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Expect A Financial Crisis In Europe With France At The Epicenter

Expect A Financial Crisis In Europe With France At The Epicenter

Authored by Mike Shedlock via MishTalk.com,

The EU never enforced its Growth…

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Expect A Financial Crisis In Europe With France At The Epicenter

Authored by Mike Shedlock via MishTalk.com,

The EU never enforced its Growth and Stability Pact or Maastricht Treaty rules. The crisis is coming to a head with France and Italy in the spotlight. The first casualty will be Green policy.

Image composite by Mish from the European Commission Compliance Tracker

Compliance Rules

  1. Deficit rule: a country is compliant if (i) the budget balance of general government is equal or larger than -3% of GDP or, (ii) in case the -3% of GDP threshold is breached, the deviation remains small (max 0.5% of GDP) and limited to one year.

  2. Debt rule: a country is compliant if the general government debt-to-GDP ratio is below 60% of GDP or if the excess above 60% of GDP has been declining by 1/20 on average over the past three years.

  3. Structural balance rule: a country is compliant if (i) the structural budget balance of general government is at or above the medium-term objective (MTO) or, (ii) in case the MTO has not been reached yet, the annual improvement of the structural balance is equal or higher than 0.5% of GDP, or the remaining distance to the MTO is smaller than 0.5% of GDP.

  4. Expenditure rule: a country is complaint if the annual rate of growth of primary government expenditure, net of discretionary revenue measures and one-offs, is at or below the 10-year average of the nominal rate of potential output growth minus the convergence margin necessary to ensure an adjustment of the structural budget deficit in line with the structural balance rule.   

Deficit Disaster Zones

France and Italy are major disasters right now on the budget deficit rule. France has a budget deficit of 7 percent and Italy 5 percent.

France needs to reduce its deficit by a whopping 4 percent of GDP!

Neither Italy nor Greece should never have been allowed in the EMU (European Monetary Union – Eurozone) in the first place.

Greece has a debt-to-GDP ratio of 170 percent. The target is 60 percent.

But the lead chart tells the picture. Only the Scandinavian countries are in compliance.

Looser Rules Postpone the Crisis

On February 10, the EU agreed to Looser Fiscal Rules to Cut Debt, Boost Investments.

The latest revamp of two-decades-old rules known as the Stability and Growth Pact came after some EU countries racked up record high debt as they increased spending to help their economies recover from the pandemic, and as the bloc announced ambitious green, industrial and defense goals.

The revised rules allow countries with excessive borrowing to reduce their debt on average by 1% per year if it is above 90% of gross domestic product (GDP), and by 0.5% per year on average if the debt pile is between 60% and 90% of GDP.

Countries with a deficit above 3% of GDP are required to halve this to 1.5% during periods of growth, creating a safety buffer for tough times ahead.

Defense spending will be taken into account when the Commission assesses a country’s high deficit, a consideration triggered by Russia’s invasion of Ukraine.
The new rules give countries seven years, up from four previously, to cut debt and deficit starting from 2025.

Note that the EU can tweak enforcement but not the baseline Stability and Growth Pact targets themselves without unanimous agreement, and a new treaty.

With that background, let’s look ahead to the crisis that looms as described by Eurointelligence.

Europe’s Next Financial Crisis

We would like to alert our readers to a theme that has been preoccupying us for a while – the possibility of another financial crisis in Europe. We have generally been restrained in our warning of financial crises. The main exception was the global financial crisis and its cousin, the euro area’s sovereign debt crisis. Fifteen or so years later, we see another financial crisis ahead here in Europe: a crisis of the European social and political model with deep consequences for fiscal and financial stability.

The canary in the coalmine is the overshooting budget deficits in France and Italy, at over 7% and over 5% for 2024 respectively. These numbers are a symptom, not a cause. Behind them lies a lack of economic growth needed to sustain Europe’s social model. Germany’s fiscal policy could not be more different than that of France or Italy, and yet Germany is afflicted by the exact same problem.

The European model was powered by oligopolistic industrial companies, which were heavily supported by the state through regulation that tilted the level-playing field in their favor. The German car industry is a classic example, but everybody did this.

What is killing this model now is a shift in technology and geopolitical fragmentation. Of the two, we would argue the first is the more important. More and more functions in our lives that were previously the realm of purely mechanical processes are nowadays wholly or partially digitalized. Barriers of entry have collapsed. China went from zero to the world leader in electric cars.

