David Stockman on Europe’s Economic Suicide…

• David Stockman on Europe’s Economic Suicide…
  by David Stockman, https://internationalman.com/
  The trio of the Sanctions War, Green Energy Crusade and the Virus Patrol is a mortal threat to capitalist prosperity. That’s already evident in the Eurozone where these policy diseases are most advanced and where the real GDP growth rate has plunged by 74% from its pre-2008 crisis rate.
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  That’s right. The real growth rate in the E19 countries posted at just 0.67% per annum during the 14-year span between Q1 2008 and Q1 2022, which compares to 2.29% per annum during the equivalent period between 1995 and 2008.
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  Moreover, the EU hari kari artists are just getting started. Notwithstanding the planned phase-out of Russian seaborne crude oil entirely by the end of 2022 and facing a potential total cut-off of Russian pipeline gas, these birdbrains are now planning a sixth round of sanctions on top of all the madness that has gone before.
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  Accordingly, Europe is heading for a rip-roaring stagflation, even as the monetary policy dial is still set on ultra-easy. That is, the ECB’s policy rate is still -0.25%, thereby creating a huge gap with the Fed’s policy rate which currently stands at +1.58% and is heading higher at a 75 basis points per meeting clip.
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  To be sure, both of these rates are utterly irrational in the face of 8%+ Y/Y inflation, but in the near term the current and prospective gap is so egregious as to literally sink the Euro’s exchange rate. It is now flirting with parity, meaning that its FX value against the dollar is down 15% in the past year alone, and more than 58% since the peak in mid-2008.
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  Needless to say, a collapsing FX rate is a classic recipe for surging imported inflation. So talk about behind the curve—the ECB is so far to the rear as to be scarcely visible.
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  What this means, of course, is that the ECB will be forced to hit the brakes hard as self-inflicted energy inflation surges and Europe’s headline CPI heads toward 10%. At the same time, real GDP growth will tumble back into the red, but the central bank will be in no position to bring on the stimmies. In fact, the brutal stagflation ahead will leave the ECB incoherent and paralyzed.
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