Quote (ofthevoid @ 7 Apr 2023 13:38)
Yeah commodities is a really interesting space. We probably both agree that Russia is an extremely important supplier and there's a real disconnect today with people understanding this and wanting to accept it.
I genuinely think that European industry, particularly German industry will see significant de-industrialization. It makes sense to make widgets and have jobs in central Europe when you can source cheap energy, it doesn't make that much sense when your costs systemically have gone up and will stay up because now you have to source energy from much farther.
From your line of work, do you think western companies are eager to go back to how things were, meaning continuing heavy Russian commodity imports or is there a mood that things are never going back?
I’ve been and lived in many countries over the past two decades and I strongly believe current trends do not support growth in Europe. It’s becoming increasingly socialistic hurting labour force participation and productivity. Yes it’s good for the little people, but it’s bad for the productivity of the society as a whole. Industry will probably not recover. Cheap energy is gone for good and you will need to compete for metals with increasingly more powerful China and US (which prints money to buy anything they want). Look how late EU bureaucrats were to counter Bidens Renewables Act (IRA). Unless something changes dramatically, Europe will become increasingly more reliant on Chinese/US tourism and a great place to retire towards the turn of the next century, but will start struggling to attract ambitious people who will be increasingly drawn to opportunities to make a career elsewhere. I see already that majority of innovation/patents is in the US/China by a mile and will continue to grow. It’s a long way from here and I hope EU folks will wake up from this slumber and regain their sovereignty they’ve traded away.
I dont know how soon this conflict will end and how soon Russia will be kosher enough to re-enter. It’s still a 140M people market who all like to drive cars, live with modern amenities like TVs, eat well and do cool stuff, just like everybody else. And they produce something tangible to trade for that stuff.
From the sales structures I’ve seen majority of businesses that exit - retain a buyback option, so door is still open to straight up repurchase their old stuff from the management teams that are trying to adjust to the new realities and keep their jobs. The problem is - if these teams are successful in keeping businesses afloat and reorienting themselves to China/India/Middle East, they will not only not sell back to the foreign corporations, they might grow big enough to compete internationally.
This is all ofcourse assuming we don’t end up in a World War 3 scenario’s with nukes flying. In which case you should probably consider getting a property in New Zealand and have a friend with a private jet that can take you there in case shit gets real.
This post was edited by Malopox on Apr 7 2023 10:42am