(Crazy) economy news

[Skybird]

Somehow the sanctioning of the Ruble does not seem to work as intended...

25 of the world's 33 most important currencies have increased in value against the euro since last May. Surprisingly, the Russian ruble is at the top of the list. Only eight currencies are trading worse today than a year ago. One lost more than a third of its value.

Going on vacation this year could be a bit more expensive than usual - at least if you want to spend a few nice weeks outside the EU. The euro has lost value against the majority of currencies used around the world. Since the beginning of May 2021, the world's 33 major currencies have gained an average of five percent in value against the euro. Conversely, this means that these currencies have become 3.4 percent more expensive on average for Germans.

Although the weak euro makes vacations more expensive, it makes export-oriented companies happy. They are now earning more from their exports than a year ago. The calculation is simple: If a German company sells a product in the U.S. for $100, for example, it could exchange that for about 83 euros a year ago. Today, it receives 94 euros for it, i.e. around 13 percent more. Conversely, imports to Germany are becoming more expensive. What a German company could buy in the USA a year ago for the equivalent of 83 euros now costs 94 euros.

There are several reasons for the current weakness of the euro. One is on the other side of the Atlantic. Because the U.S. Federal Reserve has already raised interest rates significantly, but the European Central Bank (ECB) has not yet done so, investors in the U.S. are currently enjoying much better conditions than here in Germany. Accordingly, professionals now prefer to invest in the U.S. than in the euro zone. So they are selling euros and euro-denominated assets and buying the same in U.S. dollars. Accordingly, the demand for euros is falling and that for dollars is rising, which explains the price development of both currencies.

But the euro also fell against many other currencies. Here, the kinks in the exchange rate curves were particularly visible in recent months. They are connected with the war in Ukraine. Because of its geographical proximity alone, it affects Europe more than other continents. But it also has a greater impact on us because we trade more goods with Russia and Ukraine, especially oil, gas and coal from Russia.


The war means that energy prices in particular have risen more in our country than in many others. This leads to a weakening of the economy. But with a weaker economy, less money can be earned, which is why this is another reason for investors to exchange their investments held in euros, such as stocks or bonds, for those from abroad.

Surprisingly, the Russian ruble is at the top of the currency rankings. Its value has risen by almost 28 percent against the euro in the past twelve months. After a deep fall at the beginning of the Ukraine war, the exchange rate has even more than doubled since then. This has less to do with the currency's sudden popularity than with a trick played by the Russian government. Since the outbreak of the war, the government has forced Russian exporters to exchange 80 percent of their foreign currency earnings into rubles. Accordingly, these companies have to buy up many rubles on the market, and the high demand causes the exchange rate to rise.

In second place is the Brazilian real. It has gained around 23 percent in value in a year. Brazil is currently benefiting from two developments. Because commodity prices have risen sharply, the country's export revenues are flourishing. Iron ore, crude oil and copper are among the country's most important commodities. In addition, the Brazilian central bank has gradually raised interest rates from 2 to 10.75 percent since March 2021. On the one hand, this is necessary to combat the high inflation of 8 percent last year, but it also offers foreign investors attractive returns. However, the real is still at a low level. In the past five years, it has lost almost 35 percent of its value.

The Turkish lira has lost somewhat more in just one year. It is currently down 36.2 percent, making it the weakest currency against the euro in this period. The reason for this continues to be the misguided interest rate policy, which is significantly influenced by President Recip Tayyip Erdogan. Erdogan refuses to raise interest rates, despite galloping inflation of 61 percent. Accordingly, investors are fleeing the currency, which is devaluing faster than they can collect yields.


Turkey thus leads by far a field of eight currencies that have deteriorated against the euro. The other seven are mainly from other European countries, such as the Swedish krona, the Danish krone, the Polish zloty and the Hungarian forint. The Japanese yen also deteriorated due to the weak economic development there and persistently low interest rates. From South America, the Argentine and Chilean pesos were among the losers.


Translated with www.DeepL.com/Translator (free version)

[Skybird]

Beware that inflation could quickly turn into deflation.


The banks' credit expansion has not increased economic resources, since the capital goods needed for investment have not been co-created. In the race for scarce capital goods and labor, entrepreneurs bid up prices and wages. This creates the illusion of greater wealth. The recipients of higher wages spend more money; the monetary illusion makes them feel richer even when in reality they have received only a wage increase that compensates for the loss of monetary value.

As long as the prices of goods have not adjusted to the increased money supply, more is consumed, because the entrepreneurs who sell at the old prices sell too cheaply, i.e. without taking their future higher costs into account in the calculation.

While the boom is still underway, the errors are becoming apparent. The capital goods that would be necessary for all entrepreneurs to successfully complete the investments they have embarked upon are not available. The abundance of credit and the artificially low interest rate had feigned a greater amount of capital than actually exists. The guardian function that the interest rate was supposed to perform - by ensuring that only those investments are started whose completion is possible with the available resources and desired by consumers - must now be taken over by market prices: Escalating costs lead to the abandonment of many projects. No one can get around the natural law that one must save in order to invest. If there is no voluntary saving, then the artificial boom brought about by expansionary monetary policy leads to forced saving: general price increases that reduce consumption. There is now more money in circulation, but it has less purchasing power per unit.


Suddenly comes the abrupt reversal. Credit expansion falters. This can happen through a reversal of monetary policy by central banks (interest rates rising instead of falling). But it also happened in the era before central banks existed, such as when lenders become nervous at a certain point by the sheer volume of credit (and the concomitant stretching of bank balance sheets) and/or by the arrival of news that contrasts with the exuberant optimism (and is evidence of the entrepreneurial errors committed during the credit expansion phase).

Since there are no liquidity buffers in the whole system, this triggers a chain reaction, prices fall. This is a perfectly good thing, but it is perceived as a crisis, which in our time the central banks are countering with the only tool at their disposal: Reinflate by cutting interest rates or, if that doesn't do the trick, by taking unorthodox measures like buying government bonds.

We are seeing the first signs of deflation. Many of the indicators that showed inflation in 2020/2021 have turned against a backdrop of rising interest rates. The Nasdaq index is down more than 20 percent year-to-date. Oil and commodity prices are well off their March highs. Gold's March surge to an all-time high of $2070 per troy ounce quickly turned out to be a false signal: It is now more than $200 lower. Due to rising market interest rates, demand for real estate loans in the U.S. has plunged by half compared to the same period last year. A worse-than-expected quarterly report from Alcoa, one of the world's largest aluminum producers, led to a slump in numerous commodity stocks at the end of April as investors wondered whether the zenith of the commodity boom might have passed.

