What the heck does Europe have to do with policy? It offers a lesson and if we pay attention, even a little, we might learn something and avoid the pain they will endure in the coming months. Its energy policy is reliant on Russian energy. It sanctioned Russia for its actions towards Ukraine. The effort here is not to take sides whether Russia should have invaded Ukraine or not, but to focus on Europe’s response.

It was stupid.

This does not suggest or ignore the pain and misery of the Ukrainians, but again must focus on Europe’s response. Specifically, the repercussions of its response. It is now in an energy dilemma; it does not have enough without Russia’s supply. Russia is doing just fine since the Chinese will buy as much as they will sell them. Everyone knew this. None of this is a surprise, but yet, here we are.

The citizenry will pay the price.

In this case this price is not only higher energy costs, but the reverberation of inflation throughout almost all goods and services. These inflationary costs will have another affect, it will destroy business. Not big business who have the resources and banker relations to weather a lengthy inflation storm, and its corresponding repercussions, but small AND medium businesses who have barely survived recent government attempts to destroy them with draconian Covid lockdowns measures. Many did not survive and some had a glimmer of hope that they may one day resurrect their businesses.

This new economic malaise has dashed those hopes.

This new inflationary environment, and specifically the energy problem, are not a natural disaster, it isn’t the result of a storm or an unknown pattern emerging out of the blue. For the most part, it is cause and effect. Some of it has been building for many years (arguably decades) as government debt and spending continue unabated. Economists, at least some, have warned of the pending problem. Other people, not economists, have warned the policies of the United States, and other countries, would eventually cause dire straits.

People ignored them.

This time it will be different. The pain and suffering will be extensive and the stock market will not rebound. Buy the dip will no longer work as it has for the last fifteen (and longer) years. Eventually, stock buying will again go back to fundamentals and business, eventually, will come back slowly. Hopefully the wiser, but time will tell. Blame will continue to be cast from both sides of the aisle to the other, but in fact, both sides are to blame. Neither has made any attempt to solve the policy issues that confront our nation. The real blame belongs to the American people. Without our help, they never could have created this mess.

The Bear market has begun.

Categorized as Policy

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