Health and economic crisis: “If we push families to despair, we may fear the worst”


In the midst of a health crisis, with soaring inflation, public debt and energy prices, the eminent financial expert Georges Ugeux raises a severe and alarming diagnosis. By the way, it fixes the financial markets and the casino stock market.

An interview with Frédéric Loore

From 1996 to 2003, Belgian Georges Ugeux ran the New York Stock Exchange. He then founded an investment bank specializing in independent financial and strategic advisory, which he still runs today. Academically, the doors of the most prestigious universities in the world (Columbia, La Sorbonne, Cornell, Harvard, Montreal) are open to this specialist in international finance. Georges Ugeux defines himself as a “borderless humanist financier”. In her latest book, published by Odile Jacob, Wall Street’s Assault on Democracy, she discusses how markets and shareholder worship increase inequalities.

Paris Match Belgium. To cushion the impact of the pandemic, Belgium has increased the weight of its debt to support the economy and, now, the recovery. Was that the right way to go, in your opinion?
Georges Ugeux. All Western economies have resorted to borrowing. Whether they are large companies or governments. The objective is to support the economy and finance growth, but the consequence is, in effect, the weakening of the financial system, which is now reaching colossal levels of indebtedness. In March 2020, the economic stimulus plans were insane: $ 16 trillion in interventions and 9 trillion increases in central bank balance sheets. The picture of the current situation is quite clear and the question now is how governments and central banks intend to reduce this debt. Certainly, laudable intentions governed this policy, but it must be recognized that much of this capital ended up in the financial markets, aided by low central bank rates. There was a jaw effect that helped enrich shareholders in a time of recession, unemployment, and now inflation.

Is Europe in a phase of “Japaneseization”, knowing that the Japanese are world champions of public debt?
Let’s at least do justice to Europe and recognize that before the start of the coronavirus pandemic, it had begun to pay off its debts. Then, for reasons about which there would be much to say, Mario Draghi, followed by Christine Lagarde (Editor’s note: the last two leaders of the European Central Bank), both followed a monetary policy that led to the printing press, which constitutes a form of expropriation of savings in favor of borrowers. However, the bulk of the borrowers in the European market are governments, banks and, to a lesser extent, large companies. The result is a situation of imbalance and inequality, the effects of which are severely felt in terms of growth, thus affecting the well-being of the populations. I am deeply convinced that the central banks have taken the wrong economic scenario. They believed in a strong resumption of economic activity and therefore they put as much money as possible and imaginable into the system. Except it didn’t happen that way. And now they can’t understand it. Despite everything, Europe remains the course of its monetary policy, wanting to believe that interest rates will bring economic recovery. For me, it is still too early to say that the recovery is here and, furthermore, I am very concerned about the economic consequences of the management of the pandemic by all governments, especially in Europe.

“I don’t want to make risky predictions,” explains Georges Ugeux, “but we see the population taking to the streets everywhere, making strong demands on various issues.” © Photo by Karim Ait Adjedjou / Avenir Pictures / ABACAPRESS.COM

What worries you about this management?
In 2020, we were able to verify that the different forms of restriction of economic activity – confinement, travel ban, industrial slowdown, etc. – had serious consequences. However, today we speak exactly the same language as at that time and we made the same decisions that, however, led to deflation in Europe, driven by very low interest rates. Have we not really understood anything, nor have we learned anything from what happened? What was justifiable at the beginning of 2020 is no longer so on the eve of 2022. Nothing has been imagined, nothing has been improved, starting with the hospital system.

What do you think of the proposal of the French economist Gaël Giraud, president of the Rousseau Institute, that the public debt contracted by the member states with the European Central Bank (ECB) be completely canceled?
Gaël Giraud is not the only economist to defend this position. From my point of view, debt restructuring, as we did with Greece, is not justified at European level. But beyond that, this position bothers me as it leads me to consider debt as a kind of tree that stands on its own. You just have to remove the tree and the problem is solved. Except that as soon as a debt is created, there is inevitably a creditor behind it. And eliminating the debt of the euro zone member states to the ECB would have considerable consequences. Because let’s not forget who the creditors of the states are: first of all, the banking system and the international system of central banks. If we want to create a new banking crisis, ten times stronger than the one in 2008, let’s cancel the debt! Why do some people choose not to see that when a government issues a debt, it is necessarily in the hands of someone who has the right to be canceled? What we want? Exit the rule of law and create a combat economy? I wish great courage to those who want to follow such a policy, because they would go straight to the bloodbath.

(…) The rest of the interview in your Paris Match Belgium

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