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Europe’s Sovereign Debt Bubble Is A Domino In Hyperbitcoinization

A sovereign debt crisis is brewing in Europe, and it will likely perpetuate the euro’s devaluation and pave the path for Bitcoin.

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A sovereign debt crisis is brewing in Europe, and it will likely perpetuate the euro's devaluation and pave the path for Bitcoin.

The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

European Energy Crisis Progressing

In last Thursday’s dispatch, we covered the dynamic of this inflationary bear market, where the conditions of the global macro landscape are rapidly repricing global interest rates higher. Similarly in our “Energy, Currency & Deglobalization” series,

Energy, Currency & Deglobalization, Part 1

Energy, Currency & Deglobalization, Part 2

Since our latest release, the response from European governments to “combat” surging energy costs have been astounding.

In the United Kingdom, newly appointed Prime Minister Liz Truss has already unleashed a draft plan as a response to rising consumer energy bills. The policy plan could cost £130 billion over the next 18 months. The plan details the government stepping in to set new prices while also guaranteeing financing to cover the price differences to private sector energy suppliers. Using 2021 annual numbers, the plan would be roughly 5.9% of Gross Domestic Product. The U.K.’s stimulus at 5% of GDP would roughly be the equivalent of a $1 trillion stimulus package in the United States.

There’s also a seperate plan costing £40 billion for U.K. businesses. Counting both, they represent roughly 7.7% of GDP for what’s likely to be a conservative first pass of stimulus and spending to offset a longer, sustained period of much higher energy bills across all of Europe the next 18-24 months. The initial policy scope doesn’t seem to have a cap on its spending so it’s essentially an open short position on energy prices.

Ursula von der Leyen, president of the European Commision, tweeted the following:

The supposed price cap of Russian oil is important for a number of reasons: The first is that with Europe’s solution for the incumbent energy crisis seeming to be stimulative fiscal packages and energy rationing, what this does to the euro and pound, both currencies of energy importing sovereignties, only compounds its problems.

Stimulating fiscal packages and energy rationing as solutions to the incumbent energy crisis has impacted the euro and pound.
Stimulating fiscal packages and energy rationing as solutions to the incumbent energy crisis has impacted the euro and pound.

Even with the European Central Bank (ECB) and Bank of England supposedly rolling back pandemic-era easing programs, the solution that the western voters likely demand is “energy bailouts.” Some are calling this Europe’s Lehman Moment, in reports yesterday from Bloomberg, “Energy Trading Stressed By Margin Calls Of $1.5 Trillion.”

“Liquidity support is going to be needed,” Helge Haugane, Equinor’s senior vice president for gas and power, said in an interview. The issue is focused on derivatives trading, while the physical market is functioning, he said, adding that the energy company’s estimate for $1.5 trillion to prop up so-called paper trading is “conservative.” 

Bloomberg 

Similarly, Goldman warned of a dismal outlook for markets.

“The market continues to underestimate the depth, the breadth, and the structural repercussions of the crisis,” the Goldman Sachs analysts wrote. “We believe these will be even deeper than the 1970s oil crisis.” 

The energy crisis is currently projected to cost the continent of Europe approximately €2 trillion, or 15% of GDP.

The energy crisis will have major costs for Europe.

 "At current forward prices, we estimate that energy bills will peak early next year at c.€500/month for a typical European family, implying c.200% increase vs. 2021. For Europe as a whole, this implies a c.€2 TRILLION surge in energy bills, or c.15% of GDP.”

While this number is likely reduced by the fiscal subsidized prices, the currencies are meaningfully falling against the dollar (still the incumbent unit of trade for global energy), while the dollar itself has been repriced lower in terms of energy.

However, the business sector is one of the losers, as energy rationing and soaring costs hammer the European industrial producers. 

Metal Plants Feeding Europe’s Factories Face An Existential Crisis

Europe’s Top Aluminum Plant Will Cut Output 22% On Energy Costs

German Factory Orders Fall For Sixth Month Amid Energy Squeeze

The above chart is German factory orders by month heading into the fall.

Europe Aluminum Cuts Get Deeper By The Day As Power Crisis Bites

“The curtailments add to the extreme toll that the energy crisis is having on Europe’s metals industry, which is one of the biggest industrial consumers of power and gas. A group representing the region’s biggest producers wrote to European Union politicians warning that the energy crisis could cause ‘permanent deindustrialization’ in the bloc, unless a package of support measures are implemented.”

Aluminum, which takes approximately 40 times more energy than copper to produce, is quite energy intensive.

