The global cost of the corona pandemic now approaches the $10 trillion mark. This is the price of the handouts, tax deferrals, and loan guarantees extended by governments trying to nurse their societies back to health. Only a fraction of that money may, in the fulness of time, be recouped. Since the depth of the recession that the virus thrust upon the world is still an unknown quantity, nobody knows for sure who and what is able to survive the pandemic. In Europe, most governments guesstimate that only about 65 percent of the deferred taxes will eventually get paid. Up to 20 percent of the loan guarantees extended may be invoked at some point.

Budget deficits are quickly rising to levels not seen outside times of war. Debt burdens keep pace, limiting the financial wiggle room of states as preparations are made to slowly resuscitate economies. Though most economists agree that states had no choice but to act decisively, some begin to wonder who is going to pay for their enforced largesse.

Absent a global debt jubilee, the piper must be paid – eventually and presumably. This crisis has no winners, apart from a few billionaires who somehow managed to add to their fortune whilst sipping drinks aboard mega yachts anchored within swimming distance of a welcoming tax haven. Earlier recessions were local or regional in nature and could count on strong growth elsewhere to find a way up.

Not so this time around. China sputters and nears its own day of post-corona reckoning with a regime increasingly lashing out at any and all forms of dissent in a rather sorry display of gutted self-confidence. To paraphrase Karl Marx, China’s current posturing at home and abroad masks the inherent weakness of its system. Despite the unbelievable antics of its president, the United States will be fine. The country still holds the master key to the global financial system. As always, the US dollar rules supreme in a troubled world. Not even President Trump can scare investors away from the mighty dollar – and that’s saying something.

Europe is not nearly so lucky and will be hard-pressed to come up with novel solutions to remain an economic power of note. Were it not for the almost pig-headed refusal of the Frugal Four to engage in acts of creative bookkeeping, solutions could be found such as the Spanish suggestion to issue consols – perpetual bonds that pay interest but are redeemed at the issuer’s convenience. Consols are an interesting tool to kick the proverbial can not just down the road, but into interstellar space.

The idea that the debts incurred by the pandemic must be paid, and the vast volumes of credit injected into the Eurozone economy since 2015 must be taken out (i.e. the money destroyed), seems ludicrous. Such a rigorous approach to financial management will most likely result in a very long period of lacklustre growth, high unemployment, and political turmoil. Deflation also remains a distinct possibility. Business as usual is probably not on offer for the foreseeable future. To navigate the post-corona era without creating another politically volatile lost generation, out-of-the-box thinking is needed. That’s not something to expect from Europe’s Frugal Four.