European Central Bank Chief Economist: 'Everyone Is a Sinner at the Moment'

Part 3: Greece 'Must and Will Make It'

SPIEGEL: Is Germany even an effective role model for the rest of the euro zone anymore?

Stark: Definitely. From my perspective, the debt brake (eds. note: the constitutional amendment passed in 2009 that limits deficit spending), which is grounded in Germany's Basic Law, is already an enormous and symbolic step.

SPIEGEL: The central banks aren't innocent either, because they have made enormous sums available to the markets.

Stark: Those were decisions that were urgently needed.

SPIEGEL: At some point, the ECB will also have to abandon its very loose monetary policy.

Stark: And that will happen gradually. The longer our interventions remain in effect, the more dangerous do the side effects become.

SPIEGEL: But the stability pact, which you played a key role in drafting, is dead.

Stark: It is not dead. Without it, we would have much higher deficits. And you also cannot hold it responsible for statistical inaccuracies. After all, it is an important framework for the consolidation measures that now have to be introduced.

SPIEGEL: But now, of all times, it must be very tempting for some countries to massage their own budget figures.

Stark: And that temptation is nothing new. Besides, the phenomenon is not limited to public budgets.

SPIEGEL: Those who wish to lie will lie?

Stark: No, we absolutely cannot make that our basic assumption.

SPIEGEL: Right now, everyone is a sinner.

Stark: Yes, everyone is a sinner at the moment. But we also happen to be dealing with the consequences of the worst recession in 80 years. That's one of the reasons so many governments have yielded to the enormous pressure, in some cases, to take on huge debts. A renaissance of the government's role in the economy was celebrated. The politicians were proud that they could finally rescue something. But who will rescue the state in the end?

SPIEGEL: Do you have an answer?

Stark: Things cannot be allowed to go so far that the state has to be rescued.

SPIEGEL: In the United States, the Fed is doing plenty of rescuing. It simply prints money and buys treasury bonds.

Stark: We cannot take that approach. And I am glad that we are not permitted to do so. Our mission is price stability.

SPIEGEL: You are maneuvering yourself around an answer to the main question: What happens if Greece doesn't make it?

Stark: I do not think that is the most important question, but I will answer it with a clear statement: The country must and will make it.

SPIEGEL: How dangerous can speculators be to the country in the current situation?

Stark: Speculation is a part of the market economy, which I do not want to portray as positive or negative. However, the current situation undoubtedly promotes exaggeration. For this reason, I cannot rule out that speculators are currently amplifying the processes.

SPIEGEL: You have been "only" an economist for your entire life. How exactly do you make sure that you don't fall out of touch with real life?

Stark: My roots are too deep for me to lose my grip on reality. Besides, my family regularly confronts me with real life.

SPIEGEL: Economists seem surprisingly self-certain, even in this crisis. The only problem is that none of them predicted it.

Stark: I understand this criticism. But we at the ECB have long warned of the possible effects of all the new financial instruments, most of which were developed in the United States. Analysis and concern were there, but I also have to say, quite honestly: The Europeans were unable to assert themselves in the debates in the mainstream economy. I hope that we can now demonstrate that the market, and the financial markets in particular, needs basic principles and clear rules.

SPIEGEL: The tenure of ECB President Jean-Claude Trichet ends next year. Bundesbank President Axel Weber is believed to have a good chance of succeeding him. In that case, however, there would hardly be any room for you on the ECB board of directors, because it would be hard to imagine two senior members of the same nationality. Would you replace Weber at the Bundesbank?

SPIEGEL: This personnel debate is far too premature. My contract continues until my 66th birthday.

SPIEGEL: Mr. Stark, we thank you for this interview.

Interview conducted by Christoph Pauly and Thomas Tuma

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About Jürgen Stark
Bert Bostelmann / Bildfolio
Jürgen Stark, 61, has been a member of the executive board of the European Central Bank (ECB) since 2006, where he has promoted a strong euro and fought against excessive spending in member states that have adopted Europe's common currency. In addition to his role on the board, he is also the ECB's chief economist. During the 1990s, as a state secretary in Germany's Finance Ministry, Stark campaigned for the creation of the European Stability and Growth Pact, which limits deficit spending in euro zone countries to a maximum of 3 percent of gross domestic product and total national debt of 60 percent of GDP. From 2002 to 2006, he served as vice president of the Bundesbank, Germany's central bank.

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Graphic: A Threat to the Euro

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Graphic: Euro-dollar exchange rate


Graphic: Euro-dollar exchange rate Zoom
DER SPIEGEL

Graphic: Euro-dollar exchange rate


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