Exceptional Publications

11. How European Union could win a competitive edge on China and US

10 ECB: Why a minimal rate cut doesn't make sense right now

9. Just One Way for ECB to fully hit its Inflation Target?

8. The Solution to the Most False Conflict in History

7. The Paradox and the Solitude of the Monetary Policies of the ECB

6. How the Policy of Bank of England Makes ECB's 2% Inflation Target Impossible

5. Inflation Worsened by Central Banks and National Governments!?

4. Interest Rate Hikes of ECB to Cut Inflation: Are They a Bluff?

3. The Diversification and the "strange" Trade-off between Oil and Gas Prices

2. ECB's Restrictive Monetary Policy in 202 :  Harmful or Beneficial?

1. How to Bring Down Gas and Energy Prices Immediately and Realistically

December 6, 2024

Before to go deep into the subject of this article please let me tell something else.

This article is going to be the last of the series of publications dedicated to macroeconomics issues. 

Why?

First:  real macroeconomics decisions don't exist any longer! 

I persuaded myself that politics factors affect this kind of decisions more than we could have ever imagined.

For instance, we all know that inflation depends mainly on supply side elements and the autorithy in charge moves the interest rates in the same way one should do when the inflation is pushed by demand side factors.

The result has been that the inflation came down just by some points only because  the european recession, or the like, is a reality in many countries (see Germany and France's growth data).

Second: my articles, as my statistics reveal, are continuosly and continuosly being read by many european institution's leaders and not even one of these people showed just  a minimum will to interact with me even if they acknowlege the appropriatness and sharpness of my "insights", made months or years before they came true.

Third, that is the sum of the previous two points, it's really unuseful and doesn't make sense going on writing about something that is voluntarily neglected.

Having revealed my disappoinmtment, a brief dissertation about one of the potential solutions to the economic crisis of UE follows.

EU is economically speaking far behind US and China, even if the latter has been slowing its incredible growth of the recent years, and this fact won't change if  a conpetitive advantage isn't going to be built.

One of the levers to be capitalized on doesn't concern  the way products/services are made (technology, efficiency...) nor the olitics onimpotrs and exports but  the way the products/services sold in EU are paid for in.

In the last decade + the cryptocurrencies have hit new highs in ther use to finalise many transactions (as of June 2023, there were more than 25,000 other cryptocurrencies in the marketplace in addition to Bitcoin)

More than 40 had a market capitalization exceeding $1 billion.

In Us the incoming administration even plans to set up a reserve of Cryptocurrencies since it realized their increasing importance and use.

Why not to think for the whole European Union of a tax relief (or the like) for the earnings deriving from the selling of products/service concluded in cryptocurrencies within the EU!?

This would translate into a lower price of the products/services involved with the resulting benefit for the buyers.

Now try to imagine how many buyers from all around the world would look at the european firms' product/services if an additional benefit could be achieved!!

That will raise the sales, the production, the fiscal revenues of the national governments and in the end all the wealth of Eupoean citizens

Of course, there would need an openess of the actors of the private sector to run their transaction also by using more and more the existing cryptocurrencies.

As of today, varying legal and fiscal treatments, different fron one country to another, have been applied to "crypto" in various jurisdicitons.

The time has come  for all the european countries to join their efforts also towards the building of a financial competitive advantage against two out-of-reach monsters....

Time has come for me to thank all the readers of this section for the attention you paid to my insights throughout this funny adventure.

Wish you all the best

Carlo Attademo

September 1, 2024

We all are waiting for the ECB's decision on September 12 to cut again the interest rates and the doubt about that is:

By how many basis points is ECB going to cut the main interest rates?

Many argue that one shouldn't claim victory against a high inflation before the very end, reason why a 25 basis point cut should be the best solution.

I don't agree about this soft approach in consideration of the current global economic backdrop and I'll explain here below the reasons of my statement.

Let's suppose ECB sets a 0.25 point cut.

The first effect you'll have will be a raising Oil future value based on the expectations of the following stimulous to the economic activities that at least will keep the demand for oil at the same level as  the current one (so that a cut in the production of Oil by Opec +, needed to increase the price of the Oil, will be postponed).

As to the consumer spending on many goods  the effects will be minimal and the push to the economy very low.

Summing up the final effect will be a sort of inducted stagflation, the more enduring the more supply-driven (energy-related product driven) the inflation.

