WHEN: Today, January 26, 2011
WHERE: CNBC's "Fast Money Halftime Report"
The following is the unofficial transcript of breaking news from CNBC's Maria Bartiromo.
All references must be sources to CNBC.
GARY KAMINSKY: NOW LET'S HAND IT OFF TO MARIA BARTIROMO WHO JOINS US IN DAVOS WITH AN EXCLUSIVE WITH JEAN-CLAUDE TRICHET, PRESIDENT OF THE ECB. MARIA.
MARIA BARTIROMO: ALL RIGHT THANK YOU VERY MUCH, GARY. INDEED WE ARE COMING TO YOU ONCE AGAIN FROM DAVOS AND I AM SITTING HERE WITH THE PRESIDENT OF THE EUROPEAN CENTRAL BANK, JEAN-CLAUDE TRICHET. MR. TRICHET NICE TO HAVE YOU ON THE PROGRAM.
JEAN-CLAUDE TRICHET: IT'S A PLEASURE.
BARTIROMO: THANK YOU SO MUCH FOR JOINING US. LET ME BEGIN BY YOUR ASSESSMENT OF THE EUROZONE TODAY. OF COURSE, WE HAVE REALLY DIVERGENCES GOING ON WHETHER ITS GERMANY OR THE NORDIC COUNTRIES VERSUS SOME OF THE WEAKER PLAYERS. HOW WOULD YOU CHARACTERIZE THE RECOVERY?
TRICHET: WELL FIRST OF ALL I WOULD SAY THAT IF I THINK THE AREA AS A WHOLE, THE 331 MILLION PEOPLE, WE WERE SINCE THE START OF THE RECOVERY A LITTLE BIT SURPRISED ON THE UPSIDE EACH QUARTER AND THAT IS NOT CERTAINLY REASON TO CLAIM VICTORY. WE ARE ALWAYS VERY CAUTIOUS, VERY PRUDENT, BUT ALL THAT WE SAW NOW AND THE MOST RECENT PMI AND SURVEY I'VE SEEN ARE COFIRMING THAT THE LEVEL OF THE AREA AS A WHOLE, THINGS ARE DOING A LITTLE BIT BETTER THAN EXPECTED. THIS IS REASSURING FOR US. ALL TAKEN TOGETHER. THAT BEING SAID, WE HAVE OF COURSE, SOME ECONOMIES THAT ARE DOING MUCH BETTER AND OTHERS THAT ARE ADJUSTING AND THIS IS MORE OR LESS, I HAVE TO SAY, THE REVERSE OF WHAT WE HAD OBSERVED IN THE FIRST YEARS OF THE EU WHERE YOU HAD GERMANY IN PARTICULAR NOT GOING AT ALL AND HAVING REALLY HARD WORK TO REGAIN COMPETITIVENESS AND SOME OTHER COUNTRIES WE'RE BUOYING. AND NOW WE SEE THE COUNTRIES THAT WE ARE BUOYING ARE ADJUSTING AS IS NORMAL, IF I MAY, AND GERMANY HAVING DONE A VERY GOOD JOB, BUT OTHER COUNTRIES TOGETHER ARE NOW GOING QUITE I WOULD SAY STEADY.
BARTIROMO: GIVEN THE STRENGTH OF GERMANY AND ITS LEADERSHIP IN TERMS OF SUPPORTING SOME OF THE WEAKER NATIONS, IT IS FAIR TO SAY GERMANY WILL EVENTUALLY HAVE A LARGER ROLE IN TERMS OF INFLUENCING HOW THE EUROZONE IS GOVERNED?
TRICHET: I MEAN ALL COUNTRIES OF COURSE HAVE AN IMMENSE STAKE. ALL COUNTRIES, AS THE COUNCIL AS WE SAY, IN EUROPE, THERE ARE SEVENTEEN COUNTRIES THAT ARE MEMBERS OF THE EU HERE AND GERMANY IS ONE OF THEM, AND OF COURSE WE COUNT ON GERMANY, BUT ON ALL OTHERS AND WHAT COUNTS IS THAT THEY ALL AGREE TO REINFORCE GOVERVANCE. NOW THAT BEING SAID, ALL COUNTRIES HAVE TO DO HARD WORK ON THEIR OWN COMPETITIVENESS AND ON THEIR OWN STRUCTURAL REFORMS AND I HAVE TO SAY FROM THAT STANDPOINT, THE EU HAS A LOT TO DO AND OF COURSE THEY HAVE ALSO TO IMPROVE GOVERNVANCE, TO SURVEY, TO CONTROL WHAT IS DOING BY THE OTHER COUNTRIES AND WE ARE EXTREMELY ATTACHED TO THAT GOVERNANCE OF THE -- GOVERNANCE OF THE 27 AS WELL. THE EUROPEAN UNION IS BASED UPON BOTH. INDIVIDUAL BEHAVIOR THAT ARE CORRECT AND AS SOUND AND AS REASONABLE AS POSSIBLE, BUT SURVAYANCE OF THE OTHERS.
