Lead Us Not Into Destitution

Uncle Volodya says, “The hardest thing of all is to find a black cat in a dark room.” Especially if there is no cat.”

“It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste. But in practice such a society could not long remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realise that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance.”

George Orwell, from “1984”

I went down to the bank this mornin’, ’bout half past nine
Well, I was lookin’ for a little somethin’ in the credit line
But the man said, “Look, what we got here, Sonny
There’s too much month at the end of the money”

Marty Stuart, from, “There’s Too Much Month (at the end of the money)”

What I wanted to do with this post was to highlight the unprecedented simple-mindedness with which Germany is sleepwalking into a profound economic catastrophe, which – if left to run the course its idiot government has charted – will see the ruin or relocation of core industries, the collapse of its status as the powerhouse economy of Europe and the cratering of living standards for many of its population. I thought a good way to start might be to cite an example of comparable stupidity, but that proved much harder than I thought it would be. I searched for “examples of stupidity by national governments”, but what mostly came up were jackhole lists of ‘the worst-governed countries’ as compiled by self-congratulatory think tanks like the Legatum Institute. Ha, ha; sorry, something just struck me funny – look; back in 2015, Ukraine made the list of the 25 worst-governed countries as rated by that collection of ersatz intellectuals. Of course, that was before the Churchill of Chernivtsi, the Napoleon of Novovolynsk, the Rommel of Rozdilna, the almost-too-much-humble-genius-to-fit-into-a-green-T-shirt super-fucking-size-me statesman, Volodymyr Zelensky, emerged to take the helm of the country Europe now recognizes it cannot do without. But let’s not get sidetracked. We are not here to talk about Ukraine, except peripheral recognition of its role as prime mover to a catastrophe.

Any discussion of the shit avalanche Germany is standing under, shouting up, would be incomplete without a short sidebar about how useless its present leader, Olaf Scholz, is. And again, that was much harder than I thought: the question that immediately springs to mind is – how the hell did this chocolate teapot become the leader of Europe’s most powerful and energetic economy? And I’m not quite sure myself. I know it’s not an elected position; at least, not a general election with a public vote. No, the Chancellor is elected by the members of the German Parliament. That suggests ample latitude for politics rather than what is good for the public or who might make a good leader for this reason or that. And Scholz struck a coalition agreement with the paint-chip-eating Greens, awarding the powerful positions of Foreign Minister and Economics Minister, as well as Vice Chancellor, to loopy Green ideologues Annalena Baerbock and Robert Habeck. And it is those two who are really running Germany, and the direction they are running it right now is on a collision course with the earth’s core. Right into the ground.

The former cannot seem to get her stories straight, claiming at various occasions to be a member of the German Marshall Fund and the U.N. High Commissioner for Refugees and an international lawyer – she was none of those – plagiarizing passages of her book, “Now. How We Renew Our Country” and declining to disclose all of her income. The latter, Habeck, sounded positively ebullient when he announced that Germany was ready for a shutoff of Russian gas: “Habeck, a member of the governing coalition partner Greens, acknowledged that if Germany were to cut off supplies of Russian gas, there would be a gap initially that would certainly “drive prices higher.” Habeck added, “As far as the short-term price increases and the burden on consumers and businesses are concerned, we will provide relief elsewhere.”

What a prophet. It certainly did drive prices higher: the price of natural gas in Europe was at least four times what it was at this time last year. And that was in February, before the additional sanctions imposed by Europe as punishment for commencing the military operation in Ukraine: now, they are about 15 times higher than the average, and Habeck is a lot less cocky. The expansive, devil-may-care politician – apparently allergic to razors, or has one which chops his stubble at a thigh-melting eighth-of-an-inch – who saw the quarrel as an excuse to switch the continent over to ‘renewables’ is presiding over a return to coal. That has to hurt.

“Coal has made a return, too. Just two years after the previous government set out ambitious plans to phase out coal-generated electricity by 2038, hard coal-fired power plants across the country are restarting operations in a bid to ensure that Germany can keep the lights on.”

Germans, though, are evidently slow learners; the same article gives the German government a hat-tip for its ‘smart’ choice of building LNG terminals at warp speed. The ‘NG” in LNG stands for Natural Gas. Germany is simply opting for buying natural gas in a far-more-expensive form so it can thumb its nose at Russia and its far-cheaper pipeline gas. If you’ve got money to burn, knock yourselves out.

Oh, whoops! That doesn’t appear to be the case.

That’s Germany’s consumer confidence, and I don’t think anyone here needs a course in how to read graphs to see that it is at record lows. If you weren’t sure about that, the preamble at the site (Trading Economics) dispels all illusion.

“The GfK Consumer Climate Indicator in Germany fell to a new record low of -36.5 heading into September of 2022 from a revised -30.9 in the prior month and worse than market forecasts of -31.8. The latest reading highlighted persistent recession fears and mounting concerns over higher energy costs. The propensity to save hit its highest in over 11 years, as households take precautions and put money aside for future energy bills; while the willingness to buy fell 1.2 points to -15.7, the lowest print since October 2008, marking the seventh straight month of declines. Meanwhile, the gauge for economic expectations edged up 0.6 points to -17.6 and the measure of income expectations added 0.4 points to -45.3. The institute warned that the situation could become even worse in the coming weeks and months if there is not sufficient fuel, especially gas, to heat homes, as this would further increase prices and drive up heating bills.”

