(Crazy) economy news

[Jimbuna]

Originally Posted by Skybird

Not realistic, it was a provocation only, Markus, to direct attention at the obvious contradiction of the Germans' energy policies. They want to switch off nuclear powerplants, but want to import nuclear power, and they do not want to frack their gas of which they have more than I knew until recently, but they beg that the US ships them as much fracking gas as possible - at extensive costs already before the crisis - in liquified form, and they do want to save gas and want solidarity that other nations should save gas and risk blackpouts as well so that Germany can continue to burn gas for producing electrity of which they tell the German people that there is no link between an electric future, e-heating, e-cars, and gas burnt for power production

The German positions are a stellar inner contradiction from A to Z , and nothing in the German arguments is defendable, its all BS of unbelievable proportions. The whole German energy transformation policy and plan is a hilarious heap of BS. From beginning on. Unrealistic, incompetently thought-out BS.

Thats what happens if you let ideologists and social experimentators and incompetent dilletantes run a country, unable quota girls and alpha males too full of themsleves and their powerpolitical party games.

Since decades this country gets ruled and ruined by ideologists who think reality and the laws of nature would bend to their dreamdancing. And not just Germany. And not just on nation-level, but in international institutions as well. Why do you think I'm always so pissed off, since many years?

Can;t say I fully understand the German position but this article shows you the mess the population in the UK are currently facing.

Details of £400 energy payment to households revealed
https://www.bbc.co.uk/news/business-62338543

[Skybird]

Originally Posted by Jimbuna

Can;t say I fully understand the German position but this article shows you the mess the population in the UK are currently facing.

We have comparable single payment schemes over here, but only for working people, not pensioners. We also has had some car gasoline bonus, a financial one.


Does all not work well, and covers not the costs. Suppliers have to pay up to ten times more for gas than before the world turned upsaide down. Gas households could get hit by bills 6-10 times as high as before.



Welcome to inflation. Nobody should say we did not see this coming. Centrela banks since yeras and decdades spill eve rmore kerosin into the fire, and what they do now is trying to extinguish the fire by handing out kerosine packs to the ordinary people to help them saving themselves from the fire.



The ECB meanwhile nahs prepared, desüpiute its totally insufficnet interes rise, a new way to pump EVEN MORE money into the sytem, comes the righ time. These braidead zombies just do not get it, and are fixiated on financing individual states like Italy, Greece, France...(which they have no mandate for, and which is forbidden by EU treaties).



I see no way out. This will turn uglier and uglier. God knows where we will be in 2 years, 4 years, 6 years from now on. This all can only turn really, really ugly. Even replacing the currency with another one will cost people dear ammounts of their private property and savings/buying power.



Atlas shrugs. Right now, and all around us. You can run, but you cant hide.

[Skybird]

The ECB cannot do without it and already tries to extinguish fires again by spilling even more gasoline into the fires and distorting markets. For that it uses a new "tool" (as if these fraudulent schemes they implenment all the time were "tools"...) it has "created" just last month. Also, bonds which has reached the end of their runnig time now no longer gets paid back, but mandatorily gets re"invested" (obviously they have no clue what the term "investment" actually describes) into new bonds again with even more disadvantageous conditions for the original lender.

Fraud and betrayal, plunder, theft and lies. Thats what it is about, nothing else.

---------------
(Bloomberg) The European Central Bank appears to have made billions of dollars of bond purchases to protect Italy and other southern euro members from undesirable market developments (hear, hear, Skybird) since activating its first line of defense against speculation a month ago.

Data released Tuesday indicate a significant use of funds freed up by maturing bonds in the pandemic program portfolio. This suggests that the tool has been deployed, which the central bank has earmarked as a first response to market turmoil.

The statistics, which are available only on a two-month basis, show that net holdings of German, French, and Dutch bonds fell by 18.9 billion euros through July. Net purchases of bonds from Italy, Spain, Portugal and Greece totaled 17.3 billion euros.

The figures are the first hard data to show the ECB's intervention in bond markets after a jump in bond yields in June forced President Christine Lagarde to call an emergency meeting at which officials agreed on the need for a response.

"It appears that the ECB has already activated its first line of defense," said Christoph Rieger, head of rates at Commerzbank AG. "This is by far the biggest reduction in German holdings since the ECB started quantitative easing, and more than we expected." As a first step, council members agreed to flexibly reinvest the repayments due on their €1.66 trillion asset purchase program.

To organize the bond purchases, they divided the euro area into three categories: Donors, including Germany, France and the Netherlands; Recipients, consisting of Italy, Greece, Spain and Portugal; and so-called Neutrals.

