Candle in the Wind? The European Credit Crisis

Candle in the Wind? The European Credit Crisis
China Times editorial (Taipei, Taiwan, ROC)
A Translation
February 9, 2010

An economic recovery was in sight. The financial markets were on the rise. But a European credit crisis destroyed all optimism and hope. A second recession has renewed concerns about the financial crisis. We are not that pessimistic about future developments. But this incident shows that financial markets and economies around the world remain fragile, and each nation's financial stability remains important.

The Greek, Spanish, and Portuguese debt crises have revealed how precarious the situation is. All three are Eurozone Member States. This raises concerns that the entire Eurozone's economic and financial situation may be at risk. Recently, the European and the American stock markets tumbled in response. Asian stocks were also affected. During last week's "Black Friday" global stock markets tumbled.

On Monday the global financial situation gradually stabilized. On Saturday selling pressure on the Taiwan stock market eased because it was the only market open in the world. On Monday it rose slightly, up three points at closing. Asian stocks continued to fall in response to negative reports. But the decline was not as steep. Last Thursday the British, French, and German markets continued their downward spiral. After negative reports and a sell-off, the markets rose on Monday morning. The financial situation has gradually stabilized.

Globally speaking the European credit crisis is more serious than the Dubai credit crisis. No matter how prominent Dubai might be, it was after all, merely media attention. Based on the size of its economy, Dubai's impact on global financial markets is limited. The impact of Dubai's financial crisis on international markets lasted only one or two days. The European credit crisis is different. First, these three countries' economies are much larger than Dubai's. Their impact is naturally going to be greater. Secondly, these three countries are members of the Eurozone. Those most worried about the market, are not worried about individual countries such as Greece. They are worried about the negative impact on the entire Eurozone. The impact does not compare to that of the U.S. subprime mortgage crisis and the financial tsunami. But it is definitely greater than Dubai's, and merits our attention.

Financial markets have stabilized. But Europe's debt crisis is not over. The market is still waiting to see how the Eurozone countries deal with the aftermath. More bad news and the market will once again tumble. The financial tsunami taught the nations of the world a lesson. They will not allow the crisis to fester. The only issue is approach and timing. Just how far must the market fall before it bottoms out?

Lest we forget, the global financial tsunami struck in early August, 2007. The sub-prime mortgage crisis had already struck. For two days in a row, the European Central Bank injected a total of 200 billion USD into the market. The U.S. Federal Reserve followed up with capital injections amounting to 33 billion USD. But after the storm subsided, a chain reaction occurred. Citigroup, AIG and other financial giants, announced huge losses. By the first quarter of 2008 the storm had expanded. By the second half it had swept the world. Therefore the European credit crisis must not be taken lightly. Financial markets have stabilized over the past few days. But that does not mean the crisis has ended.

The European credit crisis shows that the global economy is recovering. Financial markets are growing and have stabilized. But they remain candles in the wind. Without special attention, their flames can easily be extinguished. This is particularly true during a financial tsunami. Governments and central banks spread money around in attempts to rescue the market and save their economies. But after they have stabilized the market, these governments are weakened. They are far less financially solvent than before. Two more tests will follow. One. The government will gradually withdraw its market supports. Normal, private sector market forces will assert themselves. Two. Even more importantly, the ability of governments to support themselves will be put to the test.

After they spread money around to save the economy, governments' financial positions deteriorate. They become heavily indebted. This is not limited to the four nations analysts have mocked as the "ou zhu si guo," or "four Euro-piggy nations." Germany remains strong. But the United States, Japan, Britain and France are in very poor condition. Their deficits are at record highs. They are under immense debt pressure. None of this is news. Fortunately these economies are large enough. They have large enough economic bases. Therefore they may be able to hold out.

The Republic of China's economy has already been integrated into the global financial system. But it is a small economy. It is unable to influence and change the global financial system. It can only passively accept and cope. The Dubai and European credit crises underscore the importance of government financial stability. When the financial tsunami struck, the nations of the world threw money at the problem. Onlookers may be reluctant to criticize the government's finances. But the tsunami has subsided. For the sake of long term economic development, the government must return to normal. It must seek financial stability. Otherwise there is no guarantee that the credit crisis will not appear on Taiwan.