European companies no longer generate sufficient profits to fuel the social model – and to fund long-term research. It is no surprise that Europe has only very few tech companies. In short, Europe’s oligopolistic old-tech model no longer works in a digital world. We have been reporting on the attempts by the EU to stem against technological developments through regulation. But this is a way of addressing symptoms, not causes.

After the multiple global shocks of this decade, the consequences of Europe’s technological decline translate into lower potential growth rates. Italy came first. Its productivity growth has been near zero since it joined the euro. The UK’s productivity growth slumped after the global financial crisis, and never recovered since. Germany’s productivity growth is unlikely to recover, even if the economic cycle does. The German Council of Economic Experts see a potential growth of around 0.5% until the end of the decade. With productivity growth that low, Europe’s model has become financially unsustainable. It is unsurprising that the political system is fragmenting everywhere. The argument for sustained deficits, in France for example, is that you need them to keep Marine Le Pen out of power. This means they will persist.

We have a fiscal crisis ahead, caused by a combination of falling productivity growth and political gridlock. Technology is the main cause of the decline. Geopolitics is what accelerated it. The solutions we have been advocating over the years – a joint fiscal capacity, a capital markets union, joint defense procurement to neutralize the rise in defense spending – are further away than ever. Unless one of these parameters change, a financial crisis is a very plausible scenario. 

Spotlight France

France has a budget deficit of 7 percent but wants to fund a European army to fight Russia.

How is that supposed to work?

Spotlight Green Fantasies

The EU has adopted ambitious Green policies that will cost much more money than has been budgeted.

How is that supposed to work?

Targets Won’t Be Met

You can take those Green targets and throw then into the ashcan of ideas that never should have been set in the first place.

Even if you give France 7 years to be deficit compliant, how is France supposed to cut back a whopping 4 percent of GDP?

What’s the Basic Problem?

Eurointelligence says “Technology is the main cause of the decline. Geopolitics is what accelerated it.”

Technology is not the problem. The Maastricht treaty that created the Eurozone is flawed. And it cannot be fixed without unanimous agreement.

Given productivity and work rule differences, one interest rate set by the ECB cannot serve Italy, France, Greece, and Germany.

Add to that, EU nannycrat rules. The EU is more interested in cracking down on Google (Now Alphabet GOOG), Apple (AAPL), Facebook (now Meta Platforms META), and Microsoft (MSFT) for alleged monopolies than developing anything.

The EU Is Dysfunctional

In a single word, the EU is dysfunctional. That’s the problem, not technology. The Maastricht treaty itself is a big part of the reason the EU is dysfunctional. The Euro itself, with one common interest rate, is fundamentally flawed.

Companies like Alphabet, Meta, Microsoft, and Apple could not exist in the EU because in the name of competition and diversity, the EU would kill them before they ever got big enough to matter.

EU rules make it impossible to fix the basic problem. So the EU has resorted to nannycrat rules to regulate US and Chinese companies instead of fixing anything.

Technology, including AI, and geopolitics is now accelerating the basic problem, the EU is dysfunctional by treaty. It’s showing up in polls everywhere.

European Parliament Polls in France

EP France Polls from Wikipedia

Marine Le Pen’s National Rally is clobbering Renew/Modem by a whopping 12 percentage points, 30-18.

This chart is for France only, not the entire parliament, but it reflects on French President Emmanuel Macron’s sinking popularity and the sinking centrists in general.

A War Economy

As a way to create jobs, EC President Charles Michel promotes a war economy.

In a preposterous proposal to deal with growth, The European Council President Calls on Europe to Switch to a War Economy

I have a suggestion. Let US senator Lindsey Graham and EC president Charles Michel lead the charge.

Instead of fixing Germany’s aging infrastructure, attempting to compete with the US on AI, or competing with China on anything, EC President Charles Michel promotes war as growth.

It’s Time for a New Strategy

Please note German Chancellor Olaf Scholz is refusing to send Taurus cruise missiles to Ukraine.

On March 16, I commented Ukraine Won’t Win the War, It’s Time for a New Strategy

There’s Solidarity, Then There’s Solidarity

Poll after poll shows support for Ukraine. Every one of then is flawed because they fail to ask “how much are you willing to pay.”

There’s solidarity in the EU, but it stops with wheat and weapons. In the US, Biden is desperate for the war to go on. But he still has no goal. Is Biden’s goal the same as Zelensky’s: “The war will not be over as long as Crimea is occupied.”

