Time Is on My Side/Время на моей стороне.

Larry Johnson’s page: https://sonar21.com/operation-z-dont-interrupt/

Can you imagine Vladimir covering Mike’s performance?

In Russian, it’s Время на моей стороне.

OPERATION Z – DON’T INTERRUPT

17 July 2022 by HELMHOLTZ SMITH 3 Comments

One of Napoleon’s observations is that you should never interrupt your enemies when they are making a mistake. Russians know this, not least because they were careful not to interrupt Napoleon himself in 1812. Putin and his team have had plenty of opportunities to meet NATO’s leaders, observe them, negotiate with them and assess them. It’s unlikely they’re very impressed. But when they started their “special military operation” in Ukraine they could never have dreamed how self-destructive NATO would be.

What mistakes? First, the West has not shot itself in the foot with its economic sanctions – Hungary’s Viktor Orban is right when he observes that it has put a slug into its lungs. One can still limp along with a broken foot, but a shot to the lungs is pretty serious. Second, who in Moscow could have imagined that NATO would shovel its ammunition and weapons stockpiles into the Ukrainian black hole in the expectation that if they can get the latest wonderwaffe to General Steiner they’ll be in Moscow by Christmas.

A good reason for Moscow to take it slowly – let the mistakes develop, compound and metastasize. It’s happening by itself. Naturally, inevitably, logically. No outside effort required. An unexpected bonus.

Don’t interrupt.

Consider Germany, “the engine of Europe“. It stands on one thing – the reputation of German engineering and quality – Mercedes/Miele/Bosch, they may cost more but they’re cheaper in the long run because they’re so well made. No Western country manufactures much these days but Germany still does. In fact, only South Korea and China have a bigger share of their economies in manufacturing. (America, the colossus of former times, is half Germany!) But manufacturing needs energy. German energy comes from Russia – not all of it – about 20%. But coal is 40% and nuclear 10% and they have to reduce these because Greta wants them to which means they need more gas which is cheaper and “cleaner” and which mostly comes from Russia which requires another pipeline to be built. But then they decide that Ukraine is The Big Moral Issue and close the pipeline and step up coal which they’re going to get rid of altogether in 2030 thanks to more wind energy. And what about the nukes? Unicorn wings flapping. Hard to be green and hate Russia too.

And let’s ban potash from Russia and Belarus. That’s about a third of world production. Ban Russian wheat (it is the number 1 exporter) and oil (it is the number 2 exporter).

Oh, and by confiscating Russian assets they’ve shown the whole world that only an idiot would keep his wealth in NATO currency in a NATO bank.

And all this for a country they lied to about NATO membership.

Don’t interrupt.

Scene – Napoleon’s study – flunky enters “Mon Empereur, your enemies have banned a big energy exporter, a big food exporter and a big fertilizer exporter.” Will Napoleon shout “Stop it, mes chers ennemis, you’re going to destroy yourselves with inflation!” Probably not.

Everybody eats food and everything needs energy, their prices will rise and pull every other price up with them. EU inflation in May was 8.8%. But it hasn’t got liftoff yet – UK energy prices are set to rise 65% in October with another hike in January. It’s just begun.

Trouble in the streets all over Europe and two of the smug seven gone a month later.

Don’t interrupt.

Javelin anti-tank missiles were the wonderwaffe a few months ago – in mid April America had sent a third of its stockpile. That’s three or four years to replace. A quarter of its Stinger stocks. Vovan and Lexus got the UK Defense Minister to admit the UK had sent so many anti-tank missiles that it was running out. The Czech Republic is just about out of stuff to send. France has given up 18 months’ production of its Caesar guns.

And Kiev wants still more. Now that Kiev’s NATO backers have come up with the crazy idea of giving guns that need NATO ammunition, 155mm ammunition stocks are running down fast. If Ukraine is really firing 3000 155mm shells a day, that will burn the entire US annual production in a few weeks. And so on. War consumes astounding levels of ammunition – the Russians know this because they remember – they’re never allowed to forget – 1941-1945. NATO thinks blowing up, in wars of choice, at its leisure, people in sandals is the gold standard of military achievement. I again recommend reading The Return of Industrial Warfare. Russia is keeping up production but NATO isn’t and, absent a very long lead time (and a lot of other changes that you know perfectly well will never happen in FIRE-centered economies) can’t.

Even The Economist has noticed – Europe’s winter of discontent. (Still thinks that it’s Putin that put the double-tap into the lung though. But it is The Economist which has done its bit to bring us to this point.)

Why would Moscow want this to end any time soon? Time is working and the enemy is making lots of mistakes.

Don’t interrupt.

********************************************

A HIMARS sold to Russia for $8,000? That’s the word on the street: https://bulgarianmilitary.com/2022/07/16/russia-has-taken-control-of-one-himars-mlrs-the-media-claim/

Then, there are the HIMARS getting whacked: https://www.bitchute.com/video/gdVnGmLwpvwd/

Weekly update from New Atlas:

Marine Weekly update: https://www.bitchute.com/video/s1my7Ez4IBL1/

Germany’s Largest Power Company, Uniper, Days to Default

German energy giant and distressed nat gas utility Uniper, which is among the companies most exposed to Russian natural gas, has started using gas it was storing for the winter after Russia cut deliveries to Europe, increasing pressure on Berlin as the German energy giant needs to be rescued “in a few days.”

The country’s top buyer of Russian gas started withdrawing fuel from storage sites to supply its customers, the company said in a statement to Bloomberg on Friday. The drawdowns, which began on Monday, will also help the company to save some cash as it has been forced to pay up for gas in the spot market. Meanwhile, flows through the Nord Stream 1 pipeline remain shut for maintenance.

To put this into perspective, Uniper is Germany’s largest gas importer and successor to Eon Ruhrgas, which has maintained supply relationships with Russia for decades. Uniper itself supplies redistributors such as public utilities and suppliers and industry. In good times, the business comprised around 400 terawatt hours – according to the company, it was enough to heat 22 million households.

More than half of Germany.

Making Uniper “ground zero” for the Russian gas squeeze. And with the company substantially owned by Finland, a potential “two-fer”.

CDS up more than 10x since January

Per OilPrice.com:

Germany’s Uniper SE is just “days” away from insolvency, deputy chairman of Uniper’s supervisory board, Harold Seegatz, told Bloomberg on Friday.

Uniper is Germany’s largest purchaser of Russian natural gas, securing contracts with Gazprom. But as Gazprom cut flows of natural gas to Germany and Russia’s Nord Stream 1 pipeline undergoes maintenance, Uniper’s purchases of gas on the spot market have increased—a costlier scenario than its arrangement with Gazprom.

