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Silvia Merler Profile picture
Silvia Merler
@SMerler
Head of Economic Policy Research, Algebris Investments. Non-Resident Fellow @Bruegel_org. Adjunct Lecturer @SAISHopkins. Fellow @iep_bu.
2 subscribers
Sep 5, 2022 • 11 tweets • 3 min read
I received an unexpected massive response to this (nerd energy tweet going viral, who would have thought!). So I wrote up the methodology, I updated with data as of end-August, added more scenarios and published. One Q deserves in-depth discussion ⬇️
algebris.com/market-views/e… Some have pointed out that Italy has signed contracts for extra flows (compared to 2022) from North Africa in 2023/24. In my baseline scenarios (see here with data updated through end-August) I am not considering those future flows for two reasons (continues below).
Aug 31, 2022 • 7 tweets • 3 min read
#EnergyCrisis: energy savings in 🇩🇪 versus 🇮🇹. In Germany, gas consumption has decreased by 15% on average during the first 6 months of the year compared to 2021. If it keeps saving energy at this rate, Germany will have enough gas to withstand a scenario with 0 Russian flows. 1/ In Italy, gas consumption has declined by just 2% on average over the first 6 months of 2022 wrt 2021. At this rate, Italy will run out of gas by the spring even if Russia keeps sending 10% of the flows. Italy needs to more than double its energy savings to weather the storm. 2/
Apr 15, 2022 • 20 tweets • 5 min read
It took me some time to make all puzzle pieces click in my head, but here is why I think the rouble gas payment scheme matters. For Russia, it is functional to undermine sanctions and to pursue long-term strategic geo-economic goals. #UkraineRussiaWar 🧵1/ algebris.com/market-views/r… First, it cuts the middleman. Gas contracts typically structure payment as a direct transfer from the buyer to the seller’s designated account at a European bank, with the payment obligation deemed fulfilled when this transfer comes through. 2/
Mar 25, 2022 • 16 tweets • 8 min read
Commodity markets are reacting to uncertainty in agricultural supply by sending futures through the roof. Will the #UkraineRussiaWar be a challenge to #FoodSecurity in the short to medium term? The short answer is YES. The long answer is a read through this thread ⬇️🧵 1/ #UkraineRussiaWar is disrupting physical, logistical & market dynamics in the Black Sea - a key hub for wheat, feed grains & sunflower seed to world markets. 🇺🇦 ports are all closed or blockaded by 🇷🇺 Navy. 🇺🇦 suspended port operations for commercial activities since 24/02. 2/
Mar 2, 2022 • 12 tweets • 4 min read
Europe Unplugged: can we give up Russian gas? In our latest ESG investor letter, we find that 🇪🇺 could make up for ~62% of energy needs tied to 🇷🇺 gas, at high economic and political cost. The remaining gas deficit would exhaust reserves in 5-10 months. 1/ algebris.com/insights/green… 🇪🇺 gas production declined by 20% over the past 20 years. Today 🇷🇺 supplies ~38% of European gas imports. With gas accounting for 45% of all energy imports and 🇷🇺 providing 95% of imported gas, 🇭🇺 is by far the most exposed. 🇩🇪 and 🇮🇹 would also bear much pain from cut-off. 2/
Feb 27, 2022 • 8 tweets • 3 min read
In light of interest in yesterday's tweet on central bank sanctions, let me add a few more details. 🧵

Russia has ~USD 630bn in reserves. After invading Crimea in 2014, CBRU has moved reserves out of Europe/USA and into gold and China. Clearly, they were thinking ahead. 1/ Image A similar picture if we look at currency composition of reserves: out of EUR/USD (down from a combined 87% in 03/2014 to 49% in 06/2021, which is the latest figure available) and into gold and Yuan (up from 9% in 2014 to 25% in 2021). 2/ Image
Jun 14, 2021 • 16 tweets • 4 min read
