A very important development in the euro zone: The disappearance of the private sector borrowing requirement

The private sector's borrowing requirements has disappeared in the euro zone: Companies have profits that enable them to self-finance (and even more) their investments; Households are deleveraging, given the major decline in housing investment. This disappearance of the private sector borrowing requirement in the euro zone is having very significant effects: It is leading to excess savings overall in the euro zone despite the negative real interest rates; It makes it possible to finance significant fiscal deficits without long-term interest rates rising ; It helps euro-zone banks to reduce their size.