Lagarde described this flexibility as the ECB's first line of defense against market volatility that threatens the transmission of monetary policy. In addition, a newly created debt purchase tool is ready in the background should stronger intervention become necessary.

Italy has been in investors' focus since Prime Minister Mario Draghi's government fell last month and new elections were put on the agenda for late September.
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THIS IS FINANCIAL SOCIALISM IN ITS PUREST FORM. Not just the ammount of currency tokens, but even terms of conditions and interests as a tool to counter-balance bigger risks for lenders to leasers, are now being directly manipulated. From here on it will not be much longer anymore until the state begins to dicate prices and openly confess to be a state-micromanaged planned economy.

The - even not so long - journey of the ECB to the dark side of the force is completed. Long live the continental GDR.

[Skybird]

Prices for metals, ores and commodities are in a steep decline. That is hardly a good sign and it does not indicate a normalization, because when inflation continues to be high (as is the case), the only other explanation for that price drop is a dramatic decline of demand.

In other words, the economy is drastically contracting - globally. At a high inflaiton level, and an ever faster rotating wages-prices-spiral.



Social nitroglycerine. Eeconomic and financial core meltdown.

[Jimbuna]

Energy bill crisis is on scale of pandemic.

Cornwall also expects bills to increase much more sharply in January, with the average household paying £355 a month, instead of the current £164 a month.
https://www.bbc.co.uk/news/business-62483770

[Rockstar]

Welcome to World War III


War and Interest Rates

Zoltan Pozsar
212 538 3779 zoltan.pozsar@credit-suisse.com

https://advisoranalyst.com/wp-conten...st-rates-1.pdf

…Getting right where inflation goes from here is basically a matter of perspective: do you see inflation as cyclical (a messy re-opening after Covid, exacerbated by excessive stimulus) or structural (a messy transition to a multipolar world order, where two great powers are challenging the might and hegemony of the U.S.). If the former, inflation has peaked. If the latter, inflation has barely started, and could actually be understood as an outright instrument of war, for as Lenin said, “the best way to destabilize the capitalist system [is] to debauch the currency”.

Finally, two more notes to close our opening essay about war and inflation...

First, an observation from Pippa Malmgren: “Peter Drucker delayed publishing his book, The End of Economic Man: The Origins of Totalitarianism, until 1939 because he was frightened to say that WWII was about to begin. I feel his angst as I write of my belief that we have already entered WWIII. But before you jump out of your skin, try to remember that war is changing: the confrontations and conflicts of our time may be different from what we experienced before. [...] New theaters of conflict are no longer exclusively about physical territory and humans on a front line, but about cyberspace, space and the high seas,” as well as pipelines, interbank messaging systems (SWIFT), ASML machines, currencies, commodities, and inflation as described in our opening essay above.

[Skybird]

What a surprise. I preach since yearsd that the official inflation is intentionally marginalized and that real inflation is much higher and since many years already two-digit. Die Welt writes:

Big inflation hoax? Study detects far worse inflation

Paul Jackson comes from a working-class background. When he was born in 1961, his father was sick, the family had little money, and then there was also the period of great inflation in the 1970s. "I've seen what a lot of poor people are going through right now," says Jackson, who is now chief strategist for the investment firm Invesco. And he can offer them little hope. "Central banks are miles behind in fighting inflation, unfortunately."

In the U.K., where Jackson lives, the inflation rate just broke through the 10 percent threshold. In Germany, it is still being held down by measures such as the 9-euro ticket or the fuel rebate, but when these run out, similar rates are possible in this country.

Fifty years ago, the wave of inflation could only be stopped in the end by drastic measures: Back then, the U.S. Federal Reserve raised the key interest rate to as much as 20 percent, triggering a deep recession. Is something like that necessary again today? Or will the previous, rather modest interest rate hikes in the U.S. and the euro zone suffice this time?

The latter is suggested by the fact that official inflation rates in the 1970s were still far higher in most countries than they are today. However, this could be a deception, as a recent study by economists Marijn A. Bolhuis, Judd N. L. Cramer and Lawrence H. Summers shows. The researchers addressed the problem that inflation rates used to be measured differently than they are today. As a result, they have recalculated the data in a uniform way - and come to a startling conclusion.

"Our analysis reveals that current inflation, especially core inflation, is considerably closer to past peaks than official data suggest," the authors write. Core inflation is the value obtained when energy and food prices are excluded from the calculation. It is seen by economists as an indicator of how much inflation has already spread.

