Will Germany Break Free from the United States?

Berlin goes to Beijing: the real deal

According to these sources, the Scholz caravan went to Beijing to essentially lay down the preparatory steps for working out a peace deal with Russia, with China as privileged messenger.

This is – literally – as explosive, geopolitically and geoeconomically, as it gets. As I pointed out in one of my previous columns, Berlin and Moscow were keeping a secret communication back channel – via business interlocutors – right to the minute the usual suspects, in desperation, decided to blow up the Nord Streams.

Cue to the now notorious SMS from Liz Truss’s iPhone to Little Tony Blinken, one minute after the explosions: “It’s done.”

There’s more: the Scholz caravan may be trying to start a long and convoluted process of eventually replacing the US with China as a key ally. One should never forget that the top BRI trade/connectivity terminal in the EU is Germany (the Ruhr valley).

According to one of the sources, “if this effort is successful, then Germany, China and Russia can ally themselves together and drive the US out of Europe.”

Another source provided the cherry on the cake: “Olaf Scholz is being accompanied on this trip by German industrialists who actually control Germany and are not going to sit back watching themselves being destroyed.”

Moscow knows very well what the imperial aim is when it comes to the EU reduced to the role of totally dominated – and deindustrialized – vassal, exercising zero sovereignty. The back channels after all are not lying in tatters on the bottom of the Baltic Sea. Additionally, China has not provided any hint that its massive trade with Germany and the EU is about to vanish.

In the present, the U.S. ruling class seeks empire. Even Trump, who advocated for more nationalism, sought to use American power. He pushed Germany to wean itself from Russian energy instead of telling Germany that NATO is past its due date and American tariffs are coming for German exports. The immediate threat of war comes from the imperiliast attitudes of the American ruling class versus the Russia-China alliance. There is no nationalist political movement that can displace the imperialists yet, although there are growing movements such as the pockets of MAGA and Christian nationalism.

Zooming out in time, the U.S. was never supposed to be an imperial power. It was supposed to be the Shining City on the Hill, a Christian commerical nation that acted as a model to the world. It should rededicate itself to anti-socialism, abandon both empire and free trade, leave NATO, the United Nations, climate groups and all the other globalist NGOs. Reimplement nationlist economic policies and turn it into the fastest growing economy in the world again that play by its own rules.

Germany also has never really been an ally of the United States. It was a conquered territory and allied with the U.S. by force and because the alternative was communist oppression. As the EU commission said when Musk took over Twitter, "the bird flies by our rules." Europe and the United States were pushed into a marriage of convenience against communism, but they have different ideas of governance. The communist threat is gone. Europe and the United States share historic and cultural bonds, but the U.S. influence in Europe is keeping its nationalists from rising. The imperialist tyrants in DC oppress American nationalists along with European nationalists. It's time for the Americans to take power back in their nation and give power back to all the so-called allies that have been living under the thumb of an anti-American imperialist government for the past thirty years.

Global Margin Call

ATimes: Global margin call hits European debt markets

Risk gauges in Germany’s government debt market rose last week to levels higher than recorded in the 2008 world financial crash, as margin calls forced the liquidation of derivatives positions held by banks, insurers and pension funds.

Big institutional investors that spent the past ten years insuring their portfolios against falling interest rates now face massive losses as hedges blow up. A key measure of market risk, the spread between German government bonds (Bunds) and interest rate swap agreements jumped above the previous record set in 2008.

The cost of hedging German government debt with interest-rate options, or option-implied volatility, meanwhile rose to the highest level on record.

Bouncing to Collapse

Nord Stream system suffers multiple ‘unprecedented’ leaks as sabotage not ruled out

“Yes, there was actually information yesterday, it came from both Gazprom and the operating company. This is very alarming news, indeed we are talking about some kind of destruction in the pipe, it is not yet clear what kind, in the Danish economic zone,” Peskov told reporters.

“…This is an issue related to the energy security of the whole continent,” Peskov told reporters, commenting on the situation around Nord Stream.

According to the Danish Energy Agency, there are three possible causes of the gas leaks.

1. A shipwreck

2. Construction defect

3. Deliberate act

“It is of course worrying that there are three incidents roughly simultaneously.”

Occam's razor says only one of those, number 3, is likely to produce multiple failures at different points along the pipeline.