The high costs are creating an untenable situation for Uniper, and it is taken to withdrawing gas from storage—gas that was destined to help Germany make it through the coming winter as the country tries to wean itself off of Russian natural gas. Withdrawing gas from storage helps Uniper save on natural gas purchases, but this is merely a game of kicking the can into an inevitable insolvency oblivion.

“We are currently reducing our own gas volumes in our storage facilities in order to supply our customers with gas and to secure Uniper’s liquidity,” Uniper said, adding that it was clear “that Uniper cannot wait weeks, but needs help in a few days.”

Uniper is already negotiating with the German government a possible bailout that could give Germany a stake in the utility.

Uniper’s CEO Klaus-Dieter Maubach warned last Friday that the utility was unable to continue to refill storage ahead of winter, and could ultimately be forced to raise prices and even reduce supply.

Germany has a plan to fill its gas storage by 90% ahead of the winter season, with a deadline to achieve this set for November. But early withdrawals during summer—a relatively tame demand season for natural gas—this plan is now in serious jeopardy, and Germany could stare down winter heating season with precious little inventory.

*********

Recall I said “two-fer”.

Uniper is 75% owned by Fortum Oyj, a Finnish state-owned energy company. Also recall Finland applied for membership in NATO.

Finally, recall Russia has said a NATO country abutting Russia is a “red line” — an “existential threat.”

Anyone surprised that Fortum’s 5-year CDS spread to 335bp on June 30 close?

Little prospect German energy giant Uniper SE gets any support from Finland — that’s the US, err, Germany’s problem.

Germany will likely take a stake in Uniper Germany is preparing for the possibility of taking a stake in Uniper.

S&P Global Ratings had assessed that western sanctions on Russia could cut earnings for Fortum as they struggle to transfer profits from units in Russia, and EBITDA could drop -20% if Fortum cannot transfer earnings outside Russia.

BTW, 2 heads of state have fallen since the Russian invasion of Ukraine. That leaves 2 heads remaining — Macron whose power was slashed in the recent election, and “ground zero” for the EU project – Olaf “I know nothing” Scholz.

A recent Bank of America research note outlined how an “ugly” scenario of supply disruptions could push NatGas over 200 euros this year and in 2023.

The energy situation in Germany is worsening, and more insight into Russia’s pipeline flows will be available after Thursday, when Nord Stream is expected to return to service. Suppose Gazprom throttles flows and or even halts after the scheduled maintenance period is over. In that case, it will result in a situation that would spark economic doom for Germany and the continent this winter. 

Even though Muller predicted Germany would be independent of Russian NatGas by the summer of 2024, Europe faces two years of tight supplies that will continue to feed into energy inflation and crush households and businesses. 

Finally, Deutsche Bank senior economist Eric Heymann told clients Friday that German households will be chopping a lot of wood this winter and using fireplaces for heating as a cheap alternative to expensive NatGas.

Corrupt Joe Threatened Poroshenko

Well, the Biden family was getting paid by Mykola Zlochevsky.

Regime Change 2.0

And another one bites the dust.

Tom: https://tomluongo.me/2022/07/14/davos-loses-big-time-draghi-way-out-italy/

Italian Prime Minister Mario Draghi is out. He tendered his resignation to President Sergio Mattarella. Mattarella is refusing for now. There will be another confidence vote. It shouldn’t matter.

As is always the case with Italian politics, the story is always far murkier than the headline.

The headline is Five Star Movement (M5S) leader Giuseppe Conte could no longer back Draghi’s government because he’s doing nothing to deal with spiraling food and energy costs in Italy. Without M5S support it will be difficult, at best, for Draghi to maintain power.

The parties which ‘won’ the last election are now polling 3rd and 4th. M5S is now polling at just 12%. Lega just 15%.

It is Georgia Meloni’s Brothers of Italy that lead the polls. And we are, at most nine months away from Italian elections.

I’d say nine weeks is more likely.

So, M5S and Conte making this move now is not in their favor. This implies something far deeper than what it looks like on the surface.

It implies strongly that there is an urgency to removing Draghi that trumps basic power politics, that the future of Italy itself may be what’s at stake.

And I think I might know why.

Italy is woefully unprepared for this winter as gas storage is well below levels necessary to get through the winter. The problem is Italy and the EU have been lying publicly about it. According to EU data Italy’s gas system is over 65% full, with over 126 TWhrs available, in line with other major nations, like Germany.

But looking at the actual numbers, for this year, which have been fiendishly difficult to get a hold of in recent weeks (I wonder why), Italy’s Stogit, the main gas storage company in Italy, is only 53% full and that jumped significantly in recent days (link to the data from today 7/14/2022).

Compare the run rate of gas storage filling (see chart below) from today’s data versus that of 6/17/2022 where storage stood at just 37% capacity and you’ll see exactly what I’m getting at.

So, what happened around then that all of a sudden caused a shift in the gas storage rate for Italy? M5S began its campaign against Draghi’s handling of Ukraine and a general strike was called among transport workers for June 17th.

After Draghi publicly talked about settling the Ukraine conflict with Russia, Italian Foreign Minister Luigi DiMaio (former leader of M5S) openly criticized Draghi’s “immaturity” when dealing with Russia.

Now, this is where things get really murky. Remember that it was Conte who was Angela Merkel’s bagman back when he was Prime Minister to derail any potential Italian exit from the European Union, or, at least the euro. Remember also, that it was Lega’s Matteo Salvini who was openly calling for Italy to ditch the euro.

Salvini was then put under pressure from a bogus Soros-led lawsuit against him when he was Interior Minister over his handling of a boatload of refugees.

Conte staged a coup against DiMaio while they both threw Salvini under the bus when he made his move in August 2019 to take down the government and force new elections, which, at the time, Lega would have won in a walk, having more than 35% national support.

Since then Salvini has cucked out to nearly every bad move made by Italy, likely because it didn’t matter what he did.

In the end these maneuvers by the Italian political elites neutered the upstart M5S and Lega and eventually they brought Draghi in as a kind of politically-neutral caretaker Prime Minister to get the country through to the next election, which is scheduled for the first part of 2023.

Davos needed Draghi in charge in Italy to shepherd the country’s liquidation, which is where the gas storage crisis fits in. Davos moved quickly to put all of their people in place around Europe after installing Fungal Joe Biden as president in the US. Draghi being in charge in Italy meant that Davos was in charge of both sides of the Italian-American relationship.

And I’m sure they all expected they had everything they needed to ‘run the table’ geopolitically. Draghi would implement vaccine mandates, Green Passes and degrade further Italy’s competitiveness at every turn.

