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Europe’s Nightmare Scenario Comes True: Energy Bills To Rise By €2 Trillion, Will Reach 20% Of Disposable Income
Europe’s Nightmare Scenario Comes True: Energy Bills To Rise By €2 Trillion, Will Reach 20% Of Disposable Income
What is the scale of the energy challenge?
We got a very shocking sense of the staggering numbers involved in the existential, crippling European crisis earlier today when Norwegian energy giant Equinor echoed what Zoltan Pozsar said in March, warning that “European energy trading risks grinding to a halt unless governments extend liquidity to cover margin calls of at least $1.5 trillion.” As Bloomberg put it, in its best non-Zoltan imitation, “aside from inflating bills and fanning inflation, the biggest energy crisis in decades is sucking up capital to guarantee trades amid wild price swings. That’s putting pressure on European Union officials to intervene to prevent energy markets from stalling.”
“Liquidity support is going to be needed,” Helge Haugane, Equinor’s senior vice president for gas and power, said in an interview. The issue is focused on derivatives trading, while the physical market is functioning, he said, adding that the company’s estimate for $1.5 trillion to prop up so-called paper trading is “conservative.””
In other words, massive amounts of newly-printed funding (because with yields blowing up, Europe’s fiscal stimulus will be over before it started unless central banks step in and backstop the latest energy hyperinflation bailout plans) will be required to avert an energy disaster. Alas, the final number will be even more massive, because overnight Goldman’s research team published a must read note (available to pro subs), in which the bank looked at the scale of the energy bill challenge, potential European government responses and industry implications, and quantified the total damage. The numbers are staggering:
According to Goldman, Italian household energy bills could rise from ~€150 to ~€600 in 2023. Some more details:
…click on the above link to read the rest of the article…
‘Worst Yet to Come’ as Global Civil Unrest Index Hits All-Time High
An opposition activist shouts slogans holding up bread as he protests along with others against rising living costs, at the entrance of the president’s office in Colombo on March 15, 2022. (Photo: Ishara S. Kodikara/AFP via Getty Images)
‘Worst Yet to Come’ as Global Civil Unrest Index Hits All-Time High
The risk of civil unrest is rising in over 100 nations, with the “worst yet to come,” according to an analysis published Thursday by the U.K.-based consulting firm Verisk Maplecroft.
“With more than 80% of countries around the world seeing inflation above 6%, socioeconomic risks are reaching critical levels.”
Incorporating data going back to 2017, the latest update to the firm’s civil unrest index (CUI) shows that the last quarter of this year “saw more countries witness an increase in risks from civil unrest than at any time since the index was released,” the analysis states. “Out of 198 countries, 101 saw an increase in risk, compared with only 42 where the risk decreased.”
“In December 2020, we warned of a new era of civil unrest, projecting that 75 countries would see an increase in civil unrest risk by August 2022. The reality has been far worse, with 120 countries witnessing an increase in risk since then,” the firm pointed out.
“With more than 80% of countries around the world seeing inflation above 6%, socioeconomic risks are reaching critical levels,” the analysis explains. “Almost half of all the countries on the CUI are now categorized as high- or extreme-risk, and a large number of states are expected to experience a further deterioration over the next six months.”
In a separate index, measuring government stability within countries, the firm found that 42 nations saw an increased risk of having their governments challenged or toppled compared with 27 countries where it dropped…
…click on the above link to read the rest of the article…
This Winter, Collapse Is Coming to Britain
Britain Is Standing at the Edge of Social Collapse’s Abyss — And It’s About to Jump
These days, my British friends ask me the same question, with the same faint tinge of terror in their voices. “So. How bad is it going to be?” What they mean is…well, let me try to explain why they’re asking.
Right about now, Britain’s setting records. Not good ones. It’s the rich world’s worst performing country in a stunning multitude of regards — falling incomes, crashing economy, skyrocketing inflation, dwindling confidence and optimism. Twice as many people died in Britain this summer of Covid than they did last summer. They were mostly elderly people, and that’s a parable for what modern Britain’s become: a stunningly cruel, indifferent, embittered society, inured to the grim reality of its own collapse.