The price of copper (in U.S. dollars), which is often used as an indicator of future economic activity ("Dr. Copper"), is already 20 percent below its all-time high in March. Not to mention all the listed companies whose quarterly results disappointed.

However, the picture is not uniform: Another important economic indicator, the Baltic Dry Index (which shows how much it costs to transport bulk goods across the oceans) has reached an annual high these days.

The financial crisis year of 2008 showed how quickly the turnaround from credit expansion to deflation occurs. It was characterized by galloping inflation, especially in the commodities, energy and construction sectors. The oil price reached its all-time high in July 2008, when the price of North Sea Brent crude climbed to $147. By December 2008, it had fallen to just 33 U.S. dollars. The galloping inflation was the end point of a credit expansion, or bubble, orchestrated by the central banks.

Six months before the bankruptcy of the investment bank Lehman Brothers, you could already see a sign of deflation if you knew what to look for: The U.S. dollar, which had been steadily losing ground against the euro since the summer of 2002, hit its all-time low in March 2008, on that weekend when the major U.S. investment bank Bear Sterns admitted its liquidity problems. From then on, the dollar went up sharply - not because the prospects for the American economy had improved (they hadn't), but because investors who had borrowed cheaply in U.S. dollars to put the money into all kinds of speculations around the world got cold feet. They smoothed out their trades and repaid the dollar loans, leading to strong demand for the American currency. The rising dollar was the sign that financial markets were in risk-off mode: Capital preservation was more important than capital gain. We are in such a phase today as well.

What will happen next? One factor of uncertainty is the People's Republic of China. The lockdowns there are currently one of the biggest drags on the global economy. If they are lifted and there is a major infrastructure program in China in the run-up to the 20th National Congress of the Chinese CP, which will take place in October, this could lead to a new phase of credit expansion in the summer - especially if the key interest rate increases by the U.S. Federal Reserve are smaller than market participants expect. And that's the second uncertainty: For decades, U.S. central bank heads Greenspan, Bernanke & Co. were the patrons of the stock markets. Every time there was a crash, they responded with interest rate cuts. This time, however, Federal Reserve Chairman Powell wants to raise interest rates without regard to plummeting stock prices. Is he bluffing or not? If you knew, you could get rich quick. If Powell is not bluffing and continues on his course, then the signs point to deflation.

Just as not all prices will rise at the same time, they will not fall at the same time. Some will fall immediately, others later or not at all. Pizza maker Enzo certainly won't roll back his price increases. But an oil price of more than $100 a barrel may be just a memory by the end of the year. Maybe it will only be at forty by then. Yes: deflation is a good thing. At least for those who don't have stocks.


by Stefan Frank for AdG

Translated with www.DeepL.com/Translator (free version)

[Skybird]

The current explosion of inflationrates is not only coming from any "monetary policy", but also from a wanted productivity destruction that is immensely increasing the real costs of the entire economy. Ideology further demands to constantly increase costs for vital factors that define the existential fundament of millions and millions of citizens in our country. These wanted destructions are not even given up when being confronted by additional external crisis. Things get bend until they must break. So nobody complain please when at the end an ear-shattering knacking sound knocks your consciousness out - the bang and the subsequent numbness are only logical.


Gerd Held writes for AdG:


Among the most elementary things that determine the stability of a country and the cohesion of its society are prices. Their steadiness is the foundation on which people's trust, diligence and staying power are built. If a radical change occurs here, with the general price level suddenly rising sharply, this leads to a profound shaking of a country's economic, governmental and cultural architecture. Other crises, which just a moment ago seemed to be the greatest threat, then suddenly seem strangely distant. A wave of inflation touches people much more closely, it intervenes much more directly in their everyday lives. And it has a much broader impact. It devalues not only money, but also labor, the value added by companies, and the performance of state infrastructures. And this is especially true if the new price level is expected to remain in perpetuity.

All this applies to the wave of inflation that has gradually built up over the past few years and is now sweeping across many countries - including highly developed countries - with great force. It has not yet reached its peak. Many price increases have already occurred in raw materials and intermediate products, but have not yet been reflected in the prices of the final products. And already at this stage, there is no element visible that could eventually bring prices back to their old levels. The current wave of inflation is a profound and permanent change. It is as if the whole country is being moved to "worse ground" all at once.

There are numerous weasel words in our time that mean everything and nothing through thoughtless use. One such weasel word is "inflation," which is used to describe the current wave of inflation. This is intended to cover any increase in the price of goods - without providing any information about what this increase in price is based on.

Thus, an important distinction disappears: On the one hand, there is the price increase which is due to excessive money multiplication. In other words, it is due to a change in the relationship between money and goods. Undoubtedly, this is an element in the current wave of inflation, caused by the cheap money policy of the central banks. But on the other hand, a wave of inflation can also be rooted in changes in the real economy - that is, in goods and the conditions of their production. When conditions deteriorate, costs rise, and this is reflected in prices. When they improve, prices fall. In either direction, the changes can be very large, and they can cut across an entire economy. A price revolution based on better production conditions makes economic life easier. But a price revolution based on worsening production conditions makes it more difficult and can go so far as to bankrupt businesses, entire industries and infrastructures. Certain goods then not only become extremely expensive, but are no longer available at all. A price revolution is then the harbinger of a loss of substance in the real economy. Such a devastating price revolution is taking place in our present time.

The most conspicuous part of the current wave of inflation is energy prices. It is already foreseeable that households, businesses and government institutions will see their energy costs double or even triple this year. Energy costs affect all sectors and industries - and all stages of the value creation process. Energy is needed as drive energy in means of transport and mechanical machines, as process energy in chemical material conversion and preservation (food), as household energy for heating and cooking, as lighting energy in private and public spaces. And digitization has opened up a whole new field of medial energy use and increased the consumption of energy yet again. Thus, an increase in the cost of energy is affecting the national economy and government activity across the board.


Quite obviously, the sharp rise in energy prices is not (or only to a small extent) based on demonetization through "cheap money" and an inflation of the money supply in circulation. No, it is based on fundamental changes in the conditions of energy production. The conditions are made more difficult. But what is the aggravation? Has a sudden doom befallen the earth and humanity, causing energy resources to become less available or production facilities to fail? Or does the deterioration result from certain decisions? Is it consciously and willingly accepted or even actively pursued? The latter is apparently the case when one thinks of the "climate rescue," which is justified with the thesis of a "climate crisis" that is supposed to be so dangerous that it justifies the elimination of essential energy sources and a drastic increase in the price of energy. And now, in the Ukraine crisis, "Putin's Russia" is said to be such a world-threatening enemy that one of the largest energy countries on earth is to be eliminated. In view of such justifications, it becomes clear that we are dealing with a deep intervention in the production conditions of energy that have been developed over decades and centuries. With an intervention that significantly lowers the productivity of energy production and distribution. And there is no element visible that could allow a return to the old price level in this set framework.

