经济类新闻

The Europeans are pushing the global banking system to the edge YOU know something bad is going to happen in a horror film when someone decides to take a late-night stroll in a forest. The equivalent in finance is a bank boss insisting that his institution is completely solid. 在令人恐怖的电影里，当某个人决定深夜里在森林漫步时，人们知道不好的事情就会发生。同样在金融领域，银行老板坚信他的机构是固若金汤。

European bankers have been saying things are fine for weeks now, even as their exposure to indebted euro-zone countries strangles their access to funding.甚至在暴漏了欧元区国家负债累累进而阻止了专项资金的来源的情况下，数周来，欧洲银行家一直声称情况礼良好。

The amount of money parked at the European Central Bank (ECB) has risen to 15-month highs as banks hold back from lending to each other. 由于银行之间相互停止借钱，欧洲银行的存款增至15个月来的新高。

Fears of contagion from Europe have now infected America (see article). Banks there led the S&P500 into official bear-market territory this week, as the index briefly dipped more than 20% below a high set in April. 以防止从欧洲的蔓延已经影响到了美国。当股票指数跌过4月份新高的20%，这周银行给官方的熊市注入500-----？

The chief executive of one embattled institution, Morgan Stanley, sent a memo to employees reassuring them that the bank’s balance-sheet was dramatically stronger than it was in 2008, when Lehman Brothers collapsed.

Europe is not the only problem facing Western banks, of course. A long list of woes also includes anaemic economic growth, piles of new regulation and waves of litigation related to America’s housing bust. An ill-conceived congressional bill to punish China for manipulating its currency is yet another sign that America has little to be proud of in terms of economic policy. But the central reason to worry is the euro zone: a series of defaults there would unleash devastation, sparking big losses on European banks’ government-bond holdings, and in turn threatening anyone exposed to those banks.

Earlier this year, the prospect of another Lehman moment seemed remote. Thanks to the abject failure of Europe’s leaders since then, the similarities with 2008 are disturbingly real. Governments are once again having to

step in to support their banks. France and Belgium this week said that they would guarantee the debts of Dexia, a lender that was bailed out three years ago but which is weighed down by lots of peripheral euro-zone debt. In another throwback, plans are afoot to create a “bad bank” for Dexia’s worst assets. The cost of buying insurance against bank defaults has surged: credit-default-swap spreads for Morgan Stanley and Goldman Sachs hit their highest levels since October 2008 this week. Rumours are rife: that banks cannot pledge collateral at central banks, that hedge funds are pulling their money from prime brokers. Name the year

Will the fearfulness of 2011 turn into another panic like 2008? In any sensible world, it should not. Policymakers will surely not repeat the mistake they made then, of letting a big bank go under. The asset class at the heart of this phase of the financial crisis—sovereign debt—is far easier to value than the securitised subprime mortgages that caused the trouble last time. There is much greater clarity about where exposures to dodgy government bonds lie, although American banks need to become more transparent about their ties to Europe.

What’s more, the components of a solution to the immediate euro-zone crisis, long proposed by this newspaper, are fairly well understood. First, create a firewall around other euro-zone members like Italy and Spain

that are solvent but need help financing their debts; second, recapitalise the European banking system, which has done far less since 2008 to fortify its defences than America’s; and third, allow Greece, self-evidently insolvent, to default in an orderly fashion.

The problem with this solution for the rest of the world is that it depends on the Europeans to carry it out. The debt crisis has been running for 18 months now, and the only way that euro-zone leaders have dazzled is through sheer incompetence. It continued this week, with some politicians admitting that a hard restructuring of Greek debt was on the table, fortify others ruled out a default. The result is the worst of all worlds: more uncertainty for banks that hold Greek debt, more pointless austerity for the battered Greek economy (see article).

