Russian Gas and Forced European Hypocrisy - Economic Policy

Russian Gas and Forced European Hypocrisy – Economic Policy

The economy under its appearance of seriousness and figures, is in reality also a terribly human science. It is enough to auscultate the news to realize it.

Take the case of the euro. Our European currency is currently too weak against the greenback. This in itself is a punishment, because the hydrocarbon invoices are denominated in dollars. Each weakness of the euro against the dollar increases our hydrocarbon imports and therefore our imported inflation. The European Central Bank recently increased its interest rate to make the euro more attractive, and thus indirectly weaken imported inflation, but this increase in interest rates was in vain. I almost wrote useless.

Indeed, the euro has unfortunately not moved too much. And that’s normal: currency traders are not stupid, they know that Europe is worse off than the United States economically. First, because we are on the territory of the Ukrainian conflict, then because we are dependent on Russian gas and finally because the dollar yields much more than the euro. For these and other reasons, traders prefer the greenback to the European currency.

Today, it is the dollar which is the safe haven and not the euro. Currency traders also know that Europe will not be able to raise its interest rates too much given the Himalayan size of our public debts. Indeed, interest rates that are too high are the assurance that Italy will go off the rails, but it is hard to see how Europe could support the bankruptcy of the 3rd economy in the euro zone. Meanwhile, the ruble is also at its highest against the euro, while our politicians had announced its collapse!

In this regard, let’s also talk a bit about theforced hypocrisy of the European Commission. Everyone knows that Putin decided to shut down the Nordstream 1 pipeline. Officially, for maintenance reasons, but in reality to strangle our economies and force us out of Ukraine.

Yes, except that as Philippe Béchade, a more than seasoned commentator on the Stock Exchange and its upheavals, points out, this gas shutdown from the north has made us forget that this Russian gas continues to circulate from the south, via the Romania, Hungary and Poland and to another country which is none other than… Ukraine! In other words, and that’s what’s crazy about this conflict, is that Putin forgot to destroy facilities that transport Russian gas to the West. Worse, according to Philippe Béchade, Russia continues to pay money to Ukraine, in the form of a fee to transport its gas. It allows Ukraine to finance its war by buying American military equipment that Ukraine uses against Putin’s armies, while supplying gas to Russia’s European enemies, who are members of NATO, while these same countries have officially decided to do without Russian gas. But as they cannot do without it 100%, these European countries – the rest of us therefore – close their eyes to this Russian gas which transits through Ukraine. But there is no question of admitting it officially.

We can therefore say that at the school of hypocrisy, Europe is valedictorian. But do we really have a choice?

Take the case of the euro. Our European currency is currently too weak against the greenback. This in itself is a punishment, because the hydrocarbon invoices are denominated in dollars. Each weakness of the euro against the dollar increases our hydrocarbon imports and therefore our imported inflation. The European Central Bank recently increased its interest rate to make the euro more attractive, and thus indirectly weaken imported inflation, but this increase in interest rates was in vain. I almost wrote useless. Indeed, the euro unfortunately did not move too much. And that’s normal: currency traders are not stupid, they know that Europe is worse off than the United States economically. First, because we are on the territory of the Ukrainian conflict, then because we are dependent on Russian gas and finally because the dollar yields much more than the euro. For these and other reasons, traders prefer the greenback to the European currency. Today, the dollar is the safe haven, not the euro. Currency traders also know that Europe will not be able to raise its interest rates too much given the Himalayan size of our public debts. Indeed, interest rates that are too high are the assurance that Italy will go off the rails, but it is hard to see how Europe could support the bankruptcy of the 3rd economy in the euro zone. Meanwhile, the ruble is also at its highest against the euro, while our politicians had announced its collapse! Everyone knows that Putin decided to close the Nordstream 1 pipeline. Officially, for maintenance reasons, but in reality to strangle our economies and force us to let go of Ukraine. Yes, except that as Philippe Béchade points out, a more than seasoned commentator of the Stock Exchange and its upheavals, this closure of gas from the north, has made us forget that this Russian gas continues to circulate from the south, via Romania, Hungary and Poland and towards another country which is none other than… Ukraine! In other words, and that’s what’s crazy about this conflict, is that Putin forgot to destroy the installations that transport Russian gas to the west. Worse, according to Philippe Béchade, Russia continues to pay money to Ukraine, in the form of a fee to transport its gas. It allows Ukraine to finance its war by buying American military equipment that Ukraine uses against Putin’s armies, while supplying gas to Russia’s European enemies, who are members of NATO, while these same countries have officially decided to do without Russian gas. But since they cannot do without it 100%, these European countries – the rest of us therefore – turn a blind eye to this Russian gas which passes through Ukraine. But there is no question of admitting it officially. We can therefore say that at the school of hypocrisy, Europe is valedictorian. But do we really have a choice?

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