Estonia’s inflation hit 25% year-on-year in August, energy prices to blame
estonianworld.com
estonianworld.com
The cash that the governments printed via negative interests to give to the VCs and to real-estate owners really skewed the local market (increasing both prices and costs of producing).
The Estonian gov has basically no tools to fight against the real estate bubble either or to bankroll the most fragile startups (and they may not be as strong as they seem), so we're basically fucked.
Regarding energy, we had 4000 EUR / MWh prices a couple of weeks ago for an hour.
Think of it as oven / sauna / air conditioner costing you 10 to 25 euros per hour (if I remember right, it didn't matter that much when you have no other choice than turning them off).
For energy this is mostly because of the war, but ecological policies also affected (Estonia was known for "dirty" petrol, known as shale oil, and they are restricted there).
The only retail companies that try hard to provide good prices are LIDL and IKEA, and in that regards, they are great.
Other distributors have very poor logistics as they consider Estonia as the very end of their distribution chain (no matter if for Baltics, or for Scandinavia we are at the end of the West).
Salaries gets higher too because of much corporate cash, there is this nasty infinite loop of inflation -> salaries -> inflation -> salaries.
This is why in the newspapers we occasionally see rants from the population that foreigners destroy the quality of life by pushing prices higher.
One cause is that there is a limited amount of space in Tallinn but high attractivity for IT foreigners (due to low taxes and high startup funding).
This means that good housing is though to find for a decent price (check kv.ee for example), and that there is not enough housing for everyone.
Not enough housing means lot of construction needed.
Lots of construction worldwide + scarce construction supply + abundance of money + lot of people = potential housing catastrophe.
Concretly, for example, I wanted to buy a reasonably priced house in the countryside (500K EUR for 160m2 / 1700sqft), and someone who sold his Pipedrive or Transferwise shares (I don't remember) came and offered over 100K more than the list price. This is very broken (and I say that though I am also a startup guy, so I feel it's sad/wrong for the non-IT Estonians).
The city also have 50K to 80K refugees that came in a few months. Where do you host them ?
Well, you pay high price for rent.
Finally someone who undestood this was not linked to the war in Ukraine, but to the policy of the ECB to print money at will.
Inflation may be too much money chasing too few goods, but the "too few goods" part is absolutely crucial here. And if we want and expanded economy, the "too few goods" part should be the focus.
Any country that has achieved good living standards sees their citizens pushed out of housing by the rich people of other countries. Since the inflow is capital-only, you don't see inflow of people who can contribute to the society but you see people who come and consume resources just because they made wealth buildup oversees.
People like to blame it on immigrants but when working class immigrants come they works their a*ss off and contribute huge amount into the society.
It's almost like enslavement.
Someone in a corrupt county somehow builds up some wealth, which is essentially what the society owes them(IOU). Normally they would figure out what is actually owed to who by themselves but they take that IOU's and move to, let's say a country that has good living standards, like Portugal. Now the government is happy about it because they have IOU inflow that they can tax or stir up the economy but these rich people often don't use the IOU's to bring machinery or pay Portuguese to do research or anything like that. What they do is real estate investments.
Normally that would have been O.K. but since that money is not moving in a free market(remember, only the money can move. It's very hard to move around people and services), what you have is extreme market movements due to extreme capital movements without extreme movements in labour.
For example, when a Russian oligarch brings 10 billion dollars to London, suddenly huge demand is created but Russians who owe the oligarch the services can't come to build houses needed. Obviously their money goes into other parts of the British economy but you end up with Russians in poverty, overpaid people in some sectors where the oligarch money flows and local residents who cannot afford to pay rent despite working very hard.
That's why I'm proponent for restriction of capital movements wherever there are restrictions on human movements OR removing all restrictions on all kind of movements. In the first case we will have a patchy world where those societies who got their act together flourish(but they might do nasty things to the weaker ones. Also we lose many benefits of globalisation, like specialisation) and with the second option we will have an equalised world based on merit(however the transition will be very painful for those who are in a good standing currently, it also takes generations to learn to live together).
Unfortunately I think our minds cannot comprehend how much wealth has been created in the world in the last 30-40 years, and how many rich people that's created out of the 8bn world population.
Something like 1.4m americans have a net worth above $10m. 1.4m!!! And that's just the US. Can you imagine how many millionaires the world has created? Now imagine how much real estate actually exists in the city centers of large cities in the world. Not that much. Especially in popular cities. Nowhere near enough for this wealth to go into.
