“If we drive families to despair, we can fear the worst”


In the midst of a health crisis, with inflation, government debt and exploding energy prices, the eminent financial expert Georges Ugeux makes a serious and alarming diagnosis. In passing, he points to the financial markets and the casino stock market.

An interview with Frédéric Loore

From 1996 to 2003, the Belgian Georges Ugeux headed the New York Stock Exchange. He then founded an investment bank specializing in independent financial and strategic advice, 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 describes himself as a “humanist financier without borders”. In her latest book, edited by Odile Jacob, Wall Street Takes Over Democracyhe analyzes how markets and the cult of shareholders increase inequality.

Paris Match Belgium. To cushion the shock of the pandemic, Belgium has increased the weight of its debt to support the economy and, now, the recovery. Do you think this was the right way to do it?
Georges Ugeux. All western economies have resorted to debt. Whether it concerns large companies or governments. The aim is to support the economy and finance growth, but the effect is in fact the weakening of the financial system, which has now reached colossal levels of debt. In March 2020, economic stimulus plans were insane: $16 trillion in interventions and $9 trillion in 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 want to reduce this debt. Admittedly, laudable intentions dominated these policies, but it must be recognized that much of this capital ended up in the financial markets, aided by the low central bank rates. There was a scissors effect, which helped enrich shareholders while we were in a period of recession, unemployment and now inflation.

Is Europe in a phase of ‘Japanization’, knowing that the Japanese are world champions in public debt?
At the very least, let’s do Europe justice and recognize that it started to wind down before the start of the coronavirus pandemic. Then Mario Draghi, followed by Christine Lagarde (Editor’s note: the last two leaders of the European Central Bank), for reasons much to be said, have both pursued monetary policies that led to the printing of money, which of expropriation of savings in favor of borrowers. However, most 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 strongly felt at the level of growth, affecting the well-being of the population. I am deeply convinced that the central banks have misunderstood the economic scenario. They believed in a quick recovery of economic activity and therefore put all possible and imaginable money into the system. Except it didn’t happen that way. And now they don’t come out. Despite everything, Europe is maintaining the course of its monetary policy, because it wants to believe that interest rates will bring the economic recovery. For me it is too early to say that the recovery is there and I am also very concerned about the economic consequences of the containment of the pandemic by all governments, especially the European one.

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

What are you concerned about this management?
In 2020, we were able to verify that the various forms of restriction on economic activity – incarceration, travel ban, industrial delay, etc. – had serious consequences. Today, however, we speak exactly the same language as then and make the same decisions that nevertheless led to deflation in Europe, fueled by very low interest rates. Have we really not understood or learned lessons from what happened? What was justifiable at the beginning of 2020 is no longer justifiable on the eve of 2022. Nothing has been invented, nothing has been improved, starting with the hospital system.

What do you think of the proposal by the French economist Gaël Giraud, president of the Rousseau Institute, to completely cancel the sovereign debt that the member states have contracted with the European Central Bank (ECB)?
Gaël Giraud is not the only economist to defend this position. In my view, debt restructuring – as we have done for Greece – on a European scale is not justified. But otherwise this position bothers me as it leads to the debt being viewed as a sort of tree that stands on its own. Remove the tree and the problem is solved. Except that once a debt is created, there is inevitably a creditor behind it. And erasing the eurozone member states’ debt to the ECB would have far-reaching consequences. For let us 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 another banking crisis ten times stronger than 2008, let’s cancel the debt! Why do some choose not to see that when a government issues a debt, it is necessarily owned by someone who has the right to be repaid? What do we want? Get out of the rule of law and create a combat economy? I wish those who wish to pursue such a policy much courage, because they would end up directly in the bloodbath.

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

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