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Europe is facing a potential “Lehman Brothers” event as energy companies face $1.5 trillion in margin calls, per Bloomberg.

Calling that a "Lehman Brothers" event is mostly comparing the margin call. The event as a whole is more like a banking crisis.

I wonder if traders are currently anticipating adequate governmental intervention? Looks like Equinar is only down 6.65%.

If I'm understanding this correctly, this looks like it's a problem caused by derivative paper trading, more-so than the actual physical side.

Doctor Steuss wrote: ↑

Tue Sep 06, 2022 11:14 pm

I wonder if traders are currently anticipating adequate governmental intervention? Looks like Equinar is only down 6.65%.

If I'm understanding this correctly, this looks like it's a problem caused by derivative paper trading, more-so than the actual physical side.

Honestly, I do not think Bloomberg is the trusted leader in news, if you know what I am saying. They were better at data access than actual news. Great way to see a trade and a terrible way to find out what one was trading.

I understand that the hedges that were put in place could not, and did not, account for the sanction effects. Whether they misjudged the volumes, deliverable dates or mixed up the spreads and straddles that can help with commodities, I have no idea. But, I do not know that a disruption of that magnitude would be devastating to our markets and companies as well.

The sanctions are painful for Europe. Losing Russian gas will continue to take its toll, continuing to pressure industry and the Euro. They are forced to print paper in order to cover high commodity prices. Eventually, that has to take its toll on the currency. https://www.macrotrends.net/2548/euro-d ... ical-chart

Also, German industry is coming to a halt due to high gas prices. https://www.ft.com/content/d0d46712-623 ... 4a00dd0ca9

Putin shut off all gas supplies to Europe: https://www.telegraph.co.uk/business/20 ... -gas-euro/

Slava Ukraini is great and all until bankruptcy forces a change in mindset. I think once the reality of a cold winter sets in, perhaps the Germans will remember WWII and how two forces pressuring them from the east and west ended in disaster. I wonder how Biden and his British counterparts will react when Germany blinks and separately negotiates with Russia?

Cue the dueling banjos as the Right starts blaming Biden.

Dr Exiled wrote: ↑

Wed Sep 07, 2022 12:19 am

The sanctions are painful for Europe. Losing Russian gas will continue to take its toll, continuing to pressure industry and the Euro. They are forced to print paper in order to cover high commodity prices. Eventually, that has to take its toll on the currency. https://www.macrotrends.net/2548/euro-d ... ical-chart

Also, German industry is coming to a halt due to high gas prices. https://www.ft.com/content/d0d46712-623 ... 4a00dd0ca9

Putin shut off all gas supplies to Europe: https://www.telegraph.co.uk/business/20 ... -gas-euro/

Slava Ukraini is great and all until bankruptcy forces a change in mindset. I think once the reality of a cold winter sets in, perhaps the Germans will remember WWII and how two forces pressuring them from the east and west ended in disaster. I wonder how Biden and his British counterparts will react when Germany blinks and separately negotiates with Russia?

Dr Exiled, why do you describe that as a blink? Do you think that is a betrayal to NATO or Ukraine? At some point, they are going to need the commodity. They can't bring it in from the sea.

Binger wrote: ↑

Wed Sep 07, 2022 12:23 am

Dr Exiled wrote: ↑

Wed Sep 07, 2022 12:19 am

The sanctions are painful for Europe. Losing Russian gas will continue to take its toll, continuing to pressure industry and the Euro. They are forced to print paper in order to cover high commodity prices. Eventually, that has to take its toll on the currency. https://www.macrotrends.net/2548/euro-d ... ical-chart

Also, German industry is coming to a halt due to high gas prices. https://www.ft.com/content/d0d46712-623 ... 4a00dd0ca9

Putin shut off all gas supplies to Europe: https://www.telegraph.co.uk/business/20 ... -gas-euro/

Slava Ukraini is great and all until bankruptcy forces a change in mindset. I think once the reality of a cold winter sets in, perhaps the Germans will remember WWII and how two forces pressuring them from the east and west ended in disaster. I wonder how Biden and his British counterparts will react when Germany blinks and separately negotiates with Russia?

Dr Exiled, why do you describe that as a blink? Do you think that is a betrayal to NATO or Ukraine? At some point, they are going to need the commodity. They can't bring it in from the sea.

There is a coalition for Ukraine against Russia with the US leading it under the NATO banner. Europe and Germany, the leader of the EU, suffers economically as a result. The sanctions are harming the EU more than they are Russia. This is clear. German industry depends on Russian gas to function and the pain will be real as time goes on. German industry cannot continue with high gas prices and so I believe that instead of bankruptcy, the Germans will opt to negotiate with Russia. Also, it may be a long winter and the resolve of Slava Ukraini may suffer when the reality of a cold winter is all to real. Currently, the German leaders are towing the line but that will probably change as the pressure mounts on industry and the population.

I was curious how much Germany depends on Russian gas, and according to Reuters, it's about 1/3. Holy smokes. I can't even begin to wrap my head around that. That kind of cut in supply would absolutely cripple the US.

Reuters Link

I wonder if they had the foresight at all to do what the Netherlands did, and stockpile just in case in order to make it through the winter.

Doctor Steuss wrote: ↑

Wed Sep 07, 2022 3:21 pm

I was curious how much Germany depends on Russian gas, and according to Reuters, it's about 1/3. Holy smokes. I can't even begin to wrap my head around that. That kind of cut in supply would absolutely cripple the US.

Reuters Link

I wonder if they had the foresight at all to do what the Netherlands did, and stockpile just in case in order to make it through the winter.

Cutting the winter supply by 5 percent would cripple the US and lead to political upheaval, possibly instability.

Europe is taking a bullet for US politics. This is not going to end well.

To make things even more confusing (to me, that is), Dutch TTF Natural Gas contracts have dropped from their all-time high of $95.74 on 8/25, to $69.84 (as of this moment). With the gas lines being closed off from Russia, I would think the cost would be rising. Unless the Dutch have signaled their are keeping what they have for themselves(?)

As a crazy reference point. Prior to the invasion, it usually averaged between $1-$2.