Back in September, the Europeans decided to deal with energy price inflation by cheating. They’d hide the market prices from consumers by borrowing (printing?) money. “Germany will borrow nearly $200 billion to cap consumers’ energy bills” (CNN, 9/29/2022):
The German government announced plans to borrow €200 billion ($195 billion) to cap natural gas prices for households and businesses. That’s a bigger price tag than the £150 billion ($165 billion) the UK government is expected to borrow to finance its own price cap.
Germany, Europe’s biggest economy, is trying to cope with surging gas and electricity costs caused largely by a collapse in Russian gas supplies to Europe. Moscow has blamed these supply issues on the Western sanctions that followed its invasion of Ukraine in February.
“Prices have to come down, so the government will do everything it can. To this end, we are setting up a large defensive shield,” said German Chancellor Olaf Scholz on Thursday.
The package will be financed with new borrowing this year, as Berlin makes use of the suspension of a constitutionally enshrined limit on new debt of 0.35% of gross domestic product.
Lindner also said the steps would act as a brake on inflation, which has hit its highest level in more than a quarter century.
Consumer prices rose 10.9% in the year through September, provisional data from the country’s statistics office showed on Thursday.
As in the U.S., when the government spends more, inflation is guaranteed to come down (our “Inflation Reduction Act”). It’s been a few months How has the decision to pretend that gas prices didn’t go up gone? This December 14, 2022 report says that inflation across Europe is typically in the double digits. How about in Switzerland, where they deny the Science of printing money? From December 1: “Swiss inflation steady at 3.0% in November as expected”. The U.S. Congress and Federal Reserve have proven that there is no need to work harder in order to become richer and yet the Swiss reject this proven scientific result.
At least back in October, inflation wasn’t keeping folks in Paris from partying:
What about our own stagflation? “Home Depot co-founder says ‘socialism’ killed motivation to work: ‘Nobody gives a damn’” (New York Post, 12/29/2022):
The 93-year-old billionaire co-founder of Home Depot blamed “socialism” for Americans lacking the motivation to work and warned that the future of capitalism is in danger.
Bernie Marcus — who along with Arthur Blank built Home Depot into a nationwide empire from just two stores founded in Atlanta in the late 1970s — told Financial Times on Thursday, “Nobody works.”
“Just give it to me. Send me money. I don’t want to work — I’m too lazy, I’m too fat, I’m too stupid,” Marcus said about what he perceived as the attitude permeating the country.
“Nobody gives a damn.”
The longtime Republican backer ticked down a list of people he blamed for standing in the way of private enterprise, including President Biden, “the woke people,” the news media, Harvard graduates, MBAs, lawyers and accountants.
“I’m worried about capitalism,” said Marcus, whose net worth is estimated by Bloomberg at $5.25 billion. “Capitalism is the basis of Home Depot [and] millions of people have earned this success and had success.”
Billionaires can’t buy this Bernie because he already is one!
14 thoughts on “How are the Europeans doing with their Cheat Our Way to Economic Prosperity plan?”
I’m a bit ticked off at the favoritism to gas consumers, as I am a heating oil consumer who has to subsidize all these people that the government convinced to switch to gas heating. The German government here has been forcing home owners through more and more regulation first from oil to gas, and now from gas to heat pumps. Every year the Greens pushing for more energy renovation requirements, with a little 20% subsidy that basically gets pocketed by the contractors selling insulation and HVAC systems here. My new roof + new insulation = 30k! I didn’t go for exterior wall insulation as that the cost would be enormous (50k+!) and if done wrong in one spot can lead to serious mold problems. I will be doing the basement ceiling insulation next. Many contractors here in Germany these days are selling ‘natural’ materials e.g. wood fiber insulation (which are treated chemically!) for double the costs of ‘unnatural’ materials and for which the longevity is questionable. To me it looked like the stuff would turn into sawdust in 10 years. Even the synthetic stuff (styrofoam or polyurethane) doesn’t last for ever, as all materials go through ‘thermal shift’ i.e. lose their insulation values over time. Amortized, the energy costs savings just do not compute. Mean while the Germans continue to vote against Nuclear Energy (but buy it from France!), and keep thinking windmills and solar will save them.
They laugh at Americans being clueless about Science, but they themselves pick and choose what they want to believe in (the amount of homeopathic and botanical medicine in the drug stores here tells you everything you need to know about how much the public knows about Science).
D-man: A friend who is a German immigrant to the U.S. and lives in a modern upscale Texas city says that Germany is “dilapidated”, that the place has gone on a huge downhill slide relative to the U.S. over the past 30 years. “Even the trains don’t run on time there anymore,” he points out. What’s the trend that you see?
Maybe he/she is comparing it to the past 30 years, but I have only been here 10 years. I wouldn’t say it is dilapidated. A lot of the infrastructure feels new to me, compared to when I go back to the states (I guess it depends which state you visit!). Crime is low, health care is of very good quality, education is good enough. Like anywhere it depends on location. Cologne, Frankfurt, and Berlin are a little ‘dirtier’ than say, Munich. Southern Germany is more prosperous than North and East Germany. So everything is relative.
