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The truth? In this Europe all countries make moral hazard

Who has
never sinned (in this Europe) moral hazard cast the first stone! If the IMF believes
that the developed proceeds in three speeds (emerging countries, the U.S. and
then Europe as bottom of the heap) it is now clear that Europe, in turn,
travels to (at least) two speeds. On the one hand the North and countries with
Triple A, on the one hand and those in the South, one by one, lost them all
(there are countries like Greece and Cyprus, which have also lost B).

The
accusation that the countries of the North often move to those of the South is
the moral hazard. Due to the fact that they pay little attention to public
spending and have high rates of corruption do not deserve the help of the
troika (EU-IMF and ECB) when reeling. This is why their irresponsible attitude
the only way to receive aid packages is subject to strict austerity plans.
Plans which, as seen, if practiced in recessions are likely to trigger only
dangerous vicious circles that frustrate the aid.

If not –
and if the spendthrift and corrupt countries receive aid without engaging in a
healthier way to manage public affairs – as you could feed the moral hazard,
because there would be no incentive to correct the excesses, since not only would
remain unpunished but also quantities of food aid by.

On this
point, there's no doubt. But those who took the charge of moral hazard can cast
the first stone? I think not. And we see why, focusing in particular on two
grounds.

1) First of
all on the high morality of banks and institutions of the countries of the
North the facts leave some doubt. The German Landesbanken, for example, were
the first in Europe to fall into the trap of subprime mortgages (which instead
has only touched the Italian banks). And does anyone remember what happened to
Commerzbank (the second German bank says that today, for the voice of his chief
economist Jörg Kramer, that in Italy it would take a sheet on the current
accounts of 15%)? From what has burst the bubble of derivatives on subprime
mortgages was saved several times with initials public aid of 33 billion euro
(about as much as they capitalize today Intesa Sanpaolo and Unicredit put
together) which are then followed various capital increases.

Does anyone
remember what happened to the Franco-Belgian bank Dexia and the Dutch ING
Direct? These also saved with public money. And the list goes on.

2) And then
there's a second point. If you analyze the TARGET balances 2 – The European
mechanism created to offset assets and liabilities that arise between the
central banks of the euro area countries because of imbalances on capital flows
– there is a clear split of Europe. The North is listed as net lender of
capital while the South Europe as a net debtor. In August 2012, Germany reached
its historical peak with a credit of 751 billion euro within the system TARGET2
(euro area countries). At the same time as Spain, Italy and Greece debt
positions were respectively 429 000 000 000, 289 and 108 billion.

Not
surprisingly, when an Eurozone country does collapse it turns out that the
timely exposure of banks in Northern Europe is the highest (see the last case
Cyprus with German banks exposed to 5.8 billion against an Italian exposure of
0.9 billion). So, here's something else again. The banks of northern Europe do
not have problems to finance the countries of the South (thanks to the strong
trade surplus that the countries of the North to prance when they entered in
the euro and in fact devalued in a competitive manner the respective exchange,
see the example of the German mark). The same people who are labeling as
profligate and corrupt.

When,
however, these countries need help the northern banks are up to their
responsibility (any lender before lending money should carefully evaluate the
debtor's credit rating and assuming the risks in the face of higher interest
rates applied) and request that it is to pay the Troika (then ask for losses to
be shared within the European Union and the IMF through bailouts bail-out) or
the same as citizens of the state in trouble (as was the case for Greece and
Cyprus where it was introduced mode saving through the bail-in eroding the
value of the bonds in the hands of private investors or by imposing a balance
sheet on the current accounts of citizens).

Basically
lenders North privatize gains (interest rates charged to countries of the South
in exchange for loans made strong) but if something goes wrong ask a
socialization of losses (either through bail-out plans that bail-in). Too easy.
Is it also a form of moral hazard?