Unintended consequences in the news

[Legion]

Cash Crunch Drives Wild Moves in Commodities


Commodity traders are being hit by huge cash requests from banks and exchanges, propelling whipsaw moves in markets roiled by sanctions hindering the movement of materials beyond Russia.

The Western sanctions sparked steep price changes by clogging commodity shipments in the Black Sea.

A vicious financial cycle is exacerbating the volatility and could worsen shortages, traders say.

Exchanges and the brokerage arms of banks are demanding big down payments, known as margin, from traders in futures contracts linked to commodities such as oil, wheat and natural gas.

To avoid the expense of holding on to positions in markets, some companies are unwinding trades, fueling further price moves.

“Trade that is not even linked to Russia is getting more and more difficult to finance,” said Sebastien Bruyant, a senior portfolio manager at RiverRock European Capital Partners, which lends to commodity traders and producers.

He said lenders are withdrawing financing from economically fragile countries such as Egypt and Tunisia to hedge against uncertainty over the length of the sanctions and the economic and geopolitical fallout.

Futures are bought and sold by investors to speculate, and by producers and physical traders to lock in prices, known as hedging. Exchanges charge one payment, known as initial margin, when trades are placed to collect collateral. They then call for or return money each day depending on whether the position gains or loses value.

“When you’re trying to trade a market based on sanctions rather than any underlying fundamentals, anyone’s going to find that tricky,” said Greg Newman, chief executive officer of London-based oil-trading firm Onyx Capital Group.

In a letter to governments, regulators and central banks, the European Federation of Energy Traders lobbied for public guarantees so banks would be willing to fund margin calls for traders. A spokeswoman for the group, which says its members include Shell PLC, said Friday that discussions were continuing.

Gains in the price of energy, metals and grain have also disrupted a corner of the banking world known as trade finance.

Kristofer Tremaine, chief investment officer of Kimura Capital LLP, a London-based firm that finances physical trading of metals, energy and agricultural products, says blue-chip energy companies pay 6% or more for a line of credit, compared with between 0.25 and 1% before Russia invaded Ukraine.

Among other factors, he said sanctions on Russian lenders Sberbank and VTB Bank have sapped a key source of funding for commodity traders.


https://www.wsj.com/articles/cash-crunch-drives-wild-moves-in-commodities-11647866942?mod=rss_markets_main

 

[Legion]

BERLIN, March 21 (Reuters) - German producer prices hit a record-breaking rise in February, increasing 25.9% year on year mainly because of energy prices, Federal Statistics Office data showed on Monday.

The jump in factory gate costs, considered a leading indicator for consumer prices, was the biggest since 1949, the statistics office said.

The February figures continued a stretch of record increases since the office began compiling numbers.














https://www.nasdaq.com/articles/german-producer-prices-jump-by-record-25.9

 

[Legion]

How are those sanctions working out for you at the grocery store, virtue signalers?

 

[Legion]

Sanctions on Russia Pit the West Against the Rest of the World

Woke DEMOCRATS are less welcome than Trump populists in many countries.

As the consequences of the Russian-Ukrainian war ricochet through the global economy, the West has never been more closely aligned.

It has also rarely been more alone.

Allies in the North Atlantic Treaty Organization plus Australia and Japan are united against Vladimir Putin’s war and are cooperating with the most sweeping sanctions since World War II.

The rest of the world, not so much.

Communist China’s basic approach—not endorsing Moscow’s aggression but resisting Western efforts to punish Russia—has garnered global support.

India and Vietnam, essential partners for any American strategy in the Indo-Pacific, are closer to China than ever.

South African president blamed the war on NATO.

Brazil’s president refused to condemn Russia.

Sanctions compliance and lukewarm support for symbolic U.N. resolutions condemning Russian aggression and the lack of non-Western enthusiasm for America’s approach to Mr. Putin’s war is a phenomenon that U.S. policy makers ignore at their peril.

Just as Western policy makers, lost in fantasies about building a “post-historical world,” failed to grasp the growing threat of great-power competition, they have failed to note the development of a gap between the West and the rest of the world.

The bungling Biden bureaucracy appears not to understand the gap between Washington and what used to be called the Third World, the degree to which its own policies contribute to the divide, or the opportunities this gap creates for Red China.

