Is The 'Right' Rising And Reshaping Europe?

Washington Post: Dutch election shows far right rising and reshaping Europe 

When Austria two decades ago became the first nation in Western Europe to lurch to the far right since World War II, the rest of the continent roared in outrage. Protesters haunted its politicians. Diplomats shunned them. One Belgian delegate skipped a lunch with Austria’s then-defense minister, telling reporters: “I don’t eat with fascists.” 

Fast forward to 2023, when historic political momentum has given the far right a seat at Europe’s table and a chance to reshape the region’s politics and policies. 

The latest victory came in the socially liberal Netherlands, where hard-right icon Geert Wilders and his anti-European Union, anti-Muslim and anti-immigration Party for Freedom landed a shocking first place finish this week in parliamentary elections.  

Read more ....

Update: Where Europe's 'Far-Right' Has Gained Ground (Zero Hedge).  

WNU Editor: As to what is my take. I prefer to call what is happening in Europe a shift to the middle. Or as Armstrong Economics' Martin Armstrong points out, anyone who wants to return just to normal life is now disgustingly far-right (link here).

Poverty Is Widespread In Europe

Zero Hedge: Poverty In Europe 

In 2022, 95.3 million people in the EU (22 percent of the population) were at risk of poverty or social exclusion, i.e. living in households facing at least one of the three risks of poverty and exclusion: income poverty, severe material and social deprivation and/or living in a household with very low work intensity (where adults work at less than 20 percent of their potential over one year). 

As Statista's Anna Fleck reports, according to Eurostat data, this figure has remained relatively stable compared to the previous year (95.4 million in 2021, 22 percent of the population). 

The proportion of people at risk of poverty or social exclusion varies markedly from one EU country to another.  

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WNU Editor: I would not be surprised if poverty in Europe will be greater for 2023.

Eurozone Has Officially Entered A Recession After Revising Figures

 

BBC: Eurozone in recession as rising prices hit spending 

The eurozone fell into recession this winter, revised figures show, as consumers were hit by rising prices. 

The economy of the 20 nation-bloc contracted by 0.1% between January and March, after also shrinking in the final three months of 2022. 

A recession is generally defined as when an economy shrinks for two three-month periods, or quarters, in a row. 

As in other regions, the eurozone has been hit by rising food and energy prices that have weighed on households. 

Spending by households in the bloc fell by 0.3% in the first three months of 2023, and by 1% in the previous quarter. 

Read more .... 

Eurozone Have Officially Entered A Recession After Revising Figures  

Eurozone fell into recession as energy prices soared -- Politico  

Euro zone enters recession after Germany, Ireland growth revision -- CNBC 

Euro zone saw winter recession, more challenges ahead -- Reuters  

Eurozone officially entered recession after Eurostat revises figures -- SKY News

 Eurozone sinks into recession as cost of living crisis takes toll -- The Guardian

These Are The Countries With The Most Labor Strikes In Europe

Euronews: Which countries have the most strikes in Europe and what is the impact on the economy? 

A nationwide strike is taking place in France on Thursday in response to plans by President Emmanuel Macron’s government to reform the pension system and raise the retirement age. Strikes may continue beyond January 19 as France’s largest trade union has described Thursday as only a starting point. 

 Strikes have been happening in the UK, too. Nurses went on strike in England in December 2022 for the first time in 106 years. Rail workers have been on strike in recent weeks, and teachers and health workers are planning to strike in February. Strikes are a significant part of the culture of working life in Europe. People in several EU member states including Spain and Germany went on strike recently, primarily asking for better pay and working conditions.  

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WNU Editor: And you just know that Europe is going to be facing even more strikes in the future.

Europe's Central Bank Signals Higher Interest Rates Are Coming

Reuters: ECB may have to restrict growth to control inflation, Lagarde says 

* At 1.5%, the ECB’s deposit rate is not far from the so-called neutral rate, where the bank is neither stimulating nor holding back growth. 

* Most estimates of the neutral rate are between 1.5% and 2%, suggesting that after an expected December hike “accommodation” will have been removed. 