It is clear that such a deterioration of real conditions cannot be countered by changes in the quantity or value of money. A policy of cheap money can at most mask and conceal the deterioration for a time. But it does not reach the fundamental problem. To reach it, one has to go down into the "engine room" of a country, into its sphere of production, where there are hard physical-technical realities. One must clarify what the new hardness of conditions is that drives costs.

A good has a price only if it is scarce. Goods that are infinitely available have no price. Scarcity forms the - often unspoken - background of the movements of supply and demand. Scarcity initially appears as a conflict between natural givens and human needs. But there is a factor that mitigates this first, raw scarcity and relaxes its constraints: that factor is civilization. A civilization can greatly expand (with labor, knowledge, capital, infrastructures...) the original narrowness of the world. These margins are the material basis of our freedom. But this mitigating factor is also limited. There is a scarcity of labor and labor resources, a civilizational scarcity. However, this scarcity is considerably milder than the scarcity in a world without material-technical civilization. This sounds very sober, but in the end it is about great, precious achievements. It is about fundamental goods on which people's existence depends - including their motivation for work and commitment. It is a question of the prosperity and decline of cities and landscapes, of entire countries and societies. The significance of a level of civilization that has been reached becomes suddenly visible in devastating price revolutions: All of a sudden, what was tacitly believed to be secure is shaken.

Now the price we have to pay for a scenario in which we are exposed to maximum threats and there can only be a maximum rescue policy with drastic interventions becomes visible. We have been put in this scenario with the proclamation of ever new "major crises." With it, there are no more trade-offs in politics, but only absolute priorities and imperatives. In the case of the "climate crisis," a substantial portion of energy production is to be first made more expensive and then shut down in order to prevent the "planet from overheating." This is considered an absolute imperative, more important than any energy productivity. In the case of the "Ukraine crisis," the elimination of fossil fuels is to be accelerated even further - even though no viable alternative is available. All the same, compared to the absolutely set external danger, the achievements of modern energy production are secondary. They must be sacrificed. This principle was already followed in the German decision to phase out nuclear energy - after the Fukushima accident. There was no concrete danger connection between Fukushima and the operation of German nuclear power plants.

The current wave of energy prices is the logical consequence of a policy that works with extreme threat scenarios. Three "greatest possible dangers" are now present: a nuclear power plant catastrophe, an imminent overheating of the planet, a threat of world war by a "mad" dictator. But the extremism of the conjured dangers has little to do with the facts and much to do with feelings and assumptions. The maximum dangers thus generated are not amenable to objective consideration.

Thus, every policy of absolute imperatives also has its turning point: The more its devastating consequences for the national economy and civilization become apparent, the inclination to weigh things up after all grows: Are the sacrifices and losses really in reasonable proportion to the dangers? Thus, once again, the realization will grow that the wave of inflation is the result of a completely one-sided perception and prioritization. A case of political extremism.

In such a situation, counterforces quite inevitably develop. With each new price surge and with each new industry that is hit by it, more critical questions arise. Where will the ever-increasing threat scenarios lead? How did we get on this path in the first place? And how did we get to the point where we are ruining our industries that once worked so well and gave Europe such an important foothold?

So we could be in for an exciting contest. Of course, there will be no less attempts to get people to accept growing costs and sacrifices with scare stories and rosy rescue tales. You can tell by the way political statements and news stories are now trying hard to keep the public in suspense with a daily show of threats and rescues, of bad and good. In contrast, the camp of deliberative reason does not have to participate in such an escalating race. It does not have to forcibly push anything forward or overplay anything. It can trust that the point will come when the politics of absolute imperatives becomes increasingly hollow and at the same time has such serious consequences that more and more people will switch to the camp of the deliberative.

The Frankfurter Allgemeine Zeitung of April 13 reports on the results of the monthly representative sentiment survey conducted by the Allensbach Institute for Public Opinion Research for the FAZ. The March survey focuses in particular on energy policy issues against the background of the wave of inflation. This issue has now become the most important topic of concern for Germans. The survey shows how much skepticism has grown as to whether fossil fuels can be replaced in the foreseeable future by alternative energy sources such as solar and wind. 86 percent of respondents say there will be difficulties with energy supply in the next few years. In 2019, that figure had been just 26 percent. Now, only 26 percent believe that the supply could be completely switched to alternative energies by 2050. There has been a real change of mood in the assessment of the role of nuclear energy: as recently as February 2022, 42 percent of respondents were in favor of shutting down nuclear power plants as planned. 35 percent were in favor of continued operation. In March 2022, the votes in favor of continued operation had risen to 57 percent of those surveyed, while only 25 percent wanted to stay with shutdown. And the Ukraine crisis? 57 percent of respondents favored continuing to buy oil and gas from Russia, while only 30 percent were in favor of an immediate embargo.

Translated with www.DeepL.com/Translator (free version)

[Jimbuna]

On a personal note.....

Received an email from my energy supplier (EDF) a few days ago informing me that my current duel fuel deal ends on June 30th therefore my monthly direct debit will increase from the current £70 to £163

[Skybird]

A random find in a video lecture I watched today.




"In 1990-91, when comunism fell, the West had 80% of the world economy, purchasing power parity, and the rest of the world 20. Today, the West has basic purchasing power parity of 36%, and the rest of the world 64. That is, we have seen a massive shift. 88% of the world's population lives in non-Western countries. These countries control 70% of the world's foreign exchange reserves. What claim can the West then still make to moralize and determine the world against the backdrop of the changes in these coefficients that have taken place in the structures of this world? "

Volker Hellmeyer, former chief analyst of the Bremer Landesbank

Translated with www.DeepL.com/Translator (free version)

[Skybird]

The International Energy Agency warns of fuel shortages during summer holiday seasons far more drastical than those seen during the oil crisis in the 70s.

[Skybird]

Does it finally slowly sink into their minds? It better would. I am predicting these things since years. My only question to them thus would is - what took you so long...?

https://edition.cnn.com/2022/06/02/b...ion/index.html

The global economy has largely been able to withstand surging energy prices so far. But prices could continue to rise to unsustainable levels as Europe attempts to wean itself off Russian oil and, potentially, gas. Supply shortages could lead to some difficult choices in Europe, including rationing.

Joe McMonigle, secretary general of the International Energy Forum, said he agrees with this depressing forecast from the IEA.

"We have a serious problem around the world that I think policymakers are just waking up to. It's kind of a perfect storm," McMonigle, whose group serves as a go-between for energy producing and consuming nations, told CNN in a phone interview.