Much of the complicated algorithms of economics boils down to if you make the people spend too much of their limited money on heat or lights or rent or food, they don’t have anything left over to buy a car or a new vacuum cleaner or a refrigerator or an extravagant naughty weekend in the Mosel Valley. Much of government’s role in economics boils down to balancing wages and taxes and utility costs to ensure the voters have a little scratch left over for modest luxuries, because buying stuff makes both purchaser and seller happy. Germany’s population right now – and you don’t have to believe me, look at the graph – is as happy as if it were standing barefoot in bubbling-hot shit up to its ankles. Let me see if I can find a smiley-face that captures it. Yes…that will do. 

But maybe I’m wrong – let’s look at a few more indicators, what say? Inflation, how about? The inflation rate is the highest it’s been since the mid-70’s, and the government is visibly struggling to get it under control by throwing money at it.

Where’s the money coming from? I’m glad you asked. Well, government spending is certainly up. To the tune of 51.5% of GDP.

What effect is that having on the country’s exposure to debt? Gosh – is it getting warm in here? I’m sweating like a German writing a cheque!

What’s this…this…this idiocy based on? Well, when in doubt, a fairly reliable rule of thumb is to look at what The Economist recommends, and do the opposite. Headquartered in London, ground zero for Russophobia, The Economist is so blinded with hatred for Putin and Russia that it tends to see the unfolding situation through a cheery ejaculation-spackled lens of determined self-affirmation. Let’s look at an example.

“Industry accounts for 37% of Germany’s gas consumption, a third more than the eu average—not counting the gas-fired electricity it gets from the grid (see chart). Until recently, Germany got over half its gas imports from Russia. As happens every summer, on July 11th the main conduit for the stuff, Nord Stream 1, was shut down for maintenance. It may remain inactive after the planned restart date of July 21st. Russia’s autocrat, Vladimir Putin, is threatening to starve Europe of the fuel as punishment for Western sanctions imposed after his troops invaded Ukraine. Many EU countries are vulnerable. But Germany has the most to lose.”

See, they just couldn’t resist slipping it in there that THE AUTOCRAT, Vladimir Putin, is “threatening to starve Europe of the fuel as punishment for Western sanctions imposed after his troops invaded Ukraine“. Has Putin ever actually threatened that? Show me.

“If in winter gas is still in short supply, Mr Habeck will declare the third stage of the three-tier emergency plan. The Federal Network Agency will then decide which firms must reduce gas consumption and by how much. To make an informed decision, the regulatory body has collected data from 2,500 large firms and is feeding them into a computer model. There will be no hard-and-fast rules, but likely criteria include whether curtailment would destroy capital stock and how critical a firm’s output is to a supply chain. BASF would probably get at least 50% of its usual supply; as a maker of luxury goods, KPM may have to close its doors for some time.”

Note that Scholz is not even mentioned, as surplus to requirements as an ear growing on your ass – nope, it’s Habeck who is running the store. And one of his most noteworthy recent acts was to engineer a € 15 Biillion bailout of energy company Uniper. Uniper promptly rewarded this splurge of taxpayer funds by posting a € 12.3 Billion loss. Well, thankfully, the short-term future is not all sturm und drang. No; under Habeck’s capable leadership, a gas levy on customers who are already paying more than ten times as much for gas as they were this time last year will help keep Uniper from going under.

I bet some of you remember Uniper in happier times…like when they were a partner in Nord Stream II. Here’s what they said then, although the mandatory warning was appended later to assure you they were all out of their heads, and just didn’t see The Big Picture.

“Since the commissioning of the Nord Stream 1 Baltic Sea pipeline, which supplies natural gas directly from Russia to European markets, the global energy industry has changed. The US has advanced from an energy importer to an exporter of liquefied natural gas (LNG). The LNG market is global and Europe would be an obvious major market for LNG from the USA. We have sufficient terminal capacity and considerable interest in securing more gas for our markets.

However, US-produced LNG is not interesting for Europe in terms of price because Europe is in very good pipeline distance to major natural gas producers. That is a trump card from which we Europeans benefit every day. Thanks to pipeline gas, we have a comparatively low gas price level. That’s good for industry and good for consumers. Europe is efficiently linked to many gas producers such as Norway, Russia and Algeria through pipelines. This pays off not only economically, but also in terms of energy policy – because it means security and reliability.”

You don’t say. But since then Germany has entered a parallel universe, where its stubble-faced playboy de-facto leader is more than happy to pay extravagant prices for American LNG, and the western media and its abundant analysts reckon he is just as smart as…as a big bag of smart things, for his rapid development of LNG terminals. And his people get to pay ten times or more as much for gas as they did only a year ago, while energy companies that were full partners in the importation of cheap gas – and could look forward to a doubling of their supply via a completed but never-used pipeline which the German government refuses to certify or use – live on handouts the taxpayer has no choice but to give.

Once again – the ability to add and subtract has not been whisked away from Germany by the Blue Fairy. Germany’s unbelievably incompetent government ideologues understand perfectly well that their groveling obeisance to Washington is costing their electorate gas prices which have risen so much in a year that they make Viagra look like penny candy. They know that being Uncle Sam’s spear-carrier is ruining German industry, and putting mild everyday luxuries out of reach while essentials must be eyed with grim determination. And still they press on.

Take note, world. That’s leadership, western style. Expect more of it.

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