Month: September 2022

By Michael Every of Rabobank

No role for payrolls, or G7 oil-price caps

For those paying not attention to war or peace, US payrolls coming in largely in line with consensus didn’t move markets much on Friday. Weak factory orders that followed did: but markets would have seized on shoelace futures for any excuse to tell themselves the Fed is going to back off on rate hikes – when it isn’t.

Then the G7 announced the imposition of an as-yet unspecified December price cap on Russia’s oil exports –and Russia turned off Nord Stream 1 gas flows– and markets tumbled. Stocks and bonds went down – but Brent oil went up before easing off highs.

The G7 proposal is that they can bring down the cost of energy by using its monopoly on oil tankers and insurance to force Moscow to sell oil at a lower price, choking off its export earnings and war budget to boot. This could work: unless Russia refuses to sell oil to anyone who imposes the price cap, which it will; or Western tankers refuse to comply, or make offshore ship-to-ship transfers; or Western insurers won’t play ball; or India and China start their own insurance schemes; or third parties buy the cheap oil, blend it, and sell it back to world markets at higher prices (and maybe even split the gains with Russia). Meanwhile, thousands of inspectors would be needed to (inefficiently) police it. In short, this G7 scheme plays at a ‘war economy’ rather than doing it for real, “because markets”, and oil prices are more likely to trend higher than lower against such a backdrop.

That is ironically also the backdrop for the OPEC+ meeting today, which energy markets will be looking to with anticipation: might we see cuts in output.

Meanwhile, European electricity prices could reportedly hit new highs this week, when the flood of problems already flowing from energy prices is already staggering: 6 out of 10 British manufacturers may go the wall; experts warn of energy rationing that could see Brits told not to cook until after 8pm, pubs close at 9pm, and three-day weeks at schools; aluminium smelters and steel mills are closing; fertilizer companies are shuttering; the Netherlands warns of a plunge in flowers, fruit, and vegetable output, with that of bricks also tumbling; Spanish output of ceramic tiles has halted; and a slew of Italian firms didn’t come back after the summer break. Regardless of gas storage levels for THIS winter, Europe faces an industrial supply-chain collapse – and just as it is has pledged to re-arm to face a worrying geopolitical future.

The EU makes its peace with economic war

As such, even though markets are still pricing for local and global commercial activity to continue as before, it is no surprise that the global neo-liberal market system is collapsing around us.

In the US, Trump-era tariffs on China were just extended; the White House is also considering dramatic restrictions on outward investment to China after its limits on semiconductor sales.

But that is far from all: after saying it will halt market mechanisms in energy last week, and German rolling out another EUR65bn in price subsidies over the weekend, the EU may be shifting towards a war economy.

As Reuters puts it: “The EU executive has been looking at how to avoid the supply bottlenecks that accompanied the coronavirus pandemic and no longer wants to rely on companies… to take precautions on their own. The so-called internal market emergency instrument, set to be presented on September 13, lays out several stages that open up varying powers to the Commission depending on the situation.” Via this new instrument the Commission will reportedly seek emergency powers giving it the right to re-organise supply chains; sequester corporate assets; re-write commercial contracts with suppliers and customers; order companies to stockpile strategic reserves; and force them to prioritise EU orders over exports. This is in effect a mirror of the ‘US Defence Production Act’ –  and the current crisis suggests it is likely to be needed soon, and perhaps on a large scale. Colour me unsurprised if so, even if you have to colour markets red.

2016’s ‘Thin Ice’ showed how rapidly global neoliberalism would unravel based on heterodox economics, which shows neoliberalism’s Achilles’ heels, transition economics, which dissects how planned Soviet economies were turned into market economies, and realpolitik pointing to geopolitical rivalry as the trigger. The combination of the first two has been fabulously instructive, and predictive, in watching post-2008 market economies make the reverse journey, crisis by crisis, into crony socialism for the rich; the last matters too, as lots of people knew the neoliberalism wasn’t working –hence ‘lower for longer’– but couldn’t see how a left-wing policy backlash would happen. The answer was always that once we moved into the realm of national security, such populist policies would happen wrapped in the flag.

The way to fight economic war

The same framework can predict what now should logically follow.

Central bank will keep raising rates rise to deal with inflation – “No Escape From Biggest Bond Loss in Decades as Fed Keeps Hiking,” said Bloomberg this weekend. That said, some will be more willing than others to accept that fact: the Kiwi press, for example, is quoting RBNZ Governor Orr saying, “We’re not there yet, but we’re close,“ on a peak in rates, under the headline “Adrian Orr accepts mortgage rates could fall next year.” Really? Is that how you win an economic war?

