Looking Backwards …
LB #1
With the beginning of the new year, there are many changes about to happen. New leaders will take the stage, tariffs might be implemented, and markets will fluctuate but some monumental events have already occurred. Let’s go to ZeroHedge, “An era came to a close in Europe on the first day of 2025.
Russian gas exports via Soviet-era pipelines running through Ukraine came to a halt on New Year’s Day, marking the end of five decades of Moscow’s dominance over Europe’s energy markets, as well as cheap gas that kept Germany’s economy humming.
The gas had kept flowing despite nearly three years of war, but Russia’s gas firm Gazprom said it had stopped at 0500 GMT after Ukraine refused to renew a transit agreement as we previously noted. According to Reuters, the widely expected stoppage is unlikely to impact prices for consumers in the European Union – unlike in 2022, when falling supplies from Russia sent prices to record highs, worsened a cost-of-living crisis and hit the bloc’s competitiveness – however, that is a rather naive statement since European nat gas prices have been rising all year and closed 2024 more than doubling from their February lows. They will only keep rising now. The last few European buyers of Russian gas via Ukraine, such as Slovakia and Austria, had already arranged alternative (and far more expensive) supply, while Hungary will keep receiving Russian gas via the TurkStream pipeline under the Black Sea. But Transdniestria, a breakaway pro-Russian region of Ukraine’s neighbor Moldova also reliant on the transit flows, cut off heating and hot water supplies to households early on Wednesday.”
This is a game of chess being played by those that have means and it is affecting many of those without means. No one in Berlin or D.C are without gas this evening. No one making decisions in those countries are being affected. The number of people in Germany about to lose their jobs this year are being affected by a geopolitical decision. America and NATO creep east for 20 years. Russia says no more. Ukraine threatens to restart its nuclear program. Russia attacks. America and Europe put sanctions on Russia, blow up their pipeline, and the US sells more expensive natural gas to Europe. Europe stops being competitive because its cost of production makes its exports uncompetitive. Europe questions why they chose America. Here we are folks. The people of Europe have voted out the governments in the UK, Germany, France, and here we are…
The article continues, “But the EU has slashed its dependence on Russian energy since the start of the war in Ukraine by buying more piped gas from Norway and LNG from Qatar and the United States. The biggest beneficiary of said LNG imports is, of course, the US which has seen its LNG exports to Europe soar since the Ukraine war and since the US blew up the Nordstream pipeline, making (expensive) US sourced LNG one of the few realistic alternatives for Europe. In other words, Europe has gone from relying entirely on cheap Russian gas to relying entirely on expensive US LNG.”
LB #2
More than once we have pointed out that the US needed to sell natural gas to someone and Europe has been forced into becoming a customer. With friends like that who needs enemies huh? With the flow of gas halted on Jan.1, there are two countries in particular that are feeling the heat, or not feeling the heat I should more properly say. Moldova and Slovakia sit to the west of Ukraine, and they will be directly affected. Germany has watched the higher energy costs tank their once mighty economy. These two countries have no throne from which to fall. They are merely desperate for economic survival. This from ZeroHedge, “Slovak Prime Minister Robert Fico has penned a formal letter to European Commission President Ursula von der Leyen, for the first time urging EU intervention in the looming halt of Russian gas transit through Ukraine by the Zelensky government. He asserted that the EU’s acceptance of Kiev’s actions would be “entirely irrational and wrong” and ultimately hurt Europe itself. Fico last Friday raised the possibility that Slovakia could cut Ukraine’s electricity supplies as retribution (the country is a key foreign supplier). ”
Mr. Fico is talking sense as he has a serious problem which usually reveals honesty and honestly it is starting to cause a crisis over in Moldova already. Let’s see the effect it is having in the separatist region of Transnistria, Moldova. No, that isn’t nistria that has a gender fluidity issue, that’s just its region’s name. Sarah Rainsford writes for the BBC, “In Transnistria, a separatist region of eastern Moldova loyal to Moscow, the year began with only hospitals and critical infrastructure being heated, not houses.
