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European economic government would make euro safer - private expert

brussels bureau

European economic government would make euro safer - private expert


Frederic Bouchard, euronews: “We’re with Marc Touati, who is at the head of Global Equities. Our special report is entitled “Is the euro in danger?” What’s your answer to the question?”

Marc Touati: “Well, unfortunately, the answer is ‘yes’. The euro is clearly in danger today, because we’re letting an already difficult situation get worse over time, so it can’t all be pinned on the speculators, as is done too often. There’s always an objective reason for speculation. It’s one of the consequences of economic policy errors that have been made for years.”

euronews: “But the speculators have in a way got in on the political game or at least have made the politicians react. Now they’re talking about a European monetary fund.”

Marc Touati: “One has to be very careful about that. I think there is the fear today that Greece will slam the door and go to see the IMF, which would obviously be a painful setback for the European Union. More than a European monetary fund, what’s really needed is political monetary leaders who are responsible and who take their role seriously. That’s really what’s happening today: restoring the possibility for the euro zone to produce growth, because we’ve seen recently in France that 69% of the French miss having the franc. Why? It’s not so much that they don’t like the euro. It’s because since the euro was created we haven’t been able to manage strong growth.”

euronews: “But what would a first decision be to relaunch growth in the euro zone, and in the EU more generally?”

Marc Touati: “Two decisions to take today to stop the hemorrhage, one: the European Central Bank has to drop its interest rates to half a percent, to the Bank of England’s level. You see the US Federal Reserve is at a quarter of a percent, so we’d still be above that, at half a percent. That would be a first step; and behind that, as fast as possible, create a true government, at least the seeds of a European government which could say, for instance, ‘today the euro is too strong’, and give the market a clear signal to bring the euro down, to the one-twenty, one-fifteen levels, which, remember, are the European currency’s balancing levels. Those would be very strong measures to take.”

euronews: “You talk about a European economic government, but Germany is completely against that as a solution.”

Marc Touati: “And there’s the whole problem, unfortunately that’s where it is, Germany, who, on top of things, lit the fuse in this crisis. Germany said: whatever happens, we’re here. We’ll save Greece, we’ll avoid the difficulties for such and such a country. Except that here, from the very lips of Angela Merkel, at the end of 2009, beginning of 2010, we heard that Greece would have to cope on its own, and that is what opened the Pandora’s box which is Greece’s risk of defaulting, and which effectively got the speculators off and running.”

“The whole problem that we have today is that Germany says ‘stop’. It’s no longer ready to pay for everyone, and the result is that everyone is going to have to pitch in, enact real reforms. Not only Germany has to reform; we do too, the French, Italians, Greeks also have to bring in the reforms we’ve been refusing to, and as long as we keep putting it off the euro zone will be shakey, and in the end won’t have much credibility on the international stage.”

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