ORIGINAL FRENCH ARTICLE: Claus Matecki « Se libérer de l’étau des marchés »
by Bruno Odent
Translated Tuesday 20 September 2011, by Bill Scobleand reviewed by
Claus Matecki, the leader of the DGB, the German trade union confederation, discusses the urgent need to create a European public bank to lend to governments at very low rates.
Claus Matecki, who is responsible for economic issues at the DGB, answers questions posed by l’Humanité.
What’s your reaction to the desire expressed by Nicolas Sarkozy and Angela Merkel to extend the German model, the so-called “brake on debt” (the constitutional golden rule on a balanced budget) to the whole of Europe?
Claus Matecki: The “brake on debt” is by far the worst export product that Germany has to offer. It makes it less possible to practice anti-cyclical policies and it increases pressure against public expenditures. As a consequence, we are seeing a continued reduction in social programs and we can note a shortfall in investment. A brake on debt accentuates recessionary tendencies.
German GDP only grew by 0.1% in the second quarter. Does this development worry you?
Claus Matecki: German GDP is going to continue to grow in 2011 and 2012, but at a slower rate. Not only are we going to have to deal with the economic problems in Southern Europe and in the United States, but also with the slowing down of the dynamic in the BRIC (Brazil, Russia, India, China) emerging countries. All this is going to have a knock-on effect on German exports.
Whence is a new surge to come, if consumption in Germany remains so low? Wages continue to lag. The creation of a low-wage sector – the product of a deliberate political decision – is a contributing factor to the domestic market’s not being able to take the place of the world economy, which is “running out of gas.”
Last year, in a “Greek resolution”, the DGB came out in favor of severing the financial markets from European public finances. Hasn’t this become even more urgent today?
Claus Matecki: Certainly. The launching of euro-bonds would be a first step towards creating a unified government loan market in the euro zone, so that each government would benefit from identical refinancing conditions. But the most important step towards severing public finances from the financial markets would be the creation of a European Bank for public loans, which would be set up as a partner of the European Central Bank (ECB).
The money obtained from the ECB would be transmitted to the euro zone countries at an interest rate corresponding to its key rate (1.5% today), under very favorable conditions. Thus no government would be threatened with bankruptcy any longer. Speculation would be defused and no one would need a credit default swap (cds), because there would no longer be any risk of a default.
Finally, and this isn’t the least advantage, private investors would have to adapt and this would push down the general level of interest rates. That would not fail to encourage private and public investment and would contribute to economic prosperity and to the development of public services.
Is this creation of a European public bank compatible with existing European treaty rules?
Claus Matecki: Article 21.1 of the ECB forbids direct financing of the public sector in the euro zone. But this does not concern the banks. Consequently, the creation of a European public bank would in no way contradict ECB statutes. That the purpose of this bank should be the purchase of euro zone government loans is something that would solely and uniquely concern this bank.