This isn't about oligarchs, or rich dictators. There's nothing illegal going on here (there is a little, but its negligible).
It's the world population and the wealth we've created. It's insane. A lot of people have gotten very rich.
What I say is, the problem here comes from restricting the markets in a way that blocks natural trade and things cannot stabilize.
See, flipping burgers for a week in USA gives you an iPhone that is made by countless people all over the worlds but doing the exact same job in Turkey for example gives you a MagSafe charger only and you need to keep flipping burgers for 30 more weeks to get the iPhone.
This creates an labour arbitrage that could have been fixed with people moving around like the way it happens between cities in the same country but instead we have capital movement only which results in wealthy squeezing out the resources of areas of restricted movement, thus perpetuating the arbitrage.
It's almost like a scheme to keep the property owners and the workers in separate classes without an ability to move between classes.
Furthermore, sanctions, by definition, hurt both parties. It is impossible to design a boycott that doesn't hurt both the buyer and the seller. The only question is: who gets hurt more? If Europe was so determined to "stand with Ukraine" then they should've put soldiers on the ground over there, not shot themselves in the foot with sanctions on goods that they need.
Would Europe keep buying Russian gas while killing Russian soldiers?
"China is able to secure cheaper supply and resell shipments from more expensive exporters to utilities in Europe and Asia, while Russia can continue selling fuel at a profit."
https://www.bloomberg.com/news/articles/2022-09-08/china-sna...
Financial Times:
"The world’s largest buyer of liquefied natural gas [China] is reselling some of its surplus LNG cargoes due to weak energy demand at home. This has provided the spot market with an ample supply that Europe has tapped, despite the higher prices."
https://www.ft.com/content/1e20467a-5b53-42b7-ad89-49808f7e1...
Therefore, Ukraine's fate is sealed and the outcome is dictated by Russia's desires.
The open question is how long it will take and at what cost, to Ukraine, its allies and Russia. And it seems that there are vested interests in prolonging the conflict as much as possible.
Russia is not capable of fighting NATO and nobody besides Russia has any interest in Ukraine invasion.
But NATO soldiers are not needed in Ukraine. Ukrainians just need weapons.
Ukrainians have plenty of capable and very motivated men.
And the weapons are cheap, very cheap in comparison to loses from gas etc.
That is very far from the truth - please check the recent events. It is possible to fight against Russia, and it is in the best interest of the Europe and the collective west to do so.
For multiple decades Russia was using energy as a way to corrupt EU.
It was never only about Ukraine - occupation of Ukraine was always the first step. Baltic countries and Poland understand that very well, please listen to them. If Ukraine falls, Russia will invade Europe in a decade with Ukrainian military on its side.
Europe need to remove its dependence on the Russian gas completely for its own safety. Inflation is a very small price to pay compared to the alternative.
Also with regard to the nuclear threat.
Russia can threaten with nuclear holocaust at any time for whatever reason.
They could say tomorrow: give up all land that belonged at some point to Russian Empire, Soviet Union, Warsaw Pact or we will start nuclear holocaust. They could even demand Alaska. Then what? We give in? No!
You are forgetting or ignoring Russia's bigger guns. If Russia wanted to use NATO methods, it would be over in one day with hundreds of thousands of civilian casualties.
> For multiple decades Russia was using energy as a way to corrupt EU.
"Interesting" narrative.
> If Ukraine falls, Russia will invade Europe in a decade with Ukrainian military on its side.
If Russia wanted to attack NATO and start WW3, it would already have done so. Why would it need to attack Ukraine first?
Please try to think logically.
> Europe need to remove its dependence on the Russian gas completely for its own safety.
The same as above applies. If Russia wanted to conquer Europe as you seem to believe, independence from Russia's gas isn't going to help in any way to prevent that.
Just curious - like what?
https://www.19fortyfive.com/2022/02/russia-has-a-massive-sto...
What methods?
[1] https://www.bbc.com/news/world-europe-62873205
[2] https://www.theguardian.com/world/2022/sep/11/russian-strike...
[3] https://media.defense.gov/2017/Dec/29/2001861964/-1/-1/0/T_G...
Depends on the murderer.... sometimes we send them more soldiers to help them in places like afghanistan.. and syria.. and iraq.. and many more.
I live in a very small eu/nato country that noone cares about, and we still do it... so my taxpayer money is used for occupying eg. syria right now, in a conflict we literally have no interest in and profit nothing from.
Well, good game, now give up, they have nukes? ...
Also Ukraine does not ask for military interventions.