The extent of that perfect storm -- underinvestment, strong demand and supply disruptions from the war -- will have wide-reaching consequences, potentially threatening the economic recovery from Covid-19, exacerbating inflation, fueling social unrest and undermining efforts to save the planet from global warming.

Birol warned of supply bottlenecks of gasoline and diesel, especially in Europe, as well as rationing of natural gas next winter in Europe.
"It is a crisis for which the world is woefully unprepared," said Robert McNally, who served as a top energy adviser to former US President George W. Bush.

[Skybird]

I often implied, expressed, said that the Green's wanted economic policy is an intentional turn towards economical desaster. Its not just a consequence they are just not aware of - they WANT it. That is one of the reasons why they are so extremely dangerous. The following essay describes it specificially for the German Greens, but I am certain you have parrallel thinking amongst the green party in other nations, too.

Deindustrialization and the Shrinking Economy. Consequences of green economic policy

Antony P. Mueller

From 22 thousand members in 1982, the membership of the party grouping Bündnis 90/Grüne has now risen to over 125 thousand. Even though this number is only 0.15% of Germany's population, this party is in the process of shaping German economic policy and directing the country toward a presumably more ecological economy through coercive regulation. The question arises as to what specific economic policy ideas are being pursued here. Who exerts formative influence on the ideas of this grouping when it comes to the "ecological transformation" of the economy?

In the current federal government, the Alliance 90/Green party provides the vice chancellor and holds the ministerial posts of Foreign Affairs, Economy and Climate Protection, Food and Agriculture, Family, Senior Citizens, Women and Youth, and Environment. In Germany's population of 83.24 million, 6.47 million voted Green in the last federal election. That is 7.8%. Although this party grouping is thus not voted for by over 92% of the population, it lays claim to a determining influence on Germany's fortunes.

At the same time, little is known about what concrete ideas prevail about what the ecological turnaround should look like in concrete terms.

What form of economy is envisaged to cope with the supposed global warming? The first thing to note is that, for the Greens, it is a foregone conclusion that the global economy is on the verge of collapse because of climate change. Starting from this premise, the question is how to respond to this challenge. Which authors can be named who provide an answer to this question from a green perspective?

If you look around to see who is decisively shaping the economic policy ideas of ecological circles, you very quickly come across Ulrike Herrmann. Like hardly anyone else, Ms. Herrmann - since 2000 editor at the daily newspaper taz and its economics correspondent - shapes the economic worldview of the Green clientele. As an active lecture traveler and present in many debates, the activist knows how to communicate the vision of the ecological turnaround to her many supporters. Her influence on the ecological movement can hardly be underestimated. She is an avid writer, was awarded the Keynes Society Prize for Economic Journalism in 2015 for her contributions to the taz newspaper, and received the Otto Brenner Prize in 2019 "for her critical and trenchant economic journalism with a good sense of the welfare state."

Ms. Hermann is taken very seriously by her following. She is, as it were, the "chief economist" of the Green movement, although she holds no official party office. With her nice way of speaking, she knows how to convince her followers in a catchy way and in simple language that the end of capitalism has come. Ms. Herrmann avoids in-depth analyses and complex argumentation. But this is precisely how she has monopolized the Greens' economic worldview in her favor. Ulrike Herrmann is a master of the echo chamber.

Ulrike Herrmann's basic thesis is that capitalist economic growth is not possible in a finite world because production reaches absolute limits. There is the environmental limit and the raw material limit. The environment is overloaded and soon the raw materials will be used up to the last. But before that, there is already a climate catastrophe that will make life on the planet impossible. It must be acted fast.

Before the middle of the century, Germany should become climate neutral. The way to achieve this is the introduction of an "ecological war economy". Private property can be formally retained, but the state will give strict guidelines for consumption and production. The market will be suspended, prices will be controlled, and a system of quantity rationing must be installed.

For Ms. Hermann, capitalism is an economic system that both produces growth but also cannot exist without growth. However, since, according to Ulrike Herrmann, there are "absolute" limits to growth, capitalism is also finite and must necessarily give way to another system, which she calls a "circular economy."

It is not just a matter of rising temperatures, but a whole series of other disasters are linked to the climate catastrophe: the greatest species extinction of all time, the massive loss of fertile soils, an increasing shortage of fresh water. The world has little time left to stop global warming of several degrees. Failure to do so will result in the collapse of the Amazon forest and the thawing of areas of Siberian permafrost. If temperatures continue to rise, the melting of the Greenland ice sheet is just as inevitable as that of parts of Antarctica, resulting in a rise in sea level of twelve to fifteen meters.

A trained journalist and historian by training, she knows how to convince her congregation of the need for the German economy to shrink. In order to move from today's growth economy to a circular economy, an intermediate stage is necessary, which must now be installed: a "war economy shrinking economy." In concrete terms, this means, among other things: Stopping air travel, abolishing individual transportation and cutting back on food, especially meat consumption. The model for their ideas is the English wartime economy. Just as England did at the beginning of World War II when it was a question of converting the economy as quickly as possible from a peacetime to a wartime economy, so now the current consumption- and growth-oriented capitalist economy is to be converted to an "ecological circular economy". Investment and consumption must be aligned with government requirements. Prices will be controlled, the market suspended. The aim is to direct all economic activity towards the goal of reducing "CO2 emissions".

Mrs. Ulrike Herrmann obviously wants the systematic deindustrialization of Germany. But that's not all: services associated with capitalist growth, such as banking and insurance, the advertising industry and trade fair logistics, would also have to disappear. This dismantling does not go along with mass unemployment according to their conceptions, however, since the ecological agriculture could offer sufficient jobs. However, she admits that this is not compatible with today's income levels. Wages and salaries will fall drastically, and that is a good thing, because there will be less consumption.

According to the ecosocialists, capitalism is not viable. Its basic constellation is the interaction of technology, industrialization and greenhouse gases. For the eco-Marxists, the basic problem of capitalism is not class struggle, but the "exploitation" of nature.

In summary, Ulrike Herrmann's thesis, and thus probably also widely accepted by the Greens as a party and its supporters, is that capitalism means growth, but because constant growth is not possible in a finite world, the capitalist growth economy must be replaced by an ecological circular economy. The way to get there is through a forced shrinking economy, which requires the use of war economy methods. The goal is to drastically reduce production and consumption in order to bring consumption in line with the ecological standards of one's worldview.

For ecosocialists, the coming man-made climate catastrophe, caused quasi by "capitalism," is a certainty. Epistemologically, this thesis cannot be proven a priori, either in advance or in retrospect, i.e. not even if warming were to occur.[1] Rather, it is a kind of dogma that is no longer considered questionable in the German leading media, and even critics of the dogma who remain objective are meanwhile ostracized from public discourse as "climate deniers" - regardless of their arguments. For this reason, it makes little sense to address this thesis. The present critique aims rather at proving that even if such a climate catastrophe would occur, the argumentation of Mrs. Herrmann and the green anti-capitalists following her is based on wrong theses and thus leads to wrong conclusions.