中時電子報 新聞
中國時報 　2010.02.09
社論－風中之燭？ 從歐洲債信危機談起
本報訊

原本，復甦在望的經濟、漲聲四起的金融市場，一個歐洲債信危機，打落了樂觀希望，二次衰退、二次金融危機之疑慮再起。對未來的發展，我們認為並不悲觀，但由此事件中，我們則可看出全球金融市場與經濟仍然脆弱，及國家財政穩定度的重要性。

從希臘發生債信危機起，西班牙、葡萄牙也先後出現不穩情勢；由於此三國都屬歐元區會員國，外界擔心影響整個歐元區的經濟與金融情勢，近日歐美股市俱以重挫回應，亞股也難置身事外。上周的「黑色星期五」，全球股市也因此重挫。

周一的全球金融情勢，已漸趨穩定；台股因上周六獨步全球的開市，消化部分賣壓，周一以小漲三點作收；亞股雖仍繼續下跌以消化利空，但跌幅已輕。至於歐股方面，英、法、德三個主要國家的股市，在上周四、周五連續重挫，消化利空與賣壓後，周一開盤已出現紅盤。基本上整個金融情勢似已漸趨穩定。

以全球金融市場的眼光來看，歐洲債信危機比杜拜危機嚴重；因為，杜拜名氣再怎麼大，畢竟只是「名氣」而已，以經濟體大小、在國際金融市場的核心或邊陲地位來比較，杜拜的影響有其局限。事實上，杜拜危機對國際金融市場的影響只有一、二天的效應。但歐洲債信危機則不同，第一，這三國是比杜拜大很多的經濟體，影響自然比較大；第二，此三國都屬歐元區的一員，市場最擔心者，倒不是希臘單一國家的問題，而是憂心對整個歐元區的負面影響。因此，其影響雖然不能與由美國次貸風暴引發的金融海嘯相比，但必然較杜拜危機嚴重，值得重視。

目前，雖然金融市場已回穩，但歐洲債信危機尚未結束；市場仍在觀望歐元區國家如何處理善後，如再有利空，仍會再次重挫市場。不過，在經歷金融海嘯、全球救市的經驗後，各國斷不可能放手讓此危機與利空放大發酵；重點只是在處理方式與時機，及在全部事件落幕前，到底市場還要再反應多少才算落底。

不要忘記，全球金融海嘯，其實在二○○七年八月初，次貸風暴時即已顯現；當時，歐洲央行連續兩天為市場緊急注資二千億美元、美國聯準會跟進注資三三○億美元。但是，在市場認為風暴平息後，再出現「連環爆」，花旗、ＡＩＧ等金融巨人，分別出現並認列鉅額損失。到二○○八年第一季整個風暴擴大，下半年則終而席捲全球。因此，對歐洲債信危機，實不宜掉以輕心。這幾天金融市場的回穩，不代表事件與危機就已結束。

而由歐洲債信危機，也可看出目前全球的景氣復甦、金融市場的上揚，雖似已穩定往光明面行走，但實有如風中之燭，不特別注意呵護，燭火很容易又熄滅。特別是在金融海嘯期間，各國政府與央行「撒錢」救市場、救經濟，勉力穩住市場後，大部分政府實在是「體弱氣虛」，財政能力大不如前。未來的考驗，一個是在政府逐漸撤除對市場的支援後，民間與正常市場力量的承接能力；第二個更重要的是：各國政府本身的支撐能力。

在撒錢救經濟後，政府財政狀況惡化與國家債務變重的國家，可不是只有這幾個被分析家譏為「歐豬四國」的國家而已；除了德國仍較穩健外，美、日、英、法的狀況都相當差；政府赤字創新高、債務壓力沉重，都已不是新聞。所幸的是，這些經濟體夠大、底子也還足，因此還能撐住。

對已融入全球金融體系的台灣而言，我們是小型經濟體，無能影響與改變全球金融體系的動盪，只能被動接受與因應。但由杜拜危機到歐洲債信危機，大家應看得出國家財政穩定度的重要。金融海嘯時，全球撒錢救經濟，或許外界不忍對政府財政過分苛責，但海嘯已退，從國家中長期經濟發展的眼光看，政府仍應回歸常態，力求財政穩健。否則，債信危機難保不會出現在台灣。