Steve Bull's Blog, page 190
September 18, 2022
Liz Truss warned of mass bankruptcies if firms left in limbo over energy bills
Prime minister to lead nation in a minute’s silence to honour the Queen’s legacy ahead of funeral.
Liz Truss is facing a political and economic baptism of fire this week with warnings of mass bankruptcies across the economy – even as the new prime minister prepares to lead the nation in a minute’s silence on Sunday night to honour the Queen’s legacy.
Before the Queen’s funeral at Westminster Abbey on Monday and her burial at St George’s Chapel in Windsor Castle, Truss will appear on the steps of No 10 on Sunday night at 8pm as part of a final national “moment of reflection” on the monarch’s life and legacy.
Downing Street is hoping that people will take part in their homes and on their doorsteps across the UK. Sailors, soldiers and air crews from the armed forces stationed overseas will also pause, including on ships and in bases, in what government officials believe could become a global event.
But with the period of national mourning ending after the funeral, when Truss will fly to New York to attend the UN general assembly, and with MPs returning to Westminster on Wednesday or Thursday, the transition back to normal politics will be sudden and potentially bruising for a prime minister who had only been in office for two days before the Queen’s death.
On Saturday night, leading UK business organisations were renewing pressure on ministers for “absolute clarity” on what help government would offer them with their energy bills and warning of dire consequences if they continued to be left in limbo over the level of support in the medium term.
The new business secretary, Jacob Rees-Mogg, will make an announcement on support for business on Wednesday to be followed by a mini-budget by the new chancellor, Kwasi Kwarteng, on Friday.
…click on the above link to read the rest of the article…
‘Samarkand Spirit’ to be driven by ‘responsible powers’ Russia and China
The SCO summit of Asian power players delineated a road map for strengthening the multipolar world
Amidst serious tremors in the world of geopolitics, it is so fitting that this year’s Shanghai Cooperation Organization (SCO) heads of state summit should have taken place in Samarkand – the ultimate Silk Road crossroads for 2,500 years.
When in 329 BC Alexander the Great reached the then Sogdian city of Marakanda, part of the Achaemenid empire, he was stunned: “Everything I have heard about Samarkand it’s true, except it is even more beautiful than I had imagined.”
Fast forward to an Op-Ed by Uzbekistan’s President Shavkat Mirziyoyev published ahead of the SCO summit, where he stresses how Samarkand now “can become a platform that is able to unite and reconcile states with various foreign policy priorities.”
After all, historically, the world from the point of view of the Silk Road landmark has always been “perceived as one and indivisible, not divided. This is the essence of a unique phenomenon – the ‘Samarkand spirit’.”
And here Mirziyoyev ties the “Samarkand Spirit” to the original SCO “Shanghai Spirit” established in early 2001, a few months before the events of September 11, when the world was forced into strife and endless war, almost overnight.
All these years, the culture of the SCO has been evolving in a distinctive Chinese way. Initially, the Shanghai Five were focused on fighting terrorism – months before the US war of terror (italics mine) metastasized from Afghanistan to Iraq and beyond.
Over the years, the initial “three no’s” – no alliance, no confrontation, no targeting any third party – ended up equipping a fast, hybrid vehicle whose ‘four wheels’ are ‘politics, security, economy, and humanities,’ complete with a Global Development Initiative, all of which contrast sharply with the priorities of a hegemonic, confrontational west.
…click on the above link to read the rest of the article…
Global ‘Stilling’: Is Climate Change Slowing Down the Wind?
As carbon dioxide levels rise and the Earth’s poles warm, researchers are predicting a decline in the planet’s wind speeds. This ‘stilling’ could impact wind energy production and plant growth and might even affect the Gulf Stream, which drives much of the world’s climate.
Last year, from summer into fall, much of Europe experienced what’s known as a “wind drought.” Wind speeds in many places slowed about 15 percent below the annual average, and in other places, the drop was even more pronounced. It was one of the least windy periods in the United Kingdom in the past 60 years, and the effects on power generation were dramatic. Wind farms produced 18 percent of the U.K.’s power in September of 2020, but in September of 2021, that percentage plummeted to only 2 percent. To make up the energy gap, the U.K. was forced to restart two mothballed coal plants.
The recent declines in surface winds over Europe renewed concerns about a “global terrestrial stilling” linked with climate change. From 1978 until 2010, research showed a worldwide stilling of winds, with speeds dropping 2.3 percent per decade. In 2019, though, a group of researchers found that after 2010, global average wind speeds had actually increased — from 7 miles per hour to 7.4 miles per hour.
Despite those conflicting data, the Intergovernmental Panel on Climate Change forecasts slowing winds for the coming decades. By 2100, that body says, average annual wind speeds could drop by up to 10 percent.
“Why do we have wind at all on the planet?” asks Paul Williams, who studies wind as a professor of atmospheric science at the University of Reading in England. “It’s because of uneven temperatures — very cold at the poles and warm at the tropics. That temperature difference drives the winds, and that temperature difference is weakening. The Arctic is warming faster than the tropics.”
