欧洲债务危机

上海对外贸易学院模拟联合国大赛 Shanghai Institute of Foreign Trade Model United Nations Conference 1 of 10 2011 European Debt Crisis ●Introduction----------------------2 □What happened in Europe------------------------2 □The Greek debt crisis--------------------------3 ●Cause-----------------------------3 □Greek debt in comparison to Euro zone average---3 □Downgrading of debt-----------------------------4 □Austerity and loan agreement--------------------5 ●Controversy about national statistics-----------------------6 □Credit rating agencies--------------------------7 □Media-------------------------------------------8 □Role of speculators-----------------------------8 □Finland collateral------------------------------9 ●Follow-up development-------------10 上海对外贸易学院模拟联合国大赛 Shanghai Institute of Foreign Trade Model United Nations Conference 2 of 10 2011 ●Introduction □What happened in Europe? From late 2009, fears of a sovereign debt crisis developed among fiscally conservative investors concerning some European states, with the situation becoming particularly tense in early 2010.This included eurozone members Greece，Ireland, Italy, Spain and Portugal, the so-called "PIIGS" countries, and also some EU countries outside the area. Iceland, the country which experienced the largest crisis in 2008 when its entire international banking system collapsed has emerged less affected by the sovereign debt crisis as Icelandic citizens refused to bail out foreign banks in a referendum, stating that "they should not be penalized for their government's failure to rein in spending and for the excesses of a few banks". In the EU, especially in countries where sovereign debts have increased sharply due to bank bailouts, a crisis of confidence has emerged with the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany. While the sovereign debt increases have been most pronounced in only a few Euro zone countries they have become a perceived problem for the area as a whole. In May 2011, the crisis resurfaced, concerning mostly the refinancing of Greek public debts. The Greek people generally reject the austerity measures and have expressed their dissatisfaction through angry street protests. In late June 2011, Greece's government proposed additional spending cuts worth 28bn euros over five years. The next 12 billion Euros from the Euro zone bail-out package will be released when the proposal is passed. Without it, Greece would have to default on loan repayments due in mid-July. Concern about rising government deficits and debt levels across the globe together with a wave of downgrading of European government debt created alarm in financial markets. On 9 May 2010, Europe's Finance Ministers approved a 上海对外贸易学院模拟联合国大赛 Shanghai Institute of Foreign Trade Model United Nations Conference 3 of 10 2011 comprehensive rescue package worth €750 Billion aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility □The Greek debt crisis In 2010 the debt crisis was mostly centered on events in Greece, where the cost of financing government debt was rising. On 2 May 2010, the eurozone countries and the International Monetary Fund agreed to a €110 billion loan for Greece, conditional on the implementation of harsh austerity measures. The Greek bail-out was followed by a €85 billion rescue package for Ireland in November, a €78 billion bail-out for Portugal in May 2011, then continuing efforts to meet the continuing crisis in Greece and other countries. 5This was the first euro zone crisis since its creation in 1999. As Samuel Brittan pointed out, Jason Manolopoulos "shows conclusively that the euro zone is far from an optimum currency area". Niall Ferguson also wrote in 2010 that "the sovereign debt crisis that is unfolding...is a fiscal crisis of the western world". Axel Merk argued in a May 2011 article that the dollar was in graver danger than the euro. ●Cause □Greek debt in comparison to Euro zone average The Greek economy was one of the fastest growing in the euro zone from 2000 to 2007; during that period, it grew at an annual rate of 4.2% as foreign capital flooded the country. A strong economy and falling bond yields allowed the government of Greece to run large structural deficits. According to an editorial published by the Greek right-wing newspaper Kathimerini, large public deficits are one of the features that have marked the Greek social model since the restoration of democracy in 1974. After the removal of the right-wing military junta, the government wanted to bring disenfranchised left-leaning portions of the population into the economic mainstream. In order to do so, successive Greek governments have, among other things, customarily run large deficits to finance public sector jobs, pensions, and other social benefits. Since 1993 the ratio of debt to GDP has remained above 100%. 