(...anche attuali Ministri degli Esteri). Ma lasciando perdere la facile ironia vorrei prendere spunto da questo tweet per parlare di alcuni dati che, pur essendo cruciali nel contesto della discussione di questi giorni, non mi pare ricevano abbastanza attenzione. Thread ⬇️ 1) I salari in Italia praticamente non crescono da 20 anni, MA anche così sono cresciuti più della produttività (sia produttività del lavoro che TFP). È una situazione che nel lungo erode la competitività esterna, non è sostenibile, ed è il risultato di un circolo vizioso
May 21, 2021 • 6 tweets • 5 min read
Thank you @gpapak @alexstubb @BrigidLaffan for hosting me as a speaker in the excellent @STGEUI @EUI_EU executive training seminar on #NextGenerationEU. Here are 5 issues I highlighted in my presentation, and that I think it will be worth keeping an eye on in coming months ⬇️ What are countries prioritising? Looking at some of the #NRRPs published so far, spending areas are largely driven by the targets on green and digital, but priorities (the largest single spending items) vary. Italy stands out for prioritising infrastructure investment ⬇️
Nov 16, 2020 • 6 tweets • 3 min read
Three very important votes in #coreper today. Despite threats by 🇭🇺and 🇵🇱 to veto the EU budget if this Regulation passed, the Rule of Law (RoL) Regulation passed. 🇭🇺 and 🇵🇱 vetoed the Own Resources Decision (ORD). So what happens now? (thread) 1) First, if no agreement is found on ORD, we fall back on the previous MFF, which obviously didn't include RRF. BUT the new RoL mechanism will apply to all EU spending, hence also to the carried over MFF. Cohesion & CAP money for 🇭🇺 🇵🇱 will now be scrutinised on RoL grounds.
Nov 3, 2020 • 5 tweets • 2 min read
It's #ElectionDay in an unprecedented election in an unprecedented year. I think this chart offers the clearest and most synthetic picture of where the perfect political storm scenario could come from: it's all in the timeline mismatch. ⬇️ 1/ Biden's lead is stronger in swing states (notably Pennsylvania and Michigan) that are unlikely to be called tonight because they do little pre-processing of postal ballots. Swing states Trump could win (Florida and NC above all) have long pre-processing and will be called. 2/
Sep 9, 2020 • 19 tweets • 5 min read
🔎As the 🇬🇧 government is set to introduce its widely debated Internal Market Bill, Britannia seems to have moved from 'ruling the waves' to 'waiving the rules'. Why and what lays ahead? (Alert: long thread)1/ As we wrote in this ⬇️piece last year, the NI Protocol negotiated by Johnson achieved the remarkable combination of leaving the Prime Minister in a better political position at home, while putting the country in a worse economic position vis-à-vis 🇪🇺2/ algebris.com/policy-researc…
Sep 5, 2020 • 8 tweets • 3 min read
Il problema di #BrainDrain italiano in 2 grafici (ht @Tagliapietra_S). I ricercatori 🇮🇹 sono i secondi più premiati con grants ERC, ma meno del 40% dei vincitori è di stanza in università 🇮🇹. Di questi temi abbiamo scritto con @APRForum e @Tortugaecon qui media.algebris.com/algebris_polic… 🇮🇹 storicamente ha una bassa % di popolazione con istruzione terziaria, e in particolare sotto-produce capitale umano nelle aree che guideranno crescita e sviluppo in futuro (e.g. STEMs ICT). Ciononostante spendiamo solo ~0.3% PIL su istruzione terziaria
Aug 26, 2020 • 5 tweets • 2 min read
📊 There has been a lot of talk about #COVID19 summer 2nd waves in Europe. But I think the country we should look at as a leading indicator of transitioning into winter is Australia 🇦🇺. Two words on why (usual caveat applies: I am not a virologist nor an epidemiologist) 1/ What we are seeing in European summer 2nd waves is a big increase in cases with (for now) stable deaths numbers. This is unlike what we had in March/April and there are a lot of factors contributing to it that have been explained by experts (age profile, better knowledge etc). 2/
Jul 21, 2020 • 15 tweets • 5 min read