The euro would remain strong, Eurobond yields low, the ECB’s reputation untarnished and the Fed captive to the Democrats’ bonkers spending plans. That was the state of play when Draghi was installed in March 2021.

All that was needed was for the US to roll over and print/spend themselves into oblivion with the Democrats fully in power in the US. The Fed would be forced to monetize another 6+ trillion in debt the world didn’t want and the US would collapse, allowing capital to flow into Europe as opposed to fleeing it.

We all know how that turned out.

As I’ve been banging my shoe on the table about for the past year, the Fed, led by Jerome Powell, has been steadily undermining the Eurocrats’ agenda with tight dollar policy which started this massive bull run in the US dollar last June when he raised the payout rate on Reverse Repos to 0.05% above the Fed Funds Rate.

At the same time, Krysten Sinema (D-AZ) and Joe Manchin (D-WV) blocked the domestic agenda by refusing both the Infrastructure and Build Back Better bills in the Senate. Pelosi and Schumer were stymied at every turn and couldn’t get anything past those two.

As I said then, those two only stand tall because powerful people stood behind them. People even Davos couldn’t blackmail.

That’s a short list, FYI. It starts with the Fed and it ends with international capital not ‘down with the Comintern.’ For a full list, just look at those unwilling to sanction Russia for throwing the first punch in Ukraine.

Once that agenda collapsed and Powell’s second term as FOMC Chair secured, that set the stage for what’s happening now.

Because Draghi’s resignation begs a LOT of questions. Why would Conte, formerly Merkel’s stooge, pull out of the coalition if Davos was still in control of the situation in Italy? What changed that forced this?

I outlined the lying about the gas storage and Draghi’s wavering on Ukraine above, but is that enough? Last week Davos got a couple of scalps — Boris Johnson and Shinzo Abe. Both of them were aligned with the US, not Europe.

Europe wants to back the War against Russia without looking like they back the War against Russia. Typically European, they want to have their foreign policy cake provided by US money and eat it too.

They are going after Olaf Scholz to put the Greens formally in charge in Germany and betray what’s left of the German middle class.

You know I believe the Fed is working to re-establish US primacy over its own monetary and fiscal policy, which tracks with the way Powell has raised rates and caused heart attacks within the Eurodollar system.

Moreover, when you look at the failures of the Biden administration to get any traction globally to isolate Russia you see a Davos agenda that is failing completely.

It then tracks that weak newcomers to the Italian Swamp, like those in M5S, may have finally been given enough assurance that the situation has changed. July’s 9.1% US CPI print was enough to really begin breaking things.

The Anti-Davos factions within the US are strong enough now for them to throw off the Davos yoke, as represented by Draghi, Mattarella and former PM Matteo Renzi, and begin Italy’s bid for independence.

The Fed responds to Davos taking out Johnson by taking out Draghi and putting the EU on a path to disintegration. The euro broke parity with the US dollar on this news. Now the ECB is staring at a vortex of higher rates as the Fed is clear to raise another 75-100 bps in two weeks.

What’s Lagarde going to do? Raise rates? If so then buh-bye Italy and hello Euro-zone banking crisis.

Given how hated Draghi is in Italy, there is no way for him to continue given what we know now. Any further resistance by Mattarella will ensure the lot of them get lynched publicly.

The mood in Italy is that bad.

The likely story is that Draghi was looking the other way while Germany openly siphoned off gas meant for Italy for itself to ensure that Italy starved and froze this winter.

So, what the TL;DR?

The EU is in serious trouble. With Draghi’s fall, there is no stopping a collapse of Italian debt prices as either Davos goes for broke and nationalizes Italy’s gold reserves or Meloni comes to power with the backing of the US banks and DoD and takes the country out of the euro, if not the EU itself.

The betrayal has been total. There’s no bringing Italian loyalty to the EU back after its reveal as yet another shitty German attempt to take over Europe.

As I’ve described in previous articles, with Russia on one side and the US Fed/Banking Interests on the other the stress on the Euro-zone and the European Central Bank has never been higher.

The ECB has no answers and has as much admitted they don’t. All they can do is keep funding Italy until the US mid-terms where Davos hopes they can save the Democrats from a complete wipe out. That was also the plan.

Now Conte and M5S have blown up those plans as well.

There is a real fight for primacy over the West’s power going on. Will it be led by Eurocrat commies or Anglo corporate fascists. There are no ‘good guys’ here. They are all terrible.

This takedown of Draghi, the ultimate Davos insider, is one of the most important turning points in 2022. It signals to me that they have now lost control over the single most important country in Europe. It is the fulcrum on which the future of humanity may ultimately rest.

Given how close we are to Davos manipulating the US and the world into a global holy war for energy, as outlined by Former Secretary of State Mike Pompeo’s Three Lighthouses speech recently, I’d say I’m on the side that is working to avoid that.

20 million SPF sun block hasn’t been invented yet. I’m sure I would have seen that in Wired. For that reason alone you should probably cheer for the ignominious end of the public life of Mario Draghi.

*****

Who would ever have imagined Jerome Powell and Vladimir Putin would be the Dynamic Duo our salvation?

A little Freddie as we say “ciao”?

And, of course, Большое спасибо, Владимир. Вы современный “Петр Великий”

Hit it, Freddie.

Nancy Gets a Payday

It’s the Progressive Way

ZH: https://www.zerohedge.com/markets/nancy-pelosi-throws-her-support-behind-50-billion-semiconductor-bill-hours-after-disclosing

Oh, and in full disclosure, one of my trading strategies is the “Nancy Trade”. No surprise, I’m long Nvidia.

Nancy Pelosi Urges Support Of $50 Billion ‘CHIPS’ Bill Hours After Disclosing $8 Million Nvidia Stake

Oh, look: Nancy Pelosi is pushing legislation that stands to benefit her significantly thanks to a couple of brand new, multi-million dollar trades she has made.

Stop us if you’ve heard this one before…

This past week it hit the terminal that House Speaker Pelosi was doing a little portfolio re-jiggering, including exercising $8 million of call options in Nvidia and selling Apple and Visa calls. The data was per CongressTrading.com and was reported on by Bloomberg. 

The Nvidia LEAPS were bought June 3, 2021 with $100 strikes, set to expire June 17, 2022 and the position appeared to be disclosed on Thursday morning for the first time. $8 million trades seem a little odd for members of Congress to begin with, but who are we to judge?

