Earlier today:
Coal: Europe. He is not telling the whole story. Conveniently avoids the issue of deindustrialization and complete disruption of energy flow this past year. Another solar nut.
Now, this, from Tyler Durden:
By the way, the Biden administration killed "globalization" when the president signed the MAGA bill, the "inflation reduction act."
From the link: As proof look no further than a study published Monday by Allianz Trade which cited contract expiries and delayed wholesale pricing effects, and which according to Reuters found that German industry is set to pay about 40% more for energy in 2023 than in 2021, before the energy crisis triggered by Russia's invasion of Ukraine.
"The large energy-price shock still lies ahead for European corporates," said Allianz Trade.
As a reminder, in 2022, higher corporate utility bills were contained as long pass-through times from wholesale markets and government interventions mitigated the immediate hit from surging prices as Russia curbed fuel exports to the West. The resulting budget deficits were promptly funded by the ECB, which meant that for all the posturing, Christine Lagarde was directly funding Putin's cash build up.
But the pass-throughs are ending, which means that price increases will soon hit corporate profits across Europe by 1-1.5% and lead to lower investment, which in Germany's case would amount to 25 billion euros ($27 billion).
The silver lining is that German companies' finances are robust, while a state-imposed gas price cap would help (unless it makes things much worse).
At the same time, fears the crisis could lead to de-industrialisation and a loss of competitiveness against the United States were overdone, because labor costs and exchange rates have a bigger impact on manufacturing than energy prices.
Also, while exporters were losing market shares in areas such as agrifood, machinery, electrical equipment, metals and transport, the relative beneficiaries tended to be Asian, Middle Eastern and African, not American.Much more at the link.