Poland offered military intervention, Ukraine refused.
Ukrainians want weapons.
I'm not saying this is what we should do but it's what will happen probably: Freeze Nato accession, send guns, helmets etc. Basically whatever happened to Ukraine.
You're assuming that money and power matters less to Putin / oligarchs than soldiers' lives. I'm not sure that's a valid assumption.
> We don't impose monetary fines on murderers
Individually - no. At a larger scale - yes. For example fines / taxes from https://www.epa.gov/laws-regulations/summary-clean-air-act
My point is, they've already risked far more than just their money and power by going to war. They've also risked their lives (if there was a coup, they'd be dead), and the lives of their countrymen, and the future/standing of their whole country. Such people are not going to be deterred by sanctions they already knew were coming.
Also Europe doesnt need Russian gas. It has become reliant on it sure, but it is weaning itself off that and that gives them more power and Russia less in the long term. Your points look at the immediate short term (less than 12 months) and does little to consider beyond that timeframe.
Jesus christ. What have you been reading.
I would go so far as to suggest that NATO has done 110% of what they can against Russia. Unlimited money for Ukraine, unlimited supplies for Ukraine, unlimited training for Ukraine, and even now basically unlimited intelligence! Think of the HIMARS! The Karkhiv offensive is Ukraine's 'first truly western' attack, complete with a southern feint, built entirely on western intelligence and strategy. And as a result, Ukraine is routing the Russian military who are in drop-everything-and-run mode in half of Ukraine. Is that not a success??
Europe/US westernized/NATOized the Ukrainian military in about 6 months flat and spared no expense in the process.
Short of starting a nuclear world war 3, it's hard to imagine doing more.
https://en.wikipedia.org/wiki/Ukraine_Democracy_Defense_Lend...
1) You "" quoted "support" as a way to diminish it, even though the Western support has clearly been absolutely instrumental in every possible way to the Ukrainian resistance. To deny this is either ignorance or malfeasance. Without western "support" Kyiv would have fallen in the first weeks. Instead, Ukrainians are fully routing the Russians who are in mass retreat. Some "support"!!
2) American lend-lease is a way to reduce domestic red tape and expedite transfers of military equipment. It's a formality and the US is not some creditor hounding nations. In fact, some nations never repaid the WW2 debts at all and no one cares https://en.wikipedia.org/wiki/Lend-Lease#Repayment Your characterization of it is... bizarre and weird... unless you're pushing agitprop. If the Ukrainian people make some token tiny payment 50 years from now as a commemoration of this beautiful new brotherhood, it will be a special moment. But if it never comes, no one will care.
3) American lend-lease is SEPARATE from the monetary assistance -- the $15 billion dollars the US has given to Ukraine since the war began is not a lend-lease debt. And American lend-lease obviously doesn't cover things like the MASSIVE Polish contributions. To lump all of Western "support" into "lend-lease", when in reality it's not, again is either ignorance or malfeasance.
Yes i am diminishing the "support" provided by the west, as op mentioned if the west was so determined to stand with Ukraine then they should be putting soldiers on the ground. People like you couldn't careless, your "support" will just add fuel to the fire of an already burning Ukraine.
I'll go further, the wests support is actually tantamount to warmongering (but thats par for the course).
Lol the Kremlin yesterday posted their daily maps which showed a full retreat from the NE region to Russian borders, and social media is full of videos in NE Ukraine of abandoned gear, tanks, artillery, stockpiles, etc.
The Kremlin amusingly calls it a "a planned withdrawal" but even Russian commentators are struggling with the absurdity of the latest spin, because they have front-lines Russian bloggers attached who are filming the abandonment of heavy equipment, supplies and even small arms. How funny that you accuse me of western-MSM when even domestic Russian media has shown it.
Bless your sweet little heart, I know, it's really hard to maintain the Russian propaganda in places where the Kremlin can't murder people who disagree.
> I'll go further, the wests support is actually tantamount to warmongering (but thats par for the course).
And there it is. The 1984 Doublespeak moment that the Russian propaganda thrives on.
Defense is Warmongering. Helping is hurting. How dare those dastardly westerners allow Ukraine to freely associate with them! The Ukranian people are the property of Russia and should be thrilled to be "de-nazified"! The proper ethical decision is to simply give in during Russia's "de-nazification" genocide campaign!
I'll go further: your defense of the horrific Russian genocide campaign by attempting to blame the West for it is an act of complete moral cowardice and a textbook example of how propaganda leads people to support genocide.
