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What Putin is doing is extortion, and he will not succeed (Opinion)

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What Putin is doing is extortion, and he will not succeed (Opinion)

Editor’s note: CNN correspondent David A. Andelman, two-time Dealine Club Award winner, French Légion d’honneur, author of Red Line in the Sand: Diplomacy, Strategy, and a History of Wars That Can Still Happen, and blogging. Previously, he was a correspondent for The New York Times and CBS News in Europe and Asia. The opinions expressed in this comment are those of the author alone.

Vladimir Putin is doing everything possible against the stronghold of Europe. This is the only way to view comments made on Monday by Kremlin spokesman Dmitry Peskov that Russian natural gas will not flow back through the massive Nord Stream 1 gas pipeline until the West lifts sanctions against Russia. This latest move “significantly increased the risk that Europe will not receive more gas from Nord Stream 1 all winter,” analysts at energy consultancy Rystad Energy said in a report cited by CNBC.

There is no other name for this than extortion. This is a bad idea in the short term for Europe and in the long term for Russia.

The West imposed sanctions on Moscow after Putin’s troops invaded Ukraine in February. Putin, of course, never knew how to play in the long run. However, his short game did not end the pain and suffering. This is certainly the case in Europe. But for a number of reasons, Europe and the West must be firm and united. This is the only real way to deal with a bully.

Europe reacted quickly and decisively. Even before Peskov’s speech, most of the continent had begun to implement measures to soften the blows of cuts already underway, rising energy prices and inflationary impacts affecting millions. The front page of the French newspaper Le Monde on Monday carried the headline “The Price of Energy: The Mobilization of European States.” Eurozone inflation is at 9.1%, more than four times the 2% target, and a Reuters poll suggests the continent is “almost certainly headed for a recession.”

However, at a meeting on Monday of oil ministers from major OPEC countries, as well as other major oil producers, including Russia, it was decided to reduce production targets by a relatively small – but not negligible – amount than 100,000 barrels. day. The decision was the exact opposite of OPEC’s promise to increase production by that amount after the controversial presidential summit. [dos EUA] Joe Biden with Crown Prince Mohammed bin Salman at Al Salam Royal Palace in July. The meeting was a bad idea, now it’s even worse. Within minutes, OPEC’s actions on Monday led to a 3% increase in oil prices on world markets.

To address these issues, from rising energy prices to skyrocketing inflation, several countries have begun to take drastic measures. On Sunday, the federal government in Berlin announced a $65 billion plan to help German families. New British Prime Minister Liz Truss is considering a similar bailout plan likely to top £100bn (€115bn), Treasury sources told The Sunday Times.

At a meeting of European energy ministers on September 9, a discussion of a plan to cap natural gas prices on the continent will be presented. And the G7 energy ministers agreed from December to impose a ceiling on the price of Russian oil and oil products, designed to cut the Kremlin’s revenues and weaken Russia’s financial footing, while still allowing its oil to continue to supply global markets.

Also on Monday, the leaders of the continent’s two pillars, French President Emmanuel Macron and German Chancellor Olaf Scholz, held a video conference to discuss energy issues. At a press conference after the meeting, Macron told reporters that they had reached an agreement: France would supply Germany with excess gas, and in return Germany would supply France with the electricity it produced. Macron also called on the people of France to cut their energy consumption by 10%. Reductions or rationing would be “only a last resort,” he said.

But the pain is unlikely to subside anytime soon. The euro fell to a 20-year low against the dollar on Monday following Peskov’s words. The European Central Bank was already considering a sharp 75 basis point rate hike at the continental level at Thursday’s meeting, reflecting the path the US Federal Reserve has been on for months. “Dramatic change,” as the London Financial Times put it. “There are no more doves at the ECB, only hawks,” Katharina Utermeul, senior European economist at German insurance company Allianz, told the FT. The bank may even start cutting its securities balance sheet by 9 billion euros.

