New Cold War and an alternative plan for the EU

May 26, 2020

Yesterday was a day off in the USA and Great Britain, so Monday was not rich in events. Therefore, there is time to talk about global things.

The US and China are slowly but surely slipping into a new cold war. So far, the parties continue to exchange verbal threats, but literally half a step remains before the transition to actual actions. And then the trade wars will seem like a kindergarten. The situation in Hong Kong is rapidly deteriorating, and Trump still needs the last one, whom he will blame for all the current troubles and problems of the United States. So the escalation of the conflict seems to us inevitable.

However, judging by the dynamics of stock markets, this is of little concern to anyone. Which is strange a little more than completely, but a fact.

The fate of the European fund in the amount of 500 billion euros after the weekend finally passed into the category of uncertain. We have already written that in the EU there are a number of opponents of the idea of giving money for free, especially to those who are involved in spending extremely randomly and uncontrollably (a stone in the Italian garden). So Austria, Denmark, the Netherlands and Sweden have proposed an alternative plan for economic recovery after coronavirus. In general terms, the concept is simple: give money in the form of a loan with the most favorable conditions, but with a tight repayment period (after two years) and targeted use of funds.

The news from Germany somewhat sweetened this bitter pill: despite a recession in the economy, the level of business confidence in May turned out to be quite high (IFO expectations index in May 80.1 with a forecast of 75.0).

On the other hand, the oldest car rental company in the USA (Hertz with a fleet of nearly 700K cars and 40K employees) filed for bankruptcy, which reminds us of the price that the economy has to pay for the lockdown.