上海对外贸易学院模拟联合国大赛 Shanghai Institute of Foreign Trade Model United Nations Conference 4 of 10 2011 Initially currency devaluation helped finance the borrowing. After the introduction of the euro in Jan 2001, Greece was initially able to borrow due to the lower interest rates government bonds could command. The late-2000s financial crisis that began in 2007 had a particularly large effect on Greece. Two of the country's largest industries are tourism and shipping, and both were badly affected by the downturn with revenues falling 15% in 2009. To keep within the monetary union guidelines, the government of Greece had misreported the country's official economic statistics. In the beginning of 2010, it was discovered that Greece had paid Goldman Sachs and other banks hundreds of millions of dollars in fees since 2001 for arranging transactions that hid the actual level of borrowing. The purpose of these deals made by several successive Greek governments was to enable them to continue spending while hiding the actual deficit from the EU. In 2009, the government of George Papandreou revised its deficit from an estimated 6% to 12.7%. In May 2010, the Greek government deficit was estimated to be 13.6% which is one of the highest in the world relative to GDP. Greek government debt was estimated at €216 billion in January 2010. Accumulated government debt was forecast, according to some estimates, to hit 120% of GDP in 2010. The Greek government bond market relies on foreign investors, with some estimates suggesting that up to 70% of Greek government bonds are held externally. Estimated tax evasion costs the Greek government over $20 billion per year. Despite the crisis, Greek government bond auctions have all been over-subscribed in 2010. According to the Financial Times on 25 January 2010, "Investors placed about €20bn in orders for the five-year, fixed-rate bond, four times more than the (Greek) government had reckoned on." In March, again according to the Financial Times, "Athens sold €5bn in 10-year bonds and received orders for three times that amount." □Downgrading of debt Interest rate of Greek two-year government bonds traded in the secondary market reflecting the markets' assessment of investment risk. 上海对外贸易学院模拟联合国大赛 Shanghai Institute of Foreign Trade Model United Nations Conference 5 of 10 2011 On 27 April 2010, the Greek debt rating was decreased to the upper levels of 'junk' status by Standard & Poor's amidst hints of default by the Greek government. Yields on Greek government two-year bonds rose to 15.3% following the downgrading. Some analysts continue to question Greece's ability to refinance its debt. Standard & Poor's estimates that in the event of default investors would fail to get 30–50% of their money back. Stock markets worldwide declined in response to this announcement. Following downgrading by Fitch and Moody's, as well as Standard & Poor's, Greek bond yields rose in 2010, both in absolute terms and relative to German government bonds. Yields have risen, particularly in the wake of successive ratings downgrading. According to the Wall Street Journal, "with only a handful of bonds changing hands, the meaning of the bond move isn't so clear." On 3 May 2010, the European Central Bank suspended its minimum threshold for Greek debt "until further notice", meaning the bonds will remain eligible as collateral even with junk status. The decision will guarantee Greek banks' access to cheap central bank funding, and analysts said it should also help increase Greek bonds' attractiveness to investors. Following the introduction of these measures the yield on Greek 10-year bonds fell to 8.5%, 550 basis points above German yields, down from 800 basis points earlier. As of 22 September 2011, Greek 10-year bonds were trading at an effective yield of 23.6%, more than double the amount of the year before. □Austerity and loan agreement On 5 March 2010, the Greek parliament passed the Economy Protection Bill, expected to save €4.8 billion through a number of measures including public sector wage reductions. On 23 April 2010, the Greek government requested that the EU/International Monetary Fund bailout package be activated. The IMF had said it was "prepared to move expeditiously on this request". Greece needed money before 19 May or it would face a debt roll over of $11.3bn. The European Commission, the IMF and ECB set up a tripartite committee to prepare an appropriate program of economic policies underlying a massive loan. The Troika was led by Servaas Deroose, from the European Commission, and included also Poul Thomsen and Klaus Masuch as junior partners. On 2 May 2010, a loan