We don’t know because Biden won’t say. Biden also will not say how much he is willing to commit. Is it another $150 billion or is it $1 trillion or more?

Meanwhile, prepare for carnage of the center, Greens, and warmongers in the next European Parliament elections.

A fiscal crisis awaits. The first casualty will be Green energy policies.

Tyler Durden Thu, 03/28/2024 - 05:00

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Secret Docs Reveal Germany’s Public Health Agency Warned Lockdowns Cause More Harm Than Good

Secret Docs Reveal Germany’s Public Health Agency Warned Lockdowns Cause More Harm Than Good

Authored by John Cody via ReMix News,

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Secret Docs Reveal Germany's Public Health Agency Warned Lockdowns Cause More Harm Than Good

Authored by John Cody via ReMix News,

Following a long legal battle, Germany’s public health agency, the Robert Koch Institute (RKI), has released the confidential protocols that show the RKI was aware that “lockdowns cause more harm than good” and evidence for “making masks mandatory was lacking.”

The RKI voiced concerns in 2020 that shutting down German society could lead to increased child mortality and other negative outcomes. The RKI experts also disagreed with the implementation of FFP2 face masks, saying there was a lack of data to support such a measure.

“Active communication would make sense in order to make clear why the RKI does not recommend this measure,” notes the minute regarding implementing FFP2 mask regulations. The agency even notes in the minutes that it would tell the public it did not support FFP2 mask regulations, but notably, the agency never did so despite mass protests against mandatory masks and other harsh measures.

The 2,500 pages of documents also contain a passage noting that experts warned that lockdowns could “do more harm than good,” with experts citing lockdowns in Africa and the negative outcomes seen there.

The documents have revealed that German politicians dramatized the situation, contrary to the opinions of experts. This was done presumably in order to implement coercive measures and restrict basic rights. There are now calls to release the rest of the documents, as more than a thousand passages are still redacted, representing a third of the total text dating from meeting notes from the “crisis unit” taken between February 2020 and April 2021.

The release of the documents has sent shockwaves through Germany and led even left-wing parties, such as the Greens, to call for a “comprehensive review” of coronavirus policy. Other parties, like the Alternative for Germany (AfD), are calling for more action, including a commission investigation.

Politicians are urging the RKI to lift the redactions and make all findings available to the public, and further court proceedings are pending. In the meantime, debate continues to rage, with the #RKIFiles tag on X already generating 45,000 posts.

An example of just a couple of posts shows the anger many Germans still feel towards the coronavirus-era policies put in place.

“The Bavarian state government tortured children with masks until spring 2022 — even in physical education classes. Not because there was scientific evidence for it, but because Markus Söder liked the role of coronavirus hardliner. #RKIFiles,” wrote one X user.

Another showed video of police brutalizing protesters demonstrating against Covid-19 measures, writing:

“It’s good that the RKI protocols are included in the broader discussion! But there can be no such thing as cheap forgiveness. With the coronavirus, 2/3 of Germans became massively aggressive against 1/3. The handcuffs must click on the main criminals.”

Virologist reacts to report

Virologist Klaus Stöhr, once the WHO pandemic commissioner, said the revealed protocols once again show that the “risk assessment was not based on data.” According to Stöhr, “his hair stood on end when it came to (Germany’s) pandemic plan.”

Stöhr also commented on the fact that the RKI protocols uncovered that experts were telling the government that there is little data to support widespread mask adoption for the public.

“And the fact that what was known about FFP2 masks was completely ignored is just two small building blocks.” There was “a lot more data available where it was seen that the work was not based on evidence,” he said.

The scientist referred to “curfews, border closures, 2G/3G (areas restricted based on vaccination status), and the side effects of lockdowns” as further examples of this. Stöhr noted that “these are all things that were known – including that the vaccines could not halt the spread of the virus.” He said that the vaccines could not end the pandemic, and it was “clear from the beginning that the vaccine couldn’t do that.”

He is now calling for a commission or review process to avoid the mistakes made by the government during the Covid-19 era in the future.

Virologist Hendrik Streeck, who was appointed to the RKI expert council, also stated: “I’m very surprised that entire pages about vaccinations, for example, were blacked out,” he said to Welt. “And I wonder what it says, why the public shouldn’t see it.”

Lauterbach in panic mode?

