An era of deindustrialization across Europe began due to WEF political puppets implementing zero-carbon fiscal policies for renewable energy, the economic and inflation fallout from pandemic monetary policies, the inflationary energy crisis due to sanctions levied against Russia over the war in Ukraine, and a state-sponsored covert sabotage of the Nord Stream pipelines under the Baltic Sea. Here is an excerpt from “A Dark Age Winter of Discontent in Europe” Part 4 (Twitter thread) published in March 2023:

“The situation across Europe has changed considerably since penning Part 1, 2, and 3 (Twitter thread) last year. Any positive outcomes since the fall are likely short-lived amid a bigger picture taking shape that’s detrimental to Europe’s economy, and the socioeconomic consequences are difficult to foresee with any certainty since war rhetoric in support of Ukraine has only escalated. There’s serious concern about recession taking hold in Europe, the economic impact of deindustrialization, and the possible shutdown of BASF in Germany or permanent cost cuts in its European operations… Who used energy as a weapon while declaring economic war against its allies and declaring war on Russia? Circumstantial evidence points to sabotage by NATO members for blowing up Russia’s Nord Stream gas pipelines to Germany beneath the Baltic Sea on Sep. 26. Coincidentally, the Baltic Pipe was inaugurated with an opening ceremony in Goleniów, Poland, on Sep. 27… Results of an investigation conducted by Sweden conceded that ‘the blasts were an act of sabotage’ but refused to release its findings to civilian plebes or Moscow.” – TraderStef

Let’s set the stage with a few stateside economic statistics and how NATO’s proxy war is unfolding. An update on the war is at “The Surge of ‘Little Green Men,’ and Metal is Poised to Strike – Part XV: Z’s End” published (thread) on Jul. 17. Below is a brief interview recorded today with Judge Napolitano and Colonel Douglas Macgregor (see his must-read article) discussing the geopolitical situation, Ukraine’s military “desperation” amid its long-publicized and now failing counteroffensive, and waning enthusiasm by European politicos to support additional escalation to WW3.

 

Take note of the advanced economy data vs. emerging markets in the IMF’s World Economic Outlook and Growth Projections report released today:

”IMF CHIEF ECONOMIST GOURINCHAS: MUCH OF THE DECLINE IN HEADLINE INFLATION IS DUE TO THE DECLINE IN ENERGY PRICES.” – Financial Juice, Jul. 25

When you decimate the U.S. Strategic Petroleum Reserve (SPR) by roughly 50% since 2021 to a 40-year low while combating inflation due to self-imposed fiscal and geopolitical chaos, it’s no wonder the dominant disinflation driver since last fall is attributed to energy prices. That Band-Aid fix is unlikely to last much longer for the West unless the U.S. aggressively returns to energy independence and dominance instead of despotic greenie hopium with exponential debt and deficits.

 

This morning’s Richmond Fed Manufacturing Index report showed the sector contracting for 10 of the last 12 months.

 

Germany is the Eurozone’s economic workhorse. According to today’s IMF report, its economy is projected to contract this year. Despite the economic deterioration across the Eurozone, NATO continues to double down with financial aid and weaponry for Ukraine. The recessionary situation that’s worsening among NATO member nations was noted in “The Recession Arrived With Wardogs and Goldilocks’ Hopium in 2023 – Part 3” published in mid-June. Here’s an excerpt:

“Meanwhile, Europe’s economic powerhouse is breaking down (Germany) with consequences for all of the European Union, Australia entered a ‘retail recession’ as inflation and interest rate hikes hit spending, Japan’s recession is imminent, and the U.K. is slated for recession this year despite a recent growth spurt. Germany announced in late May that it fell into recession in early 2023 with persistent inflation pressures, and the Eurozone admitted it’s in a recession last week. The 20-country GDP has been contracting since 4Q22 since growth was zero-bound for two consecutive quarters.” – TraderStef

Eurozone inflation data via Eurostat’s interactive map:

 

 

Goldman Sachs warned that the European energy crisis will lead to the “deindustrialization of Europe.” The British magazine Spectator also chimed in last fall:

Europe’s descent into deindustrialization – the attack on the Nord Stream pipeline will encourage protectionism… “The rapid economic collapse that Britain is facing is simply an accelerated version of what the whole of Europe is about to go through; unsustainable borrowing to fund the gap between high energy prices and what households can afford. With the sabotage of the Nord Stream pipeline, there is now no feasible way back. Europe can no longer physically import Russian gas – prices will remain high until Europe builds more energy capacity, which could take years. What is likely to come of this? High energy prices will render European manufacturing uncompetitive. European manufacturers will be forced to pass through the higher energy costs in the form of higher prices for consumers will find it cheaper to buy products from countries with normal energy prices… The only logical European response to the threat of widespread deindustrialization is to raise tariffs… This strategy will lower living standards, depriving Europeans of cheaper goods, but it will at least preserve some manufacturing jobs. This process looks remarkably like the start of the Great Depression.”

A downtrend in Eurozone manufacturing data accelerated in 3Q23 and was broad-based across all sectors in its two biggest economies, Germany and France, which are now in contractionary territory. Less demand prompted the steepest fall in orders since 2009, and the service sector printed its first drop since last fall. Germany’s data is a bloodbath with levels not seen since 2009 and 2020.

EU PMIs Plunge As German Manufacturing Collapses; Inflation Remains ‘Sticky’… “Germany: The German composite flash PMI decreased by 2.3pt to 48.3, also below consensus expectations. The decline in the composite index was broad-based across sectors, but led by manufacturing as the manufacturing output index fell to a 38-month low; services activity remains in expansionary territory.” – ZH, Jul. 24

 

 

European industries that include but are not limited to fertilizer, aluminum, and zinc have been hit hard due to the soaring price of energy. Factory closures are growing across Europe, and next winter is a long way off. Producers of aluminum and zinc that are required for the automotive and construction industries were the first to shut down in Norway, Slovakia, and the Netherlands. Mining behemoth Glencore has warned that the energy crisis is a major threat to supply, and Europe’s largest copper producer, Aurubis AG, will begin rationing its use of German natural gas and pass on rising electricity costs to consumers. An article from Politico last week covered a few details:

Rust Belt On The Rhine… “The deindustrialization of Germany: If Europe’s economic motor stalls, the already polarized political landscape will shudder. Germany’s biggest companies are ditching the fatherland. Chemical giant BASF… its latest $10 billion investment in a state-of-the-art complex the company claims will be the gold standard for sustainable production — isn’t going up in Germany. Instead, it’s being erected in China. BASF was founded on the banks of the Rhine in 1865 and scaling back operations in Germany. In February, the company announced the shutdown of a fertilizer and other facilities, which led to about 2,600 job cuts. ‘We are increasingly worried about our home market,’ BASF CEO told shareholders in April, noting that the company lost €130 million in Germany last year. ‘Profitability is no longer anywhere near where it should be’… Such malaise now pervades the whole of the German economy, which slipped into a recession in 1Q23… Put simply, the formula that made Germany Europe’s industrial powerhouse — a highly skilled workforce and innovative companies powered by cheap energy — has come undone.” – Politico, Jul. 13  

The German government may have finally awakened to the fact that its industrial base and financial survival must be preserved. To that end, it proposed this week to break its climate policy promises to the international community and continue multibillion-dollar investments in overseas oil and gas projects.

“The new German policy is the most explicit indication of Germany’s departure from climate pledges. Last year, Germany played a leading role in weakening a G7 commitment near-identical to the Glasgow Statement pledge to end international public finance for fossil fuels under the guise of energy security concerns. Germany also called on EU states to work with countries that can develop new gas fields, and Olaf Scholz’s Chief of Staff publicly suggested Germany should finance new gas fields in Senegal.” – OilChange, Jul. 24

Numerous climate policy promises are in the process of being discarded, such as an offshore wind turbine project the U.K. axed due to soaring costs. Unfortunately, I suspect that the damage has been done and Europe is in for a rude awakening. The U.S. is not immune to the economic consequences taking hold in Europe.

The deindustrialization of Germany has begun – The Duran, Jul. 3

 

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TraderStef on Twitter, Gettr / Website: TraderStef.com