WEBVTT - The Fall 0:00:03.760 --> 0:00:07.440 Welcome to Bloomberg Opinion. I'm Vonnie Quinn this week. Right now, 0:00:07.680 --> 0:00:11.320 it doesn't look like anyone has the initiative. Neither side 0:00:11.400 --> 0:00:14.320 is strong enough to push the other, and so in 0:00:14.440 --> 0:00:18.639 this salemate situation you need some extraordinary slate of hand 0:00:18.680 --> 0:00:21.400 to the clear victory. Leonin Burschitski on six months of 0:00:21.480 --> 0:00:23.840 Russia's war on Ukraine, as the U. S And Germany 0:00:23.880 --> 0:00:26.680 are among countries preparing to send more aid, ammunition and 0:00:26.800 --> 0:00:31.400 weaponry before Wednesday's Independence day. Later in Germany, we need 0:00:31.440 --> 0:00:34.280 to declare essentially a war economy, and I think it 0:00:34.360 --> 0:00:37.559 will come down to rationally and Asclute from Berlin on 0:00:37.600 --> 0:00:41.640 Germany's energy emergency. First, though, all market attention is directed 0:00:41.640 --> 0:00:44.440 this weekend towards Jackson Hole and the annual Kansas City 0:00:44.479 --> 0:00:48.000 FED Symposium, the opportunity for Fed Cherry J. Powell to 0:00:48.040 --> 0:00:51.440 address markets between July's f OMC meeting and September's meeting. 0:00:51.600 --> 0:00:55.080 We're with Bloomberg Opinions Jonathan Livin, So, Jonathan, the Fed 0:00:55.160 --> 0:00:58.880 Cherry's speech from Jackson Hole continues the pandemic trend, although 0:00:58.920 --> 0:01:02.280 it breaks from pre pandemic norms. Interestingly, well, I think 0:01:02.280 --> 0:01:04.800 it reflects the time that we're in, right, I mean, 0:01:05.040 --> 0:01:08.840 never in recent economic history, at least since the nineties 0:01:09.000 --> 0:01:13.000 I think, has the monetary policy narrative been as important 0:01:13.040 --> 0:01:16.000 as it is right now. This is the driver, right, 0:01:16.120 --> 0:01:20.120 the evolution of inflation and what the Federal Reserve is 0:01:20.160 --> 0:01:22.959 going to do about it is going to be the 0:01:23.160 --> 0:01:25.920 driver for global markets in the next twelve months. So 0:01:25.959 --> 0:01:29.720 you can understand the heightened interest. History shows that nobody 0:01:29.800 --> 0:01:33.560 has ever particularly hawkish in Jackson Hole. You know, I 0:01:33.920 --> 0:01:36.800 looked at the history. I'm working on a project and 0:01:36.840 --> 0:01:41.600 going through market reactions for the last ten Jackson Hole speeches, 0:01:42.160 --> 0:01:47.440 and the biggest market sell off came in. You know, 0:01:47.520 --> 0:01:50.640 the market was off two point six percent on the day, 0:01:50.960 --> 0:01:52.760 and it wasn't even the said that did it. It 0:01:52.800 --> 0:01:55.520 was Trump because you often remember that Trump came in 0:01:55.800 --> 0:01:59.240 and stole the show with the China trade war talk. 0:01:59.680 --> 0:02:03.880 So there seems to be a historical pattern where FED 0:02:03.960 --> 0:02:07.400 chairs for whatever reason, seemed to tiptoe around this event. 0:02:07.480 --> 0:02:11.240 So that this fire and brimstone idea I think is 0:02:11.280 --> 0:02:14.040 off space. As you point out as well, FED fund 0:02:14.200 --> 0:02:16.600 futures have gone from pricing in a December peak around 0:02:16.639 --> 0:02:18.920 three and a quarter percent to pricing in a March 0:02:18.960 --> 0:02:21.959 peak around three and three quarters percent, with Cotson not 0:02:22.120 --> 0:02:26.000 until the later part of three. Does that seem reasonable? 0:02:26.160 --> 0:02:28.560 John Taylor of the Taylor Rule Of course, Stanford told 0:02:28.600 --> 0:02:31.440 us this week he sees the terminal rate at five percent. 0:02:31.840 --> 0:02:34.000 I say five percent as where we should name. And 0:02:34.080 --> 0:02:37.000 that is not high by historical standard, that's for sure. 0:02:37.200 --> 0:02:39.200 Remember what it was in the seven Will it be 0:02:39.360 --> 0:02:42.639 enough March peak of three and three quarters percent? Yeah, 0:02:42.680 --> 0:02:45.920 I think that the market pricing is totally within the 0:02:45.960 --> 0:02:49.320 realm of possibility right now. And I was not there 0:02:49.400 --> 0:02:53.000 maybe three months ago, certainly not certainly not six months ago. 0:02:53.280 --> 0:02:56.480 But this feels plausible. You can disagree a little bit 0:02:56.480 --> 0:02:58.240 to the upside, you can disagree a little bit to 0:02:58.280 --> 0:03:01.320 the downside. You know, the house view of Bloomberg Economics 0:03:01.560 --> 0:03:04.760 is at the terminal rate needs to go to five percent. 