BARTIROMO: MR. PRESIDENT, THE ECB OF COURSE HAS BEEN BUYING BONDS OF THE REGION. HOW LONG WILL THIS GO ON?
TRICHET: WELL I HAVE NO OTHER MESSAGE FOR YOU TO SAY, IT'S AN ONGOING PROBLEM.
BARTIROMO: IF WE WERE TO SEE A PROBLEM AND ONE OF THESE PROBLEM COUNTRIES TAKE A STEP DOWN, WHAT KIND OF LOSSES ARE WE TALKING ABOUT ON THE ECB'S BALANCE SHEET?
TRICHET: THOSE COUNTRIES -- OLD COUNTRIES IN EUROPE, WITHOUT ANY EXCEPTION, ARE ENGAGED IN ADJUSTMENT PROGRAM, ALL WITHOUT EXCEPTION. WE CALL ON ALL OF THEM TO WORK HARD AND IMPLEMENT THEIR PROGRAM, IT IS PARTICULARLY THE CASE OF COURSE FOR GREECE AND IRELAND BECAUSE THEY HAVE AN IMF PROGRAM. AND THEY HAVE A COMMISSION PROGRAM WHICH HAS BEEN APPROVED BY ALL GOVERNMENTS OF EUROPE.SO THIS IS THE JOB WHICH HAS TO BE PERFORMED.THEY HAVE TO IMPLEMENT THEIR PROGRAM. THE WORKING ASSUMPTION IS THAT THEY WILL IMPLEMENT THEIR PROGRAM AS HAS BEEN DONE BY DOZENS OF OTHER COUNTRIES IN THE WORLD.
BARTIROMO: SO DO YOU WORRY, THOUGH, THAT IF, IN FACT, WE WERE TO SEE AN ISSUE THAT WE ARE TALKING ABOUT SIGNIFICANT LOSSES FOR THE ECB?
TRICHET: I HAVE NOT IN MIND AT ALL THIS WORKING ASSUMPTION, NOT AT ALL. THE WORKING ASSUMPTION IS THEY DO THE JOB AND THEY HAVE TO DO THE JOB AND THEY KNOW THAT IT IS THE BEST WAY TO GET BACK TO GROWTH, SUSTAINABLE GROWTH AND SUSTAINABLE JOB CREATION. THIS IS NOT AN INVENTION OF THE EUROPEANS. IT IS THE GLOBAL RULE THAT WE ARE FOLLOWING.
BARTIROMO: TALK TO US ABOUT WORKING THIS -- AND GETTING THE JOB DONE. WHAT WILL IT TAKE TO TURN THE SITUATION AROUND FOR SOME OF THOSE WEAKER NATIONS? DO WE NEED MORE AUSTERITY PROGRAMS, BECAUSE I KNOW YOU ARE A VERY LONG-TERM THINKER IN TERMS OF GETTING YOUR ARMS AROUND THE DEBT? OR DO WE NEED TO SEE MORE STIMULUS?
TRICHET: NO, CLEARLY, TAKING INTO ACCOUNT THE SITUATION OF ADVANCED ECONOMIES IN GENERAL AND THE EUROPEAN ECONOMY IN PARTICULAR, I HAVE TO SAY THAT THE MAIN ISSUE TO US, TO THE GOVERNING COUNCIL OF THE ECB IS THAT WE HAVE TO IMPROVE CONFIDENCE IN THE CAPACITY OF AUTHORITIES AND GOVERNMENTS IN PARTICULAR TO REGAIN CONTROL OF THEIR OWN SITUATION. WE TRUST THAT THE FACT THAT THERE ARE PROGRAMS, MEDIUM TERM PROGRAMS, THAT GOT IMPLEMENTED YEAR AFTER YEAR, ARE CREDIBLE. GAIN CONTROL OF THE DEBT OUTSTANDING WOULD HELP GROWTH BECAUSE IT WOULD HELP CONFIDENCE BOTH IN THE HOUSEHOLD CONSTITUENCY, IN THE ENTREPRENEURS. AND OBVIOUSLY THIS IS SO VISIBLE OF INVESTORS AND SAVERS. SO, AGAIN, BY HAVING SOUND POLICIES AND CREDIBLE POLICIES IN THE FISCAL SIDE IN PARTICULAR, BUT I WOULD ADD ALSO IN TERMS OF STRUCTURAL REFORMS, WHICH ARE OVERDUE IN EUROPE IN PARTICULAR, BY IT BEING STEADY ON THIS PATH, YOU IMPROVE CONFIDENCE AND YOU PAVE THE WAY FOR CONDITIONS FOR JOB CREATION.
