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Daniel Kral @danielkral.bsky.social · 03/04/2025

For decades, the US has been the primary source of global demand (& issuer of reserve assets) running large external deficits and debts. This proved politically unsustainable. Biden tried to reverse it via large subsidies. Trump via tariffs. Their objective is the same: reindustrialize US.

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Daniel Kral @danielkral.bsky.social · 24/03/2025

Some argue that while the EU runs a large goods trade surplus with the US, its large deficit in services gives it leverage. But this deficit is driven by accounting tricks of Irish-domiciled US multinationals. Excluding Ireland, the EU runs a (small) surplus in services, too.

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Daniel Kral @danielkral.bsky.social · 02/12/2024

Is France facing a Greek-style sovereign debt crisis? No. At the height of the € debt crisis, Greek govt was spending almost 20% of all its revenue on interest payments. France is spending less than 4% (even less when subtracting interest paid on debt held by central bank).

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Daniel Kral @danielkral.bsky.social · 02/12/2024

Fixed investment has been hammered by high interest rates & weak demand. Germany is the worst performer (no surprises), France propped up by fake IP and Spain & Neth. around pre-pandemic level (way below trend). After Superbonus-fuelled bonanza in Italy comes the inevitable - a protracted recession.

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Daniel Kral @danielkral.bsky.social · 21/11/2024

Current cold spell across Europe drives an earlier drawdown from gas storages than in previous years, as wholesale prices hit the highest in a year. Gazprom cutting off Austria this week and uncertainty over Ukraine transit route next year means Europe again bidding up spot LNG.

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Daniel Kral @danielkral.bsky.social · 19/11/2024

Hard to see how the EU would benefit from a big US-China trade war. Chinese exporters would seek to replace lost US market and flood the world with goods at dumping prices, undermining EU companies at home and abroad - worsening EU trade balance & compounding the "China shock" for industry.

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Daniel Kral @danielkral.bsky.social · 19/11/2024

Or we can recycle Eurozone's large private sector surpluses into government deficits and allow the debt-to-GDP ratio and the ECB's balance sheet to balloon up, keeping debt servicing costs contained. Having our welfare state with no growth. Like, you know, Japan.

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Daniel Kral @danielkral.bsky.social · 18/11/2024

@ec.europa.eu analysis points to a sizeable fiscal tightening in EU next year. RRF / EU funds key offset in large recipients (CEE & South Europe). Largest tightening planned in FRA but unlikely to fully materialize. Large loosening in DNK, LAT, HUN (big assumptions on frozen EU funds in HUN tho).

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Daniel Kral @danielkral.bsky.social · 18/11/2024

IRL, BEL, NLD have the largest direct trade exposure to US. But this is distorted by IRL contract manufacturing and large Dutch & Belgian ports handling much of EU trade. Also, their large pharma surpluses are rarely mentioned. This leaves GER, FIN, SWE, ITA & auto-heavy CEE economies most at risk.

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