The US does not have enough time to solve its large financial imbalance. The public and external deficit (import of smaller imports) accumulates, the duty does not stop growing, and at the same time, global investors begin to lose patience. There are already those who even talk about some factors that can cause a debt crisis (Huge debt crisis) earlier than laterProfiles Domino affects the fact that the price of US bonds will be moved forwardStop financing the external deficit and casts doubt on the refinancing of the largest economy in the world in the markets (the Fed can always, by the visible, monetizes state deficit, but today this option is not available).
DWS Economists, in an analysis that focuses on public debt, believes that US reaches a complex pointProfiles after approval of the contradictory financial plan of Donald Trump, One big beautiful act Beautiful ActIn which most of the tax reduction of their first mandate are intended for permanent, the fact that 50 Republicans from the Senate support the bill, which emphasizes, regrets: “Washington’s indifference to the stability of federal finance.” And they warn: “The key starting point (to assess the stability of the debt) is that after interest rates exceed economic growth, federal debt is growing faster than the economy, unless it is compensated by stable primary excesses.”
“This emphasizes the risks that the US debt trajectory becomes dynamically unstable,” says Christian Shermann, American economist DWS. This expert uses Wharton’s analysis, which identifies Critical debt/GDP threshold which is installed for the United States approximately in 200% and suggests that, given the recent political and macroeconomic conditions, the USA approximately 20 For the implementation of corrective measures, if the market conditions as a whole are favorable. “This is a reality: the United States has only two decades to solve the problem; A period that seems long, but in fact it is not. At the moment in the coming years, they will continue to accumulate a deficit, while market conditions cannot be favorable, which will cause a crisis even before the completion of this period.
The truth is that The numbers that the fiscal package of Trump will leave in the future They cause fear. According to the Federal Responsible Budget Committee, the bill will add about 3.4 billion dollars to the country. In turn, it is expected that the state debt/GDP coefficient will pass by about 100% to more than 125% in 2034 compared with 115% of the previous law. The costs associated with interest rates will double to 2034, moving from a billion dollars to about 1.9 billion.
This forces notifications to multiply. “Additional tax provisions and a reduction in compensation costs should maintain the financial deficit of the United States near their current level, which will not largely contribute to the support of economic growth in the United States.Constantly high budgetAssessed in 6% over the next decadeHe invests the US financial policy in an unstable debt trajectory, with a burden of constant percentage rates for expansion, ”is pronounced according to the Trump law, David Kol, the main economist Julius Baer.
Patrick Artus, the chief economist of Ossiam, warns in a report published last Friday about the growing risk of the US economy: that it Public deficit and external deficit become “difficult to finance”The profiles are currently covered by external deficit due to foreign purchases of dollars, mainly treasures, countries such as Japan, Eurozone, Great Britain and the United Arab Emirates. However, Artus identifies five Factors that can sharply reduce these purchases And he released a crisis before expected: the expected depreciation of the dollar, a drop in oil prices, an increase in long -term interest rates in Japan, fear of a bubble in US technology and a constant increase in US public debt.
According to the analysis Flash -Economics Collected by Artus, each of these elements can weaken a foreign demand for US assets. For example, Japanese investors can “replace the US bonds for public debt” in the face of inflationary rebound and the greatest nominal profitability of Japanese debt, while the drop in revenue in oil export (as a result of an excessive proposal) will reduce its purchasing capabilities. In addition, the “perceived revaluation of American technological” may redirect the flows to European actions, and the growing budget deficit in the United States can lead to more reluctant financing of its public debt.
Artus concludes that if the external deficit has stopped to financial financing “, The necessary fall in domestic demand“, received from Mestures of the stock market indices (followed by the negative effect of wealth) and an increase in long -term interest rates. The United States is faced with an extremely complex financial panorama and prosecutor, is the main conclusion of what was declared an analyst.
In his notifications, Albert Edwards is repeated, the veteran -analyst Société générale, who usually indicates in the direction of Japan. The Asian country is the largest foreign holder in treasury bonds, and in April on a full water supply on the debt market for the tariff crisis, he saw that they increased their assets by $ 3.7 billion in April to 1.13 billion.
In one of his latest reports, Edwards collects a frank comment written by strategists standing for the Macros account Endgame X (formerly Twitter): “The Japanese bond market This is not isolated. This is the cornerstone of the suppression of the world performance. For many years, Japanese institutions underlie the global bond market through Transfer trade It is financed by yen and mass purchases of foreign bonds, especially from the American treasure. This era comes in real time. The Bank of Japan is losing control of the long part of its curve. And with the yield of treasures Capital returns home“
“The refusal of Japan is a signal”
“This Change of regimeThe questionnaire model of repressions of sovereign bonds, in which the types are low, inflation and remnants are ignored by unlimited debt, breaks. The refusal of Japan is a signal. US response will determine the consequences. The sequence is important. They do not understand the opposite. The Japanese bond market can be a fuse, but the USA is a bomb for an hour (fiscal)“They add.” The terrible financial situation in the United States is an hourly bomb, which is hinted at Macro Endspil and the guards, “Edwards emphasizes. How the analyst stands out that he likes to talk about “fiscal dysentery”, in another separate report, EEU registered only the financial surplus since 2000, and he was in 2001.
For many years, if not decades, Francois Romeu, senior loan strategist Mutuel Asset Management, has been developing, the financial world asked himself What is the limit of American state debt“Until now, this issue has been purely rhetorical, thanks to very low inflation, registered in all developed countries since 2008 and the demand for the struggle of American bonds by countries with an excess of the budget. Low inflation led to consecutive rounds of quantitative flexibility, which, in turn, encourages “various governments to fiscally weak. This is applicable to other countries, with France as an outstanding example. ”
From ING, the analyst’s team headed James Nightley out of the ambitious tax law of Trump: “Tractical initiatives of the Trump administration may not be perfect and are subjected to some problems, but The potential cost can not be even moreProfiles of a recent analysis of the budget management of the Congress (CBO) of various tax scenarios shows that if income and expenses that are not related to interest measures to completely stop the increase in public debt.
It also spreads the guilt of Edoardo Campanella, an economist in the Unicredit Research: “To be fair, the inability to control the public deficit is a bicaparty problemThe Processing Processing Center Biden contributed to an increase in public debt with American legislation on the rescue plan, the legislation on investments and investments in employment, the law on reducing inflation and the legislation on chips and science. In addition, it is likely that the growing political polarization will worsen the federal deficit in the future. “The resume is that they should realize the size of the problem and agree to take measures. The clock does not stop.