Mrs. Ulrike Herrmann has obviously studied Marx and perhaps also Adam Smith and a little Keynes, but beyond that she has hardly dealt with other economic theories and has certainly not thought about the Austrian School or even neoclassicism. Following the limited horizon of her intellectual foster fathers, Herrmann concludes that the life span of capitalism is limited. Here she follows Marx's thesis of the tendential fall of the rate of profit. According to this, competition drives capitalists to overaccumulate capital. This leads to ever diminishing returns. The rate of profit falls all the more as the concentration of capital increases. Capitalism is creating its own grave.

The law of diminishing marginal returns is part of the standard repertoire of economic theory and has long been well known from agriculture. Ecologists are now transferring this principle to the entire economy and using it to justify the limits to growth. In doing so, however, they fail to recognize a number of points: First, it is these diminishing marginal returns that prevent over-expansion. As soon as loss threatens, the entrepreneur will stop expanding. This is why there are so many small and medium-sized enterprises in the market economy, in addition to the few large enterprises. Second, a diminishing marginal return on the productive assets employed drives enterprises to seek new uses of capital that yield higher returns. This is what is known as technical progress. This is not just technology in the conventional sense of the word, but all operational measures that increase total factor productivity. Innovation is the hallmark of modern capitalism, not more and more production of the same goods with the same means of production.

Eco-socialists talk about scarcity of raw materials, ignoring the fact that scarcity is universal and is the essence of economic activity. If there were no scarcity, there would be no need for economies. In a market economy, prices are indicators of scarcity and also serve as an incentive to deal with scarcity economically. Therefore, because the theses of the ecosocialists are based on the threat of an increased scarcity of raw materials, a rational assessment would have to support market-based pricing all the more.

Another error of the ecological anti-capitalists follows the previous one: The belief that people are only ever concerned with more production and more consumption. Rather, it is the case that productivity growth also serves to demand more leisure time instead of more goods. What characterizes modern capitalism is ongoing productivity progress and not, as the ecosocialists try to make you believe, ever more production. Technological progress reduces the consumption of resources, and higher productivity allows for more muse.

The fact that Ulrike Herrmann certainly knows how to write and is an excellent speaker should not obscure the fact that her main thesis about the limits to growth, is deceptively false. Instead of repeating the same errors over and over again and parading through the country with the same theses, the "chief economist of the Greens" would do well to look into economic theory beyond Smith, Marx and Keynes. Then she would have to realize that not less capitalism, but more capitalism is the solution - and that regardless of whether a climate catastrophe is really imminent or not. The best way to guard against an environmental crisis is through high economic performance. High productivity is the basis for mastering this and the other challenges. But this is precisely the specific achievement of "capitalism", i.e. the unconstrained exchange of goods and services using production capital, as opposed to all other economic systems. Whether the announced climate catastrophe becomes reality or not, the more market-oriented the economic system is in the aforementioned sense, the better one will be able to cope with it. Conversely, ecosocialism leads in any case to an economic and human catastrophe - even if the climatic crisis should fail to materialize.

Translated with www.DeepL.com/Translator (free version)

https://www.misesde.org/2022/06/dein...chaftspolitik/

One must be afraid for this country, and for one's own life, one's own prosperity, one's own freedom. Personally I am deeply worried, extremely concerned, and utmost alarmed - since many years. Germany and Germans need a devastating collective shock experience in a bid to push some reason and mental sanity back into their heads. So far Germans take the echoes from events somewhere else, start their imagination machinery and then react to the drama of their fantasies, mistaking this with "adressing the reality". This country needs a shocking, desastrous experience (that it does not hear of happenngn somewhere else, but here), that people do not fantasize about how it feels for the effected people far away, but that lets them feel the pain themselves - real and undeniable.

When they need to fight for their very survival and fear and pain and agony is shaking them, maybe this then leaves them no more too much free time to wallow in stupid nutcase fantasies like these.

I always said so: the Greens are not just about ecology, they are about socialist-communist ideology and a destruction of the civil and burgeoise order there is.

[Skybird]

FOCUS: There are two culprits for the destruction of prosperity - neither of them sits in Moscow.



Since the global financial crisis in 2008, the ECB has pumped an additional six trillion euros into the market. Experts speak of a money overhang that is now being unloaded in inflation. A dangerous chain reaction has long since set in.

"Peace is the highest good" is the current slogan of the "Greens". But violating monetary stability, one would like to shout at them, is no trivial offense either. It remains Putin's war, but it is our inflation.

Two culprits can be named for the destruction of prosperity and purchasing power that has now become obvious, neither of whom lives in Moscow. Possibly this is even the reason why none of the governing parties wants to talk seriously to the citizen about the cause and effect of this inflation of the century.

Both hands of every government politician are currently pointing indignantly in the direction of the Kremlin, so that there is no hand left for reaching for one's own nose.

War and inflation have one thing in common. Only the state can start both and only the state can end them. From the point of view of its critics, capitalism may be evil and omnipresent. But waging war, printing money and fixing interest rates, it cannot do that by its own power and glory.

So when we talk about inflation, we are talking about the core competence of the state. It owns the central bank. It appoints the ECB president and the head of the Bundesbank. The consequences of inflation are of utmost relevance to Germans economically, politically and socially. Narrowing the political debate to the question "heavy or light weapons for Ukraine?" therefore means trivializing and ultimately fictionalizing politics.

The inflation victim, who is thankfully different from the war victim, is physically unharmed. The employer's salary transfer looks the same as always. The bank statement from the savings account or stock portfolio shows no peculiarities.

But at the latest at the store counter, in the car dealership and travel agency, at the gas station and also when paying rent and ancillary rental costs, it is noticeable that something has started to slip here, robbing money of its stability and many people of their certainty about the future.

Which brings us to the culprits who have worked hand in hand for years. For the European debt politicians burned those trillions that were printed for them by the European central banks. What-Ever-It-Takes was the rallying cry of a crazy time. The Americans would call those involved "Partners in Crime."

The fact is that since the global financial crisis of 2008, the ECB has pumped an additional six trillion euros into the market. This means that the amount of central bank money in the euro area has increased more than sixfold since 2008. The lion's share of this money is not matched by any economic value, i.e., neither additional sales nor additional profits, which is why experts also speak of a money overhang.
"Five trillion euros are powder kegs in the ECB's basement".