Yes the trains don’t run on time in comparison to Switzerland/Austria. Hard to say what is the reason for that – usually I’d say it’s the unions but Austria and Switzerland also have unions for their trains. Perhaps the train culture in Germany just deteriorated where punctuality is no longer a point of pride anymore. It is much harder to return to high standards once they are lost I guess. Also the tendency of Germans to over engineer things tends to bite them back a lot of times. On the other hand, there were lots of German guffaws and mockery at poor engineering of the enormous “American made” aquarium that busted open in the hotel in Berlin (those poor fishies! I am a fish person ).
The cost of living is tough on the average person, especially due to the taxes / social security. I would say, it makes no sense to seek out a job that pays more than 150k , as the cost-benefit seems to even out at that point in my line of work. I can imagine some low-stress high pay work like Notaries where it would make sense. Public pension is looking to collapse as well under the weight of the baby boomers that we worked so hard to preserve from the deadly covid-19!
philg: I agree with your friend. Private homes are dilapidated because private citizens (subjects) don’t have money to fix them. Government and public buildings on the other hand are in top shape and sometimes veritable palaces.
Money goes to parasitical classes like State TV, lawyers, landlords, politicians and their friends.
Groceries here also keep creeping up. I’d say close to 30% since 2020. It used to cost me 100-150 euros a week for food (family of 4) and now its approaching 200 euros a week. Diesel is another thing that the government is trying to phase out. My 10-year old BMW 3 series is doing well (I love that car), and I hope to keep using it for another 10 years, but the city governments have started banning diesel cars (e.g Frankfurt). Fortunately I live in a small town and can still use it, and I can take the train to big cities than ban diesel if needed.
I’m also a bit lucky that my oil heater falls outside of the Green’s regulations. It’s technically a single room tiled-oven heater, not a central heating system with radiators for each room (which is regulated!), but it has air ducts going to different rooms to distribute the hot air. It is so efficient that I can store 3 years of heating oil, thus I can time my purchases when the oil price drops. Hopefully my heater stays under the radar of the Greens and I can continue using it without interruption.
The entire Nord Stream business is purely performative. Even the Washington Post and the NYT (!) now question whether the Russians blew it up.
The German government policy is not to ask questions. If you do, you are a defeatist and a “far-right” appeasement proponent . So instead of using the remaining pipeline, the whole of Europe buys overpriced Russian LNG and oil. The oil flows through the Druschba pipeline, where Poland collects transit costs (one of the main reasons against Nord Stream was that the transit countries wanted fees and control. Poland’s own pipeline from Norway goes via Denmark but circumvents Germany!). Note that since last week the oil officially comes from Kazakhstan.
So all parties, including the purportedly monetarist FDP, print money and finance the charade.
 It is a historical curiosity that Ronald Reagan has also been accused of appeasement (https://www.spectator.co.uk/article/newt-ronald-reagan-is-as-dangerous-as-neville-chamberlain/):
Such was Gingrich’s faith in President Reagan that in 1985, he called Reagan’s meeting with Soviet leader Mikhail Gorbachev “the most dangerous summit for the West since Adolf Hitler met with Neville Chamberlain in 1938 in Munich.”
Swiss inflation is lower because they’re not getting hammered by energy prices:
The article claims 99% of Switzerland’s energy is produced by renewables including nuclear energy. My friend ChatGPT says “Switzerland has five nuclear reactors that generate about 40% of the country’s electricity,” and “According to the International Energy Agency, in 2019, wind and solar power accounted for about 2% of Switzerland’s total electricity generation.”
Only know the Swiss situation but my parents 460 year old house looks pretty good compared to the 460 year old house in Texas.
“Germany dilapidated.” “The sick man of Europe.” “Trains do not run on time.”
You know what? I live în France. Give me Germany any time.
From London, on extended Christmas/Kwanzaa holidays with the daughter: Heating bills astronomical, shop prices OK with the GBP/USD rate somewhat favorable. Bus/Tube systems still a wonder if you have time for them. Uber has strangled taxis but a few still running. Rotating strikes of trainpersons, baggage handlers, border control, healthcare, intercity buses.
Press says Brexit now polls badly, but unlikely to be reversed. If not, demographics will unite Ireland in EU as Orange die off, Scotland will secede and rejoin EU. Little England that swallowed lies about becoming Singapore, more likely to become Manila. Liars were shorting the pound and came out laughing. UK has had more Prime Ministers than Italy in past few years.
Daughter now on consulting gig at Amazon, SIL in wealth management at Big UK Bank, whistling past the graveyard but have made nest egg employed in Europe/UK..
Meanwhile, immigration continues apace, the monarchy stumbles along. Daughter’s family buying Portuguese passports in 5-year scheme, will probably retire in Europe.
There is NO WAY Scotland gets into the EU. That requires unanimous consent. You think Spain wants to encourage the Basques and Catalonia? And there are other separatist movements in Europe. Hopefully the Scots don’t find out the hard way – give up English subsidies and then never get into the EU. Not sure they can support themselves anymore – their best people came to Canada 150+ years ago.
Re: “I don’t want to work — I’m too lazy, I’m too fat, I’m too stupid,” I don’t know if it’s because I’m too fat, stupid, and lazy, but I wouldn’t want to work for that grouchy boomer either.
It is also interesting that the do-it-yourself movement propagated by companies like Home Depot has eliminated/reduced the livelihood for entire trades.
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