European Economics Thread

[gelgoog]

Europe will go into recession as Russian energy restrictions and other factors kick in. But this recession will be temporary, prob for 1-2 years. After that Europe will never be completely dependent on Russian energy again. Russia will emerge significantly weaker. The decoupling between. Europe and Russia will be complete; exactly as planned by the US.

This is idiotic. Do you have any idea of the amount of natural gas Europe imports from Russia? Even if you put all the LNG exports of the USA and Qatar combined, heck even all the LNG in the world, it wouldn't cover the flows.
The only way for Europe to do without Russia energy is to basically shut down its heavy industry so people won't freeze in the winter.
As it is, we aren't even if the fall yet, and half of the heavy industry users who use lots of energy like steel mills, aluminium mills, glassworks, brickworks, etc are closed. These products will have to be imported. From someone else with cheaper energy. Guess who.

European energy companies will not face insolvency as long as their governments provide the necessary loans and aid, which is already underway. It’s a short term cash crunch. But they government/banks will issue loans and know that these will be repaid.

Short term my ass. This won't be anything less than 1970s oil crisis. Totally self-inflicted. We did not ban US oil when they invaded Iraq in 2003.
It will take at least 5 years until most of these so called replacements of Russian energy come online, be it extra US or Qatari LNG, or more ships to transport it, or the shipping terminals to unload it. 10 years to replace it for good. And that is if there aren't any issues along the way and with investments which haven't been made. And LNG will be more expensive than piped gas. So Europe will find itself in the same hole Japan is in, unattractive economically and long term economic depression. A large chunk of Europe might even recede economically into middle income status.

 

[FairAndUnbiased]

Europe will go into recession as Russian energy restrictions and other factors kick in. But this recession will be temporary, prob for 1-2 years. After that Europe will never be completely dependent on Russian energy again. Russia will emerge significantly weaker. The decoupling between. Europe and Russia will be complete; exactly as planned by the US.

there is no way to be free of Russian energy. Pipeline gas is much cheaper than LNG both in terms of money and in terms of EROEI. LNG is also a globalized commodity that can go to anyone while pipeline gas is not, pipeline gas is essentially a customized contract because it can only go to a small subset of customers. Pipeline gas also competes with LNG. Remove it and prices go up to LNG prices. LNG prices themselves also go up. Remove supply from market, price will increase or demand will decrease. Simple.

It doesn't matter if Russian pipeline gas is eventually turned into LNG and sold by 3rd parties either, the cost of turning it into LNG and being a global commodity means that the price will rise to fit.

EU is getting deindustrialized permanently.

 

[Abominable]

This is idiotic. Do you have any idea of the amount of natural gas Europe imports from Russia? Even if you put all the LNG exports of the USA and Qatar combined, heck even all the LNG in the world, it wouldn't cover the flows.
The only way for Europe to do without Russia energy is to basically shut down its heavy industry so people won't freeze in the winter.
As it is, we aren't even if the fall yet, and half of the heavy industry users who use lots of energy like steel mills, aluminium mills, glassworks, brickworks, etc are closed. These products will have to be imported. From someone else with cheaper energy. Guess who.


Short term my ass. This won't be anything less than 1970s oil crisis. Totally self-inflicted. We did not ban US oil when they invaded Iraq in 2003.
It will take at least 5 years until most of these so called replacements of Russian energy come online, be it extra US or Qatari LNG, or more ships to transport it, or the shipping terminals to unload it. 10 years to replace it for good. And that is if there aren't any issues along the way and with investments which haven't been made. And LNG will be more expensive than piped gas. So Europe will find itself in the same hole Japan is in, unattractive economically and long term economic depression. A large chunk of Europe might even recede economically into middle income status.

America a net importer overall and the only reason why American production is so high is because of high prices. In other words Europe will be locked into these high prices for a long time.

The biggest elephant in the room is now both America and Europe are totally dependent on the middle east for oil and gas. As I expected, the Saudis and Iranians have held secret meetings and are basically planning the downfall of the west through some form of an embargo.