0:03:05.080 --> 0:03:07.320 I think that, you know, our economist Dan A. Long 0:03:07.440 --> 0:03:11.560 has some really interesting rationale. They're talking about the labor market. 0:03:11.800 --> 0:03:15.200 But this at least fuels sort of plausible as sort 0:03:15.240 --> 0:03:19.919 of a consensus or average of the distribution of views. 0:03:20.600 --> 0:03:22.120 So I do want to point something you said in 0:03:22.160 --> 0:03:25.480 your column about summertime about how Summer's fling wasn't a 0:03:25.560 --> 0:03:28.600 real thing. Say that to the people that made in 0:03:28.639 --> 0:03:31.200 the SMP from its June low, assuming they timed the 0:03:31.200 --> 0:03:33.760 market right, I mean, I get what you're trying to say, 0:03:33.760 --> 0:03:38.080 but should market participants act like this was just an aberration? Yeah? 0:03:38.080 --> 0:03:42.400 I mean, you know, my view was not to say, uh, 0:03:42.520 --> 0:03:44.600 you know, the markets have to sell off for the 0:03:44.680 --> 0:03:48.360 markets need to continue from here. But I thought that, 0:03:48.960 --> 0:03:51.440 you know, people really shouldn't be looking at the price 0:03:51.520 --> 0:03:54.840 action and saying, well, this indicates the direction going forward 0:03:55.080 --> 0:03:59.560 because it was based on nothing essentially fund fundamentally, you know, 0:03:59.720 --> 0:04:03.600 not changed. You know, I think people took heart in 0:04:03.680 --> 0:04:07.240 the fact that earning season wasn't bad. But I've always 0:04:07.320 --> 0:04:09.680 been of the view that the FED has a slow 0:04:09.760 --> 0:04:12.800 moving wrecking ball, and if things are going to get 0:04:12.840 --> 0:04:16.080 really bad for earnings, it was going to take several quarters. 0:04:16.640 --> 0:04:19.479 Retail sales are very much holding up, and I think 0:04:19.720 --> 0:04:22.960 the reason is you have this slow moving effect, right. 0:04:23.040 --> 0:04:26.400 You know, first people need to need to start working 0:04:26.440 --> 0:04:30.680 through their savings, then they move on to more consumer credit, 0:04:30.920 --> 0:04:34.480 and only after that option is exhausted. Do you really 0:04:34.560 --> 0:04:37.720 see sort of retail sales and these things start to 0:04:37.800 --> 0:04:39.760 dry up. So that's a lot of runway, and it's 0:04:39.800 --> 0:04:43.560 conceivable that we may not see those impacts until maybe 0:04:43.560 --> 0:04:48.279 even you know, one Q and we are seeing effects 0:04:48.279 --> 0:04:50.760 and housing and rent and so on. I mean, obviously 0:04:50.800 --> 0:04:53.120 for other reasons too, but we're definitely seeing a dampening 0:04:53.279 --> 0:04:56.599 in housing activity. Yeah, that's for sure. I hate to 0:04:56.600 --> 0:04:59.400 be all gloom and doom, but my nightmare scenario is 0:04:59.480 --> 0:05:03.960 just one in which the fragility of the housing market 0:05:04.440 --> 0:05:07.600 combines with the fragility of the labor market and they 0:05:07.640 --> 0:05:09.880 start to sort of feed on one another in a 0:05:10.000 --> 0:05:13.360 very toxic way. You know, in both cases. There are 0:05:13.480 --> 0:05:16.320 both cases, right, you know. I mean the housing market 0:05:16.360 --> 0:05:20.080 in terms of prices at least is sustained by this 0:05:20.200 --> 0:05:23.280 low inventory situation and people really don't want to sell. 0:05:23.680 --> 0:05:26.839 But that situation could change very very quickly. You know, 0:05:27.120 --> 0:05:31.920 people sadly start losing their job. Yeah, exactly, Jonathan. Does 0:05:31.960 --> 0:05:34.200 the market of confidence in fed chapale It look for 0:05:34.200 --> 0:05:36.640 a moment they're back a few months that that confidence 0:05:36.720 --> 0:05:38.839 might be a little bit fragile, But ever since July 0:05:38.920 --> 0:05:41.960 twenty seven, that feels like the market has confidence again. Yeah, 0:05:42.000 --> 0:05:44.839 I mean, if you look at where inflation expectations are, 0:05:44.960 --> 0:05:48.320 whether it's swaps or some of these surveys, it's certainly 0:05:48.400 --> 0:05:52.320 indicates a confidence, maybe an overconfidence, that this FED is 0:05:52.360 --> 0:05:54.919 going to get the job done. It's either that or 0:05:54.960 --> 0:05:59.240 the market still believes in the transitory story, which you know, 0:05:59.400 --> 0:06:02.479 I don't know what to say about that, Bloomberg Opinions. 