This money overhang is now being discharged in inflation. Professor Hans-Werner Sinn puts this overhang at five trillion euros and says: "The five trillion euros are powder kegs in the basement of the ECB. Due to the effect of rising demand from the states that have taken on debt, some of the barrels have caught fire. The spark was the supply tightening by Corona."

All the promises made by the German government - Lindner: tackling rising prices is "top priority" - are meant to reassure, but can't help. The force of the events is too great for that. A chain reaction has long since been set in motion. More explosive devices are on their way to ignite the remaining powder kegs:

Explosive device 1: The markets for energy cannot calm down like this. The war in Europe, the monopoly-like structure of the oil companies and Germany's dependence on imported energy, exacerbated by the simultaneity of the coal and nuclear phase-out, mean the perfect storm for price developments.

Explosive 2: The markets for raw materials and semi-finished goods have tightened, due to the coincidence of pandemic and war. In many places, supply chains are still broken. Global demand and global supply do not currently match in many product groups. Plus 33.5 percent over April 2021 prices for semi-finished goods were just measured.

Explosive device 3: The victims of price developments to date will do everything in their power, at least where they are organized in trade unions, to defend themselves against the reduction in their standard of living and the dimming of their future prospects. The heads of the individual unions, above all IG Metall, have no other chance than to go to the barricades on behalf of their members. The price spiral is driving the wage spiral. And before long, the wage spiral will drive the price spiral.

Explosive device 4: The government debtors are not very insightful. They are in the process of further expanding spending financed on credit - in southern Europe, but not only there. In Germany, too, social relief packages are being put together without regard for financial losses, coal and nuclear power plants are being taken off the grid and the largest debt-financed rearmament program in German history is being launched.

Explosive device 5: In this situation, the ECB would have to increase the value of money, i.e. raise interest rates. But that is exactly what it does not dare to do. It is the prisoner of its stock and bond-buying policy with an associated zero interest rate policy, because the highly indebted countries of Greece (193 percent of GDP), Italy (150 percent of GDP), France (112 percent) and Portugal (127 percent) can no longer bear their debts at a significantly higher interest rate. They are not productive enough. They are addicted to cheap money. An effective fight against inflation will trigger a deep recession for them - and possibly not only for them.

Explosive device 6: There is currently no politician in Germany who, equipped with expertise and personal credibility, could seek a serious dialog with the people. Christian Lindner is not a second Karl Schiller, and Robert Habeck is not a new Otto Graf Lambsdorff. But someone would have to talk to the voters about performance and productivity and thus also about the impending overburdening of the German social product.

Conclusion: The miraculous increase in money is reaching its natural limits. The German prosperity of the past 15 years was the best prosperity that money could buy.

Translated with www.DeepL.com/Translator (free version)





My impression is that many people still have not understood the real scale and dimension of desaster that is coming upon us now. And a few decision-makers are so frozen by fear of realization that they just function in autopilot mode, staying on course for deaster, because they are frozen, paralysed in horror and reality denial. What has - finally - found us now, will become very, very bad.



Add to this the damn sociological, Green-marxist (thats what it is) agenda that intentionally wants to destroy industrialization in Germany, and wants a destabilising of the structural integrity of the middle class to get if flushed away in riots and being replaced with marxist collectivism. No more private property, no more rights to claim self-responsibility, a merciless collectivization of everybody and everything and destroying of everbyody rejecting to "voluntarily" participate. State-given mass movements as mandatory citizens' duty.


Personally, I do not take it for granted anymore that I will still have an economic-financial basis in a couple of years from now on. Ten years, maybe 15 if I am lucky, then the brown stuff will have reached the ceiling. And that is just the economical aspect, not including the for ideological reasons tuned dysfunctional minds of our decision makers whose predecessors brought us to this pass.


You may hope for some randomness gifting you unpredictably and unexpectedly some luck born out of chaos - but let go all reasonable hope. There is no reason to be hopeful. A mess does not suddenly evaporate into air just because you pray and hope it would. It never does. The world is about to learn why the Germans are so traumatized by the sound of this word, "inflation". Its one of the very few things where they indeed are right. And still, even Germany continue to spill fuel and gasoline into the fire. We could and should know it better.

[Skybird]

ECB finally considers to recognise that there might be a problem with inflation. Thats why they annnoucned a plan to increase interest rates for the first time since 11 years by 25 points. Inflation in the Eurozone is at over 800 points.

Way too little and way too late.

Involuntarily funny was how Gangsterlagarde explained where inflation wasc oming from. Its all the war's fault. The past 1.5 decades of criminally irresponsible fiscal policies, illegal state financing, flooding the market with new "money", and self-suicidal debts boosting, were not mentioned, have nothing to do with it.

She also threatened that the cartel stands ready to reverse this new policiy in case the southern European states and their high debt regimes wallowing in cheap money do not find it likeable.

Maybe penalty fees on your savings will become a thing of the past soon. But beyond that, money savings still get plundered. Inflation rate is currently over 33 times as high as the promised new interest rates. Costs will remain high, the global logistics disruptions will ae just starting to peek in Europe, Hamburg harbour said they do not expect a bettering of the situation before 18 months have passed, and only if nothing else gets added in desasters. With this policy, the ECB has no chance to catch inflation and bring the ocean of money ir ha sprinted back into the stables.

And maybeprobably that is exactly what Gangsterlagarde wants.

[Skybird]

FOCUS

Rising inflation is devaluing people's money. Politicians have done everything to make this happen. Now they would have to intervene boldly, but that would cost every politician his career. No one dares. There is one example of this.

A backroom deal between statesmen, a treaty that is not worth the paper it is written on, and politicians who shy away from making unpopular decisions - these are the real reasons for galloping inflation in the euro area.

These birth defects of the euro combined with the effects of the global pandemic and a war that is causing energy prices to skyrocket is the cocktail that is allowing inflation to flourish. Trippy steps by the European Central Bank, which now wants to raise interest rates to curb inflation, will not be enough to stop it.

The backroom deal was one that the fathers of the euro, French President François Mitterand and German Chancellor Helmut Kohl, engineered in a kind of bromance common to the era and to Kohl in particular.

It went like this: The guardian of the euro, the European Central Bank, sits in Frankfurt and is independent on paper. Kohl enforced that. But even then, its boss was not allowed to be German. That is still the case today, and Mitterrand enforced it. For the Germans, as the French president knew, have an aversion to inflation, although it is inflation that makes it easier to run up debts, which is what every politician needs if he wants to be elected thanks to his good deeds.

Mitterand's calculation worked out. Kohl's hope, on the other hand, that by being formally independent and based in Germany he had done enough for an ECB that was supposed to have monetary stability as its primary objective was not fulfilled.

Instead, the ECB got caught between the mills of national politics: on the one hand, the countries, primarily in the south of Europe, which were accustomed to inflating away their debts, and on the other hand, the countries, primarily in the north, which were striving to keep budgets under control to the extent that debts remained financeable.

