The great crisis that began in 2007 in the United States, generated by the fall in real estate prices and the consequent difficulties of low quality (sub-prime) mortgages disbursed and subsequently sold in the form of securitized loans, became global after the bankruptcy of Lehman in 2008. The crisis has forced many governments (not the Italian one, actually) to intervene with public money to support the banks and avoid the collapse of the financial system. Even in Europe, many countries have seen their public debt increase considerably (eg Ireland, United Kingdom, Spain) due to these interventions. At the same time, the new Greek government declared that its public debt was in reality far greater than the official one and the financial crisis was therefore turning into a public debt crisis in Europe. But the increase in debt of the countries belonging to the euro area, in itself, does not explain the crisis of the single currency: in fact, the debt of the euro area as a whole (88% of GDP) is lower than that of the USA (100 %) and not much higher than that of the United Kingdom (76%), a non-eurozone country.
Indeed, the distrust of the markets is primarily attributable to doubts about the sustainability of the single currency in the face of systemic crises such as the one we are experiencing. In economic literature, the conditions that make the adoption of a single currency sustainable are four: (1) price and wage flexibility, (2) mobility of production factors, (3) integration of fiscal policies for a common redistributive policy, (4) convergence of inflation rates. With the Stability and Growth Pact of 97, the EU countries managed in part to obtain convergence of public debts and inflation rates, but never a true integration of policies. On the other hand, already in 1950 Schumann declared that "Europe cannot be made at once nor will it be built all together, but will arise from concrete and progressive achievements" and, later, Prodi, in an interview with the Economist (2002) had underlined how “the monetary union was an incomplete construction, which would be perfected when the conditions were ripe or a crisis imposed it”.
The lack of strategic vision of European leaders in recent years has forced us into this second scenario. Last month, during a round of meetings in China, a local investor explained to me that the word "crisis" in his language is made up of two ideograms, the first of which indicates an "imminent danger" and the second "an 'opportunity". If we focus on this second aspect, we can try to draw an ideal and, at the same time, realistic path, which allows us to imagine Europe after the crisis, in 24 months' time.
First of all, to clear up a possible misunderstanding, I must say right away that the hypothesis of expelling Greece from the euro area as a solution to the sovereign debt crisis should not even be considered. If you don't trust me, I invite you to read an accurate study by the Swiss bank UBS, which quantifies the cost of Greece leaving Europe as 10 times the total amount of the plans developed to date to keep it inside: devaluation of reintroduced old national currency, tariff barriers and debt (which would remain in euros) would cause a chain of defaults of banks and companies, which would plunge the country into an "Argentina 2011" model chaos.
But the most interesting datum of the study is in the passage in which it demonstrates that even the German government, should it indignantly choose to leave the euro area, would force its own citizens to pay a bill of about 10 euros each, against the thousand of a "bailout" of Greece, Ireland and Portugal combined.
Therefore, in order to arrive at a solution that avoids incurring the abnormal costs (including political ones) of a collapse of the single currency, it is essential to carry out profound changes in the institutional architecture of the EU which lead to greater integration of economic and fiscal policies, overcoming the reticence of short-sighted and localist national political classes.
The Fiscal Compact and the European Stability Mechanism are the latest emergency measures, which we welcome, provided that we raise the Mes budget to 1.000 billion and allow it to intervene directly in support of banking groups in crisis and not only through the States, such as 'is expected now.
A medium-term instrument waiting to proceed with real fiscal integration could be Eurobonds, i.e. common bond issues by the member states of the Eurozone, which would become an ordinary public debt management instrument, partially replacing national debts with joint guarantee. In other words, the public debts of the States would be replaced only in part by Eurobonds (there would be a limit as a percentage of GDP on the issue of Eurobonds); for another part, states should continue to issue national bonds to finance themselves. The other states would in any case be guarantors of all Eurobonds issued.
More than twenty years ago, the Delors and McDougall reports had already paved the way: “In all federations, different combinations of budgetary policies have a powerful shock-absorbing effect… A federal budget (excluding defence) should be at 2-2,5% of GDP, given that a Community fiscal policy for stabilization is a key element in any program of European monetary integration”.
Furthermore, half of the current 1% is dedicated to agricultural subsidies, rather than to strategic subjects such as energy, defense or foreign and security policy. In other words, to calm the markets and design the only possible future of the European federal Union, we must centralize fiscal policy, progressively increase the resources and matters falling within the Community's competence. Let's give ourselves two years of time, no more!