Alongside higher rates, MMT will also need to back state spending in vital areas. Such hypothecated credit will reallocate scarce resources towards supply-chain restructuring and away from the likes of too-much high-end housing. Indeed, the question is when/if we also get non-fungible credit to key firms that can only go into specific physical capital rather than being arbitraged. It might take a central bank digital currency to do it, but it will happen: you don’t win wars with SPVs and spivs.

MMT will probably also be used to supress energy prices to maintain as much industrial supply as possible, and to minimize household pain. In which case, we will have to see the Commission’s proposed industrial policy too: because if we do not have energy rationing by price, which the Soviets avoided, then we will have it by diktat, as the Soviets then had to do. And note the Soviets only avoided a currency collapse with capital controls and fixed exchange rates.

We will also require friendshoring or onshoring to recycle capital and keep production in ‘safe’ hands. It’s time for market analysts to stop looking at papers on the benefits of free trade, and to instead read academic papers from other disciplines, such as ‘Wartime Commercial Policy and Trade between Enemies’ (Grinberg, 2021), which assesses how trade works during wars. Grinberg shows there are rare examples of countries selling weapons to their enemies: in the Siege of Grave, the French commander was ordered to sell gunpowder to the Dutch forces besieging his town. There is evidence for business-as-usual non-military trade despite bloodshed in smaller wars: during the Crimean War (1853-56), flax, hemp, linseed, and tallow trade continued between the UK and Russia given no alternative buyers or sellers. Even early in WW1, UK-German trade-flows were so large that they were allowed to continue either directly or via third parties.

However, the key conclusion is the more a war is seen as existential and/or long term, the more trade is disrupted, whatever the costs – and business lobbying has little effect on such national security decisions.

It’s existential to get this call right

It goes without saying this war is existential for Ukraine; and Russia says it is for it too. The above hypothesis suggests the Commission’s latest policy proposals say the war is also existential and/or long-term for Europe. By contrast, the G7’s laughable oil-price cap says Ukraine is a far less important, shorter term struggle. Either that, or it reflects the ‘Crimean’ reality that there is no alternative oil seller or buyer. In which case, no, not just back to “because markets”…. the Commission’s proposals for rationing by diktat and industrial policy are going to be needed even more, as shown above.

The alternative policy call stemming from the populist right and left –even from heterodox voices who predicted this neoliberal collapse, such as the brilliant Steve ‘MMT’ Keen– is to say ‘give Putin Ukraine to get cheap gas’. However, this is a simplistic “because not markets” view which fails to see the logical and historical risks that a Western retreat could open the door for more, and more global, war; for more, and more global weaponization of commodities and trade; and, though nobody in the West will publicly admit it, for a huge tail risk to the living standards it (fairly or unfairly) enjoys.

In short, this war clearly remains both existential and long-term: and Grinberg’s hypothesis, and my own ‘Thin Ice’ framework, say commercial activity will shift accordingly. Indeed, if the Commission crosses the looming policy Rubicon, the EU may not be able to go back to ‘normal’ until its economy has been restructured defensively – literally so; and until geopolitical risks have been resolved by said defensive actions; and that might take years, or even *decades*.

Markets will have to make their peace with the reality of economic war: more state controls on what you can and can’t do; rationing by price or by diktat; MMT; perhaps non-fungible credit; higher structural inflation; higher interest rates; mercantilism in ideological blocs; and a broad reversal of globalisation’s trend of higher asset prices and lower goods prices.

You have not seen what Ga-Liz-riel has seen

Against this backdrop, Ga-Liz-riel Truss is likely to be selected as the new UK PM today and assume office tomorrow – to face perhaps 20% inflation, strikes, recession, shortages, blackouts, ‘economic’ war with Russia, and possible trade war with the EU over Northern Ireland.

Her philosophy of “geoliberalism” makes her a foreign policy leader in shining armor with blade out for Russia and China. Yet her Brexit self-confidence may also see her dive into the sea to swim away from allies in Europe and the West, ending up on a raft. Further, while absolutely cognizant of the ongoing economic war, having called for the G7 to become an “economic NATO”, and backing a new global “Network of Liberty”, her domestic policy is hard to reconcile with it.

