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Paul
N. Goldschmidt |
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ARTICLES Ø
Règlementation et
Supervision Ø
Politique o
Belge ARTICLES RECENTS Reform of the ECB: trap and an opportunity Statut de la BCE :
Piège et Opportunité Bankers bonuses must be handled with care Gérer le bonus des
banquiers avec prudence François
Hollande et l’ Europe François Hollande
and Europe The French
election: the European debate emerges – at last! Elections
françaises: l’Europe fait surface – enfin ! François
Hollande et le traité de discipline budgétaire Peut-on
réformer l’Education Nationale? A
Federal EU and a fully empowered ECB: two facets of European solidarity Ratification
du MES: un processus incompréhensible Ratification of the ESM: an
incomprehensible process François Hollande et
l’Education: un rendez-vous manqué The Financial Sector:
Public Enemy N°1? Le Secteur
Financier: Ennemi Public N°1? Controversy surrounding the ECB |
QUI
SUIS-JE ? Ø Ingénieur Commercial Solvay (Université Libre de Bruxelles) 1959 Ø
Licencié en Science Commerciales
et Financières (ULB) 1961 Ø
Goldman, Sachs & Co. (New York
– Londres) 1963 – 1985 Ø
Consultant Financier (Londres –
Monaco) 1985 -1993 Ø
Commission Européenne (Luxembourg)
Directeur Service Opérations Financières (ECFIN) 1993 – 2002 Ø
Membre de la Ligue Européenne de
Coopération Economique 2004 – Ø
Membre de
l’Institut Thomas More 2007 – Ø
Administrateur :
Rencontres Musicales Intern. d’Enghien 2009 - WHO AM I ? Ø Graduate Solvay Business School (Brussels
University) 1959 Ø Master in Commercial and Financial Sc.
(Brussels Univ.) 1961 Ø Goldman, Sachs & Co. (New York – London)
1963 – 1985 Ø Financial Consultant (London – Monaco) 1985 –
1993 Ø European Commission (Luxemburg) Director
Financial Operations Service (ECFIN) 1993 -2002 Ø Member of the European League for economic
Cooperation 2004 - Ø Member of the Thomas More Institute 2007 – Ø Board Member: |
CONTACT Ø 13 Avenue Victoria 1000
Bruxelles Belgique Ø Tel : +32
(02) 6475310 begin_of_the_skype_highlighting Ø Mob : +32 (0497) 549259 Ø E-mail :
paul.goldschmidt@skynet.be |
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Ø Domaine Saint Donat 1052 Route de Salernes 83510 Lorgues – Var France Ø Tel : +33 (04) 94 73 20 15 Ø E-mail : domainestdonat@orange.fr Ø Web : http://www.domainesaintdonat.com
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Commentaires - Commentry |
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Rule Britannia?
Only time will tell whether the gamble of
David Cameron will be only bad or, indeed, very bad for the UK.
If the Euro (EU) fails - as it still well might - the UK will see its main
trading partners in such a mess that it will be inevitably sucked into abyss, a
poor consolation for "having been right". Let us not forget that the
tough Prime Minister has forcefully defended in the House of Commons - until
last week - the point of view that the survival of the Euro was
"vital" to the UK. What justifies now the applause when he
contradicts himself by placing bets against such an outcome?
If the Euro holds together things will be even worse for the UK. The City will
lose its (European) preeminence and world financial centre status: do not count
on the Americans to remain in London on the basis of language: they do well in
Tokyo, Singapore or Shanghai so they can just as well do their business in
Frankfurt (in English). They will always prefer a market of some 330 million
people to an isolated UK. That bodes extremely well for the London housing
market, the Exchequer’s tax receipts and the general British standard of
living!
After watching the steady decline of the City (which will occur whatever
happens if the UK does not join the Euro), the irrelevance of the UK will
extend to other emblematic areas: for instance how long can Britain justify a
Security Council permanent Member Status when as a delayed result of a more
integrated Europe, France will be, in due course, compelled to abandon its seat
in favor of the EU. This perspective may indeed well complicate reaching a
"euro" agreement in the first place, but it would be foolish to bet
on it because the alternative is the implosion of the EU and loss of any
possible French ambition to justify its current unwarranted elevated United
Nations status.