Federal Health Minister Karl Lauterbach (SPD) reacted with horror to the findings in the report. As federal health minister during a significant portion of the pandemic, he has often been the top target of criticism from those opposed to Germany’s Covid-19 policies.

“Enlightenment is good, but we must not allow conspiracy theories to arise on social media through the interference of foreign governments,” he wrote on the X platform. Why he referred to “foreign governments” remained unclear, but when cornered, left-wing politicians often resort to claims of “foreign interference” and “Russia.”

Despite calls for a review of policy, Lauterbach is desperate to avoid this outcome and is also openly rejecting a commission, as the AfD and BSW parties are calling for.

Lauterbach claims this would only benefit “a small group of politicians, but also people who perhaps represent radical ideas in other areas.” He claims they would use the findings “to politicize against the state.”

Some from the Greens also resorted to claims of “foreign influence” following the release of the RKI protocols.

Green health politician Janosch Dahmen, one of the most aggressive supporters of extreme Covid-19 policies, said: “It seems to me that the virulent spread of such untruthful rumors is also the result of the influence of foreign intelligence services on our society against the background of Russia’s war against Ukraine, to further divide and render politics incapable of action.”

The AfD, FDP and BSW want an investigation

The AfD, Free Democrats and BSW parties all want a more thorough investigation than a simple “review.”

“The public has a right to know what really happened back then,” said the health policy spokesman for the AfD parliamentary group, Martin Sichert, regarding the redactions still in the report. He appealed to the other parliamentary groups: “Take a look at the protocols of the RKI crisis team and set up a coronavirus investigation committee with us.”

Even the FDP, which is in a governing coalition with the ruling government, is calling for a more thorough investigation. FDP vice-president Wolfgang Kubicki announced that he would “work to ensure that the entire basis for decision-making at this time becomes public.” He also said it is becoming increasingly clear “that the Robert Koch Institute for Health Policy served as a scientific façade for former Minister Jens Spahn and probably also Karl Lauterbach.”

Some Greens are conciliatory

Some left-wing politicians believe some kind of review is necessary to improve “social cohesion.”

“It would be good for social cohesion if there were a review of coronavirus policy with a little distance,” said the Green parliamentary group’s legal policy spokesperson, Helge Limburg, to Welt newspaper. “This could be a commission of inquiry, a commission of experts, or another form of debate that signals to people: We are not simply brushing aside the drastic measures of that time.”

Health and budget politician Paula Piechotta said: “Almost exactly four years after the first pandemic measures were introduced in Germany, it is now overdue to address the mistakes of pandemic policy in a wide range of areas, from health and education to financial policy, in a transparent and timely manner for everyone.”

Her party colleague, Vice Chancellor Robert Habeck, also said a review of the coronavirus era was necessary but was short on specifics.

“We should now initiate a phase in which we reflect on the difficult pandemic period with all its effects,” he told the Bild newspaper. The German government at the time had to make far-reaching decisions quickly in an unprecedented situation during the pandemic.

“Certainly mistakes were made, but it would also have been a mistake not to make a decision,” he continued. “I think we should have the courage to learn the lessons, review processes, and evaluate the impact.”

In retrospect, it is fair to ask “whether the advisory bodies for politicians really covered the diversity of perspectives in science,” said Green MP Dieter Janecek. “For example, some encroachments on fundamental rights were certainly questionable: Unvaccinated people were not allowed into restaurants or swimming pools, even though it was already clear that the vaccine did not prevent transmission. Children and young people were unduly disadvantaged.”

Read more here...

Tyler Durden Thu, 03/28/2024 - 03:30

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The Crude Necessity: Excerpt From “How To Listen When The Markets Speak”

The Crude Necessity: Excerpt From "How To Listen When The Markets Speak"

From "How to Listen When Markets Speak", the latest book by veteran…

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The Crude Necessity: Excerpt From "How To Listen When The Markets Speak"

From "How to Listen When Markets Speak", the latest book by veteran Lehman Brothers trader and creator of the Bear Traps report Larry McDonald, available now for sale at Amazon and all other book sellers.

"The Crude Necessity"

Excerpted from Chapter 5, "Fossil Fuels Paving the Way to the Green Meadow"

If Trudeau was here, I’d tell him this coffee is made of oil,” Rafi Tahma­zian commented wryly as he poured a cup for each of us. I was sitting with Tahma­zian, one of the world’s finest energy asset managers, in his office in Calgary in November 2021. “Machines to grow it and harvest it, vehicles to transport it, more machines to pack it, electricity to roast and grind the beans, heat to boil the water,” he continued. “It doesn’t happen with pixie dust, old pal. It happens with crude oil.”