Truss is adamantly backing tax cuts for high earners and businesses, despite all the evidence that this is the worst possible way to run MMT or boost the supply-side; and she may also introduce Covid-scale price subsidies to keep energy lower. If so, that is a belt and braces, and sword and shield and plate-mail armour, approach that will artificially suppress supply shocks while juicing demand, and yet doing nothing to restructure supply chains defensively, or to reallocate physically scarce resources. Nobody wins an economic war that way.

Apparently, however, we should all expect confident Ga-Liz-riel statements that: “You have not seen what I have seen.” Like the 1970’s collapse in Sterling, where the IMF had to be called in?

Russia announced Monday that it has blacklisted American actors over their activities in support of the Ukrainian government, also as retaliation for recent anti-Kremlin US sanctions. In total 25 US citizens, including senators and analysts at think tanks, are on the updated list.

The list of those now banned from entering Russia “on a permanent basis” – according a Russian foreign ministry statement – includes Ben Stiller and Sean Penn, both of which met with President Volodymyr Zelensky in June. 

A foreign ministry statement said the fresh action is in response to the “ever-expanding” US sanctions “against Russian citizens”. At this point, an estimated more than one thousand American nationals have been barred from entering Russia. 

“As a measure in response to the ever-expanding personal sanctions on Russian citizens by [the US President] Joe Biden’s administration a permanent ban to enter the Russian Federation has been imposed on another group of US Congress members, high-ranking officials, members of the business and expert community and cultural figures (25 people),” the statement reads.

“The hostile actions of US authorities, which continue to follow a Russophobic course, destroying bilateral ties and escalating confrontation between Russia and the United States, will continue to be resolutely rebuffed,” the ministry said.

In late June Stiller traveled to Ukraine to meet with Zelensky, declaring the president “my hero”:

“It’s a great honor for me.. you’re my hero!” said Stiller, a UN goodwill ambassador who met the Ukrainian leader on World Refugee Day.

“What you’ve done, the way that you’ve rallied the country, the world, it’s really inspiring,” said the 56-year-old American comedian referring to Zelensky’s countless speeches to audiences around the world to rally support for his embattled country.

Zelensky’s office released video of the meeting with the Hollywood star…

As for Sean Penn, he was actually in Ukraine working on a documentary at the moment Russia invaded on Feb. 24.

Ukraine subsequently bestowed top state awards to both Stiller and Penn “for support, upholding freedom and independence of Ukraine” – which they’ve continued to do in public statements and on social media.

Authored by Jonathan Turley,

Country singer Jason Aldean has been dropped by his longtime PR firm, GreenRoom PR, after his wife, Brittany Aldean, criticized early interventions on gender transitioning for young children.

Brittany Aldean said that she was thankful that her parents did not intervene during her “tomboy phase” because she loves being a female. Various stars and advocates denounced her and GreenRoom then dropped her husband. What is interesting is that the company had its client list displayed yesterday but just removed the list and its home page. The effort may be to protect other country stars from the backlash of staying with the company when it is effectively blacklisting an artist for the political or social views of his spouse.

Tyne Parrish, the co-owner of The Green Room called it a “difficult decision after 17 years to step away from representing Jason.”

The call for the firm to drop the artist grew after this statement last week in an Instagram post by Aldrean that she would “really like to thank my parents for not changing my gender when I went through my tomboy phase.”

“The Bones” singer Maren Morris later commented on Pope’s post, writing, “It’s so easy to, like, not be a scumbag human? Sell your clip-ins and zip it, Insurrection Barbie.”

Aldrean later responded to her critics by saying “Advocating for the genital mutilation of children under the disguise of love and calling it ‘gender affirming care’ is one of the worst evils.”

Singer and songwriter Cassadee Pope responded to Brittany Aldean’s post on Twitter, noting that Brittany Aldean’s alleged “tomboy phase” in no way compares “to someone wanting to transition.”

Pope captured the essence of any people are angry with the comment.

However, my concern, as usual, is with the free speech implications of what has become a type of blacklisting culture for those with unpopular or controversial political, social, or religious views. I understand the objections to Aldean’s comments but the response is reminiscent of the campaign against JK Rowling as a TERF (Trans Exclusionary Radical Feminist), including banning and burning her books. There is no willingness to separate her creative work from her personal views.

In this case, a singer is being blacklisted because his wife (and possibly Aldean himself) hold conservative views on gender transitioning for young children. Yet, while some artists have joined the campaign, most others are silent, including the country singers represented by Green Room PR.