“The hot water was on until about 2am, I checked. Now it’s off and the radiators are barely warm,” Dmitry told the BBC by phone from his flat in the enclave.
“We still have gas, but the pressure is very low – just what’s left in the pipes.” “It’s the same everywhere.”
Transnistria split from the rest of Moldova in a short war as the Soviet Union fell apart. It still has Russian troops on its soil and an economy that’s fully dependent on Russian gas, for which the authorities in Tiraspol pay nothing.
“They just have a file, where it says how much the debt is each month,” explains Jakub Pieńkowski, of the Polish Institute of International Affairs, PSIM. “But Russia is not interested in asking for this money.”
Suddenly, that lifeline via Ukraine has been cut. In some Transnistrian towns, the authorities are setting up “heating points” and there are hotlines for help finding firewood. Families have been advised to gather in one room for warmth and seal cracks in the windows and doors with blankets.”
In the 20th century it might be surprising that countries are being forced to scrounge for firewood and huddle for warmth, but this is what happens during times of conflict. If we look at the Maslov’s hierarchy of needs, shelter is in the basement. Shelter means a place to stay warm and dry and the most fundamental needs are not being met because America wants to sell natural gas to the Europeans at a higher cost than the Russians did. We must understand the context with which these events occur. We won’t read about them in the US, but rest assured the shivering people of Moldova will realize that when Russia delivered gas they could be warm, now that America delivers gas they are freezing. Like Mr. Fico, serious problems reveal honesty.
Rainsford continues, “But Transnistria’s main power plant in Kurchugan is already being fuelled by coal instead of Russian gas and the authorities say there’s only enough of that for 50 days.
That means problems for the rest of Moldova, which gets 80% of its electricity from Kurchugan.
The government in Chisinau says it has enough gas to heat the country until spring and it will switch to buying electricity from Europe, but that means a giant hike in costs.
A state of emergency was introduced last month and businesses and citizens have been told to reduce consumption with the country braced for power cuts.
The abrupt halt in gas via Ukraine affects Slovakia and Hungary, too.
Both have governments sympathetic to Moscow that have been far slower than others in the EU to wean themselves off Russian fuel and stop funding Russia’s war. Paying more for alternative supplies will squeeze their budgets.
But Moldova is poorer and less stable – a prolonged crisis could have serious economic and political consequences.”
While you sit all warm and comfy in your McMansions America, please remember what your actions are doing to people around the world and don’t be surprised when they turn on you, and they will.
Slovakia doesn’t feel the heat
LB #3
As Europe is feeling the pinch of poverty and war in extremes not felt since World War II we must mourn the loss of an entire generation of young men, mostly that spent their lives teaching us lessons, if we listened. Audrey Mcavoy writes for the AP,
“Warren Upton, the oldest living survivor of the 1941 Japanese attack on Pearl Harbor and the last remaining survivor of the USS Utah, has died. He was 105…The Utah, a battleship, was moored at Pearl Harbor when Japanese planes began bombing the Hawaii naval base in the early hours of Dec. 7, 1941, in an attack that propelled the U.S. into World War II. Upton told The Associated Press in 2020 that he had been getting ready to shave when he felt the first torpedo hit the Utah. He recalled that no one on board knew what made the ship shake. Then, the second torpedo hit and the ship began to list and capsize.
The then-22-year-old swam ashore to Ford Island, where he jumped in a trench to avoid Japanese planes strafing the area. He stayed for about 30 minutes until a truck came and took him to safety.
Upton said he didn’t mind talking about what happened during the attack. Instead, what upset him was that he kept losing shipmates over the years. By 2020, there were only three crew members of the Utah still alive, including himself.
There were an estimated 87,000 military personnel on Oahu on the day of the attack, according to military historian J. Michael Wenger. After Upton’s death, there are only 15 still alive.”
This generation of fighters, heroes, and rebuilders of a broken world are all about gone now. They didn’t ask for their role in world history. They accepted it. We have been poor stewards of their legacy.
