Coming chaos part II

This piece is an (obvious) continuation of the piece below, with enough data points you can understand where everything is coming from.

The Coming Chaos

As I have written many times over the past few months, given all the events and dynamics at play, and the response of countries to said events, coal would suffer a shortage and its price would increase gradually, and I still stick by it.

Afghanistan raises coal prices to USD 80 per tonnes for Pakistan

A surge in tariffs has added USD 80 to each tonne of Afghanistan’s coal export to Pakistan…
Afghanistan exported 10,000 tonnes of coal to Pakistan in the past two months, a local media reported, adding that the majority of coal was bought by companies connected to the Pakistan military.

Poorer countries will suffer, and continue to suffer from the European suicidal attempt at “sanctioning” its main source of energy. Pakistan has been dealing with severe disruptions to its economy and now finds itself near the doom loop. Increased food and fuel prices, constriction of the economy, and further inflation, until the country collapses. This thread on Twitter explains in great detail every Pakistan is facing right now.

No type of complex system, organic or not, is able to function without abundant energy. And Pakistan imports energy, food, everything.

Even countries considered “coal-rich” are facing severe problems with coal.

Coal-Rich Poland Rushes to Imports as Russian Sanctions Bite

• Poland is the European Union’s most coal-reliant nation

• The country is buying coal from Colombia, Australia, S. Africa

A coal powered power plant in Belchatow, Poland. Photographer: Bartek Sadowski/Bloomberg

Poland, the European Union’s top coal producer, is scrambling to fill a potential deficit of the fuel ahead of winter as a ban on Russian imports is set to hurt households and small heating plants the most.

In an unusual move, Prime Minister Mateusz Morawiecki last week ordered two state companies to purchase 4.5 million tons of coal by the end of October to supply households. That’s about a half of what the country had imported each year from Russia before the war in Ukraine started. Now, Poland is hunting for coal in Colombia, Australia and South Africa.

The situation is getting so dire, that Poland now plans to use its Central Bank profits to buy coal for citizens that own coal furnaces, billions will be “invested” in this endeavor, and of course, it will not have the desired effect long-term. This is what we call it here “blocking the sun with the sieve”. Merely avoiding dealing with the real problems, postponing any actual resolution, and putting more pressure on the market forces pushing coal higher. If you are wondering why they are contemplating such measures, it is because the population faces a 180% increase in their energy bills.

Poland is not alone, Finland might experience a 2 hour blackout to deal with the energy woes. India has been suffering from a coal crunch for months, by both the lack of enough workforce and logistical capacity to transport all the coal it needs.

Repeating myself is a common trend around here, maybe it is good for the new subscribers. Expensive energy affects the production of chemicals, of medicine, of every industrialized good, but it achieves quite the impact on one of the world’s most needed materials. Aluminum and steel, and something else…

Romanian alumina producer to halt production, lay off 500 staff

Romanian alumina producer ALUM will halt output for 17 months and lay off about 70% of its staff as soaring energy prices make production costs unsustainable, its owner Alro Group ALR.BX, one of Europe's largest aluminium smelters, said on Thursday.

Like most European aluminium smelters, Alro Group was struggling with rising energy costs even before Russia's invasion of Ukraine.

This has been a persistent trend in the smelting and steel industry for quite some time, and similar to the “something else” we will look into later, these changes affect the market months later, and this will be a problem. The world finds itself paying the costs for the last 2 years of absurdly stupid policies, and being a victim of hybrid war (China played this game solo for quite a while) so demand is going down, therefore prices are also slowly going down.

But any projection from any analytic outfit will give you the same outcome. Demand will keep increasing, regardless. Such is the case with solar panels where the costs keep increasing, and as I covered months ago, its production is both energy and material intensive, and the entire globe now has a big appetite for them. These ripples will affect the market for years without some foresight from the decision-making folk.

One argument one could make is that “the world can survive without stuff”. I would be inclined to agree, we don’t need “stuff” to survive, it would have an astronomical economical cost, but we don’t “need it”. What we do need, is food. And two things severely impact the price of food. Fuel, and fertilizers.

Gas Crisis May Force Fertilizer Giant Yara to Further Cut Output

• European producer highlights toll of capacity reductions

• High gas prices have forced fertilizer makers to curb plants

European fertilizer giant Yara International ASA said the energy crisis is forcing it to curb output and warned that more cuts may come.

The huge ammonia distributor is among producers around the world that have cut output due to high prices of natural gas, a crucial feedstock used to make crop nutrients. Yara said Tuesday that it has curtailed several sites, cutting capacity by 1.3 million tons for ammonia and 1.7 million tons for finished fertilizer.

Energy prices, and especially gas prices have a profound impact on fertilizer production and prices, which on a good day would be a minor problem, but given what we discussed previously, this is a major national (continental in this case) security issue. The issue with fertilizer and fuel prices for most people (including me before 2021) was the following. Surges on any farm tool or output take a long time for the consumer to feel it. Months long cycles in fact.

A curtail on fertilizer production right now will have a substantial and quite perceptible impact month down the road with global repercussions. Farmers buying less fertilizer means less yield, and on a good day, that would equate to a little increase in global prices.

Months ago, when fertilizer prices hit all-time highs, a couple of farmers while being interviewed voiced their concerns and asked for a reprieve from Mother Nature. “Perhaps Nature will help us.” And I wrote “Relying on the whims of Mother Nature doesn’t seem like a wise choice right now”, given my Year Without Summer (weather shift) bias.

