Co-founder of Affari Miei Independent Financial Advisory Company
October 20, 2023
The budget law currently under discussion provides a new rule that excludes i government bonds from the calculation ofISEE. This measure would be introduced as part of a package to benefit families and would represent an important chapter of the budget.
The ISEE, in fact, is a key tool for accessing bonuses and social benefits, so its modification could have a significant impact on people’s lives.
There is a lot of controversy on the topic because the initiative is seen as helping people who don’t need it: but is it really like that?
In this article we will not go into the merits of the political story which is not our concern but we will ask ourselves one fundamental thing: what does this mean for a private investor? Is investing in BTP really that convenient?
This article talks about:
Because the MEF is studying to exclude BTp from the ISEE
The exclusion of BTPs from the ISEE is seen as a way to incentivize the purchase of government bonds by Italian families. This will be particularly relevant in 2024, when the government will have to place securities for around 480 billion euros.
The measure is also in line with theobjective of “nationalizing” Treasury issuesfollowing the Japanese model in which most government bonds are held by domestic investors.
Gone are the days of the ECB buying Italian government bonds with both hands and, with the increase in interest rates making the country risk even more concrete, the MEF is wondering how to remedy the inevitable problems that the new scenario entails.
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What if it was a SUPER TRAP?
Those who have been following Affari Miei for some time know very well how I feel about this topic.
My general concerns are objectified by the reality of the facts: with a monstrous and potentially out of control public debt, long-term investing in Italian government bonds is far from safe and guaranteed.
And I have been repeating them for some time because I know for a fact that those who buy these tools with both hands are not aware of the risks and almost get irritated when they read those who, with a bit of common sense, simply want to share the truth.
So how should we interpret this initiative?
For years I have been warning of the growing country risk and the end of ECB aid which will put Italy with its back against the wall.
This new project, if successful, will be just another example of how the government is trying to tie the hands of Italian savers to the fate of public finances.
It is a trap, similar to the promises of “stellar” returns and the almost misleading advertisements of the MEF with each issue of BTp.
Behind the “give me the money it’s safe” a larger project is hidden, almost like a bankruptcy trustee: secure the country from default.
Which would also be fair, considering that we will eventually repay the public debt, if it weren’t for the fact that in all likelihood many will be led to this without being warned of the danger.
The public debt, in fact, will sooner or later have to be restructured and the money, which Europe will ask of us, will have to come from the Italians.
How?
The possibilities are few and can be combined with each other:
Increase in taxation;
Reduction in public spendingtherefore fewer pensions and services;
AssetsI write it like this to give an idea of all the possible maneuvers aimed at recovering money directly from citizens’ pockets.
There are no other alternatives and anyone who says otherwise doesn’t know what they’re talking about.
This measure, in fact, is an attempt to prepare the ground for a future debt restructuring by contributing even more to entice people to buy BTp, something which, among other things, is succeeding perfectly this year given the success of the issues of BTp Value.
When all this happens, and I am convinced it will happen within the next decade, don’t say I didn’t warn you.
Useful insights
To delve further into the topic, here are some resources we recently published on Affari Miei:
If, however, you are trying to start your investment journey in a conscious manner as an independent investor, then I recommend you find out more here:
Happy continuation!
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