A clear plan for a forced bank recapitalisation in the euro zone is badly needed, too. The mere rumours of it happening sparked a late market rally on October 4th. There are all sorts of reasons to deplore the fact that banks would once again be propped up by public money. It would have been far better if over the past three years more had been done to boost banks’ capital and liquidity, and to create the mechanisms that would force bank losses onto creditors, not taxpayers. Every euro-zone finance minister should be forced to explain the whitewash “stress tests” that gave even Dexia a clean bill of health earlier this year. But for now the

priority is to prevent a systemic meltdown, not to accelerate it for the sake of principle.

A fragmented, nation-by-nation approach to recapitalisation will not work this time, however. France and Belgium may be able to stand behind Dexia but supporting entire banking systems is beyond the capacity of many sovereigns. The European Financial Stability Facility (EFSF), the euro zone’s bail-out fund, must carry out simultaneous injections of capital into the region’s banks as soon as it can. Central banks must get into full fire-fighting mode, too. In particular, that means offers of unlimited two-year liquidity from the ECB, which was due to meet after The Economist went to press. Herding Eurocrats

Above all, no amount of recapitalisation would be enough to protect banks from a cascade of euro-zone defaults. Nothing matters more than putting a firewall around the likes of Italy and Spain. Here, the news is bleak. Jean-Claude Trichet, the outgoing president of the ECB, describes this as the worst crisis Europe has faced since the second world war; but the institution he runs is unwilling to respond in kind. It is reluctant to keep buying government bonds itself, and is unimpressed by suggestions that it should boost the EFSF’s firepower by lending to it. Politicians are

contorting themselves to try to strengthen the EFSF without relying on the ECB (see article).

In 2008 governments were credible backstops for their banks and the Fed, the central bank at the heart of the crisis, was willing to do everything it could to create confidence. Now the sovereigns are the problem and the ECB’s help is limited and conditional. That is the real horror film.

The economy QE plus

The recession was worse than once thought. How to spur the recovery?

Oct 8th 2011 | from the print edition

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NEW estimates of GDP released on October 5th rewrote the history of the downturn. The economy was stronger going into recession, fell much harder and started to recover sooner than had been previously thought, said the ONS. Figures for the first half of 2011 were revised down a notch, though the closely watched purchasing managers’ surveys suggest the economy perked up a bit in September.

Despite this rare piece of good news, the Bank of England’s monetary-policy committee announced a fresh round of quantitative easing (QE), the purchase of government bonds with central-bank money, after its monthly meeting on October 6th. The committee said the bank would buy a further £75 billion of bonds to add to the £200 billion of purchases it made in 2009-10.

The renewal of QE might prove more effective if the bank bought bonds issued by companies and commercial banks, thus directly lowering their borrowing costs. But the committee is wary of the political risks of wading into private credit markets. The choices over whose bonds to buy, and the losses that might accrue, would take it beyond pure monetary policy into fiscal turf.

Such qualms explain why George Osborne, the chancellor of the exchequer, announced this week that the Treasury would soon initiate “credit easing” to avert a renewed credit crunch and to help small businesses. The policy will be fleshed out in the chancellor’s autumn statement next month; it is likely to have two prongs. The Treasury will stand ready to buy bonds issued by biggish firms should markets seize up. A second longer-term goal is to promote lending to small businesses by purchasing blocks of their debt, packaged into securities. If the Treasury were willing to buy such bonds, goes the thinking, it would create enough

market liquidity to persuade others to hold them. That in turn would spur private outfits to lend and to create the securities.

The hope is that in time smallish companies can bypass ailing banks and raise money directly from investors. There are already some promising initiatives: consumer-facing firms, such as King of Shaves, have issued “mini-bonds” to customers; Funding Circle, an online service, matches savers with businesses in need of cash. BlueBay, an asset manager, is launching a fund to lend directly to midsized companies, mostly in Britain and Germany.

A shortage of credit in part explains why capital spending by private firms has been sluggish—though official investment figures are prone to serial revision. The picture of the recent past has already been redrawn by changes to the way GDP is calculated and by information from tax returns. The latest figures show a peak-to-trough fall in GDP during the recession of 7.1%, revised from an earlier estimate of 6.4%. They also reveal that the economy was much deeper in recession before the fall of Lehman Brothers in September 2008. Recovery is now thought to have started a bit earlier: GDP was revised up by around half a percent in both 2009 and 2010.