The British Euro-skeptics may gloat over the difficulties of the Euro, but
promoting actively such an outcome will lead the country on the wrong side of
the fabled "Salomon's judgment".
In any case let us be fair play and, taking a leaf out of Cameron's rhetoric,
wish England "all the best".
Brussels, 9th
December 2011
Le Président Sarkosy veut-il entrer dans l’Histoire ou être réélu ?
En cette veille du Sommet Européen, considéré comme crucial pour la
pérennité de l’Euro et la survie de l’Union Européenne, une occasion unique
s’offre au Président de tous les français de marquer l’histoire de façon
indélébile.
Devant la difficulté de réunir un large consensus qui dépasse les clivages
politiques traditionnels en France, alors que la gravité et l’urgence de la
situation sont reconnues par tous, le Président, mettant l’intérêt supérieur de
l’Etat au-dessus de toute autre préoccupation (notamment électorale), devrait
annoncer qu’il renonce à se présenter aux élections présidentielles pour
consacrer le reste de son mandat entièrement à la résolution de la crise. Il
nommerait pour ce faire un Gouvernement d’Union nationale dont l’objectif
principal serait de présenter un front commun français dans les négociations
sur les réformes des Traités européens qui se préparent.
Un tel geste, d’une noblesse incontestable, permettrait de mettre en
sourdine les sordides calculs d’une politique politicienne qui, - élections
obligent - empoisonnent l’atmosphère du débat politique en France. Sans
candidat pour les élections de mai prochain, la majorité présidentielle devrait
désigner rapidement un autre champion qui ne ferait pas partie du Gouvernement
mais porterait devant le pays les aspirations sociopolitiques défendues par la
majorité actuelle.
Ce choix
courageux améliorerait de façon significative les chances de réussite d’une
solution européenne à la crise ainsi que les possibilités pour la France
d’imprimer sa marque sur les négociations difficiles qui s’annoncent. Si la crise
peut être ainsi jugulée, rendant acceptable des propositions aussi audacieuses
que nécessaires, alors, le Président sera gratifié de la reconnaissance de la
grande majorité des français et de nombreux citoyens de l’Union toute entière.
Bruxelles, le 10
décembre 2011
Rating Agencies: misguided Commission proposals
The
inexcusable error of Standard and Poor's in releasing
an announcement concerning the loss of France's triple A rating has
considerably reinforced the "emotional" appeal of further poorly
thought out reforms of the Rating industry.
First it
should be quite obvious that the market has decided - rightly or wrongly - that
France does no longer deserve the AAA as the spread over Bunds reaches - as I
write -170bp. This fact can no longer be attributed to the S&P mistake.
This assessment by the market is based on two main factors: France's poor
economic outlook which will cause further austerity measures to meet the French
commitments on the budget deficit, but more importantly, the lack of political
consensus between Government and opposition which translates itself by the
obligation of the opposition to criticize every Government measure as part of
their "electoral" strategy. This typically French characteristic will
pollute the Eurozone debate on further economic and fiscal integration until
the elections next May and weigh heavily on the market's assessment of French
creditworthiness. It may also be to late by next May
to save the Euro!
Turning to
the proposals themselves, their intrusiveness in several key aspect
is likely to harm very seriously the unquestioned usefulness of ratings and
lead to greater market volatility. Ratings are and should remain private
"opinions" expressed by respected professionals. It is right to frame
rules that cover areas such as "conflicts of interest" as well as
transparency of the methodology used by Agencies. It is wrong to interfere with
the freedom of issuers and investors to rely on the ratings they choose to
trust by imposing a mandatory "rotation" in a poorly thought out
copycat measure inspired by the regulations applied to auditors. The idea of
even a restricted form of "suspension" of ratings is also bound to be
counterproductive as the measure - should it ever be used - will in itself
create a negative market feedback loop.
