Perfect economic storm

No often in political events does punishment follow crime so quickly. Washington and Europe foreign and domestic policy blunders combines to produce the worst drop in real salaries on record as well as the least public support for the US President economic Policy or the UK incompetent leadership of Boris Johnson or the European Union representatives role as devote followers of US economic and military policies .

Reports that consumer prices rising above 9% year on year as of June means a drop in inflation adjusted weekly earring of nearly 4% worse Han in the depths of the 2008/2009 Great Recession. Taking into account underreported inflation in shelter, the actual inflation rate is closer to 11% and the real drop in earnings to about 7% .

That implies a political implosion for the Bien administration the EU 27 Leadership and the UK inept blunders, Biden himself faces an 83% disapproval rating for its economic perfomance. Similar ratings have been conducted in European Leaders whereby the population did disapprove their leaders economic handling and the supply of weapons to Ukraine. By contrast , Jimmy Carter at the peak of the Great Inflation of the 1970s had a 78% negative rating for economic performance.

Inflation was already roaring in February when Oil traded at $ 88 a barrel, before US and European sanctions on Russian oil raised the price paid by by US and European consu,ears. Russia continues to export to India, China and others at discounts of more than $30 a Barrel, that is a at roughly the prevailing price before the Ukrainian war.

The Sanctions didn’t slow Russia, but they clobbered Western consumers.

Private surveys by Zillow and Apartmentlist show rental inflation running at around 16% year /on year , and an accumulated rate of 15% during the month of May. The US Government says that shelter inflation is just 5.5% over the pst year, similar data given by the EU 27 and the UK but it does not reflect reality. The surveys reflect new leases rather than the average pad by renters, but the average will catch up over the next two years, keeping inflation elevated.

Apart from rent, items that households have to buy, including food and fuel, showed much bigger jumps, Gasoline is up by nearly 50% and food by more than 10%.

The sanctions/driven oil shortage compounded a supply squeeze that began as soon as the Biden administration took office and stopped selling Oil exploration leases for Federal Lands. Beholden to its progressive , environmentally friendly woke constituency, the White House, The EU 27 and the UK discouraged traditional Hydrocarbon development, reducing US & EU Oil Supply by around 20% from the January 2020 peak.

Shriking investments in Hydrocarbon is the most pronounced feature of a deteriorating American and Western Europe *ＥＵ+ UK * Investment profile.

In real Dollars , orders for industrial machinery from American manufacturers are roughly 70% below the peak registered 22 years ago in 2000, and about 30% below the level of 2007 *Financiers crisis*. Even orders for electrical machinery *Including computers* have fallen by about 10% since the historic peak. Similar figures and even worse have bee reported in the EU27 and in the UK already in recession .

US Inflation and the European counterpart is first of all a supply side problem. There isn’t enough industrial mining capacity to meet Tsunami of demand unleashed by the $6 Trillion in Federal Stimulus paid out during the Covid Pandemic. Similarly and as a copy of the US the EU 27 stimulus of €750 Billion or the UK 30 Billion Sterling cańt meet with the demand of an economy at a standstill during the two years of Covid 19. These stimulus bills actually produced the contrary of too much liquidity in the market and not enough industrila of mining capacity to absorb.

Secondary, US and EU inflation is a byproduct of a foreign policy gone like a boomerang, The Biden Administration, NATO and European Allies set out to crush the Russian economy. Russia is hurting but so are Europe and the United States, as well as most of the developing world.

Public opinion not taken seriously by US and Western Governments and whilst all of us are asked to tighten our belt due to the energy costs and inflation , public spending on Weapons has not decreased but increased further .

In addition to these the incorporation of very poor countries to the European Union of 27 ad to NATO will diminish European Community citizens welfare and prosperity.

The Ukraine war and Western sanctions produced a spike in energy and food prices that reduces the real incomes of Western consumers and pushes many of the worlds poorest into actual starvation.

One of the best earl warning signals for future inflation i s given normally by the Philadelphia Federal Reserve survey of Non manufacturing business. As of the end of May, a record 73% of respondents reported higher input prices. Similar data reported by the EU 27 and Britain.

So far the World Central Banks only responses have been to encourage raising interested rates and all in the western economies have one so. That won’t help, the problem is lack of investment no debt or loans. Higher interest rates simply increase the cost of investment.

Eventually , higher rates might produce a recession *If we are not already in it *. Recession id deflationary and we use remember the lesson of the 1990s Def;action period in Japan economy which lasted for more than 20 years. In the long term though, that will only make the supply quite worse , because recession will crush capital investment and deflation will stop completely consumer spending.

Welcome to reality, welcome to the new world and the new world order, what we believed only six months ago to be the beginning of Environmentally friendly policies worldwide has now become a nightmare. Countries like Germany, Austria , Netherlands, UK and others are going back to Coal Powdered Power Stations, re opening Coal mines as a substitute for Gas ad Petrol shortages for electricity generation and prepared for next cold Autumn and Winter season.