Beseiged from all sides, Germany can now look to one reliable partner: Russia.
Europe’s escalating economic, financial and geopolitical crises are putting increasing pressure on the whole EU project. They’re also unmasking the exalted “European unity” for the utter farce that it is. It’s become clear that like most other things in the empire of lies, that unity is exactly its opposite as allies turn against allies.
Destroying Germany’s economic lifeline
Someone blew up Nord Stream pipelines bringing in cheap, abundant natural gas from Russia to Germany. German economy depended on this resource for nearly 60% of its industrial production. As Zoltan Pozsar suggested, $2 trillion of German value depended on $20 billion of Russian gas.
We can’t be sure who blew up the pipelines,but the most likely suspects are all Germany’s supposed friends and allies: the US, UK, Poland, Sweden and Denmark. Of course, we are not talking about those nations’ legitimate government structures, but rather, the deep state elements within. One thing that is not in doubt however, is that Germany, not Russia, will sustain by far the greatest damage from the sabotage. That was fully well appreciated by all protagonists of this drama, implying that it was a deliberate and premeditated attack on Germany.
Adding insult to injury
For years, the US had pressured Germany to cancel the Nord Stream 2 pipeline and to cut its dependency on Russian gas. To persuade German leaders, their U.S. counterparts promised to replace Russian gas with American LNG shipments. As we now know, Germany’s “friends and allies” took advantage of German compliance by delivering natural gas at extortionate prices. According to an energy investment banker Laurent Segalen, US gas suppliers could load a large LNG tanker in the US at a cost of about $60 million per shipment. The cargo could then be sold for up to $275 million in Europe, thanks to the massive price disparity between the US and European markets: in the US, Natural Gas trades at less than $7/mBtu (million British thermal units) while Dutch TTF futures recently traded at over $60/mBtu.
Last month one of the key architects of this catastrophe, Berlin’s hapless Economy minister, Robert Habeck publicly complained about the situation in an interview to the German media. Only yesterday, French economy minister Bruno Le Maire chimed in: “We cannot accept that our American partner sells its LNG four times the price at which it sells it to its own industries.” But lamenting the situation they themselves created comes far too late to mitigate the extreme damage to European economies.
Beseiged from all sides…
Thus, together with Poland’s bold demand for 1.3 trillion Euros in WW2 reparations, Germany has suddenly found itself besieged by its “friends” and “allies” on many fronts. Even though the reactions from Germany (apart from that Habeck interview) have been remarkably quiet, it is easy to imagine that Chancellor Scholz‘s telephone must be ringing off the hook with angry complaints from German industrialists and labor union leaders. As Hans Peter Wollseifer, president of the Central Association of German Crafts said to the Rheinische post, “Every day, we receive emergency calls from companies that are about to stop production because they can no longer pay the enormously increased energy bills.” The Federation of German Industries (BDI) also warned of a wave of bankruptcies due to energy cost inflation which is now a major challenge for 58% of companies while 34% believe that the crisis jeopardizes their very survival.
Germany has (potentially) one reliable partner
The nation is being pushed to destruction. But while this may note be apparent to the unsuspecting consumers of western corporate media narrative, Germany has found itself in the situation where it may have only one partner to rely upon. If you guessed Russia, you guessed correctly. Of course, as a member of the EU and NATO, Germany cannot chart its foreign policy independently, but the pressure to somehow break out of its constraints and reclaim its sovereignty must be growing.
German subsidies arms-race could sink the EU
One way to go about it would be to sink the EU project altogether, and Chancellor Scholz’s announcement on Thursday last week will prove to be a measure in this direction. Scholz announced that the government “will do everything it can” to bring the price of energy down, announcing a whopping €200 billion subsidy package to protect German households and businesses from high energy prices. This package comes on top of previous measures, said to be worth €65 billion. But that figure could be low.
