It is imperative not to reduce the deficit too quickly

Can markets be blow up euro-zone and push the Greece bankruptcy

Technically Yes. Today, the question lies in the political ability of Europeans to ensure the safety of the refinancing of the Greece, to make credible the ability of this country to control its debt.

The markets have reason to worry

The situation of the countries of southern Europe is different from the other. It of course depends on the importance of the deficit, but the speed of the deterioration of public finances.

In the Greek case, the fact that the Government had handled the statistics certainly played a role in the current concern in financial markets. These manipulations do not hide something more serious The Spanish case is different. Until recently, the Spanish public debt was not very high. But the bursting of the bubble, as the construction sector has, in total, represented up to 25 of the active population, will require a diversification of the economy; What is a difficult process in an international environment little carrier. In the transition, unemployment will remain high and the debt will grow strongly. Markets worry therefore the capacity of the Spain well driving this diversification of the domestic economy.

But the Japan, with a high public debt, knows no difficulty

It is true that the public debt is close to 200 of GDP and that the Government is still of low interest rates to borrow. It is a debt financed entirely by a domestic savings very high in a country where private consumption increased only very few and where savings is very largely intermédiée. As interest rates are largely administered and the cost of servicing the debt remains low despite its amount.

In Europe, with the stability pact, political leaders are able to believe that a level of public debt over 60 of GDP was dangerous. It is a mistake. The question will be to find a level of debt to GDP that is stable in the long term and that the markets consider credible.

What can do the States to get out of this infernal circle

First, it seems to me vital that European States fully displayed their solidarity and that the markets are convinced. But the Stability Pact is that introduce a constraint for all members of the euro area. It is crucial that States whose financial situation is more robust to show solidarity with countries with difficulties. Then, it must at all costs avoid a recurrence of the economy into recession. It is imperative not to reduce the deficit too quickly. Return to the nails of the Stability Pact into 2013 seems to me impossible.

Rating agencies are threatening the United States of degradation of their signature. Do they not contribute to the crisis

After it was unable to predict the crisis of subprime two years ago, they are now screaming Wolf on sovereign debt! The United States, the possible loss of their AAA is a major risk. If such be the case, we would see a flight of foreign capital and a serious crisis on the dollar. It would inevitably follow an increase in interest rates that could support the private sector. A new recession would be inevitable.