UPDATE 2-EU debt limit of 60% no longer makes sense - ESM's Regling
BRUSSELS, May 5 (Reuters) - The European Union's public debt ceiling of 60% of gross domestic product no longer makes sense and should be revised as the EU reforms its fiscal rules, the head of the euro zone's bailout fund Klaus Regling said on Wednesday.
EU law obliges governments to keep budget deficits below 3% of GDP and public debt below 60% of GDP to safeguard the stability of the common euro currency, now used by 19 members of the 27-nation bloc.
But since the two values were set in a protocol to the Maastricht Treaty in 1992, global economic realities have changed, prompting the EU to consider a revision of the rules that set the borrowing limits and enforce fiscal discipline.
The COVID-19 pandemic made the need for change all the more pressing, Regling, who runs the euro zone's powerful European Stability Mechanism, told a seminar of the Belgian central bank.
"In my view the 3% deficit limit remains relevant, and that's good because it's also mentioned in the Treaty. But we need to think about the debt limit. Or I should say a debt target of 60%, which made sense when the Maastricht Treaty was negotiated, but it doesn't make sense now," he said.
The European Commission is to present its ideas for revising the EU's fiscal rules, called the Stability and Growth Pact, towards the end of the year, focusing on the treatment of debt and investment and changes to what metrics are most relevant.
HIGH DEBT, LOW RATES
The final decision on how to change the rules will be in the hands of EU governments, most likely after talks in 2022 when the current rules will remain suspended to allow leeway in fighting the effects of the pandemic.
Debt levels will continue to soar to unbelievable levels. Translation; Corrections should be embraced as Central bankers have no choice but to debase their currencies. In other words, it's going to be pump more money into the economy or die
When the words short term appear under any post; the same conditions listed in the Market update under the short term category apply
The end is always near; its the beginning and how you live each moment that counts the most
Every serious player needs to understand that the more money central bankers pump into the Economy the more volatile the markets will be be, but the overall trend will be up. Hence, the only way to win under such conditions is to embrace volatility and focus on the long term trend.
Companies that are reporting great to spectacular earnings are getting hammered. Here are few, CHGG, MTCH, CYBR, DDOG, MKC, and the list goes on. It's a topsy-turvy world as world and we spoke of this many months ago. When we stated that what worked before will not work going forward. Having said that, those that give in to these volatile movements will lose loads of money. Volatility has to be embraced and more than ever it now becomes important to never deploy more than 1 lot at a time (1/3rd)
When the words short term appear under any post; the same conditions listed in the Market update under the short term category apply
The end is always near; its the beginning and how you live each moment that counts the most
SOL wrote: ↑Fri May 07, 2021 6:20 am
Every serious player needs to understand that the more money central bankers pump into the Economy the more volatile the markets will be be, but the overall trend will be up. Hence, the only way to win under such conditions is to embrace volatility and focus on the long term trend.
Companies that are reporting great to spectacular earnings are getting hammered. Here are few, CHGG, MTCH, CYBR, DDOG, MKC, and the list goes on. It's a topsy-turvy world as world and we spoke of this many months ago. When we stated that what worked before will not work going forward. Having said that, those that give in to these volatile movements will lose loads of money. Volatility has to be embraced and more than ever it now becomes important to never deploy more than 1 lot at a time (1/3rd)
I understand and embrace the concept of the Fed injecting liquidity to support the market and this causing both growth & volatility. The real questions I have is: how will it all end? ... and when. Also "will we be able to see it coming in time to sell stocks" The only modern analogy I can think of is Japan's "Lost 30 years". In an attempt to rein in inflation they raised intra bank interest rates. Stock prices and assets collapsed, creating loan defaults. I can imagine if something similar occurs the US stock market and real estate prices will collapse & there will be long protracted period of low or no growth. I'm not sure how US status as defacto world currency plays into it all but it is possible the Chinese Yuan could become more important. https://en.wikipedia.org/wiki/Lost_Decade_(Japan)
My guess? This goes on at LEAST until the next mid-term election. Maybe much longer. But guessing what happens next and when is difficult.
I do get the need for a steady hand, but no one wants to get caught in a game of musical chairs being stuck without a chair when the music stops.
Current atmospheric levels of CO2 (400ppm) are much lower than 500 million years ago (3000-9000ppm).
