One of the most consequential ripple effects of the war in Ukraine was the energy crisis that developed and that has had much of Europe in its grip since Russia invaded.
The continent’s dependence on Russian oil and gas became evident as the war was brewing, and subsequent efforts to wane Europe off of Russian energy have brought nothing but pain for households and businesses.
Anxiety over prospects of a cold winter in Europe is being exacerbated by high gas and energy prices, with fears that Russia’s president may shut off the flow of gas completely and use energy as a weapon. How prevalent the anxiety is among intellectuals is evidenced by a recent tweet by Tuomas Malinen, a forecaster, associate professor, and columnist, on September 7.
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“I am telling you, people, that the situation in Europe is much worse than many understand. We are essentially on the brink of another banking crisis, a collapse of our industrial base and households, and thus on the brink of the collapse of our economies.”
Cold winter
On the old continent, consumers seem to be preparing for a cold winter; just recently, the Google searches for firewood in Germany exploded, while an attempt to completely phase out Russian energy is leaving some economies on the brink of possible stagflation.
On the political front, the biggest fear is that the current crisis could lead to the strengthening of authoritarian regimes if the destabilization of developing countries continues. Europe is still looking to push multilateralism as a viable alternative.
However, despite the prevailing sour sentiment, certain suggestions like hoarding cash could make sense in a crisis of this magnitude. Investing in risky assets could be even riskier in situations where high uncertainty is the norm. Staying on the sidelines and tracking possible investments could make sense if there is another leg lower to go from here in the broader markets.
On the other hand, stressing over doomsayer prophecies of societal collapse has not historically been a viable form of investing or living strategy; yet, some might argue that this time it’s different.
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