agreement was reached between Greece, the other euro zone countries, and the 上海对外贸易学院模拟联合国大赛 Shanghai Institute of Foreign Trade Model United Nations Conference 6 of 10 2011 International Monetary Fund. The deal consisted of an immediate €45 billion in loans to be provided in 2010, with more funds available later. A total of €110 billion has been agreed. The interest for the euro zone loans is 5%, considered to be a rather high level for any bailout loan. According to EU officials, France and Germany demanded that their military dealings with Greece be a condition of their participation in the financial rescue. The government of Greece agreed to impose a fourth and final round of austerity measures. They include: 1） Public sector limit of €1,000 introduced to bi-annual bonus, abolished entirely for those earning over €3,000 a month. 2） An 8% cut on public sector allowances and a 3% pay cut for public sector utilities employees. 3） Limit of €800 per month to 13th and 14th month pension installments. 4） Return of a special tax on high pensions. 5） Changes were planned to the laws governing lay-offs and overtime pay. 6） Extraordinary taxes imposed on company profits. 7） Increases in VAT to 23%, 11% and 5.5%. 8） 10% rise in luxury taxes and taxes on alcohol, cigarettes, and fuel. 9） Equalization of men's and women's pension age limits. 10） General pension age has not changed, but a mechanism has been introduced to scale them to life expectancy changes. 11） A financial stability fund has been created. 12） Average retirement age for public sector workers has increased from 61 to 65. 13） Public-owned companies to be reduced from 6,000 to 2,000. ●Controversy about national statistics In 1992, members of the European Union signed an agreement known as the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels. However, a number of European Union member states, including Greece and Italy, were able to circumvent these rules and mask their deficit and debt levels through the use of complex currency and credit derivatives structures. The structures 上海对外贸易学院模拟联合国大赛 Shanghai Institute of Foreign Trade Model United Nations Conference 7 of 10 2011 were designed by prominent U.S. investment banks, who received substantial fees in return for their services and who took on little credit risk themselves thanks to special legal protections for derivatives counterparties. Financial reforms within the U.S. since the financial crisis have only served to reinforce special protections for derivatives--including greater access to government guarantees--while minimizing disclosure to broader financial markets. The revision of Greece’s 2009 budget deficit from a forecast of "6–8% of GDP" to 12.7% by the new Pasok Government in late 2009 (a number which, after reclassification of expenses under IMF/EU supervision was further raised to 15.4% in 2010) has been cited as one of the issues that ignited the Greek debt crisis. This added a new dimension in the world financial turmoil, as the issues of "creative accounting" and manipulation of statistics by several nations came into focus, potentially undermining investor confidence. The focus has naturally remained on Greece due to its debt crisis. However there has been a growing number of reports about manipulated statistics by EU and other nations aiming, as was the case for Greece, to mask the sizes of public debts and deficits. These have included analyses of examples in several countries or have focused on Italy, the United Kingdom, Spain, the United States, and even Germany. □Credit rating agencies The international U.S. based credit rating agencies – Moody's, Standard & Poor's and Fitch – have played a centraland controversial rolein the current European bond market crisis. As with the housing bubble and the Icelandic crisis the ratings agencies have been under fire. The agencies have been accused of giving overly generous ratings due to conflicts of interest. Ratings agencies also have a tendency to act conservatively, and to take some time to adjust when a firm or country is in trouble. In the case of Greece, the market responded to the crisis before the downgrades, with Greek bonds trading at junk levels several weeks before the ratings agencies began to describe them as such. In a response to the downgrading of Greek governmental bonds the ECB announced on 3 May that it will accept as collateral all outstanding and new debt instruments issued or guaranteed by the Greek government, regardless of the nation's credit rating. Government officials have criticized the ratings agencies. Following downgrades of Greece, Spain and Portugal that roiled financial markets, Germany's foreign minister Guido Westerwelle said that traders should not take global rating agencies "too seriously" and called for an "independent" European rating agency, which could avoid the conflicts of interest that he claimed US-based agencies faced. European leaders are reportedly studying the possibility of setting up a European ratings agency in order that the private U.S.