Michael A. Arouet @MichaelAArouet

Compounding. Economy & politics, investing, charts and irony. Born in Europe, made in USA. No investment advice. I’m not on Threads, Telegram, Bluesky etc. Here and there Joined August 2017

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Michael A. Arouet @MichaelAArouet

15 hours ago

The French left’s latest magic fiscal trick: cancel a large slice of sovereign debt. Mélenchon and LFI want the Banque de France and the Eurosystem to freeze the 18% of French debt they hold, roughly €600–650 billion of more than €3.5 trillion, or 117.5% of GDP. Isn’t that cute? That is not how markets work. France must refinance hundreds of billions a year, about €310 billion in 2026. Investors lend because they expect repayment in a stable euro under treaty rules written to stop governments using the central bank as a piggy bank. Article 123 TFEU forbids monetary financing. Announce that a chunk of debt vanishes because the central bank owns it and the Euro is debased, loses all trust as a stable currency. Then two things follow: 1. Remaining privately held debt is re-priced and yields jump 2. New issuance becomes far more expensive or dries up. A sharp rise in borrowing costs or a buyer strike hits the budget, banks and the real economy, that’s how a solvency crisis starts. Then the ECB faces a brutal choice: stand aside and risk a financing crisis in one of Europe’s largest economies, or monetize. Monetization would violate the treaty again and signal that the rules no longer bind the biggest members. Other governments and bondholders would notice. Debasement erodes wages, savings and pensions. French savers and retirees would pay, along with every other euro-area household. Isn’t the left’s naivety and ignorance simply amazing? Don’t they have even the slightest idea how markets and the economy work?

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Michael A. Arouet @MichaelAArouet

13 hours ago

Everyone has heard about Spain being Europe’s immigration champion despite one of the highest youth unemployment rates, but look at Portugal. 310k arrivals in a country of just 10 million: that’s 3% in just one year, and that’s only non-EU migration. What’s behind that? Any other surprises here?

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Michael A. Arouet @MichaelAArouet

3 hours ago

To be clear, I do not support the AfD. Granted, many of their economic points sound reasonable, but my moral compass and Christian values prevent me from backing an openly pro-Russian party. Russia’s war crimes against women and children in Ukraine are the most inhumane in Europe since WWII. Calling for normalized relations with Russia today is no different from demanding the same with Germany in 1941. Relations can only be normalized after a modern equivalent of the Nuremberg trials. That said… the AfD’s rise stems from the total failure of established parties, especially the “conservative” CDU and the SPD. Little was expected from the Greens or the far left, but isn’t the conservatives’ and social democrats’ failure simply epic? Abandon the left-green nonsense. Most Germans want truly conservative, common-sense policies, listen to them and seriously reform Germany, or the next chancellor will come from the openly pro-Russian AfD. With Russia no longer hiding its imperialism, isn’t that a frightening prospect for peace in Europe?

Michael A. Arouet @MichaelAArouet

a day ago

Isn't the response of Germany's established parties to the AfD's rise simply pathetic? "We need to explain our policies better" no longer works. Germans fear losing their jobs, no longer feel safe at Christmas markets, and struggle with high energy bills. Legacy policies have

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Michael A. Arouet @MichaelAArouet

2 hours ago

@nic_amadio Some people will get it, some won’t, and some will get upset.

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Michael A. Arouet @MichaelAArouet

3 hours ago

@RudyDrischel Both are very bad choices

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Michael A. Arouet @MichaelAArouet

3 hours ago

@RejoinNowUK I said many, not all. BTW, Germany doesn’t need to leave the Eurozone. The euro will cease to exist in its current form anyway. Just wait till the next euro crisis starts in France.

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Michael A. Arouet @MichaelAArouet

4 hours ago

@lukom4 Give it couple of years, and differentiate between Boomers and everyone else.

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Michael A. Arouet @MichaelAArouet

5 hours ago

Believe it or not, bur the last generation that watched Hollywood movies and series is alive right now. 1990: You left the house, sat in the dark with strangers, and let a studio decide what a story was. 2005: You drove to Blockbuster, paid late fees, and still let someone else decide. 2020: You stayed on the couch, paid Netflix $15 a month, and let an algorithm decide. 2030 or even sooner: You type a few sentences and the movie is created by AI. Just a prompt, and a private universe no one else will ever see the same way. Hollywood isn’t being disrupted, it’s being made optional, like cinemas made classic theaters optional. The days of $20M movie actors paydays are ending. The days when anyone with enough creativity can launch the next blockbuster movie or series are around the corner.

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Michael A. Arouet @MichaelAArouet

6 hours ago

@nic_amadio True, but there were times when real statesmen did what was right for the nation and the country, even if it was initially unpopular.

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Michael A. Arouet @MichaelAArouet

7 hours ago

The French political class lives in an imaginary world of complete denial of economic and market realities. Why is it so difficult for French politicians and unions to understand that France has only two options left: 1. Structurally reform its absurd pension system and overblown state spending, or 2. The bond market will force even deeper and more painful cuts later. Greece learned this the hard way in 2011–12: when politicians stall, investors stop rolling over the debt and force much deeper, uglier cuts. Greek pensions today are just a fraction of what they used to be. This is not rocket science. Why is it so difficult to understand?

Michael A. Arouet @MichaelAArouet

2 days ago

Markets now price Greek 10-year debt cheaper than French. Greece yields 4.24%, France 4.46%, this would have sounded insane just a decade ago. Debt/GDP is still higher in Greece (143%) than in France (118%). So why does the market see Greece as more trustworthy than France? The

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Michael A. Arouet @MichaelAArouet

7 hours ago

@Unionbuster There is nothing progressive in „progressive“ policies

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Michael A. Arouet @MichaelAArouet

8 hours ago

@TeslaTrucklet Not really, Portugal has one of the lowest Muslim populations in Europe.

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Michael A. Arouet @MichaelAArouet

9 hours ago

@Sophia877948704 Right, what would be the moral or legal ground to do that?

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Michael A. Arouet @MichaelAArouet

9 hours ago

Inheritance tax is the most unfair tax. You already paid income tax on every dollar you earned in your life. You paid tax on the house, the savings and the business. Then you die, and the government seriously wants to take another cut of what’s left. That money is not “unearned“, it is your already-taxed life savings. Only the person who built it should decide if he wants to: 1. Spend it 2. Give it to charity, or 3. Leave it to his children. Why should the state have a claim to another charge at the same pile of money just because the owner stopped breathing? Does it make any sense to you? If you oppose inheritance tax, you are not defending millionaires, you are defending the principle that people, not politicians, decide what happens to what they already earned and taxed. Why are socialists so obsessed with inheritances? Not your money, not your business.

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Michael A. Arouet @MichaelAArouet

9 hours ago

@grok @MmmBbbbmmm666 Why does Estonia lead the list?

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Michael A. Arouet @MichaelAArouet

9 hours ago

@RejoinNowUK Yes, smart points-based immigration does, but not uncontrolled mass immigration into the welfare system and Uber jobs, it drains society.