Source: Bloomberg

“This is a genuine existential crisis,” said Paul Voss, director-general of European Aluminum, which represents the region’s biggest producers and processors. “We really need to sort something quite quickly, otherwise there will be nothing left to fix.”

Bloomberg

What is being demanded due to the structural energy deficit in Europe is the populous and the business sector demanding the public balance sheet assume the risk. Subsidies for energy bills or price caps does nothing to change the absolute amount of molecules of high-energy density fossil fuels on the planet. The price caps and subsequent response from Russian President Vladimir Putin is what makes all the difference, and it has the potential to create potentially devastating outcomes in financial markets.

No government is going to allow their citizens to starve or freeze; it’s the same story throughout history with sovereign nations loading up on future debt obligations to solve today’s problems. This just happens to come at a time when a handful of European countries have astronomical public debt-to-GDP ratios well over 100%.

A handful of European countries have astronomical public debt-to-GDP ratios well over 100%

A sovereign debt crisis is brewing in Europe, and the overwhelmingly likely outcome is that the European Central Bank steps in to contain credit risk, perpetuating the devolution of the euro.

We’ve talked at length about the drastic rise and rate of change in 10-year yields in the United States, but it happens to be the same picture across every major European country despite slower actions from various central banks to hike rates.

European debt yields, also accounting for future inflation expectations, are still not showing signs of slowing down. The Bank of England is projecting 9.5% Consumer Price Index inflation through 2023 (read “Bitcoin’s Seven Daily Candles” where we cover their latest August monetary report) and the European Central Bank expects a 75 basis point rate hike in their announcement tomorrow, after just recently raising from negative rates. For what it’s worth, the probability for a Federal Reserve rate hike to 75 basis points for the Federal Open Market Committee meeting two weeks away is currently at 80% (intraday pricing versus 73% for September 6).

With political pressures mounting, the high inflation prints, even showing small signs of some deceleration recently, continue to leave central banks no other viable option. They must “do something” in an attempt to maintain 2% inflation targets even if it only partially causes adequate demand destruction. This is largely where investors who have a thesis around peak rates and “Fed can’t hike rates” have gotten crushed. Although rising government yields are not sustainable to service debt interest payment burdens in the long term, we’re still awaiting that breaking point that forces a directional change.

The second-order inflationary effects of unloading more fiscal stimulus policies and/or a seizure in U.S. Treasury collateral markets are what to watch for.

Watch for the second-order inflationary effects of unloading more fiscal stimulus policies and/or a seizure in U.S. Treasury collateral markets.
Watch for the second-order inflationary effects of unloading more fiscal stimulus policies and/or a seizure in U.S. Treasury collateral markets.

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Decrease in Japanese children’s ability to balance during movement related to COVID-19 activity restrictions

A team of researchers from Nagoya University in central Japan investigated how restrictions on children’s activities during the COVID-19 pandemic affected…

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A team of researchers from Nagoya University in central Japan investigated how restrictions on children’s activities during the COVID-19 pandemic affected their life habits and their abilities to perform physical activities. By comparing medical examination data before and after the onset of the pandemic, they found that physical functions among adolescents deteriorated, including their dynamic balance. They also found that the children had higher body fat levels and worse life habits. Rather than a lack of exercise time, this may have been because of a lack of quality exercise due to activity restrictions.  

Credit: Credit must be given when image is used

A team of researchers from Nagoya University in central Japan investigated how restrictions on children’s activities during the COVID-19 pandemic affected their life habits and their abilities to perform physical activities. By comparing medical examination data before and after the onset of the pandemic, they found that physical functions among adolescents deteriorated, including their dynamic balance. They also found that the children had higher body fat levels and worse life habits. Rather than a lack of exercise time, this may have been because of a lack of quality exercise due to activity restrictions.  

During the COVID-19 pandemic, in Japan, as in other countries, schools and sports clubs tried to prevent the spread of infection by reducing physical education and restricting outdoor physical activities, club activities, and sports. However, children who are denied opportunities for physical activity with social elements may develop bad habits. During the pandemic, children, like adults, increased the time they spent looking at television, smartphone, and computer screens, exercised less, and slept less. Such changes in lifestyle can harm adolescent bodies, leading to weight gain and health problems. 

