“Europe shouldn’t waste a good crisis”, is what the chairman of Goldman Sachs Asset Management, Jim O ‘Neil, stated on CNBC. Mr. O ‘Neil went on CNBC’s offices in London to discuss with members of the CNBC TV-18 and was asked to express his view on the efforts of the Eurozone to combat the debt crisis.
“It’s very difficult for Europe to speak with one voice. I think the most interesting thing today is that when we have a week like the past one where European markets were doing so well, the pressure for a coordinated approach, particularly in Germany, seems to fade”, said Mr. Jim O ‘Neil. “So now they are shifting targets to another dilemma regarding the subject. For us who expect the same clarity of purpose and consistency displayed in the U.S. in such a case, is something we will never see in Europe”, he added.
Mr. O ‘Neil believes that European policy makers should not let a good crisis be wasted. “Now is the opportunity for Europe to improve the structure of the EU, and in my opinion, this is not a debt crisis but a crisis of governance and structure. Europeans should join forces. We can see that Germany does not know exactly what to do. This will be the solution. I suspect that what actually happens in the background is that the Germans are negotiating with leaders of other countries for greater institutional support for them and for a stronger stability pact”.
The prospect of a Eurobond, which was rejected by Germany, makes sense, according to Mr. O ‘Neil, as “if you want a market where investors can fund things the same way as do the U.S., then Eurobonds is inevitable”. He also considers that Eurobond should be “in conjunction with a Stability Pact which really means something, where people have agreements that held and there is some kind of punishment when they do not. These are the parameters for a reasonable and sustainable European monetary union”.
Additionally he stresses – and this is the most controversial part – that “the idea that the ECB may be completely independent from all sides has proved just unrealistic”.
