As pointed out by my friend Brian Sullivan of CNBC today, spot power prices in Germany have hit $330/MWh. By comparison, in New England in May 2022, power hit a peak price of $74/MWh. For those that like percentages, Germany is 330% more expensive than the worst of New England, and more than 10x baseline. The brutal truth is you cannot run an industrialized economy with power prices 330% more than competitors at the peak of power prices in the US.
Globalization has seen the trend of moving manufacturing from areas of high cost (now Europe and historically, the US) to low cost (Mexico, and increasingly China and India). When power prices make manufacturing goods prohibitive based on “no cost” climate policies, things break. Unfortunately, as goes the German economy, goes the economy of Europe. When the economic superpower of Europe catches a cold… the rest of the continent gets hepagonasyphilAIDS.
As goes the economy of Europe, goes the European Union, who’s formal formation in 1993 was an effort to further simplify the mobility of goods and alignment in a post World War II structure. While there have been cracks, notably banking crisis in Italy and Germany and BREXIT, it’s not hard to imagine the total collapse of the currency and the union along with it.
Some people believe the stand in Ukraine is the result of worry that Putin is the next Hitler and will thusly follow a policy of nation-state expansionism. That story makes for nice clickbait and a rallying cry around the support we’ve offered Ukraine to date, but I don’t buy that narrative at all. Putin is not Hitler. Putin saw an opportunity based on European weakness (energy policy) and took it. Hitler was born out of the economic collapse of Germany following the reparation payments imposed on them in the Treaty of Versailles. He was the response not the initiator and as we are seeing in Sri Lanka, desperate people will do desperate things when bread takes a wheelbarrow of money to buy .
The reality is that Saddam, Osama and Hitler were all manifestations of our own making through foreign policy. If Putin becomes Hitler it’s because we tried to break his economy and if the European Union collapses and freezes this winter, we are going to see some interesting elections in the coming years.
Final point, in January of 2020, oil traded down 20% while the S&P traded up 4.3%. It made no sense. How can the commodity that runs the world be predicting a fall in demand while the S&P suggests a surge? The answer? Oil was the canary. Here’s what I wrote back then.
Europe is fully F’d, and while I don’t give investment advice, that oil prices back below $100 with Russian sanctions still in place and no spare capacity in Saudi or the UAE tells you just how bad the recession is likely to be. Look out below. 2008 may look downright rosy.
If memory serves, “ hepagonasyphilAIDS” is the direct result of headarectomitis.
"we are going to see some interesting elections in the coming years."
I believe there was an "interesting" election in 2020 in the USA .
The candidate with a healthy electoral college lead on election night lost due to ballots appearing after election day in 6 states that were hardly scrutinized (poll watchers were barred from observing as required by law)
I fear the people deliberately wrecking the US and European economy with energy scarcity and lockdowns and vaccine mandate sin the name of "going green" and "keeping us safe" from COVID have also worked out ahead of time that they need to "fortify" elections so that they wont be held accountable.
Hence the dilution of the vote with mass immigration of new dependent classes that don't believe in constitutionally limited government and mass mail in ballots.
Speaking of US elections: Voting in person with an ID should not be controversial. Restricting mail in ballots to those who request them and are genuinely incapable of voting in person, (i.e. due to being out or state or handicapped/bed bound) should not be controversial.
And under no circumstances should election laws allow ballots to arrive after election day, unless of course the law is designed to create opportunities for fraud, whereby someone trying to cheat will know howmany ballots they need to make up in order to win.