BARTIROMO: WHAT ARE THE MOST IMPORTANT POLICIES IN THAT REGARD AND THE PROGRAMS THAT YOU'D LIKE TO SEE IMPLEMENTED SOONER RATHER THAN LATER?
TRICHET: AS REGARDS THE FISCAL POLICY, AS I SAID, ALL EUROPEAN COUNTRIES WITHOUT ANY EXCEPTION HAVE THEIR OWN HOMEWORK TO DO. AND FIGURES ARE THERE, TARGETS ARE THERE. THEY HAVE TO SUBSTANTIATE THE TARGETS, TO SUBSTANTIATE THE FIGURES IN THE BEST POSSIBLE WAY. AND THEY HAVE -- THIS IS A VERY STRONG MESSAGE FOR ALL OF THEM ALSO COLLECTIVELY. THEY HAVE TO IMPROVE GOVERNANCE. THEY NEED TO IMPROVE SURVEILLANCE OF BOTH THE ECONOMIC UNION ON THE SIDE OF FISCAL POLICIES AND THE MACRO POLICIES IN GENERAL. COMPETITIVE INDICATORS IMBALANCES, IT IS A VERY STRONG MESSAGE. WE CONSIDER THAT WE HAVE, AS FAR AS THE EU IS CONCERNED, AN ECONOMIC AND MONETARY UNION. WE CARE FOR THE MONETARY UNION OURSELVES AND WE DELIVER BECAUSE WE HAVE THE PRICE OVER 12 YEARS IN LINE WITH OUR DEFINITION LESS THAN 2%, CLOSE TO 2%. IT'S EXACTLY 1.97%. THE YEARLY AVERAGE OF INFLATION. ECONOMIC UNION HAS TO BE IMPROVED. WE DELIVER AS FAR AS MONETARY UNION IS CONCERNED, WE HAVE TO IMPROVE ECONOMIC UNION. THIS IS THE MESSAGE ON GOVERNANCE.
BARTIROMO: IN ADDITION TO THE ECB BUYING BONDS OF THE REGION, THE CHINESE HAVE BEEN ALSO ACQUIRING THIS PAPER. WHAT ARE THE IMPLICATIONS OF THAT?
TRICHET: WELL, I GUESS THAT WHEN YOU HAVE TO OPTIMIZE YOUR PORTFOLIO AT A GLOBAL LEVEL, YOU HAVE A NUMBER OF POSSIBILITIES. OF COURSE, EUROPEAN BONDS ARE ONE OF THE POSSIBILITIES. AND I'M NOT SURPRISED THAT THEY ARE INVESTORS IN EUROPEAN BONDS. IT'S NOT SURPRISING.
BARTIROMO: ARE THERE TARGETS THAT YOU HAVE IN MIND THAT WILL BE YOUR MEASURE TO END THE BUYING PROGRAM?
TRICHET: WE HAVE AN ONGOING PROGRAM. IT IS ENTIRELY UP TO THE GOVERNING COUNCIL TO DECIDE WHAT TO DO. IT'S CLEAR THAT IF GOVERNMENTS DO THE JOB AND IT IS A STRONG GOAL INDIVIDUALLY AND COLLECTIVELY, IN PARTICULAR, INDIVIDUALLY, IF THEY SUBSTANTIATE ALL THEIR TARGETS AS WE HAVE THE FISCAL POLICIES, COLLECTIVELY, IF THEY ENFORCE THEIR GOVERNANCE TO AVOID -- TO HAVE TO COPE TO ABNORMAL SITUATIONS AND IF THEY HAVE IMPROVE THE FLEXIBILITY IN PARTICULAR OF THE STABILIZATION FUND, THEN WE'LL SEE WHAT IS THE SITUATION. THOSE NON-STANDARD MEASURES THAT ARE TRANSITORY BY NATURE WILL BE TRANSITORY.
