Double-digit rates of inflation in the European Union

This is what is happening in many EU countries right now. Will the energy crisis make anything better or worse? Knee-jerk reactions are leading many European countries towards a major disaster. Britain's backwards and forwards political decisions do not favour any kind of political stability either. This comes on top of the COVID disaster and the rabid anti-Russian attitudes that might be leading the continent towards a political blackout. Investors need to trust that European economies are in capable hands. Are they?

Welfare systems don't have the capacity to deal with changes of such magnitude and the financial system is bound to suffer if suddenly customers cannot afford to repay debts or to keep up with mortgage payments. There comes a time when interest payments become unaffordable and Argentina could teach us a few lessons about that. Mortgage defaults and inabilty to rent accommodation are major issues. There is even the case of landlords who explicitly say that they do not let properties to people who can only pay for accommodation with welfare payments. There will be even less properties let  to people supported with welfare payments if legislation is passed preventing landlords from evicting tenants who cannot afford tenacy payments.

Britain is in a dire position. Who is the Prime Minister? Who is the Chancellor of the Exchequer? Who is in charge? What will be the tax regime tomorrow? Day-after tomorrow? Next week? Next month? Political volatility and economic volatility go hand in hand.

Germany is no better. SPD barely managed to form a coalition that could be broken apart by the consequences of energy crisis. Job creation? If manufacturing is torpedoed by energy prices or scarcety of energy sources, the concern will not be about creating more jobs, but about keeping the ones that already exist. BMW's move to China might be due to several factors including an uncertan tax environment, the prospect of energy cuts, the fact that China is not deterred from building new coal fired energy plants and therefore able of offering cheaper and reliable sources of energy and if this wasn't enough the fact that China is a gigantic market.

If financial sectors get into trouble - it happened before - will governments be willing or be capable of rescuing financial sectors? And what about industrial unrest? Are we thinking about the consequences of persistent industrial unrest? For every strike i.e. transport strike, how many other areas are negatively impacted? If strikes happen simultaneouly, the impact is compounded.