Those listed artists included Lauren Akins, Tucker Beathard, Dierks Bentley, Bobby Bones, BROOKS & DUNN, Travis Denning, Patrict Droney, Caylee Hammack, and others. The home page now says simply “Contact: news@thegreenroompr.com” if you want to know who the firm represents or anything about the firm.

The concern is clearly that these artists might make the “difficult decision” of separating from the firm after it dropped a fellow artist over the political and social views of his spouse.  The firm yielded to the pressure on one side but seems to be moving to protect itself from a backlash from country music fans.

I would be raising the same free speech concerns if an artist was dropped because a spouse supported gender transitioning. The issue is whether the arts community should impose a de facto political litmus test for artists.  Blacklisting by studios and firms was common in the 1950s when communists and other political dissenters were being attacked by figures like Eugene McCarthy. The left has now embraced the practice in a far more extensive systems of banning books, speakers, and events by those who hold opposing views.

Here is Aldean’s interview on Fox News:

With the yuan in freefall, on Monday morning China announced it will cut the reserve requirement ratio on FX deposits by 2% from 8% to 6%, effective September 15th, in a move aimed to stem its currency’s fall. This announcement came after more than 3% depreciation of the USDCNY since mid-August on the back of a stronger USD. This was China’s second FX RRR cut this year – on 25 April, PBOC cut the RRR on FX deposits by 1% from 9% to 8% after CNY depreciated by almost 3% against the USD in one week.

According to Goldman, this cut should help increase FX liquidity onshore, easing FX appreciation (i.e., CNY depreciation) pressures as a result. And while the actual liquidity impact from this cut looks modest by Goldman’s estimates – onshore FX deposits stood at $674BN as of July 2022, so a 2% cut implies $13BN liquidity release – this cut serves as a strong policy signal that the PBOC is uncomfortable with the rapid depreciation of the currency especially ahead of the 20th Party Congress in October; sure enough the USDCNH appreciated slightly immediately after this announcement.

Indeed, as Goldman’s Maggie Wei writes, the countercyclical factor (CCF) in the daily fixing also implies strengthening bias by the PBOC in recent days.

The bank found a similar pattern ahead of the previous 19th National Party Congress in October 2017, when policymakers leaned against CNY depreciation through more negative CCF ahead of the Congress, though policy signals were less obvious going into the Congress in 2017.

Looking forward, Goldman expects USD strength to continue in the near term, and local Covid outbreaks and property weakness to continue to drag on activity growth in China. As such, the bank expects USDCNY to depreciate to 7.0 over a 3-month horizon. After the 20th Party Congress, Wei adds that “policymakers might also have higher tolerance for CNY weakness” –  during a press conference this afternoon (September 5th), PBOC deputy governor Liu Guoqiang stated the exchange rate has been more flexible and acting as the automatic stabilizer of both the macroeconomy and the global balance of payments. He added that the exchange rate should demonstrate two-way fluctuations, and not necessarily stick to any fixed number. Goldman agrees, and thinks the PBOC might have tolerance for further CNY depreciation against the USD, especially as the broad USD continues to strengthen, though they might want to avoid continued and too fast one-way depreciation if possible.

Bloomberg’s Simon White agrees and writes that “the forces causing the yuan to decline are structural, and there is a mounting likelihood that China may eventually drop the fixed-exchange rate regime altogether.”

As White adds, Beijing’s FX RRR cut “is unlikely to be enough to countervail the structural problems in China putting pressure on the nominally-closed capital account. China’s response to the economic impact of lockdowns has been to aim stimulus at the predominantly export-facing SOE sector. The result has been a surge of almost $0.5 trillion in China’s trade surplus since 2020.”

Indeed, a look at the underlying drivers of the surplus gets to the heart of China’s main problem: the surplus grew not just due to a surge in exports, but a stagnation in imports. Stimulus in China comes at a cost to the household sector, a net importer. In a sign of the poor sentiment and pessimism in the household sector — driven by financial repression, lockdowns and collapses in property prices — new CNY loan growth for households has fallen to at least 13-year lows.

The bottom line, according to the Bloomberg commentator, is that China’s growth model is broken, as the loss in demand from the household sector is greater than any gain from the export sector, leading to lower growth overall, and thus greater pressure on the capital account. This is enough to push the yuan lower, but China also faces a mounting risk from its heavy debt load.  China has had the largest rise in private debt levels since 2010, and its debt-service ratio is through the danger level of 20%.

And while high debt when growth is strong and rising is manageable, it becomes much less so when growth is falling.