I could hear emails chiming into his inbox as he spoke. He runs the investment division at Canoe Financial, a $2 billion management firm focused on oil, mining, and natural gas. He wasn’t political in his views, but he’d firmly maintained a single belief for many years: “The entire planet is run by crude oil. Everything we touch. Everything we consume. It’s nothing to do with politics. It’s pragmatism. And this war on the supply side of oil is the dumbest thing I’ve ever seen.”

The COVID-19 pandemic changed the oil sector, perhaps for a de­cade. In 2020, demand dried up like a drop of water on a hot copper pan. The oil markets crashed, sending West Texas Intermediate oil to $0 a barrel. Companies right across the industry switched off their wells, turned off their equipment, and sent their em­ployees home to collect unemployment checks. Even the highways emptied, and Manhattan on a Saturday night didn’t have a car horn within earshot. The Gen Zers and millennials were con­vinced that the energy future was not in the dirty oil patch anymore, that it would be different somehow, free of carbon emissions in a new electri­fied world, and the gas-guzzling cars of the last hundred years would be towed, finally, to the junkyard of history. But this was a terrible misjudg­ment.

When the world reopened in 2021 after the COVID lockdowns, OPEC imposed a firm limit on supply, while U.S. production was slow to re­cover. Rhetoric about “killing shale” dominated Democratic Party de­bates in 2020, too, which scared a lot of participants away from the space, especially after Biden won the election. Why invest in a kill zone? Unsurprisingly, oil prices climbed higher and higher. Demand quickly outstripped supply, and inflation started to roll through markets as fleets of airlines turned on their massive kerosene- powered turbofans, diesel cruise ships for three thousand people cast off their lines, and highways steadily reloaded with gasoline-powered cars, buses, and trucks. And this was occurring not just in America but all over the world.

Tahma­zian had been around energy investments all his life, and he was born to trade the energy booms and busts. As we spoke, he leaned in intently: “Larry, think of India. Energy use has doubled there since 2000, and it’s going to grow at three times the global average because they’re urbanizing so fast. That’s going to mean a colossal surge in air-conditioning demand from 2021 to 2031. So we are in a climate crisis, and 1.4 billion people make up the fastest-growing swath of energy demand on planet Earth. That’s three to four times faster than the U.S., UK, Germany, and the rest of the developed world. Of the roughly 320 million households in India, fewer than 22 million have air-conditioning units right now.”

As I traveled back home to New York, I couldn’t stop thinking about the supply of energy in the foreseeable future or, rather, the lack of it. With the global population on an upward trajectory, planet Earth will have an unstoppable demand for energy in the coming years. Meanwhile, supply growth is under arrest. Western politicians are driving hard for alternative energies and run the other way if someone suggests a continuation of drilling, fracking, and mining. This has left a gaping chasm between the amount of energy and critical resources needed to continue raising our global standard of liv­ing and the amount on tap—a chasm that will only widen in the coming decades.

By my estimate, $2.4 trillion was cut from the fossil fuels and metals capex between 2014 and 2020. Over the same period, the global population grew by 800 million. Today, we might need $3 trillion in additional capital expenditure just to play catch-up. In other words, there have not been nearly enough good old-fashioned investments in coal, oil, gas, uranium, and metals exploration and production, especially in North America.

But aren’t we well on our way towards knocking out oil with wind farms, solar panels, and hydroelectric power? I largely support the push to adopt green energy, but we’re about twenty years too early. Knocking out oil with green energy right now is a mathematical impos­sibility, especially since some of the most populated countries in the world (such as India, China, and Russia) have no intention of being bound by Western emission standards. If governments really wanted to replace oil as a source of energy on planet Earth, it would currently take a wind farm a little bigger than France, 134 million acres of land. A solar field to replace oil would need to be the size of Spain, at 120 million acres, not to mention that it would need to experience at least 70 percent sunshine for eight hours a day, every day, every year. Now think about the amount of plastic that would be used, the fiberglass, the steel shafts and turbines, the endless mainte­nance, the millions of batteries and cabling. It simply cannot be done without bankrupting the planet. Maybe one day, over the course of many decades, but not today. Right now the top priority should be keeping the lights on, and keep­ing the gargantuan global economy rumbling forward in a responsi­ble, low-inflationary fashion.