…click on the above link to read the rest of the article…September 17, 2022
Powell: A Breathing Weapon of Mass Destruction
Below we track how the Powell Fed serves as a contemporary weapon of mass destruction.
Powell’s so-called “war against inflation” will fail, but not before crushing everything from risk asset, precious metal and currency pricing to the USD. As importantly, Powell is accelerating global market shifts while sending a death knell to the ignored middle class.
Let’s dig in.
The Fed: Creators of Their Own Rock & Hard Place
In countless interviews and articles, we have openly declared that after years of drunken monetary driving, the Fed has no good options left and is literally caught between an inflationary rock and a depressionary hard-place.
That is, hawkishly tightening the Fed’s monthly balance sheet (starting in September at $95B) while raising the Fed Funds Rate (FFR) into a recession was, is and will continue to be an open head-shot to the markets and the economy; yet dovishly mouse-clicking more money (i.e., QE) would be fatally inflationary.
Again, rock and a hard place.
What’s remarkable and unknown to most, however, is that the Chicago Fed recently released a white paper during the Jackson Hole meeting which says the very same thing we’ve been warning: Namely, that Powell’s WMD “Volcker 2.0” stance (arrogance/delusion) is only going to make inflation (and stagflation) worse, not better.
To quote the Chicago Fed:
“In this pathological situation, monetary tightening would actually spur higher inflation and would spark a pernicious fiscal stagflation, with the inflation rate drifting away from the monetary authority’s target and with GDP growth slowing down considerably. While in the short run, monetary tightening might succeed in partially reducing the business cycle component of inflation, the trend component of inflation would move in the opposite direction as a result of the higher fiscal burden.”
In short, Powell can’t be Volcker.
Why?
Simple.
…click on the above link to read the rest of the article…
Intense heat and flooding are wreaking havoc on power and water systems as climate change batters America’s aging infrastructure
The 1960s and 1970s were a golden age of infrastructure development in the U.S., with the expansion of the interstate system and widespread construction of new water treatment, wastewater and flood control systems reflecting national priorities in public health and national defense. But infrastructure requires maintenance, and, eventually, it has to be replaced.
That hasn’t been happening in many parts of the country. Increasingly, extreme heat and storms are putting roads, bridges, water systems and other infrastructure under stress.
Two recent examples – an intense heat wave that pushed California’s power grid to its limits in September 2022, and the failure of the water system in Jackson, Mississippi, amid flooding in August – show how a growing maintenance backlog and increasing climate change are turning the 2020s and 2030s into a golden age of infrastructure failure.
I am a civil engineer whose work focuses on the impacts of climate change on infrastructure. Often, low-income communities and communities of color like Jackson see the least investment in infrastructure replacements and repairs.
Crumbling bridge and water systems
The United States is consistently falling short on funding infrastructure maintenance. A report by former Federal Reserve Board Chairman Paul Volcker’s Volcker Alliance in 2019 estimated the U.S. has a US$1 trillion backlog of needed repairs.
Over 220,000 bridges across the country – about 33% of the total – require rehabilitation or replacement.
A water main break now occurs somewhere in the U.S. every two minutes, and an estimated 6 million gallons of treated water are lost each day. This is happening at the same time the western United States is implementing water restrictions amid the driest 20-year span in 1,200 years. Similarly, drinking water distribution in the United States relies on over 2 million miles of pipes that have limited life spans.
…click on the above link to read the rest of the article…
Energy Shock
The world is in energy shock.
European imported coal prices increased 421% before Russia invaded Ukraine. German electric power price increased 518%. European natural gas jumped 765% and Asian spot LNG, 957%. Since then, it’s gotten even worse.
U.K. natural gas futures price has increased +$99.86 (+574%) from $17.41 to $117.27 per mmBtu just since June 8 (Figure 1).
Figure 1. U.K. natural gas futures price has increased +$99.86 (+574%) from $17.41 to $117.27 per mmBtu since June 8. Source: MarketWatch, CME & Labyrinth Consulting Services, Inc.Now Europe’s energy crisis is on a path to even worse outcomes.
Russia announced on September 4 that gas supplies to Europe via the Nord Stream 1 pipeline would not resume in full until the sanctions against Russia were lifted. Finland’s Economic Affairs Minister stated ,
“This has had the ingredients for a kind of a Lehman Brothers of energy industry.”
–Mika Lintilä
Many governments are planning to subsidize consumers with price caps and to help industry with loans. My friend and colleague Nate Hagens recently noted that,
“Europe is committing economic suicide.”
–Nate Hagens
That is because these bailouts are happening at a time of economic contraction, high inflation and rising interest rates. That means increased and unproductive debt at a time that states cannot afford its service except with more debt.