There are several levers China can pull to alleviate the growth impact from increased capital flight. One of these is allowing the yuan to weaken. But if the pain becomes too much, White believes that China may choose to abandon its fixed-rate regime altogether, which would have many profound (and dire for the status quo) implications, including for EM monetary policy and global supply chains.

Authored by Nikolaus Jilch via BitcoinMagazine.com,

The market for money has been distorted by The State for so long, it came to hardly exist before Bitcoin arrived…

Alright. It seems like we have decided to spend the “cryptowinter” arguing about who is the coolest kid on the block: Bitcoin Maximalists or altcoiners.

This isn’t a new debate but the recent defection of Nic “rising star” Carter and some others from the camp of “toxic maxis” has restarted it. Then there was this thread by Bitcoin core dev Matt Corallo.

1/ Bitcoin maxis are a dying breed. While there was a time where ~everything except Bitcoin was basically a scam, that hasn’t been true for a long time, and the smart money has moved on to figuring out which projects are going somewhere, and which are straight pump-and-dumps.

— Matt Corallo (@TheBlueMatt) August 8, 2022

Now I’ll gladly start here. Obviously Matt knows what he is talking about regarding Bitcoin. He knows way, way, way more than I do when it comes to the technical side of things. Compared to him I’m nobody.

But still, I’d call myself a Bitcoin Maximalist.

And I disagree that they are a “dying breed.” In fact, if anything, our camp is growing.

Have people forgotten about Luna already? A whole new class of maxis was born the day it collapsed.

We all have our reasons for focusing on Bitcoin. Mine is deeply personal: I want to fix the money. Maybe that’s cheesy or arrogant. But ever since I realized that our monetary system is broken, this has been my obsession.

I didn’t get Bitcoin for years! I was a goldbug, a nocoiner, an altcoiner first.

It took me about seven years to end up as a Bitcoin Maximalist and the pivotal moment was when I decided for myself that it’s now probably too late to “get rich” with Bitcoin.

That little thought opened up a whole new world to me.

SO WHERE DO ALL THE NON-MAXIS COME FROM?

Since then I’ve met all kinds of people. And one thing is for sure. The real Bitcoin Maximalists are a completely different group than the rest of the crypto people. They think and act differently. They are building a social network on top of the monetary network.

So what about the non-maxis?

My experience has been that many people who came to Bitcoin with a purely technical perspective like to look at newer projects (altcoins) and what these projects aim to achieve. After all, wasn’t it the intellectual curiosity that brought them to Bitcoin in the first place?

Many of these “nerds” (I mean this in the nicest way possible, I love you all!) also came to Bitcoin early and are now rich beyond their imaginations — they might even be a little bit bored with Bitcoin by now.

For them, being “Bitcoin only” doesn’t make much sense. Matt has contributed more to Bitcoin than I ever will. Why shouldn’t he be curious about other things? Good for him!

NUMBER GO UP — THAT’S HOW BITCOIN LURES YOU IN

Nic Carter comes from the investing side of things. This is where many altcoiners come from, the small and the big ones.

That’s a different group.

Some were early and already got rich with Bitcoin. They now look for their next big payday. Others feel they “missed” Bitcoin and look for their opportunity to grow. I can understand them better because I was one of them. In fact, I imagine that almost all newcomers fall into this group.

Number go up.

That’s how Bitcoin (and crypto) lures you in. And that’s ok. It’s like a Trojan horse. Someone once said: “Bitcoin is a revolution that protects itself by making the revolutionaries rich and incorruptible.”

Well, it turns out the lust for ever more wealth and status is part of human nature today and even rich Bitcoiners can be enticed by even more money. This should come as no surprise after decades of inflation, fiat money, consumerism and high time-preference.

That’s also the crux of my argument here.

WE NEED TO SEPARATE MONEY AND STATE

Carl von Clausewitz said that, “War is the continuation of politics by other means.”

Altcoins, DeFi, NFTs and proof-of-stake are the continuation of fiat money by other means.

I get way more out of fighting to fix the money than chasing the next fiat high.

I want to play my part in making sure that the Bitcoin network survives and thrives. I don’t know much about computers or trading but I know how to write, talk, make podcasts and videos — so that’s what I’m doing.

I want to see the fiat experiment end. I want to know what that will do to our precious investment theories. And to be honest, I don’t see this as limiting either. Scarcity is so important to us as human beings, it literally is what helps us start our lives. Ask any trust fund baby. I think money is a good like any other. I think the market for money has been distorted by the state for so long, it hardly existed before Bitcoin arrived.

