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The End of Europe: The Conclusion of a Long Historical Cycle.

The End of Europe: The Conclusion of a Long Historical Cycle.

The failure of the European Union may have started with the choice of the flag. Not that state flags are supposed to be works of art, but at least they can be inspiring. But this flag is completely flat, unoriginal, and depressing. It looks mostly like a blue cheese pizza gone bad. And that’s just one of the many things gone bad with the European Union. (attempts to make it more appealing failed utterly). It is the conclusion of a thousand-year cycle that’s coming to an end. It was probably unavoidable, but that doesn’t make it less painful. 

Europe has a long history that goes back to when the ice sheets retreated at the end of the last ice age, some 10,000 years ago. At that time, our remote ancestors moved into a pristine land, cultivated it, built villages, roads, and cities. They traveled, migrated, fought each other, created cultures, built temples, fortresses, and palaces. On the Southern coast of Europe, a lively network of commercial exchanges emerged, made possible by maritime transportation over the Mediterranean Sea. Out of this network, the Greek civilization was born, and then the Roman Empire appeared around the end of the first millennium BCE. It included most of Western Europe. (image from ESA)

As all empires do, the Roman Empire went through its cycle of glory and decline. In the 5th century AD, as Europe entered the Middle Ages, the Empire had disappeared except as a memory of past greatness. In the following centuries, the population of Western Europe declined to a historical minimum, maybe less than 20 million people. Europe became a land of thick forests, portentous ruins, small villages, and petty warlords fighting each other. No one could have imagined that, centuries later, Europeans would become the dominators of the world.

…click on the above link to read the rest…

First Big Freeze Puts “Heavy Strain” On European Power Grids

First Big Freeze Puts “Heavy Strain” On European Power Grids

Europe’s cold blast is due to a weak, polar vortex split in the stratosphere, which allowed high pressure to build across Greenland last week. As a result, Arctic air poured over the energy-stricken continent, sending natural gas and power prices higher.

The unseasonably cold weather will continue through this week. North West and Central Europe are recording average temperatures well below normal, boosting residential and commercial heating demand.

In the North West region, temperatures are forecasted to average around 30 degrees Fahrenheit this week, about 10 degrees less than the 30-year mean.

A similar setup is for Central Europe.

The arrival of the cold snap has already sent UK electricity prices to record highs.

Bloomberg’s energy crisis index shows gas storage percentages full for top European countries have already flipped from injections to drawing season. Power prices in France, Germany, Italy, and the UK are elevated as the cost of producing electricity is surging.

Here’s a better view of the gas storage situation. Even though significant progress was made to refill storage in an unusually warm autumn, cold snaps will draw down supplies much quicker as supply gaps persist due to Russian flows to the continent severed at some key entry points.

“The first winter blast is placing a heavy strain on European power grids, after a mild autumn allowed utilities to replenish depleted natural gas reserves. The energy crunch has forced some countries to return to coal, with the UK’s National Grid asking two coal-fired units from its winter reserve to run on Monday,” Bloomberg reported.

In a separate report, Bloomberg outlined three reasons why Europe’s addiction to NatGas persists:

  • First, nuclear outages in France have resulted in the loss of a sizable chunk of electricity generation. 

…click on the above link to read the rest…

EU’s Oil Price Cap Creates a Price Cap… on Stupidity

EU’s Oil Price Cap Creates a Price Cap… on Stupidity

MOSCOW, RUSSIA – DECEMBER 1, 2021: Russia’s Foreign Ministry Spokesperson Maria Zakharova gives a weekly press briefing. Russian Foreign Ministry/TASS

The EU and the US went forward with their long-debated, long-telegraphed move to put a price cap on Russian oil at $60 per barrel.

By believing they can pressure suppliers into not hauling Russian oil lest they run afoul of the sanctions that support the price cap, they believe they can take only Russian oil off the market for the long run.

Because of the way oil is actually traded in the real world, versus the way it trades in Janet Yellen’s head, this policy is actually much harder to implement than it actually looks. You don’t buy oil at the crude oil counter at Target or Wal-Mart.

There isn’t a price tag you can look at and say yes or no too. As Tsvetana Paraskova at Oilprice points out, crude contracts are written based on a discount or premium to a benchmark price at a particular moment in time.

“Physical traders rarely trade on a fixed price,” John Driscoll, chief strategist at JTD Energy Services Pte Ltd, told Bloomberg.

“It’s a much more complex space where they trade on formulas and spot differentials to a benchmark crude for the trading of actual cargoes as well as for hedging that follows,” said Driscoll, who has more than 30 years of trading oil in Singapore.

