MUNCHAU: Portugal will require a new programme, and there will ultimately be a significant degree of debt default, negotiated or otherwise
Wolfgang Munchau, German, 51, based in Oxford UK, founder of Eurointelligence and editor and columnist of the Financial Times, in an interview at Expresso weekly newspaper in Portugal, interviewed by Jorge Nascimento Rodrigues, 20 April 2013.
Main Topics
# «If you extend maturities for sufficiently long enough, and reduce interest rates towards zero, then forbearance turns into debt foregiveness. A seven-year extension is, however, not going to be sufficient. Portugal will require a new programme, and there will ultimately be a significant degree of debt default, negotiated or otherwise.»
# «I expect a new full programme, and that would not be consistent with the OMT. If I am wrong, I would expect a combination of precautionary credit line and OMT. »
# «Austerity continues in Europe, but I expect the extend to lessen a bit. What concerns me a lot more than the isolated austerity in the south – which is to some extent necessary, is the austerity in the north, which is not. The eurozone as a whole needs an expansionary policy, made of a strong element of fiscal expansion in the north, and moderate austerity in the south.»
# «I am getting more sceptical about the long-term sustainability of the eurozone. I see no chance that we will be overcoming the various debt and adjustment crises with the current crisis resolution framework. We will see a lot more default in the private and public sector, against external debtors, but also government default against their citizens, and I am not sure the latter is politically sustainable. As for the supposedly “genuine economic and monetary union”, I just don’t see it. The banking union will stop half-way. There will be a joint resolution fund, no joint deposit insurance.»
# «I think monetary financing of debt is not only illegal, but also very detrimental in the long run. The only thing that can overcome the crisis is a joint economic policy, where the most important econoimc policy decisions are centralised, where in turn, the burden of some of the existing debt stocks is shared. Plus a framework to manage default in the banking sector, and to manage sovereign default.»
Wolfgang Munchau, German, 51, based in Oxford UK, founder of Eurointelligence and editor and columnist of the Financial Times, in an interview at Expresso weekly newspaper in Portugal, interviewed by Jorge Nascimento Rodrigues, 20 April 2013.
Main Topics
# «If you extend maturities for sufficiently long enough, and reduce interest rates towards zero, then forbearance turns into debt foregiveness. A seven-year extension is, however, not going to be sufficient. Portugal will require a new programme, and there will ultimately be a significant degree of debt default, negotiated or otherwise.»
# «I expect a new full programme, and that would not be consistent with the OMT. If I am wrong, I would expect a combination of precautionary credit line and OMT. »
# «Austerity continues in Europe, but I expect the extend to lessen a bit. What concerns me a lot more than the isolated austerity in the south – which is to some extent necessary, is the austerity in the north, which is not. The eurozone as a whole needs an expansionary policy, made of a strong element of fiscal expansion in the north, and moderate austerity in the south.»
# «I am getting more sceptical about the long-term sustainability of the eurozone. I see no chance that we will be overcoming the various debt and adjustment crises with the current crisis resolution framework. We will see a lot more default in the private and public sector, against external debtors, but also government default against their citizens, and I am not sure the latter is politically sustainable. As for the supposedly “genuine economic and monetary union”, I just don’t see it. The banking union will stop half-way. There will be a joint resolution fund, no joint deposit insurance.»
# «I think monetary financing of debt is not only illegal, but also very detrimental in the long run. The only thing that can overcome the crisis is a joint economic policy, where the most important econoimc policy decisions are centralised, where in turn, the burden of some of the existing debt stocks is shared. Plus a framework to manage default in the banking sector, and to manage sovereign default.»
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