The European Central Bank will keep raising interest rates and may even need to restrict economic activity to tame inflation, ECB President Christine Lagarde said on Friday, singling out rates as the bank’s key instrument over balance sheet reduction. 

The ECB has raised rates by an unprecedented 200 basis points since July to tackle inflation, and said that more policy tightening is coming via rate hikes and the reduction of its 5 trillion euro ($5.2 trillion) debt holding.  

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Update #1: ECB must raise rates decisively; let bonds expire from start of 2023, Nagel says (Reuters)  

Update #2: Lagarde Says Rates to Rise More, May Need to Become Restrictive (Bloomberg)  

WNU Editor: The EU inflation rate is now over 10%. Interest rates will need to approach that level if the EU does not want to implode their currency and face even higher inflation numbers.

Are Western Weapons Destined For Ukraine Ending Up With Criminal Organizations In Europe?

Gregoire Moutaux, was stopped on the Polish-Ukrainian border on May 21 with 125 kilograms of explosives, five AK-series assault rifles, two antitank grenade launchers, some 5,000 rounds of ammunition, and 100 detonators. Ukrainian officials claim he planned more than a dozen attacks. 

Remix: Some weapons destined for Ukraine ending up with Finnish criminals  

Weapons sent to Ukraine are finding their way across Europe 

Organized crime is on the rise in Finland, and there’s a high demand for weapons. Criminal networks have already established weapon smuggling routes between Finland and Poland. 

Europol, the European police cooperation organization, is reported to have warned in the summer that armed criminal groups could soon start smuggling weapons from Ukraine to EU member states. 

According to Christer Ahlgren, superintendent of the Organized Crime Intelligence Unit of the Finnish National Bureau of Investigation (Keskusrikospoliisi, KRP), Europol’s prediction has already become a reality in Finland: 

“We are seeing signs that these weapons are already in Finland, (…) and we have already seen signs that weapons delivered to Ukraine have been found in Finland,” Ahlgren says. 

 Read more ....  

Update: Finnish Police: Weapons Bound For Ukraine End Up on Europe's Black Market (Moscow Times) 

WNU Editor: Concerns about Ukraine becoming a smuggling hub for weapons to Europe first started this summer .... Flood Of Weapons Makes Eastern Ukraine Ripe For Arms Trade (RFE). 

My personal concern is on shoulder-launched anti-aircraft missiles. Even before the war Ukraine was one of the most corrupt countries in the world. Coupled with the country also being one of the poorest in Europe, especially now, the temptation for someone to sell weapons like a shoulder-launched anti-aircraft missile to a terror organization for a few tens of thousands of dollars is a temptation that I am sure some would take.

The De-industrialization Of Europe Is Speeding Up

BASF complex in Ludwigshafen, Germany. Credit: BASF  

Businesslend: BASF to downsize 'permanently' in Europe 

BASF has stated it should downsize “permanently” in Europe, with excessive power prices making the area more and more uncompetitive. 

The assertion from the world’s largest chemical substances group by income got here after it opened the primary a part of its new €10bn plastics engineering facility in China a month in the past, which it stated would help rising demand within the nation. 

“The European chemical market has been growing only weakly for about a decade [and] the significant increase in natural gas and power prices over the course of this year is putting pressure on chemical value chains,” chief govt Martin Brudermüller stated on Wednesday. 

Read more .... 

WNU Editor: BASF downsizing its operations in Europe and moving elsewhere is a shock. 

This company provides critical materials and supplies to numerous companies throughout Europe and is critical to the industrial base of Europe. If BASF closes down, these companies that employ hundreds of thousands will also be force to close. To say that this is a recipe for mass unemployment followed by mass unrest is an understatement.

To give you an indication of BASF's size, its largest plant uses more natural gas than Switzerland .... The biggest corporate victim of Europe’s energy crisis may be a $93 billion chemical giant whose flagship plant uses as much gas as Switzerland (Fortune). 

In March President Biden and European leaders told everyone that sanctions will implode the Russian economy. It looks like the reverse is happening.

