9th Munich Economic Summit
April 29–30, 2010, Munich
“The Financial Crisis: The Way Forward”
Bringing together some 200 experts from European politics, business, academia, and media, this year’s Summit was dominated by the international financial crisis, with the panel discussions focusing on identifying the causes of the crisis and the steps that must be taken to resolve it. The international news media and the broader public showed particularly strong interest in this year’s Summit, featuring as it did key actors of European political and economic life such as German President Horst Köhler, ECB President Jean-Claude Trichet, Bundesbank President Axel Weber, and Latvia’s Prime Minister Valdis Dombrovskis. In addition, important representatives of the European Economic and Monetary Union such as Theo Waigel, former German Minister of Finance, and Konstantin Simitis, former Prime Minister of Greece, put the current events into historical perspective. They all provided answers and explanations one day after “black Wednesday,” which saw the escalation of the Greece crisis – a concurrence of events that gave the conference at the Hotel Bayerischer Hof particular urgency.
Two themes were at the center of the discussions: on the one hand, the immediate future of Greece, which, according to co-organizer Hans-Werner Sinn, was insolvent and thus “broke”; on the other hand, the prospects for the euro and the international financial economy and global financial cooperation. On the latter issue especially, Federal President Köhler was quite outspoken, denouncing the unbridled “modern financial capitalism” that privatizes gains and socializes losses. The only way to reign it in, he said, is at the international level through effective measures such as the prohibition of business models with “enormous leverage.” This point was also emphasized by Bundesbank President Weber, underscoring the importance of the new financial market regulation. On this issue, he agreed with Jean-Claude Trichet who made an urgent plea for the European Monetary Union and called for a renewal of the Stability and Growth Pact, which Federal Minister Waigel had pushed through for good reasons when the euro was introduced.
Given the risks for both the euro and other heavily indebted EU countries, there is no doubt that the EU has to provide de facto bankrupt Greece with rapid financial aid tied to strict conditions. What a stringent savings and reform program under IMF guidance can look like, was delineated by Lithuania’s Prime Minister Dombrovskis who has embraced such program to save his country from collapse and already scored first successes. In light of the dramatic situation in Athens, little weight was given to the opinion voiced by Greece’s former Prime Minister Simitis that Greece was a “symptom, not cause, of the crisis,” i.e. that the underlying problem was a fundamental structural one, a “gap between north and south.” Much discussion, however, was prompted by the question of whether the series of bank crises would now be followed by a series of national debt crises. The participants agreed that to prevent further scenarios such as in Greece, the western world in any case had to finally tackle fiscal consolidation and make it the “most important political task of the next decade,” as German President Köhler put it at the beginning of the Summit.
