THE ECONOMIC SITUATION OF THE EURO AREA. IT SHOULD BE THAT HE FALLS

 

The European Central Bank (BCE), noticed by Berlin, he prepares a revolution in the market of public debt that seeks to brake the budgetary happiness of some Governments and to avoid that the banks of the euro zona fill their balances of funds of their own countries. The plan of the BCE that will be executed through the Unique Mechanism of Supervision (MUS), it goes to eliminate the armor-plating that the public debt enjoys like active free of risk for the financial entities or to impose limits to the volume of funds that the entities will be able to accumulate in their balances. 

The impact of those measures could suppose of stocking an increase of the cousins of risk of 10 basic points and some capital necessities for the banks of up to 11.000 million Eurus (more than 1.000 million for the Spanish banking), you calculate assumable according to a published study last week for the European Council of Systemic Risks (ESRB, for its initials in English), clerk of the BCE. But that study, first step toward the new treatment of the public debt, recognizes that the consequences can be bigger for the countries with debt of worse qualification because the purchase of their funds would force to the banks to capital bigger provisioned in prevention of an unpaid one. 

Said the euro area otherwise through their bank the BCE and of their real headquarters Germany is saying to the markets and all that that he wants to understand it that the funds of its partners or countries like want that they compose it they are not of trusting because otherwise that better asset to strengthen the capital of a bank that funds of the own states or of anyone of the euro area. But not for what seems this it is not an advisable asset because we go much guided then we don't astonish that Iceland doesn't want to enter in the UE neither in the euro.    

Neither Berlin neither Frankfort hide their intention that to the long one that penalization becomes in kind of a cousin of permanent risk that forces to the markets to differ among the public debt of the different countries of the area euro. Because undoubtedly this is this way but the problem is not this, the problem it is the continuous lack of trust inside the euro area, this doesn't hold back more, it is very clear neither the own BCE and of course Germany, they trust in that the economies him the euro zona can come out to it floats someday. 

The objective says it is to achieve the investors to impose the budgetary discipline, to the own countries understanding that as much as but budgetary discipline has a country smaller risk he will have its debt, a paper that the founders of the euro thought that it would be exercised in a natural way. Gross error. The forecast was not completed and during the first decade of the euro the markets granted the same level of trust practically too all the funds, with independence that they were Greek, Spaniards or German. 

Some of the specialists that have elaborated the report of the ESRB doubt that the norms have more than enough capital requirements they are the appropriate road to impose the budgetary discipline and to avoid the overexposure from the financial sector to the sovereign debt. But that point of view is minority and as much the BCE as the MUS seem resolved to get that the public debt stops to be an asset free of risk.   

The study of the ESRB shows that the vicious circle between bank risk and sovereign risk is increased soon after a financial crisis. Between 2007 and 2011, for example, the sovereign risk of the financial entities of the area euro almost increased 66%, until reaching the 1,6 trillion Eurus, according to the data of the ESRB. In Spain almost tripled; in Portugal he multiplied for five, and in Ireland, for eight. In Greece, the banks national Greeks are already almost the only clients of the Greek Treasure.    

The BCE wants to break that dangerous curl, although the specialists of the ESBR notice that the new cousin will have to be introduced gradually, because the banks, according to the limits that are imposed, could have to come undone of up to 720.000 million Eurus in public debt and we are already another time making juggling’s with the financial engineering. 

All this is cause that there is not enough European GDP able to sustain neither to the economies neither the currency of the euro zona. That they are left of funds and debts everything it is question of taking place, to sell and to buy tangible goods that avoid to have to move single notes accountants, passing them of a side to other and what moves between countries and markets is notes of legal course, taken place by components and goods, manufactured in the euro area, are clear.