When it couldn’t get worse, the best is yet to come
“Just when it couldn’t get worse – surprise – the best is yet to come”.
Al momento tutti i commentatori sono pessimisti e prevedono un immediato crollo totale dell’economia.
Ma secondo me nel breve periodo ci sarà un miglioramento della situazione della zona euro, anche in Italia.
No, non sono pazzo: prima di tutto, ci sono sempre dei rimbalzi in ogni tendenza al ribasso.
Ma in particolare, è ormai molto probabile che la BCE decida presto di sostenere l’intero sistema bancario.
Il meccanismo è semplice : la BCE garantirà la liquidità delle banche prestando a qualsiasi banca membro con garanzie idonee.
Di conseguenza, l’elenco delle garanzie idonee sarà sufficientemente ampio e gli scarti di garanzia sufficientemente bassi da garantire la liquidità.
Il debito pubblico nazionale (incluso nell’elenco delle garanzie idonee) consentirà al sistema bancario di sostenere le esigenze di finanziamento dei governi nazionali.
La spesa in deficit dell’Eurozona a questo punto è ancora sufficiente a sostenere una crescita da piatta a modesta, anche se la recessione dovesse continuare nei paesi periferici del Mediterraneo, in un momento in cui è improbabile che i politici spingano per ulteriori misure di austerità materiali e proattive.
Per capire perché sono piuttosto ottimista al momento (almeno nel breve termine), potete leggere l’ultima intervista di Ray Dalio a Barron’s.
Non dimenticate : Dalio è un potente membro del WEF… conosce la verità dietro le quinte.
Barron’s : You’ve called the current phase of U.S. deleveraging “beautiful“.
Explain that, please.
Dalio : De-leveraging happens in a mechanical way that is important to understand.
There are three ways you deleverage.
You hear a lot of talk about austerity.
In other words, tighten your belt, spend less, reduce debt.
But austerity causes less spending, and because if you spend less, somebody earns less, it causes the contraction to feed on itself.
Austerity causes more problems.
It is deflationary and it is negative for growth.
Debt restructuring means that creditors are paid less or paid over a longer period of time or at a lower interest rate ; somehow a contract is broken in a way that reduces the debt.
But debt restructurings are also deflationary and negative for growth.
One man’s debt is another man’s asset, and when debt is written down to relieve the debtor, it has a negative effect on wealth.
This causes credit to decline.
Printing money usually happens when interest rates are near zero, because you can’t lower interest rates any further.
Central banks essentially create money and buy the assets that put money into the system for quantitative easing or debt monetization.
Unlike the first two options, this is inflationary and stimulative to the economy.
Barron’s : How is any of this “nice” ?
Dalio : A beautiful deleveraging balances the three options. In other words, there is a certain amount of austerity, there is a certain amount of debt restructuring, and there is a certain amount of money printing.
If you do it in the right mix, it’s not dramatic.
It doesn’t create too much deflation or too much depression.
There is slow growth, but it is positive slow growth.
At the same time, the ratio of debt to income goes down.
It’s a nice deleveraging.
We’re now in a period in the U.S. that is very similar to the 1933-37 period, where there is positive growth around a slow growth trend.
The Federal Reserve is going to do another round of quantitative easing when the economy turns down again, to reduce debt and get money into people’s hands.
We will also need fiscal stimulus from the government, which of course is very classic.
Governments have to spend more when sales and tax revenues are down and when unemployment and other social benefits kick in and there is a redistribution of wealth.
So there’s going to be more taxation on the wealthy and more social tension.
Deleveraging is not an easy time.
But when you get back to balance, it’s a good thing.
B : What is the difference between the ugly and the beautiful ?
D: The key is to keep nominal interest rates below the nominal growth rate of the economy without printing so much money that you create an inflationary spiral.
The way to do that is to print money at the same time as you do austerity and debt restructuring.
B : What do you think will happen in Europ e?
D : Europe is probably the most interesting case of deleveraging in history.
Normally, a country figures out what’s best for itself.
In other words, a central bank will make monetary decisions for the country and a treasury will make fiscal policy for the country.
They may make mistakes along the way, but they can be adjusted, and eventually there is a policy for the country.
There’s a very big problem in Europe because there’s no good agreement about who should bear what kind of risks, and there’s no decision-making process to produce that kind of agreement.
We were very close to a debt collapse in Europe, and then the European Central Bank started the LTROs [long-term refinancing operations].
The ECB said it would lend eurozone banks as much money as they wanted at 1% for three years.
The banks could then buy government bonds at much higher yields, which would also create much more demand for those assets and ease the pressure in countries like Spain and Italy. Essentially, the ECB and the individual banks have taken on a lot of credit risk.
The banks have about 20 trillion euros ($25.38 trillion) of assets and less than a trillion euros of capital.
They are very leveraged.
Also, the countries themselves have debt problems and they have to roll over existing debt and borrow more.
The banks are now overleveraged and can’t expand their balance sheets. And governments don’t have enough buyers for their debt.
Demand has fallen not just because of bad expectations, although everyone should have bad expectations, but because the buyers themselves have less money to spend on that debt.
So the ECB’s action has created a temporary surge in buying of these bonds, and it has alleviated the crisis for the moment, but it’s still not good enough.
They can continue to do that, but every central bank in every country wants to know what happens if the debtors can’t pay, who’s going to bear what part of the burden ?
B : Have the French and Greek elections changed the outlook ?
D : They are the last steps in a long drama, which in itself is not much more important than most of the other steps.
It’s normal for the pendulum to swing to produce these kinds of changes, and it’s to be expected that tensions will rise and agreements will be harder to come by.
This will increase the risks next year.
B : So what is the solution ?
How will the European debt crisis be solved ?
D : What is happening now in Europe is essentially the same, almost totally analogous, to what happened in the U.S. in 1789.
It is an interesting comparison.