But an increase in oil supply doesn’t just happen with a snap of the fingers. First, there are multiyear regulatory loopholes to jump through. Then govern­ments need to incentivize the companies to do it, instead of slapping windfall taxes on them. Next, the exploration phase has to be carried out, finding the most oil-rich patches of land to drill. That’s an expensive game. Phase four is moving the equipment, a multimillion-dollar problem. Then comes the hiring of qualified people, and then the drilling, infrastructure, transportation, and logistics. It will take about seven to ten years to flood the market once again with oil and gas after the ESG drive eventually fails. And it will.

As you can see in the above chart, the oil reserves of the majors are in decline. This dynamic is making independent E&P companies attractive acquisition targets. Likewise, the sector has de-levered. There has been far less investing in production, as the large oil companies have been aggressively paying down debt.

With the global population growing, energy demand surging, and supply growth under arrest, I believe higher energy and metals prices will be sustained for the next decade. From the COVID lows to the end of 2022, as inflation raged higher, the Energy Select Sector SPDR ETF (XLE) was up 325 percent, the Sprott Uranium Miners ETF (URNM) was up 318 percent, the Global X Copper Miners ETF (COPX) was up 260 percent, and the SPDR S&P Metals and Mining ETF (XME) was up 260 percent. The oil stocks are still in the early innings, and I predict that in the next few years billions of dollars will flow into these companies.

Juicing Inflation

Energy prices are the root cause of inflation, when you get right down to it. Think of every drop of gasoline and energy used in something simple like our Calgary cup of coffee. Add high oil prices to that, and suddenly that $4 cup of coffee at Starbucks costs $6.

But there’s a second layer to the relationship between energy and infla­tion. Not only will higher energy costs drive other costs up along with it, but it will make inflation harder to fight. If inflation normalizes in this cycle at 3 to 4 percent instead of 1 to 2 percent as in previous decades, trillions of dollars are misallocated across the investment asset ecosystem, as most portfolios are still massively overweight growth stocks.

Usually, during a time of recession, the prices of energy and oil drop dramatically due to lower demand, which acts as a major deflationary force. But going forward, the price of energy will likely stay relatively high even during recessions. Through chronic underinvestment in the oil and gas industries, the United States and Canada handed over valuable market share to the Saudis, the Russians, and OPEC, giving them way more control over the global price of oil. In a multipolar world, these not-so-friendly players can now coordinate supply cuts during recessions to keep the price high.            

If the U.S. had eight thousand drilled but uncompleted wells (DUCs), we could just ramp up production and steal market share back from them. But we don’t. DUCs are at a ten-year low, and this dynamic sets us up for a longer-term battle with higher and stickier inflation. We saw this during the minor energy crisis in 2022, and it is going to be the norm in the years ahead.

With the endless issues hanging over the global energy markets, you might be asking how an investor can capitalize on this knowledge. And my advice is simple: Get long oil. The energy ETFs XLE and XOP are great places to start, along with Chevron, Shell, and ExxonMobil. In particular, Exxon is interesting because of its massive new reserves in Guyana, right on the northeastern tip of South America. The company has an operating office in Guyana’s capital, Georgetown, with numerous ongo­ing exploration and development operations offshore. At its Stabroek oil field, in operation since May 2015, it has made significant discoveries, and the company expects production capacity to reach 1.2 million barrels per day in 2027, up from 375,000 barrels in 2022. This implies that in four years Guyana will represent approximately 25 percent of Exxon’s worldwide production.

This chart also highlights several smaller oil and gas producers with an attractive valuation and the potential to be acquired by one of the oil majors.

One way to value a company in the energy sector is to compare its enterprise value (the sum of its debt and its market capitalization) with the value of the oil and gas reserves it has in the ground. This comparison measures what the value of the company is per “barrel of oil equivalent,” which is the oil and the natural gas converted into barrels of oil. The lower a company’s enter­prise value is compared with the reserves it has in the ground, the cheaper the company’s valuation is. PDC Energy, for example, is very cheap. Chevron thought so, too: It made an offer for the company in May 2023. (The chart shows PDC’s valuation before Chevron’s offer.)

