Pipelines, Italy, and Economic Crises: Last Week in Liberty 10/2/22
Ladies and gentlemen, welcome back to Last Week in Liberty, where we go over the news of the past week from a Liberty-minded perspective. Big news this week, so let’s jump right in:
On September 28, it was discovered that a leak had erupted in the Nord Stream Pipelines, which carries natural gas from Russia to Germany. The pipeline was not currently in operation, and had not been actually transporting any gas at the time of the leak, although there was still gas within the pipes which leaked out into the ocean. In response to this incident, Russia called for a meeting of the UN Security Counsil to discuss and investigate what had happened.
The million-dollar question is, of course, who is responsible for the leak? First, we must rule out any naturally-occuring damage. These pipelines were built to last, and all experts and officials (including Biden) are claiming it as sabotage. There is virtually no chance that this was naturally occuring. Well, who did it then? Naturally, the U.S. has blamed Russia for the destruction, and Russia has responded by blaming the U.S. But who really has the motive, means, and opportunity here?
Biden stated before the invasion of Ukraine by Russia that if Russia invaded, it would mean the end of the Nord Stream 2 pipeline. When asked how exactly he would do that, considering that the project is handled by Germany and Russia, he stated, “I promise you, we will be able to do that”.
Russia operates the Nord Stream pipelines, so they can already turn off the gas to Germany any time they wanted. Nord Stream 2 was never active, but flow of the operational Nord Stream 1 had already been cut in August. Why would they feel the need to blow up the pipeline if they already control its flow?
Russia had invested large amounts of resources into building both Nord Stream 1 and 2. Why would they just turn around and blow up their own pipelines after sinking so much money into them?
Without access to Nord Stream for natural gas, where would Germany - as well as Europe as a whole - have to turn to? Why, the United States of course! Awefully convenient for someone who wanted Europe to pivot away from reliance on Russian energy. The age-old question of cui bono seems particularly revelant here.
If Russia did actually want to destroy the pipeline (for some reason) to use as leverage against Europe, why would they keep that a secret? Wouldn’t they want everyone to know that they were the ones responsible and that these are the consequences of crossing them? Wouldn’t keeping it a secret defeat the entire point of blowing the pipeline in the first place?
Russia seems to have little incentive in blowing up their own pipelines, but let’s not box ourselves into a false choice. It might not be the U.S. is the guilty party either. According to German newspaper Der Spigel, the German government had been warned over the summer of the possibility of a Ukrainian attack on the Nord Stream pipelines. Could it be the Ukranians that did it? I find it difficult to believe that they would act so brazenly without U.S. support or approval, but its a possibility. In any case, more details will be forthcoming in the days and weeks ahead, so we will see where this story goes from here. As for me, I think it was Professor Plum in the Library with a Butter Knife.
The energy crisis in Europe continues to loom heavy over the continent. Energy prices all across the EuroZone have skyrocketed, which has fed into rising inflation. All of this was bad enough during the spring and summer, but as they say in Westeros, winter is coming. With winter will come even more hardships and difficult choices as Europeans are forced to choose between energy and other necessities of life.
Reports are already coming out of Germany of people turning to wood as a source of heat, a trend that will likely increase in the coming months. Germany is turning back to burning ol’ king coal, which they had committed to phasing out completely over the next two decades. Other countries will have to make similar decisions to how to make up for the lack of availability in natural gas. No matter what, it seems like this will be a uniquely difficult winter for the entire continent. For any European readers, my sympathies are with you. I will light a bunson burner tonight in your honor.
In related news, Italy has a new prime minister. On Septmber 26, Giorgia Miloni was confirmed as the winner of Italy’s prime minister election, becoming the first woman ever to be elected to the office. She is also a literal fascist - or so some twitter blue-checkmarks and outrageous headlines would have you believe. While she is undenaibly very right-wing, there is no good reason to call her a “fascist” or anything of the sort. She won because her message, one of conservative values and skepticism of globalism, is one that many of the older voters of Italy resonate with, not because there was some overnight ressurenge of fascism or some such nonsense.
Meloni is part-in-parcel of a larger trend in Europe, one which nationalism and populism are intertwined in a right-leaning message aimed at regular people. In a lot of ways, its a message similar to the one that Donald Trump gave to the American people. Importantly, Meloni also ran on supporting Ukraine, but ending the sanctions against Russia. With the rising energy prices we discussed above, one can wonder if this was a key issue for Italian voters. If Meloni makes good on this promise, then it could be problematic for the united front that the EU has maintained against Russia. If Italy can go back to buying Russian gas, why can’t Germany do so as well? That Jenga tower seems awfully fragile, and Italy could be the block that brings it all down.
Regardless, right-wing populism seems to a be a recipe for finding electoral success in Europe. Viktor Orban has wielded it effectively in Hungary, Marine le Pen survived all the way to the final round against Emmanuel Macron in France, and Meloni won with that message in Italy. Will we see more of this flavor of right-wing rheotric in the future from European conservatives? My money is on yes. Trump forever changed American politics, but it looks like he might have changed European politics as well. However you feel about the man, he is nothing if not influential.
In other news, the U.S. economy is in pretty rough shape. First off, the housing market has recorded its first month of falling prices since 2012. This was going to come sooner or later, as nearly every housing related metric (new housing starts, housing sales, mortgage rates, etc.) have all been bearish for several months now. Seeing as how we are just coming off of record-high housing prices, it seems as if this might be the popping of a housing bubble. That is bad news for anyone that just bought a home, especially those who were late enough to the party to miss the cheap mortgages.
Aside from just the housing sector, recent declines in the stock market have wiped out $9 trillion dollars of wealth. While this obviously hurts the billionaries, bankers, and Wall Street finance frat bros, it also hurts the average American and their 401k. Most major stock indexes are now down at least 20% on the year, which officially marks the current decline as a bear market. Unfortunately, this is probably only the beginning of the crash. Stocks could still have a long way to fall if the underlying economy continues to weaken and collapse.
Our old friend inflation is still around as well, and still eating into the purchasing power of the dollar, making it more difficult for people to afford daily necessities. CNBC reports that a shocking 70% of Americans are looking for extra work to help fight inflation. Thats over 2/3rds of all working adults. Extra hours spent working means lost leisure and free time that would have been enjoyed on weeknights and weekends, but it also means less time spent with one’s spouse and children. Hopefully, this will only be a temporary measure for most, but if the economy collapses in the near-future, these temporary extra hours might turn into permanent sources of income needed to make ends meet. In an age where many households arelready have both parents working, the prospect of even more hours spent at work could have dire social and cultural consequences as families spend even less time with each other.
A few links from the past week that I found interesting, and you might as well:
An article from AIER on the short-sightedness of antitrust laws.
Stanislav Petrov day was last week, celebrating the man who single-handedly prevented a nuclear apocalpyse.
The forgotten disaster of Obama’s efforts to erase child hunger.
Because we live in a clown world, Medeline Albright and Condoleeze Rice have a MasterClass on Diplomacy.
Quote of the Week: “Morality ends where a gun begins” - Ayn Rand
That’s all for this week friends. We’ll be back next week, same bat-time, same bat-channel.
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