BARTIROMO: MR. PRESIDENT, WE HAVE INVESTORS WATCHING, SMART INVESTORS WHO HAVE STUDIED MANY OF THESE NATIONS, IN PARTICULAR PORTUGAL AND SPAIN. CAN PORTUGAL AND SPAIN GET THROUGH THIS UNSCATHED?
TRICHET: THEY HAVE TO DO THE JOB EXACTLY LIKE ALL OTHERS. AND WE HAVE THE SAME MESSAGE FOR ALL COUNTRIES. THEY HAVE ALL TO SUBSTANTIATE THEIR PROGRAM AND BE AHEAD OF THE CURVE. THAT IS THE WAY TO PRESERVE INDIVIDUALLY AND COLLECTIVELY ALL COUNTRIES.
BARTIROMO: HOW?
TRICHET: BUT, AGAIN, IT IS NOT ONLY THE ISSUE OF THE EUROPEAN. IT IS A PROBLEM OF THE ADVANCED ECONOMIES IN GENERAL. WE HAVE TO SUBSTANTIATE OUR FISCAL POLICIES IN ORDER TO REGAIN CONTROL AND REINFORCE CONFIDENCE.
BARTIROMO: LET ME SWITCH GEARS AND TALK ABOUT SOME OF THE COMMENTS YOU HAVE MADE AND WRITTEN ABOUT RECENTLY. AND THAT IS AS THEY PERTAIN TO INFLATION. YOU HAVE SUGGESTED THAT YOU WOULD BE READY TO RAISE INTEREST RATES AT SOME POINT. IS THIS RIGHT?
TRICHET: I HAVE SAID THAT WE HAVE DELIVERED PRICE STABILITY OVER THE PAST 12 YEARS, AS I HAVE TOLD YOU, AND THAT HAVING BEEN CREDIBLE IN THE PAST, WE WERE CREDIBLE IN THE FUTURE. THE FUTURE INFLATION EXPECTATIONS ARE THEMSELVES IN LINE WITH OUR DEFINITION OF PRICE STABILITY, LESS THAN -- CLOSE TO 2%. AND I HAVE SAID THAT THE MARKET AND THE OBSERVERS KNEW THAT WE WERE FAITHFUL TO OUR MANDATE, THAT WE WERE NEVER PRECOMMITTED. AND SO WE WILL DO WHAT WAS NECESSARY TO DELIVER PRICE STABILITY. THIS IS A REFERENCE TO OUR -- THERE WAS NOTHING NEW IN WHAT I SAID. IT IS OUR DOCTRINE. YOU DO WHATEVER IS NECESSARY TO DELIVER STABILITY. AT THE SAME TIME, I SAID THE PRESENT LEVEL OF INTEREST RATE IS APPROPRIATE.
BARTIROMO: THIS IS A DELICATE BALANCE, OBVIOUSLY, AND WE'RE LOOKING AT PRICE INCREASES ACROSS THE BOARD AND COMMODITIES AND WE'RE LOOKING AT ON THE OTHER SIDE OF THE COIN SOME WEAKNESS ON SEVERAL ECONOMIES. HOW DO YOU BALANCE THIS DELICATE MOVE?
TRICHET: WE DON'T SEE THAT THERE IS A CONTRADICTION THERE BECAUSE IT SEEMS TO US THAT BY CONTINUING TO HAVE A SOLID ANCHORING OF INFLATION EXPECTATIONS, WE ARE PAVING THE WAY FOR SUSTAINABLE GROWTH AND SUSTAINABLE JOB CREATION. IT SEEMS TO ME THERE IS A UNITY OF PURPOSE ON THAT POINT. WITH ALL THE OTHER CENTRAL BANKERS, WE CONSIDER THAT BEING CREDIBLE IN ANCHORING INFLATION EXPECTATIONS IS A NECESSARY CONDITION, NOT SUFFICIENT BY ITSELF, OF COURSE, BECAUSE WE NEED GOOD MACRO POLICIES, GOOD FISCAL POLICIES AND SO FORTH. BUT WE PAVE THE WAY FOR SUSTAINABLE GROWTH AND JOB CREATION.
BARTIROMO: WHAT'S MOST CONCERNING TO YOU ON THE INFLATION FRONT?