In 2022, BlackRock CEO Larry Fink penned a letter outlining his vision of a decarbonized future, calling those working to help knock out oil with green energy “phoenixes,” the immortal birds from Greek mythology that rise from the ashes of their pre­decessors, and suggesting that those who resist the net-zero transitions are “dodos,” a kind of flightless bird that went extinct in the seventeenth century.

The dodos of the future will be those who cling to their ailing growth stocks. The phoenixes will be invested in hard assets and the still-unloved energy stocks. Borrowing costs will be high, the $2 trillion capex hole will take years to plug, and low prices for fossil fuels—oil, gas, and coal—will soon be a distant memory.

Much more in the full book

Tyler Durden Wed, 03/27/2024 - 21:00

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Reclaim ‘wellness’ from the rich and famous, and restore its political radicalism, new book argues

A new cultural history of the 1970s wellness industry offers urgent lessons for today. It reveals that in the seventies, wellness was neither narcissistic…

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A new cultural history of the 1970s wellness industry offers urgent lessons for today. It reveals that in the seventies, wellness was neither narcissistic nor self-indulgent, and nor did its practice involve buying expensive, on-trend luxury products. Instead, wellness emphasised social well-being just as much as it focused on the needs of the individual. Wellness practitioners thought of self-care as a way of empowering people to prioritise their health so that they could also enhance the well-being of those around them.

Credit: Icon Books / Anna Morrison

A new cultural history of the 1970s wellness industry offers urgent lessons for today. It reveals that in the seventies, wellness was neither narcissistic nor self-indulgent, and nor did its practice involve buying expensive, on-trend luxury products. Instead, wellness emphasised social well-being just as much as it focused on the needs of the individual. Wellness practitioners thought of self-care as a way of empowering people to prioritise their health so that they could also enhance the well-being of those around them.

 

Today’s wellness industry generates trillions of dollars in revenue, but in a new book, Dr James Riley of Cambridge University’s English Faculty, shows that 1970s wellness pioneers imagined something radically different to today’s culture of celebrity endorsements and exclusive health retreats.

“Wellness was never about elite experiences and glossy, high-value products,” says Riley, a Fellow of Girton College, noting that “When we think of wellness today, Gwyneth Paltrow’s Goop and other lifestyle brands might come to mind, along with the oft-cited criticism that they only really offer quackery for the rich.” By contrast, in the 1970s, “wellness was much more practical, accessible and political.”

The word, as it was first proposed in the late-1950s, described a holistic approach to well-being, one that attended equally to the mind (mental health), the body (physical health) and the spirit (one’s sense of purpose in life). The aim was to be more than merely ‘not ill’. Being well, according to the likes of Halbert Dunn and later in the 1970s, John Travis and Don Ardell, meant realising your potential, living with ‘energy to burn’ and putting that energy to work for the wider social good.

Riley’s Well Beings: How the Seventies Lost Its Mind and Taught Us to Find Ourselves, published by Icon Books on 28th March, is the first book to explore the background of the wellness concept in the wider political and cultural context of the 1970s.

“Wellness in the 1970s grew out of changing attitudes to health in the post-war period – the same thinking that gave rise to the NHS,” Riley says. “When coupled with the political activism of the 1960s counterculture and the New Left, what emerged was a proactive, socially oriented approach to physical and mental well-being. This was not about buying a product off the shelf.

“The pursuit of wellness was intended to take time, commitment and effort. It challenged you to think through every facet of your life: your diet, health, psychology, relationships, community engagement and aspirations. The aim was to change your behaviour – for the better – for the long term.”

Riley’s book also makes a case for what the 1970s wellness industry can do for us today.

“We’re often warned about an imminent return to ‘the seventies’, a threat that’s based on the stereotypical image of the decade as one of social decline, urban strife, and industrial discontent. It’s an over-worked comparison that tends to say more about our own social problems, our own contemporary culture of overlapping political, social and economic crises. Rather than fearing the seventies, there’s much we can learn to help us navigate current difficulties.” 

“It was in the 1970s that serious thought was given to stress and overwork to say nothing of such frequently derided ‘events’ as the mid-life crisis and the nervous breakdown. The manifold pressures of modern life – from loneliness to information overload – increasingly came under the microscope and wellness offered the tools to deal with them.”

“Not only are these problems still with us, they’ve got much worse.  To start remedying them, we need to remember what wellness used to mean. The pandemic, for all its horrors, reminded us of the importance of mutual self-care. To deal with the ongoing entanglement of physical and mental health requires more of that conviviality. Being well should be within everyone’s reach, it should not be a privilege afforded to those who have already done well.”

