I contract with a lot of European game studios. I've noticed many contracts were terminated suddenly including my retainers for cost reasons.
Is the energy crisis that bad ? Are multiple industries affected right now or is it just planning ?
Is the energy crisis that bad ? Are multiple industries affected right now or is it just planning ?
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Yes, it's starting to get bad. As a example a huge producer of automotive parts in Germany went bankrupt today. 4000+ people lost their jobs instantly.
Nord Stream 1 has been shut down indefinitely and Germany requires it to keep their economy, heat and power supply going so lots more companies will follow.
My family is going to stock up on firewood for our fireplace soon, so at least the house will not be cold come november-december when the Netherlands will run out of their gas supply in just about 2 weeks time tops.
I would not be so worried. While the situation is not so rosy, Nordstream's closing will be compensated by using less energy generally (e.g. not heating up gov buildings, lots of people working from home etc.) and from dozens of other sources (importing more LNG, letting nuclear plants run more, firing up coal powered plants etc)
Russians are very good as sowing discord and creating panic among the population, but if you look at the facts things are not so bleak.
- If closing down Nordstream would really lead to the collapse of the German economy then the EU would have lifted the sanctions. While they can accept some hardships to beat Russia, they would not kill their economy to do so.
- Just look at the gas futures price in the EU: https://www.theice.com/products/27996665/Dutch-TTF-Gas-Futur... Since the full closure of Nordstream gas prices have actually gone down showing that the gas market has already priced the closure, and as time will pass it will go down even more (since people will see that we have enough gas & Putin's threats are taken less and less seriously mostly because he has run out of things to threaten with)
So dont panic and trust Western leaders a bit more.
Thanks, that's a much calmer balanced view. https://www.youtube.com/watch?v=ce5TR-qWCk4&t=3574s this vid has a great and lengthy analysis on the economic situation in Europe. Basically, Europe and Germany will be fine because they can afford the burden for awhile and may even still grow economically. Russia has stabilised their economy for the moment with drastic intervention, but they are time limited.
By gremlinsinc 2022-09-081:041 reply Russia is as toxic as you can possibly get, they have a 'brain drought' of talent that has exited the country either in protest or in fear or retaliation for sympathizing with Ukraine. Russia's losing the war because they always value loyalty over skill, strategy -- those with skill usually end up appearing to be a threat so end up dead, or get canned if they're lucky - militarily speaking.
In the business/tech centers, there practically IS no business/tech centers, with all this moving out of Russia into the western nations and baltic states -- there will be huge growth after the war is over in most EU countries that aren't Russia or Belarus.
Short term, I think it will be a struggle, long term I think weaker Russia is good for the whole world, I'm hoping china begins to decline too - esp with the real estate crash they have looming, if they lose their ass on foreign real estate our housing prices might go to some semblance of normalcy. Here in Utah, the average home price went from 200k 10 years ago to 600k now, only way I'll ever own a home is if I buy land and build a $10k earthbag home lol.
If the war is over next year (I'm not optimistic, but fingers crossed) and Ukraine prevails, which seems to be a certainty, then the US and EU will plough money into Ukraine's recovery. They'll want an institutionally stronger country there regardless of the diplomatic solutions found to the war/borders etc. That will be a shot in the arm to the eastern EU economy and probably quite positive to the world as a whole.
Yeah I agree that the future looks bleak for Russia, actually regardless of how well they fight. They lost, long term, when they didn't take Ukraine in 3 days. They showed a weak hand and I suspect even their ally China will treat them as a second partner and with some contempt. Perhaps the best outcome would be the Russian government falling again and this time western powers actually helping out, but I doubt they'll collapse in a way that lets that happen, or that society there will accept help, or that western countries would be interested in helping anyway.
China will decline, they're not in a great place demographically. And this is my personal opinion: China had the opportunity to become great, with just a little more freedom they could have leveraged their hi-tech manufacturing base and encouraged innovation. But instead the leadership got scared that they were losing power and sent thing in the wrong direction. It's not that they aren't innovative, it's just that has been tempered enough that they won't take the lead and all the other issues - demographic, geographic etc will take them downhill. Which is a shame because instead of a (slightly) freer world we get nationalism and unpredictability; who knows now what they'll do if they can't deliver on better living standards and an ever improving economy? Invading Taiwan would be stupid from many perspectives, but as a way to drum up and hold support of the population maybe it works?