According to data from the Bruegel think tank cited by Politico.eu, in the 12 months to September 2022, the German government already allocated more than €100 billion to support households and firms through the energy crisis in addition to another €85 billion allocated to prop up German energy companies. According to my calculations that’s €185 billion, not €64 billion!
If other nations take their cue from Germany, this will trigger a subsidies arms-race and further fuel the flames of European inflation. As a result, the euro could collapse much in the way ruble did when inflation was ignited in Russia in 1991. At that time, having eliminated domestic price controls, the IMF obliged Russia to maintain the ruble as the common currency for all Soviet Union successor states, giving each of the 15 new countries the incentive to issue ruble credits for the benefit of their own economies, while fueling inflation for all others.
In commenting on Germany’s “go it alone” subsidies, one EU diplomat suggested that this could be the outcome: “We are really risking a subsidy race with some of the EU’s largest nations going against one another.” The question we can’t easily answer – but will soon find out – is, how soon will the EU collapse? What we may never find out is whether Germany has turned on the EU deliberately.
Alex Krainer – @NakedHedgie is the creator of I-System Trend Following and publisher of daily TrendCompass reports, probably the best CTA daily newsletter on the market today.
7 thoughts on “Will Germany sink the EU?”
Quite a fascinating insight. I think you’d appreciate this podcast by thegeopolity https://thegeopolity.com/2022/09/22/podcast-germany-at-geopolitical-crossroads/
and the Germans are clueless. I recently had a conversation with the head of a German radio station and yesterday with his wife. They don’t know anything, claim that Putin is to blame for everything and believe that it doesn’t affect them because they don’t have gas heating. I don’t know what has happened to my fellow citizens, but there is no more differentiated thinking.
Well, to be fair, being clueless is a prerequisite for some jobs. I don’t think all Germans are quite as clueless and I believe they’re awakening in large numbers. We can’t predict how this changes things, but it will certainly change things.
A Letter from an unimportant county.
The simple answer is yes.
Sheer folly of the entire German political class in jumping onto this Anti-Russian bandwagon has sentenced Germany to a socio-economic catastrophe of Biblical proportions. Saying that: none is blind as one who doesnt want to see, is an accurate description of the German establishment, for they had just blown off the very foundations of their competitive advantage: a very cheap Russian energy. Just to make sure that things remain that way, a certain someone has taken care of the Nord Stream pipe lines. This time around, there is no magician, who can pull a proverbial rabbit out the hat. Consequently, the engine of the European economic growth will grind to a halt. Dare I say that, in a not so distant future, Germany will become largely deindustrialised. Bear in mind that we are only in October; General Frost and Field Marshal Winter are just around the corner.
Let us cast our eye onto really unimportant countries such as Baltic (stans), Balkan (istans) and the daisy chain of equally unimportant countries in central Europe to asses the impact for they depend on the EU subsidies and handouts, none more so than Poland; just walk through any of them and almost everything is financed by the EU.
Case in point is Croatia which, for some unknown reason, will introduce Euro on 01.01.2023. With no substantial industrial base to speak of, and, the tourism making 20% of its GDP mostly from Germany and Austria, it is terrifying to think as to what the next year will bring. People here are blissfully unaware of the disaster that is coming their way
The question that every country in Europe should ask herself is: If a country as important as Germany can be shafted in this way, what chance do we have.
No. There wont be nuclear war. Russia will prevail in Ukraine. Europe will be ruined economically. No amount of Euro printing will get them out of this mess. P.S. Just how important Russia is s to the world economy has been revealed to everyone. None is blind as one who doesnt want to see
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Hi Zoran, thank you for the excellent comment. As a Croatian myself, I cannot begin to understand us joining the Eurozone for the life in me. It can only be understood as high treason for which there must be accountability. This is like scrambling to board the Titanic as a 3rd class passenger after it had already begun to sink. Surreal!
Very interesting information of the current evens saw you on Gonzalio Lira Roundtable YT channel. im glad to know you 🙏
Thank you Mike!