Análisis de la fase de edición y post-producción

Issing’s contribution to the topic paints a Europe in black and white. He basically dreads a spending frenzy in the undisciplined south and skyrocketing costs in the prudent north.

The author starts from the observation that what we now call the periphery of the euro zone has factually profited a lot from the common currency’s introduction but failed to convert the gift of cheaper money and exchange stability into sustainable growth. “Market participants” saw all EMU members “as belonging to a zone of stability” which led to the de facto elimination of government bond spreads.34

In Issing’s view their poor deployment of this resource excludes the troubled states from any form of mutual assistance by the leader states. Actually, it ought expose them to the capital market’s efficient

33 _{Interestingly we observe that the main proposals for a common debt scheme originate in the strongest}

countries of the euro area (Germany, France, The Netherlands) and that the most insisting critical voices preponderantly grow in the centrepiece of the Union.

34 _{Compare to chapter 5.1 and its footnotes; actually Spain and Ireland reduced their stock debt significantly}

and rightful punishment - or put differently “times of crisis give governments the best arguments to take tough measures needed to get the country back on a sustainable path”. So Issing tries to convey that sinners never turn into saints if temptation is “waiting just around the corner” (in form of bail- outs). Without the cathartic experience of a deep crisis the periphery will never convert to the gospel of budget discipline.

For Issing it is as clear that rising spreads are due to “financial markets’ growing concerns about the solidity of some Eurozone countries” as that a common bond “would be the a first step on the slippery road to ‘bail-outs’ and thus the end of the euro area as a zone of stability” (2009, p. 78). Once the financial ties would tighten with a common bond no EMU member would have any incentive to behave in a prudent fashion, as the disciplining effect of financial markets would fade. Sinn (2011) seconds him saying he found no “leads that markets were dysfunctional”.35

Because the periphery sets at risk the stability of the whole Union he further argues that solidarity with the troubled states would not mean “the ‘strongest’ guarantee for the ‘weakest’” but rather full compliance “with the fundamental rules of EMU”. This compliance should be enforced establishing the conviction among euro area members that for no sovereign debtor it would become “impossible- to-default”.36 _{So in his words the “Europeans” understanding of solidarity at best led to the re-election}

of the government that accumulated all that messy debt but would result in “no more than a placebo for a ‘weak’ country”. In earnest, solidarity disguised as indulgence “would foster the illusion that it is possible to get out of difficulty without having undertaken fundamental reforms” (p. 79).

As a matter of fact, Issing does never refer to any concrete eurobond proposal. Hence it it is difficult to understand his real intention. Of course, if we installed an unrestraint and uncontrolled mutual euro security then it actually “would be hard to find a clearer case of free riding”. But, every single of the four proposals or the three schemes presented above provides for a mechanism setting incentives towards financial responsibility and in the case of Boonstra (2010) we also observe heavy measures of punishment. The really juicy question in his proposal concerns whether sovereigns shall render their bonds defaultable as he implicitly advocates. We discuss this query in a later section of the thesis in a short and reviewing manner.

Next, if countries of the periphery were free riding all these years of EMU affiliation then we have to consider the possibility of financial markets completely messed up in indicating this misconduct.

35 _{Moreover, Sinn points out that the „commotion“ about the rising national bond yields was „exaggerated“ as}

e.g. for Italy and Spain in 1995 they amounted to the double (respective to 2010). This was actually at a time when every state controlled its own currency and thus immense bund-spreads were not such a big deal as they are today (original text in German, author’s translation).

36 _{This reasoning unveils the little economic content of Issing’s critique. By equalising a state and its citizens}

(and its bureaucracy) with an enterprise convinced to be „too-big-too-fail” he “takes the cynical view that all government debt is bad” as De Grauwe (2011d, p.2) describes. “This is also the view that governments are simply wasteful and do not contribute to the productivity of a nation.”

Furthermore, we may conjecture that his argument implicates his wish for a default mechanism for (euro area) sovereigns.

Actually, the governor of the Banque de France, Christian Noyer, admits that “the pressure of the markets utterly failed”. In his view, “the time before the crisis completely lacked of pressure and as the crisis burst pressure was totally exaggerated”. When he says, that “[m]arkets scared each other, market agents acted like a flock of sheep” he radically opposes Issing’s - and not only Issing’s - belief in the galvanising corrections of global capital markets.37 _{Further, this scenario may exclusively apply}

to Greece as De Grauwe (2011d) convincingly argues.38

Finally, the author’s argument on solidarity could hold if the rules of a group were set up pari passu by equal members. This may not have been the case as generally in EU or euro area negotiations firm and infirm parties meat around the green table.

3.2.2