Here is yet another gold and silver bull market catalyst, the Iran War has sent global debt ballooning even faster.
Iran War Sends Global Debt Ballooning Even Faster
April 22 (King World News) – Gerald Celente: Since the Iran War began, “dozens” of countries have cut or suspended fuel-related taxes, subsidized energy bills for businesses and households, and even made cash handouts to help citizens cope with high energy costs, The New York Times reported.
Germany has reduced fuel taxes for two months, cutting the government’s expected revenue by an estimated $1.9 billion. Canada will lose out on $1.7 billion in revenue after cutting taxes through August on diesel, gasoline, and aviation fuel.
Countries bailing their economies out of dangers posed by the war’s energy shock already had piled up massive debt during the COVID War, debt that remains unpaid.
In a 15 April blog post, the International Monetary Fund (IMF) acknowledged nations’ need to support their economies through the new emergency but also warned that “fiscal policy must respond cautiously – providing support where needed without pushing public finances closer to the brink.”
Oil, liquefied natural gas, fertilizer, helium, and other essential resources will remain in short supply for months even after the hot war ends, the IMF noted. That will lead to higher inflation and slowed GDP growth, pressuring governments to borrow more to keep propping up their wobbling economies.
Italy has extended a fuel tax cut through this month, costing its treasury another $590 million. Greece is handing a “fuel pass” – paid for by the government – to low- and modest-income households. The pass is part of a $354-million menu of gifts to drivers.
Japan has created a mechanism that will offer $10 billion in aid to strapped countries in Southeast Asia to help them buy fuel and other commodities…
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Due to lavish “and often indiscriminate” spending during the COVID War and the energy crisis following Russia’s attack on Ukraine, the NYT noted, governments have much less financial wiggle room. Government debt has reached 94 percent of the world’s total economic output and will equal global GDP in less than three years, the IMF said.
“Global growth was robust in 2025, yet there was no meaningful progress in repairing budgets,” the IMF wrote in its blog post. “In many countries, deficits stayed high, debt kept rising, and interest bills grew rapidly.”
The new energy crisis is atop a world economy already in chaos, the IMF pointed out. European nations are pouring money into national defense, AI is disrupting labor markets, and more governments are needing more private investors to buy their ever-growing bond issues.
Those investors already are demanding higher returns to cover their risk in investing in bonds that lose value every time more are issued, increasing the amount of money governments have to raise to pay interest on the rising debt.
The IMF’s warnings echo those of the European Commission and European Central Bank. Christine Lagarde, the bank’s president, last week urged nations to provide only targeted and temporary aid.
TREND FORECAST:
Lagarde and the IMF are issuing warnings and urging governments to be prudent. But to prop up sagging economies, many EU governments will not comply.
As the world has learned, politicians respond to urgencies of the moment. Debt will be ignored and there will be ineffective attempts to deal with it in the future; citizens are demanding help right now.
The problem is that there are always urgencies of the moment, whether a need for help paying heating bills or businesses demanding tax cuts during times of economic weakness.
Consequently, debt is virtually never a priority problem “right now” — until it is.
As we continue to point out, governments will not deal with the debt crisis until it erupts in a public form and creates a visible emergency in the way that the U.S. housing market’s collapse did in 2007, igniting the Great Recession.
With bond investors shying away from the U.S. and other heavily indebted nations, the time when debt becomes a “right now” crisis is approaching faster than politicians and the public realize.
Iran War has Damaged $58 Billion In Energy Infrastructure
The Iran War has damaged or destroyed as much as $58 billion worth of the Gulf states’ capacity to produce and refine oil and natural gas, according to Rystad, a leading research and advisory firm in the energy industry.
Israel has attacked Iran’s gas facilities and petrochemical plants. Iran has rained missiles on pipelines, production plants, refineries, and shipping terminals in Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates.
More than 80 such facilities have been struck since the war began on 28 February, with at least a third being severely damaged, Fatih Birol, executive director of the International Energy Agency, said in a public statement last week.
“This is one of the most critical issues and different than in the past,” he added, estimating that it could take two years to fully restore the region’s production of various products to prewar levels.
Restoring the facilities will cost at least $34 billion, Rystad calculated, and could rise as the extent and degree of the damage becomes clear. As equipment needed to do the repairs is deployed to the Gulf region, projects elsewhere in the world will have to wait, the company noted.
Iran faces the largest repair bill, figured at about $19 billion so far. Qatar’s liquefied natural gas (LNG) facility, the world’s largest, also faces a major expense and repairs could take three to five years, the government has said. Before the war, the plant shipped 17 percent of the LNG exports from the region.
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