European Nations Tighten Energy Infrastructure Security After Nord Stream Gas Pipeline 'Attack'

FILE PHOTO: A general view of the Equinor's Johan Sverdrup oilfield platforms in the North Sea © Reuters/Ints Kalnins  

Euronews: Nord Stream: Norway and Denmark tighten energy infrastructure security after gas pipeline 'attack' 

Norway and Denmark will increase security and surveillance around their energy infrastructure sites after the alleged sabotage of Russia's Nord Stream gas pipeline in the Baltic Sea. 

Major leaks struck two underwater natural gas pipelines running from Russia to Germany, with experts reporting that explosions rattled the Baltic Sea beforehand. 

Norway -- an oil-rich nation and Europe's biggest supplier of gas -- will strengthen security at its land and offshore installations, the country's energy minister said.  

Read more ....  

WNU Editor: The Nord Stream pipeline attacks occurred in a region where the maritime security was the responsibility of Denmark and Sweden. This is a major failure on their part, and not surprising they are now reacting to it. 

 European Nations Tighten Energy Infrastructure Security After Nord Stream Gas Pipeline 'Attack'  

Norway to deploy military to protect its oil and gas installations -- Reuters  

Denmark’s defense minister concerned about security situation in Baltic Sea region -- AFP  

"Heightened vigilance" at Swedish nuclear plants after Nord Stream leaks -- (Sveriges Radio)

European Central Bank President Christine Lagarde Warns ‘Outlook Is Darkening’

European Central Bank President Christine Lagarde  

Politico: ECB’s Lagarde expects technical recession this winter 

Central Bank estimates currently predict euro area growth to remain positive in 2023, albeit low at 0.9 percent. The European Central Bank expects the euro area economy to contract in the last quarter of this year and in the first quarter next year, its president said Monday. 

That fits the definition of a technical recession, which is two consecutive quarters of negative growth. 

"It is difficult to predict what the real outcome will be in 2023 but it will certainly be a difficult year of which the first quarter will most likely be negative, as we believe the last quarter of 2022 will likely be negative as well," ECB President Christine Lagarde told the Economic and Monetary Affairs Committee of the European Parliament.  

Read more ....  

Update #1: Europe's outlook 'darkening,' ECB head hedges on recession (AP) 

Update #2: EU central bank warns ‘outlook is darkening’ (RT)  

WNU Editor: ECB President Christine Lagarde blames Russia for this economic crisis, even though it is the EU that imposed sanctions over Russia's invasion of Ukraine thereby precipitating the current economic crisis not the otherway around. 

ECB President Christine Lagarde is also predicting a short technical recession. 

I disagree. 

Europe's access to cheap and reliable energy from Russia has now come to an end. What this means is that Europe's business model, based on cheap energy, is now broken.

For the people in Europe this means expensive energy alternatives and supplies, the closure of businesses that are dependent on reliable and affordable energy, and the departure of businesses to other more affordable energy producing countries. 

Europe is not facing a short recession this winter. Europe is already in a recession, and it is going to get worse.

Is Europe De-Indistrializing?

Daily Signal: Europe’s Alarming New Trend: Rapid De-Industrialization 

Germany, widely known as Europe’s industrial powerhouse, is now leading the Continent in an alarming new trend—rapid de-industrialization. 

Astronomical natural gas prices are forcing heavy industries, from smelters to fertilizer plants, to shut down or curtail production. Germany’s fabled “Mittelstand”—the collection of mid-sized firms that form the backbone of its economic might—is buckling under the weight of terrible decisions made by climate-obsessed politicians going back decades. 

“It’s not good news,” German Economic Minister Robert Habeck said Wednesday of his country’s plight. “[I]t 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.”  

Read more ....  

WNU Editor: European metal producers are in panic mode (see tweet below):

BREAKING: 40 CEOs of European metal producers have wrote an open later to Ursula Von Der Leyen and the European Commission warning of an "existential threat" to industry as power prices surge.

— SGM World News (@SGMWorldnews) September 7, 2022

My prediction. Expect massive EU government bailouts of these industries with money that they do not have in the coming months. 

