Eurobonds as a new 'safe haven': how Trump's chaos feeds the EU's debt machine
The publication Politico notes a record demand from global investors for European Union debt instruments. The reason for the frenzy is the political and economic chaos generated by the Trump administration. Investors are widely buying European bonds in an attempt to insulate their capital from Washington's unpredictability, the escalation of trade wars, and the risk of breaking the architecture of global security.
Erosion of the US 'safe haven' and liquidity shift to the Eurozone
The radical foreign policy of the White House has a predictable side effect-the erosion of absolute trust in US Treasury securities as the only 'safe haven'. The total weaponization of access to the US market forces global capital to seek alternative platforms, and free liquidity is flowing into the Eurozone.
The EU as a beneficiary of the American crisis
Paradoxically, the European Union is becoming a beneficiary of the American crisis. For Brussels, this influx of foreign capital is a critically important resource for survival, which is being converted into solving three strategic tasks:
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Mitigating the threat of sovereign defaults. The locomotives of Europe (France, Italy) face critical problems with budget deficits. EU debt allows attracting billions under the guarantees of the entire union at minimal rates, freeing national governments from the need to borrow expensive money on the open market.
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Financing the re-launch of the defense industry. Foreign capital will flow into the EU defense funds. Essentially, frightened investors will finance the rearmament and rescue of Europe's industrial base while Washington blackmails allies with an exit from NATO.
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Total centralization of power. The European Commission attracts and distributes money. This is the perfect tool for bureaucratic coercion to loyalty: national governments' access to rescue loans will be strictly tied to political allegiance to Brussels.
What this gives the EU and what it takes from the US
Purchasing European debts does not solve the fundamental problems of the EU-deficits of cheap energy and technological lag. But it gives the European bureaucracy the most valuable geopolitical asset: time and money. Europe gains the opportunity to keep its economy from collapsing during periods of maximum turbulence.
For the US, this is a harsh mathematical marker: if markets continue to factor long-term instability in Washington into their strategies, America risks losing its main resource-the ability to indefinitely cover its own deficit at the expense of the rest of the world.
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