We need to separate money and state. I think Bitcoin is our best (and maybe only) shot to do this.

That’s why I’m Bitcoin only. That’s why I’m a Maximalist. We need to fix the money first.

Then we can talk about the value of your JPG of an ape.

Putin is done playing around.

Two days after Russia indefinitely halted nat gas supplies via the Nord Stream 1 pipeline for the amusing reason that there was an “oil leak” (shown below)…

… on Monday Russia finally admitted what everyone has known since February – namely that it has weaponized commodities in response to the West’s weaponization of currencies (as Zoltan Pozsar has said all along),when the Kremlin said that Russia’s gas supplies to Europe via the Nord Stream 1 pipeline will not resume in full until the “collective west” lifts sanctions against Moscow over its invasion of Ukraine.

Putin’s spokesman, Dmitry Peskov, blamed EU, UK, and Canadian sanctions for Russia’s failure to deliver gas through the key pipeline, which delivers gas to Germany from St Petersburg via the Baltic sea.

“The problems pumping gas came about because of the sanctions western countries introduced against our country and several companies,” Peskov said, according to the Interfax news agency. “There are no other reasons that could have caused this pumping problem.”

Peskov’s comments were the most stark demand yet by the Kremlin that the EU roll back its sanctions in exchange for Russia resuming gas deliveries to the continent. It also confirms that Russia no longer needs to pretend it needs to export commodities to Europe – after all it has more than enough demand in China and India – and is willing to give Europe just enough to rope to… well, you know the rest.

On Friday, Gazprom said it would halt gas supplies through Nord Stream 1 because of a technical fault, which it blamed on difficulties repairing German-made turbines in Canada. We now know that was a strawman; and in the latest confirmation of who has the upper hand in the ongoing commodity feud, the EU had already rolled back some sanctions against Russia explicitly to allow the turbines to be repaired. European leaders have said there is nothing to prevent Gazprom from supplying the continent with gas and had accused Russia of “weaponising” its energy exports.

Meanwhile, as we reported over the weekend, Russia is still supplying gas to Europe via Soviet-era pipelines through Ukraine that have remained open despite the invasion, as well as the South Stream pipeline via Turkey. And in an ironic twist, the head of the Ukraine gas transit operator told Reuters that Ukraine could “technically” substitute full capacity of Nord Stream 1 via Ukraine’s Sudzha entry point.  In other words, Europe would pay Putin billions for Russian gas transiting through Ukraine with Russia using proceeds to fight Ukraine…

Of course, nothing in today’s “news” should come as a surprise: Russian officials have made little secret of their hope that the growing energy crisis in Europe will sap the bloc’s support for Ukraine. “Obviously life is getting worse for people, businessmen, and companies in Europe,” Peskov said. “Of course, ordinary people in these countries will have more and more questions for their leaders.”

One not so ordinary person was Matteo Salvini, the leader of Italy’s far-right League party, who said that Western sanctions against Russia are not working and actually harm Italy, and suggesting allied countries should reconsider their approach. Speaking at a conference of political leaders Sunday on Lake Como, Salvini claimed the sanctions meant to punish Moscow over its invasion of Ukraine had in fact helped Russia, resulting in an export surplus of $140 billion, during the year ending July 2022. “Do we have to defend Ukraine? Yes,” Salvini said. “But I would not want the sanctions to harm those who impose them more than those who are hit by them.”

Former Russian president Dmitry Medvedev was even more explicit than Peskov, and after German chancellor Olaf Scholz announced a €65bn aid package on Sunday to soften the blow of soaring energy bills, Medvedev, now deputy chair of Russia’s security council, said Germany was “acting as an enemy of Russia” by supporting sanctions against Moscow and supplying Ukraine with weapons. “They have declared hybrid war against Russia,” Medvedev wrote on Telegram. “And this old man acts surprised that the Germans have some little problems with gas.”

Of course, with neither side willing to ease back on its approach, moments after Russia’s comments, EU Commission president Ursula von der Leyen, twitted that “Putin is using energy as a weapon by cutting supply and manipulating our energy markets”, which of course he is doing in response to the west’s weaponization of currencies and capital flows.

