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Germany is in trouble. The IMF has revised its projected growth figures down to just 1.2 percent for 2022. Even this may prove to be optimistic now that gas imports from Russia have dropped to just 20 percent of what was anticipated prior to the EU sanctions. With autumn approaching, German industry is anticipating power outages while the population looks forward to food and energy shortages.

The cuts in gas supplies – resulting, apparently, from Canada refusing to return essential turbines following repair – mean that Germany has no chance of building up its gas storage before winter arrives. And, of course, it is possible that the Russian state will use this moment of weakness to cut supplies even further. After all, most of the future gas which would have gone to Europe has since been sold to Asian states instead.

Inevitably then, German – and western – media outlets will spend much of the winter talking about “Putin’s energy cuts.” In reality, it is the European technocracy and its puppet politicians who bear the greater responsibility. After all, it is they who have spent the last three decades leaving Europe vulnerable to precisely this kind of supply shock. As Lea Booth at Quillette argues:

“The truth is that the Energiewende was doomed to fail from the start. Germany bet big on solar and wind and shut down their nuclear plants when they should have forgone renewables and expanded their nuclear energy program instead. Germany’s anti-nuclear ideology is so rigid that they closed three nuclear plants in December 2021, despite the global energy crisis, and plan to close their last three nuclear plants this December, despite Russia’s energy extortion.

…click on the above link to read the rest of the article…

Bigger than you can imagine

July 15, 2022

Bigger than you can imagine

What I “remember” of the 1970s is actually very limited. Most of what I think of as “my memories” have, in fact, been generated by various retrospective media coverage of the period which provide the framework into which my scraps of memory have been slotted. And the younger someone is, the more their view of the 1970s will have been shaped by media rather than memory. And so, it has been all too easy for today’s lazy news coverage to frame our current woes through the lens of an imaginary 1970s.

The crisis now unfolding, however, is entirely different to the 1970s in one crucial respect… The 1970s crisis was largely artificial. When all is said and done, the oil shock was nothing more than the emerging OPEC cartel asserting its newfound leverage following the peak of continental US oil production…

…click on the above link to read the rest of the article…

The great unravelling

July 14, 2022

The great unravelling

Real life Bond villain Klaus Schwab has become the focus of ridicule following crude attempts to remove articles praising Sri Lanka’s “Vision 2025” economic plan from the World economic Forum (WEF) website – the world’s leading proponent of the hi-tech fourth industrial revolution apparently not realising that nothing ever disappears from the internet.

Sri Lanka was supposed to be the poster child for the Great Green New Reset, scoring a 98 percent ESG (Environment, Social and Governance) ranking. Sri Lankan President Gotabaya Rajapaksa winning considerable praise from globalist leaders and climate activists alike for his speech to the COP26 conference in Glasgow last November:

“Sri Lanka recently restricted imports of chemical fertilizers, pesticides, and weedicides due to public health concerns, water contamination, soil degradation, and biodiversity impacts.

“Although opposed by entrenched lobbies, this has created opportunities for innovation and investment into organic agriculture that will be healthier and more sustainable in future.”

Critics of climate action have understandably focussed on this policy as “the reason” for Sri Lanka’s economic collapse and descent into political chaos – Gotabaya Rajapaksa and Prime Minister Ranil Wickremesinghe having fled the country after the hungry masses invaded the presidential palace last week. In spite of praise from organisations like the WEF and the world bank, however, the Sri Lankan economy was highly indebted and vulnerable to economic shocks long before the country’s leaders decided that a mass crash diet was in order. The country’s main sources of foreign currency – without which it could not repay its debts – are tea exports and tourism. Tourism was, of course, crushed in 2020 and 2021, as countries locked down and air travel ground to a halt. In 2022, moreover, air travel is still disrupted, and far fewer consumers can afford international travel.

…click on the above link to read the rest of the article…

The age of dissonance

May 9, 2022

The age of dissonance

As the surplus energy available to the economy declines, so the number of things that we can do in theory but can no longer do in practice will grow. This is the inverse of the technological efficiencies won in the course of three centuries of industrialisation – the peak of which occurred at some point in the last quarter of the twentieth century.

