Europe's Crisis of Competence Revisited & Germany's Political Crisis with The Brawl Street Journal
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Ten months after Europe's Crisis of Competence, one of the most listened-to episodes of Hypernormal Investing, I caught up again with Brawlster, author of The Brawl Street Journal, to ask what has changed. The answer is not much, and most of it for the worse.
We discuss:
- EU regulation hitting reality. The LNG methane rules carry fines of up to 20% of global turnover, and Brussels is already telling member states not to enforce them. The packaging regulation is pushing small businesses out of cross-border trade.
- German energy policy. Economy Minister Katherina Reiche offers a small glimmer of hope, but there's no route back to nuclear.
- German politics. Chancellor Merz is polling around 15% and pressing charges against people online who call him a liar, in a coalition where sensible reform dies at the hands of the SPD.
- Europe's energy dependency. Europe swapped Russian gas for US LNG, and a short US export halt could empty European storage by mid-January.
- Nord Stream. A US-owned "freedom gas" pipeline and a reverse-Nixon strategy towards Russia.
- Sovereign stress. French 10-year yields are at their highest since 2008, Germany's AAA rating is at risk, and Germany can no longer afford to backstop France.
- Defence spending. Rheinmetall and Volkswagen's pivot to defence, and why spending on tanks is fiscal expansion, not productive capital.
- German industry. Volkswagen is cutting 100,000 jobs, and Chinese EVs are filling the affordable mid-market.
- Italy's gold. Italy has reclassified its gold as belonging to "the people", with implications for TARGET2 balances and EU solidarity.
- Political shifts. The AfD's rise, the Saxony-Anhalt election and France's 2027 elections.
- Ukraine. The escalation risk of Ukraine's drone campaign, and what a pre-midterm US peace deal would mean for Europe's leaders.
Europe economy, EU regulation, German politics, Friedrich Merz, AfD, European gas crisis, US LNG, Nord Stream, French bond yields, German debt, euro crisis, TARGET2, Italy gold, de-dollarisation, Volkswagen, Rheinmetall, defence spending, Ukraine war, macro investing, Hypernormal Investing
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