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Why The European Recovery Plan Will Likely Fail

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Why The European Recovery Plan Will Likely Fail

The 750 billion euro stimulus plan announced by the European Commission has been greeted by many macroeconomic analysts and investment banks with euphoria. However, we must be cautious. Why? Many would argue that a swift and decisive response to the crisis with an injection of liquidity that avoids a financial collapse and a strong fiscal impulse that cements the recovery are overwhelmingly positive measures. History and experience tell us that, indeed, the risk of disappointment regarding the positive impact on the real economy is not small.

The history of stimulus plans in the eurozone should alert us against excessive optimism.

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An “L”-Shaped Recovery Is Not An Anomaly, It Is The Norm.

Global Economy, Sin categoría

Many analysts and economists are trying to predict the shape of the economic recovery post-Covid-19. To understand how the recovery may look like, we need to look at past recoveries and at the history of pandemics.

Starting with the pandemic, we know a few things. First, there has never been a vaccine for any of the previous 18 Covid types. Second, there has never been a pandemic without a second wave before a treatment existed. Taking both things into account, the idea that many investors have that the worst is discounted may be overoptimistic.

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Gold and Cryptocurrencies In Times Of Crisis

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The case for gold remains. In this video we explain:

  • Emerging Market rising demand as local currencies collapse.
  • Central banks buying gold to build reserves.
  • Gold as a de-correlated asset that works as a positive hedge to equities and bonds.

If you like gold, silver and palladium should be seen as attractive too.

Cryptocurrencies are slowly reaching money status but remain as start-uo currencies.