The most
important initiative that the Authorities could take in the area of ratings is
to remove all instances where ratings are used as “legal” criteria of
eligibility for assessing risk parameters, mainly in the field of the use of
securities as collateral (ECB) or the determination of risk in investment
portfolios of insurance or legal pension funds. Rating Agencies are requesting
such a move. This would not prevent private institutions from using ratings as
a "tool" and under their own responsibility in assuming their credit
assessment responsibilities or as a reference in private contractual
agreements.
The
Commission should realize that this is not the right moment to overhaul
fundamentally the Rating industry in the middle of the crisis. It will
unavoidably give rise to criticisms that it is itself at the heart of
"conflicts of interest" it wishes to "regulate".
BNP urges EFSF to issue
credit default swaps
Commentary on article in the Financial Times
of20/10/2011
The idea of
issuance of CDS by the EFSF is interesting. It does indeed appear a more
transparent and manageable scheme relative to the alternative "first
loss" insurance scheme that has been proposed
It does in
no way contradict the recent agreement at EU level to ban writing of
"naked CDS" as such issuance would have to be tied to the purchase or
ownership of sovereign bonds.
It does
however raise a number of important questions:
1) As a CDS
is an insurance contract, the EFSF should build over time the necessary
"mathematical reserves" needed to meet sovereign debt defaults. With
no "track record" or reliable statistical information available, the
correct amount of provisioning will be hard to determine. The Member States
could ensure the “residual risk” which should diminish over time and not impair
individual MS indebtedness.
2) How
would the pricing of the CDS issuance be handled.
Would the contracts be attached once and for all to a specific holding until
final maturity or would the CDS be "detachable" and subject to
"secondary market trading"? Clearly if the latter was the case, the
EFSF could only be required to pay under the contract to the extent that the
defaulted bonds were presented and turned over by the holder of the contract.
This ensures that there are no naked CDS can be “issued” creating liabilities
that would exceed that outstanding amount of debt.
3) If such
a scheme was implemented, one advantage would be that all outstanding debt
could be insurable. This creates however the obligation for the EFSF to
calculate its "premiums" correctly.
4) These
comments underline the need to complement the proposed EU legislation on
"naked CDS" by measures to underpin the "insurance"
characteristic of this market as opposed to an "independent"
financial product. Regulation and Supervision of the CDS market should be
brought under the control of the European Insurance Authority rather than the
EBA.
Standing on the precipice and ready to jump
Commentary
on the article of W. Münchau FT 21/07/11
Excellent reminder of the realities!
However, let me point out that even you maintain a somewhat ambiguous position:
It is not only necessary to broaden the size and scope of the EFSF but it is
indispensable to bring it fully under the EU umbrella and remove it from the
status of a seperate club for EMU Members.
This requirement entails a number of consequences: it is illusory to reform the
EFSF without completely revisiting the question of the ESM which is supposed to
be its "June 30th 2013" successor. The current "draft ESM
Treaty" which is about to start its long "ratification" process
should be thrown out lock stock and barrel. Second, the "commitment"
of EMU Member states not to require any form of restructuring prior to June
30th 2013 should be "officially" removed as this arbitrary decision
has created "moral hazard" and exacerbated unnecessarily market
volatility as investors determine their strategies in light of this - probably
unsustainable - commitment.
A comprehensive and credible solution should include the following ingredients
(all contained in my proposals of January 2011).
- The EFSF/ESM should be a fully fledged Agency of the EU.
- Its debt should benefit from a full EU budget guarantee (joint and several
commitments of the EU 27 Member States).
- Non EMU Member states should have access to the Facility
- Conditionality should be monitored by the Commission as part of the
"Semester" process.(possibility of requiring
pledging of collateral by borrowing Member states).
- Counter guarantee in favor of the EU budget by EMU Member states and
participating non EMU Members.
