Europeans can effectively distance themselves from Donald Trump by adopting a step-by-step approach to sever ties. Initially, it may appear as though nothing has changed, but behind the scenes, key financial decisions would be made.
The EU and UK could start by cutting up credit cards or closing joint bank accounts to limit Trump's influence on their economic policies. This move wouldn't be easy, but separating financially from him is essential for long-term stability.
The recent actions of some European investors serve as a harbinger for what could become the norm. A Danish pension fund announced it would sell all remaining US government bonds in its multibillion-pound portfolio by the end of the month due to concerns over US government finances.
European regulators can facilitate this shift by making it easier for other pension funds to sell their US bond holdings, despite warnings from credit rating agencies that US debt is still considered safe. Selling these bonds would lead to a reduction in portfolio risk and lower overall bond values, but there's an added benefit: less exposure to the risks associated with Trump's unpredictable economic policies.
Additionally, Brussels could create a market for euro-denominated bonds, rivaling the US Treasury bond market, which would further drain the value of US government borrowing. This has been proposed in a 2010 document by the Bruegel thinktank and was recently updated.
The EU can begin with smaller member states collaborating rather than all 28 countries at once. It's essential to acknowledge that London hosts deeper bond markets than Europe, which could be leveraged to generate funds for this new market. If politicians in key European cities can harness the power of a thriving eurobond market, they may find themselves less susceptible to Trump's financial threats.
By taking these steps, Europeans can distance themselves from the tumultuous US politics and create an alternative safe haven for their investments. This will require coordination, but it is essential for protecting the economic interests of European nations in the face of unpredictable American policies under Trump's presidency.
The EU and UK could start by cutting up credit cards or closing joint bank accounts to limit Trump's influence on their economic policies. This move wouldn't be easy, but separating financially from him is essential for long-term stability.
The recent actions of some European investors serve as a harbinger for what could become the norm. A Danish pension fund announced it would sell all remaining US government bonds in its multibillion-pound portfolio by the end of the month due to concerns over US government finances.
European regulators can facilitate this shift by making it easier for other pension funds to sell their US bond holdings, despite warnings from credit rating agencies that US debt is still considered safe. Selling these bonds would lead to a reduction in portfolio risk and lower overall bond values, but there's an added benefit: less exposure to the risks associated with Trump's unpredictable economic policies.
Additionally, Brussels could create a market for euro-denominated bonds, rivaling the US Treasury bond market, which would further drain the value of US government borrowing. This has been proposed in a 2010 document by the Bruegel thinktank and was recently updated.
The EU can begin with smaller member states collaborating rather than all 28 countries at once. It's essential to acknowledge that London hosts deeper bond markets than Europe, which could be leveraged to generate funds for this new market. If politicians in key European cities can harness the power of a thriving eurobond market, they may find themselves less susceptible to Trump's financial threats.
By taking these steps, Europeans can distance themselves from the tumultuous US politics and create an alternative safe haven for their investments. This will require coordination, but it is essential for protecting the economic interests of European nations in the face of unpredictable American policies under Trump's presidency.