From Russia With Love: Europe’s Energy Catastrophe

UK faces 18% inflation

You can't fix inflation harm with deflation

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From Russia With Love: Europe’s Energy Catastrophe

September 7, 2022

“European stress is increasing as financial stress increases. You’re really talking about social anxieties and political stress that gets played out. TPI [transmission protection instrument] acting as a smoke screen for the ECB balance sheet reshuffling. After our medical and social experimentation with COVID, we’ve put ourselves in the worst possible position, not just in Europe, not just in the US, but globally.” — David McAlvany

Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany. 

Gosh, Dave, from the German energy crisis to the difficulty of the French cooling their nuclear reactors because the rivers are getting hot, and you’ve got the Ukrainian situation with Russia. It almost sounds like a James Bond movie. But we sort of need the real James Bond back, don’t we? I mean, I’m thinking Sean Connery at this point.

David: From Russia with Love. Yeah. No, there’s some similarities, maybe some differences too. 1963, Sean Connery, a lot has changed since then. All you have to do is watch the trailer for that movie and know that a lot has changed since then, versus 2022. We’re not at the present seeking a decoder or an encryption device that’ll access Soviet state secrets and unbalance the world order, quite the opposite from Spectre. It’s the Russians who are destabilizing. All we’re seeking is reliable energy that can’t be leveraged and weaponized to do that very thing, remake the world order after tearing apart the old one. We have Gazprom and Russian state announcement that there will be an indefinite suspension of supplies from Nord Stream 1. And maybe that’s a different version of From Russia with Love. I think the best thing to do with an abusive relationship is get out of it, and I think the Europeans have maybe some application of that principle right here and now.

Kevin: Last week you were making comments about the German energy policy and how it was shortsighted. It was going green before they actually had a replacement for it. But France, we had talked about France keeping their nuclear reactors working. I just mentioned, they’re working a little hotter than they were before, and there’s concern, isn’t there?

David: That’s right. Just to balance out those comments on policy shortsightedness, there’s issues everywhere. And the spike in temperatures across the continent this summer, the French are having difficulty cooling their nuclear plants because the river temperatures have risen past the required or preferred thresholds. No one in Europe is exempt from current energy pressures. Some are climate related up to and including rivers that move coal and rivers below levels that are allowing for shipping. We’ve got that up and down the line. You’ve got some of them on the other hand which are compliments of Vlad. And Russia’s indefinite closure of Nord Stream 1 till all sanctions are removed simply upped the geopolitical stakes as well as the domestic political challenges for governments across Europe. Not a surprise that Germany very quickly announced a 65 billion euro package to help defray energy costs to consumers and businesses following that announcement from Russia that Nord Stream 1 would be closed indefinitely.

Kevin: Well, it seems like it’s the perfect storm. I mean, you’ve got the energy situation with costs just skyrocketing. I mean, oil, it’s the equivalent of thousand-dollar a barrel oil here, what’s going on in Europe. But my question would be, isn’t this like a fever? When you get a fever in your body, it affects everything. And you only have a certain margin before that fever ultimately kills you. Inflation is a little bit like a fever, isn’t it?

David: Yeah. But interestingly, I mean,