The two obvious apex technologies were the Anglo-French Concorde – the only supersonic passenger aircraft to operate commercially – and the USA’s Saturn Five rocket and associated technologies which propelled three men at a time to the Moon and back. We didn’t forget how to do those things, and theoretically we could repeat them given enough time and resources. But energetically, they are now beyond us – the energy cost of doing them is far greater than any benefits they might offer in return. The humble automated car wash turns out to be a more mundane technology that is disappearing in the rear-view mirror. It is simply cheaper to pay someone to hose down a car, or cash-strapped car owners can do it themselves. And following peak oil in November 2018, and with the ensuing energy crisis – exacerbated by lockdowns and economic warfare – gathering pace, we can expect many more of our supposed technological feats to turn into stranded assets.

Another technology – in the broadest sense of the word – that looks set to go the way of the dodo is the once ubiquitous shopping high street. The once prestigious department stores were already in freefall before SARs-CoV-2 began its world tour. But two years of lockdowns have devastated retail businesses of all kinds, leaving shuttered-up shopfronts along every high street in the country, with the Welsh city of Newport claiming the record for having a third of its former shops empty.

…click on the above link to read the rest of the article…

Walking backward into the storm

April 26, 2022

Walking backward into the storm

Are we in a recession? It is an interesting question because nobody can know for sure. A recession is defined as two successive quarters of negative growth. Okay, but how do we know if, in the quarter we are in, the economy is shrinking? Again, we cannot know this. This is because the latest data we have is for February 2022… and it showed an unexpected fall in growth to just 0.1 percent. In the event that growth turned sufficiently negative in March 2022, then the first quarter of 2022 as a whole might have been negative. And in the event that this negative trend continued through April and on through May and June 2022, then we would indeed be in a recession… but we will only know for sure when the data is published in August.

It is on this kind of uncertainty that economic policy is set. On top of the slowdown in growth – which may have improved or worsened, but nobody knows yet – comes data for March showing a dramatic fall in retail spending, largely resulting from rising food and fuel prices. Is this because households and businesses can no longer afford to buy, or are they reining in their spending in anticipation of higher prices in future? Again, we do not know. Certainly, food and energy retailers have warned that prices will have to rise in future. At the same time, households and businesses face higher local and national taxes and utility bills. And so, falling sales is likely a combination of both prices that have already risen and the expectation of price rises to come.

Crucially though, the lens through which economic policy makers are viewing the economic clouds gathering on the horizon is a financial lens which looks back fondly on the sunlit uplands of the pre-2008 years as some kind of normal…

…click on the above link to read the rest of the article…

This time really is different

April 20, 2022

This time really is different

The UK may have avoided a technical recession – two successive quarters of negative growth – in the first half of 2022, but a year from now this will be of little comfort. This is because – despite the protestations of the US Bidon administration – the downturn in economic activity in the latest (February) growth figures – 0.1 percent, down from 0.8 percent in January – has nothing to do with Putin’s invasion of Ukraine. Rather, the decline in economic activity is the result, primarily, of a massive global shortfall in energy, with fossil fuel extraction impaired by the lack of investment during the lockdowns, and with oil down some four million barrels a day from its November 2018 peak.

Last autumn, these energy shortages translated into painful spikes in prices, which helped fan the flames of a general inflation resulting from broken supply chains and the rapid spending of two-years’ worth of state pandemic handouts – mostly to corporations and the wealthier half of the population. Much of the additional demand generated by state spending, however, has already disappeared – in part due to the additional price of almost everything within the economy at a time when wages are failing to keep up.

In this, at least, the inflation of the 2020s is very different to its 1970s cousin. In those days, wages were protected by a combination of strong trade unions, governments committed to maintaining full-employment, and financial controls that prevented investor-flight. None of those constraints exists today and are not compensated for by a minimum wage which, if set too high, can only result in fewer jobs. In a few sectors of the economy – such as HGV haulage last autumn – market forces have driven up wages. Although even here, employers have preferred to offer golden handshakes rather than an increase in the hourly wage…

…click on the above link to read the rest of the article…

Imperialism in bright green

February 24, 2022

Imperialism in bright green

The human ability to disconnect from and deny geopolitical reality lies at the heart of the “green” net-zero project. Most obviously, those – like the current UK Prime Minister – who claim victories along the road to the Nirvana of net-zero must maintain blindness to the way in which the UK economy is integrated into a global industrial civilisation. As a result, such measures as closing British coal mines and coal-fired power stations can be translated into lower national carbon emissions figures, even though all that is achieved is the outsourcing of UK emissions to other, less developed states elsewhere on the planet. Aiding this sleight of hand is the international convention that we do not include emissions from shipping in anyone’s national data, giving the appearance that there is no difference between goods moved tens of miles by truck or train, and goods transported by ship from the other side of the Earth.

