Goldman uses Italy as a school case.  Announcing a "deficit in bills"

Goldman uses Italy as a school case. Announcing a “deficit in bills”

In the beginning, it was the very negation of the problem. Then began the world tour in search of alternative sources to Russian gas and the rush to fill the storage. Then came Ferragosto, a harbinger of the first autumn thoughts. And the rationing plan hitherto enunciated only as a pure precautionary hypothesis, became a reality. Obviously, nuanced in tone and hidden in content. Now we know him.

And it is necessary to be doubly realistic. In fact, if on the one hand it is clear that the restrictions and prohibitions contained therein certainly do not appear draconian warlikeon the other hand, we must admit that we have gone far beyond the single degree of heating in less or the hour of heaters turned on to be renounced. There is talk of systems activated fifteen days after normal, of shorter showers and above all of vademecum on the use of household appliances. And if those who have the misfortune of supporting their team through DAZN live shows are already used to forced TV stand-by, the others will have to deal with it. In short, it is certainly not the winter of suffering for Italians summoned by the spokesman of the Russian Foreign Ministry. But not even the healthy walk that minister Cingolani outlined until yesterday. The problem exists.

And not because Maria Zakharova or the Gazprom commercial evoke it. But because the evidence begins to arrive daily in the form of alarms and figures. All from Western sources. And anything but pro-Russian. The first to tear the veil of prevailing hypocrisy was the vice-president of the Norwegian energy giant Equinor, Helge Hauganeaccording to which European energy trading risks being completely blocked, if governments do not create a permanent liquidity fund to cover margin calls which are already quantifiable today at at least 1.5 trillion euros for continental utilities.

And if that’s not enough. here is to question the swagger of Minister Cingolani and his peremptory we do not take orders from anyone, the sacrifices are contained in response to threats from Moscow, Goldman Sachs took care of it. The complete and definitive version of his report on the European energy crisis in view of the summit the day after tomorrow, in fact, sees Italy as a case study for the entire prospective evaluation. And the findings are anything but pleasant or optimistic. Starting from this graph,



Evolution of monthly energy costs in Italy based on the current curve
Source: Eurostat / Goldman Sachs

which shows the evolution of the monthly cost of the energy bill for the average Italian household, based on the current price curve on the 1-year futures maturities. Based on the worst case scenario of the zero flows from the Russian side, the cost would already rise at the beginning of 2023 to around 500 euros per month. For family. Let’s say it is made up of two parents, both workers with a salary of 1,500 euros each, one sixth of the entrances would be eroded by gas and light.

But that’s not enough. Why these other two images


Percentage evolution of the weight of energy in disposable income (2023)

Percentage evolution of the weight of energy in disposable income (2023)
Source: Eurostat / Goldman Sachs


Prospective increase in energy costs in the EU in 2021 for price scenarios

Prospective increase in energy costs in the EU in 2021 for price scenarios
Source: Eurostat / Goldman Sachs

widen the picture to the European context. And if in the first case, the projection is that of energy costs which – at current prices – will become such as to absorb 20% of the average income. in the second we see the prospect of an increase for Europe as a whole equal to 2 trillion euros in energy expenditure, something like 15% of the eurozone’s GDP.

Finally, this last image


Evolution of the average monthly cost of gas bills in Italy and tariff deficit

Evolution of the average monthly cost of gas bills in Italy and tariff deficit
Source: Goldman Sachs / Eurostat

it is the one that should make us reflect more, if only because it has been designated by the Goldman Sachs team as a general model of impact on parameters that are once again all Italian. The New York bank speaks clearly of tariff deficit, a bill deficit that will have to be adopted in order to spread the recent jump in energy prices on 10-20, in order to allow the various utilities to secure future payments in advance. And avoid the potential margin calls evoked by the vice-president of Equinor. All this while trying to limit the destruction of demand to a minimum, defusing regulatory risks and limiting the short-term decline in industrial production..

In short, we are certainly not facing the winter of freezing and tears evoked by Zakharova for Italy. But not even in the presence of a contingency lump sum destined to disappear within a few weeks. Also why borrow or print currency to pay (in dollars) for imported energyAs the central bank raises rates and governments embark on dual deficit activities, it appears the best way to destroy a currency. And the euro at 0.99 against the dollar for the first time in 20 years, perhaps a proxy not to underestimate. But don’t tell Minister Cingolani.

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