0:06:02.600 --> 0:06:06.919 Jonathan Livin. Indonesia's president told Bloomberg recently he's invited Russia's 0:06:06.960 --> 0:06:09.760 Vladimir Putin and China's Cheese Jinping to the Group of 0:06:09.760 --> 0:06:13.640 twenty summit in Bali in November. That poses questions, does 0:06:13.680 --> 0:06:17.800 President Biden attend in person? Does Ukraine's Voladimir Zelenski then 0:06:17.839 --> 0:06:21.520 get an invitation? Here's former Defense Secretary Leon Panetta. Every 0:06:21.640 --> 0:06:25.080 meeting like this of the G twining, it's both a 0:06:25.200 --> 0:06:28.960 challenge and an opportunity. The permutations of possible encounters raise 0:06:29.040 --> 0:06:32.200 the questions what happens in a post war world? And 0:06:32.240 --> 0:06:34.560 how do we even get to that point. We're joined 0:06:34.600 --> 0:06:38.600 from Berlin by Bloomberg Opinions Leonid Breschitski. So, Leonid, what's 0:06:38.640 --> 0:06:41.280 the post end game? If there ever is some kind 0:06:41.320 --> 0:06:44.600 of armistice? Or treaty. One analyst Lawrence Freedman and The 0:06:44.600 --> 0:06:47.360 Guardian this week, saying the Kremlin's current theory is that 0:06:47.400 --> 0:06:50.719 the energy crisis will undermine support in Europe for Ukraine, 0:06:51.040 --> 0:06:53.320 and that might allow Putin to declare some kind of 0:06:53.320 --> 0:06:56.479 face saving victory. But in any event, what do post 0:06:56.520 --> 0:07:00.080 war diplomatic relations look like? Well, I mean there's the 0:07:00.240 --> 0:07:04.080 sense of the list that Russia is somehow isolated, but 0:07:04.360 --> 0:07:07.960 the West is only a minority of both countries and 0:07:08.000 --> 0:07:12.560 global population, and so a lot of countries are willing 0:07:12.600 --> 0:07:15.040 to talk to Puttin, and some of them are even 0:07:15.120 --> 0:07:19.560 Natal members, like Turkey. You know, there's in't yet, There's China, 0:07:19.680 --> 0:07:24.800 there's Indonesia, there's Vietnam, there's African nations that have not 0:07:25.000 --> 0:07:29.440 done anything to support this Western effort to isolate Russia. 0:07:29.760 --> 0:07:35.520 So like reintegration, I don't think Putting in his group 0:07:35.560 --> 0:07:42.239 of chronies feels there's a need to reintegrate into anything Western, 0:07:42.280 --> 0:07:45.440 maybe except maybe some supply change. Yeah, it's a very 0:07:45.440 --> 0:07:48.720 Western view of things to pose the question that way. 0:07:48.760 --> 0:07:52.120 I guess you do have to wonder, though, how this ends. 0:07:52.320 --> 0:07:55.480 Do you see protracted war? Do you see Vladimir Putin 0:07:55.520 --> 0:07:57.679 trying to declare some kind of victory. At some point 0:07:57.920 --> 0:08:02.280 does he run out of resources? Well, the plan is 0:08:02.360 --> 0:08:06.800 changing every couple of weeks. The most recent plan was 0:08:06.880 --> 0:08:11.800 apparently to try to integrate the captured Ukrainian territories directly 0:08:11.800 --> 0:08:17.520 into Russia by holding these fake referendums in which they 0:08:17.560 --> 0:08:23.400 would vote quote unquote to during Russia. And the putitive 0:08:23.520 --> 0:08:27.679 date for these referendums was supposed to be September eleventh, 0:08:28.000 --> 0:08:31.360 when a bunch of regional elections are going to be 0:08:31.440 --> 0:08:35.360 held in Russia. But it doesn't look like there's going 0:08:35.400 --> 0:08:39.440 to be much to integrate by September eleven, because the 0:08:39.440 --> 0:08:43.880 invasion has kind of stalled, and that has been really 0:08:44.120 --> 0:08:47.960 very little movement of the front line in the last 0:08:48.080 --> 0:08:51.920 five six weeks. And so if that plan still exists, 0:08:52.360 --> 0:08:56.440 it's getting delayed. But obviously, because the military part of 0:08:56.480 --> 0:09:00.600 this so called special operation is obviously going deadly and 0:09:00.720 --> 0:09:04.640 not going to plan for the Kremlin, they need a 0:09:05.320 --> 0:09:09.760 scheme and invent ways in which they can declare victory. 