It is known that stagflation is a stagnation accompanied by an inflation level that is a bit higher than one compatible with a very slow economic growth.

You are not sure about this analysis since you believe the inflation is caused by the global demand more than it's by supply issues and as a result the impact on the demand of a 0.25 basis point will be stronger, aren't you?

If this doubt exists, then, a larger interest rate cut should be also providential!

How can it be so appropriate?

So far the ECB made no secrets about the data-dependent nature of its decisions but the extent of the inflation decrease due to the reduced demand is not clear and a a larger rate cut could reveal the "truth".

I will be more straight.

A 0.50 cut is enough to see a potential positive impact on the demand from the consumers for many goods and this increase will be the higher the less hit the consumer goods by the unavoidable Oil price increase, derived just as we have explained in the lines above.

The lapse of time to observe this results should not be  so short in consideration of the time needed for the cuts to be translated into the real economy.

After the appropriate lapse of time if the global demand for consumer goods increases to a good extent, it will mean that the inflation is really driven by demand factors; if not, the inflation is supply-driven.

That means in the best scenario case the economy will be stimulated in the right direction (net of geopolitical situations), while in the worst scenario case the ECB will have a real picture of the kind of inflation more than the one a multiple data analysis can achieve in order to be facilitated in making the most appropriate decisions in the future.

In the end a strong rate cut now is a win-win solution. 

March 20, 2024

Please look at these data showing the inflation rate year on year as of February 2024 EU, Country by EU Country.

What a difference!

Italy, Latvia, Finland, Lithuania are around 1%.

Portugal, Cyprus, Ireland around 2%.

Spain, Netherlands, France, Luxembourg, Germany, Malta, Greece, Slovenia around 3%.

Belgium, Estonia, Slovakia, Austria, Croatia around 4% or near 5%.

The reasons are clear enough to me!

1 - Different economic structures when you look at the economic industry distribution in each Country. You can find Countries where services have a percent weight more important than they have in others. This facet is important because the current  inflation also derives by the wage level growth that is different industry by industry.

2 - Different percent weight of import vs export when we compare EU Countries to each other and since most of inflation is generated by supply bottlenecks, this aspect is vey impacting.

3 - Different kind of import structure that is very relevant in particular in Country dependent on energy products imported from outside EU and that are affected by Ukraine-Russia conflict and the sanction policy on Russia.

4 - Different efficacy degrees of the transmission mechanisms of the EU's monetary policy into the single Countries as a result of the different actions taken by the national governments in charge in each of the EU Countries.

5 - Different cycles of Economic Growth Country by Country; some are growing more than others.

6 - Fiscal Policies different Country by Country.

At this point, can a single EU's monetary policy equally affect all the nations involved with the same degree and with the same expected timing?

NO, it cannot!!

The solution is  realistic:

Regrouping EU's countries according to some criteria that put together the ones that approach the same level.

One can think of the latest inflation rates recorded as the mentioned criteria and in so doing you can see up to 4 groups.

In reality, just as I explained above, the different inflation rates depend on many factors and their combinations they are the result of.

It would be better choose those factors for creating the groups.

In the end ECB could decide different actions.

Here is the procedure.

First Step is selecting the main factors causing the inflation as the criteria of distinction.

After that you can attribute a score to each of the criteria according to its single impact on the general inflation of EU area.

Final Steps consist of calculating the score of all the Countries involved, spotting 3/4 groups and putting thogether those countries that have the score falling into each group.

 A simplified example with this matrix:

Group 0-8: Countries J,L,O,R

Group 9-11: Countries A,E,G,H,I, K, M,N, P,Q,S

Group 12 Plus: Countries B,C,D,F

Once created these groups, EU shall be able to take more courses of "action", each of them good for each group and the countries falling into.

Visionary?

I don't think so. Just a radical change of course acknowledging that only by considering the differences a single goal can be pursued: an inflation rate that is almost the same for everyone.

Thanks President Lagarde for your steady attention you have been paying to this page.

Publishing date on this website: January 23, 2024

Publishing date on Linkedin: January 21, 2024

Writing date: July, 23 2023

What to say about the conflict between Ukraine and Russia!?

Just that it is the most avoidable conflict History ever known and that is impacting the world more that any other past war!!

Here attached you can find the framework that I think as the most appropriate to find the right solution.