Visiting Researcher Tadashi Ito and Professor Hideshi Sugiura from the Department of Biological Functional Science at the Nagoya University Graduate School of Medicine, together with Dr. Yuji Ito from the Department of Pediatrics at Nagoya University Hospital, and  Dr. Nobuhiko Ochi and Dr. Koji Noritake from Aichi Prefectural Mikawa Aoitori Medical and Rehabilitation Center for Developmental Disabilities, conducted a study of Japanese children and students in elementary and junior high schools, aged 9-15, by analyzing data from physical examinations before and during the COVID-19 pandemic. They evaluated the children’s muscle strength, dynamic balance functions, walking speed, body fat percentage, screen time, sleep time, quality of life, and physical activity time.  

The researchers found that after the onset of the pandemic, children were more likely to have decreased balance ability when moving, larger body fat percentage, report spending more time looking at TV, computers or smartphones, and sleep less. Since there were no changes in the time spent on physical activity or the number of meals eaten, Sugiura and his colleagues suggest that the worsening of physical functions was related to the quality of exercise of the children. The researchers reported their findings in the International Journal of Environmental Research and Public Health.  

“Since the outbreak of the novel coronavirus in Japan after April 2020, children have not been able to engage in sufficient physical education, sports activities, and outdoor play at school. It became clear that balance ability during movement was easily affected, lifestyle habits were disrupted, and the percentage of body fat was likely to increase,” explained Ito. “This may have been because of shorter outdoor playtime and club activities, which impeded children’s ability to learn the motor skills necessary to balance during movement.” 

“Limitations on children’s opportunities for physical activity because of the outbreak of the novel coronavirus have had a significant impact on the development of physical function and lifestyle and may cause physical deterioration and health problems in the future,” warned Ito. “Especially, the risk of injury to children may increase because of a reduced dynamic balance function.” 

The results suggest that even after the novel coronavirus becomes endemic, it is important to consider the effects of social restrictions on the body composition of adolescents. Since physical activities with a social element may be important for health, authorities should prioritize preventing the reduction of children’s physical inactivity and actively encourage them to play outdoors and exercise. The group has some recommendations for families worried about the effects of school closings and other coronavirus measures on their children. “It is important for children to practice dynamic balance ability, maintaining balance to avoid falling over while performing movements,” Ito advised. “To improve balance function in children, it is important to incorporate enhanced content, such as short-term exercise programs specifically designed to improve balance functions.” 


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Contradictions, Lies, And “I Don’t Recalls”: The Fauci Deposition

Contradictions, Lies, And "I Don’t Recalls": The Fauci Deposition

Authored by Techno Fog via The Reactionary,

Today, Missouri Attoney General…

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Contradictions, Lies, And "I Don't Recalls": The Fauci Deposition

Authored by Techno Fog via The Reactionary,

Today, Missouri Attoney General Eric Schmitt released the transcript of the testimony of Dr. Anthony Fauci. As you might recall, Fauci was deposed as part of an ongoing federal lawsuit challenging the Biden Administration’s violations of the First Amendment in targeting and suppressing the speech of Americans who challenged the government’s narrative on COVID-19.

Here is the Fauci deposition transcript.

And here are the highlights…

EcoHealth Alliance - the Peter Daszak group - is knee-deep in the Wuhan controversy, having been funded by the Fauci’s NIH for coronavirus and gain of function research in China (and having worked with the Chinese team in Wuhan). What does Fauci say about EcoHealth Alliance? Over two years after the COVID-19 pandemic began, and after millions dead worldwide, he’s “vaguely familiar” with their work.

In early 2020, Fauci was put on notice that his group - NIAID - had funded EcoHealth alliance on bat coronavirus research for the past five years.

This coincided with early reports - directly to Fauci, from Jeremy Ferrar and Christian Anderson - “of the possibility of there being a manipulation of the virus” based on the fact that “it was an unusual virus.”

Fauci conceded that he was specifically made aware by Anderson that “the unusual features of the virus” make it look “potentially engineered.”

Fauci couldn’t recall why he sent an article discussing gain of function research in China to his deputy, Hugh Auchincloss, telling him it was essential that they speak on the phone. He couldn’t recall speaking with Auchincloss via phone that day. But remarkably, Fauci did remember assigning research tasks to Auchincloss

Fauci was evasive on conversations with Francis Collins about whether NIAID may have funded coronavirus-related research in China, eventually stating “I don’t recall.”

The phrase “I don’t recall” was prominent in Fauci’s deposition. He said it a total of 174 times:

For example, Fauci couldn’t remember what anyone said on a call discussing whether the virus originated in a lab:

During that same call, Fauci couldn’t recall whether anyone expressed concern that the lab leak “might discredit scientific funding projects.” He also couldn’t recall whether there was a discussion about a lab leak distracting from the virus response. Fauci did remember, however, that they agreed there needed to be more time to investigate the virus origins - including the lab leak theory.