Nor is it only governments and politicians that get away with this dubious accounting trick. Activists simultaneously demand the construction of thousands of wind turbines – manufactured on the other side of the planet – while denying the need for the materials from which wind turbines are made, deployed, and maintained. Consider, for example, the recent outrage over the decision to extend the Aberpergwm anthracite mine in South Wales and the proposal for a new mine in Cumbria. Both are intended to supply UK steelworks which, among other things, will produce the steel which is essential to the construction and deployment of thousands of wind turbines. Activists have reacted as if wind turbines might otherwise magically construct and deploy themselves with the aid of the net-zero fairy, or – even less plausibly…

…click on the above link to read the rest of the article…

The devil is in the detail

February 20, 2022

The devil is in the detail

If you get your news from the BBC, you might be forgiven for thinking that the economic hit from the pandemic lockdowns and restrictions has come to an end. Indeed, if you merely skim through the headlines in your social media feed, you might believe that the UK is poised for an explosion of growth, the like of which we haven’t witnessed since the late 1960s. “Retail sales,” we are told, “rebound in January as Omicron eases.” The “UK economy rebounds,” they say, “with fastest growth since WW2.” Chancellor Sunak – who wants to be seen as a prime-minister-in-waiting – announced that:

“Today’s figures show that despite Omicron the economy was remarkably resilient. We were the fastest growing economy in the G7 last year and are forecast to continue being the fastest growing economy this year.”

The GDP figures are certainly better than they might have been if more businesses had been left to go bust during lockdown. Nevertheless, they are still well below February 2020, following the massive crash immediately after lockdown was ordered. As the Office for National Statistics explain:

“UK gross domestic product (GDP) is estimated to have increased by 1.0% in Quarter 4 (Oct to Dec) 2021… Compared with the same quarter a year ago, GDP increased by 6.5%.

“Following the large 9.4% fall in 2020 because of the initial impact of the coronavirus (COVID-19) pandemic and public health restrictions, UK GDP saw an annual rise of 7.5% in 2021.”

Worse still, manufacturing GDP was negative, and continues to lag well behind its February 2020 level:

“Production output fell by 0.4% in Quarter 4 2021 and is now 3.6% below its pre-coronavirus levels. The fall in production output was because of a 3.2% fall in electricity, gas, steam and air conditioning supply (energy) and a 4.5% fall in mining and quarrying.”

…click on the above link to read the rest of the article…

Welcome to the age of cuts

February 8, 2022

Welcome to the age of cuts

The UK government faced a barrage of criticism over its National Insurance hike this week. The tax – which theoretically pays for public services, pensions, and benefits – was in creased last autumn, before the political class became aware of the massive increase in gas and electricity prices coming later this year. However, with cost-push inflation rising across the economy, and with rises in local taxes due to be announced, millions of British households are facing a massive squeeze on their standard of living. This has given more weight to the idea that government should extend its pandemic borrowing until the economy has recovered, rather than raising new taxes at this point.

It goes without saying that nobody welcomes tax increases. Nevertheless, as a consequence of the way this currency-creation system works, the government is rapidly running out of room to manoeuvre. In the UK, around £500bn worth of government bonds are index-linked, so that as the inflation rate rises, so the cost of servicing the debt increases. As James Sillars at Sky News reported this week:

“Interest payments on government debt hit a record £8.1bn for the month of December because of surging inflation… The Office for National Statistics (ONS) said the cost of servicing the country’s £2trn+ debt pile was almost 200% or £5.4bn up on December 2020.

“It is because half a trillion pounds worth of government bonds are linked to the Retail Prices Index (RPI) measure of inflation which stood at 8.4% in December – its highest level since 1991.”

The problem will worsen in the spring as the new energy price cap comes into force, and as prices continue to rise across the economy. This sets up one of contemporary democracy’s greatest flaws. It is precisely during inflationary periods that the people begin to demand more government spending and less taxation…

…click on the above link to read the rest of the article…

Days of reckoning

February 8, 2022

Days of reckoning

Here’s something which will likely be universally unpopular: The government shouldn’t do anything to subsidise energy prices. I say this in the face of a £700 or so increase on annual bills announced today. And this is just the beginning, because, as Nils Pratley at the Guardian points out, when the price cap is raised again in October, it will add a further £300 to bills – just in time for next winter.

