Ackermann interview sparks debate on Greek rescue
… jika seorang bos tiba-tiba ngoceh2, maka orang-orang akan menoleh sejenak, tapi lalu berbalik arah lage ke topik yang sebenarnya … well, seorang bos boleh ngoceh2 apa aja seh, persoalannya KENAPA BARU SEKARANG NGOCEH2 … bukan kah sejak taon2 sebelumnya, krisis Yunani sudah mulai … itu artinya neh bos bak harimau yang dibangunkan dari tidurnya … apakah analisisnya didengarkan beneran oleh pasar … well, kita liat aja (jauh banget dibandingkan dengan Roubini)
CEO Ackermann says Greece is unlikely to pay its debt
Deutsche Bank CEO Josef Ackermann told German public television that he doubted Greece could pay off its debt. This set off a new debate about whether the Greek bailout will work – and the future of the euro.
Deutsche Bank CEO Josef Ackermann walked a narrow line Thursday when he expressed his doubts on public broadcaster ZDF that Greece will be able to pay down its debts despite a 110 billion euro ($138 billion) international rescue package.
Ackermann was more optimistic about the success chances of a separate 750 billion euro fund intended to aid faltering economies in Spain and Italy.
“I have my doubts about whether Greece is really in a position to step up its efforts,” Ackermann said in the ZDF interview.
The rescue package is in part a political maneuver intended to show European resolve to secure its joint currency and maintain solidarity.
The current financial rescue gives Greece temporary liquidity
Chancellor Angela Merkel said Thursday as Polish Prime Minister Donald Tusk was awarded the Charlemagne Prize for promoting European understanding that the European Union is facing an “existential” crisis.
“If the euro fails, it’s not just the currency that fails, but Europe and the idea of European unification,” she said, adding that if the crisis can be overcome, “Europe will be stronger than ever before.”
While Ackermann said on ZDF the European Union is sure to lose the money it invests in Greece, he emphasized the necessity of avoiding a Greek bankruptcy. That would lead to a “kind of meltdown” and would “very certainly affect other countries,” he said.
According to Friedrich Heinemann of the Centre for European Economic Research in Mannheim, Ackermann found himself in a tricky situation. He needed to act as a public figure capable of drumming up support and, at the same time, protect his creditability.
Greece will unlikely be able to pay off its nearly 300 billion euro debt, but the rescue package will enable it to hold out for a few more years, according to Heinemann.
“In the end, there will be a restructuring of Greece’s debt… but in the meantime before that happens, other countries will make such progress that the danger of a meltdown will no longer exist,” he told Deutsche Welle. “This means maybe in 2012 a restructuring of Greece’s debt can be undertaken without shock waves being triggered.”
But other economists are less optimistic about the future of the common European currency.
Economist Joachim Starbatty is skeptical about the future of the euro
Joachim Starbatty, professor emeritus of economics at the University of Tubingen, said Greece should end its use of the euro. Instead, the country should return to its former currency, the drachma, and devalue it based on market factors, he said.
“Solidarity doesn’t mean that we should all sink into this swamp of debt,” Starbatty told Deutsche Welle. “Solidarity means each country should have an opportunity to ascend again economically.”
If Greece were to use a devalued drachma, the favorable exchange rate would make its exports more competitive and its tourism industry more attractive, according to Starbatty.
“It is the only possible solution; they don’t have solid economic ground under their feet anymore,” he said. “I’m advocating a solution with which a long-term future for Greece and Europe can be secured. The politicians are sticking their heads in the sand and believe they can make debts disappear by creating new debts.”
Problem only delayed
In contrast to Starbatty, Heinemann believes Deutsche Bank CEO Ackermann was correct to say the euro does have a future.
The crisis has led to violent demonstrations in Greece
“Ackermann is right,” Heinemann said. “Every expert who looks at the situation will come to the conclusion that the subsidies will bridge Greece’s liquidity problem, but not solve the insolvency problem. But keep in mind that these troubled nations states have an enormous desire to reduce their expenditures, and at the moment the global economy is playing along.”
Asgar Belke, of the German Institute of Economic Research in Berlin, said while Ackermann’s speech was “practical and adept,” Greek debt is sure to present more problems in the future. The country’s savings ratio is low, he said, and its ability to collect taxes owed is insufficient.
“I think in the future we’ll find ourselves confronted with the same problem, and then we’ll have to pay again,” Belke told Deutsche Welle.
Author: Gerhard Schneibel
Editor: John Blau
ECB suffers credibility blow
… para analis juga berposisi sama seperti sang bos, yaitu NGOCEH2 PAS KEJADIAN … kenapa harus MENUNGGU LEBIH DARI 1 TAON UNTUK BERSIKAP? apakah karena sedang terjadi krisis yang lebe gede… tapi kenapa tidak 1/2 taon yang lalu … bahkan di kalangan orang paling pintar di dunia ini pun, perilaku pencegahan BELUM SAMA SEKALI TERJADI … well, be prepared always for the worst … liat aja dah
ECB fights claims of bowing to political pressure
The credibility of the European Central Bank is on the line following a decision to intervene in financial markets under a eurozone rescue plan. ECB president Jean-Claude Trichet claims he had no other option.
Credibility is sacred to powerful monetary watchdogs like the US Federal Reserve, the European Central Bank (ECB) and Germany’s Bundesbank. It’s something precious, central bankers are quick to admit, that is hard to earn but easy to lose.
Perhaps no one knows that better than Jean-Claude Trichet, an architect of the euro who oversaw the French central bank’s deliverance from political control in the 1990s. The ECB president is waging the battle of his career to preserve the reputation of the bank, which he and his predecessor, former Dutch central banker and European Monetary Institute president Wim Duisenberg, helped build. The outcome is all but clear.
An unprecedented move to rescue the euro
Trichet has been under fire ever since eurozone finance ministers agreed over the weekend to launch an unprecedented aid package worth 750 billion euros ($1 trillion). The scheme is designed to rescue the euro as the effects of the Greek fiscal crisis spill over into other indebted nations in the eurozone. In a nutshell, it allows the ECB to buy government bonds issued by eurozone nations in financial trouble.
ECB president Trichet is hearing plenty of criticism about the bank’s euro rescue move
Analysts argue the move has comprised the central bank’s independence; the bank would effectively be buying government debt, giving governments a freer hand in raising money when it should actually be policing their efforts to do so.
Trichet has vigorously defended the move. At a press conference in Basel, he said the central bank’s monetary policy was “hampered” and that a number of markets were “dysfunctional.” And with an eye to critics, he said that the central bank has always been and will always be “fiercely and totally independent.”
Critics, indeed, are in no short supply. Numerous monetary experts accuse the ECB’s 22-member council of bowing to political pressure from the European Union and the 16 eurozone nations.
“Significant stability risks”
Among the more outspoken and high-profile critics is Bundesbank president Alex Weber, who is a leading candidate to succeed Trichet next year. In an interview with Germany’s Boersen Zeitung, Weber said that the purchase of government bonds “poses significant stability risks.” He criticized the ECB council’s decision “even in this extraordinary situation.”
Europeans want the euro to remain a strong currency
In a message to investors, David Zervos, managing director of Jefferies & Co investment bank in New York, said that for all the attempts by the ECB to remain independent, it was unable “to push back on the EU power base in a crisis period.” Zervos warned that this development could make the eurozone “far less stable in any crisis times than a traditional national union.”
Trichet realizes that ECB’s credibility is tightly linked to the bank’s independence and that any u-turns could soften the euro. He knows all too well that if there’s anything Europeans don’t want – especially many Germans who still mourn the loss of their beloved deutschmark – it is a weak, suffering currency.
Citizens of euro nations have every reason to be concerned: Tuesday saw the euro retreat against the dollar as euphoria over the massive eurozone bailout announced on Monday gave way to continuing doubts over the ability of euro nations to reduce their deficits.
Author: John Blau
Editor: Sam Edmonds