In Jackson Hole, the Schnabel (ECB) kicked off the great European Risk

In Jackson Hole, the Schnabel (ECB) kicked off the great European Risk

Christine Lagarde was fascinated by the flow of consciousness was guessed at her first exit as number one of the ECBwhen he inaugurated the mandate with the gaffe on the Eurotower which does not statutorily have to close the spreads, But net of the lack of communication capacity as a substitute for that of punctuation marks, the excuse according to which the former president of the IMF has decided to send her shoulder, Isabel Schnabel, because she was taken in reading theUlysses by James Joyce is obviously quite funny.

Less amusing is the message that the former German dove – turned into a post-pandemic hawk on a mandate from the Bundesbank in Weimar mode – delivered from the Wyoming stage to the markets: recession or not, the inflation trend is so serious that drastic action is needed. And painful. Having said that, by return of post, internal sources of the ECB covered by anonymity have made known to the Reuters how some board member intends to place an increase of 75 basis points on the plate of the next Council (7-8 September).

In short, if the market has reacted badly to Jerome Powell’s particularly hawkish message, Christine Lagarde’s acting replacement seems to have wanted to alert everyone two weeks in advance: the inflation trends during the summer have worsened, so we need to proceed quickly. And that + 37.2% yoy in German producer prices, in fact, made many in Berlin jump into their seats. Everything as expected? No. Because at least a couple of variables must be followed with particular interest. And apprehension, if you look from the Italian latitude.

First, such an approach risks setting up a Trichet error to the nth degreesince in July 2011 the two increases operated at the height of the Greek crisis were sufficient to act as a detonator of the final contagion towards the other members of the so-called Club Med. Today an acceleration in the midst of an energy crisis like the current one could prove to be a real and own atomic bomb, if only for the continuous signs of tension between Brussels and Moscow. Indeed, more than a bomb, a heat-seeking missile. Which will go straight into the trajectory of the systemic crisis that Italian small and medium-sized enterprises are already experiencing and which risks expanding out of all proportion with a cost of money that will force banks already on who is there to operate the most classic of precautionary credit crunches.

All with an underlying fear that substantiates the second variable. In fact, if the hedge funds have mounted a position of 39 billion against our debt, clearly the Italian banks overloaded with BTP will have to – in addition to lighting votive candles to the Madonna – create relatively quiet provisions to cover losses on those holdings. In the midst of a banking risk that for Italy is configured in the first instance in the moloch of Monte dei Paschi, between capital increases to be hyper-diluted given the 2.5 billion to be raised against a capitalization of only 375 millionemployment cuts and perennial balance to be drawn against an EU that regulates the balance of power with the Treasury.

In a similar situation, loans to households and businesses will hardly be able to guarantee a flow of credit sufficient to buffer the shocks of the energy crisis, in the face of a government that seems willing to limit the intervention to 8-10 billion in support. In short, the risk is that of a do ut des as tacit as it is systemic within the Rhine axis. Germany has operated a hostile takeover bid on the ECB, given the need to raise rates quickly not only to counter inflation but also to deflate the housing bubble, while France has obtained in exchange a statist exemption substantiated in the first instance in the blitz on the re-nationalization of EdF.

But that could go even further, if the 4% cap on the increases in bills and the extra-income support guaranteed in Paris by the energy utility were not enough to keep the economy afloat. France system. The latter risk made clear by Emmanuel Macron’s kamikaze visit to Algeria, a clear disturbance to our gas supplies. But the big move will come later. When inflation has deflated. And when Monte dei Paschi will be settled. An epochal move on the Paris-Turin axis, in which prodromes are already sprouting like sprouts from a joint relative majority. And of state matrix.

In front of which, Berlin will turn its gaze the other way. And what will Rome have to gain? This,



Total divided by the purchase program of the securities held in the balance sheet of the ECB
Source: Pictet / ECB

or the certainty that, between now and at least spring 2023, no one in the ECB will dare to question the anti-spread shield without conditionality represented by the reinvestment of securities. We’ll see. That before us is not the most dramatic crisis since 2008, but also the most Schumpeterian season for our country. Since 1992. And Madame Lagarde, determined not to burn her fingers, which are always well-kept, therefore preferred theUlysses to a less complex but more compromising speech to be delivered in Wyoming. And Mario Draghi, what will he do?


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