Its interesting because I would argue for the exact opposite of everything you say (almost). Which makes for a nice discussion.
I don't think the war will be over until US and EU decide to stop sending weapons to UKR. Now, in terms of UKR prevailing, no matter how you spin it, they lost 20% of their country and the majority of their fighting ability if not for external support. Doesn't look like prevailing to me. Basically any chance they had to be "independent" state are gone, either they are occupied or in heavy debt/reliance to the EU/US.
Yes future looks bleak for Russia indeed, but the same is the outlook for EU. A broken relationship with Russia never worked with Europe historically, and for good reasons. Also, Russia cannot be "helped" from the "west", its not "yet another" country. Whoever I know that has been there, can confirm that its a special place with dynamics that are not entirely understandable by western values.
I don't see China declining, the opposite actually. Yes COVID hit them (which for me screams "Cui bono" to the whole covid thing, but thats off topic) and they are doing bad demographically, but their struggles are not in vacuum. Europe is getting hammered and its even worse demographically, US is in a "esoteric mode" dealing with problems from within.
By jemmyw 2022-09-0822:49 Whether they can push Russia out I don't know, that probably depends more on Russia than Ukraine. Russian people aren't exactly signing up in droves to push this invasion - a little probably, but stories coming out from the Russian soldiers now are on the side of "we didn't know what we were doing, we didn't want to be doing it." Ukraine, on the other hand, has had more recruits than they could handle, because people want to defend their country. Putin's view was that the people of Ukraine wouldn't stand up, didn't see themselves as a country, didn't like their own leadership, would revolt etc. and he was wrong. Ukraine is now making counter offensives. Whether those succeed or not, it's remarkably different from the predictions of many analysts that Ukraine would be taken over in days or weeks.
I disagree with your line about independence. America funded the rebuilding of Europe and Japan after WWII. It is way more in the interests of us in the west to have independent states rather than vassal states. This is where Russia is failing - if they make Ukraine a vassal state and install a government the people there will forever agitate and cause trouble, it will always be a thorn in their side. They'd have to attempt Russification once again, and how well has that worked out?
Small states are never independent completely, but internally independent and being rebuilt by western allies is surely a lot better than vassal state of Russia. Especially as the majority of Ukraine wanted to loosen ties with Russian and join the EU - thus why we're where we are.
China has a worse demographic problem than Europe. Fastest ageing country. Yes Europe has some similar problems, but the worst place in Europe for that is Russia.
> I don't see China declining
You don't seem to follow recent economic developments then
> Basically any chance they had to be "independent" state are gone
Ukraine is more independent now than it ever was 2013 or 2021 and all is telling that it will be even more so after the war, so I'm not sure what you are smoking there
By v4dok 2022-09-0810:23 1. I meant declining in a more generic/long-term view 2. Independence is underpinned by a combination of military and economic power which adds up to enough power to take your own policy decisions. For now UKR has all the independence it wants to take any decision that is aligned with western goals. That (might) be aligned with their interests right now, giving the impression of independence, but it won't be always so. 3. I was trying to make conversation, your comment about my smoking probably tells more about you.
The war will be over when Ukraine takes Crimea. Russia only cares about the gas that is found there, which can entirely replace Russia's deliveries.
The future looks better for Europe/Ukraine than you'd expect over a 4 year term.
Not so much for Russia. Putin made Russia a pariah state like North Korea
Nobody knows when the war will be over. Most of us didn't even know there would be a war, even while Russia was amassing troops at the border.
While I'm not sure about Europe, Ukraine seems lost: they're at the mercy of the IMF and had to give up their economic independence. In the best case, they can emerge like Bulgaria, Romania, etc in a decade or more - moderate brain drain, industry bought off, moderate corruption. In the worst case, they'll suffer massive brain drain, all their industry will be bought out or lost, high levels of corruption and they'll be reduced to providing labour and raw materials for the EU.