Who is responsible? Russia seems the least likely since they built the pipelines. Germany would also seem unlikely, except the current government is already destroying the economy. This is only an escalation of current German policy. The United States is also a potential culprit, as are anti-Russian and anti-German countries such as Poland. Whether regional players are capable or not, I cannot say. Although China hasn't shown itself to be aggressive in geopolitics outside of the South China Sea, if they are playing a realpolitik deep game, setting the United States and Russia against each other could be a goal. There's also ecoterrorists, though this seems beyond their capabilities.

For all the losses in the stock market, investors still seem oblivious to risks. This has all the hallmarks of a bear market given the amount of time and the destruction in smaller speculative companies, but major index declines have aborted at these levels before such as in 1998, 2011 and 2018. That is to say, U.S. large cap indexes have declined on par with corrections and small panics, not a world where bond and currency markets are crashing, Europe's main energy supply has been destroyed and the global economy is tipping into a deep recession.

eugyppius: German Energy Apocalypse Update V

Prices have increased vastly across the economy, and estimates are that up to 60 percent of German households are now committing their entire monthly income to cover the rising cost of living.

It is like the 2020 lockdowns, but it never ends. Consumer spending will collapse and with it will go the rest of the economy.

As the pressure builds and the first closures begin, Germany is entering an economic recession, and there are everyday renewed cracks in the political edifice. Minister President of Saxony Michael Kretschmer (CDU) – no fringe political figure – recently remarked that Germany “cannot do without Russian gas” and acknowledged that EU sanctions are to blame for the shortage, but he stopped short of demanding that Nord Stream 2 be opened; instead, he hopes for a return to Russian gas after the Ukraine war has ended.

Ending sanctions was a good solution until the pipeline was sabotaged. There's no way out for Germany. There is no way out for the world. The NY Federal Reserve Bank's DSGE model showing a mild recession that lasts until 2024 looks like a rosy scenario.

With markets oversold, a bounce seems likely, but with a caveat. Oversold conditions produce crashes and market indicators don't include everything. It's true that markets usually price everything into the market, but there are exceptions. One is when the people are delusional. As I've put it before, either losing a main source of energy isn't a big deal or the European economy will sink into depression. I don't see an alternative. The market is priced for "not a big deal." 

This is a category of risks the Chinese like to call gray rhinos. Take China's bad debt and housing bubble. Everyone knows it's potentially a problem, but it isn't at the moment. I'd add situations such as Germany's energy situation into the mix. Everyone knows about it, but do they understand it? Many "shocks" and "black swans" are gray rhinos that people don't know about or don't understand. If China lets the yuan drop to USDCNY 8, that isn't a black swan. It's not even entirely a gray rhino because it's highly probable if current conditions continue. Yet markets would be "shocked" and "panic" if that happens.

The chart of the S&P 500 has a clear bullish foundation. The June low wasn't taken out. It looks like a potential double bottom. Markets are oversold. Bearish sentiment is widespread. A rally would give bull confidence and bears doubt because, if the market rallies on news that Germany's economy is guaranteed to collapse next year, then what won't it rally on? That will be the thinking.

I don't think this is anything except a relief rally until it gains at least another 1 percent. If it starts running towards 3800, then a more substantial rally could unfold.

All I see from bulls is very short-term oriented thinking, such as the bearish positioning among traders. I don't see them making a strong case for owning stocks here. I do see some talk from the value guys about locking in high treasury yields.

Longer term, the Western public is delusional. Their behavior during the pandemic, their slavish following of all media narratives up to an including the Ukraine war, their inability to distinguish between male and female. It is trivially easy to find social media accounts with a Ukraine emoji complaining about high energy prices and even blaming it on the right-wing, Russia or Trump voters. Smart money knows better, or does it? My suspicion is they do not. My suspicion is that even if they know better, they don't realize how many of their colleagues do not. 

There is a confidence about the world that is wholly unwarranted. The mainstream was shocked by 100 predictable elections in Sweden and Italy. Events I and others have been expecting for the past decade come to pass and many people lose their minds because their concept of the world is divorced from reality. There is a moment of intense shock when one realizes their view of the world is 180 degrees out of step with reality. This shock is going to make its way into the financial markets. If not now, then sometime over the next 12 months. The shock can also come from a continuation of current events. What if the voting public in the USA is already so lost that they vote for more of the same? What if they burn the nation down, and then blame it all on white supremacists? What if the public believes it?