Update: Here is how Russian President Putin is seeing it:  

    Europe is about to throw its achievements in building up its manufacturing capability, the quality of life of its people and socioeconomic stability into the sanctions furnace, depleting its potential, as directed by Washington for the sake of the infamous Euro-Atlantic unity. In fact, this amounts to sacrifices in the name of preserving the dominance of the United States in global affairs.

... 

   The competitive ability of European companies is in decline, for the EU officials themselves are essentially cutting them off from affordable commodities and energy, as well as trade markets. It will come as no surprise if eventually the niches currently occupied by European businesses, both on the continent and on the global market in general, will be taken over by their American patrons who know no boundaries or hesitation when it comes to pursuing their interests and achieving their goals. 

Hat tip Moon of Alabama.

European Central Bank Raises Interest Rates Across The Eurozone To Tackle Inflation

 

The Guardian: ECB raises interest rates across eurozone by record margin 

European Central Bank sets aside recession fears to increase rates by 0.75 of a percentage point to 1.25% 

The European Central Bank has raised interest rates across the eurozone by a record margin to combat soaring inflation that has reached double figures in some of the currency bloc’s 19 member countries. 

Setting aside concerns that higher rates would add to the current squeeze on consumers’ disposable incomes and increase the depth of a looming recession, the central bank’s 25-member governing council raised its key benchmarks by an unprecedented 0.75 of a percentage point to 1.25%.  

Read more .... 

WNU Editor: Too little too late. Expect more rate increases in the future .... ECB promises more rate hikes after unprecedented increase (Reuters). 

European Central Bank Raises Interest Rates Across The Eurozone To Tackle Inflation  

Eurozone interest rates in record rise to fight inflation -- BBC  

European Central Bank raises rates by 75 basis points to tackle soaring inflation -- CNBC  

European Central Bank sets record rate hike to fight energy price shock -- CNN

ECB raises interest rates by record 0.75%, signals more to come -- RTE

European Leaders Are Now Realizing That The Continent Is Entering A Severe And Protracted Economic Crisis

 

Yves Smith, Naked Capitalism: Will Europe Go Down to Defeat Before Ukraine? 

During the runup to the financial crisis, your humble blogger pointed out that financial time moved faster than political time. Market players often had better and more comprehensive access to important information than officials did and had strong incentives to act on it. 

By contrast, regulated entities were motivated to shuffle their feet and mumble until problems became undeniable…and then the regulators themselves would too often hope gunshot wounds would magically heal themselves, rather than risk having to answer embarrassing questions by going into emergency response mode.  

Read more ....  

WNU Editor: She is spot on with this observation .... 

 .... Now that European leaders are returning from summer holidays, it appears only now to be dawning on them that Europe is entering a severe and almost certainly protracted economic crisis. 

It is a long post, but provides an excellent analysis on the growing economic crisis in Europe.

Recesson Fears Grow In Europe As The Euro Declines And Inflation Grows

 

CNBC: Euro slides to 20-year low against the dollar as recession fears build 

The euro fell to its lowest level in two decades on Tuesday as fears of a recession in the euro zone ramped up, with gas prices soaring and the Ukraine war showing no signs of abating. 

The euro shed around 1.5% for the session to hit $1.0265 against the dollar, while the dollar index gained 1.29% to 106.49. 

Euro zone inflation hit a record 8.6% in June, prompting the European Central Bank to give markets advance notice of its intention to hike interest rates for the first time in 11 years at its July meeting.  

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Update #1: Euro Slumps to Two-Decade Low as Recession Fears Bite (Reuters)  

Update #2: European stock markets tumble on rising fears of recession (The Guardian)  

WNU editor: My European friends are telling me that the recession is happening now. I am not sure about that, but I am sure that if this happens, the EU will definitely be in a deep recession by fall .... Europe at risk of recession amid concerns Russia could cut gas supplies (The Guardian).

Are Europeans Willing To Pay The Price For Defending Their Values?

Statista: Paying the Price to Defend EU Values?  