Because it was clear that the two systems did not fit under one hat or in one currency, the member states of the euro invented the EU convergence criteria and wrote them down in the Maastricht Treaty of 1992. Above all, it states that government debt may not exceed 60 percent of gross domestic product. This criterion has been constantly broken since it came into force.
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Greece and Italy have always been far from it, Spain and France have now reached about twice the debt level. And Germany, where the debt brake is suspended first because of the Corona crisis and now because of the Ukraine crisis, or - as in the case of the new 100 billion debt for the Bundeswehr - may be circumvented, has also lost sight of the goal.

Dealing with debt differently, however, leads to tensions in a common currency area, because at some point the rich will have to pay for the poor. The debt crisis in the euro area was born, from which the countries could no longer find their way out on their own, which is why the then Italian ECB President Mario Draghi in 2012 pressed out his famous "What ever it takes" with a tight lip.

In the final analysis, it meant that the ECB would continue to print euro bills until everyone was able to keep their debts under control. The "whatever it takes" to which Draghi committed himself for the sake of saving the euro was redemption at the time. From today's perspective, it is the origin of galloping inflation.

Because the money supply in Europe increased by leaps and bounds. Since the debt crisis, it has increased sevenfold to around 8.8 trillion euros. Only a small part of this is justified by economic growth in the euro area. The rest comes from the printing press and has led to inflation in most asset classes: First in real estate, then in equities, and most recently in commodities.

Demand skyrocketed; all that money had to go somewhere. But when supplies became drastically tighter with the pandemic, consumer prices rose and all at once inflation became visible.

What happened next should never have been done by an ECB committed to price stability, but now it was taking revenge for the fact that Kohl had once created its formal independence and that no one could now interfere with it.

The ECB first turned two percent inflation into a "target corridor" of two percent and then into a "symmetrical inflation target" of two percent, which in the end means something like: It is enough to be below two percent for a few years, then a few years above it are not so bad. The fact that inflation tends to grow exponentially and can suddenly lapse from a leisurely pace into a gallop, like a horse running through its paces, did not matter to the ECB decision-makers, first around Draghi and then around his French successor Christine Lagarde.

If this was the first betrayal of price stability, the second followed on its heels. Again, it was politics that led the way, and again it was the ECB, which then let nothing and no one dissuade it from following. When the EU, under the leadership of its President Ursula von der Leyen, proclaimed the Green Deal and thus gave top priority to the goal of climate neutrality, the Governing Council of the ECB decided in July 2021 to also be driven by climate protection targets in its decisions.

The ECB accepted the fact that its sole mandate, namely to guarantee monetary stability, was being undermined, and the national governments even applauded. For them, this made it clear once and for all that the ECB would never thwart their plans.

Since then, national and EU-wide corona reconstruction programs worth billions have been launched. The ramping up of military spending in the EU member states and a subsidy of energy prices, as decided by most national EU parliaments, lead to further burdens worth billions, which can be financed as long as the ECB keeps interest rates low - but thus gives inflation free rein.

The manageable interest rate steps Lagarde has now announced are the compromise in a dilemma where, in reality, there are only ever two bad solutions.

Inflation rates such as the euro area and the U.S. are now experiencing were last seen at the end of the 1970s. The then U.S. President Jimmy Carter put the tough economist Paul Volcker at the head of the Federal Reserve as his last reserve. As one of his first official acts, he drastically raised interest rates to as high as 20 percent.

Inflation, which had been as high as 15 percent at the time, immediately collapsed. The U.S., however, slid into a recession that ultimately swept away even Jimmy Charter. So far, no one in Europe has been able or willing to take this step.


-------


I expect inflation to rise deeply into the two digit range (could be in the 20s) - and stay there for years to come.


At the same time more wars in the world. More military spending. More famines. Less sweet water. Megalomaniac climate "deals" to destroy industrial Western capacities. Democracy in retreat globally, totalitarian regimes marching stronger and louder. Left-leaning messiahs will take over even more of the West, and make things even worse as a result.



This will not become a happy century.

[Skybird]

Endgame for the Euro? I think the author is right. The going will get tough now for the ordinary man.

https://www-focus-de.translate.goog/..._x_tr_pto=wapp


ECB interest rates (blue) and consumer prices in Germany (red)




The ECB raised the interest by a gfearful, hesitent .25%. That is pathetic, any everythjignt he eCb now can do, will be too late, too little. The sin lies in the criminal fiscal policy of the past one and a half decade.

There is no rescue and no escape from that murderous heritage. And no, its not Russia' fault alone. The inflation in Europe already was above 5% before the war broke out.

The good news is: the EU's reality-denying green deal dogma and all that stuff the Greens want to enforce in Germany, will not happen: at least as long as they do not want civil war and bloody riots in the cities and thus establish a hardcore police dictatorship. The money system will collapse before. Mark my words.

Fasten your seat belts, please, it's getting rough. It's all downhill from here on.

[Skybird]

7 Factors form the perfect storm, writes the FOCUS:

Novelist Sebastian Junger landed a world bestseller and director Wolfgang Petersen repeated this on the big screen: " The Perfect Storm " is the story of a fishing boat that gets caught up in a weather phenomenon off the east coast of the USA that occurs at most once every 100 years: a low-pressure area moves from the mainland to the sea, a high pressure system from Canada pushes cold air southward and Hurricane Grace swirls warm and humid remnants across the ocean. The men on the boat "Andrea Gail" fight the forces of nature and lose. For George Clooney, it was one more tragic hero role. The fascinating thing about the title is its contrariness: even evil can be perfect.

The result of many ingredients brewing in the financial markets

Economists have therefore adopted this title when describing the result of many ingredients brewing in the world's financial markets so uniquely that more than one ship can sink. The perfect storm they mean can make people poor and drive them into the street, it can push companies to the wall, it can drag entire economies into the abyss. And of all things, there is now talk of such a perfect storm. U.S. star economist Kenneth Rogoff already has it on his radar. He speaks of the danger of a simultaneous recession in Europe, China and the USA. Economics Minister Robert Habeck (Greens) is warning of a global recession. He says there are currently several interconnected crises: "The high inflation, the energy crisis, the food shortage and the climate crisis." In addition, he said, "the world is in danger of disintegrating into power blocs."

Bleak forecast from star investor George Soros

Observers will never forget the appearance of 91-year-old star investor George Soros at the recently concluded World Economic Forum in Davos. With heavy steps, he made his way to the lectern. His often rather bleak predictions - they have all come to pass, some worse than even Soros could have imagined. In hushed tones, he addresses the threat of totalitarian regimes like Russia and China. He, who survived the Holocaust, addresses his world audience in a brittle voice: What is coming now "may not survive our civilization."

