Euro death spiral?

Are we staring down the barrel of a gun

Germany Chooses Inflation. Bond Investors Say "No Thanks"

Since the creation of Europe’s common currency in 1999, Germany has been the key to the whole project. The European Central Bank stood ready to buy up all the (for instance) Italian debt that the markets couldn’t or wouldn’t absorb, and Germany stood ready to back the ECB with its industrial might and financial wealth. So in effect, Italian (and Greek, Spanish, and French) bonds were viewed by the markets as German bonds, super-safe and therefore worth owning even with low yields.

If Germany is both deindustrializing and militarizing, it will be spending wealth it isn’t creating, and will have to borrow a growing part of future budgets. Not only will its bonds no longer be rock-solid triple-A paper, but Italian and Greek bonds will be, gasp, obligations of Italy and Greece. Rational investors understand the implications of this change, and are demanding higher interest rates, not just from Germany… More

---

The Fat Lady is Warming Up .. lalalalala…. lalalala…..

As we are aware, the United States has been furiously shipping LNG to Europe and Britain at great expense to these client states. Expensive energy destroys economies because 1. it causes inflation 2. it hammers consumer spending 3. entire industries vanish unable to compete.

Germany, an industrial Leviathan in severe decline, is now abandoning all restraint and letting rip as the country aims to replace affordable energy with debt in a parlous attempt to escape a death spiral. The bond market is not liking this one bit.

The Germans, along with France, are claiming this is all about rebuilding their military now that the US is apparently abandoning them. The usual whipping boy, the fake Ukraine War, which Trump is no longer willing to fund (why fund a fake war other than the CGI and photo op budgets), ‘needs the help of Europe’.

This is all complete and utter bullshit.

Do you want the truth? Are you sure? Or would you prefer to stick with the cnnbbc version?

The truth is that North Sea oil and gas production has collapsed. Norway is in decline. Russia is the primary supplier of gas to Europe but it’s simply not enough, and Russian production is likely declining. Europe and the UK are energy starved.

Because Germany’s economy is top heavy on energy-intensive industrial businesses, it is suffering the most. Therefore it is likely to be the first domino to fall. Germany is now now doing ‘whatever it takes’ to try to fend off the total collapse of their economy.

They will fail.

When they fail this will trigger Financial System Supply-Chain Cross-Contagion and all hell will break lose.