French President Emmanuel Macron recently stated,
“What we are currently living through is a kind of major tipping point or a great upheaval … we are living the end of what could have seemed an era of abundance…the end of the abundance of products of technologies that seemed always available.”
–Emmanuel Macron
Meanwhile, OPEC+ has decided to cut production by 100,000 barrels of oil per day reversing 15 months of output increases. Although oil is relatively less expensive for Europeans than natural gas and coal, many countries have begun using diesel as a substitute to generate electric power.
…click on the above link to read the rest of the article…
Angry Customers Demand Explanation As German Energy Bills Soar
Utilities in Germany have had to handle a surge in customer service calls in recent weeks from clients angry or desperate about their sky-rocketing energy bills, Reuters reports.
The biggest utility, E.ON, has ramped up its capacity to handle calls from consumers who are shocked to find just how much their energy bills have surged in recent months.
Gas prices in Europe are very high and power prices in many countries, including Germany, have hit record levels this summer after Russia choked pipeline gas supply to Europe and shut down indefinitely the key gas export pipeline to Germany, Nord Stream, at the beginning of this month.
“Some become aggressive out of frustration, others are in tears and need psychological support,” Ingbert Liebing, head of local utilities organization VKU, told Reuters, commenting on the spike in customer calls to utilities’ service centers.
Apart from already high energy bills, German customers will have a surcharge as of October, as part of a government plan to implement a so-called gas levy on consumers in order to help struggling energy firms.
Germany has recently announced it would impose a gas levy on consumers from October 1 through March 2024 as it aims to help energy providers and importers of natural gas, which are struggling with low Russian gas supply and very expensive alternatives to Russian gas. The new natural gas tax is set to cost German families, who will have to foot the bill for the tax, an extra $500 a year.
Meanwhile, the German government is in talks with the biggest German importer of natural gas, Uniper, to potentially lift its 30% stake in the company to majority participation or to nationalize the firm…
…click on the above link to read the rest of the article…
Europe Cannibalized
Abandoned industrial building. Image credit: PixabayEurope is in the process of losing its industry. It didn’t start this year, it was already going on for decades now. However, in 2022 the process has switched from a long slow grind to a considerably higher gear.
Energy is the economy. This is the key point in understanding not only economics, but geopolitics and history as well — especially the recent events in Europe and around the world. Too bad, that this rather self-explanatory observation has been completely left out of modern (i.e.: neoclassical) economics theory, where everything revolves around prices of goods and services, demand and supply, and ultimately: infinite growth on a finite planet.
In the real world, however, every single economic activity requires an irreversible expenditure of energy: from cutting a client’s hair, to melting or forging steel. Take energy away and all economic activity stops, starting with the ones using the highest amount of energy and continuing with the rest as the loss of one business leads to the loss of another.
List of the most energy intensive businesses. Source: US Energy Information AdministrationThere is a very important point to understand here though. Complex self-adapting systems, like the Economy, very rarely collapse completely. As the knock-on effects take their toll, the falling of dominoes usually stops at a certain point. It’s like an avalanche: it starts slowly beneath the surface. As the fundamentals deep inside the snow-pack slowly give way to gravity, a large piece breaks away: all of a sudden half of the mountain is on it’s way towards the valley! However, there are many natural stopgaps in the process, and the avalanche remains concentrated to a certain area. It destroys everything in its path, but it eventually stops.
…click on the above link to read the rest of the article…
5 Reasons Not to Predict the End of the World
“Everyone, deep in their hearts, is waiting for the end of the world to come.”
— Haruki Murakami
So you want to talk about the end of the world without sounding like a crank?
Rule #1 should be: Don’t predict when it will happen.
A lot of the writing on this site has to do with the collapse of civilization (and what that means). Following Jem Bendell, author of the now (in)famous “Deep Adaptation paper”, I anticipate “inevitable collapse, probable catastrophe, and possible extinction”.
Of course, all civilizations collapse. And all species die. Eventually, everything ends. But we are now in a process of acceleration toward that end. When will this happen? Who knows. The best answer I have read is “sooner rather than later”–which doesn’t really say much.
I have noticed, though, that a lot of people who are in the Doomer and Post-Doom communities are not so circumspect when it comes to putting a date on the end of the world.
Here’s five reasons why you shouldn’t put a date on the end of the world.
1. You’re wrong. (Collapse is complex.)
The collapse of any civilization is a complex phenomenon. Our global industrial-capitalist civilization is incredibly complex. And it stands to reason that the collapse of that civilization will be complex as well. And that makes predicting it that much harder.
I think some of the tendency to over-simplify collapse is driven by an unconscious desire for control. We feel out of control in our lives. Contemplating collapse only amplifies this. Imagining a simplified collapse gives us a sense of control. A false sense. The desire for control is a big part of the reason people deny collapse. It shouldn’t be surprising, then, that we would see vestiges of this desire in the doomer and post-doom communities.
When you talk about collapse as something simple, you’re wrong. Because it’s complex.
…click on the above link to read the rest of the article…