Europe has other alternatives, although they are certainly less attractive and less efficient. Soviet-era gas pipelines still carry an uninterrupted flow of natural gas through Ukraine, despite Russian incursion and objections from Ukrainian leaders through Turkey. Increasing the supply of oil from oil wells in the North Sea, controlled by Norway and the UK, could help Europe hold out, perhaps until a time, perhaps, when reason can return to the Kremlin. But re-drilling in the North Sea could prove highly controversial due to long-standing environmental concerns.

It’s certainly a price worth paying, but the pain will be severe and there are already rumors of failures. Matteo Salvini, leader of Italy’s far-right party, said over the weekend that the sanctions had indeed helped Russia accumulate a $140 billion in payments surplus, hurting the country’s economy in Europe, especially in Italy. “I would not want sanctions to cause more harm to those who impose them than to those who are affected,” Salvini said. According to a Politico poll, Salvini’s League is forming a coalition with other Italian right-wing parties that are holding a significant lead ahead of the September 25 national elections.

Accordingly, Ukraine and much of official Europe are resisting calls for sanctions to be lifted. President of Ukraine Volodymyr Zelensky in a telephone conversation with the head of the European Commission Ursula von der Leyen called on Europe to further tighten the screws against Russia with a new package of sanctions.

Strong will is needed in elections, ministries and parliaments across the continent. Putin has significant support in some still isolated sectors. On the part of the West, there should be an equally deep understanding of how high the cost of any compromise in the face of Russian bluster.

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Economy

Home loan: Interest rates have already risen more than in the 2008 crisis See how far they can go

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Home loan: Interest rates have already risen more than in the 2008 crisis See how far they can go

Installments will increase sharply from next week, when October begins. Interest rates are rising rapidly to 3% and the OECD already allows rates at 4%. This is TVI’s new weekly feature, “People Are Not Numbers.”

Do you have a home loan? So get ready: October will be the first month you’ll experience a significant increase in mortgage payments.

Nearly 19 out of 20 mortgages in Portugal have variable interest rates, with payments being reviewed every three, six or 12 months according to the contract index. However, the update is based on the average Euribor for the previous month. And September was the first month when the average Euribor was much higher. That’s why the big effects start in October. Next week.

The six-month Euribor (most used in Portugal) is about two percentage points higher than it was six months ago in March. And the 12-month Euribor (the second most used) is almost 2.5 percentage points from what it was a year ago.

Hence the simulations. For example, for a loan of 150 thousand euros for 30 years, indexed to Euribor for 6 months, the installment will increase by 141 euros, from 454 to 595 euros. In the same example, but with indexation to Euribor for 12 months, it is worse: the increase in October, that the installment plan will be revised, will be 194 euros.

21 more years to pay

More than 1.43 million Portuguese families owe a total of more than 100 billion euros in mortgage loans. And on average, it takes about 21 years to repay a loan.

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This means that only with the currently confirmed increase in the Euribor rate, Portuguese families will pay at least another two billion euros per year.

What is the average performance?

But how much do the Portuguese owe today and how much do they pay?

On average, each Portuguese with a mortgage loan owes the bank about 60,000 euros and pays 268 euros per month. These people will pay about 100 euros more per month.

But if you look at who bought a house in the last three months, and the most expensive houses, then the average debt is 128 thousand euros, and the monthly payment is 445 euros. Benefit, which will increase to about 200 euros per month.

And in the future? Adults without time and younger without money

In the future, it will be more difficult to buy a house on credit. For three reasons:

Firstly, because the loan is more expensive, so the installment plan will put more pressure on the family income. And this will force the banks themselves to say “no” more often, rejecting offers from customers who want to buy a house.

Secondly, because older people have less time. From April 1, the Bank of Portugal introduced new age rules, which in practice reduce the loan repayment period from 40 to 30 years. And that means higher monthly payments. Only up to 30 years old can get a 40-year loan. The problem is that…

… Thirdly, the younger one has no money. Housing is one of the biggest problems for young people and even one of the reasons why young people do not leave their parents’ homes.

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Portugal is indeed a European Union country where young people leave home later, at an average age of 33 years and 7 months (women leave later than men). This is almost seven years later than the EU average, and, for example, almost 15 years later than the Swedes.

