The Minister of Economy Giorgetti did not fail to offer us yet another financial surprise with the launch of the new ones Btp Value of May 2024 (fourth issue) which risk being the most generous ever for savers. This time the novelty is represented by yield curve facing each other. For the first three years the saver will collect the 3.35% (gross) to get to 3.9% from the fourth year onwards, a notable rate, with a final gift of 0.8%. If we keep in mind that according to estimates inflation will fall in the next few years to around 2%, this is an excellent return, difficult to match for the small saver. But precisely, with the decline in expected inflation, the yield also had to be less generous. Why this less than rational financial dynamic, but very much appreciated by the saver-voter?
There can be two explanations here, a technical one and a political one. From a technical point of view the treasury needs fresh money to finance its growing debt and tries to match, with various expedients, the success of the previous auction which it brought into the state coffers 18.5 billion euros. However, it is difficult to repeat that result. However, the asphyxiating courtship strategy of saver It’s bearing fruit. The share of public debt of Italian families is rising over 10%. The normalization of monetary policy by the ECB has led to a reduction in its purchases and therefore it is necessary for governments to ask for the contribution of families. A choice necessarily autarchicin short, exactly as happened in the Seventies, even if the comparison is not exactly positive given the difficult economic situation of the time.
What struck the experts, however, was the government’s option to increase the yield from the fourth year to 3.9%. Why this upward tail? It seems like little, but it’s about a 10% increase without any apparent reason. If anything, the opposite should have happened: with the reduction in inflation, interest rates should have also decreased. With this fourth round of BTP values the government has consolidated its strategy populist to woo savers with a super return to entice them to purchase public debt securities. Very easy strategy, as a well-known advertisement would say, but not very brilliant from the point of view of public coffers, given that every additional point in the interest rate, with a debt of 3,000 billion, will cost us a fair sum of 30 billion every year. The prudent minister Giorgetti brings home a double negative record: the highest public debt ever with the highest ever cost to the public coffers. A real disaster for public finances.
But where does all this greatness come from? liquid assets (58 billion collected in the first three rounds) that Italian savers have evidently parked in their current accounts? Personally, I would have an explanation, perhaps a bit risky and malicious. If every year yes they escape taxes for 100 billion, it is probable that a significant part of these fresh resources is available to tax evaders-savers to buy public securities. So we should also be grateful to dishonest taxpayers because with their purchases they support our debt, with a decent return of course.
The well-known phrase of the Nobel Prize winner in economics comes to our aid Franco Modigliani who, when questioned about the sustainability of Italian public debt, observed that Italy was a very strange country. The American economist noted how Italians did not like paying taxes but willingly purchased public debt securities, which at the time yielded around 20% in nominal terms. Here then is that Italy is truly a republic founded on tax evasion, not because it is widely practiced by the usual (and now in the times of the right-right elusive) known, but also because the money thus illegally stolen from the public coffers is invested in public securities. However, in my humble opinion, it would be desirable a different Italy in which the taxpayer fulfilled his fiscal obligations and in which the public debt was not so gigantic and so profitable.
Is it too much to ask that Italy is a normal country? At the time of the Giorgetti-Leo duo it seems so: it is more convenient to let tax evaders escape and woo savers. Whether the boat sinks in the meantime is of little concern, at least until the waters of financial collapse reach our throats. And it seems that this will happen quite soon, already at September 2024.
