One of the most memorable quotes of the financial crisis was delivered by German Chancellor Angela Merkel in May 2010, when she declared that “in a way, it is a struggle between politics and the markets. We must re-establish the primacy of politics over the markets.” Though unusually stark, this formulation echoes a widespread perception in Europe. Disorderly market movements, such as the successive increases in Greece’s borrowing costs, are overwhelmingly blamed by political leaders on speculators, abetted by their dubious sidekicks, the credit rating agencies.
This depiction is both natural and misleading. It echoes centuries of uneasy relations between political leaders and financiers in both Europe and the United States, which oscillate between excessive proximity and excessive antagonism – sometimes both simultaneously. From Friar Savonarola’s anti-banker revolution in Florence in 1494 to Louis XIV’s crushing of France’s finance superintendent, Nicolas Fouquet, in 1661, to President Andrew Jackson’s undermining of the Second Bank of the United States in 1833, this is a running theme of Western history. At the same time, the anti-speculator rhetoric does not quite fit the facts of the euro crisis. Bond market investors are moved by fear more than greed. The problem now is that too few investors want to buy sovereign debt from the Eurozone periphery, and this “buyers’ strike” is driven by economic and policy uncertainty, rather than by market manipulation at the hands of unethical private-sector participants. This is not to say that the financial community is immune from conflicts of interest or reckless risk-taking, but only that these are not at the core of the current crisis episode.
Πηγή: Bruegel