To be clear, I am not arguing that millions of households should be left to choose between heat and food; I am merely pointing out that there are better and more effective ways of alleviating poverty than bailing out a private energy industry which is the victim of its own past follies. Rather, I agree with Torsten Bell from the Resolution Foundation, who told this morning’s Today programme that the best way of addressing poverty is through increases in the benefits system. Restoring and adding to the £20 a week cut from Universal Credit and the triple lock on pensions would be by far the most effective way of alleviating fuel poverty.

The energy side of the crisis, however, requires sweeping restructuring which goes well beyond anything the government or the opposition are currently prepared to countenance – not least because the economic models they operate on are so out of step with the real world that they fail even to understand the problem, still less offer a workable solution.

Why the energy cap failed

The state-imposed energy cap, which is the focus of establishment media attention today, was always the wrong solution to the wrong problem. As I explained four and a half years ago:

…click on the above link to read the rest of the article…

It’s okay to look up

January 12, 2022

It’s okay to look up

I am told I should look into filing a copyright claim against the Netflix movie Don’t Look Up, since I wrote a version of it in my 2015 book, The Consciousness of Sheep, and for exactly the same reason:

“We’ve all seen this movie before: A giant asteroid is heading straight for us, and it looks like a big one. Although somewhat smaller than the rock that wiped out the dinosaurs – together with 90 percent of life on Earth – this one could well destroy human civilisation. If it hits a landmass, it will spew pollution into the upper atmosphere. This will initially produce a global ‘nuclear winter’ in which temperatures plummet and plant life withers as sunlight is blocked out. Those of us that survive the impact will face starvation as harvests fail. In the longer-term we face runaway global warming as the gases trapped in the upper atmosphere act like a blanket to prevent heat radiating into space. Even if the asteroid hits an ocean, things may not be much better. Super-size tsunami waves will sweep around the planet wiping out 70-90 percent of the World’s cities and causing massive damage to infrastructure. The water vapour that erupts into the sky is three times more powerful a greenhouse gas than the carbon dioxide that humanity routinely pumps into the atmosphere. This, too, threatens runaway global warming…

“What would we humans do if this was for real?

“The decision to act now should be obvious except for two compounding factors. First, governments in the modern world tend not to trust the people. So they have been trying to keep the lid on the whole thing while telling the population to carry on with business as usual…

…click on the above link to read the rest of the article…

This economy is going down

December 28, 2021

This economy is going down

UK gas prices have fallen back this week – although they are still some 400 percent higher than at the start of 2021. And the reasons for the fall in price should not breed complacency. First, the arrival of a south-westerly airflow off the Atlantic has finally begun to spin those offshore wind turbines after last week’s doldrums. At the time of writing, wind is supplying 28.5 percent of our electricity, allowing gas to fall back to 27.4 percent, and for coal plants to be switched off – although nuclear is being run flat out at 20 percent, reflecting the still too high price of gas. With stronger winds forecast for next week, demand for gas may fall even further. But the winter is only just beginning, and it is doubtful that we will get through January, February and early March without at least one more week of cold, still, high pressure air. And if we are unlucky, we could face several weeks in a row.

The second reason for the lull in price is worrying for a more complicated reason. On Wednesday, Marwa Rashad at Reuters reported that:

“At least ten cargoes of liquefied natural gas (LNG) have recently been diverted from Asia to head west drawn by Europe’s record high prices amid supply concerns ahead of peak winter demand, industry sources said…

“In addition to the above cargoes, a U.S. cargo onboard Marvel Crane had headed toward Panama bound for Asia before being diverted northeast and now signalled it was bound for the UK’s South Hook terminal, according to ICIS LNG Edge.

“Data Intelligence firm Kpler said it has listed more tankers diverting towards Europe from Asia and Other destinations like Brazil including British Contributor, Tembek, LNGShips Manhattan, LNG Alliance and are eying two more for possible route change.

…click on the above link to read the rest of the article…

The hidden recession of 2020

December 24, 2021

The hidden recession of 2020

After 20 months of economy-wrecking lockdowns and restrictions, 2019 is fondly remembered as a period of prosperous calm. Memories though, are deceptive. And in the days before we learned what gain-of-function meant, things were not as rosy as they now seem. Although the decade 2009-2019 was officially one of the longest periods of economic growth ever recorded, the rate of growth was anaemic – the media reporting on any quarter with more than 1.0% growth as if it heralded a return to the 1960s. And what growth there was owed more to additional debt than to improvements in productivity. The reality of the post-2008 years was of the mergence of an 80:20 economy in which the majority watched their prosperity evaporate, while a shrinking metropolitan salaried class fought a rear-guard defence of their income and status.