 

[Chilled_k6]

America a net importer overall and the only reason why American production is so high is because of high prices. In other words Europe will be locked into these high prices for a long time.

The biggest elephant in the room is now both America and Europe are totally dependent on the middle east for oil and gas. As I expected, the Saudis and Iranians have held secret meetings and are basically planning the downfall of the west through some form of an embargo.

Interesting. What is this news? Any links?

 

[Abominable]

Interesting. What is this news? Any links?

Please, Log in or Register to view URLs content!

 

[In4ser]

Which brings us to Russia. I think that really depends on how successful Russia is at redirecting its exports to Asian countries. Strategically, it's actually a smart plan to embrace the rise of Asia. Unfortunately for them, they did it at a time when Asian countries can't export them advanced machineries. Therefore, we have a period where Russia is losing talented engineers and seeing degradation of its infrastructure. There is also the more permanent issue for Russia of population decline. Longer term, I'm not sure how much Russia can rely on oil and natural gas, since countries around the world are moving away from hydrocarbon energy sources. Fortunately for Russia, it has so much of the natural resources the rest of the world needs for this green economy. So, I think the long term outlook of Russia is very dependent on quickly it can finish the conflict with Ukraine and start trading with rest of the world.

I think a long recession in Europe that weakens its resolve to stick with US sanctions is probably the best way to achieve that. Russia does not need Europe, but it needs to be able to buy everything it needs from China.

I’m somewhat more optimistic about Russia in the longer term like 2050 onwards as I’m still pessimistic about China’s demographics. Still how Russia does will be dependent upon how it plays its cards regarding Global Warming and Europe deindustrialization.

If done correctly, Russia maybe able to reverse its decline with massive domestic investment into infrastructure from commodity price increases and be able to use the instability and power vacuum in Europe to become a regional hegemon in Eastern Europe. I’m doing so, it could absorb manpower and expertise from the rest of Europe. It’s revival of religiosity which increases fertility rate and being open immigration (it’s the 3rd largest immigrant country) may offset its demographic decline especially when there is plenty of land to be settled. The increased connectivity with Asia will also make its companies and industries more competitive as they will be able to tap into China’s BRI to source or to export through.

 

[gelgoog]

I would not expect Russia to have this massive economic explosion you are talking about here. It might have happened if they could trade with everyone else, but not under the current situation. Russia's economy will contract a bit from the sanctions, have heard numbers from 3% to 10% GDP contraction, and any growth will only happen in like 3 years. Russia will have to redirect trade towards Asia and this will require a massive infrastructure investment.

 

[In4ser]

I would not expect Russia to have this massive economic explosion you are talking about here. It might have happened if they could trade with everyone else, but not under the current situation. Russia's economy will contract a bit from the sanctions, have heard numbers from 3% to 10% GDP contraction, and any growth will only happen in like 3 years. Russia will have to redirect trade towards Asia and this will require a massive infrastructure investment.

Definitely not in the near term but in the longer term, who knows? Russia does have a lot of untapped potential that gets often underestimated. I do wonder how the Sino-Russian relationship will end up ultimately with an Eastern reformation of Western orthodoxy for Globalization perhaps they could establish a Eurasian relationship like Germany and France in the EU.

 

[tphuang]

if you look at Russia on the map, it's really well located between Europe and Asia. Russia used to make a lot of money from just air rights of airlines flying over its air space. From European POV, Russia should be a great connecting point between Europe and Asia. That's why a large part of BRI was to go through Russia to get to Europe. There is a lot of transit fees that Russia is not collecting when it's not trading with Europe. So even if Russia re-orients its industries to Asia in the next few years, it would be silly for both Russia and Europe to be cut off from each other long term. It's also just amusing for me to see German ministers keep saying they need to decouple themselves from China when Germany is only going to become more dependent on China as they permanently de-industrialize themselves.

 

[gelgoog]

Russia will basically be a backup for China as a resource base in case trade with Canada and Australia breaks down completely.
Russia is China's natural supplier basically.