…click on the above link to read the rest…

Europe’s Energy Crisis Is Reshaping Geopolitics

Europe’s Energy Crisis Is Reshaping Geopolitics

  • Europe’s energy crisis is fueling a major geopolitical reconfiguration.
  • The IEA is warning that we are currently living through a “global energy crisis of unprecedented depth and complexity,” and that “there is no going back to the way things were.”
  • The financial vulnerabilities emanating out of Europe threaten to destabilize not only some of the more indebted European countries, but also developing nations and net energy importers around the world.

Europe’s energy crisis is about far more than just energy. It’s also the impetus for a major geopolitical reconfiguration at a global scale. No one knows exactly what the world’s energy and political landscapes will look like when the dust settles (which, by the way, will be years from now) but it’s guaranteed that it will be markedly different than it was the day before Russia – historically the largest exporter of oil and natural gas to the European Union by a long shot – illegally invaded Ukraine.

This year’s annual energy outlook from the International Energy Agency (IEA) warns that we are currently living through a “global energy crisis of unprecedented depth and complexity,” and that “there is no going back to the way things were” before the unprecedented dual shocks of the novel coronavirus pandemic and Russia’s war in Ukraine. Together, these events have already reconfigured the energy trade worldwide, but the shockwaves to the global economy are just getting started.

Many look at Europe’s current energy deficit as a kind of heroism, as the European Union has taken a huge economic hit in order to impose energy sanctions on the Kremlin – the one kind of sanction that could really cripple the Russian economy in the hopes of ending the war in Ukraine. “In the struggle to help Ukraine and resist Russian aggression, Europe has displayed unity, grit and a principled willingness to bear enormous costs,” the Economist recently reported.

…click on the above link to read the rest…

Winter in Central Europe and for the dollar

Winter in Central Europe and for the dollar

In this article I examine the current state of the fight for hegemonic control between America on the one side, and Russia and China on the other. It is being fought on two fronts. Ukraine, the one in plain sight, is about to endure a winter without power and adequate food potentially leading to a humanitarian crisis.

The other front is financial with America facing a coordinated attack by Russia and China on its dollar hegemony. The Russians are planning a replacement trade settlement currency, which if it succeeds, could unleash a flood of foreign-owned dollars onto the foreign exchanges.

We have no way of knowing how advanced this plan is, but the indications point perhaps to a gold-based digital currency. Moscow establishing a new gold exchange, Asian central banks accumulating additional gold reserves, and Saudi Arabia seeking non-dollar payments for oil sales are all circumstantial evidence.

As well as these plans, there has been an underlying shift away from a long-term everything financial bubble, with the prospect of higher interest rate levels in time. The reasons for foreign ownership of fiat dollars are diminishing, and a successful new Asian trade currency will only add to the dollar’s woes.

Could this pressure compel America de-escalate Ukraine and sanctions against Russia? The argument to do so has become compelling. It is also a way to lower energy prices, giving central banks needed room for interest rate manoeuvre. 

Russia is making the most of winter

The evidence that Russia is intent on breaking the will of the Ukrainian people is mounting. As the snow begins to settle, Russia is knocking out the power generation necessary to keep people warm and alive. It is a modern variation on the medieval siege. But instead of surrounding a city or castle and starving the residents into submission, by making conditions impossible they expect the Ukrainians to leave.

…click on the above link to read the rest…

Russia Now Says US & NATO “Directly Participating” In Ukraine War

Russia Now Says US & NATO “Directly Participating” In Ukraine War

Earlier this week CNN reported that the Biden administration is considering “dramatically” increasing its training of Ukrainian forces. The proposal would involve US advisers training “much larger groups of Ukrainian soldiers in more sophisticated battlefield tactics” at American installations in Germany, and possibly other locations in Europe. This could involve as many as 2,500 Ukrainian soldiers trained by US advisers a month, which over a half-year period would total 15,000 going through the proposed ramped-up US program.

This report and others, which have also detailed expanding military training programs for Ukrainians in Europe overseen by UK and other NATO-member militaries, has prompted a Friday response from the Kremlin. Foreign Minister Sergey Lavrov alleged Thursday that the US and NATO are now directly participating in the Ukraine war.

Via AP

“You shouldn’t say that the US and NATO aren’t taking part in this war. You are directly participating in it,” Lavrov told a press briefing.

“And not just by providing weapons but also by training personnel. You are training their military on your territory, on the territories of Britain, Germany, Italy, and other countries,” he pointed out.

He reiterated prior Kremlin statements underscoring that war between nuclear powers is “unacceptable” but while highlighting that growing US-NATO involvement greatly heightens this risk.

