Bailouts for Swiss, Finns (& Brits)

Switzerland, Finland (and soon Britain) are now providing multi-billion Franc/Euro/Pound energy bailouts in the wake of last week’s energy-related bailouts announced by Sweden and Germany.

https://www.reuters.com/markets/europe/europe-tries-shore-up…

Per Reuters:

Finnish utility Fortum (FORTUM.HE) said on Tuesday it had signed a bridge financing arrangement with government investment company Solidium worth 2.35 billion euros to cover its collateral needs…
A Finnish government official told Reuters the support was in addition to the 10 billion euros of liquidity guarantees Helsinki announced for power companies on Sunday…

Swiss utility Axpo (AXPOH.UL) said it had sought and received a credit line of up to 4 billion Swiss francs ($4.1 billion) from the government to help its finances. The Swiss government has lined up a 10 billion franc safety net for power firms, but decided to allocate the funds to Axpo even though the legislation is still before parliament.

The Financial Times also reported that Britain’s largest energy supplier, Centrica (CNA.L), was in talks with banks to secure billions of pounds in extra credit…

Many European power distributors have already collapsed and some major generators could be at risk, hit by caps that limit the price rises they can pass to consumers, or caught out by hedging bets…
Soaring prices are forcing energy-hungry industries to scale back production, raising the chances of European economies plunging into recession…

https://www.reuters.com/markets/europe/europe-tries-shore-up…

Members of the civilized world (everyone outside of China, India, and Turkey) have every reason to hate Vladimir Putin and to wish total destruction of the Russian economy because of Putin’s decision to invade Ukraine and conduct a brutal war on Ukraine’s civilian population.

However, those civilized countries which have built their economies and electric power upon an uninterrupted supply of Russian oil and natural gas have set themselves up for serious pain and even greater inflation if they persist in printing massive sums of money just to subsidize the purchase of farcical “non-Russian” oil and gas.

China has been quietly reselling Russian LNG to the one place that desperately needs it more than anything. Europe… and of course, it is charging a kidney’s worth of markups in the process.
As the FT reported recently, "Europe’s fears of gas shortages heading into winter may have been circumvented, thanks to an unexpected white knight: “China… the world’s largest buyer of liquefied natural gas is reselling some of its surplus LNG cargoes due to weak energy demand at home. This has provided the spot market with an ample supply that Europe has tapped, despite the higher prices.”

https://elements.visualcapitalist.com/importers-of-russian-f…

The Russian Ruble is trading high against the Euro because the Ruble is supported by petroleum exports to China, India, Turkey, and others, despite sanctions. In addition, the Ruble is supported by Russian gold reserves - despite sanctions on Russian gold.

https://seekingalpha.com/article/4498704-russias-3-step-prog…

The US and most other countries were able to pile bailout upon bailout without inflation for about a decade after the global financial crisis. However, even the Federal Reserve eventually had to acknowledge that you cannot provide limitless bailouts and money printing without eventually causing inflation.

I am concerned that the $4.3 Trillion of USD of “bailout” spending in response to COVID-19 will cause inflation in the US to persist long enough to do real or long-term damage to the nation’s economy.

I am becoming concerned that billions of Euros of “bailout” spending in response to the repricing of gas and oil will cause inflation in Europe to persist long enough to do real or long-term damage to European nations’ economies.

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… wish total destruction of the Russian economy …

No, only destruction of Putin’s power network, no grudge against the Russian people or their economy …

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… wish total destruction of the Russian economy …
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No, only destruction of Putin’s power network, no grudge against the Russian people or their economy …

Yes, why create 2 or 3 generations of disgruntled malcontents with self-pity and revenge on their minds. That kind of thinking is what led to WWI, WWII, and, to a lesser extent due to some subtle but not too subtle ball spiking after the Cold War, the conditions we have today

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No, only destruction of Putin’s power network, no grudge against the Russian people or their economy …

It’s not exactly like the Russian economy was humming along. Russian GDP is about $1.5T with a population of 144M. The U.S. has 3 states with a higher GDP and less population (CA $3.3T/39M, TX $2T/30M, and NY $1.8T/22M).

When was the last time you bought something that said Made in Russia? Heck, the Russians are so desperate they are buying drones (when they work) from Iran and rockets and artillery shells from North Korea.

In North Korea’s defense, their weapons have been field tested by using anti-aircraft guns to execute generals who fall asleep during one of Kim Jung-Un’s stirring speeches.

Sadly, Putin’s power network is still intact, albeit somewhat smaller due to some recent tragic suicides.

AW

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