What else couldn’t Fauci remember? Whether, early into the pandemic, his confidants raised concerns about social media posts about the origins of COVID-19.

Yet Fauci did admit he was concerned about social media posts blaming China for the pandemic. He even admitted the accidental lab leak “certainly is a possibility,” contradicting his prior claims to National Geographic where he said the virus “could not have been artificially or deliberately manipulated.”

Fauci also couldn’t recall whether he had any conversations with Daszak about the origins of COVID-19 in February 2020, but admitted those conversations might have happened: “I told you before that I did not remember any direct conversations with him about the origin, and I said I very well might have had conversations but I don't specifically remember conversations.” And he couldn’t recall telling the media early on during the pandemic that the virus was consistent with a jump “from an animal to a human.”

Fauci said he was in the dark on social media actions to curb speech and suspend accounts that posted COVID-19 information that didn’t fit the mainstream narrative: “I’m not aware of suppression of speech on social media.” Yet it was Fauci’s proclamations of the truth, whether about the origins of COVID-19 to the effectiveness of hydroxychloroquine, that led to social media companies banning discussions of contrary information.

Regarding those removals of content, Fauci had no personal knowledge of a US Government/Social Media effort to curb “misinformation.” But he conceded the possibility numerous times.

Then there’s the issue of masks. In February 2020, Fauci informed an acquaintance that was traveling: “I do not recommend that you wear a mask.” Fauci would later become a vocal proponent of masks only two months later.

I’m near my Substack length limit - posting the excerpts does that - but you can see from Fauci’s testimony that his public statements about COVID-19 origins and the necessity to wear a mask didn’t match his private conversations. This has been known for some time, but it’s finally nice to get him on record.

Again, read it all and subscribe here.

Tyler Durden Mon, 12/05/2022 - 21:40

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“That Is Where Tyranny Starts”: New Zealand May Take Baby From Parents Demanding ‘Unvaccinated’ Blood For Heart Surgery

"That Is Where Tyranny Starts": New Zealand May Take Baby From Parents Demanding ‘Unvaccinated’ Blood For Heart Surgery

Over 100 anti-vaccination…

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"That Is Where Tyranny Starts": New Zealand May Take Baby From Parents Demanding 'Unvaccinated' Blood For Heart Surgery

Over 100 anti-vaccination protests showed up in New Zealand to support the parents of a critically ill 4-month-old baby in New Zealand who demanded that the hospital provide supplementary blood from unvaxxinated donors before the child goes under the knife for pulmonary valve stenosis, a heart valve disorder.

Te Whatu Ora is taking a case against parents who are refusing to allow blood from vaccinated people to be used during their baby's life-saving heart operation. Photo: RNZ / Mohammad Alafeshat

The boy's mother says she wants "safe blood" to be used, which her lawyer described as a fear of blood containing traces of vaccines using mRNA technology.

The request has been denied by New Zealand health service, which says vaccines pose no risk to donor supplies, according to RNZ. On Tuesday, the Auckland High Court will decide whether to grant a request to remove the child from the family to perform the surgery.

Paul White, a lawyer for Te Whatu Ora, aka Health New Zealand, described the baby as "getting sicker with every heartbeat."

Te Whatu Ora is making an application under the Care of Children Act regarding the baby who needs open heart surgery.

It is asking that the baby be placed under the guardianship of the court.

Te Whatu Ora then wants the court to appoint the doctors as agents of the court for medical care, and the parents agents of the court for all other care. -RNZ

According to White, a child with this condition would have been treated by now.

Supporters outside the High Court in Auckland where Te Whatu Ora is taking a case against parents who are refusing to allow blood from vaccinated people to be used during their baby's life-saving heart operation. Photo: RNZ / Marika Khabazi

Sue Grey, a lawyer for the family, said the doctors are dismissing the parents as conspiracy theorists and ignoring their concerns.

A full hearing on the matter will be held on Tuesday.

One supporter of the family, Sarah McNaulty, said she was standing up for freedom of choice.

"There's so many people lined up to give their blood freely," she said, adding "That is where tyranny starts. When the state provides us with not being able to give blood freely to a patient that needs it."

According to officials, the Blood Service does not segregate blood from vaccinated and unvaccinated donors, and that there is no risk from the Covid-19 vaccine.

Tyler Durden Mon, 12/05/2022 - 21:20

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