Interest rates will continue to rise?

You can remove the question mark: interest rates will continue to rise. Yesterday, the ECB signaled that it would raise interest rates again in October by at least another 0.5 percentage points, and it does not stop there. For this reason, the Euribor (which has now already exceeded 2.5% in 12 months when it was negative a year ago) is rapidly approaching 3%.

Worse, in a report released yesterday, the OECD made an assessment that went unnoticed: it already allows central bank interest rates at 4%.

Yes, rates will go up.

Euribor has already risen more than the financial crisis

This is another aspect that has gone unnoticed. Many people ask if Euribor will be able to reach the record set in October 2008, at the height of the financial crisis, when it exceeded 5.5%. Everything will depend on the evolution of inflation, but even the pessimism of the OECD does not indicate such high values.

It turns out that not the value of Euribor, but its growth this year is already greater than in 2008. That year, the Euribor rose from February to September by about 1.1 percentage points, from about 4.2% to 5.5%.

This year, the 12-month Euribor, for example, rose from a negative 0.4% in early February to over 2.5% in early October.

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So installments are not as expensive as they were then, but they have more than doubled from the year that banks like Lehman Brothers or, in Portugal, BPN and BPP collapsed.

This analysis is carried out in a new feature called “People are not numbers”, which will be broadcast every Tuesday on the TVI program Jornal das 8.

Note. Cited sources of information

Bank of Portugal

Credit Market Monitoring Report

Interest rates and amounts of new loans and deposits: statistical information for July 2022

Non-financial sector debt

Amounts-Credits-Private UM-housing-M€ (new operations)

INE

Mortgage Interest Rates – August

interest rates

Evribor

ECB key rates

OECD

Economic Outlook Interim Report September 2022: Payback for War

Eurostat

Leaving home: young Europeans spread their wings

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Economy

House valuations fell by three euros, and the number of orders fell in three months | Frame

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House valuations fell by three euros, and the number of orders fell in three months |  Frame

The average value of the bank’s valuation in August was 1414 euros, which is three euros less than in the previous month, which indicates a slight slowdown in the value of houses in the context of new loans. This sign is accompanied by two other signs of slowdown, one is the year-on-year growth of 15.8%, down from the 16.1% recorded in June, and the other is the number of evaluation requests that have bounced back. the fall.

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Economy

The Lightyear 0 continues to break records and become the most aerodynamic car in the world…and it’s powered by solar energy.

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The Lightyear 0 continues to break records and become the most aerodynamic car in the world...and it's powered by solar energy.

The Lightyear 0 never ceases to amaze: in tests conducted in Germany under the WLTP homologation cycle, the electric car, which can also be powered by solar energy, scored 0.175, the lowest score of any production car in history. But this is not an absolute record.

Lighter assured that the result is surprising even for engineers who expected a value of about 0.19. Ario Van der Ham, the company’s technical director, admitted: “We are very proud of this result. We started from scratch when we began to study the machine and its technologies. We’ve put a lot of effort into this.”

The Lightyear 0 managed to beat the previous record set by the 1996 GM EV1, which was 0.19. For example, the two most aerodynamic cars sold today are the Mercedes EQS and Tesla Model S, with claimed values ​​of 0.20 and 0.208, respectively.

However, if we also take concept cars into account, the Lightyear 0 is not the most aerodynamic car – the Mercedes Vision EQXX, introduced this year, scored 0.17 points, while the JCB Dieselmax, a prototype built to set the speed record in category of diesel vehicles. , it had a coefficient of 0.147.

946 examples of the electric sedan were produced, just over 5 meters long, capable of covering almost 625 km on the WLTP cycle thanks to a 60 kWh battery, a 170 hp electric motor. and solar power, which on its own, according to the Dutch manufacturer, it can travel up to 70 km a day.

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With a base price of 250 to 300 thousand euros, this model is clearly beyond the reach of any budget. However, after 0, Lightyear is already working on a more affordable entry-level model, which has a list price of around 30,000 euros and is scheduled to launch in 2026.

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