Looking Forwards…
LF#1
Speaking of just a memory, the high prices that we saw for real estate are also just a memory. If we go to the New York Post’s Brooke Kato,
“Housing prices in San Francisco have plunged to pre-pandemic levels amid widespread layoffs in the tech sector, SFGATE reports. Despite still being one of the more expensive metropolitan areas in the US, prices for condominiums and co-ops in the city were down 14.7% from May 2022 and now average $986,000.”
Ok, $986k is still a lot of money for an apartment or condo in an earthquake zone that has homo sapiens pooping in the grocery stores aisles at a store near you. Why anyone would want to live in San Francisco is beyond me, but it seems the former glorious city by the bay is seeing people exiting quickly if sale prices are down 15% in less than 3 years. When a borrower takes out a mortgage, the interest expense is the largest portion of the payment in comparison to the principal for many years. Many banks have not required 20% down payments even after the lessons learned in the financial crisis. When prices drop 15% that can often put people underwater on their mortgages. If people find themselves owing more than something is worth they simply will try and walk away. If this phenomenon starts happening in other cities, and it is in Austin, then real estate prices and banks might find themselves in a familiar situation as they did almost 20 years ago.
LF#2
According to ABC7 news out of Santa Ana California, the school systems rosters, that were buoyed by Covid stimulus money, are set to be culled. “Nearly 350 teachers and school employees in Santa Ana could be at risk of losing their jobs this year. The Santa Ana Unified School District, the second largest district in Orange County, is facing a spending deficit of more than $180 million. On Thursday, the school board voted 4-1 to move forward with its plan to help the district close the gap as enrollment declines and COVID-19 relief funds dry up.”
We mustn’t forget that the large Covid Stimulus packages that added so much money to the national debt were largely state bailouts. Most states rely on sales tax revenue for a large part of their income. When the country was shut down and people could only buy overpriced exercise bikes and watch Netflix that spending came to a stop. Thus the sales tax came to a stop. When the stimmie checks flowed the coffers in the state filled back up again, but as we have discussed the well is running dry. There will be large layoffs in schools and state and local government programs in the coming year. States and local governments can’t print money so they have no choice but to make cuts. We will see if Elon and Vivek have the federal government follow suit.
LF#3
Speaking of Musk and Vivek, their names were in the paper this week. This from Mediaite via the New York Times, “ Retired Lt. General Russel L. Honoré is sounding the alarm on Elon Musk’s potential security risk in his newfound role as close advisor to President-elect Donald Trump.
Honoré took to the op-ed pages of the New York Times to explain in significant detail why he believes the leader of DOGE (the Department of Government Efficiency) and holder of multiple federal contracts with the United States industrial space and military complex may be beholden to China over massive loans he received from the foreign government in years past. He opens by citing past comments from his DOGE deputy, Vivek Ramaswamy.
Honoré writes: According to numerous interviews and remarks, Mr. Musk’s Department of Government Efficiency co-leader, Vivek Ramaswamy, once appeared to believe he was. In May 2023, Mr. Ramaswamy went so far as to publicly state, “I have no reason to think Elon won’t jump like a circus monkey when Xi Jinping calls in the hour of need,” a reference to China’s leader. In a separate X post targeting Mr. Musk, he wrote, “the U.S. needs leaders who aren’t in China’s pocket.”
Trump and the hype men in the media are trying to saint Vivek and Elon for making America great by reducing waste in America. Well, there are two problems that I see. One, they haven’t done anything yet. Second, they need to be careful how they do it or they will throw us into a recession which we can’t afford right now considering where the debt levels are currently tracking. I am all for the reduction of government waste or better yet the actually reduction of government, regulations, and the interference in our lives. They might call it the Department of Government Efficiency, but I have my own acronym for it: Doubts on greedy eccentrics. We have walked through how these two are pump and dump billionaires. It seems even the retired generals feel the need to speak out now and not the podcast heartthrobs.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 42,732.
The 10-year Treasury bond is at …at 4.602%
The price of Brent Crude is … at $76.51 per barrel.
The price of gold is … at $2,652/oz.
The price of silver is … at $30.1/oz.
I leave you with this from the information superhighway, “I stand corrected.” Said the man in the orthopedic shoes.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.