The political dam broke in 2016, with “the revenge of the places that didn’t matter” – aka Brexit and the election of Donald Trump. But few in the salaried class understood the economic decline which had spilled over into the political arena; preferring instead to blame it all on Russian bots. Nevertheless, whether the elites and their salaried lapdogs chose to understand the economic situation or not, the process of decline continued.

In the UK, Christmas 2018 had been the worse on record… until Christmas 2019 rolled around. And whereas Christmas 2018 had seen a big decline in discretionary spending, Christmas 2019 produced the first indicators of a decline in borderline essential spending too. We might choose to regard the humble Christmas pudding as something which can be lived without – although those who lived under Cromwell’s puritanical dictatorship might beg to differ – but a decline in sales – along with those of turkey and seasonal biscuits – points to a nation which was reining in its spending long before SARS-CoV-2 embarked upon the European leg of its world tour.

…click on the above link to read the rest of the article…

In Brief: Fracking back, new weather warnings, lockdown by any other name

December 21, 2021

In Brief: Fracking back, new weather warnings, lockdown by any other name

Fracking back

Anti-fracking campaigners like to flatter themselves by claiming that it was their protests which finally brought UK fracking to an end. The reality though, is that the price at which UK shale gas might be recovered was far higher than the prevailing price of gas from the North Sea. The UK’s tortured geology and its lack of unpopulated open space meant that UK fracking could never match the relatively low prices of its US counterpart. And a few years ago, when government had to decide whether to give UK fracking the green light, there was enough surplus gas on the wholesale market to justify a moratorium.

Several gigawatts of intermittent wind farms and an insane German decision to phase out nuclear, later, and Western Europe finds itself desperately short of the gas supplies required to keep the lights and heaters running this winter. The UK – which failed to model the future strength of the Gulf Stream correctly – is particularly vulnerable as it depends upon gas power stations to iron out the intermittency from its over-deployment of wind turbines. One result – which the establishment media is being surprisingly quiet about – is that the wholesale price of gas has rocketed past October’s record price of £2.93 per therm. As of this afternoon, the price is £3.49, and may well reach new highs later this week (see below).

The issue here is whether the current price increases are here to stay. Some commentators suggest that the shortage is due to Russia cutting its supply to Europe in order to pressure Germany to finalise the Nord Stream 2 pipeline…

…click on the above link to read the rest of the article…

The UK energy rationing plan

December 21, 2021

The UK energy rationing plan

The establishment media are suspiciously silent about the energy crunch facing Europe in general and the UK in particular. In October, when the wholesale gas price spiked at 400 percent above its January 2021 level, energy prices were headline news. So too was the sight of energy supply companies falling like dominoes. But then, perhaps because energy supply problems couldn’t be blamed on Brexit, the news moved on to MPs sleaze and the Prime Minister’s Christmas parties. Most Brits today are entirely unaware that our energy situation has become far more precarious.

It falls to the business pages of the American press to spell out what UK outlets refuse to consider. For example, Anna Shiryaevskaya, Jesper Starn, and Elena Mazneva at Bloomberg explain that:

“Temperatures are forecast to fall below zero degrees Celsius in several European capitals this week, straining electricity grids already coping with low wind speeds and severe nuclear outages in France. To make matters worse, Russia is limiting natural gas flows through a major transit route to Germany…

“Energy prices have spiraled this year, with European gas surging more than 600%. The region’s benchmark gas contract climbed as much as 8.8% Monday and closed record-high, while German year-ahead power, a benchmark in Europe, rose as much as 5.7% to a record 256.25 euros ($289) a megawatt-hour. The French contract jumped 9% to an all-time high.”

The energy crunch has been exacerbated by the political games being played out by the new German government and Russia – the former refusing to finalise the Nord Stream 2 pipeline deal, and the latter choosing to store gas reserves for its own population rather than pump it over to Western Europe. One consequence for the UK – which is now at the end of the pipelines from Russia – is that the price of gas spiked above £3.70 per therm this afternoon (20.12.2021):

…click on the above link to read the rest of the article…

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