Short-term, I'm waiting for the bounce in stocks to finish. I expect it'll rally another 1 percent or so this morning. That's where I'll be looking to reenter short positions. The past few days saw several rallies. All of them were caused by strong performances from BigTech stocks such as Microsoft, Apple, Amazon and Google. A different mix each day, but always BigTech. It doesn't tell direction, but these stocks are propping up the market. If they give way, the market can plunge.

BTC remains one of the charts that sums up the whole market. It rallied strongly today and hasn't broken it's long-term uptrend. The slope of the line is very steep though, rising from a current $17,800 to around $19,000 by late November.

Next Up: Partitioning Ukraine

The Saker: Will the Ukraine be partitioned next and, if so, how?

ranslation: MOSCOW, August 16 – RIA Novosti. Western curators have practically written off the Kyiv regime and are already planning the partition of Ukraine, Foreign Intelligence Service spokesman Colonel-General Volodymyr Matveev said at the Moscow Conference on International Security. “Obviously, the West is not concerned about the fate of the Kyiv regime. As can be seen from the information received by the SVR, Western curators have almost written it off and are in full swing developing plans for the division and occupation of at least part of the Ukrainian lands,” he said. However, according to the general, much more is at stake than Ukraine: for Washington and its allies, it is about the fate of the colonial system of world domination.

It sounds as if Western support for Kiev is ending:

Several countries in the West are waiting for Kiev to surrender and think their problems will immediately solve themselves, said Ukrainian Foreign Minister Dmitry Kuleba in an interview published on Tuesday. “I often get asked in interviews and while speaking to other foreign ministers: how long will you last? That’s instead of asking what else could be done to help us defeat Putin in the shortest time possible,” Kuleba said, noting that such questions suggest that everyone “is waiting for us to fall and for their problems to disappear on their own.”

VoxDay: The Partition of Ukraine

This anticipated partition would be a very good thing, as it would mark to an end the war between Russia and NATO by the surrender of the latter. The problem is that it will almost certainly require the European “partners” to break with the neocons who presently dictate US foreign policy, and the neocons are more than willing to fight to the very last European – yes, European, not Ukrainian – rather than give up their revenge war against Russia.

So, as fearful as the European leaders rightly are – they are terrified of their native populations going all Sri Lanka on their useless, cowardly selves once the winter shortages kick in – I don’t believe they are fully cognizant of the consequences of the Russian victory due to the media gaslighting, so they are reluctant to throw off their globalist masters and give up the fancy pants and lollipops that come with their submission.

Which means that I don’t think the nations that matter – France, Germany, and the UK – will give up and accept the new geopolitical reality until the winter of 2023 extinguishes all hope of reprieve, unless the coming winter is even worse than we’re expecting and the citizenries explode in open revolt.

Here is the post-war map that Medvedev posted, with the current map for comparison:

How likely is this? Here's an interesting news item from Vox's post: Germany wants to retake Polish soil — official

Since the reunification of Germany in 1990, Berlin’s strategic goal is to “regain in some form their former lands, which are now within Polish borders, and subordinate the entire belt of countries between Germany and Russia,” the Polish official said.

Can Russia obtain peace and splinter the EU by offering Poland historically Polish lands?

Beyond the geopolitics, I still believe that this round of a multi-year, perhaps decade-long bear market will complete when the EU surrenders to Russia and accepts that the Baizuo of USG have destroyed Ukraine. There was a rumor of a peace offer back in July that didn't materialize, but eventually it will come one way or another. On the European side, the self-inflicted pain from sanctions will pressure the Europeans.

For the Records: German Greens Vote For More Coal over Nuclear

Anyone who is serious about climate change would never choose coal over nuclear. Yet the German Green party voted for exactly this in July. The entire topic of climate change is a scam as evidenced by the behavior and political choices of its leading adherents.

WSJ: Germany’s Nuclear-Power Implosion

The West is gripped by a suicidal, depressed, self-loathing people who fall for any foreign criticism. The same pattern of decline in seen in many regimes. The U.S. shares parallels with the late Qing dynasty, complete with the drug abuse, lack of confidence, and rule by invaders. Upcoming will be the Boxer rebellions (expelling of foreigners; Muslims in Europe and who knows who in the USA), followed by the political volatility, low level to full blown civil war, then religious/cultural revival. Enjoy the decline!