0:09:10.240 --> 0:09:14.760 I don't think they've come up with even a relatively 0:09:14.840 --> 0:09:18.600 credible plan yet for what to do in a situation 0:09:19.280 --> 0:09:23.920 where they can no longer advance and where the Ukrainians 0:09:24.120 --> 0:09:27.400 could have the initiative if they had the sheer combat 0:09:27.480 --> 0:09:31.880 power to go on a counter offensive. So right now 0:09:32.240 --> 0:09:36.040 it doesn't look like anyone has the initiative. Neither side 0:09:36.120 --> 0:09:39.280 is strong enough to push the other, and so in 0:09:39.400 --> 0:09:44.320 this stalemate situation you need some extraordinary slate of hand 0:09:44.360 --> 0:09:47.839 to declare victory. Is that how you see it ending? 0:09:48.040 --> 0:09:51.319 Or do you see some kind of third party mediating 0:09:51.520 --> 0:09:54.000 to find some kind of truth? I mean, in that situation, 0:09:54.080 --> 0:09:59.560 Putin couldn't say denazified Ukraine or taken Ukraine back into 0:09:59.640 --> 0:10:03.200 the arms of the Russian territories. But will it come 0:10:03.240 --> 0:10:07.520 to that. I don't think I negotiated solution is possible 0:10:07.800 --> 0:10:13.679 in any foreseeable future, mainly because the Ukrainians don't feel 0:10:13.720 --> 0:10:20.000 they can negotiate while putting holds of their territory almost 0:10:20.920 --> 0:10:23.840 and you know, if I were them, I wouldn't negotiate 0:10:23.920 --> 0:10:28.040 even And they clearly see that Russia's ability to win 0:10:28.200 --> 0:10:33.839 more territory is limited and that Russia doesn't really have 0:10:34.040 --> 0:10:38.240 the troops that it needs to advance. So the Ukrainians, 0:10:38.559 --> 0:10:41.440 they're hoping that they're going to mobilize more reserves that 0:10:41.480 --> 0:10:43.959 they're going to train them, going to get more weapons 0:10:44.000 --> 0:10:48.880 from the West, and perhaps sees the initiative and fight 0:10:49.000 --> 0:10:53.000 successfully through the fall. So in that sense, obviously, for Putting, 0:10:53.000 --> 0:10:57.120 it's too early to seek a negotiated solution too, because 0:10:57.160 --> 0:11:02.640 he appears to have hopes for further advancement. So I 0:11:02.679 --> 0:11:05.240 don't think there's going to be any sort of deal 0:11:05.320 --> 0:11:09.640 when anyone is capable of mediating between these two parties. 0:11:10.360 --> 0:11:14.360 So this conflict is going to be resolved militarily one 0:11:14.360 --> 0:11:16.920 way or the other. Speaking of which, the idea of 0:11:17.000 --> 0:11:19.840 conscription will have to come up at some point if 0:11:20.040 --> 0:11:23.720 Putin keeps losing troops or if Putin wants to escalate 0:11:23.760 --> 0:11:28.480 this again somehow. Is there any appetite for conscription in Russia? 0:11:28.600 --> 0:11:31.960 Would it be a successful drive? Well, yes, you're right, 0:11:32.440 --> 0:11:37.160 conscription would need to come up. And like the Russian nationalists, 0:11:37.960 --> 0:11:41.360 the ultra nationalists who are the only enthusiastic supporters of 0:11:41.400 --> 0:11:43.800 the war in Russia, have been saying since the first 0:11:43.880 --> 0:11:47.560 days that to win this war, Russia would need to mobilize. 0:11:47.600 --> 0:11:49.760 And they know what they're talking about because they have 0:11:49.840 --> 0:11:53.880 been actually fighting Ukrainians for these last eight years, and 0:11:53.920 --> 0:11:57.680 they know what they're upper gainst. But I don't think 0:11:57.720 --> 0:12:03.480 there's an appetite for anything like general mobilization or conscription, 0:12:04.160 --> 0:12:06.880 because if there was appetite for that, we would see 0:12:07.360 --> 0:12:11.479 much more active support on the part of the general population, 0:12:11.559 --> 0:12:15.160 including in big cities, which so far have been spared 0:12:15.240 --> 0:12:19.360 most of the military losses. The troops that are fighting 0:12:19.400 --> 0:12:25.080 in Ukraine are mainly drawn from poor rural areas, small towns. 