The hope is that another burst of QE will give the recovery a fillip. The Bank of England reckons the first dose lifted the economy by 1.5-2% .

But unless other central banks (notably the Federal Reserve) join in, the effect on confidence will be limited. Indeed the main effect of QE-in-one-country may be a weaker pound. And a cheap currency is little use when Britain’s export markets are struggling, too. A crisis carol

Things are starting to look depressingly familiar

LIKE Ebenezer Scrooge, the markets are being haunted by the Ghost of Crises Past. This particular spectre hails from 2008, as plunging stockmarkets and worries about the health of the banking system call to mind events of three years ago.

Once again politicians are grappling with the problem of moral hazard. In 2008 the question was: why should American taxpayers protect Lehman creditors from the consequences of their own failure to monitor risks taken by the investment bank? Now the questions are: why should northern European taxpayers be required to subsidise Greek voters given their failure to control their own government? And why should those same taxpayers be required to save banks from their failure to monitor the extent of their exposure to Greece?

The Lehman example illustrates the dangers of a wrong answer. The American authorities decided to let Lehman fail pour encourager les autres. But the result was a collapse of confidence in the banking system. Let Greece fail chaotically, and let banks bear a significant part of the cost, and the result might be another run on the banks and on the debt of other euro-zone members like Spain and Italy.

This crisis has been building for a couple of years but all along the European authorities have been in a state of denial. First, they said that Greece would not need a rescue. It has needed two. Then they said that Greek problems would not spread to other countries. They duly did. Then they said that banks would not need recapitalising because sovereign nations would never default. They now seem to be facing reality on this score.

Such dithering is to confidence what termites are to wooden roof beams. European bank shares have fallen by 40% this summer; in the third quarter investors in European subordinated bank debt lost almost 13%. In the end the European authorities will surely keep the banks safe, just as they did in 2008 (Dexia, a Franco-Belgian behemoth, is now heading for its second bail-out). But there is a further, worrying similarity with the previous crisis—the lack of a clear message from the authorities.

Three years ago the American government seemed to react to each problem with a different solution. It supported a private-sector rescue of Bear Stearns, nationalised Fannie Mae and Freddie Mac, let Lehman die and then pumped money into AIG, an insurance giant. In some cases it penalised shareholders and protected creditors; at Washington Mutual, holders of unsecured debt were made to bear losses. All this created a climate of uncertainty in which investors decided to sell first and ask questions later.

Europe’s leaders cannot seem to agree on anything. Should private-sector creditors be forced to take losses? How big should the euro zone’s bail-out fund be, and how broad its scope? Governments have taken one line, the European Central Bank another, sometimes the European Commission has taken a third. After the IMF meetings in September British newspapers were full of reports of a plan to ramp up the European Financial Stability Facility by letting it borrow money. But then Wolfgang Schäuble, the German finance minister, said: “I don’t understand how anyone in the European Commission can have such a stupid idea.” It makes America’s debt-ceiling negotiations look like best practice.

The lack of a clear plan has only made investors more nervous. Another example of confusion occurred in early October with hints that

private-sector bondholders would be required to take bigger hits on Greek debt than they have already signed up for. That only increased the fears about the banking system.

The parallels with 2008 raise a further issue. The developed world seems to be facing another recession even though it has seen three years of substantial fiscal and monetary stimulus. Although there is talk of more quantitative easing in America and Britain, the spectre that haunts policymakers—the Ghost of Crises Present, if you like—is that they no longer have enough ammunition to deal with the problem.

And then there are the longer-term issues. Europe has to face up not only to its debt burden but also to the prospect of ageing (and in some cases, shrinking) populations. Those populations have been promised benefits to which they feel entitled, and have grown used to a standard of living that may have been exaggerated by the availability of cheap credit. Their expectations will have to be managed downwards: a tricky process, as Greece is demonstrating. That may be the Ghost of Crises Yet-to-Come.