Britain is the world’s preeminent bellwether of social collapse at this point in history. No nation in the rich world — and barely any in the poor one, really — come close. The rest of the world is dusting itself off after a rough few years, and restarting the engines of progress. But in Britain? Well, the engines of regress are pumping. Literally — sewage into the rivers. What kind of country wants to cover itself in its own — never mind.
For some reason that the world can’t quite fathom, Britain has decided to turn itself a kind of Neo Victorian dystopia, by way of American style ultra libertarianism. Think about how baffling and strange this really is for a moment. The nation that was renowned for its NHS and BBC, which invented the idea of the public park and the modern public library and museum. Now? It’s the kind of place with would make Dickens entire cast of villains, from Uriah Heep to Fagin, cackle in morbid glee.
…click on the above link to read the rest of the article…
“This Is Beyond Imagination”: Polish Homeowners Line Up For Days To Buy Coal Ahead Of Winter
“This Is Beyond Imagination”: Polish Homeowners Line Up For Days To Buy Coal Ahead Of Winter
Several weeks ago we reported that amid Europe’s mindblowing gas and electricity prices, Deutsche Bank predicted that a growing number of German households will be using firewood for heating, a forecast which appears to have become self-fulfilling as German google searches for firewood (“brennholz”) had since exploded off the charts:
But while Germans are still “searching” merely in the virtual realm, for countless Poles the search is all too real.
According to Reuters, with Poland still basking in the late summer heat, hundreds of cars and trucks have already lined up at the Lubelski Wegiel Bogdanka coal mine, as householders fearful of winter shortages wait for days and nights to stock up on heating fuel ahead of the coming cold winter in queues reminiscent of communist times.
Artur, 57, a pensioner, drove up from Swidnik, some 30 km (18 miles) from the mine in eastern Poland on Tuesday, hoping to buy several tonnes of coal for himself and his family.
“Toilets were put up today, but there’s no running water,” he said, after three nights of sleeping in his small red hatchback in a crawling queue of trucks, tractors towing trailers and private cars. “This is beyond imagination, people are sleeping in their cars. I remember the communist times but it didn’t cross my mind that we could return to something even worse.”
In Poland, where coal is king, dozens are lining up at the Lubelski Wegiel Bogdanka coal mine, waiting for days and nights to stock up on heating fuel. Read more: https://t.co/jVGwSEfLam pic.twitter.com/zZV3vtzEQk
— Reuters Business (@ReutersBiz) August 27, 2022
…click on the above link to read the rest of the article…
UK “Passed Debt And Death Sentence On Millions” By Increasing Energy Price Cap By 80%
UK “Passed Debt And Death Sentence On Millions” By Increasing Energy Price Cap By 80%
The 80% rise in the U.K.’s cap for consumer electricity and natural gas bills this fall will drive millions of households into energy poverty this winter as the worsening cost-of-living crisis stokes fears of recession.
All the chatter today among British people is energy regulator Ofgem’s rise in the cap on power bills to a record £3,549 ($4,189) beginning Oct. 1 from £1,971 ($2,330) at present. That cap is expected to rise to £5,439 ($6,427) by January and £7,272 ($8,594) by spring — all due to skyrocketing wholesale NatGas and electricity prices caused by declining Russian energy supplies to Europe, made worse by Western sanctions that have backfired.
“An increase of this much cannot be budgeted for by households with no wiggle room,” said Peter Smith, director of policy and advocacy for the National Energy Action charity. “Come October, low-income households will simply not turn on their heating.”
Reuters spoke to one Brit, Philip Keetley, who said:
“The cost of living has increased and yet you’re still expected to live on the money provided for when there wasn’t a crisis … I either can have my heating on or eat.”
Another Brit, Dawn White, who has kidney failure, fears the cost of soaring energy costs means she won’t be able to afford life-saving medical treatment:
“Without my (dialysis) machine five times a week, 20 hours, I will die,” the 59-year-old woman said.
Soaring energy inflation has crushed real earnings for Brits, forcing many to pull back on spending.
The higher cap rate could push inflation to even more elevated levels as U.K. economists at Citi warned CPI inflation could reach a mindboggling 18.6% print in January due to soaring energy prices.
The last time CPI printed above 18% was during the stagflationary years of the mid-1970s (more precisely, 1976) after an oil supply shock led to soaring energy prices worldwide.
…click on the above link to read the rest of the article…