Why the Dollar is Relatively Strong, Euro Edition

One of the first emergent signs of what is now called Wokeism was an attack on "ethnocentrism" in the 1990s. That's when the universities started cancelling "dead white men" for being white and men. However, the concept of ethnocentrism isn't entirely bad. A person can cloud their judgement by being excessively focused on the near while ignoring the far. This has been most evident among the dollar bears who are so focused on the failures of the Federal Reserve that they cannot see the greater failures of foreign central banks.

The rise of the U.S. dollar exchange rate this year has made monkeys of all the dollar bears. Cyclically, the U.S. dollar was primed for a decline, yet instead it has broken with four decades of cycle history and moved higher. The U.S. economy is shrinking as a share of the global economy, yet as a reserve currency and unit of account, creation of simulacra dollars (Eurodollars) exceeds that of the base money. Base money growth in the U.S. rises, but demand on that base money rises faster because of overseas credit creation.  Hence demand for the base money rises when expansion of the credit money (Eurodollars) slows or contracts.

I predict that, if the U.S. dollar loses reserve currency status, avoids going the way of Zimbabwe and something like SDRs replace it, the U.S. dollar will eventually appreciate versus the SDR. For the same reason the German deutschmark would appreciate versus a rump euro. Whenever there is a shared resources such as a common currency, he who prints most will drive the value of the currency lower.

Mises.org: ECB’s Long Journey into Currency Collapse Just Got a Lot Shorter

The new instrument, born under the name “transmission protection instrument” (TPI), will be the catalyst to the accelerated full transformation of the ECB into a bloated European “bad bank” fund. This entity enjoys a giant privilege. Its liabilities are in large part the designated money (whether as banknotes or as reserves of banks) enjoying huge protections as such (most importantly legal tender) in all member countries of the European Monetary Union.

In effect, since the EMU crises of 2010-12, the ECB has been the agent which has “communalized” much of the bad state and bank debt of Italy (also Spain, Portugal and Greece). It has done this by issuing euro money liabilities against giant purchases of government paper and long-term lending (called LTROs) into the corresponding weak banking systems (again most of all Italy).

This communalization has created three big problems for the future of the euro:

The euro is weak because it allowed countries such as Greece to issue "deutschmark" bonds in the 2000s. The euro was strong because of Germany, rather than weak because of Greece. Economic policy in Germany looks even worse than that of Greece in 2022, hence the rapid decline in the euro. The breakup scenario for the euro, however, has always been a German exit because the common currency exchange rate trends towards the most profligate borrowers over time. As soon as the European Union passed on kicking Greece out, it guaranteed the most likely breakup scenario is a German exit.

Third: the tolerance of the German public for this transformation of the ECB and its money could snap in a way which means that the Federal Republic pulls out of the union. Germany has been critical in keeping the ECB humpty dumpty together. Partly this critical role depends on public perception (that Germany stands behind the ECB and all its potential losses), albeit there is much wishful thinking here rather than legal fact.

...If, for whatever reason, the Italian spread (Italian government bond yields vs. German) suddenly widens – perhaps because markets distrust the political direction or sense that Italian credit institutions are in a new bleak situation – then the ECB can turn on the taps. Yes, it will sterilize the new lending, that means presumably disposing of German and Dutch paper in the ECB balance sheet to make room for Italian for example, becoming even more of a bad bank.

There are decisive moments in monetary history. The aftermath of July 21 is likely to be one of them as regards the European monetary future. These problems have become a lot worse

The same logic can be applied to an SDR, special drawing rights from the IMF. Whether it is formal or not, a move to a world with no dominant reserve currency is not that different from one with the SDR as the main reserve asset because in both cases, countries will be using currency baskets. The U.S. losing its reserve currency status would look more like a German exit from the euro than not in terms of the domestic economy. A costly adjustment period followed by the U.S. "decoupling" from the global economy as it becomes free to pursue a mercenary America First national economic plan. Placing tariffs on Chinese goods and on Chinese purchases of U.S. assets is fraught with economic costs today because it threatens the reserve currency status of the U.S. dollar. 

In the near-term though, it is the breakup of the euro that is helping lift the U.S. dollar because the (formerly?) dominant Germany economy is being pulled down by green idiocy, Baizuo foreign policy and the deficit spenders in Southern Europe. Declining social mood makes a total breakup increasingly likely. Keeping the euro together will require printing money much faster than in the United States. Investors and businesses that leverage themselves on the assumption of a relatively weak dollar will experience deflationary collapses as happened in 2008, 2011, 2014, 2018, and again in 2022.