Seven ingredients for the perfect storm

Unlike in the novel, the "perfect storm" that Rogoff and Habeck are worried about and that makes Soros look black has not three but seven ingredients, which are currently intertwining with varying degrees of force. They are:

1. pandemic

It was at the beginning of the hot phase of the storm. The world had not experienced anything like it since the Spanish flu more than 100 years ago. In the age of MRIs and heart transplants, people around the world were once again dying from a virus. The enforced lockdowns weakened economies and government coffers. New variants of the virus keep getting ahead of the vaccines, causing renewed lockdowns at neuralgic points of world trade like Shanghai. The danger has not been averted; it has merely slipped to the periphery of perception. Already, infection rates are rising again. Popular virologists such as Christian Drosten are warning of the next wave of coronas after the summer vacations.

2. war

Unimaginable for most people living in the European Union and dreaming of perpetual peaceful coexistence on their continent since the fall of the Berlin Wall, Russia invades Ukraine on February 24, 2022, unleashing not only a military but also an economic war. At stake are energy deliveries to the West and grain shipments to the entire world, which suddenly come to a standstill coming from Russia.

Germany, one of the main consumers of Russian energy supplies and one of the few countries in the world to have scrapped its nuclear power plants, is sliding unprepared into an energy crisis the likes of which have not been seen since the oil price shock of 1973. The German government has sounded the alarm for gas supplies. If even less gas comes from Russia in the next few weeks, businesses will have to close, and homes will remain cold in the winter. The high energy costs are hitting Germany particularly hard, Europe a little less so, and the rest of the world hardly at all. Europe is losing out in international competition.

3. inflation

More than ten years ago, when the high debt levels of some countries in the EU threatened to blow up the euro, the then central bank president Mario Draghi announced his "Whatever it takes" policy. The intention behind this was to rev up the printing press until there was enough money in the market to finance government debt.

This, together with energy prices and the consequences of pandemics, has driven inflation to a record high of currently more than eight percent. This means that on a salary of 50,000 euros net per year, the purchasing power for a family is reduced to 46,000 euros within a year. If they want to compensate for this, summer vacations, for example, fall flat. Dissatisfaction grows.

4. interest rates

Directly related to inflation is what the central banks prescribe as an antidote: rising interest rates. Not a bad idea in itself - but it comes too late.

The consequence: Either central banks raise interest rates as hesitantly as in the EU, in which case the remedy does not work against inflation. Or they will be more aggressive, as in the U.S., in which case the interest rate hike will strangle economic growth because loans for investments will become too expensive. In the USA, there has never been a phase of rising interest rates that did not lead to a recession after twelve months at the latest.

5. labor market

Companies have long since noticed what is coming. Some can no longer afford the cost of energy, others are short of materials for their products, and sales are faltering. As a result, the labor market is turning. The labor shortage is turning into a labor surplus, at least in terms of what companies can still afford to hire during the crisis. The head of the German Federal Employment Agency, Detlef Scheele, warns: If Russian gas supplies were to fail, the risk with regard to jobs in Germany would be "currently very high".

The inflation rate in Germany is the highest it has been in 40 years. FOCUS Online therefore asks: Your everyday life consists only of saving? Do you really have to turn over every penny and are constantly on the lookout for ways to make a living more cheaply? We want to tell your story. Please write to us at mein-bericht@focus.de. Please briefly describe your situation in an email and also write us when we could contact you by phone regarding this in the next few days. Thank you very much.

He then believes that short-time work and a sharp rise in unemployment are likely. Things are also looking bleak on the other side of the Atlantic. Prominent investor and stock market expert Dirk Müller analyzes: "People, especially in the low-wage sector, are being laid off by the dozen. This comes in a situation where they are highly indebted and the interest on their debt is going through the roof." At the same time, there is still a shortage of skilled workers. Germany produces high school graduates on an assembly line, but craftsmen, IT specialists and technicians are lacking. Orders are left undone because no one can take care of them.

6. material bottlenecks

New cars from German manufacturers are still lined up on unused parking lots, missing a chip at a crucial point to get the electronics working. The delivery is stuck. The same picture elsewhere: the real estate industry, which has been spoiled by success for years, is suddenly feeling that no one wants to build anymore.

One reason: No one can calculate when and at what price building materials can be found. Either they are stuck in containers that cannot be unloaded in time due to the pandemic, or they have become so expensive due to the rise in energy costs that they are throwing every construction calculation out of kilter.

7. geostrategic danger

Russia's regime has become the enemy, and many are realizing that totalitarian and thus unpredictable structures like those in Moscow also prevail in Beijing. The leadership there is embroiled in a trade dispute with the U.S., pursuing a zero-covid strategy that is clutching the economy and dimming its decades-long prodigious growth rates to normal levels.

At the same time, it suppresses rebellious peoples in its giant empire, such as that of the Uyghurs, and shows the cruelty of which it is capable. All of this is leading to the greatest dislocations in its own country: The real estate market has collapsed. The two largest real estate developers in the giant empire are surviving only thanks to state aid. China is one of Germany's most important trading partners. So far, companies have been able to rely on it: If things don't go so well here in Germany, they'll go like hot cakes in China. But this is a thing of the past.

In the book "The Perfect Storm," which is based on true events, it is said that such a rare combination of factors created a situation that "could not possibly have been worse. The storm created waves ten stories high and wind speeds of 190 kilometers an hour. It whipped the sea to unimaginable heights, the likes of which few people on earth have ever seen." The next day, the haunting was over. The "Andrea Gail" and its crew, however, had disappeared from the surface.

Translated with www.DeepL.com/Translator (free version)

[Skybird]

Do the price slumps show that the economy is coming apart at the seams and the financial system is in disarray? No, the opposite is the case. The system is starting to straighten up again. After a far too long period of financial engineering wizardry, gravity is prevailing. Thus, the years following the financial crisis from 2008 onward resembled a theater of illusion. What was performed was the great recklessness. Thanks to unlimited money printing and loans at zero cost, it seemed that everything the heart desired could be financed. That is now over.

The public may have long suspected that not everything in this theater was above board, that there was a lot of hocus-pocus involved. But it was convenient for politicians, central bankers and investors to indulge in the deception. Today, one has to realize: If something is too good to be true, it usually isn't. What is currently taking place is therefore not an irrational whim of the markets. Rather, we are witnessing the return of rationality and the bursting of various illusions.

-NZZ-

[mapuc]

Would this be part of the economical perfect storm ?

This was the worst first half for the market in 50 years and it’s all because of one thing — inflation

https://www.cnbc.com/2022/06/30/the-...one-thing.html

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