0:12:25.800 --> 0:12:29.719 They're not from Bosco or St. Petersburg or Ekaterinburg or 0:12:29.800 --> 0:12:33.360 No Sabersk or any of these big cities where it 0:12:33.440 --> 0:12:38.600 appears it's been extremely hard to find volunteers, even with 0:12:38.880 --> 0:12:43.640 promises of large amounts of cash. So if a general 0:12:43.640 --> 0:12:48.319 mobilization or conscription is announced, there's going to be certainly 0:12:48.800 --> 0:12:55.440 mass draft dodging and probably increased emigration. And then you know, 0:12:55.520 --> 0:12:59.920 you already see even contract troops, professional troops refusing to 0:13:00.120 --> 0:13:04.040 fight with the kind of equipment they're given and under 0:13:04.080 --> 0:13:09.040 the under the conditions that they're in. So that is 0:13:09.080 --> 0:13:11.480 going to be even more of a mass phenomenon with 0:13:11.520 --> 0:13:15.280 the draft based army. So Leonard, there is debate raging 0:13:15.400 --> 0:13:19.360 right now about Russians being granted visas to travel outside Russia. 0:13:19.559 --> 0:13:22.520 It's obviously more approximate in Europe, but pressure is building 0:13:22.520 --> 0:13:25.320 for a Pan EU ban on visas for Russian citizens. 0:13:26.080 --> 0:13:29.720 Is that wise? The first question to ask would be 0:13:30.160 --> 0:13:33.480 is it likely? And I think it isn't because the 0:13:33.480 --> 0:13:40.920 countries that are advocating wholesale ban on Russian's entering are 0:13:40.960 --> 0:13:45.000 a very specific group that have been either subjugated or 0:13:45.080 --> 0:13:48.040 colonized or whatever words you want to use by Russia 0:13:48.040 --> 0:13:52.560 in the twentieth century, and so obviously what Russia has 0:13:52.559 --> 0:13:55.440 done in Ukraine fits too close to home for these 0:13:55.440 --> 0:14:00.840 particular countries, the Baltics, Poland, the Czech Republic, Finland, and 0:14:01.120 --> 0:14:06.040 their reaction is perfectly understandable. They don't really want to 0:14:06.040 --> 0:14:12.840 see any Russians, especially Prussian holiday makers, while Russia is 0:14:12.840 --> 0:14:16.440 waging this war in Ukraine. The rest of Europe, which 0:14:16.880 --> 0:14:21.200 does not have this kind of tragic past, doesn't really 0:14:21.240 --> 0:14:26.880 have those unhealed wounds inflicted by Russia and Russians, some 0:14:27.000 --> 0:14:32.440 of which actually all Russia at that, like Germany Germans. 0:14:32.760 --> 0:14:37.479 Many of them are still grateful for the Soviet unions 0:14:37.600 --> 0:14:42.240 or Russia's part in freeing them from the Nazis. So 0:14:43.280 --> 0:14:48.080 it's unlikely that you'll see Germany or France or Italy 0:14:48.360 --> 0:14:51.400 or for that matter of Hungary, and you know, voting 0:14:51.480 --> 0:14:54.320 for a blanket with the band for Russians. Well, and 0:14:54.320 --> 0:14:57.480 of course it's important to have descent outside of Russia 0:14:57.520 --> 0:15:00.800 as well, to have voices free to express disagreement with 0:15:00.840 --> 0:15:04.720 what the president Vladimir Putin is doing. How easy is 0:15:04.760 --> 0:15:06.880 it to get out of Russia if you're so inclined 0:15:07.000 --> 0:15:10.960 right now, Well, that is sort of the other half 0:15:11.000 --> 0:15:14.520 of the equation. I'd rather think we Russians, whether we 0:15:14.560 --> 0:15:19.120 are in Europe or in Russia or elsewhere, should not 0:15:19.320 --> 0:15:23.680 really be making as much noise about this whole visiband 0:15:23.760 --> 0:15:28.000 situation as we have been. It is extremely easy to 0:15:28.040 --> 0:15:31.320 get out of Russia if you're not trying to go 0:15:31.560 --> 0:15:34.640 to any of the group of countries that expressly do 0:15:34.760 --> 0:15:38.920 not want us. There's dozens of countries in the world 0:15:38.960 --> 0:15:43.280 that allow Russians visit free entry, all of Latin America, 0:15:43.720 --> 0:15:47.480 a lot of Asian nations, a bunch of countries, and 0:15:47.600 --> 0:15:52.840 Russia's immediate neighborhood former Soviet republics Kazakhstan, a media Georgia. 