But then, what did Speaker Pelosi do just hours after disclosing the trade, on Friday? She threw her weight behind a stalled $50 billion CHIPS PLUS bill that “would provide $52 billion in funding for semiconductor manufacturing grants and investment tax credits for the chip industry,” according to RollCall.com

Pelosi said last week: “We had been working constantly on the chips bill. And we need to have the transformative nature of research and education and the rest to make us continue to be preeminent in the world. How it shapes up in the next short period of time, we’ll see. But we are determined that we will pass a bill.”

“Democrats are ‘more interested in’ a chips-plus bill than a chips-only measure,” Pelosi added, according to the Roll Call report

Yeah…interested in that and buying super yachts. Let us guess: the unrealized gains tax won’t be supported by Pelosi until she cashes out of the market altogether, either…

Mike Pompeo – Psychopath

On June 24, 2022, former Secretary of State gave a speech at the Hudson Institute bordering on “General Jack D. Ripper”-crazy.

But don’t take my word for it — there’s Mike up top, and Jack below. Psychopathic or insane — you make the call.

Mike could not have made this speech without the “s’all good, man” from our State Department apparatchiks.

That means “Mad Mike” is speaking on behalf of the Foggy Bottom crowd.

Here’s the link: https://www.hudson.org/research/17914-transcript-of-pompeo-speech-on-ukraine-and-a-global-alliance-for-freedom

And the text — highlights are mine reflect a range of psychopaths, starting with “let’s go to war with Russia AND China at the same time, fought to the last vassal”. Because THAT’S the point, I’ll withhold most comments about claims Mad Mike makes that are just factually wrong:

Transcript of Pompeo Speech on Ukraine and a Global Alliance for Freedom

Hudson Institute

WASHINGTON—Below is the transcript of the speech by Hudson Distinguished Fellow and the 70th U.S. Secretary of State Mike Pompeo will give today at Hudson Institute on the future of Ukraine and why the U.S. should defend Taiwan from Chinese aggression:

“It’s great to be here at the Hudson Institute. To those of you from the Ambassadors Court, thank you for being here. Honored guests and friends, it’s an honor to greet you. I consider it an enormous responsibility to speak to you about a matter of the utmost urgency and significance. It involves war, Ukraine, and the necessity of forming a new global alliance for freedom, which has to contest, which must contest both Russian and Chinese aggression.

“I last had the privilege of meeting with President Zelenskyy in January 2020. How different the world seemed then. But unlike the presidency that the Trump administration followed, America did not hesitate in supplying Ukraine with weapons, such as the Javelin, which broke the back of Russia’s armed advance to Ukraine’s capital.

[Comment: Russia’s move on Kyiv was a mere feint intent on freezing Ukrainian reserves. 40,000 troops cannot possibly seize and hold a city of 2 million. That requires 200,000 troops at minimum. So, there you go – typical West Point thinking which is why the US hasn’t defeated a peer military power by ourselves EVER]

I looked back at this as I was preparing for this speech, at the joint press conference with President Zelenskyy. Your nation’s heroic president thanked the Trump administration for our support of Ukraine in the war and the Donbas and your efforts to reclaim Crimea. A war for freedom now rages in Ukraine, it demands that we speak with absolute candor and with unlimited certainty of purpose.

“Let’s start at the beginning. Ukraine must be free and freedom requires strength and dignity. To be secure, Ukraine must always be a sovereign, not constrained by another nation’s territorial incursions or influence. Russia’s invasion of Ukraine is an inflection point in the post-Cold War politics. John referred to my time as a young soldier, then serving on the then East German border. Here we are, that border still challenged, the European front attacked. So what does this say? What does this portend for Europe? How does this war affect Russia’s affiliation with China and that country’s actions with respect to Taiwan? And what lessons must we draw for our security and for our freedom throughout the entirety of the world?

“At the center of these questions, and a question I want to answer to all today, is why does this matter? Why does this matter to the United States of America? Why should America support Ukraine? And why should it matter to citizens far flung across our great country? Why should a machinist in Wichita, Kansas, or a school teacher in Des Moines care about what happens in the Donbas? It is my hope today that we will find answers because to find those answers is vital to liberty, for our own people here at home. We know this in America, the gift of freedom is always purchased. This fact is iridescent today in Ukraine. Men and women of extraordinary intrepidity are sacrificing themselves to secure liberty for their children and for their countrymen. And because of their courage, the Ukrainian people’s courage against harrowing odds, I am confident that Ukraine will live. And the deeds that this generation achieved and their heroism that is on display today will forever be remembered. Not just in Ukraine, but all across the world.

“For when the preponderance of a nation, that’s never known war for a lifetime thinks freedom cheap they create risk. Sometimes freedom appears as an afterthought that is plentiful as the air we breathe. It’s not, it is rare. It is the most precious commodity. The most precious commodity that humanity has ever attained. This is the lesson that Ukraine is teaching us all. They’re teaching America’s children, and it is perhaps the most important message that they will ever be taught.

“Virtue. Virtue is the prerequisite for freedom for it provides the boundary that enables exercise, without unduly limiting or infringing upon the rights of others. Keep this thought in your head as I speak today. This safeguarding, the safeguarding the exercises’ of freedom, depends on virtue in its totality. Liberty is freedom. Liberty is freedom from molestation by an oppressive government or authority. And freedom is crushed. Freedom is crushed if virtue is not prized. Vladimir Putin’s utter lack of basic humanity ensures that as long as he remains in power, Russia will be virtual prison and no nation that borders its expanse will ever be safe.

“Liberty. Liberty as promised in our Declaration of Independence and as guaranteed by our Constitution and guaranteed by the constitution of Ukraine is thus only possible, if limited government is practiced and not enlarged for expansive government, through its desire to accrete power, subverts individual agency and choice, ultimately destroying liberty. I worked on this as a member of Congress. And this choice ultimately destroys liberty if we centralize. Economic security begins with this understanding, and I want to talk about economic security. Ukraine, like America before, is the magnificent answer to the questions that I’ve raised. You can see it, you can feel it. Is freedom worth dying for? And the question that gets asked in my hometown is, but should America be involved in this war? We’re not the world’s policemen, Mike. But I tell them because this is clear, by assisting Ukraine, America bolsters our own security without the involvement in combat of our men and women. We’re not going to send America’s military into this war, our president has made that clear. But we can do so much.

“We can do what President Zelenskyy has asked. We must aid Ukraine, for to do so in part is our first duty to America and to Americans. It’s because supporting Ukraine, we prevent larger European conflict. A war that would almost certainly involve America’s military because we have a deep commitment to the NATO treaty and Article Five there in. By helping Ukraine, we prevent Russia’s reconstitution of the Soviet Empire, the thing that I studied about when I was a cadet at West Point. [Comment: no evidence Putin is reconstituting the Soviet Empire] That empire, if rebuilt even in small measure, would dictate world fossil fuel supplies causing massive economic hemorrhaging in America and throughout the globe affecting every single American. [Comment: a lot cheaper to expend to expand US hydrocarbon production if that’s the concern].