Opposition to Russia looked like a global slam dunk to many in the West. They thought world opinion would so robustly oppose Moscow’s attack that countries like China would pay a high political price for failing to jump onto the anti-Russia bandwagon.

That is not how it is working.

Some countries, like America’s disheartened and alienated Middle East allies, worry about backing a waning Washington against an ascendant Russia.



https://www.wsj.com/articles/the-west-vs-rest-of-the-world-russia-ukraine-dictators-south-america-asia-africa-11647894483

 

[Legion]

Is Western Virtue Signaling on Ukraine a Form of Mass Formation Psychosis?

As the US, UK and its NATO allies try to rally the world to join in the destruction of the Russian economy through the collective punishment of economic sanctions, few have dared to ask what the negative ramifications might be.

In terms of economic blow-back, the West is already feeling it.

Is western anti-Russian hysteria and virtue-signaling on Ukraine really a form of mass formation psychosis?

The evidence strongly suggests that this is likely the case.



https://www.newyorknationalreview.com/state-of-affairs/is-western-virtue-signaling-on-ukraine-a-form-of-mass-formation-psychosis/

 

[Legion]

Bungling Biden's sanctimonious sanctions are devastating the world's needy

Russia is the leading exporter of wheat, while Ukraine is the fourth-largest exporter. Together, these countries account for nearly one-third of total wheat exports in the world.

Much of Russia’s and Ukraine’s wheat exports are sent to the Middle East and Africa.

For Egypt, which is the top importer of wheat and has more than one-quarter of its population living below the poverty line, Russia and Ukraine are the sources of 78 percent of its wheat imports.

In addition to wheat, Russia and Ukraine are large exporters of fertilizer. Russia, and its ally Belarus, account for 42 percent of all potash exports, which is used for producing fertilizer.

The supply disruptions from the war on Ukraine will particularly impact the agricultural sector in India – one of the largest importers of fertilizer. India sources one-third of its potash from Russia and Belarus. Its agriculture sector is sizable and makes up 15 percent of the country’s GDP and provides employment for 60 percent of its workforce.

India is one of the top producers of wheat and makes up five percent of global wheat exports. The U.S. Department of Agriculture reported that demand for India’s wheat exports has grown since the invasion of Ukraine.

As Kip Tom, former U.S. Ambassador to the United Nations Agencies for Food and Agriculture, recently noted, though global traders are adept at “finding supplies and re-routing vessels to meet the need…this only functions if reserves of grain are available.”

Insecure food and short supply in this period of disruption are not the only challenges to combating the deepening hunger crisis. The rising costs of commodities are also a significant hurdle.

The skyrocketing price of oil impacts transportation costs, as well as production costs for farmers operating equipment and machinery. Additionally, on March 7, the cost of wheat surged and nearly tripled to nearly $13.00 per bushel.

These costs are ultimately passed on to consumers and aid organizations that provide assistance to those impacted by hunger.

In 2021, before the invasion of Ukraine, the World Food Program had a budget shortfall of $5.3 billion and was forced to reduce rations in many places. Now, as commodity costs rise and supply disruptions continue, it will be even more difficult to overcome budgetary challenges and provide food to those most in need.

According to Ambassador Tom, “None of this suggests we will make any progress soon in terms of food security.” His conclusion is particularly concerning not only from a humanitarian perspective, but also because “We know there is a direct correlation between hunger and migration and the spread of extremism and terrorist activities.”

As more than 3 million people flee Ukraine due to the conflict, we can expect the hunger crisis to impact more countries, as well as organizations coming to their aid. This humanitarian tragedy demands immediate attention and action to reduce the devastating effects of hunger around the world.

IMPEACH JOE BIDEN



https://humanevents.com/2022/03/21/how-the-war-on-ukraine-will-shatter-global-food-security/

 

[Legion]

‘Energy or rent?’ Britons expect rising hardship after sanctions

https://www.theguardian.com/uk-news/2022/mar/23/energy-or-rent-britons-expect-rising-hardship-after-sunaks-spring-statement


UK inflation hits 6.2%, the highest level in three decades - UK households have been hit by the rising cost of a wide range of goods, from food to toys and games, as well as soaring energy and fuel prices.


https://www.theguardian.com/business/2022/mar/23/uk-inflation-highest-level-in-three-decades