0:15:53.280 --> 0:15:58.560 There's even European country Serbia, that allows visit free entry 0:15:58.600 --> 0:16:02.760 to Russians. There's plenty of places you can go even 0:16:02.800 --> 0:16:07.600 if you don't have all that much money for like travel. 0:16:08.480 --> 0:16:11.400 If you want to fly to any destination within the 0:16:11.600 --> 0:16:14.040 you you're going to have to take a very circuitous 0:16:14.120 --> 0:16:18.760 route because Russian planes have been banned from the U. 0:16:19.000 --> 0:16:22.280 But there are countries much closer where you don't have 0:16:22.400 --> 0:16:26.760 to go around the entire U air space and spend 0:16:26.760 --> 0:16:32.400 thousands of dollars on a twelve or fifteen hour journey. 0:16:32.600 --> 0:16:36.240 There are places that are within to three hours flight 0:16:36.520 --> 0:16:39.080 that will take you if you need to run. The 0:16:39.120 --> 0:16:41.480 other point is that people may not be willing to 0:16:41.520 --> 0:16:43.560 go without their belongings, or may not be able to 0:16:43.600 --> 0:16:45.960 go without their belongings, and also may not want to 0:16:46.040 --> 0:16:49.040 leave home. Do we have any idea of how many 0:16:49.080 --> 0:16:52.520 people are in Russia that know what's going on and 0:16:52.520 --> 0:16:57.000 that are staying in Russia but are very against the situation. Well, 0:16:57.040 --> 0:17:01.000 I'd say most Russians know what's going on, and I 0:17:01.080 --> 0:17:05.679 doubt that the majority really supports the war to the 0:17:05.760 --> 0:17:09.080 extent that they're willing to do anything in its support, 0:17:09.760 --> 0:17:14.480 whether to go fight or to give up money, or 0:17:14.560 --> 0:17:19.000 to go out and demonstrate and support of the so 0:17:19.080 --> 0:17:24.080 called special military operation. Active support, I would guess is 0:17:24.560 --> 0:17:29.440 a tiny timing minority is capable of active support. And 0:17:29.520 --> 0:17:34.480 so the reason Russians are seeing kind of passively supporting 0:17:34.520 --> 0:17:38.359 Busin is because Russia is a fascist dictatorship and people 0:17:38.400 --> 0:17:42.720 are scared to speak out and to protest against what 0:17:42.800 --> 0:17:46.520 Putting is doing. It's very natural. A lot of people 0:17:46.520 --> 0:17:50.600 are afraid for their families and you know, their property, 0:17:50.680 --> 0:17:54.640 their lives, their safety, so they look like they support 0:17:54.680 --> 0:17:59.520 it without actually doing anything active to help Putin's war. 0:18:00.040 --> 0:18:03.560 Leon and Brishitski in Berlin. European natural gas futures have 0:18:03.560 --> 0:18:06.960 been skyrocketing with no respite in sight now, as European 0:18:07.000 --> 0:18:10.560 authorities warn of a possible total shutdown of Russia supplies. 0:18:10.880 --> 0:18:13.560 I spoke with Bloomer Opinions and ask foot for a view. 0:18:13.600 --> 0:18:17.479 From Berlin. Storage is at a fill level of two 0:18:17.480 --> 0:18:20.280 weeks ahead of schedule. But what does that fact signal 0:18:20.440 --> 0:18:25.320 about Germany's energy capacity at this point? The first of all, money, 0:18:25.480 --> 0:18:28.600 it shows you quite little. At the moment. What's happened 0:18:28.640 --> 0:18:32.920 is that Russia, Vladimir Putin has throttled the gas flowing 0:18:33.000 --> 0:18:36.560 through the main pipeline from Russia to Germany, which is 0:18:36.600 --> 0:18:40.960 called North Stream one to bout of its normal capacity 0:18:41.000 --> 0:18:44.640 at this stage. And you know, there's gas coming from 0:18:44.640 --> 0:18:47.760 other places like Norway and stuff, and they're trying to 0:18:48.080 --> 0:18:52.240 organize liquid natural gas to replace what's missing from Russia. 