“Even if someone plans to start it by conventional means, the risk of escalation into a nuclear war will be enormous,” Lavrov added.

Lavrov’s comments are hugely significant given up to this point Moscow slammed what it called “indirect” American involvement. Russian officials spoke of the growing proxy war nature of the conflict. But now it appears the Kremlin sees that there’s been an escalation to direct NATO involvement.

…click on the above link to read the rest…

October 2022: Earth’s 4th-warmest October on record

October 2022: Earth’s 4th-warmest October on record

Europe had its warmest October on record, as did Northern Hemisphere land areas.
Warm afternoon in London on 11/28/22
Sunshine bathes government buildings at Whitehall Street in London on the unusually mild afternoon of Friday, October 28, 2022. The high of 66 degrees Fahrenheit at Kew Gardens followed 70 degrees on October 27. Some of the warmest late-October weather ever recorded reached many locations in Europe, including 92 degrees Fahrenheit at Lomnè, France, on October 29. (Image credit: Bob Henson)

October 2022 was Earth’s fourth-warmest October since record-keeping began in 1880, NOAA’s National Centers for Environmental Information (NCEI) reported November 15. NASA rated October as the fifth-warmest on record, behind 2016, 1.23 degrees Celsius (2.21°F) above the 1880-1920 period – its best estimate for when preindustrial temperatures last occurred. The European Copernicus Climate Change Service and the Japan Meteorological Agency rated October 2022 as the third-warmest October on record. Such minor differences in the agencies’ rankings can result from the different ways they treat data-sparse regions such as the Arctic.

Land areas had their second-warmest October on record in 2022, land areas in the Northern Hemisphere had their warmest October on record, and global ocean temperatures were the fifth-warmest on record, according to NOAA. Europe had its warmest October on record; Africa, its third-warmest; and Asia and North America, their sixth-warmest. Oceania and South America each had a warmer-than-average October, but the month did not rank among their top 10 warmest on record.

The year-to-date global surface temperature is the sixth-highest on record, and 2022 is 99% likely to end up as the sixth-warmest year on record, according to NOAA.

Land and ocean temperature percentiles
Figure 1. Departure of temperature from average for October 2022, the fourth-warmest October for the globe since record-keeping began in 1880, according to NOAA. Parts of western and central Europe, western North America, and Africa experienced record-high October temperatures. No areas experienced record cold. (Image credit: NOAA/NCEI)

…click on the above link to read the rest…

Peter Zeihan: You’re Being Instructed Not to Notice This!!!

Peter Zeihan: You’re Being Instructed Not to Notice This!!!

https://youtu.be/6pLAaWUUM6c

How Europe’s Energy Crisis Could Turn Into A Food Crisis

How Europe’s Energy Crisis Could Turn Into A Food Crisis

Runaway energy inflation has taken a toll on European industry, but another threat is looming.

  • Europe’s two biggest fertilizer suppliers, Russia and Belarus have retaliated against European sanctions by cutting off fertilizer exports.
  • The fact remains that the global food chain, especially its European links, is not in a good place right now.

Runaway energy price inflation has wreaked havoc on European industrial activity, with the heaviest consumers taking the brunt. Aluminum and steel smelters are shutting down because of energy costs. Chemical producers are moving to the United States. BASF is planning a permanent downsizing.

There is, however, a bigger problem than all these would constitute for their respective industries. Fertilizer makers are also shutting down their plants. And fertilizer imports are down because the biggest suppliers of fertilizers for Europe were Russia and Belarus, both currently under sanctions.

Both countries have retaliated against the sanctions by cutting off exports of fertilizers to Europe, and European officials repeating that fertilizer exports are not sanctioned is not really helping.

Russia accounts for 45 percent of the global ammonia nitrate supply, according to figures from the Institute for Agriculture and Trade Policy cited by the FT. But it also accounts for 18 percent of the supply of potash—potassium-containing salts that are one of the main gradients of fertilizers—and 14 percent of phosphate exports.

Belarus is a major exporter of fertilizers, too, especially potash. But Belarus has been under EU sanctions since 2021 on human rights allegations, and unlike Russia, it has seen its fertilizer industry targeted by these sanctions. This has made for an unfortunate coincidence for Europe and its food security.