 

Mindfulness versus wellness

At the heart of Riley’s book is an analysis of the ongoing corporate and commercial tussle between ‘mindfulness’ and ‘wellness’.

In 1979 Dr Jon Kabat-Zinn founded the Stress Reduction and Relaxation Programme at the University of Massachusetts Medical Center, where he taught ‘mindfulness-based stress reduction’. For Kabat-Zinn mindfulness meant accepting the inevitable stress that comes with the ‘full catastrophe’ of life and adopting an attitude of serene resilience in the face of it. Stress could be alleviated thanks to a regular meditation routine and small changes made to the working day such as the decision to try a different, more pleasant commute. Little was said about altering the pace of the work causing the stress in the first place.

By contrast, John Travis, a medical doctor who founded the Wellness Resource Center in California’s Marin County in 1975, talked about the health dangers of sedentary, office-based jobs while Don Ardell, author of High Level Wellness (1977), encouraged his readers to become agents of change in the workplace. Both saw work-fixated lifestyles as the problem. Work and work-related stress was thus something to fix, not to endure.     

Ardell argued that because burn-out was becoming increasingly common it was incumbent upon employers to offer paid time off to improve employee well-being. Better to be too well to come to work, reasoned Ardell, than too sick. “We tend to think that flexible hours and remote working are relatively new concepts, particularly in the digital and post-COVID eras,” adds Riley, “but Ardell was calling for this half a century ago.”

Riley argues that the techniques of mindfulness, rather than those of wellness, have proved attractive to contemporary corporate culture because they ultimately help to maintain the status quo. Corporate mindfulness puts the onus on the employee to weather the storm of stress. It says, “there is nothing wrong with the firm, you are the problem, this is the pace, get with it or leave”. 

According to Riley this view is a far-cry from the thinking of seventies wellness advocates like Travis and Ardell who “imagined a health-oriented citizenship, a process of development in which social well-being follows on from the widespread optimistic and goal-oriented pursuit of personal health. It’s that sense of social mission that self-care has lost.”

Riley points out that this self-care mission had a very particular meaning in the 1970s among groups like The Black Panther Party for Self-Defense, which established clinics and ran an ambulance service for black communities in and around Oakland, California. “They were saying you’ve got to look after yourself so you can then look after your community. Such communal effort was vital because the system was seen to be so opposed to Oakland’s needs. One sees the deeply political potency of ‘self-care’ in this context. It meant radical, collective autonomy, not indulgent self-regard.”

The Bad Guru

As well as suggesting positive lessons from the past, Riley is also quick to call out the problems. “The emphasis on self-responsibility in wellness culture could easily turn into a form of patient-blame,” he argues, “the idea that if you’re ill, or rather if you fail to be well, it’s your fault, a view that neglects to consider all kinds of social and economic factors that contribute to ill-health.”

Elsewhere, Riley draws attention to the numerous claims of exploitation and abuse within the wider context of the alternative health systems, new religious movements and ‘therapy cults’ that proliferated in the 1970s.

“It was not always a utopia of free thought. The complex and often unregulated world of New Age groups and alternative health systems could often be a minefield of toxic behaviour, aggressive salesmanship and manipulative mind games. Charismatic and very persuasive human engineers were a common presence in the scene, and one can easily see these anxieties reflected in the various ‘bad gurus’ of the period’s fiction and film.

“There are plenty of voices who say they gained great insights as a result of being pushed to their limits in these situations,” says Riley, “but many others were deeply affected, if not traumatised, by the same experiences.”

 

Self-Experimentation

In addition to exploring the literature of the period, Riley’s research for Well Beings found him trying out many of the therapeutic practices he describes. These included extended sessions in floatation tanks, guided meditation, mindfulness seminars, fire walking, primal screaming in the middle of the countryside, remote healing, yoga, meal replacement and food supplements. 

 

References

J. Riley, Well Beings: How the Seventies Lost Its Mind and Taught Us to Find Ourselves. Published by Icon Books on 28th March 2024. ISBN: 9781785787898.

 

Media contacts

Tom Almeroth-Williams, Communications Manager (Research), University of Cambridge: researchcommunications@admin.cam.ac.uk  / tel: +44 (0) 7540 139 444.

Dr James Riley, University of Cambridge: rjer2@cam.ac.uk


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