Ótimo artigo do Mohamed El-Erian da PImco. Sua análise, muito mais elegante e articulada, não difere muito da visão deste blogger sobre a complicada situação econômica da zona do euro.
The financial markets have enthusiastically welcomed the agreements reached in Brussels on Thursday, and understandably so – not only for their immediate content but also for what they signal about how far European leaders are willing to go to finally catch up with the realities of the region’s crisis.
But the feel good factor will only last if this is followed quickly by two other important developments.
First, and most immediate, there is a long list of details that must be specified over the next few weeks to put into practice what was agreed to in Brussels. Many of these are technically very complex. Indeed, implementation may prove as tricky as the original negotiations, if not more so.
How will the reduction of Greek debt actually be executed? Will the banks that need capital be able to find sufficient private funds to meet the new prudential targets? In the event that they do not, what conditions should be attached to the financing coming from taxpayers? How will the European Financial Stability Facility be levered? How will its funds be allocated among competing claims, including between stabilising the old stock of debt and providing partial risk insurance for new issuance? And what roles will the European Central Bank and the International Monetary Fund play, as well as other countries?
Second, and critical for long-term sustainability, Europe must still address two big issues. While these were not scheduled to be addressed in this week’s summit, they must be tackled, and decisively, over the coming months.
Europe desperately needs an effective plan to boost employment and promote inclusive economic growth. Without this, it will be virtually impossible to stabilise the region’s sovereign debt markets, and counter fragilities in its banking system. Bold structural reforms are needed, especially in the peripheral countries but also in the core.
Politicians also need to decide how they will strengthen the institutional underpinnings of the eurozone. Can they deliver a fiscal union with much greater political integration? Or will they be forced to settle for a eurozone consisting of a smaller number of countries with similar initial conditions? Until they answer this basic – basic, but very difficult – question, healthy balance sheets around the world will continue to hesitate to engage in Europe’s recovery.
Policymakers should be commended for the important steps that they took this week. They shifted the emphasis from focusing on liquidity to solvency; and from ad hoc measures, to more comprehensive ones.
But to succeed in the longer term, they must do more than just transform these recent agreements into detailed measures. Indeed, crucial inflows of fresh capital from the private sector and from outside Europe will only materialise in size if the big issues are also resolved.
If any of this is to happen, the region’s leaders will soon find themselves engaged in yet another set of difficult, long, and uncertain negotiations.
The writer is the chief executive and co-chief investment officer of Pimco.