…click on the above link to read the rest…

The press are completely crazy and they are going to get us all killed

The press are completely crazy and they are going to get us all killed

Remarks on the rocket strike in Poland, and the heedless jingoistic war rhetoric of the German media

Yesterday, at around 3.40 in the afternoon, a rocket exploded in the Polish village of Przewodów. Two people died. Ukrainian president Volodymyr Zelensky immediately blamed Russia, later going so far as to characterise the alleged attack as a message from Putin to the G20 summit. Then the Associated Press reported that they had heard from “a senior U.S. intelligence official” claiming that “Russian missiles” were responsible for the attack, and thereafter the worst German journalistic actors embarked upon an evening of dark speculation about the proper NATO response to a Russian attack on Poland. Higher brow outlets, like ZDF, merely ran inflammatory headlines about Russian rockets, with the crucial information – that the rockets were Russian-made, while their immediate origins were unclear – buried in the body of the piece. Bild, on the other hand, went all-in, with this incredible rant from chief editor Johannes Boie:

The Russian army has bombed Poland, the AP news agency reports, citing a US intelligence official.

Two people are dead, murdered!

Accidental or not – this is an armed attack on NATO territory!

The two most likely possibilities are, first, that Putin’s soldiers hit Poland by mistake. They are often poorly trained and drunk. In this case, the tyrant must apologise formally, beg for forgiveness on bended knee, so to speak, while armed NATO fighter jets fly around his country.

He is not used to that. When his troops shot down a passenger plane in 2014, killing 298 people, there were no consequences.

…click on the above link to read the rest…

Germany Preparing For Emergency Cash Deliveries, Bank Runs And “Aggressive Discontent” Ahead Of Winter Power Cuts

Germany Preparing For Emergency Cash Deliveries, Bank Runs And “Aggressive Discontent” Ahead Of Winter Power Cuts

While Europe has been keeping a generally optimistic facade ahead of the coming cold winter, signaling that it has more than enough gas in storage to make up for loss of Russian supply even in a “coldest-case” scenario, behind the scenes Europe’s largest economy is quietly preparing for a worst case scenario which include angry mobs and bankruns should blackouts prevent the population from accessing cash.

As Reuters reports citing four sources, German authorities have stepped up preparations for emergency cash deliveries in case of a blackout (or rather blackouts) to keep the economy running, as the nation braces for possible power cuts arising from the war in Ukraine. The plans include the Bundesbank hoarding extra billions to cope with a surge in demand, as well as “possible limits on withdrawals”, one of the people said. And if you think crypto investors are angry when they can’t access their digital tokens in a bankrupt exchange, just wait until you see a German whose cash has just been locked out.

Officials and banks are looking not only at origination (i.e., money-printing) but also at distribution, discussing for example priority fuel access for cash transporters, according to other sources commenting on preparations that accelerated in recent weeks after Russia throttled gas supplies.

The planning discussions involve the central bank, its financial market regulator BaFin, and multiple financial industry associations, said the Reuters sources most of whom spoke on condition of anonymity about plans that are private and in flux.

Although German authorities have publicly played down the likelihood of a blackout and bank runs – for obvious reasons  – the discussions show both how seriously they take the threat and how they struggle to prepare for potential crippling power outages caused by soaring energy costs or even sabotage…

…click on the above link to read the rest…

Europe May See Forced De-Industrialization As Result Of Energy Crisis

Europe May See Forced De-Industrialization As Result Of Energy Crisis

  • European industries including ferroalloys, fertilizer plants and specialty chemicals are shutting down as a result of the ongoing energy crisis.
  • Certain industries may not come back, even if the energy crisis eases.
  • An increasingly tight regulatory environment is another reason for de-industrialization in Europe.

The European Union has been quietly celebrating a consistent decline in gas and electricity consumption this year amid record-breaking prices, a cutoff of much of the Russian gas supply, and a liquidity crisis in the energy market.

Yet the cause for celebration is dubious: businesses are not just curbing their energy use and continuing on a business-as-usual basis. They are shutting down factories, downsizing, or relocating. Europe may well be on the way to deindustrialization.

That the European Union is heading for a recession is now quite clear to anyone watching the indicators. The latest there—eurozone manufacturing activity—fell to the lowest since May 2020.

The October reading for S&P Global’s PMI also signaled a looming recession, falling on the month and being the fourth monthly reading below 50—an indication of an economic contraction.

In perhaps worse news, however, German conglomerate BASF said last month it would permanently downside in its home country and expand in China. The announcement served as a blow to a government trying to juggle energy shortages with climate goals without extending the lives of nuclear power plants.

“The European chemical market has been growing only weakly for about a decade [and] the significant increase in natural gas and power prices over the course of this year is putting pressure on chemical value chains,” said BASF’s chief executive, Martin Brudermueller, as quoted by the FT, in late October.