-based ratings agencies have less influence on developments in European financial markets in the future. According to German consultant company Roland Berger, setting up a new ratings agency would cost €300 million and could be operating by 2014. Due to the failures of the ratings agencies, 上海对外贸易学院模拟联合国大赛 Shanghai Institute of Foreign Trade Model United Nations Conference 8 of 10 2011 European regulators will be given new powers to supervise ratings agencies. With the creation of the European Supervisory Authority in January 2011 the European Union set up a whole range of new financial regulatory institutions, including the European Securities and Markets Authority (ESMA), which will become the EU’s single credit-ratings firm regulator on 7 July. Credit-ratings companies have to comply with the new standards or be denied operation on EU territory, says ESMA Chief Steven Maijoor. But attempts to regulate more strictly credit rating agencies in the wake of the European sovereign debt crisis have been rather unsuccessful. Some European financial law and regulation experts have argued that the hastily drafted, unevenly transposed in national law, and poorly enforced EU rule on rating agencies has had little effect on the way financial analysts and economists interpret data or on the potential for conflicts of interests created by the complex contractual arrangements between credit rating agencies and their clients" □Media There has been considerable controversy about the role of the English-language press in the regard to the bond market crisis. The Spanish Prime Minister José Luis Rodríguez Zapatero has suggested that the recent financial market crisis in Europe is an attempt to draw international capital away from the euro in order that countries, such as the U.K. and the U.S., can continue to fund their large external deficits which are matched by large government deficits. The U.S. and U.K. do not have large domestic savings pools to draw on and therefore are dependent on external savings. This is not the case in the euro zone which is self funding. Zapatero ordered the Centro Nacional de Inteligencia intelligence service (National Intelligence Center, CNI in Spanish) to investigate the role of the "Anglo-Saxon media" in fomenting the crisis. No results have so far been reported from this investigation. Greek Prime Minister Papandreou is quoted as saying that there was no question of Greece leaving the euro and suggested that the crisis was politically as well as financially motivated. "This is an attack on the euro zone by certain other interests, political or financial”. □Role of speculators Financial speculators and hedge funds engaged in selling euros have also been accused by both the Spanish and Greek Prime Ministers of worsening the crisis. German chancellor Merkel has stated that "institutions bailed out with public funds are exploiting the budget crisis in Greece and elsewhere." 上海对外贸易学院模拟联合国大赛 Shanghai Institute of Foreign Trade Model United Nations Conference 9 of 10 2011 The role of Goldman Sachsin Greek bond yield increases is also under scrutiny. It is not yet clear to what extent this bank has been involved in the unfolding of the crisis or if they have made a profit as a result of the sell-off on the Greek government debt market. In response to accusations that speculators were worsening the problem, some markets banned naked short selling for a few months. □Finland collateral On 18 August 2011, as requested by the Finnish parliament as a condition for any further bailouts, it became apparent that Finland would receive collateral from Greece enabling it to participate in the potential new €109 billion support package for the Greek economy. Austria, the Netherlands, Slovenia, and Slovakia responded with irritation over this special guarantee for Finland and demanded equal treatment across the Euro zone, or a similar deal with Greece, as not to increase the risk level over their participation in the bailout. The main point of contention was that the collateral is aimed to be a cash deposit. Greeks can only give it by recycling part of the funds loaned by Finland for the bailout, which means Finland and the other Euro zone countries guarantee the Finnish loans in the event of a Greek default. After extensive negotiations to implement a collateral structure open to all Euro zone countries, on 4 October 2011, a modified escrow collateral agreement wa