A collapse of the European monetary union would cost Germany alone more than a trillion euros; this, without calculating the further damages deriving from an interruption of trade, from the consequences on the trade balance for a new core euro or even for a new mark, from the immense political costs. These are the recent ones forecasts by Allianz Global Investors, the asset management and financial advisory division of the German insurance giant.
For Allianz GI, the euro area is in a trap from which it will be difficult to escape if it is pursued in the current policy, characterized by aggressive monetary choices and fiscal tightening, all the more in the face of a potentially very damaging clash on the fiscal compact between Germany and France. Moreover, the exceptional monetary stimulus provided by the ECB (and by the Fed) is very likely close to exhaustion, as the tensions on the price side, in particular of oil and energy, force central banks to be more cautious and any refinancing operations will be partially nullified by the increase in political tensions.
For Allianz GI, instead, collaborative solutions between member states would be needed, with greater tax incentives from EU countries that can afford it (Germany, the Netherlands, Finland and, perhaps, France), in support of the reform commitment in the peripheral countries of the area.
More generally, on international markets – although Allianz GI does not hide certain shadows, such as data on the US labor market and concerns about a possible Chinese real estate bubble – the continued growth in consumption of the new middle class among the BRICS is viewed with optimism, with retail sales up 15,2% in China, up 9,6% in Brazil and up 7,3% in Russia, year on year. Furthermore, the positive elements coming from the real US economy, where the quarterly data of 80% of the companies belonging to the Standard & Poor's 500 index exceeded analysts' estimates.
Allianz GI also counts among the positive factors the recent decision to widen the fluctuation range of the renmimbi against the usd, with a consequent possible appreciation of the Chinese currency which could entice foreign investors.