For example, according to official data, U.S. core inflation was 13.6 percent at its peak in June 1980; it is currently reported at 5.9 percent - seemingly a far cry from the value at that time. However, according to the researchers' recalculations, it was 9.1 percent in 1980, which would shrink the difference significantly.
"We need a decline in inflation of a similar magnitude today"

Moreover, the inflation measure at the time makes the subsequent decline, brought about by drastic interest rate increases under then-Fed Chairman Paul Volcker, look more severe than it was. Instead of an eleven percentage point drop in the inflation rate as a result of these measures, he said, it only fell by about five percentage points. "To return to a core inflation rate of two percent," the economists write, "we need a decline in inflation today of similar magnitude to that achieved by Volcker."

So inflation is currently much more pronounced by historical standards than most observers assume, and far harsher measures would therefore be needed than have been taken so far. But most importantly, they should have been taken sooner. "The Fed should have responded as early as mid-2021," says Invesco strategist Jackson.

Instead, it let valuable time pass until March of this year. The European Central Bank (ECB) waited even longer, raising its interest rate for the first time only last month. "Because central banks have been so late in responding, they now have to act all the more aggressively."

But apparently that hasn't been enough so far. This is shown by people's so-called inflation expectations, which are determined in surveys. The Bundesbank published these data for Germany as recently as August 12 - and they are shocking. According to the data, Germans do not expect a decline in inflation over the next twelve months, but on average a rate of seven to eight percent. Even over a five-year period, they expect a rate of around five percent.

For Jörg Krämer, chief economist at Commerzbank, this is an alarm signal. "People expect higher inflation when they don't believe that central banks are successfully fighting inflation," he says. "And currently, many no longer believe that." That's not just because of the reluctance to raise interest rates, he adds. "There was an ECB crisis meeting on rising Italian government bond yields," Krämer says. "But there hasn't been an emergency meeting on inflation to date."

He also believes that interest rates would have to rise significantly further to get inflation under control. Currently, the ECB's key interest rate is 0.5 percent. "At 2.5 to three percent would be the neutral interest rate," says Krämer. So at that level, monetary policy would neither slow down nor fire up the economy. "Three to four percent would be necessary to get into inflation-fighting mode," the Commerzbank expert believes.

Paradoxically, however, the belief has spread in the financial market in recent weeks that the worst is already behind us in terms of inflation. The reason for this was the slight decline in the inflation rate in the USA in July. Now, the majority of investors believe that the U.S. Federal Reserve will raise interest rates once or twice more by the end of the year, but that it will cut them again next year. And for the ECB, too, they expect a maximum of one or two more slight increases before the Europeans do a U-turn again.

The consequence of this will be that Germany will have to live with high inflation rates for years to come, Krämer fears. "Inflation is becoming entrenched and will not go away on its own," he says. That doesn't mean hyperinflation by any means, but rates of four to five percent could become normal.

Unless, of course, things are different than they were 50 years ago. And indeed, there is evidence for that, too, because despite all the similarities between then and now, there are also many differences. "Back then, inflation was driven even more by energy prices," says Paul Jackson. This was triggered by Opec's oil price increases, but ultimately behind it was a huge surge in demand due to the population explosion since the 1950s. In the meantime, however, the population is shrinking, and demand for energy will tend to decline.

"Also, workers had much stronger bargaining power back then," Jackson says. In Germany, 32 percent of workers were members of a union in 1970; since then, the percentage has shrunk to half. "This makes it much harder for workers to fight for wage compensation, and the wage-price spiral turns more slowly today than it did 50 years ago."

But if price increases are not offset by corresponding wage increases, workers will inevitably have to save. They will be able to afford fewer goods and services. "That, in turn, will lead to a drop in demand," the investment expert says, "which then triggers a recession." Along the way, inflation sows the seeds for its own decline.

This would then be achieved by a different route than in the late 1970s, but it would not be any less painful. Especially not for workers, employees and the poorest strata of society.

---------------

Just months ago Russia had inflation worries, too. Putin's chief of central bank did no half things,k and raise dinterest rates to 20%. Short time later inflaiton was down to managable levels and interest rate of the centrla bank followed. When I red about this ealrier this year, it was back to below 9%, at that time tendency dropping.

ECB and FED will blow up both economies. And leave the middle class as a monumental collateral damage.

[Skybird]

Everybody talks about gas. Why? Have this, for a change : spot market prices on the EEX power exchange in Leipzig are currently breaking record after record: whereas a year ago it was only 23 euros for a megawatt hour, we have now already reached 563 euros. An increase of well over 2000 percent within 12 months.

And Bubble-Olaf and children's book author Robert Habeck (really!) jet to Canada and want to seal deals for hydrogen deliveries, in a coupe of years.
Habeck has just once again categorically ruled out to leave the nuclear reactors in action. I wish he had stuck to writing children's books. And in a way, he has. The whole policy he makes, is a fairy tale.

