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Years ago, when the crisis broke out in 2008, a crisis whose consequences we still see today, the Federal Reserve decided to launch its financial settlement plan. Plan that had like aim a continuous devaluation of the green ticket, taking the birth of a war of currencies to planetary level. So if on the one hand all the central banks have had to respond with often extreme measures, on the other hand there is an advantage for the Fed itself, as well as for the US economy in general, to change gears to the ultra-expansive policy, while that Europe is now taking its first steps with its QE.
In the euro zone, the sudden interruption of the flow of loans to the economy at risk sparked the crisis and cuts in spending, both publicly and privately. In the absence of compensatory expansion in the creditor countries (culturally impossible, they say), the eurozone as a whole has failed and can not become a great Germany. Between 2008 and 2013, the balance of the current account of the euro area increased from a slight deficit to a surplus of 2.8% of gross domestic product, cushioning the fall in GDP: while domestic demand in real terms contracted by 5%. , 9% between the first quarter of 2008 and the first quarter of 2013, real GDP contracted by 3.5% (source: Il Sole 24 Ore).
Today, the monetary policies of the ECB will only work if the loss of value of the euro favors an export boom. It is difficult to imagine a sustainable expansion of domestic spending, taking into account the enormous burden of debt in countries at risk, the lack of expansion of public spending and the reluctance to spend of families and companies in creditor countries. .
At the moment, Draghi's QE has led not only to the immediate fall of the euro, but also to the fall of the spread and the advantage of Italy over Spain, with the second, for better or for worse, had the increase by merit, and in a short time, the view of the reforms demanded by the EU. Fair or not, in fact, Madrid decided to create them, which instead of Rome refrained from doing it (correctly?) At least until now ..
In this scenario, the macroeconomic forecasts continue to increase but also the number of times that are wrong … the non-agricultural payrolls and in general the better data of the American employment (although there are still many problems to solve) are putting the FED to a hard test, which in At that time, the growth of salaries is strongly pursued, the data whose improvement could give the peace of mind to end the QE.
What is going to happen?
Simply, in the face of uncertainty and aware of the inadvertent fact made two years ago by Bernanke announcing the tapering, the Federal Reserve may decide to postpone the return to raise interest rates at a normal rate already forgotten. The extension, at the same time, of the credit bubble that, in turn, could be at the base of the others, numerous bubbles present in the markets. including anxiety. Looking to the future, a future that between the fall of oil, stretched markets, fundamentally thrown, does not promise anything good.
In search of the lost surplus of export
Today, the monetary policies of the ECB will only work if the loss of value of the euro favors an export boom. It is difficult to imagine a sustainable expansion of domestic spending, taking into account the enormous burden of debt in countries at risk, the lack of expansion of public spending and the reluctance to spend of families and companies in creditor countries. . China faces similar challenges. The annual increase in GDP of 9% in 2007 is a distant memory. After the crisis, Chian has replaced the lost exports with a huge investment boom driven by credit, so how is China going to manage its excess savings without facing a severe recession? One of the ways will probably be the increase in the trade surplus favored by the weakening of the exchange rate. Japan. Here the main source of excess savings is the business sector. Unlike Germany, however, Tokyo is willing to compensate for the huge surplus of companies with a huge public sector deficit, with the result that public debt spreads to exceptionally high levels. Today the ultra-expansive monetary policy will not eliminate the excess of savings, but a return to a surplus in the balance of payments will alleviate the consequences. Once again, the strength of the dollar and the weakness of the yen can only help. Conclusions We are going for a savage competitive devaluation. As I said to the Forinvest of Valencia, this strategy is dangerous, it's a zero-sum game. If someone makes money, it will be on someone else's shoulders. But if everyone devalues in an attempt to gain competitiveness, nobody will really make a profit. Simply, the exporting companies will see an increase in the instability in the forefront of the currencies and the protection costs against the fluctuations of the exchange rate in continuous increase, with the result that they will be focusing more on the national production. Basically, the danger is that economies could unconsciously be pushed to close with world trade, due to currency uncertainties. The super dollar market leader, and as history teaches (eg Asian crisis 1997, Gulf war, etc) this could be the real cause of the market collapse, with sovereign debt holdings from Emerging Countries. That the Fed takes note, only with the consumption the Americans can not take the whole world.