(No one planned for this, but Europe is toast.)
From the Desk of Don Yocham: |
| | | | | | | | | | | | | No one planned for this, but Europe is toast.
Blame Putin, green energy policies, the New World Order, or sunspots — it doesn’t matter. Because regardless of who you blame, the fact remains that European economies find themselves trapped in a dangerous inflationary storm. A self-reinforcing feedback loop of the worst kind.
The culprit — natural gas.
This vital economic feed stock now trades in Europe at prices equivalent to $350 per barrel. That’s far beyond the point where profitable production remains possible so many companies are shutting down in response. That means fewer goods. And, as any first-year economics major can tell you, less supply relative to demand leaves prices no where to go but up.
Higher prices beget less production which begets higher prices.
But never fear. Because European politicians, bureaucrats, parliamentarians, diplomats, technocrats, and other sundry useless functionaries have plans to nip that cycle in the bud.
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No one planned for this, but Europe is toast. Blame Putin, green energy policies, the New World Order, or sunspots — it doesn’t matter. Because regardless of who you blame, the fact remains that European economies find themselves trapped in a dangerous inflationary storm. A self-reinforcing feedback loop of the worst kind. The culprit — natural gas. This vital economic feed stock now trades in Europe at prices equivalent to $350 per barrel. That’s far beyond the point where profitable production remains possible so many companies are shutting down in response. That means fewer goods. And, as any first-year economics major can tell you, less supply relative to demand leaves prices no where to go but up. Higher prices beget less production which begets higher prices. But never fear. Because European politicians, bureaucrats, parliamentarians, diplomats, technocrats, and other sundry useless functionaries have plans to nip that cycle in the bud. |
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