It Is Going To Take “Trillions” To Repair The Huge Derivatives Disaster That Has Erupted In Europe – Funding Watch


by Michael

This factor in Europe is quickly changing into relatively severe.  Vladimir Putin’s choice to finish the move of gasoline by the Nord Stream 1 pipeline has brought on an unlimited derivatives disaster to erupt in Europe, and it will take an enormous mountain of cash to repair it.  Some are already referring to this as a “Lehman Brothers second” for the European monetary system, and authorities all around the EU are actually beginning to freak out.  We haven’t seen something like this since 2008, and if the Europeans aren’t in a position to comprise the harm we may quickly see a tsunami of economic panic sweep throughout your entire globe.

It’s being reported that power buying and selling in Europe “is being strained by margin calls of at the very least $1.5 trillion”

European power buying and selling is being strained by margin calls of at the very least $1.5 trillion, placing stress on governments to offer extra liquidity buffers, based on Norway’s Equinor ASA.

Except for fanning inflation, the largest power disaster in many years is sucking up capital to ensure trades amid wild value swings. That’s pushing European Union officers to intervene to stop power markets from stalling, whereas governments throughout the area are stepping in to backstop struggling utilities. Finland has warned of a “Lehman Brothers” second, with energy firms going through sudden money shortages.

We aren’t speaking about 1.5 million {dollars}.

We aren’t even speaking about 1.5 billion {dollars}.

1.5 trillion {dollars} is a colossal amount of money.

To place this in perspective, should you have been in a position to create a stack of 1 trillion greenback payments it will be 67,866 miles excessive.

So a stack of 1.5 trillion {dollars} could be over 100,000 miles excessive.

We frequently use the phrase “a mountain of cash” relatively flippantly, however this actually could be a colossal mountain of cash.

The issue is just not with the bodily markets.  Moderately, we’re being instructed that 1.5 trillion {dollars} in “liquidity help” will likely be wanted as a result of derivatives buying and selling has gone fully haywire…

“Liquidity help goes to be wanted,” Helge Haugane, Equinor’s senior vice chairman for gasoline and energy, mentioned in an interview. The problem is targeted on derivatives buying and selling, whereas the bodily market is functioning, he mentioned, including that the power firm’s estimate for $1.5 trillion to prop up so-called paper buying and selling is “conservative.”

1.5 trillion {dollars} is the “conservative” estimate that we’re being given proper now.

That implies that the ultimate invoice will seemingly be within the “trillions”.

The place is all of that cash going to return from?

Through the years, I’ve carried out so many articles concerning the risks of derivatives.

Is the inevitable world derivatives meltdown lastly upon us?

At this level, one possibility that the European Fee is contemplating is the “short-term suspensions of derivatives markets”

The European Fee can also be analyzing measures to assist with liquidity. These may embody credit score strains from the European Central Financial institution, new merchandise as margin collateral, and short-term suspensions of derivatives markets, based on a coverage background paper seen by Bloomberg Information.

If they really determined to briefly droop the buying and selling of derivatives, that might really create much more panic.

This complete disaster might be solved if the struggle in Ukraine ends and Russian gasoline begins flowing again into Europe.

However that isn’t going to occur.  Neither aspect goes to again down, and there is not going to be peace any time quickly.

And so that is going to be a really bitter and really chilly winter for Europeans, and the Russians are overtly taunting them

Russia’s state-controlled power large Gazprom has taunted Europe with a sinister video warning a couple of lengthy winter with snow and ice sweeping throughout the continent.

The 2-minute clip titled Winter will likely be Lengthy reveals how Europe will freeze amid the exorbitant power costs brought on by Vladimir Putin’s savage invasion of Ukraine.

The footage reveals a employee turning off the provides, sending the gasoline stress needle to zero, as icy clouds ominously creep throughout the display screen, interspersed with aerial photographs of Brussels, Berlin, Paris and London.

This winter, we’re more likely to see shortages, obligatory rationing and insanely excessive power payments throughout Europe.

In accordance to Zero Hedge, it’s now being projected that power payments in Europe will improve by a complete of two trillion euros and can in the end attain 20 p.c of all disposable revenue.

For sure, we are actually in unprecedented territory.

We now have already began to see completely large protests in main European cities, and Italian politician Matteo Salvini is overtly admitting that this disaster has introduced Europeans to “their knees”

On Sunday Salvini urged an finish to Russia power sanctions that are solely leaving Europeans “on their knees” as a consequence of greater power payments and lack of provide. “A number of months have handed and individuals are paying two, three, even 4 occasions extra for his or her payments,” he mentioned in an interview RTL radio. “And after seven months, the struggle continues and Russian Federation coffers are filling with cash.”

He defined that not solely are the sanctions not working, however they hit Italy tougher. Whereas saying he stands in solidarity with Ukraine, he’s not keen to stay with one thing clearly counterproductive the place the blowback is felt extra in Europe, Italy specifically with its hovering power import costs, and never the supposed goal of the Putin authorities.

The longer the gasoline stays off, the more serious issues are going to get.

So what occurs if the Russians by no means flip the gasoline again on?

Already, firms are shutting down services throughout Europe as a result of power prices have made it unprofitable for them to proceed working.  This contains the second greatest metal producer in your entire world

The second-largest metal producer on this planet, ArcelorMittal, is the newest enterprise title to announce the closure of a manufacturing facility in Europe on account of rising gasoline and power prices.

Because of the outrageously excessive surge in power costs, ArcelorMittal is shutting down one of many two present blast furnaces at its steelworks plant in Bremen of Germany, beginning by the top of September till any additional updates.

Many have warned that Europe is plunging right into a “recession”, however the reality is that what the Europeans are going through is rather more severe than that.

That is going to be dangerous.

And issues are going to remain dangerous till there’s peace with the Russians, and the reality is that peace with the Russians could not occur in any respect.

Months in the past, western leaders have been overtly bragging that they have been going to crush the Russian economic system.

It seems that Europe is the one being crushed as an alternative.

Summer time is nearly over, winter is coming, and the Europeans are fully and totally unprepared for what’s coming subsequent.


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