Gasoline Price Change Since End of 2020

Highest to lowest increase: USA, China, UK, Italy, Germany, Mexico, Japan.

Germany Plans Defense Cuts

This is more and more looking like the Green-Baizuo shutdown of the West as opposed to a conflict with Russia.

Twitter. Bild article (paywalled): Verteidigungsetat soll bis 2026 SINKEN

Depression or a Rally?

ZH: French, German Leaders Warn Populations "Prepare For Total Cut-Off Of Russian Gas" As Social Unrest Looms

Germany too is fearing the worst, as its main conduit for Russian natural gas, Nord Stream 1, has long been scheduled to go down for 10-day maintenance starting Monday. But the persisting fear is that Moscow won't bring it back online, for the purpose of squeezing the German economy further as punishment for its Ukraine stance, forcing Berlin into emergency rationing.

Germany's population of some 80-million is reliant on Russia for over one-third of total gas supplies, and there's no immediate alternative. Should Moscow use "routine" maintenance as an excuse to keep supplies halted, some German publications are even predicting social unrest as the squeeze gets put on the working class population in particular.

Vertical moves up and down in energy prices occurs because of marginal changes in supply and demand. Oil has traded above $130 per barrel twice in the past 25 years and also below $10 twice. That was in the context of a functioning global markets.

VD: A Dire Situation

Three years ago, a megawatt hour of gas cost EUR 7. The price is now EUR 175, and is expected to rise to at least 250.

I'm at a loss for words. The Baizuo of Western Europe, at the behest of Baizuo in Washington, DC, are taking steps that could result in significant deaths of their own people, for no clear gain. There is not a kinetic, existential war between the West and Russia at the moment. Energy and materials aren't being funneled into armament factories for the war, fuel for jets, tanks and missiles. They're destroying their ability to resist Russia with these shutdowns. It looks like they're surrendering rather than fighting.

It makes sense if they are Greens though. The destruction of the West, industry and capitalism was always an aim of the radical elements. It makes sense if the governments are at war with their own people. It makes sense if depression and borderline starvation is a preferred solution to what otherwise might be a fierce domestic resistance to the "Great Reset." It makes sense that truckers and farmers, who could form the core infrastructure of serious domestic resistance movements, would be targeted first. It makes sense that Russia would "cooperate" in destroying the West and sinking into a century or more of oblivion.

At any other time I'd say, "this won't happen." They'll come to their senses, this is more rhetoric than policy. Yet at every step this year, that was the wrong interpretation. They've taken that step and then proposed an even more destructive step that was also followed through with. 

The decision tree from here is as bifurcated as can be. On one path, Europe takes a step that creates irreversible damage. It could be deaths in winter, a depression unlike anything since the 1930s or Weimar Germany, and/or a revolt that becomes violent against the political/media class. A revolt like what was seen in Sri Lanka. On the other path, Europe blinks and decides against collapsing itself on purpose, for no good purpose. Markets and economies that are braced for hell breathe a sign of relief.

One possible sign of relief: Canada to return repaired Russian pipeline part to Germany

Canada has announced it will return to Germany a repaired turbine of the Russian Nord Stream 1 pipeline, which is a core source of the gas supply to Germany.

...Ukraine had urged Canada not to return the repaired part, saying it would undermine sanctions against Russia.

...But when announcing its decision on Saturday, Canada's Natural Resources Minister Jonathan Wilkinson said it was taken to "support Europe's ability to access reliable and affordable energy as they continue to transition away from Russian oil and gas."

...The minister particularly cited concern for the German economy as well as German citizens, saying they could be left unable to heat their homes during winter.

Lockdowns All Over Again

The people who were stupid enough to believe in lockdowns believe these energy policies have to do with war and Russia. They don't. Darwin Awards for everybody!

HAMBURG GERMANY IS REPORTEDLY PLANNING TO RATION HOT WATER ***

— The_Real_Fly (@The_Real_Fly) July 4, 2022

Why the Dollar Soars With Oil

The Sounding Line: Where Did Germany’s Trade Surplus Go and Why?

Well, today the data officially confirms that Germany’s [trade balance] turned negative in May for the first time since reunification (1991).

When people talk about the dollar dying, they're talking about the euro. Rising energy will kill the euro. The U.S. consumer and businesses will be hurt, but money that would have gone into buying Chinese imports will instead go to buying oil and gas from Texas, Oklahoma, South Dakota, Pennsylvania...