TRICHET: WELL, WE HAVE AT THE PRESENT MOMENT VERY CLEARLY INCREASING PRICES OF COMMODITIES, PARTICULARLY OF OIL. THREATS OF INCREASE OF PRICES IN FOOD AND AG PRODUCTS IN GENERAL. THIS IS A PHENOMENON WHICH IS BY NATURE GLOBAL. SO WE HAVE TO TAKE THAT INTO ACCOUNT. AND AVOID SECOND ROUND EFFECTS. OF COURSE, THE FIRST-ROUND EFFECT WE CANNOT AVOID. WE ARE NOT THE MASTER OF THE PRICE OF OIL. WE ARE NOT THE MASTER OF THE PRICE OF THE VARIOUS AGRICULTURAL PRODUCTS. BUT WHAT WE CAN DO, BEING VERY ALERT, IS TO AVOID THE SECOND-ROUND EFFECTS WHERE ALL OTHER PRICES ARE STEPPING UP. AND THAT'S WHY IT IS SO IMPORTANT FOR US TO CONTINUE SOLIDLY ANCHORING INFLATION EXPECTATION BY BEING ALERT.
BARTIROMO: HAVE WE SEEN ANY EVIDENCE OF THAT SECOND ROUND?
TRICHET: NO.
BARTIROMO: HAVE WE SEEN ANY EVIDENCE OF WAGE INFLATION?
TRICHET: NO, NO, I DON'T THINK THAT WE HAVE SEEN THAT. AGAIN, EVERYBODY KNOWS THAT WE ARE ALERT AND THAT WE WOULD NOT LET SECOND-ROUND EFFECTS MATERIALIZE.
BARTIROMO: THIS AS YOU ALSO HAVE BEEN LOOKING AT STRUCTURAL REFORM FOR THE EURO ZONE ECONOMY. SO TALK TO US A LITTLE ABOUT YOUR PRIORITY IN TERMS OF MID-TERM AND LONG-TERM AND STRUCTURAL REFORM. WHAT WOULD YOU LIKE TO SEE CHANGED?
TRICHET: FIRST OF ALL, I WOULD SAY WE ALL AGREE ON THE FACT THAT WE HAVE TO DO A LOT IN TERMS OF STRUCTURAL REFORMS. THERE WAS THE FAMOUS LISBON PROGRAM WHICH HAS NOT BEEN FULLY IMPLEMENTED AT ALL. AND THEN WE HAVE THE NEW PROGRAM, WHICH IS 2020, THE NEW TEN-YEAR PERIOD WHERE WE HAVE A CONSENSUS OF THE GOVERNMENTS. AND, OF COURSE, OF THEEU TO DO THE JOB. I WOULD SAY WHAT IS EXTREMELY IMPORTANT IN OUR EYES IS CERTAINLY TO HAVE MORE FLEXIBILITY IN THE ECONOMY IN GENERAL, MORE FLEXIBILITY IN THE MARKETS OF GOODS AND SERVICES.
BARTIROMO: AND THE LABOR MARKET?
TRICHET: PARTICULARLY SERVICES BECAUSE OUR ECONOMY -- OUR ADVANCED ECONOMY, WITH THE PROPORTION OF SERVICES WHICH IS VERY, VERY IMPORTANT. AND WE HAVE A LOT OF HARD WORK TO DO IN THIS DOMAIN AND OF COURSE THE LABOR MARKET.
BARTIROMO: MR. TRICHET, THIS LAST TWO YEARS, PROBABLY HAS BEEN THE MOMENT IN TIME WHERE THE EURO HAS BEEN TESTED THE WAY SOME OF THE CRITICS HAVE PREDICTED. CLEARLY, WE ARE SEEING A BETTER SITUATION THAN WE WERE. WE ARE GOING TO TALK ABOUT THE EURO ON THE "CLOSING BELL" LATER TODAY. I WANT TO THANK YOU SO MUCH FOR YOUR TIME TODAY.
TRICHET: IT WAS A PLEASURE. THANK YOU SO MUCH.
BARTIROMO: JEAN-CLAUDE TRICHET, THE PRESIDENT OF THE ECB WITH US. WE'LL CONTINUE OUR CONVERSATION ON "CLOSING BELL" TODAY, 4:00 P.M. EASTERN. "FAST MONEY" IS IN PROGRESS RIGHT NOW. BACK TO YOU IN THE STUDIO. THANK YOU.
About CNBC:
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.
Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.