By aiding Ukraine, we undermined the creation of a Russian-Chinese axis bent on exerting military and economic hegemony in Europe, in Asia and in the Middle East. [Comment: by aiding Ukraine, we drove Russia into an extraordinary tight alliance and codependency with China] This would further devastate the lives of Americans and our economy here at home. Indeed, by empowering Ukraine, we demonstrate to China the cost of invading Taiwan. Or frankly exerting its influence in nations all across the world, thus helping to thwart an assault that would rupture the living standards of the world by crippling supplies of goods, such as semiconductors. Look, we must act in support of Ukraine’s territorial integrity, lest we undercut America’s self-interest. It is a deeply American mission.

“I served in a unique administration. I’m proud of that uniqueness. And in the Trump administration, before the global pandemic induced by China, we created the greatest economy America has ever known. The strength of America’s economy propelled by affordable and abundant supplies of fossil fuels was a bulwark and an enormous tool for America’s Secretary of State. It was a bulwark against Russian and Chinese expansionism. Today our economy is at risk. Stripped of our energy dominance, subdued by our disastrous withdrawal from Afghanistan, subjected to waves of undocumented immigrants coerced by transnational criminal organizations. Shattered by inflation, due to deeply irresponsible federal spending and pummeled by lawlessness as we approach a precipice here at America. A broadened European war would push us over the edge and spell unmitigated disaster for our economy.

“Farmers from my home state in Kansas would see their markets evaporate as our nation’s manufacturers in all towns, in all cities. I ran a machine shop in Wichita before I lost my mind and ran for Congress. It would be devastating to American manufacturing not to support what’s taking place in Ukraine today. Every American, every American would face the burden of exponentially higher costs of living on top of what we’re already facing.

“You need not guess about this next fact. Putin has proclaimed that there is no intermediate state. Either a country is sovereign or it is a colony. Xi Jinping believes the same. This war, Putin’s war, is to expunge Ukraine as a sovereign nation and as a people. Ukraine is to be folded into the new Russian Empire that seeks to become a rump of the Soviet Union. Nine, count them, nine American presidents from each of our political parties. Nine American presidents dismembered the Soviet Empire at enormous great human costs, to allow it to even begin to be reconstitution unthinkable.

“Putin’s illegal assault of war represents a planned genocide, which is deliberate obliteration of a people, as defined by the 1948 United Nations. Though each genocide is different and unique as John mentioned, the one taking place in Xinjiang. This genocide that we’re seeing today is like the Holodomor engineered by Stalin that murdered millions of Ukrainians and it must be named to be fought.

“I get asked all time, “Has Putin changed?” In 2005, Putin declared the demise of the Soviet Union as one of the greatest tragedies in history. In 2007, he enunciated his rationale for conquest in terms that would be familiar to dictators who ruled Europe almost 90 years ago. Putin’s been consistent. He’s been consistent in his revanchist objectives. In Grozny in 1999. In Georgia in 2008. And in Ukraine in 2014.

“Today is different however. Putin’s intentions haven’t changed, but his calculus of risk did change. The implacable resolve of the administration, which I served gave pause to Putin’s vicious goals. For he knew if he invaded Ukraine, he would face a whirlwind. I made this clear to the president of Russia when I spoke with him, to my counterpart Lavrov and I think they both understood the might that I represented. Look, Putin may or may not be ill, but what is certain, what is certain is that he cannot contain his murderous fury. That he still leads a country exemplifies Russia’s decline into the abyss of madness.

“A mass murderer. A mass murderer is someone who kills a large number of people at one time. A serial killer murders sequentially. Only in war therefore can a man be both a mass murderer and a serial killer. Putin is that. I pray that Russia will reclaim its soul, its country’s soul. But it cannot do so as long it is led by a man who does not evince any concern for the horrific carnage he has wrought, or any concern for his own people.

“Putin has this dream, to reestablish a lost empire. If America behaves properly, it will not occur. And we know this, we know that the dreams of dictators quickly become nightmares, if the world has resolved. As with so many tyrants before and Putin has sought refuge from his maladministration corruption and unaccountable crimes by taking his nation into war. What Putin has ordained, however, is not war with any justifiable purpose, but a pact of death, a pact of death to which Putin has forced his nation’s signature. The Russian people and their armed forces are now paying dearly for their toleration of what must never have been tolerated. [Comment: Russian Ruble is at historic highs as is Russia’s current acount, while the US and our vassals in Europe are entering a recession with historic levels of inflation]. Russia’s power has exceeded its wisdom, which itself must rest on decency if wisdom is to be meaningful at all. There will be repercussions for this calamitous war. This calamitous war results from the change in perception of Vladimir Putin. And that begins with mechanisms of conquest being allowed to feed on Europe’s and the world’s demands for natural gas and other hydrocarbons. The greater part of Russia’s federal budget continues to be funded by its energy sector, which rests on oil, coal and natural gas revenue. Comprehending that Russia’s inexplicable decline due to its endemic corruption and its demographic collapse, Putin, in order to secure his own rule, covets that natural gas and coal of the Donbas and Ukraine’s untouched oil fields that he may be open to fracking.

“Also sought are Ukraine’s warm water ports and the pipelines Putin seeks to permanently control, including those with access to China. It is my conviction that America and the West must acknowledge the centrality of hydrocarbon energy to the world geopolitics and indeed to man’s ability, humanity’s ability to adapt a cornerstone of life. Adaptation results from prosperity, which is made possible through the use of fossil fuels. The present administration has a different approach. They assert that America’s energy producers gouge and must produce more fuel all at the same time. Today’s obscene fuel prices should stimulate increased output. But for the fact that our government’s degrowth policy stand in the way of that increase in output. Central to America’s place in the world and our support of Ukraine is that these radical policies must be eradicated. If we’re to regain our energy dominance, which we must, we must eliminate these policies. Russia and China understand this. Many advanced countries, however, do not. For we’ve become enraptured by unreal narratives.

“Thank you, Greta. This war is a clarion call. Energy and economic security along with military strength are the pillars upon which geostrategic power and peace rest. Energy is the fundamental basis for everything we consume. If energy prices spiral further, the economies of every nation will fragment, leading to massive worldwide recession and to authoritarian regimes coalescing their power in a time of turmoil and political strife. Indeed, if Russia has allowed dominion over the Donbas and Ukraine’s coast, Putin will next seek control of the energy resources of other independent countries as well that were once part of this Soviet empire. Russia will become a juggernaut, dominating fossil fuels in addition to its present lead in supplying nuclear power plants to recipient nations.