Fertility Crash: Negative Mood, the Vaxx or Both?

Two tweets I saw passed around thsi weekend looked at Germany's and the Netherlands' drop in fertility.

Unless there is a vaxx and unvaxxed control group, the drop could be mainly driven by social mood. If mood is driving it, the drop will accelerate around August or September (mapping to the stock market peak rather than vaccinations) and continue sliding for at least six months.

Here are the Germany and Netherlands country ETFs. They peakedin May and August 2021, respectively.

Bond Troubles Could Resume on Stock Slide

The spread between the 2s10s, 10yrs in US and China, and 10yrs in Japan and US, plus the 10yrs for Germany and the US for laughs.

Chart for the Decade: Greece vs Germany

As I first pointed out in April, the Greece ETF has been basing versus the German ETF.

Greece doesn't look as strong versus the Eurozone ETF, but EZU includes countries such as Italy that also look like Greece:

Note that these ETFs include fluctuation in the euro, but the relative charts cancel that out. 

Investors in European debtor states have not made any money for 20 years. The chart of the Greece ETF alone looks like a gold mining stock, some "expensive oil" services companies such as offshore drillers, but hasn't broken out yet. Italy doesn't look as good here, but it is also tracing out a large basing pattern. In short, outperformance is happening on the downside for now.

Here is the Germany ETF. A possible low could be in the $20 area. Below the green support line and the blue horizontal, there is nothing but air to the downside.

The DAX Index has a clean top and two failed reversal attempts. Major support lines are about 23 percent lower and 50 percent lower from Friday's close.

Going all the way back to the post-2008 fallout era, when Greek sovereign debt emerged almost immediately and first rattled markets in the spring of 2010, critics of the euro and European Union have explained how Greece was being harmed by the euro and austerity programs being forced on the nation without any fiscal transfers:

Greece made a big mistake taking on too much debt in the 2000s at artificially low interest rates afforded by a credit bubble and its use of the euro. Any sovereign state in a similar situation post-bubble would intentionally devalue its currency or see the market would depreciate it for them, outside of an incredible reform movement.

Would it be impossible for the Greek stock market to rally in a bear market? No. There is one outlier scenario where that happens: Greece does something extreme such as exiting the euro and redenominating its sovereign debt in drachmas. More so than most nations, Greece would benefit from currency devaluation because it's economy and assets are already devalued. 

Currency devaluation is an escape valve for incompetent sovereigns. Serial devaluation shows a nation doesn't make hard choices and opts for the easy way out, impoverishing its own people and foreign investors over time. All nations will eventually devalue their currencies though, if reforms were not undertaken and credit not controlled. The mistake was blowing the bubble in the first place, not the currency devaluation that balances assets to liabilities.

Trade Implications

If Greece assets could rally on a euro exit, then Greece should outperform amid high inflation and euro weakness. The macro forces that crushed Greece in the prior decade are now turning in Greece's favor and against Germany. If trends continue for years, it might be Germany that wants out soon.

The cleanest trade here is short Germany, in local currency or in dollars via an ETF such as EWG. (Not necessarily a trade to put on Monday, but one that could have been put on in January and still held today.) Greece is not a clean buy because it will probably fall in a global bear market, but if that basing pattern turns into a breakout at any point, then I would recommend accumulating Greek assets along with Italian and other debtor countries, depressed sectors and so on during the dip because they should outperform in the next bull market. If you find a depressed asset that is harmed by a strong euro and deflation/disinflation, and it still has good underlying fundamentals, it sounds like a potentially good buy on the surface.

A breakout in the "Greece vs Germany" chart would signal a significant turn in macroeconomic forces. Conversely, if the chart were to fail (a "bear market" rally that delays the eventual breakout is not a fail) and sink again, it would tell me the post-2008 central bank trap is alive and well with potentially more QE and even more negative interest rates on the way.

German Trade Surplus Gone

My main problem with all the anti-dollar arguments is they ignore that the BOJ and ECB are less responsible than the FRB, their demographics are worse and their trade balances are worse in terms of the delta. The chart is from The Sounding Line.

Greece Beats Germany

Fresh off the heels of posting Tomorrow's News Today, I give you the Greece ETF divided by the Eurozone ETF and the Greece ETF divided by the Germany ETF. Not complete...but basing. Now work backwards: in what scenario will the pattern complete and break out?

Leftist Environmentalism

Central planning fails over and over and over...