[Jimbuna]

Your lot sound as clueless as our lot are.

[Skybird]

The quesiton is whether they are in a state of cluelessness - or reality denial.



I think many most often know quite early what the truth is and what is right and wrong - but then take a lot of time more to admit to themselves that they know it, because the truth is so hard, and denying it and pretending one does not know looks like an easy way out.



But while you can run, you cannot hide. Truth finds you - and we are about to get found. Won't get pretty.

[mapuc]

Danish Ekstra Bladet Writes:
Even though this article is mostly about UK economy. I decide to post it here and not in the UK politics thread.

Sinister prediction: inflation could explode
In Britain, inflation could peak at 18 percent next year, economist warns

It's not just at home that prices are soaring.

In Britain, inflation is raging too. Fears of recession prompted the Bank of England earlier in August to make the biggest interest rate jump in 27 years.

At home, inflation stood at 8.7% in July. However, a new prediction from US bank Citi makes the Danish scare figures look 'nice'.

Early next year
UK consumer prices are expected to be as much as 18 percent higher by early 2023 than they were at the start of this year, according to CNN.

'The question now is what policymakers can do to have an impact on both inflation and the real economy,' writes Citi Bank economist Benjamin Nabarro in a note to clients.

The last time inflation was at 18 percent in Britain was in 1976.

Hits 13 per cent in October
So there are signs that the British still have the worst of it ahead of them. Indeed, the Bank of England estimates that inflation - a measure of how much prices rise in a year - will reach 13% as early as October.

At the same time, the central bank estimates that the UK will enter a period of recession in the fourth quarter of this year, with the economy shrinking rather than growing.

Therefore, inflation must come down to an acceptable level, says Andrew Bailey, head of the Bank of England.

- Getting inflation down to two per cent is our first priority. Let there be no doubt about that.

- All options are on the table for our September meeting and beyond," he said following the interest rate rise in early August.

The Bank of England raised its key interest rate by 0.50 percentage points to 1.75%.

Normally, a rate hike would strengthen the local currency, but this time the picture was different.

The pound fell against the euro by 0.6% after the rate rise. This is probably due to the pessimistic assessment of the British economy in the coming year.

Markus

[Skybird]

Recession should not be feared, its not a fault, but a correction. Like fever, one should let it run. Getting inflation under control ASAP, at any cost, is the only priority left now. THE ONLY PRIORITY. Becasue the situaiton is despearte - and still there are cen tral bankers and potlkicans who have not relaised this. Any other purpose means nothing without this preconditon be fulfilled.


I would push interests up to 20-25% immediately, in America, Europe, Asia. Nuking from orbit, for the beasts roam freely and are out of control. Better loose some economies and states, than all.



Yes, we are at this stage already: better loose some states, instead of all.


Zero chance the ECB criminals will understand this. Their egoism and incompetence ridicules all reason and sanity.

[mapuc]

We have a saying here in Denmark - exaggeration promotes understanding - However, it seems that 20-25% is just on the high side

You can also kill the patient by giving them an overdosis.

This is what I think would happen to our economy if our government raised the interest rate from 20 to 25 %.

Markus

[Skybird]

There are precedences, and they worked.

UsA, 50 years ago. The long text above mentions it.

Also, we have toohigh a quota of zombie companies, they skyrocketd during corona, are unable to live by themselves, are only kept floating by aid and subvention, suck the blood of the healthy companies.

Before corona, their share was said to be around 18% in europe, and I said add around 5 to 10 percent to that. Now, three yeafs later, the zombies may form even a 25 to 30 percent of the economy officially. And again i say they make it look nice, so i add another 5% to those numbers again, estimated.

The rotten flesh stinks and poisens the rest of the body. It must be cut off.
Problem is politicians oftdn do not understand tbat failing and going bancrupg is part of the market econkmy. Uncompetitive companies must be allowed to leave the competition. Tbeir slot then gegs picked by somebody else.

Kill the competition like they do in planned economies, and the whole system gets zombified.

[Jimbuna]

A regular energy industry exercise aimed at preparing the UK for the possibility of a gas supply emergency has been scaled up despite the government downplaying the threat of shortages this winter.

The annual drill will see potential scenarios - including rationing electricity - wargamed over four days, rather than the usual two, as energy concerns grow.

Industry insiders linked the drill's extension to the seriousness of the energy challenges forecast this winter.

But the government says the exercise is a routine part of the energy industry calendar and insists there is no risk to gas supplies this winter.

The National Grid exercise, which will take place across four days in September and October, will involve government agencies, regulators, lobby groups and major energy firms.

Called Exercise Degree, it will simulate scenarios in which a loss of gas supply triggers an emergency situation for the UK's energy system.