“This will serve and can serve as citadels to which Russian military forces may be deployed without any notice or any warning. This is what’s at stake. Nothing less. Had the current administration maintained American energy dominance rather than prostrate itself to radicals, America could have led the way in securing the world’s hydrocarbon needs during this war. But because America’s abdicated this vital role, the war in Ukraine is compounding the pain that consumers are feeling today to cool their homes and to drive their vehicles. Farmers in Kansas can’t fuel their tractors. Fertilizer, 300% increase in cost to help continue to feed the world. Again, I ask why does this matter to hardworking Americans? I’ve given many reasons, but it’s in part because if Russia controls Ukraine’s energy, today’s ruinous prices of the pump will be remembered as a type of cheap gas.

“Contrary to Russian propaganda, Ukraine has always maintained its own unique culture, language and identity. This should always be so, so long as the Ukrainian people are prepared to fight to defend it. This maintenance of distinctiveness during protective periods of foreign deprivations is the mark of a great people. A great people who have sought independence throughout their history. In our country, America’s founders decided that people of a common past, people of a shared future, people of a common purpose have the right to choose a path for themselves. And so must it be in Ukraine. The ancient Greek geographer and historian Herodotus wrote of the Ukrainian homeland. Before the time of Charlemagne, a polity was established in the land that is now Ukraine. It is a country of immense historical, linguistical and cultural roots, which deserves the world’s admiration.

“One of our greatest Ukrainian Americans was Ambassador Lev Dobriansky. Instrumental in the formulation of what became Public Law 86-90, as well as the plans to free the captive nations that were the constituent parts of the then Soviet Union. These nations were unchained in 1991 because of the collapse of the Soviet Union. And we dare not let any of them be recaptured by Russia. Ambassador Dobriansky had it right. Ambassador Dobriansky worked tirelessly to create a Ukrainian memorial to the great Ukrainian poet and patriot Taras Shevchenko. President Eisenhower signed that law that authorized the monument. Shevchenko was born into serfdom. His liberty had to be purchased. This is why Shevchenko devoted his life to attaining freedom for his people. He and America’s great abolitionist, Frederick Douglas, who himself was born into slavery, shared a common quest for seeking dignity for all of humanity.

“On the base of the Shevchenko memorial are inscribed these words. They read, “When will Ukraine have its own Washington with fair and just laws? Someday we will.” I believe Ukraine has found it’s Washington in the embodiment of a single man. His name is Volodymyr Zelenskyy. He has led the world at a time of great peril. For centuries, Russia has been revered for its innumerable artists and scientists. But in mere months, Vladimir Putin has turned the world’s perception of his country into one of absolute disgusted and disdain. Russia employed a ballistic missile to murder over 50 civilians at the train station in Kramatorsk. This is butchering. This is nothing less than butchering cowardice to compensate for the failing Russian army. Putin has brought great shame, exodus and poverty to the Russian people. And in the wake of that missile attack, Russia’s homicidal rage in Bucha, its merciless siege of Mariupol and its destruction of food stocks.

“America and the nations of the world cannot continue the pretense that the war in Ukraine can end in a negotiated peace, which mollifies Russia. For such a peace cannot be negotiated with Vladimir Putin. Ukraine must win this war. It must win this war decisively if it is to realize peace, independence and freedom. Same goes for Europe. The transit of ships today carrying grain from Ukraine must be guaranteed by the international community. Over 40% of Ukrainian wheat is exported to Africa. I know a little bit about wheat, having lived in the state of Kansas. Russian denial of these wheat shipments may result in starvation across multiple continents. Consideration must be given to convoying shipments of grain out of Ukraine. For Ukraine to be victorious, it must be provisioned with the weapons that it needs. And I don’t just mean talks inside the Oval Office or the West Wing. You have to deliver the goods.

The war can be won. [Comment: really, with what army?] This war can be won if America and our allies supply a range of our most capable conventional weapons to Kyiv. Dauntlessness is needed to end the war in Ukraine, seriousness of purpose. NATO solidarity is essential Germany and France must not defer to any of the Kremlin’s wishes. America and Britain have supplied multiple launch rocket systems. Ukraine has received advanced artillery from a number of NATO nations. That’s good. It’s crucial that Spain follow through in sending Leopard 2 tanks. That’s an old M1 one tanker. The Leopard’s a great tank. The Europeans will use it well. They’re third generation tanks. They’re comparable to what I was in, the ones that I commanded when I was sitting face-to-face with the evil empire. America has large numbers of Abrams tanks in storage. A significant portion should be immediately made ready for employment in Ukraine. You can train the Ukrainians on them in days.

“The combination of rockets, artillery, armor and advanced unmanned combat aerial vehicles providing real reconnaissance, real intelligence and real kinetic capabilities and advanced targeting systems would provide Kyiv with precise the tools they need to begin to recapture, deterrence, to recapture precious Ukrainian soil, and to be coupled with an unending supply of ordinance that would stream into the nation. Don’t give any heat. We must not give heat to Russia’s false claim that it believes its borders are threatened. This is silliness. I spent maybe 10 hours with Vladimir Putin. There was never any chance that he truly believed that an invasion from Ukraine or from Europe was imminent. Are Russia’s borders more secure say than Ukraine’s territorial integrity or America’s Southern flank?

“In addition to land systems, Ukraine urgently needs new air defenses. Putin will continue to pummel Ukrainian cities if Ukraine does not receive surface to air missile system that engage both aircraft and missiles. The present Soviet era S300 system isn’t enough. How many more innocent civilians need to be slaughtered before Ukraine receives what morality demands? Indeed, Patriot missile batteries must be complimented by the transfer of fourth generation fighter aircraft and remotely piloted vehicles, which can loiter for hours. I’ve seen them used well. These synergistic weapons, if rapidly provided will absolutely be determinative. Russia cannot be allowed to dictate the terms of this conflict. Though perhaps counterintuitive, a surge providing conventional weapons will reduce the chance that Putin will resort to weapons of mass destruction. For providing decisive weapons to Ukraine will irrevocably shape the face of battle, causing Putin to realize that his strategy is doomed to fail.

