It’s not a coincidence that Spain and Italy are the biggest debtors in TARGET2 and the most politically unstable. Both have increased their debts with Germany and other countries: Spain from 189.9 billion euros to 319.7 billion. Italy from 188.6 billion to 353.9 billion. Not insignificant amounts.
Trump’s victory has been yet another nail in the coffin of the breed which has ruled the world for decades. This bipartisan group exists in every country, but is well connected via the G-7 and the G-20, as well of course by the EU and the collateral networks of the World Bank and AMC.
My view is that recessions don’t come along for any real reasons, the cycles are not real. They have financial origins. This is where I see the risk: that an unexpected event leads to a plunge in the stock markets (don’t lets forget that world markets are highly correlated, and one can make the other move), and this ends up hitting the banking sector.
In an article dedicated to the French economy, Timothy Taylor makes some interesting comments on the “mystery” that is France, one of the richest countries in the world, where you can breathe opulence as soon as you arrive there. But all this implies a degree of interventionism which has its consequences.
It’s undeniable that the latest information which has come out about the Bankia case reveals new areas of responsability. And in the front-line is the worst governor in the Bank of Spain’s history. The correspondence which the head of the Bankia inspectors’ team José Antonio Casaus sent to his superiors is definitive.
Since 2008, pessimism has beaten optimism by a landslide in the human mind. It’s a fact which doesn’t need to be demonstrated, at least when we are talking about “how things are going with the economy.” But the Bond Vigilantes dare to challenge this unstoppable current of pessimism – and not only with regard to the economy – with an article based on the Internet’s contribution to global well-being.
Trump is not peculiar just to the US. There are Trumps in Austria, France, the UK and in every country. Except, surprise, surprise, in Spain!
The IMF estimates world debt at over $150 billion as can be seen in the graphic below. This represents approximately 250% of global GDP. And it’s easy to see that the bulk of it is private debt. It’s also clear that debt jumped massively when the crisis broke out in 2008 and has continued to grow since then. In 2008, debt was less than 150% of GDP.
The British economy has absorbed Brexit well and one of the reasons for this soft landing is the pound’s devaluation. But the pound’s weakness is already a problem for the Eurozone, particularly for Spain, and if this is prolonged it will be an even bigger one. Furthermore if Europe is stagnating, how Spain can be doing as well as the government says? Are we living on an island?
In terms of economic performance, it’s easy to see the most successful US presidents have been Truman and Eisenhower, due to the high growth and low deficit under their presidency, followed by Kennedy-Johnson, and most of all Clinton, the best in all these areas: constant growth, low inflation, very low unemployment rate, diminshing deficit.