Adding that “He will fail. Europe will prevail”, Van Der Leyen confirmed what we reported yesterday, namely that “the @EU_Commission is preparing proposals to help vulnerable households and businesses to cope with high energy prices” and aims to:

• Reduce electricity demand (peaks)
• Price cap on Russian pipeline gas
• Help vulnerable consumers & businesses with revenue from the energy sector
• Enable support to electricity producers facing liquidity challenges linked to volatility

The @EU_Commission proposal will aim to:

• Reduce electricity demand (peaks)
• Price cap on 🇷🇺 pipeline gas
• Help vulnerable consumers & businesses with revenue from the energy sector
• Enable support to electricity producers facing liquidity challenges linked to volatility

— Ursula von der Leyen (@vonderleyen) September 5, 2022

Will it work? Of course not, because Russia will never agree to sell to those imposing price caps (especially since China and India will never join), while ordinary Europeans will never agree to voluntarily sacrifice their own comfort without the knowledge that everyone else is also sharing in the burden. Which is why the announcement by French president Macron, calling for 10% reduction in country’s energy use to avoid rationing and cuts this winter, will achieve nothing at all and Europe will have no choice but to ration in a few months as the winter freeze arrives.

Authored by Mark Glennon, co-founder of Wirepoints.org,

Whodathunkit?  Taxpayer assistance to relieve the pain of government failure…

On Wednesday, Gov. JB Pritzker proudly announced a whopping $300 million of cash assistance for Illinoisans struggling with energy bills. “Every Illinoisan deserves access to reliable energy—regardless of their economic status,” Pritzker said in his press release.

That’s just the latest result of Illinois’ foundering energy policy but, first, note that the new program is for natural gas, propane and electricity (only about 10% of which is from renewable projects). Those are the very energy sources that Illinois is in the process of deliberately trying to destroy.

Illinois plans to have 50% of its electricity production from renewable sources by 2040 and 100% from clean energy sources by 2050. That’s under CEJA (Illinois’ Climate and Equitable Jobs Act), which became law last year and was correctly called by one of its sponsors “the most aggressive, most progressive climate bill in the nation.”

It’s all part of what two leading supporters openly call an “industrial policy.” That was in a Chicago Tribune op-ed last week by Kady McFadden, a former deputy director at Sierra Club “whose work was instrumental in passing” CEJA, and Ameya Pawar, a former Chicago alderman who was also active in forming Illinois’ energy policy.

The first “case in point” of what they call in their column a “thoughtful industrial policy” is the financial support Illinois taxpayers are providing to Illinois electric vehicle makers. Illinois last year set out to become the national leader in electric vehicles and their batteries with its Reimagining Electric Vehicles Act.

But reimagine this: The plan is failing.

Details are in a Crain’s report last week. “Pritzker’s vision of Illinois as an electric vehicle production hub is in danger of becoming a pipe dream,” Crain’s says. “Illinois still hasn’t landed a factory that produces the most valuable component of electric vehicles—the batteries that make them go.” Illinois is 0 for 18 in the competition for battery plants.

Crain’s identified another problem discouraging manufacturers of anything – not just EVs – from coming to Illinois: CEJA “is expected to drive up electricity costs, a major expense for manufacturers.” Historically, Illinois had comparatively inexpensive electricity thanks to market-based competition for the best sources. But policy now favoring more expensive renewable sources is turning into another disadvantage in the competition for investment and jobs.

Illinois consumers are already getting slammed. Roughly the southern two-thirds of Illinois has is seeing a 50% jump in electricity cost and is at “severe risk” of brownouts.

Defenders of CEJA are often saying that it isn’t to blame for rising costs. CEJA, they note, only became law last year and the shutdown of coal plants, which is causing much of the problem, was announced earlier.

That’s hardly convincing. Pritzker and the General Assembly put a target on the back of all fossil fuel plants long ago. He campaigned on a goal of 100% renewables and made it a priority upon taking office over three years ago. Even then, legislation had already set the impossible goal of 25% renewables by 2025. That goal was clearly an illusion and won’t be met.

On a more fundamental level, this isn’t complicated. Illinois simply does not have adequate capacity to deliver electricity reliably at a good price. Higher prices and brownout risk prove that. The government simply blew it with policies that we now know did not match capacity with demand.

The most frightening, new warnings of the consequences of naively aggressive green energy policy are from California and Europe.

California, which is right up with Illinois in green ambitions, this week issued an energy conservation emergency alert and is asking consumers to avoid charging EVs.

Most of Europe is in crisis. Companies large and small are cutting back or closing entirely due to high energy prices. People are hoarding firewood. The continent faces a true catastrophe this winter. Their problem is mostly caused by foolish reliance on natural gas from Russia, but green overoptimism has contributed.