The war will likely strengthen the nationalist and extremist factions in the country and make it even more difficult for the government to reach a compromise. It's not clear if the fledging democracy will survive this war. Beforehand there were concerns that the president has too much power, now with political parties banned it's uncertain how a meaningful opposition would look like.
On the military side, even ignoring that they've lost a large chunk of territory, they are still neighbouring Russia. And despite the optimist messaging, Russia has many ways to make Ukraine's life harder or even snuff it out. From targeting energy and industry, to chemical weapons and even nukes.
By NicoJuicy 2022-09-096:12 Ukraine isn't lost, even after the war multiple countries now are mentioning which cities they are going to help rebuild.
Additionally, in 4 years time they will have insane profits from gas, where the pipelines have already been laid. Europe will be able to stop all payments to Russia and change it to Ukraine.
In the future, they will probably do similar preparations like Finland did ( since Finland got invaded hard also in the past).
Russia is already the pariah state. And while Europe is harboring fleeing Ukranians, we are tightening ties and exponentially tieing their future WITH Europe ( eg. The English language).
Ps. The future of Ukraine tied to Russia would have been a joke, just check Chechnya and Syria. They are way better off if they are open to it. Just check GDP growth of Poland, that's what partnering with Europe means and can do.
By sxpnsxpn 2022-09-091:26
What does it mean to "afford" the burden and be "fine"? Yes, a collapse of the EU economy and the EUR is unlikely, but other things are already happening: massive heating and electricity bills for businesses and individuals. Companies going bankrupt. Manufacturers of essential materials shutting down. And so on and so forth.
How does this reconcile with warnings by the Belgian government that we can expect between 5 and 10 hard years? Or the comment by the French president, that the "end of abundance" has arrived - which perhaps wouldn't be so bad, if it really were an era of abundance for large parts of EU societies.
By sydd 2022-09-1021:57 > What does it mean to "afford" the burden and be "fine"?
That the EU has 2 choices in the long term:
1. bow to Russia's demands and lift the sanctions. Gas will be turned on and its price will fall, but now Russia knows that they have a weapon that they can and will use against the EU when they see it fit. Also it would result in a huge uproar, most EU states are very pro-sanctions despite the hardships.
2. Do not lift sanctions. In this case the gas price will stay high, but will certainly fall long term. Also Russia will have no leverage against the EU. Also the situation is not so dire as it seems: Russia supplied ~15% of the energy to EU, so if the EU can lower its energy demand by a bit and get a bit of energy from extra sources they are set. People did the math and its possible, likely in 2 years there will be a minimal effect of no gas flowing from Russia.
As for the "hard years", its not just the energy crisis caused by Russia turning off the gas valve: After the constant boom of the 2010s its time for the bubble to burst. Global warming effects are starting to hit hard, the supply chain issues starting with COVID and getting worse with the war made governments realize that you cannot outsource everything; moving back production to the West will casue lots of price hikes. Also boomers are now starting to retire causing the most experienced part of the workforce to shrink drastically and being replaced by pensioners who just cost states money.
So no matter what we do with Russia the next 15 years will be hard -- I'd say that the belgian government was optimistic with the 5-10 years estimate.
By mattnewport 2022-09-0722:491 reply > and trust Western leaders a bit more.
What have Western leaders done in the last 20+ years to earn such trust?
Being sustainably successful for hundreds of years?
I mean, China is the only successful country that isn't western, not even in spirit (like India, Japan, or Korea) and their run seems coming to an end lately, with all their debtors defaulting.
Causing two global conflicts isn't what I'd call 'sustainably successful'. Since those, I'd agree with you, but definitely not hundreds of years.
By k__ 2022-09-0814:54 Not?
The Indian trading companies seem to have left the west in a very good position.
By mind_heist 2022-09-080:341 reply I m not sure if this is fully accurate though, especially about Japan and South Korea part. Both of them have demonstrated solid economic prowess in the last few decades & if you ignore a few decades of colonial interlude and look back further - they still have had sound economies in previous centuries. I think Singapore , Taiwan and even may be UAE are missing from this list ( depending on how much further back in history you are looking at).