0:18:52.600 --> 0:18:54.800 But they're going to have this problem, and so what 0:18:54.880 --> 0:18:57.399 they're trying now is to use whatever they have to 0:18:57.560 --> 0:19:00.959 fill those storage tanks that you mentioned to be ready 0:19:01.119 --> 0:19:05.280 for whatever Vladimir Putin does next. Okay, so Vladimir Putin 0:19:05.440 --> 0:19:09.240 plays along, then Germany and other countries like Austria will 0:19:09.280 --> 0:19:13.640 be fine. If not, it'll get really tight. And Germany 0:19:13.760 --> 0:19:16.040 is just now in the middle of a debate on 0:19:16.240 --> 0:19:20.000 how to pass on those higher costs to consumers and 0:19:20.040 --> 0:19:23.720 how to compensate poor people for that and stuff. And 0:19:23.760 --> 0:19:26.960 this is of course a dependency the situation that the 0:19:27.000 --> 0:19:32.040 Germans almost deliberately naively got themselves into over the course 0:19:32.160 --> 0:19:34.840 of about twenty years. And we'll speak more about that, 0:19:35.000 --> 0:19:39.560 but first, if stories got would that be enough to 0:19:39.600 --> 0:19:42.720 get Germany through the winter, I think is more of 0:19:42.800 --> 0:19:46.040 a notional amount. I think that that's never happened before. 0:19:46.080 --> 0:19:49.040 I think. But they're ahead of target right now, and 0:19:49.080 --> 0:19:51.200 even ahead of where they would be at this time 0:19:51.240 --> 0:19:54.040 of year in other years. So that's not the problem. 0:19:54.119 --> 0:19:56.760 I mean, that's supposed to help while the normal gas 0:19:56.760 --> 0:19:59.760 flows continue. So if they use just what's in the 0:19:59.800 --> 0:20:03.080 st orange, they could get through three months, which isn't great. 0:20:03.119 --> 0:20:07.240 Now the government has asked people to reduce energy consumption, 0:20:07.280 --> 0:20:10.440 by it's not a mandate. I was speaking with Liam 0:20:10.480 --> 0:20:12.600 Denning on this and he was pointing out that it 0:20:12.680 --> 0:20:15.240 almost needs to be war rhetoric. It almost needs to 0:20:15.240 --> 0:20:18.800 be a mandate that people reduce their energy consumption. Will 0:20:18.880 --> 0:20:23.439 people comply? Well? The actually comes from the European Union, 0:20:23.560 --> 0:20:26.760 probably at the behest of Germany, because Germany wanted all 0:20:26.880 --> 0:20:31.119 European EU countries to save, and countries like Spain in 0:20:31.160 --> 0:20:33.960 particular that hang on, what does that have to do 0:20:34.040 --> 0:20:36.960 with us. You made the wrong decisions with pipelines in 0:20:36.960 --> 0:20:39.560 the past, We made the right decisions with l n 0:20:39.640 --> 0:20:42.480 G in the past. If we save gas, we can't 0:20:42.520 --> 0:20:45.200 even pipe it to Germany. There's no point in US 0:20:45.200 --> 0:20:48.359 taking shorter showers. So there was a big debate within 0:20:48.440 --> 0:20:52.240 Europe and in Germany. We need to declare essentially a 0:20:52.280 --> 0:20:55.680 war economy, and I think it will come down to rationally. 0:20:56.040 --> 0:20:58.800 That would be the third of three steps. Were in 0:20:58.880 --> 0:21:02.480 step two right now of an emergency plan that the 0:21:02.560 --> 0:21:06.720 Economics and Energy Minister named Robert Hobbeck could invoke. Okay, 0:21:06.840 --> 0:21:09.359 so it may come to that, But the savings is 0:21:09.640 --> 0:21:13.320 mainly going to fall on industry, the big chemical plans 0:21:13.359 --> 0:21:16.639 like B A, SF and and they're in preparations to 0:21:16.760 --> 0:21:20.359 save as much as they can. And then consumers will also, 0:21:20.440 --> 0:21:22.560 of course, and you'll hear a lot of talk about 0:21:22.960 --> 0:21:26.600 taking shorter showers, shorter showers with cold or water, you know, 0:21:27.440 --> 0:21:30.240 do that anyway? That right now is that we're in 0:21:30.240 --> 0:21:32.159 the middle of a eaight wave. People are diving in 0:21:32.200 --> 0:21:36.359 their lakes. Actually the summer atmosphere as a sunk in 0:21:36.440 --> 0:21:40.040 yet really you know so, and a lot then depends 0:21:40.040 --> 0:21:42.880 on how bitter and cold the winter gets. By the way, 0:21:42.920 --> 0:21:45.280 a lot of people and that includes me. I rent 0:21:45.520 --> 0:21:48.040 my home. I don't even know. I have a utility 0:21:48.040 --> 0:21:50.240 that warms our home, but I don't even know if 0:21:50.280 --> 0:21:52.159 gas is part of it. And it felt paid this 0:21:52.280 --> 0:21:54.520 new levee or