Extreme Heat And High Nighttime Temps Now Hitting At A Crucial Time For A U.S. Corn Crop Planted Late

I can’t find, for the life of me, the UN document I mentioned here months ago, but there they expected prices of staples and grains to be high for at least the next 5 years. These are but merely a few of the data points I can provide, but I think I made myself clear.

Crops everywhere are being impacted by both of these variables, the wheat and fertilized, from France lower yield, to Canada lower quality. Africa has very little chance to even partially feed itself. Desperate times will call for desperate measures.

PiQ  @PriapusIQ

⚠️ EU TO PERMIT UNFREEZING OF SOME RESOURCES OWNED BY SANCTIONED RUSSIAN BANKS TO ALLOW TRANSACTIONS FOR FOOD, FERTILISER TRADE - DRAFT DOCUMENT - Reuters via PiQSuite.com The unwinding of sanctions begins

piqsuite.comPriapusIQPutting News & Commentary - On All Things Markets & Geopolitics - At Your Fingertips

And even at that, one could easily deduce this is a somewhat too little too late kinda situation. Europe needs to drastically slash natural gas consumption in the next few months to prepare for what is likely to be “a long, hard winter,” the head of the International Energy Agency said. The EU is in such a tough spot they want to revert even the bank-linked sanctions, to get fertilizer and food (because they know they won’t be able to produce enough to even keep inflation at bay).

The short-term “fate” of the system is fixed, bureaucracy is a slow-moving, lethargic leviathan and the necessary changes always come months later than they should have been done. While light on the data, given my track record, and how extensively I covered all these issues here, you can judge my following statement by yourself.

The world will not be able to feed itself, and huge swaths of countries will experience different levels of starvation to literal famine, destabilization will come to many Middle Eastern and African countries, and to Europe’s poor countries and neighborhoods, the Third World can NOT compete First World economies, even if said economies are going into recession or depression. China finds itself on the razor’s edge of civil unrest, the US going ever deeper into political division.

Most of Latin America finds itself at the doors of revolt, which further destabilize their own countries, society, and economies, further degrading the situation for everyone else. From Panama to Peru.

Costly food and energy are fostering global unrest

Many governments are too indebted to cushion the blow to living standards

Money no longer had any value in Istanbul,” laments the narrator of “My Name is Red”, a novel by Orhan Pamuk set in the 16th century. “[B]akeries that once sold large…loaves of bread for one silver coin now baked loaves half the size for the same price.” The royal mint was slyly reducing the amount of silver in each coin. When the Janissaries (an elite military force) found that their wages had been debased, “they rioted, besieging Our Sultan’s palace as if it were an enemy fortress.”

Galloping inflation afflicts Turkey again today. Officially it is 73%, but everyone suspects it is higher. Mr Pamuk, a Nobel laureate for literature, says he has “never seen such a dramatic rise in prices”. He makes no predictions about what the political consequences might be. To criticise Turkey’s modern sultan, Recep Tayyip Erdogan, would be risky. But fr
We are also at the feared stage of any collapse of complex societies, where things break down faster than you can manufacture and replace them. US energy prices are high enough, even though the US is energy sufficient, the industry finds itself buckling because of the costs. CLF Industries is the only company in the US that produces a specific grade of steel to manufacture transformers and is now contemplating completely stopping production. Energy companies have been facing supply issues for months and attempting to adapt, in fact, it has been known for weeks that California now burns more transformers than supply can get them, so many of the specialized workforce is attempting to salvage what they can.

As Europe faces even worse energy costs and problems, you can expect similar outcomes being played in many of its countries. Another trend that I don’t think I need to cover here, but forecasted ages ago was the exponential growth of strikes. From the UK to the US, and elsewhere, hitting at the worst possible times, multiple (essential) workers will choose to strike by the sheer amount of pressure the current inflationary trends brought them.

Even well-off people, with good salaries, are now feeling the pressure. And this will further disrupt and add weight to a fractured fragile system, with some of these strikes possessing the potential for massive disruption. Strikes are also a very powerful hybrid war weapon to disrupt your adversary’s economy.

Many places will fall for the opportunistic power grab of certain organizations, or politicians with a keen eye for distress. With both Part I and II, and the entirety of the Beyond Mathematical Odds series, which you perhaps should visit some, every single one of you should think really hard on how to prepare yourself.

The entire planet will experience shortages of workers because of unsatisfactory pay, and there is an ever-growing shortage of sparing parts, tools, and specialized tools, after the lifting of lockdowns industry has been running at its peak, and a lot of places are now postponing critical maintenance, which will lead to failure, and in some cases cascade failure. Given all the dynamics discussed so far, and how human behavior is often memetic (contagious), you can expect many forms of disruptions in poor and rich countries alike arising in the next 12 months.

I didn’t even touch on the biological/virological aspect of it all, and how the increase of different diseases in many parts of the world will also affect the system’s function. To be clear, the world is not ending, we are just entering a fairly chaotic period where old alliances die, new alliances are poor, and the decline of what otherwise was held as safe and prosperous places is visible even to the average Joe with some common sense. This in turn leads to conflict, in its many forms. And everything that this entails (I will start covering aspects I like of warfare here, maybe, definitely Cognitive Warfare, which is coming next).

For last, I will leave you with a speech that deeply impacted me and the people I once knew in my former professional life. The action-packed version for…forecasting purposes.
The history behind how they came up with the speech in the comments.

A very big thank you to all supporters here and those who use KoFi =) !

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