Another reason not to panic is that the Dutch have a massive gas field and choose to use it only 10% (2.7B m3/year out of 25B m3/year, about 60% of their consumption). Surely, if the situation was dire they would max out their wells first, (they say it would produce small earthquakes and 15000 houses would be in danger but that's a small price to pay)
By mind_heist 2022-09-080:461 reply and looks like coal seems to be the first choice for now ? imported from australia and south africa ?
https://www.reuters.com/markets/commodities/europe-imports-m...
https://www.argusmedia.com/en/news/2349110-australia-leads-n...
By sydd 2022-09-0818:05 Australia is happily selling any amount of coal to the EU because they are in a trade war with the Chinese who refuse to buy their coal.
By blub 2022-09-0819:48 There are many unpleasant steps to go until reaching the collapse of the German economy and while the EU has certainly overplayed its hand, giving up too early is (geo)political suicide.
Outcomes that are likely this winter are blackouts, bankruptcies for businesses and for individuals financial ruin and losing one's savings. The question is to what extent those will happen and which percentage of the population will be affected.
By origin_path 2022-09-0810:572 reply "So dont panic and trust Western leaders a bit more."
It's the western leaders who are keeping both Nord Stream 2 and 1 closed: NS2 because Germany won't license it, and NS1 by sanctioning Russia so they can't work with the companies that repair the broken components.
In fact there are at least 5 gas pipelines into various parts of Europe which are all closed by the west or western actions:
By hackeraccount 2022-09-0814:101 reply This is a political not a technical issue. Russia and the EU are figuring out what their relationship is with regard to energy supplies and if we will say The Ukraine or Ukraine in 10 years.
By origin_path 2022-09-0815:20 It's both - there are compressors sitting in the UK that are blocked from being returned to NS1 because of British sanctions. The pipeline needs compressors (technical) but can't get them because they're repaired in foreign countries (political).
The stupid thing is, somehow these facts seem to have got lost somewhere along the line and the European countries are convinced this is 4D chess by Russia instead of the exact outcome sanctions were intended to create.
> NS1 by sanctioning Russia so they can't work with the companies that repair the broken components.
Not true. While Canada who repaired the turbine first refused to give it back to Russia now they are willing because of German pressure. Siemens (the operator of the turbines) has stated multiple times that there is no technical issue in running NS1. Russia is not supplying gas trough NS1 because of political reasons:
- Russia's main goal is to make the EU stop supporting Ukraine, thus they can make a favorable peace agreement. Their main goal is to get the EU states oppose the war.
- They are doing this by trying to sow panic and chaos in the EU by turning NS1 lower and lower (now its off) and other things like releasing ridiculous videos like https://www.youtube.com/watch?v=kcbcBrL4ju4
- This panic also results in high gas prices which is harmful to EU's economy and good for Russia's pockets.
The west should not bow to Putin's will, if it would lift the sanctions Putin would use gas as a weapon against the EU whenever he wants; the only good choice is to get rid of any Russian dependency.
Trust the western leaders, they did the math. The EU will have enough energy for the winter. Also USA is bringing out the big economical guns too, they started to lower the price of oil which will result in crushing Russia's #1 income source (they can produce oil for around $50) and this will also bring down energy prices.
This and the next winter will be still hard for the EU, but after that things will stabilize. But seriously what did you expect, how could a Russia, a country with a total GDP around Italy beat the EU, Japan, USA, Australia, South Korea in an economic war?
Didn't the EU leaders botch the most recent global crisis, the Covid pandemic? Downplaying the virus at the beginning, then failing to secure masks and lying about their benefits and discouraging their use, failing to secure enough vaccine fast enough. My concern is that in EU math, 2 + 2 could very well equal 5.
In any case, presenting this as a fight between Russia and the EU/US/etc is a bit of a red herring. In the end, it doesn't matter that Russia "loses" or is hurt worse, if the EU economy's in shambles and governments are voted out and replaced with more extremist political parties for example.
By sydd 2022-09-1022:17 > Didn't the EU leaders botch the most recent global crisis, the Covid pandemic?
I would not say so. Compared to most other countries the EU did very well:
- Got the best vaccines with the 2nd fastest (USA was better because the EU did not mandate Pfizer to build a factory in the EU, thus Trump could block most of the vaccine exports for a few months until the USA was mostly vaccinated). Compare this to e.g. China where they still have to do lockdowns, likely because of their subpar vaccine that is ineffective in the elderly. Or to Japan where like 2% of the population was vaccinated by the time of the olympics.