not. A lot of people don't know. 0:21:54.720 --> 0:21:57.680 Some people do, of course. Fascinating. The other thing that 0:21:57.720 --> 0:21:59.800 I noticed this week is that Germany wants in Dutch 0:22:00.040 --> 0:22:02.840 as the Netherlands has plenty. As you point out in 0:22:02.880 --> 0:22:05.080 one of your columns, Europe's largest gas field is in 0:22:05.280 --> 0:22:08.480 growing in. But there's a simple matter of earthquakes which 0:22:08.480 --> 0:22:11.600 happened when the Netherlands tries to get the gas out 0:22:11.640 --> 0:22:13.720 of the gas field. Is that an option at all? 0:22:13.840 --> 0:22:17.040 Is is the Netherlands considering it. I moved here from California, 0:22:17.119 --> 0:22:20.080 so I know earthquakes, and these are smaller earthquakes. These 0:22:20.080 --> 0:22:23.560 are there's no fault line. But if you pump these 0:22:23.640 --> 0:22:28.160 chemicals underground, then you fracture rock and you cause smaller earthquakes. 0:22:28.160 --> 0:22:30.800 And that's been going on for many, many years, and 0:22:31.080 --> 0:22:34.840 therefore the Dutch have decided. There has been a long 0:22:34.960 --> 0:22:38.880 campaign to exit the production of that gas field. They 0:22:38.920 --> 0:22:42.040 were hoping to phase that out this year, just as 0:22:42.040 --> 0:22:44.520 the Germans who are hoping to phase out nuclear power 0:22:44.680 --> 0:22:48.480 this year and then later to phase out coal power. 0:22:48.880 --> 0:22:52.080 And so the Germans are now asking the Dutch to 0:22:52.400 --> 0:22:55.440 please not phase that out, but pump it and send 0:22:55.440 --> 0:22:58.040 it over. And there's a couple of technical problems. The 0:22:58.119 --> 0:23:00.520 quality of the gas is different than what the grid 0:23:00.640 --> 0:23:02.680 is ready for in Germany. But that's what they want, 0:23:02.720 --> 0:23:06.080 of course, and the Dutch is saying, well, okay, we've 0:23:06.080 --> 0:23:09.840 got this gas field. You're right, but you guys next door, 0:23:10.080 --> 0:23:14.600 you're hyperventilating. The Germans are famous for this about phasing 0:23:14.600 --> 0:23:18.120 out your nuclear power plans, and why don't you do 0:23:18.280 --> 0:23:21.320 that first or at the same time, at least so 0:23:21.359 --> 0:23:23.960 we can explain to our motors who are upset about 0:23:23.960 --> 0:23:27.200 earthquakes that we have to do this to show solidarity 0:23:27.240 --> 0:23:30.440 with you. But it's hard to do that if you insist, 0:23:30.800 --> 0:23:34.600 unlike other Europeans, to shut off the last three nuclear 0:23:34.680 --> 0:23:37.639 power plants in your electricity grid this year, by the 0:23:37.720 --> 0:23:41.360 end of this year. Right, So this problem is producing 0:23:41.400 --> 0:23:43.960 a whole lot of neighbor league problems as well, sort 0:23:44.000 --> 0:23:46.640 of not in my backyard and why me and not you? 0:23:46.680 --> 0:23:49.680 And so on. You mentioned nuclear you the great column 0:23:49.680 --> 0:23:52.000 recently on nuclear as well. Germany is trying to exit 0:23:52.040 --> 0:23:54.359 at three times, as trying a fourth time now, but 0:23:54.400 --> 0:23:56.960 it's still accounts for twelve percent of electricity at least 0:23:57.040 --> 0:23:59.880 last year. How strong is the argument for not exiting 0:23:59.880 --> 0:24:04.120 a moment, even though obviously nuclear is a huge flash point, 0:24:04.240 --> 0:24:07.639 the argument for not exiting it is very good. And 0:24:07.680 --> 0:24:11.160 always has been. The French get most of their electricity 0:24:11.240 --> 0:24:14.439 from nuclear and want to invest more in it. Cutting 0:24:14.480 --> 0:24:18.399 edge countries like Finland they used everything. You're renewables, of course, 0:24:18.520 --> 0:24:21.800 but for them nuclear is always part of the mix 0:24:21.920 --> 0:24:25.000 because you want a resilient grid and you want new 0:24:25.160 --> 0:24:28.840 nuclear technology that is safe, and they also found ways 0:24:28.880 --> 0:24:31.800 to deal with nuclear waste. So the arguments are very good. 0:24:31.840 --> 0:24:36.320 They've never got a fair hearing in Germany because Germany, interestingly, 0:24:36.359 --> 0:24:40.800