Showing posts with label Euro. Show all posts
Showing posts with label Euro. Show all posts

Friday, September 1, 2023

Crush Europe and Strengthen the U.S. | RAND Corporation

January 25, 2022 
Confidential
Distribution: WHCS, ANSA, Dept. of State, CIA, NSA, DNC 
 
Executive Summary
[...] The current German economic model is based on two pillars. These are unlimited access to cheap Russian energy resources and to cheap French electric power, thanks to the operation of nuclear power plants. The importance of the first factor is considerably higher. Halting Russian supplies can well create a systemic crisis that would be devastating for the German economy and, indirectly, for the entire European Union. The French energy sector could also soon begin to experience heavy problems. The predictable stop of Russian-controlled nuclear fuel supplies, combined with the unstable situation in the Sahel region, would make French energy sector critically dependent on Australian and Canadian fuel.
 
"A reduction in Russian energy supplies - ideally, a complete halt of such supplies -
would lead to disastrous outcomes for German industry
." - RAND Corporation, Jan 25, 2022.
 
[...] The only feasible way to guarantee Germany's rejection of Russian energy supplies is to involve both sides in the military conflict in Ukraine. Our further actions in this country will inevitably lead to a military response from Russia. Russians will obviously not be able to leave unanswered the massive Ukrainian army pressure on the unrecognized Donbas republics. That would make possible to declare Russia an aggressor and apply to it the entire package of sanctions prepared beforehand. Putin may in turn decide to impose limited counter-sanctions - primarily on Russian energy supplies to Europe. Thus, the damage to the EU countries will be quite comparable to the one to the Russians, and in some countries - primarily in Germany - it will be higher.
 
The prerequisite for Germany to fall into this trap is the leading role of green parties and ideology in Europe. The German Greens are a strongly dogmatic, if not zealous, movement, which makes it quite easy to make them ignore economic arguments. In this respect, the German Greens somewhat exceed their counterparts in the rest of Europe. Personal features and the lack of professionalism of their leaders - primarily Annalena Baerbock and Robert Habeck - permit to presume that it is next to impossible for them to admit their own mistakes in a timely manner.
 
Thus, it will be enough to quickly form the media image of Putin’s aggressive war to turn the Greens into ardent and hardline supporters of sanctions, a ‘party of war’. It will enable the sanctions regime to be introduced without any obstacles. The lack of professionalism of the current leaders will not allow a setback in the future, even when the negative impact of the chosen policy becomes obvious enough [...] This will ensure a sufficiently long gap in cooperation between Germany and Russia, which will make large German economic operators uncompetitive.

"The prerequisite for Germany to fall into this trap is the leading role of the German Greens."

[...] A reduction in Russian energy supplies - ideally, a complete halt of such supplies - would lead to disastrous outcomes for German industry. The need to divert significant amounts of Russian gas for winter heating of residential and public facilities will further exacerbate the shortages [...] A complete standstill at the largest in the chemical, metallurgical, and machine-building, plants is likely, while they have virtually no spare capacity to reduce energy consumption. It could lead to the shutting down of continuous-cycle enterprises, which would mean their destruction.

The cumulative losses of the German economy can be estimated only approximately. Even if the restriction of Russian supplies is limited to 2022, its consequences will last for several years, and the total losses could reach 200-300 billion euros. Not only will it deliver a devastating blow to the German economy, but the entire EU economy will inevitably collapse. We are talking not about a decline in economy growth pace, but about a sustained recession and a decline in GDP only in material production by 3-4% per year for the next 5-6 years. Such a fall will inevitably cause panic in the financial markets and may bring them to a collapse.

The euro will inevitably, and most likely irreversibly, fall below the dollar. A sharp fall of the euro will consequently cause its global sale. It will become a toxic currency, and all countries in the world will rapidly reduce its share in their forex reserves. This gap will be primarily filled with dollar and yuan.
 
NATO's purpose is "keep the Russians out, the Americans in, and the Germans down",
as Lord Hastings Lionel Ismay, NATO's first Secretary General, put it.

Another inevitable consequence of a prolonged economic recession will be a sharp drop in living standards and rising unemployment (up to 200,000-400,000 in Germany alone), which will entail the exodus of skilled labour and well-educated young people. There are literally no other destinations for such migration other than the United States today. A somewhat smaller, but also quite significant flow of migrants can be expected from other EU countries.
 
Since 1871 the prime U.S. geopolitical foreign policy doctrine for Europe is:
"Keep Germany and Russia separate and in conflict."
Or as Victoria Nuland put it in 2014: "Fuck the EU!"

The scenario under consideration will thus serve to strengthen the national financial condition both indirectly and most directly. In the short term, it will reverse the trend of the looming, economic recession and, in addition, consolidate American society by distracting it from immediate economic concerns. This, in turn, will reduce electoral risks.

In the medium term (4-5 years), the cumulative benefits of capital flight, re-oriented logistical flows and reduced competition in major industries may amount to USD 7-9 trillion. Unfortunately, China is also expected to benefit over the medium term from this emerging scenario. At the same time, Europe's deep political dependence on the U.S. allows us to effectively neutralise possible attempts by individual European states to draw closer to China [...]



See also:

Monday, January 4, 2016

When Not To Put Money In The Bank - Negative Interest Rates in Europe

econfix (Jan 4, 2016) - It seems that in Europe negative interest rates are common place. Below are the current rates of some central banks:
 
European Central Bank -0.3%
Swiss National Bank -0.75%;
Danish Central bank -0.75%
Swedish Central Bank -1.1%
Why are they in negative territory? For all these countries it is the exchange rate against the Euro that is important. Negative interest rates weaken a country’s currency and make imports more expensive and exports cheaper. Furthermore central banks could be trying to prevent a slide into deflation, or a spiral of falling prices that could derail the recovery.
In theory, interest rates below zero should reduce borrowing costs for companies and households, driving demand for loans. In practice, there’s a risk that the policy might do more harm than good. If banks make more customers pay to hold their money, cash may go under the mattress instead. Janet Yellen, the U.S. Federal Reserve chair, said at her confirmation hearing in November 2013 that even a deposit rate that’s positive but close to zero could disrupt the money markets that help fund financial institutions. Two years later, she said that a change in economic circumstances could put negative rates “on the table” in the U.S., and Bank of England Governor Mark Carney said he could now cut the benchmark rate below the current 0.5 percent if necessary. Deutsche Bank economists note that negative rates haven’t sparked the bank runs or cash hoarding some had feared, in part because banks haven’t passed them on to their customers. But there’s still a worry that when banks absorb the cost themselves, it squeezes the profit margin between their lending and deposit rates, and might make them even less willing to lend. Ever-lower rates also fuel concern that countries are engaged in a currency war of competitive devaluations. Source: Bloomberg

Saturday, July 11, 2015

Game Over 2015.75 | Martin Armstrong

"Schaeuble wants a Grexit to put the fear of God into the French!" HEREHERE
Martin Armstrong: "This is the start of BIG BANG and as the rest of Western nations
raise taxes, the economy is about to fall off a cliff and they bring economic activity
into a swan-dive. They will, as always, blame the private sector. We can see this
decline coming as long-term bonds crashed from May, liquidity has collapsed, and there
is excess cash in the short-end keeping interest rates low ensuring we will see not
just municipalities decline into a debt crisis like Detroit, but we are staring in the
eyes of death insofar as pensions are concerned. Politicians are good for only (1) lies,
(2) corruption, (3) debt, (4) taxes, and (5) death and war."