- Was among the best for keeping the virus under control until it was not necessary with the right amount of lockdowns. For bad examples see Russia where lockdowns were not enforced/declared too late or Brazil where they declared it a hoax.
So who did better?
- Israel with securing the very first batch for a price of playing guinea pigs, which was a big gamble.
- Island states like New Zealand or Australia because they can just lock down airports and ports to prevent spread. EU could not do this, too many land borders.
Compared to some ideal world where we would have a global lockdown for 2 weeks and the virus is gone everyone was doing pretty shitty of course. But compared to other countries EU was among the best.
By k__ 2022-09-0722:51 This.
If Germany loves one thing, it's being richer than the rest of Europe. They just throwing their weight around.
By neural_thing 2022-09-0722:12 Another interpretation is that the futures are pricing in price controls.
By triyambakam 2022-09-0722:18
>My family is going to stock up on firewood for our fireplace soon
Unless you're cutting down trees and splitting them yourself, and have done so in the past, why are you waiting? You know a surge in demand is going to happen, and there's a limited supply.
By morgunkorn 2022-09-084:02 I can confirm the surge is already there. A stere (1 cubic meter of piled logs) cost us 75€ last year, best we found was 120€ this summer and prices are still on the rise.
> As a example a huge producer of automotive parts in Germany went bankrupt today. 4000+ people lost their jobs instantly.
Could not find any news about that. Which company do you mean?
It's Dr. Schneider [1]. Never heard about them until now.
[1] https://www.focus.de/finanzen/news/kronach-kronach-neuses-au...
By fxtentacle 2022-09-0722:112 reply But
a) they are not bankrupt yet, they merely filed for government protection while they reorganize
and
b) it's only 2000 jobs
By jonas21 2022-09-0722:40 > they merely filed for government protection while they reorganize
That's what Chapter 11 bankruptcy is in the US - I assume Germany has an equivalent.
By martin_a 2022-09-0722:17 Yes, probably just shrinking themselves to a more healthy state. Good "chance" to do so right now.
By em1sar 2022-09-0810:28 lmao typical redditor who only reads the headline of an article. there's literally a factual mistake in every third word of your comment
By Gys 2022-09-0723:08 By djbusby 2022-09-0722:15 Nov-Feb friend, get more wood.
By downrightmike 2022-09-0722:36 Might be worth getting creative going into fall harvest: https://www.youtube.com/watch?v=RZqaW-gdXxE
We have a very difficult winter ahead of us, especially here in Europe. Inflation is on the rise, energy prices are skyrocketing, wages are almost stationary and people are worried about the future. Im afraid that the recession/depression is coming…
However, when it comes to contracts with european companies, it has more to do with fundraising. Energy and even margins are not hitting game studios and SaS products, but it is harder to close funding rounds.
Why? Because asset prices in europe are down hard, and the exiting holders are reluctant to accept dilution by taking adequate funding now. The new investors would get a better price than them and erode their share of the company excessively, so they'd rather push management to raise less, cut costs, and try to limp through to better times.
The other side of this is that venture firms / PE had an amazing 2021, so now they have loads of cash and not many opportunities. They can hold off for a while but the money needs to be committed before this dip is realistically over.
By rgavuliak 2022-09-0819:28 > exiting holders are reluctant to accept dilution by taking adequate funding now. The new investors would get a better price than them and erode their share of the company excessively, so they'd rather push management to raise less, cut costs, and try to limp through to better times.
This is the case for my employer
By jethronethro 2022-09-0720:511 reply Panicking? No. But you should be seriously considering a Plan B and even a Plan C and a Plan D.
Regardless, panicking won't change the situation. Taking them time to step back, look at your other options, and proceed calmly (though with a sense of urgency) is a better way to go.
By readonthegoapp 2022-09-089:581 reply I didn't think the OP meant to literally panic.
But maybe they did?
By jethronethro 2022-09-0819:15 Or maybe just used the wrong word (panic instead of worry)? Regardless, what I posted still applies ...