When Russia invaded Ukraine on February 24, it didn’t take long for the international community to condemn the attack and react accordingly. Within a few days, Western powers imposed strict sanctions on Russia, hoping to cripple the country’s ailing economy and force Putin to retreat. More than four months and tens of thousands of casualties later, hopes of a quick resolution of the conflict have vanished, as a drawn-out war of attrition looks increasingly likely.  

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WNU Editor: This poll was done between April 19 - May 16, 2022, and 59% say the "defense of European values be prioritized over the rising cost of living. I suspect the numbers are going to shift at the end of this year when the realization hits that Russia is not going to be pushed back in Ukraine, and the cost of living will be exploding as energy prices and limited supplies starts to impact everyone.

EU's Foreign Policy Chief Says EU's Weapons Stockpile Is Seriously Depleted Due To Providing Aid To Ukraine

EU foreign policy chief Josep Borrell 

Novinite: Borrell: The EU needs to Strengthen its Military Security 

“The European Union needs European forces to ensure its own security”, EU foreign policy chief Josep Borrell said in a blog post Sunday. 

"The new security environment shows that the EU must take greater responsibility for its own security. To achieve this, we need a modern and compatible European armed forces that will have a higher level of spectrum and strive to build abilities and strength," he wrote.  

Read more ....  

WNU Editor: The key part in the above post is this .... 

.... Borrell also acknowledged that the European Union's stockpile of military equipment has been depleted by aid to Ukraine. "The depletion of supplies as a result of the military support we have given to Ukraine is the most obvious example of the EU's defense shortcomings," Borrell wrote. EU's Foreign Policy Chief Says 

EU's Weapons Stockpile Is Seriously Depleted Due To Providing Aid To Ukraine  

We need to increase European defence capabilities, working better together -- Europa.eu  

EU’s weapons stockpile depleted – Borrell -- RT  

EU Depleted Military Stockpiles Helping Ukraine - Borrell -- Sputnik  

EU urges members to work together to renew weapons stocks -- AP  

European Commission Proposed an Armaments Plan to Ensure the Security of the EU -- Novinite

EU Lowers Growth Forecasts And Expects Higher Inflation

 

Euronews: EU slashes growth forecast and predicts prices will rise faster than thought this year 

The war in Ukraine is severely curtailing the European Union's economic rebound from the COVID-19 pandemic with this year's growth forecast sharply revised down, the European Commission warned on Monday. 

It lowered its economic growth forecast for the eurozone in 2022 by 1.3 points to 2.7% and increased its inflation forecast by 3.5 points to 6.1%. Inflation for the whole of the EU is meanwhile expected to reach 6.8% this year.  

Read more ....  

WNU Editor: This is an understatement .... Europe’s Economic Outlook Is Looking Bleaker By The Day (OilPrice.com). 

EU Lowers Growth Forecasts And Expects Higher Inflation  

EU growth forecast cut as war in Ukraine fuels inflation -- The Guardian  

EU lowers economic growth expectations amid Ukraine war -- DW  

The EU says the bloc will likely enter a recession if Russian gas is cut off or even if supplies keep flowing -- Business Insider  

EU slashes forecast for economic growth as war’s fallout deepens -- Al Jazeera  

EU issues dire economic forecast -- RT

Euro Crashes To Five-Year Low After Russia Shuts-Off Natural Gas Supplies To Poland And Bulgaria

CNBC: Euro slides to five-year low on Russian energy supply, slowdown fears 

* On Wednesday, European Commission President Ursula von der Leyen accused Russia of blackmail for its decision to cut supplies. 

* The EU is highly dependent on Russian gas, with about 40% of its imports coming from the country, and there are wider concerns about a deeper economic slowdown in the region. 

The euro tumbled against the U.S. dollar Wednesday as investors grew increasingly concerned with energy supply and a potential recession in the region. 

The euro dipped below $1.06 for the first time since 2017. It was last almost 0.7% lower to $1.056. The dollar has surged in recent weeks on its safe-haven appeal, as traders fear a growth slowdown or even a recession. 