Illinois’ energy policy still includes a complete moratorium on new nuclear plants, even though nuclear is making a “remarkable comeback” elsewhere in the world, as described here. Even climate alarmist National Public Radio reports that environmentalists are now embracing nuclear energy.

Such is Illinois’ “industrial policy” that its architects are so proud of.

You’d think they’d have chosen a better term. Even to those of us who aren’t free market purists, “industrial policy” has very derogatory connotations, and rightfully so. It means central planning and statism, which typically fail because the government is particularly bad at picking winners and losers or looking into the future. It’s better to let the private sector take the losses gambling on that, as some of us see things, and the private sector is more likely to get it right.

Industrial policies are also prone to the politics of the day. So it was with CEJA, which is jam-packed with social justice goals. In CEJA’s 956 pages, “equity” appears 114 times and “environmental justice” appears 86 times. It amounts to micro-management of Illinois’ energy sector by bureaucrats.

All that costs money. Lots of it. The total cost of CEJA has been estimated at more than $800 million annually plus another $1.2 billion annually in higher electricity rates. Estimates, however, vary widely, and nobody truly knows the full cost.

The lesson Illinois is learning is not that renewable energy sources have no place in a long-term solution. They do. It’s just that they aren’t remotely close to being ready enough, and the consequences of pretending otherwise are materializing faster than anybody expected.

“We will sell no wine before it’s time” was Orson Welles’ line in a commercial decades ago for Paul Masson wine. “We will rely on no technology before it’s time” should have been a cornerstone in Illinois’ energy policy. The consequences of that mistake are rapidly becoming apparent.

A federal judge on Monday granted former President Trump’s request for a third-party expert to review materials seized by the FBI from his Mar-a-Lago residence.

US District Judge Aileen Cannon, a Trump appointee, said in a Sunday ruling released on Monday that a so-called special master would review the seized property, manage assertions of privilege, as well as make recommendations regarding the investigative value of materials – and what property should be returned to Trump, Bloomberg reports.

BREAKING: Judge Aileen Cannon grants Trump’s request and orders the appointment of a special master to review questions over the materials seized at Mar-a-Lago. She also halts use of the materials for “criminal investigative purposes” pending the special master’s review. pic.twitter.com/VvDzIAzCSF

— Chris “Subscribe to Law Dork!” Geidner (@chrisgeidner) September 5, 2022

Details of the review process will be decided after both sides submit proposals.

As Jonathan Turley noted last week;

Such an appointment should have been done before the Justice Department reviewed the material. The Department sought a ridiculously broad search warrant and Magistrate Paul Reinhart simply signed off on the order without considering the wide array of privileged material that could be seized. It adopted language so broad that it was the legal version of Captain Jack Sparrow’s “Take what you can … Give nothing back.” It allowed the seizure of any box containing any document with any classification of any kind — and all boxes stored with that box. It also allowed the seizure of any writing from Trump’s presidency.

However, a special master could still serve the same interests of transparency and legitimacy. The special master could divide these documents in classified material, unclassified but defense information, and unclassified material outside of the scope of the alleged crimes. The last category would then be returned.

That accounting could also offer basic descriptive information on the material without revealing their precise content or titles. The special master could describe material as related to national defense or nuclear weapons (as was previously leaked government sources). The government has already leaked that there was nuclear weapons material being sought. Confirming such general details can be done without giving details on the specific information or even titles for the documents to protect national security. In national security cases, including cases where I have served as counsel, such indexes and summaries are common.

Once again, as with the release of the redacted affidavit, Garland could have taken these steps to assure the public that the Department was not acting for political or improper purposes — or using excessive means to achieve those goals. He has refused every opportunity to do so while chastising those who question the integrity of his Department.

The release of the redacted affidavit shows that what Garland and his Department told the public was untrue about the inability to release a redacted affidavit without endangering the case or national security. As discussed yesterday, the redacted affidavit confirmed various key points on the legal and factual background. After opposing the release of even a single line, the government released whole pages that were manifestly suitable for public disclosure.

Once again, Garland waited to be forced to take this step rather than act on his own to address widespread concerns. His department has a documented history of officials misleading courts and filing false material in Trump-related investigations. This is yet another example of how Attorney General Garland has done little to earn the trust of almost half of the country. In this and other controversies, he has demanded respect but refused to take even modest measures to justify it.