🔎After reading the 68 pages of Council conclusions, here are m 2 cents on the #EUCO #NextGenerationEU deal 1/ The total amount of funds available under #NextGenerationEU remains 750bn as in the original EC proposal, but the composition changes: grants fall from 500bn to 390bn while loans increase from 250bn to EUR 360bn. But the composition of cuts matter 2/
May 29, 2020 • 14 tweets • 5 min read
🔎Due parole in italiano su #NextGenerationEU, su cui mi pare di vedere nel dibattito italiano ancora più frustrante confusione che sul tema del MES (se possibile). Non mi guadagnerà simpatia, ma certe cose vanno dette. 1/ #NextGenerationEU è un pacchetto composto da vari strumenti che trovate elencati qui. Il riassunto è che si tratta di 750 miliardi (di cui 500 miliardi di grants) che la Commission finanzierà con l'emissione comune di titoli Europei sul mercato ⬇️ ec.europa.eu/commission/pre…
May 19, 2020 • 10 tweets • 2 min read
2 parole anche in italiano sulla proposta 🇩🇪🇫🇷 per il EU recovery fund, su cui mi pare di vedere nel dibattito italiano una certa confusione 1/ 1) Molti lamentano la dimensione (500mld vs 1000mld prospettati da Von der Leyen), ma non guardano alla composizione. I 1000mld di Von der Leyen erano pensati a leva come misto di loans e grants, in cui la grande incognita era la misura della componente grants.
Apr 19, 2020 • 16 tweets • 7 min read
🔎Quale sarà l'effetto del #COVID19 shock sull'economia e le finanze pubbliche dell'Italia? Proviamo a rispondere in questo nuovo paper @APRForum (per ora in inglese ma a breve avremo anche qualcosa in italiano). Avvertenza: il thread è lungo ⬇️ 1/ media.algebris.com/algebris_polic… Tra i settori più colpiti ci sono ovviamente ristorazione e alberghiero - e già da inizio anno (complici il disastro di Venezia da un lato, e i minori arrivi dalla Cina dall'altro). Queste le nostre stime di impatto sull'attività economica in questo settore a Marzo 2020. 2/
Apr 10, 2020 • 10 tweets • 2 min read
🔎Un breve thread in italiano sulle decisioni prese dall'Eurogruppo ieri sera, cosa significano e come interpretarle. Il testo del comunicato finale lo trovate qui 1/: consilium.europa.eu/en/press/press… Cominciamo da lontano. Se facciamo un paragone con la crisi del 2010, oggi parliamo molto più apertamente di solidarietà in Europa e anche la discussione su strumenti di debito in comune è arrivata molto velocemente al centro della discussione. 2/
Mar 25, 2020 • 18 tweets • 4 min read
🇪🇺🦠A few words on yesterday's non-decision by the Eurogroup, which *unsurprisingly* underwhelms again. The EG is so NOT in agreement that they could not even agree on a conclusive statement, we only have @mariofcenteno presser to infer upon 1/ The key is the last paragraphs, where we understand that the EG is currently discussing "a Pandemic crisis support safeguard based on an existing ESM precautionary instrument, such as the Enhanced Conditions Credit Line (ECCL)"., which they say... 2/
Mar 21, 2020 • 24 tweets • 6 min read
In the run up to EMU, 2 famous views dominated. The 'economists' thought that real economic convergence ought to occur before monetary unification. The 'monetarists' thought that nominal convergence could drive real one (endogenous OCA theory and all that). 2nd view prevailed 1/ The 1st decade of EMU proved the economist right. Nominal convergence let to massive real divergence, imbalances accumulated although - except in the case of Greece - they were not fiscal. Fiscal rules worked, but we did not have rules to keep other macro imbalances in check 2/
Mar 11, 2020 • 6 tweets • 2 min read
Thank you everyone so much for the interest shown in this. I have written it up in a nicer form and you can find it at this link ⏬. Let me just discuss a few points 1/ algebris.com/policy-researc… First, this is NOT a forecast. I took the actual data on COVID-19 by country, normalised per 10k inhabitants, and mapped against the Italian curve to see at which point of that curve each country stands today. No degree of forecasting involved. 2/