Global debt has reached 365% of world annual GDP, an amount close to $280trillion and surely no one should expect this amount to be repaid within the space of a century. The only solution that seems feasible now is its unstoppable per-financing, although in the long term this solution is not sustainable, since it has its limits and especially when the phase of raising interest rates begins. In this case the solution of re-financing will be difficult, and many states will not succeed.
by Thanos S. Chonthrogiannis
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The Logic that characterizes institutional participants in the Capital Markets
What is clear today on the World Capital Markets, particularly from the euro area/EU member countries, is that both their governments and their Central Banks, which are branches of the ECB, are massively involved, that we will now have to borrow as much capital as we can since interest rates are negative and investors are available around the world, regardless of what should be done to repay these loans.
Of course, governments want hot money to fill their vaults so that they are ready to face the tough days that are sure to come.
An Issue of a Perpetual Bond for Eurozone?
Eurozone/EU member countries such as Italy, which is the third largest euro area/EU economy with a public debt of 160% of its annual GDP (€2.6 trillion) that does not have the same solvency as Germany and France (last week the credibility of the Italian economy was upgraded due to the Prime Minister ship of Super Mario Draghi) manage to comfortably issue 30-year bond securities.
Last week France, Belgium and Spain issued successful 50-year government bonds. Slovenia in January 2021 issued a successful 60-year government bond, while Austria in June 2020 paved the way with a successful issue of a 100-year bond with a yield of 1%.
So did the time crew and the Commission, together with the governments of the euro area member countries, come to issue Euro Perpetual Bond (A bond that never expires) and which will be constantly re-funded covering any insolvency of the euro area member countries?