“One can’t speak about this in isolation. American military power has been the guarantor of my country’s promises for decades. It’s been the means to give body and shape to my nation’s obligations by supporting diplomacy. I used it well for my 1,000 days as Secretary of State. It remains a tool without equal if properly understood, Sadly, the fall of Kabul and the creation by force of an undemocratic government in Afghanistan are assaults on the international system. I believe deeply that the weakness that was expressed in America’s undisciplined withdrawal from Afghanistan was interpreted by Vladimir Putin as a green light, recovering from a doomed strategy that spanned decades. The administration which I serve sought to reduce our commitment there in a responsible manner. This planning was cast aside for reasons that seemed to hinge on expectations of or appearances rather than the discernment of realities.

“As Secretary of State, I built upon my work as the director of the CIA to aid President Trump in formulating concrete terms that would’ve allowed for force reductions and withdrawal from Afghanistan but without the debacle and the hard one progress that had been made in that country. And without the risk that we told bad guys all around the world that America was abandoning our friends. What a help established was the certainty of action that should the Taliban renounce operationally or operationally rescind what was agreed, that we would with certainty respond in a way that restored the heart of deterrence. And we did it at a tactical level time and time again. Russia’s assaults has exposed the sinners of global economic and energy and securities affecting every single American. The United States should never again fight another nation’s war. But we must stand ready when people who are willing to fight for their own liberty request support that will not require the dispatch of our armed forces.

“America must not let Afghanistan and the war in Ukraine be the cue that ignites combat in the Indo-Pacific. China stated intent is to displace the United States as the world’s preeminent power. The height of the global health catastrophe that it created, the Chinese Communist Party did not moderate its objectives. Instead, it accelerated them with utter disregard of its commitments to the United Kingdom and to the people of Hong Kong. China broke the Sino-British Joint Declaration. The declaration constituted a treaty granting Hong Kong a high degree of autonomy. China was obligated to main this through 2047. We all know what has fallen. It did not. And given China’s actions, it matters of world health, bio safety, Hong Kong. We have to ask ourselves on what important document is China’s signature meaningful? The answer is that China’s signature is authentic as that of the Russian signature on the 1994 Budapest Memorandum, in which Russia guaranteed Ukraine’s territorial integrity in exchange for Kyiv’s elimination of its nuclear arsenal.

“We must not ever allow the communist model for development to proliferate, for it’s a kleptocracy. It is autocratic rule by thieves as is demonstrated by the magnitude of China’s theft of American intellectual properties and the millions of jobs that fled our country as a result of it. We know China’s intention. It’s intent on dominating global infrastructure development through its Belt and Road Initiative. But this is subterfuge. It hides. It’s a deceit. China’s Belt and Road Initiative is a form of imperialism. It is the manifestation of a corrupt intent to entrap less developed countries with promises of loans and infrastructure improvements.

“These loans are national assets. They’re collateral for terms that are designed to ensure non-compliance of the detonation with asset forfeiture. More properly thought of as political extortion in the hands of the Chinese Communist Party. Even more ominous still is China’s stated intent to conquer Taiwan. Through Ukraine’s bravery resisting Russia, it’s given China pause. I am confident Xi Jinping is asking his generals, “Really? Can you do what you say you can do?” Part of the answer to how to combat this is what we do in Ukraine. Part of the answer is that every president since Truman believed Taiwan’s existence is crucial to America’s defense. I believe that with all my heart. The 1970 Taiwan Relations Act requires that we maintain Taiwan’s defensive abilities to thwart an attack, but we’re now in danger of becoming complacent. The capture of Taiwan would grant the following objectives to Beijing: it would severely reduce American influence in the Indo-Pacific, America’s status as a superpower would be placed in jeopardy, which would invite armed conflict affecting our nation directly. It would eliminate a primary technological and economic partner of the United States. The principle supplier of high-end semiconductors to the United States’ economy, were these supplies to be disrupted, America’s economy would falter and our security here at home would be at risk. It would also remove the key strategic chill point to a Chinese military breakout, which would threaten the entirety of the Indo-Pacific, including Guam, Hawaii, Japan, and Australia.

“So, our approach to promoting the Indo-Pacific security was to believe that our relationship with Taiwan should be reinforced at every turn. It’s become a shining example in Taiwan of democracy, democracy for Asian peoples, and a hope to all of Asia. And it is my steadfast view that our government should immediately confer diplomatic recognition to Taiwan, for it is a free and sovereign country. Our recognition of Taiwan should not hinge on what will occur. Taiwan is already an independent country. Our government should simply reflect that fact.

[Comment: China has made clear our recognition of Taiwan is a “red line” that will not be tolerated — just as Putin told Biden in December 2021 that Ukraine joining NATO is a “red line” that will not be tolerated.” Or, if I may channel my best General Jack regarding Taiwan: “I did send out the order for Plan R, R for Robert…yes…yes, I take full responsibility…eh? Oh, no…don’t you see, General? The commies…don’t you–don’t you use Clemenceau on me. The planes…no, it can’t be done, Ripper. They are on their way in and no one can bring them back. For the sake of our country and our way of life, I suggest you get the rest of SAC in after them. Otherwise, we will be totally destroyed by Red retaliation. My boys will give you the best kind of start, 1400 megatons worth, and you sure as hell won’t stop them now. So let’s get going. There’s no other choice. God willing, we will prevail in peace and freedom from fear and in true health through the purity and essence of our natural fluids. God bless you all.]

“This is central to helping us in Europe as well, because central to the economic wellbeing of American families is a United States that leads. It leads all across the world, both in military and in economic power. We must use our strengths prudently, our founders knew this, and conservatively, for America is most secure when it leads by example and not by intervention. This is the lesson that we have learned since 9/11. We can get this right.

“I hope that my words today will galvanize American support for Ukraine and for Europe, for such aid is essential if we’re to enforce the national security policies that place American public interest as of paramount importance. Europe must do more too, to meet daunting economic challenges, which were first provoked by irresponsible domestic policies. We must take steps now to ensure that Europe realizes peace and not continuous war or extortion. For Europe is inextricably bound to our nation as it is to both Asia and to the Middle East.

“American industry and our farmers rely on the vitality of export markets that will be stricken if Russia succeeds. Weakness, indecisiveness, and disengagement in the world stage invite needless conflict. Timidity, timidity in the face of evil emboldens tyrants. Energy has already been weaponized, and we should never allow Russia or China to weaponize food and mineral supplies as well.

“Let us summon the will to ensure that this present conflict does not entrap our future. We must act in concert with our allies to affect strategic clarity, unmistakable to both Vladimir Putin and Xi Jinping. We must prevent the formation of a Pan-Eurasian colossus incorporating Russia, but led by China. To do that, we have to strengthen NATO, and we see that nothing hinders Finland and Sweden’s entry into that organization. This would be an enormous boon to Russia were they to be denied access. Russia’s military would have the capability to deploy against Ukraine in ways that were different and even worse than what’s being confronted today.

