Despite a relatively predicted crisis, the pace with which the European energy crisis is developing seems to be surprising the markets.
Everyone anticipates a harsh winter with exorbitant costs, but it seems that the majority believed these issues would not be realized until the winter months.
This style of thinking is proving to be an enormous miscalculation, as the compounding effects of ever-decreasing supply and markets trying to anticipate the turmoil are resulting in price levels that make it difficult for markets to function.
The news broke this morning that European trading desks face at least $1.5 TRILLION in margin calls as prices in the European energy sector exceed the available liquidity. “I understand that we live in an age when trillions are tossed about like confetti at the Super Bowl, but to put that in perspective, it would represent around 13% of gold’s overall market capitalization and 31.6 times bitcoin’s current market capitalization. All to guarantee today’s energy trading markets have enough liquidity.”
This does not even begin to account for the amount of liquidity that will be required as the year progresses. At some time in the near future, the liquidity situation will compel the European Central Bank to create money to save the energy industry.
This might be a defining moment on the worldwide path toward Weimar 2.0. This is solely the case in Europe. If you move a little to the west toward the United Kingdom, you will observe that they are commencing on a very similar path, beginning with the fiscal side of the equation.
Liz Truss, the next British prime minister selected by the World Economic Forum, is going out swinging with price limits on energy. Prepared to transfer up to 170 BILLION pounds, or more than 5% of England’s GDP, to try to alleviate the suffering British consumers face when paying their power bills at the end of the month.
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