“How In The Name Of God”: Shocked Europeans Post Astronomical Energy Bills As ‘Terrifying Winter’ Approaches
Over the past week, shocked Europeans – mostly in the UK and Ireland – have been posting viral photos of shockingly high energy bills amid the ongoing (and worsening) energy crisis.Several of the posts were from small business owners who getting absolutely crushed right now, and won’t be able to remain operational much longer.
One such owner is Geraldine Dolan, who owns the Poppyfields cafe in Athlone, Ireland – and was charged nearly €10,000 (US$10,021) for just over two months of energy usage.
As the Irish Times reports, “The cost of electricity to the Poppyfields cafe for 73 days from early June until the end of August came in at €9,024.70 an increase of 250 per cent in just 12 months. There doesn’t include the €812.22 in VAT, which brought her total bill to €9,836.92.”
“How in the name of God is this possible,” tweeted Dolan.
UK pensioners are also facing a “terrifying” winter, as elderly Britons are about to get hit with an 80% rise in energy bills in October.
Elderly Britons are set to welcome a boost of around £1,000 to their state pension payments next year thanks to the return of the triple lock, however the cost of living crisis will still leave them significantly poorer.
However, the price cap for energy bills will rise by 80 per cent to £3,549 in October, and it is predicted to rise over £6,600 next year according to Cornwall Insight.
Higher energy bills often hurt pensioners significantly more than the rest of the population because they spend a greater amount of their income on heating their home. -Daily Mail
According to Caroline Abrahams, charity director of Age UK, “‘It’s a truly frightening prospect and one that most could not have prepared for, and never expected to face at this point in their lives,” adding “I think a lot of older people will be utterly bewildered that it has come to this and will also feel badly let down, and I can’t say I blame them.”
But that’s just the tip of the iceberg. Twitter researcher ‘Crab Man’ (@crabcrawler1), who compiles deep dives on a wide variety of topics (and is absolutely worth a follow), has put together a lengthy thread of similar cases – and put it in the context of the current European energy backdrop. The situation is dire, to say the least.
Read the full article at ZeroHedge.com.
“A Structural Rupture” – German Companies Shutting Down In Response To Record Energy Prices
It’s not just European smelters shutting down due to soaring energy prices: the entire German economy is about to get its plug pulled.
While a handful of macro tourists rejoice that record European year-ahead electricity prices plunged by 50% to levels not seen since… last week…
… the reality is that absent a complete normalization in European power markets – which “no longer function“…
… Europe is facing economic devastation and depression at a scale that will make 2008 seems like a walk in the park.
As the FT reports, German manufacturers are halting production in response to the surge in energy prices, a trend the government has described as “alarming”. German economy minister Robert Habeck said industry had worked hard to reduce its gas consumption in recent months, partly by switching to alternative fuels like oil, making its processes more efficient and reducing output. But he amusingly clarified, some companies had also “stopped production altogether” — a development he said was “alarming”.
“It’s not good news,” he said, “because it can mean that the industries in question aren’t just being restructured but are experiencing a rupture — a structural rupture, one that is happening under enormous pressure.”
Habeck said rising gas prices were affecting everyone from big industrial companies to small trading firms and the medium-sized enterprises that make up the “Mittelstand”. “Wherever energy is an important part of the business model, companies are experiencing sheer angst,” he said. And since energy is a crucial part of every business model, one can only imagine the chaos, fear and loathing hammering the largest European economy right now.
Confirming that Trump was right all along, the German minister said the business model of large parts of German manufacturing was based on the abundance of gas from Russia that was cheaper than gas from other regions. That competitive advantage “won’t come back any time soon, if it ever comes back at all”, Habeck said.
Whether he was aware of it or not, Habeck effectively echoed what Zoltan Pozsar said over the weekend, that Europe is facing a Minsky moment triggered by excessive financial leverage “and in the context of supply chains, leverage means excessive operating leverage: in Germany, $2 trillion of value added depends on $20 billion of gas from Russia… …that’s 100-times leverage – much more than Lehman’s.”
The German spoke just as Russia escalated its “squeeze” of Europe, having halted the flow of gas through the Nord Stream 1 pipeline for three days of planned maintenance. The outage comes with European countries already laboring under sharp price rises as a result of dwindling Russian supplies. Prices have more than doubled since Russian exporter Gazprom first restricted deliveries through Nord Stream 1 three months ago.
Habeck’s comments echo the May warnings from Siegfried Russwurm, head of the main German business lobby, the BDI. He said earlier this month that a lot of companies were having to shut down production because “expenses and income are no longer matched”. He said German companies were not only labouring under higher energy prices but also under the recent interest rate hikes in the US and the slowing growth in China, one of Germany’s largest export markets.
In short: German corporations are facing a perfect storm.
The pessimism was reflect in the recent Ifo Institute survey, which showed that German business confidence had fallen for its third consecutive month. The index, based on a monthly survey of 9,000 companies, slipped to a more than two-year low of 88.5, down from 88.7 last month.
Habeck was speaking after a cabinet away-day at the government’s guest house Schloss Meseberg, outside Berlin. Finance minister Christian Lindner said after the meeting that the government was working on a “massive” package of relief measures for hard-pressed consumers buffeted by soaring inflation and rising energy prices.
Lindner said the measures would be in the “single-digit billions” for this year and “double-digit billions” for 2023. The two previous packages of relief measures introduced in the aftermath of Russia’s invasion of Ukraine had together been worth €30bn.
So… on one hand the ECB is preparing to hike rates 75bps to crush demand and cripple inflation, while on the other hand, Germany is preparing to boost stimulus with a “massive” stimulus package of relief measures to offset the soaring inflation that the ECB’s previously policies enabled. What can possibly go wrong.
Read the full article at ZeroHedge.com.