J.L.M. Campuzano (AEB) | The Bank of Spain has published the financial accounts for the Spanish economy at the end of the first quarter. Consolidated household and company debt fell in the first quarter to 132% of GDP, 4.1 percentage points below the rate the year before. Company debt represents 74.4% and that of households 58.4%.
Miguel Navascués | There are many signs that the public think the crisis is over. One is the bankruptcy of Podemos, but there are many more. But has it ended? I doubt it.
Craig Willy via Fair Observer | It will be a busy few years for Japan, which hosts the G20 summit on June 28-29 followed by the Tokyo Olympics in 2020. The international attention sparks questions concerning how durable its economic success will be.
Link Securities | We highlight the negative impact that the new conflict between the European Commission (EC) and the populist government of Italy is having on the European securities markets and on the euro. Rome has not taken the necessary measures to contain the public deficit, which it will lead to a further increase in Italian public debt, whose weight could surpass 135% of GDP in two years.
Link Securities | According to Bloomberg, citing sources close to the issue, the European Commission is considering opening disciplinary proceedings against Italy next week because of its inability to control its debt.
Debt/Ebitda ratios of US companies is estimated to be around 3.3X compared to 2.3X in 2008, although the coverage of interest ratio (Ebitda/interests) reaches 7.4X compared to 7.3X in 2008. Therefore, although the level of debt is indeed high, the capacity to pay is also elevated, which is what really matters.
Despite the general deleveraging in the US, the corporate and non-corporate sector has begun to indebt itself again, currently to a level of 72.6% of GDP ($15 trillion). According to calculations of economists at the firm Solunion, the real level of non-financial corporate debt could exceed by 30%, or $3.9 Tr.
The European Commission authorise the merger in Holland between Tele2 and Deutsche Telekom without preconditions , which drove the European teleco sector yesterday. Until now the Commission had shown itself radically opposed to allowing corporate operations which imply a reduction from four to three in the number of operators in a country.
In this new binary world where China is bad and the US is good, there is a great danger of over-looking the very real structural risks in the west at the moment. As told by Mark Tinker, AXA strategist in Asia, one of the current amusing party games might be to play ‘substitute the words US for China in different bearish economic projection’ and see if it worries you more or less.
The EC found yesterday that Italy is in breach of the European Union’s debt criterion, with a debt/GDP ratio of 131.2% for 2017, significantly above the EU’s threshold of 60%. According to the firm Julius Baer, it is obviou the 60% target introduced in the Maastricht Treaty in the early 1990s cannot be binding anymore, given the elevated debt levels across European countries.