May States die Their level of indebtedness has rarely scrutinized with so much concern by markets. And the words "bankruptcy" or "disappearance" are more taboo. The question of public credit is not new. It arises whenever the State, a public institution, Department... research funding (for example when a bond issue) or that it provides funding (for example in the granting of public security in support of a branch of activities). But, with the financial and economic crisis, and the evolution of sovereign risk, which reflects the ability of States to pay their debts, fears are growing. If the risks are real, they must be precisely measured. Rating agencies have largely contributed to the rise of this debate, widely relayed in the media. They were, logically, degraded the Iceland; the Greece became the first European country to see his note lowered; the Portugal and the Spain suffered the same fate, resulting in a fall in the euro. The Fitch Agency has threatened, last February, the France, the United Kingdom and the Spain to lower their note in view of the delicate situation of public finances.
The economy-fiction, the insolvency of the public power is perfectly possible. The Iceland has unfortunately made the experience and European solidarity should allow the Greece to avoid it. But some, facing the rout of the finances, go to predict the possible death of States. It cannot be crossed.
The Cassandras of the economy, cite in support of their theses of the famous cases such as the fall of the Roman Empire or the disappearance of the Weimar Republic. These examples demonstrate that the death of a State is the result of a political collapse, not financial. A financial crisis can obviously lead to a major political crisis leading to the failure of a State. But the public debt is the result that the cause of the crisis. The Iceland became insolvent because of private debt and the situation of its banks. Similarly, the "subprime" crisis comes from the hyper-endettement of American households and non-public debt of the United States. Once there is a political leadership, accepted as such by economic actors, the credit of State - the confidence it inspires - remains strong.
Step of termination of activity
The current crisis has also demonstrated the ability of Governments to adopt strong, if sometimes flawed policy responses. Safeguarding of economic plans have been implemented; with rating agencies autorégulées, that is not regulated, the idea of a European Agency sheltered by the ECB (European Central Bank) was promoted; policy makers have supported tighter regulation project to contain the speculative operations on sovereign debt, as the CDS (credit default swaps")...
The public power cannot be wound up or subject to a cessation of activity, in contrast to persons of private law, even deemed steadfast as Lehman Brothers. This is the basis of trust granted to him by private actors. Strength is found at the height of the crisis, when it said the "dry" credit, the banks themselves were more between them, the credit of the public power is presented as the only valid use. He helped to save the banks and put in place a comprehensive recovery plan for the economy.
Does the death of the Western States is therefore irrelevant. The credit of the public power today attacked because it has been used beyond the reasonable, including via stimulus plans who helped digging deficits. But States are still actors which is granted great confidence beyond the single economic area. The Court of appeal of Aix-en-Provence, in a judgment of 15 January 2002, had noted in his own way: facing a private association wishing to open a funeral, the judges have justified the monopoly of the cemeteries. The dead have a right to eternal rest, they recalled. And only public power can provide them with the.