people, not the rich, who suffer most in a downturn”.