EURUSD: If the fudamentals are so bad why is EURUSD at 1.38?

 --Stark: Europe needs political leadership to restore confidence --Stark: ECB gave advance warnings about imbalances, but politicians didn't  listen --Stark says risk "water damage" more significant than "fire damage" in euro  zone --Stark urges fiscal, financial union in the euro zone 

By Marcin Sobczyk and William Launder

Of DOW JONES NEWSWIRES

WARSAW (Dow Jones)--Juergen Stark, executive board member for the European Central Bank, delivered a withering assessment of the euro-zone debt crisis Friday, placing the blame squarely on the region's politicians.

The ECB gave advance warnings about rising imbalances in the euro zone, but European politicians didn't listen, he said at a conference here.

"The ECB was the only [institution] to raise the issue many years ago, in 2005-2006. We know current account imbalances don't emerge overnight, it's a longer process...but there was no urgency" from politicians, he said.

"We are in charge of monetary policy. There were warnings. Maybe politicians heard, but didn't listen," he said.

Stark quit the ECB board earlier this year for personal reasons, but continues to serve until a replacement is appointed. His departure comes amid controversy over the ECB's program to purchase government bonds in the open market, a risky practice that has provoked strong criticism in Stark's native Germany.

Stark said the ECB needs to do all it can to tackle the euro-zone crisis, but political leadership will be needed.

"What we have in Europe is a confidence crisis and confidence can only be restored at the level of politicians," he said. "We have this significant and external imbalance within the euro area. We have a failure of policy making at national and at supranational level."

Increasingly large rescue packages for troubled euro-zone members may be more damaging than the sovereign debt problems they are designed to resolve, he said.

"With ever larger rescue packages, there's a risk that in the end water damage is much more significant than the damage done by the fire," Stark said. "What is needed is adjustment at the national level. This is exactly what has not happened."

Euro-zone members must respect the debt and deficit limits imposed by the Maastricht Treaty, which remains valid and correct, he said, adding that the euro zone needs more integration, including a fiscal and financial union.

The euro zone's budget office could be a step toward a euro-zone finance ministry, a move officials should consider, Stark said.

He said that other countries need to learn Germany's efforts to improve price competitiveness, which deteriorated following reunification.

"Germany ran current account deficits for many years and returned to positive territory at the end of the 1990s or in 2000," he said. "But 10 years ago the reform process started in bringing back price competitiveness which Germany had lost after reunification.

"It was a correction process and indirectly, not explicitly, also an adjustment to the conditions of the monetary union. In my view, other countries have to learn from that experience," he said.

PS: Groupon IPO/floatation? Do you see a profitable future for such a company.I would'nt touch it with a barge pole.