Tag Archives: Trichet

ECB’s Trichet Suggests Creation of Euro Finance Ministry

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“if efforts to deal with its debt crisis do not deliver results”

ECB’s Trichet Suggests Creation of Euro Finance Ministry

May 25 (Reuters) — Europe should consider strengthening central control of economic policy if efforts to deal with its debt crisis do not deliver results, European Central Bank President Jean-Claude Trichet said on Thursday.

Accepting a prize for his contribution to European unification, Trichet laid out ideas including the formation of a European Union finance ministry and a veto for EU authorities over spending and other major domestic policy decisions.

“As a first stage, it is justified to provide financial assistance in the context of a strong adjustment program,” Trichet said. “But if a country is still not delivering, I think all would agree that the second stage has to be different.”

“Would it go too far if we envisaged, at this second stage, giving euro area authorities a much deeper and authoritative say in the formation of the country’s economic policies if these go harmfully astray?” European policymakers are struggling towards a new aid package for Greece that is expected to include new loans, fresh austerity commitments and a stepped-up privatisation programme, potentially supervised from outside.

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TRICHET SAYS ECB BOND PURCHASES ARE `ONGOING PROGRAM’

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TRICHET SAYS ECB BOND PURCHASES ARE `ONGOING PROGRAM’

>   
>   (email exchange)
>   
>    On Fri, Jan 7, 2011 at 7:09 AM, Dave wrote:
>   
>   In response to German govt comments earlier
>   
>   Also ECB is in buying small amounts of Greece and Portugal in today’s
>   weak market
>   

They probably only see two choices-

Keep muddling through by doing what they are doing.

Or stop doing it, which means it all quickly grinds to a halt, most likely with none of the member nations being able to fund themselves.

At least for now, there doesn’t seem to be any political progress towards any other institutional structure.

Meanwhile, the ECB’s highly deflationary terms and conditions exacted in exchange for the funding (aka austerity measures) are slowly working to cut aggregate demand in reverse the current modest expansion.

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Trichet cmnts

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Translation- they keep funding on an as needed basis, at least for now.

*DJ ECB Trichet: The ECB Is Meeting Its Resposibilities
*DJ ECB Trichet: Important That Deficit Targets Are Met
*DJ ECB Trichet: Spain Should Deepen Labor Mkt Reform
*DJ ECB Trichet: Bank Stress Tests Are Very Useful
*DJ ECB Trichet: Stress Tests Important To Do On Regular Basis
*DJ ECB Trichet: Investors Don’t Yet Appreciate Postive Actions Taken
*DJ ECB Trichet: We Permamently Watch Commodities Prices
*DJ ECB Trichet: Spain One Of Countries That Needs Deficit Cuts

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Trichet statement

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*DJ Trichet: Euro-Zone Govts Are Conscious Of Their Past Mistakes
*DJ Trichet: Efforts To Improve Governance Are Being Underestimated
*DJ Trichet: Ireland And Greece Are Solvent
*DJ Trichet: Euro-Zone Public Finances Compare Well With Japan, US
*DJ Trichet: Real Euro-Zone Economy Has Surprised Positively

As if he doesn’t know the actual analogy is with the US states.

This is shameless, bold faced intellectual dishonesty.

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re: Trichet statement

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The old german model was tight fiscal to keep domestic demand down, costs down, to help exporters. this made the mark strong so they sold marks vs dollars to keep it weak at the expense of the macro economy but to the benefit of the exporters.

The euro zone is trying same but can’t buy dollars for ideological reasons- it would look like the dollar is backing the euro as a reserve currency, etc.

So the euro gets strong to the point where the export strategy is thwarted. Hence it went up to 160 to the dollar before it all broke down and ‘automatic’ counter cyclical deficits kicked in which weakened the euro, which they are now trying to reverse with austerity. But going broke trying, etc.

From Pragmatic Capitalist:

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Trichet statement

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Trichet rejected the notion that fiscal discipline would hamper growth in the Eurozone.

He’s wrong for the macro economy.

“It is a complete fallacy to say that fiscal soundness dampens growth. It is exactly the contrary. It is the absence of fiscal credibility which dampens growth,” he said.

He’s right at the micro level of the national govts given the eu’s current institutional structure.

They need fiscal expansion to come from the ECB level rather than the nat gov level.

But he probably wouldn’t agree with that either.

With current policy, the eurozone institutional structure can only survive with an impossibly large surge in exports.

A cartoon with a fencer stabbing a figure labeled the euro zone and exclaiming ‘Trichet’ as he stabs it?

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Trichet: Eurozone can’t spend any more

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(email exchange)

>   On Mon, Jun 22, 2009 at 4:32 AM, wrote:
>   
>   ECB President Trichet has warned that governments have no more room
>   for taking on more debt, and should now look to start bringing down
>   budget deficits. “There is a moment where you can’t spend anymore and
>   you can’t accumulate any more debt. I think we are at that moment”.
>   

Similar to the Obama statement that the US has ‘run out of money.’

The difference is that under current institutional constraints Trichet is, unfortunately, probably right.

They are stuck waiting around for their own automatic stabilizers to function, and for exports to improve.

And hope the markets don’t test their banking system deposit guarantees and national government funding abilities.


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Trichet on funding the national governments

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Trichet on funding the national governments

When asked specifically if there are any obstacles to the ECB purchasing government assets, Mr Trichet reiterated that the ECB “are not pre-committed for any new decisions”, while his comments suggest the issue of risk-sharing and fiscal indemnity remains an important consideration: “One element which has to be taken into account is that the risks of the central banks and the risks of the governments are, in the euro area, clearly separated without combination of risks or blending of responsibilities”.


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Trichet says rising deficits are ‘problem’

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Agreed!

They are risking the solvency of the national governments.

The national governments are beyond the point where they can write the check should any of their major banks be declared insolvent.

Trichet Says Rising Deficits are ‘Problem,’ Osnabruecker Reports

by Matthew Brockett

Feb 12 (Bloomberg) &#8212 European Central Bank President Jean-Claude Trichet said rising budget deficits in the euro region are an “important problem” and urged governments to respect the Stability and Growth Pact, the Neue Osnabruecker Zeitung reported, citing an interview.

Trichet also said the situation in the banking sector remains “difficult” and should be monitored closely by governments and central banks, the newspaper reported on its Web site today. Measures such as so-called bad banks should be competition neutral, Trichet said, according to Neue Osnabruecker.


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Ominous warnings from Trichet

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(email exchange)

He gets it!

>   
>   On Fri, Oct 3, 2008 at 8:49 AM, Karim wrote:
>   
>   Trichet says solvency is an issue
>   for governments.
>   

Yes!

>   
>   Trichet: West passing through
>   most serious time since WWII.
>   

The largest systemic risk is in the eurozone.

>   
>   Trichet: We must do everything
>   to preserve unity in Europe.
>   

Good luck to them!


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