…click on the above link to read the rest…

Energy Bills In Europe Are 90% Higher Than Last Year

Energy Bills In Europe Are 90% Higher Than Last Year

Electricity and gas prices are soaring across Europe, with bills close to double from last year in most European capitals, according to new data from the Household Energy Price Index—a monthly tracker of energy prices for households across 33 European capitals, including the 27 EU member states and several non-members.

According to the data collected for the HEPI, natural gas bills in Europe have gone up by as much as 111 percent over the past year, with electricity prices up by an average of 69 percent. Taken together, Euronews calculates these two make for a total 90-percent increase in household energy bills over the past year.

“Significantly higher [energy prices] compared to one year ago … can be attributed to a combination of factors, such as increased demand connected to post-pandemic economic recovery and extraordinary weather conditions, the record-high prices for natural gas, and high CO2 emissions allowances,” the authors of the latest HEPI report noted.

The high energy bills are creating headaches for European governments: strikes and protests are multiplying and disgruntlement with energy policies is growing. The cost of living in most of Europe is already exorbitant because of the energy crisis and this crisis is only going to get worse after the EU embargoes on Russian oil and then fuels come into effect.

In some parts of Europe, according to the latest HEPI report, energy prices have reached record highs but in others, prices have actually fallen, at least in October. The news is not as good as it looks at first glance: the decline was a result of government intervention, i.e. energy subsidies.

There have been a lot of subsidies as European governments try to alleviate the financial pain on households and businesses to avoid further disgruntlement. Germany alone will be spending some $200 billion on such coping measures, including a cap on energy prices up to a certain level of consumption.

There Is No Way Out for Europe

The late historian Toynbee argued, that when civilizations meet a challenge they cannot overcome or resolve, they rather commit suicide than to let themselves murdered by outside forces. I sincerely doubt however that anyone from the political class in the West read Toynbee, let alone be influenced by his thoughts… Yet, here we are at this historical juncture clearly marking the end of centuries long Western dominance, colonization and exploitation — and together with a looming fall in global oil production: the slow decline of industrial civilization. What do we do next? Are we strong enough to step back and stop this madness?

Systems, which took centuries to build up and evolve to their current form are not willing to give up on their dominance easily. What we are witnessing today is but a beginning to a long political, economical and technological struggle lasting (probably many) decades into the future. The economic superorganism encircling the planet is doing everything to keep itself alive for a little longer while being starved of energy. It would first crack in two large chunks, then after the crumbling an fall of its more depleted half, the other would follow suit.

With the above process in mind, let’s first make a quick sweep through the economic news in Europe, where the idea of Western dominance born and where it seems to meet its fate. So, how things look like on the onset of Europe’s long descent? On the face of it, the continent it seems has now filled up its gas storage units to the brim and LNG tankers are now queuing up in front of European ports waiting to be unloaded…

…click on the above link to read the rest…

War; Economic War; War; Military; War; Economic War – Do You Spot A Pattern?

War; Economic War; War; Military; War; Economic War – Do You Spot A Pattern?

The times are not just a-changin’ – they have changed. Let’s take six of the top seven headlines in the Financial Times this morning in Asia as Exhibit A:

  • ‘Biden claims oil companies are ‘war profiteering’ as he floats windfall tax’
  • ‘The Long View. Is Europe winning the gas war with Russia?’
  • ‘Military Briefing: Russia and Ukraine prepare for the rigours of winter war’
  • ‘The Big Read. Egypt and the IMF: will Sisi take the economy out of the military’s hands?’
  • ‘The nuclear threats that hang over the world’
  • ‘Live news updates: Putin says grain deal ‘suspended’ not terminated’’

Do you spot a pattern? War; economic war; war; military; war; economic war. Are you incorporating them into your forecasts? I can assure you that the vast majority of analysts still aren’t because this is apparently ‘exogenous’. If so, what is endogenous is irrelevant. Anyway, on we go into those murky waters, via a mini-edition of the Global D’Oily.

The White House has come out all guns blazing against Big Oil, calling them war profiteers (which the US is no stranger to: **cough** The 2003 Iraq War **cough**), and threatening windfall taxes. President Biden gave a public address and specifically tweeted that: “The oil industry has a choice. Either invest in America by lowering prices for consumers at the pump and increasing production and refining capacity. Or pay a higher tax on your excessive profits and face other restrictions.” Recall when in 2016 I talked of geopolitical ‘Thin Ice’ we could fall through, after which markets would no longer operate the way they used to? Well, it wasn’t just about tariffs: the US is now laying down the law to not only the Russian energy industry, but its own.

…click on the above link to read the rest…

 

Olduvai IV: Courage
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Olduvai II: Exodus
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