“The euro is clearly heading towards parity. Reasons for this weakness are the weak economic prospects for the eurozone and huge differences in monetary policy reactions in the US and the eurozone,” Carsten Brzeski, chief economist at ING Germany, told CNBC via email. 

Read more ....  

Update #1: The euro just hit a 5-year low against the dollar as Russia's halt in gas flows darkens economic prospects for Europe (Business Insider)  

Update #2: Euro crashes to five-year low (RT) 

WNU Editor: One can only imagine what the Euro will be worth if Russia cuts-off all natural gas supplies to Europe.

Update #3: The U.S. dollar is increasing .... Dollar hits five-year high, growth concerns dent euro (Reuters), as well as the Russian ruble .... Rouble hits over 2-year high vs euro in Moscow as Russia halts some gas supplies (Reuters).

EU Banking Watchdog Warns Banks To Be Aware Of Wartime Fake News Triggering A Bank Run

European Union flags fly outside the European Commission headquarters in Brussels, Belgium, April 10, 2019. REUTERS/Yves Herman 

Reuters: Beware of wartime fake news triggering a run, EU banks told 

LONDON (Reuters) - Banks should beware of fake news that could trigger a run on their deposits, the European Union's banking watchdog said in a warning on Friday about potential fallout from the war in Ukraine. 

"As market sentiment remains highly volatile and driven by news flow, banks' liquidity levels can become vulnerable due to spread of inaccurate information," the European Banking Authority said in its latest "risk dashboard", which focused on exposures to Russia and Ukraine. 

 "Such campaigns that spread inaccurate information may result in deposit outflows from targeted banks," EBA said. 

EBA said exposures of banks in the bloc to Russia are too low to threaten financial stability, but economic fallout from the war in Ukraine and cyber attacks could hit the profitability of lenders. 

EU banks had exposures totalling 76 billion euros ($84 billion) to Russia and 11 billion euros to Ukraine in the fourth quarter of 2021, mainly among Austrian, French and Italian lenders.  

Read more ....  

WNU Editor: I am not worried about fake news triggering a bank run. I am more worried about real news triggering a bank run.

Europe's Economy Is Reeling From The Russia - Ukraine War

Bloomberg: Shockwaves Spread as Europe’s Economy Reels at Energy Fallout 

Two weeks since Russia began Europe’s biggest conflict since World War II, businesses across the continent are already in varying stages of despair at the consequences on livelihoods. 

A crisis of human suffering in Ukraine, whose wider economic impact prompted European Central Bank officials to quicken their withdrawal from stimulus this week, is affecting prosperity from the farmlands of Spain to the euro zone’s manufacturing core in Germany and France. 

Surging energy costs are the central complaint, though disrupted supply chains, sanctions and worries about a looming demand drop are also weighing on enterprises. The abrupt shock of war nearby, combined with broad effects and an uncertain duration, will pile pressure on governments to cushion the blow as well as testing their resolve to confront Russia.  

Read more ....  

Update: How Russia's war could knock out Europe's economy (CNN)  

WNU Editor: Goldman Sach's assessments are grim .... Goldman Sachs predicts what will happen to Europe’s economy if Putin shuts off the gas taps (CNBC).

Europeans Are Reeling From High Energy Prices

Liquefied Natural Gas (LNG) storage tanks. Copyright DANIEL LEAL-OLIVAS / AFP  

Euronews: Europe's energy crisis: Five charts to explain why your bills might go up this winter 

Natural gas prices have surged in Europe as countries exit COVID-19 lockdown, fuelling a crisis that is already impacting consumers' bills. 

The cost is now four times higher than what it was last year in Europe and is continuing to increase, with the crisis unlikely to abate before the spring.

Governments are scrambling to issue subsidies and cut taxes in an effort to protect consumers. 

Here are five charts to help you visualise what's going on.  

Read more ....  

Update #1: High energy prices send Europe’s businesses, homes reeling (AP)  

Update #2: The European Energy Crisis Was Inevitable (OilPrice.com)  

WNU Editor: If a war breaks out and sanctions follow, these high energy prices will be seen as a bargain.