The global one affects 324 thousand billion dollars. However, situations and objectives of the various countries are different. The United States must refinance. China needs to unlock exports. In Europe, there are those who have to drain resources for rearmament (Ursula von der Leyen) or relaunch their economies with powerful subsidies (France and Germany). And Italy? The accounts are keeping. And the government, which does not want to sign the MES, has its good reasons.
Sometimes they come back, and it’s not a good sign. Last week at the Eurogroup meeting-they are the ministers of the economy of the twenty countries that adopt the euro-the MES or the saved fund that you want to say was re-emerged. Why? He pulls a bad debt air into the world. Evoking the European stability mechanism is very significant; It should serve to buffer a flaw in public accounts flanked by an instrument called “back-stop” to help banks in difficulty. Italy as you know is the only nation that has not ratified MES despite having paid the share, 18 percent, of its relevance: 15 billion. In total, the MES is capitalized with 80 billion (plus 68 of the back-stop). The Commissioner for Economic Affairs Valdis Dombrovskis insisted: “Approved the MES as the Conte 2 government had promised (the five-star-PD government, ed.), Especially for the function of the back-stop” and the executive director of the MES, Pierre Gramegna has come back: “We have that money stopped if you need it, how do you do it?”.
Giancarlo Giorgetti, Minister of Economy, but also exponent of the League who has always made a wall on the MES, has not even “accused received”. But the question arises spontaneously: why restart of this fund when the banks, at least the Italian ones that close with 49.6 billion profits on 2024, are healthy and while in the EU everything is silent about the banking union to the point that the German government prevents Unicredit from scalar comrazbank? Why predict a debt rescue tool when the spreads – at least the Italian one is on 100 points – are quite calm? The answer is easy: because in Europe on the economic level, the worldwide avalanche is feared and on the political one it is feared that Italy could become a little too heterodox towards the urocracy becoming the leader of the countries that turn right. So through the MES you can try to commission the government.
The general proof was made at the time of Mario Monti’s executive who is no coincidence that he wanted to join, By pouring the famous 15 billion, which have been stopped there for 13 years, to the stability mechanism. But there is another reason: Ursula von der Leyen insists to finance Rearm Europe with common debt – it has now been understood that it serves Germany, not Ukraine, and therefore it has to do – and the MES is an excellent means to force the euro countries to pay. The trigger of this process is the world debt.
It reached 324 thousand billion dollars – taking into account the liabilities of governments, banks, businesses and families – and the International Monetary Fund led by Kristaline Georgieva hypothesizes that from here to five years it will exceed 100 percent of the world GDP. If we limit ourselves to public debt – that is, that of governments – according to the estimate of the OECD we are over 100 thousand billion dollars. The total debt of the developed countries has risen to 214,300 billion dollars and that of developing states exploded with more 180 percent of their GDP at 103,700 billion with India, Brazil and Poland that beat each record. It means that growth is drugged. According to the figures released by the Global Debt Monitor, 7,500 billion dollars of increase in the global debt they had in the first three months of this year – and which led to the record – are in China, Germany and France.
President Emmanuel Macron brought France’s public debt to 3,300 billion euros (113.7 percent compared to GDP) and the French banks have almost 700 billion in their belly, for them the MES is an indispensable rescue donut and it is explained why Lorenzo Bini Smaghi – President of Société Générale, the third French financial institution – Martelli continuously in Italy on the need to approve it.
It is equally in Germany where, the debt to the debt that was in the Constitution was abolished-thanks to the Monti-Neapolitano combination, Italy has remained the only one to have the budget tie as a constitutional obligation-public spending is inflating and the vice-changing and finance minister Lars Klingbeil, social democrat eager to replenish the expense of welfare, has already said that It can do without.
His colleague of government Katerina Reiche (CDU), who has the responsibility of the economy, has instead expressed heavy concerns: the German GDP is expected to 0.2 percent of growth in 2025 with a deficit/GDP in the surge.
In so much instability the country that best behaves for now is Italy, The “dissident of the MES”, which also has a newfound reliability on the markets: the yields of our BTPs are more stable than those of the French and German debt securities. One more reason to put us under protecting MES since Italy goes strong thanks to its exports (we are over 700 billion euros) and that global debt affects a lot on world trade.
China had to somehow suffer the war of Donald Trump’s duties Because in three months he made another two thousand billion dollars of debts and, forecast of the Georgieva of the International Monetary Fund, within the year the Chinese public debt will be over 100 percent of the gross domestic product. On the other hand, 21 percent less exported to the United States.
The weakness of the dollar swells the nominal value of the debt expressed in other currencies (euro, renminbi, yen) and the war of duties can lead to an imbalance: It is sold less, therefore the incidence of the debt increases. In Europe this is outgoing for France and Germany and the angry reaction of Ursula von der Leyen towards the American president is explained. There is an additional factor of restlessness that spread the positions between the Federal Reserve and the European Central Bank. Christine Lagarde has so far sailed with preserves compared to the moves of the American homologous Jerome Powell, but now the situation is different. Europe does not grow (the latest estimate is of a restoration 0.9 percent and lagarde cannot do too restrictive monetary policies: it must support internal demand even with an inflationary risk and must avoid the revaluation of the euro, already induced by the weakness of the dollar, which constitutes a handicap at European exports and first of all of the German one.
On the contrary, Powell has an American debt financing problem. If the emissions of “Tresaury Bond” increase, the government bonds, there will be an increase in returns that swell inflation with inevitable rates of rates to contain it. But a world inflationary push would translate consumption into collapse. In the United States it was estimated that the impact of Trump’s maneuvers on duties could lead to a decrease of up to 10 percent of consumption, supermarkets are very worried.
In China there is stagflation. Inflation travels to the two increases of increase, Xi Jinping has ordered a cut of the rates, despite the inflationary course, to support the very weak internal demand as demonstrated by the collapse of PDD Holdings-the most important e-commerce platform-which has lost 78 billion dollars and the collapse of the real estate market with a decrease of almost a third of the transactions.
“IV” analysts, a German research center, denounce a trajectory to contraction Germany’s GDP of 0.2 percent due to a block of internal consumption, They estimate that China will not grow more than 4 percent, a widely unsatisfactory data that ends the negative impact of the production surcharge of the dragon.
In Europe it is not better. A study coop (large retailers) and Nomisma says that beyond the obliged ones (health, energy, food) the consumption will be stagnant. The managers interviewed – 500 throughout the old continent – see very black: the growth of GDP will be 0.5 percent, lower than the EUROSTAT estimate of 0.9. 60 percent of the interviewees predicted the EU in difficulty braking from the German recession and 77 percent think that protectionist duties could make themselves necessary. In these conditions, the world debt is potentially explosive also for the mass of securities that must be refinanced: this year about seven thousand billion dollars of debt of emerging states and over 19 thousand billion of mature economies expire. A debt mass must be renewed that exceeds the US GDP and, between wars in weapons and wars of rates, we are badly “mes”.