This structure would bring the full credit standing (unquestioned AAA) of the
EU as a whole to bear on the market acceptance of EFSF securities and removes
doubts by investors as to the likelihood of reimbursement. The counter
guarantee is an "intergovernmental agreement" by which EMU Members
and those other Members using the EFSF are called upon first, reducing
significantly the risk of other Member states.
It is of paramount importance to remove from the market perspective the
ambiguity between the liability of the EU and EMU and to create q structure
where there is a conflict of interest between Member States.
The latest pronouncements by the Chancellor calling for the Eurozone to get its
act together because of the grave dangers that a collapse would pose to the UK
is the best argument for the UK to agree to the EU budget guarantee while
accepting a limited amount of risk (a total breakdown of EMU would be in his
own words catastrophic for the UK).
Short of addressing these fundamental questions, I agree that whatever the
apparent "financial peace in our time" declarations expected later
today from Brussels, it will not take long for the markets to realize the precarity of the situation.
in this respect, the recent publication of the EU proposals for Basel III
compliance within the EU show a capital deficiency of €460 billion to be
eliminated by 2019. This figure is much more likely to be the focus of markets
rather than the €2.5billion existing capital shortfall revealed by the stress
tests. It will also show the dangers of a bank "tax" as part of the
solution to the sovereign debt crisis; such a tax can only reduce the banks
capacity to meet its recapitalization requirements in the same way as excessive
conditionality o loans can impair the capacity of the borrower to
"grow" out of his predicament.
Politicians should understand that markets link together all their different
pronouncements and look for the incoherencies between them. The capital
requirements of banks constitute on the one hand and the
"participation" in the solution of the sovereign debt problems
constitutes a particularly clear and sensitive example.
Commission proposal on Ratings
The suggestion made by Commissioner Barnier to study ways of prohibiting Rating Agencies to
rate EU Sovereign States that are subject to an EU “financial assistance” program risks to
create more confusion than bring any relief to the volatility of the sovereign debt bond market. It may also
jeopardise the Commission’s own credibility.
Attributing market movements to rating announcements is the result of
the direct link between ratings and the eligibility of (Greek and other)
Sovereign bonds as collateral for ECB advances. The fear is that the “self
imposed” rule of the ECB, requiring at least one “rating” above the level of
default, would shut off the access of banks to ECB refinancing with a domino
effect spreading rapidly throughout the entire EMU banking system and beyond.
The ECB has wisely decided the suspension of that rule for Portugal on
the morrow of the downgrade by Moody’s by four notches of the Portuguese
rating.
The most important
step in addressing the problem of the incidence of ratings on the market is to
break formally any link of “private ratings” with “regulatory requirements” and
remind markets that ratings are only one element of any responsible assessment
of a borrower’s creditworthiness.
The EU (through its various institutions) having privileged access to
detailed information, as part of the work undertaken to structure the
conditionality of its various “assistance” packages, is rightly pointing out
that, “sustainability” being its key criteria for assistance, markets should
give due consideration to the solvency implications of countries that subscribe
to an EU/IMF program. Time will tell
whether the track record of the Agencies is better or worse than that of the
EU’s own assessment. The apparent need for a second “Greek package” does not
give at present much credibility to the EU. The envisaged modifications of
extant loan conditions which include (at last) the lowering of interest and an
extension of maturities on EU loans, should have been features of the initial
package; they are examples that show why the market is not prepared to accept
blindly the official declarations of “financial peace in our time”!
Regulatory moves that would impinge on the agencies freedom to publish
ratings will only add to fears that authorities are not in full control of the
situation. This does not mean that agencies should not be regulated but the
framework should address questions of standards of professionalism and
management of conflicts of interest as well as punish severely any market abuse
or manipulation from which operators would profit.
As was clearly demonstrated by the significant sell off in
Italian/Spanish and other bonds on July 11, these major moves were not created
by any rating announcements and the selling pressure was not the result of
speculation but rather of responsible managers exercising their fiduciary
responsibility towards their clients (pensioners – insured – investors etc.).
Rather, the incapacity of Finance Ministers to agree on a set of concrete
measures is likely to prolong uncertainty and allow markets to impose their
views.