When ideology trumps physical reality, the result is epic failure.

Green revolution, replace fossil fuels.

Result: close nuclear power plants that have no CO2 emissions, retarded economic policies cause soaring oil and gas prices such that coal returns as a major fuel source.

You can try to concoct some conspiracy theory, but unless the coal industry is a cabal of secret geniuses, Occam's Razor says the ruling class went full retard.

Sieg Heil! Sieg Heil! Sieg Heil!

The infrastructure is all there. For good or ill, Germany awaits its next authoritarian leader.

Gateway Pundit: Germany Conducts Mass Raids Over Online ‘Insults’ Against Elected Officials

The German government has begun prosecuting its citizens for thought crimes, raiding the homes of hundreds of Germans who have allegedly leveled insults against politicians online.

In an effort to prosecute ”criminal content” contained in over 600 statements posted on the internet, Federal Criminal police raided scores of apartments and houses for incriminating evidence on Tuesday and interrogated 100 people across 13 German states for allegedly posting hateful remarks against elected officials and question the results of the 2021 federal election, the German news publication Der Spiegel reports.

Fragile Economy

The fragility of the European economy has been exposed by Russia. Green energy policies have crippled the European economy, perhaps fatally. Inflation will explode higher for a generation if they can't get a handle on it quickly. Unfortunately, the only way to bring prices down quickly is by crashing the economy.

The United States could probably afford soomething close to autarky with vast natural resources, but it would have to rebuild manufacturing. This would be highly inflationary, but would generate growth as opposed to Germany and Japan, whoh would lose export markets—assuming this is a global movement.

The U.S. is politically fragile though. Would the country unite and make the sacrifices necessary for rebuilding or would it turn to infighting? There probably is a majority coalition for taking action. Everything that will happen in a China invades Taiwan scenario, is like the Trump 2016 platform on steroids. Trade war with China, bring the troops home from Europe and Asia, focus on domestic production. Had the country started along that path voluntarily 5 years ago, it would be in better shape. Instead, Trump couldn't stand a drop in the DJIA and the ruling class was entirely opposed to him anyway.

I didn't have a major point with this post, but only thinking about how extremely fragile globalism has become. Everything we knew could be a disaster is now coming into view. Would China risk invading Taiwan? It depends entirely on whether they think now is the time to deliver a death blow to U.S. hegemony. Their best option is to wait, but the question is, will they ever get a better shot? Trump looks like the likely winner in 2024 right now, or someone who probably is more like Trump than Trump in terms of policy. If China's "free lunch" from the USA is ending, it alters the calculus. If the U.S. reversed its decline, perhaps China cannot wait. Maybe this is their only chance to take Taiwan without starting a wider war.

Stocks like Apple have far lower price targets than imagined in a war scenario. Amazon would have no products to sell. Wal-Marts without supermarket departments would also see their sales head towards zero.

Layer on that most Americans have their retirements in stocks. Most of the stocks they own are index funds or closet index funds loaded with geopolitically sensitive companies such as Apple and Amazon and Wal-Mart. Financials of course would be wrecked either by the disruption or by the ensuing inflation. All the social media stocks such as Facebook and Twitter live off advertising. They are dependent on the wealth of the nation. Most of the growth darlings the past decade will implode in a trade war scenario because they are companies built for an economy that will cease to exist the moment the first shot is fired. Ironically, someone like Elon Musk will probably do well even if Tesla doesn't. Bold entrepreneurs with big ideas for building stuff will be in demand. It's hard to say what happens to EV in this scenario because greens will probably be wiped out politically, but the massive cost of rebuilding the economy might make the EV transition look like a rounding number. It might come down to relative inflation rates for battery metals such as nickel and crude oil.

At the other end are the beaten down mining, energy and various industrial companies. They are extremely cheap on a relative basis if there's a shift towards greater domestic production.

As they say about going bankrupt, history moves slowly for many decades and then suddenly accelerates in a crisis. Major shifts build into a tipping point. Russia reached a tipping point with Ukraine. It's verbal complaints reached their limit and it went to war to stop NATO expansion. The sanctins against Russia confirm to China that it will lose market access if it attacks Taiwan. What price is it willing to pay? The highly nationalistic country is willing to pay a higher price than the United States right now, of that I'm sure.

Germany PPI

The German stock market is behaving like it understands. The American stock market has not. A few stocks are holding it up like Apple and Microsoft, but I think they will succumb soon enough.