DW-TV: For more we're joined by Norbert Walter of Walter and Daughters Consult. I thought the EU Treaty didn't include bailing-out member countries. Something must have changed?
Norbert Walter: There's still no bailing out, but there is a kind of treatment that after discipline has emerged in the culprit country, others are willing to invest part of their funds to make life easier for all of them, not just for the country that is helped.
DW-TV: That's a nice way of putting it, so we invest in Greece now. Now, what do you make of the IMF stepping in? Isn't that kind of admitting that the Eurozone failed?
Norbert Walter: The Eurozone has no ready instrument for the situation and therefore I advised already in December last year, that one should use what is ready and happy to go. The IMF was there, the IMF is part of our obligation as well. It is an institution that can bring about discipline in economics policies and need not to step on the toes of the brother, which would be the case if a neighboring country in Europe were to do it to Greece.
DW-TV: If you are too close, but for awhile there was talk of implementing a European Monetary Fund. Is that out of the window now?
Norbert Walter: It's a wonderful dream. The [inaudible] tried to discuss that in 1997. It didn't work until today. I believe if the Europeans are serious they can get it in two years, but it's not helpful with the Greece problem.
DW-TV: Do you think they're serious? is it something we should talk about again in order to avoid the problem?
Norbert Walter: We will talk and it will not succeed.
DW-TV: There is one other point which is part of this agreement which basically means that Brussels will now have a bigger say in national economic issues. Is that wise, how far can that go?
Norbert Walter: If you have a borderless European market, an internal market and if you are often hit by an international shock simultaneously, you should respond in a kind of coordinated, if not simultaneous, way. Yes, we need some understanding that we have to have some common policy, some common responses to common threats. That's reasonable.
DW-TV: So does this eventually lead to a European economy led by Brussels perhaps?
Norbert Walter: I believe it will not be led by Brussels, but it will be led by institutions that are of course, not only supported, but carried by the states, by the nation states.
DW-TV: Norbert Walter, long-time chief economist at Deutsche Bank, and now an independent consultant, what we just heard is that even with the help of the IMF and other Eurozone countries, we only scratch the top of the huge debt mountain – do you think it's possible for Greece to solve its problem?
Norbert Walter: I believe, yes, because I considered the capital markets' reaction as overblown. And I believe if there is clarity that the Europeans are not only bystanders, but really support, and the IMF is there and gives guidance then I believe markets will be impressed.
DW-TV: But what signal, do you think, does this rescue plan send out to other Eurozone members like Portugal, for example, or Ireland? Somehow one gets the impression that you can do whatever you want with your own economy, there will always be someone to bail you out in order to save their own neck.!
Norbert Walter: At the end of the day, the answer may be yes, but at what price. If the Spaniards, if the Portuguese, look at what Greece has to go through now with the reform packages they will probably understand that it shouldn't go into this situation in the first place.
DW-TV: If they have a chance, now the talk about all these debt crises has put the Euro under immense pressure against the US Dollar, it plummeted from $1.52 in December 2009 to below $1.34 in March 2010. That's a drop of 12 percent! What'll happen to the Euro now if the IMF steps in?
Norbert Walter: There could be stabilization. Of course, it depends whether the other countries that are in trouble are well-behaved. If there would be more trouble in the other countries then we may see another weakness of the Euro. At the end of the day, I do not believe that the Americans in particular are not interested in a strong dollar. They badly need something to support their exports and it should be a weaker dollar rather than a stronger dollar. Therefore, I believe that the messages that we have now sent, I guess, the Euro will again be stronger.
DW-TV: That argument I've heard before the other way around, German exports usually benefit from a weaker Euro.
Norbert Walter: That's true, and it remains true, and the exchange rate will not be very much to the liking of the European suppliers, because of course they would be very happy with today's exchange rate.
DW-TV: Ok, Norbert Walter, thank you very much for joining us!