“In the Indo-Pacific, America must continue to expand the quadrilateral security dialogue to incorporate the Republic of Korea, Great Britain, and France, in addition to Japan, Australia, India, and the United States. The AUKUS Union should be folded into this expanded security alliance.

“Moving past our current geo-strategic focus, the United States must help in building of the three lighthouses for liberty. These beacons should be centered on nations that have great strife: Ukraine, Israel, and Taiwan. They can be the hubs of new security architecture that links alliances of free nations globally, reinforcing the strengths of each member state, in time, linking these three bastions with NATO, as well as the new and expanded security framework for the Indo-Pacific will form a global alliance for freedom. This will benefit America.

“The need for this network of alliances is patent and cannot come too soon. The world has become too small for free countries to not be part of something greater, which will forestall armed conflict rather than react to it.

“I close today by relating a story, a story of pain, bravery, and rebirth that affected my wife, Susan, and me deeply. Oksana Balandina was walking to her home with her love, Viktor Vasyliv, when a landmine tore off her legs and part of one hand. Oksana and Viktor were married last month in Lviv Surgery Center, after Oksana endured multiple operations. Although she lost her legs due to Putin’s cruel and unconscionable war, the couple danced after they were pronounced man and wife. Viktor took Oksana in his arms as they twirled and kissed. [Comment: Mad Mike fails to mention that Oksana was walking home when the landmine detonated. She was not in Russian occupied DPR. She was in Ukrainian-occupied Lysychansk. The landmine was Ukrainian.]

“This is rebirth. This is the future of Ukraine and of Europe and of America. The brave nation, the brave nation that now feels the pain of Russia’s onslaught, but will soon know peace, as is the promise of our Lord to be virtuous. Putin believed he could destroy Ukrainian unity, pitting brother against brother on the basis of their spoken tongues. But all Ukraine has emerged with a single heart. Putin sought to destroy a great nation. Instead, this war has forged all Ukraine into an unbreakable sword that Russia now fears. The people of America are committed to seeing Ukraine emerge from this war as an undivided nation which will be a beacon to all, to show the world the primacy of freedom, determination, and of love. Thank you, and God bless you.”

Or, as General Jack would say:

“Do you realize that in addition to fluoridating water, why, there are studies underway to fluoridate salt, flour, fruit juices, soup, sugar, milk, ice cream? Ice cream, Mandrake? Children’s ice cream!…You know when fluoridation began?…1946. 1946, Mandrake. How does that coincide with your post-war Commie conspiracy, huh? It’s incredibly obvious, isn’t it? A foreign substance is introduced into our precious bodily fluids without the knowledge of the individual, and certainly without any choice. That’s the way your hard-core Commie works.”

“The final intent of this economic war is regime change in Russia. The likely consequence will be regime change in many other countries”

OK, I lifted that quote from Moon of Alabama who made that call on February 28.

I admit I was a bit late to the party.

But today, can you see Putin with some gourmet popcorn, enjoying the moment, chanting:

Еще один повержен в прах

Or maybe he’s grooving on some Freddie

Or maybe he’s grooving on some Freddie

A final goodbye

A message just in from Davos:

Next up, Olaf Scholz.

Als Klimakanzlerin im Wahlkampf antreten.

Mit den Grünen eine Regierung bilden.

Erdgas als nachhaltig einstufen als 1. Amtshandlung.

Dann Selbstmord wegen der Ukraine begehen.

“What’s Unfolding In Europe In Recent Days Is A Fresh Big Negative Supply Shock”

ZH: https://www.zerohedge.com/commodities/whats-unfolding-europe-recent-days-fresh-big-negative-supply-shock


It is probably not a coincidence that around the time the stock of German energy giant and largest utility gas consumer, Uniper was plunging amid speculation it would have to be bailed out due to soaring nat gas prices…

One number to consider. Uniper probably is paying currently ~€30 million extra for the gas it’s buying in the spot market. Multiply that for 365 days: ~€11 billion. And that’s one single European utility. Now think about other big buyers of Russian gas. And start multiplying. https://t.co/6hKzinI7Pw— Javier Blas (@JavierBlas) June 30, 2022

… Deutsche Bank’s chief FX strategist George Saravelos penned a note in which he said that he was becoming increasingly concerned about the unfolding energy situation in Germany.

Here’s why: two weeks ago, Russia reduced Nordstream gas flows by 60% on the back of an alleged disruption over Siemens part supplies (chart 1). While the immediate availability of gas in Germany is not an issue, the energy market is starting to price a risk of a complete disruption to gas supplies for winter, and year-ahead natural gas prices are making fresh record highs (chart 2).

Most concerning however, is the skyrocketing price of electricity. Prices for 2023 delivery have also soared to all-time highs and have now tripled from the start of the year (chart 3). French and Italian electricity prices are similarly soaring. Which brings us tot he abovementioned collapse in the share price of Germany’s largest utility gas consumer, which just dropped to record lows amid speculation of an imminent bailout (chart 4).

As the DB strategist admits, his underlying assumption this year was that gas supplies to Europe would continue: even though the Nordstream pipeline is set to shut for ten days during July 11-21 for regular maintenance, press reports suggest that authorities are attempting to find a solution on sanctions restrictions to move gas turbine components back to Russia. Yet the German government is stating that disruptions are politically motivated and there are risks supply may be completely shut off.

So, as Saravelos warns, if the gas shutoff is not resolved in coming weeks this would lead to a broadening out of energy disruption with material upfront effects on economic growth, and of course much higher inflation, or as he puts it, “beyond the market’s worries about slower global growth in recent months, what is unfolding in Europe in recent days is a fresh big negative supply shock.”

If so, it would clearly make the ECB’s job more difficult and their reaction function ambivalent. But as far as the EUR/USD exchange rate goes, it would provide clear downside as not only would the energy import bill rise due to even higher prices, but it would raise the risk of an imminent German recession on the back of energy rationing. So while DB’s EUR/USD forecasts imply a range-bound euro over the summer months, the bank’s chjef FX strategist is worried that the energy situation is providing clear downside risks.

As for July 22, or a Friday three weeks from today, fellow DB strategist Jim Reid asks whether this could be the most important day of the year: “while we all spend most of our market time thinking about the Fed and a recession, I suspect what happens to Russian gas in H2 is potentially an even bigger story. Of course by July 22nd parts may have be found and the supply might start to normalise. Anyone who tells you they know what is going to happen here is guessing but as minimum it should be a huge focal point for everyone in markets.”

******

To put this in perspective: