IMF Special Report: Europe Running out of Time

Financial markets move at lightning speeds that contrast sharply with the slowness of the European political process. Whether politicians and financiers can bridge the gap in coming weeks likely to decide the fate of the euro.

The signals coming out of this weekend’s annual meetings of the International Monetary Fund and World Bank were not positive. Bankers and officials alike stepped up pressure on euro area leaders to take bolder and faster steps to prevent the bloc’s sovereign debt problem from spinning out of control. U.S. Treasury Secretary Timothy Geithner urged European governments to “create a firewall against further contagion,” while Bank of Canada Government Mark Carney said governments needed to amass about €1 trillion ($1.35 trillion) in firepower – more than double the bloc’s existing €440 billion bailout facility – to “overwhelm” the crisis.

然而，欧洲官员坚持认为，本集团需要专注于批准欧盟领导人在欧盟领导人达成协议，以提高欧洲金融稳定设施的灵活性和有效规模。德国南德斯塔格将于周四（9月29日）的协议投票，曾对芬兰和荷兰的议会也需要在未来几周内提出同意。没有人愿意通过谈论在通过之前对外围的额外政府支持来批准危险。

German Finance Minister Wolfgang Schäuble offered a bracing message of German tough love in a speech to the Institute of International Finance, a banking lobby that meets alongside the IMF meetings. European governments were determined to defend the euro, he said, but he offered no hint that Berlin was ready to stump up more money. Instead, he said states with excessive debts need to aggressively pursue fiscal austerity and economic reform. And he rejected the view put forward by the IMF itself this week that too much deficit reduction by countries like Germany and the U.S. in the short term would worsen the economic slowdown and make debt problems even more intractable.

“We won’t come to grips with economies deleveraging by having governments and central banks throwing – literally – even more money at the problem,” he said. “You simply cannot fight fire with fire.”

In the short term, markets are worried about Greece’s spiraling mountain of debt, which will exceed 150 percent of GDP this year, and waning political support for austerity in Athens at a time of deep economic recession. Bruce Kasman, J.P. Morgan’s chief economist, told an IIF panel that the current EU-IMF economic program has pushed Greece into a recession more severe than Argentina’s a decade ago and would drive its debt up to more than 190 percent of GDP by the end of this decade; it’s arguable that the country would be better off leaving the euro, he suggested, an option that remains anathema for EU officialdom. “Greece is insolvent and the European monetary union and the EU as a whole needs to deal with it,” Kasman said. “It hasn’t come to terms yet with how to deal with it.”

Greek Finance Minister Evangelos Venizelos last week hinted that the government would try to negotiate a bigger writedown of private-sector bondholdings than the 21 percent included in the July agreement to persuade Greeks; some analysts argue that a 50 percent writedown is necessary. But Josef Ackermann, the Deutsche Bank CEO and head of the IIF, which helped negotiate the July writedown, warned against asking more of banks. As it is, many lenders are balking at the July terms. “If we now start to reopen that Pandora’s box, I think we lose a lot of time and I’m not sure people will be willing to participate,” he said. Any unravelling of the July deal, moreover, would threaten a Greek default and the spread of contagion, he added.

欧洲官员正在落后于景象，以防止传染，无论是希腊如何发生的事情。几个月前由德意志银行首席经济学家托马斯梅纳提出的一个想法，并建议盖特纳到欧元区财政部长一周前，将efsf转变为银行，并从意大利和西班牙等国家购买债券来自欧洲中央银行的流动性。“我们需要找到更可靠的东西来支持意大利，”Mayer在国际货币基金组织会议上讲述了一个小组。

But Jürgen Stark, who announced his resignation from the ECB earlier this month because of his opposition to the bank’s existing bond purchases, insisted that the idea would never fly. “It is a step too far,” he told Institutional Investor on the margins of the IIF meeting. “It is monetary financing” of government debt, something that’s strictly forbidden by the Maastricht Treaty that established the euro. Stark also sent a thinly veiled rebuke to U.S. officials to focus on their own debt problems. “All governments should do their homework before giving advice to others,” he told an IIF panel.

正在讨论的另一个想法将拥有EFSF为意大利和西班牙债券的买家提供了一流的损失保障。例如，最初的损失保证将有效地利用五到一个人的资金，使其更大的市场影响和私人投资者恢复市场。这种安排的机制需要几个星期的时间来锻炼身体，并且几乎肯定需要从柏林，巴黎和其他首都的公开政治支持。到目前为止欧盟领导人的沉默 - 对欧元的承诺支持，但没有拼写如何实现的 - 并不建议B计划在翅膀中等待。

Ackermann表示，困境很清楚。他说，市场要求遏制债务危机的全面和可靠的计划，但政治是令人生畏的。“这是说服纳税人的一个非常困难的政治问题......这是支持周边的最大利益，”他说。