[1] https://www.theguardian.com/world/2022/sep/11/russian-strike...
While Russia's attacks on Ukraine's power and heating infrastructure are vile and evil and designed to hurt civilians, I do believe that the West has many plans to help the people of Ukraine who are displaced and at-risk due to Russia's warcrimes.
This also includes the reality that the Russian's are attempting to destroy nuclear facilities to create a massive regional fallout event, another breathtakingly evil war crime.
> It seems to me that the local success in Kharkiv is not possible to expand onto other regions without significant army loss, because the adversary is energy-independent and is able to continue indefinitely as long as their army doesn't lose its military or as long as their losses a xN fewer than Ukraine's.
This doesn't make any sense. Russia is not "energy-independent", quite contrary, they require supply lines for fuel to keep the vehicles moving just like everyone else. The Russian supply lines have been notoriously bad this war, which is arguably the #1 reason for the poor Russian performance. (Although American intelligence tracks all Russian supply movement in Ukraine, and American HIMARS can hit any target in Ukraine, so the Ukrainians have viciously destroyed Russian supply infrastructure from long range, forcing Russians to keep supplies far from the front).
Ukraine has just dealt a massive blow to the Russian resupply lines by taking major train hubs that the Russians, until 3 days ago, were using to resupply forces across Ukraine.
> How much military did Ukraine lose to achieve success in Kharkiv region?
Considered that there was very little reports of Russian resistance (they were in full withdrawal and not mounting any kind of stand), reports from both Ukraine and Russia show that losses over the past 3 days have been minimal for both sides.
What help would it be in case of a blackout? Energy prices in Europe are soaring at the moment and I don't see a clear strategy how these infrastructure destructions could be mitigated and replaced by european nations on a timely manner, that is crucial for civilians' safety in major urban areas. People in rural areas could probably fallback to sustaining their households by burning logs and coal, but the city dwellers?
Yes, Russia will be able to enact a lot of pain of Europe through natural gas, but the reality is that Europe is fully capable of transitioning away from Russia, while Russia has absolutely zero plan for their economy after losing their biggest export and biggest customer.
Honestly, the oligarchs, the Russian generals, the Russian people, when they realize that their main source of money is being replaced permanently it's not hard to imagine regime change leading to the end of the invasion and re-opening of supplies. Putin might not care, but his people do. This is how out of control dictators fail... they cut off their nose to spite their face.
I see no need to respond to your hysterical misrepresentation of my point. Holding an opinion on an issue that is not yours does not mean i immediately support the exact opposite. Again, no nuance with you at all. Again, I am against the war. Putins resolve is far stronger than the wests and whether you like it or not Putin is winning the war.
More denial of real evidence. I love how casually people simply discard real video evidence that goes against their propaganda beliefs. What about the Kremlin's official maps? I notice you did not have any opinion when I quoted the Kremlin. Hmm!
Putin can and will lose this war, and it will cost him his position and his country.
> I see no need to respond to your hysterical misrepresentation of my point
Fascinating how when I use the exact same debate tactic as you, suddenly you feel the need to pretend to be above it (despite doing the same thing multiple times in a chain we can all read). I love the "golden rule mirror" because it exposes the hypocrisy of bad actors online so effortlessly.
> Again, no nuance with you at all
And I would charge that you have no evidence. You exist in a world of stories and propaganda and your only skills are "denying video evidence" and "spinning stories the opposite".
Also, the person who says "putin cannot and will not lose" is saying someone else has no nuance? This is rank hypocrisy and a bad joke.
> Putins resolve is far stronger than the wests and whether you like it or not Putin is winning the war.
The genocide of the Ukranian existence will not succeed, no matter how much Na*i Putin and his supporters like you want it to be. The Russian genocide will fail.
Why? The entire domestic predicate of the war is non-existence. 50% of Russians do not follow the war and don't care. Putin plays on ferris wheels while his army crumbles in mass retreat.
The only way Putin can win is through a full scale draft and war-time mobilization of the Russian economy, which he cannot do.
We are watching the end of Putin's Russia in real time. I personally believe that the fallout from this massive blunder will be the breakup of Russian colonization across Asia, and countries like China will be growing.
Also, Russia is capable to start a thermonuclear global holocaust at any point. They could literally say tomorrow - either you give us Warsaw Pact / Russian Empire territories or we start a thermonuclear global holocaust. What then?
But Ukrainians are not asking for military intervention. They are asking for stuff like ATACMS.
So the idea is not so much to "stand with Ukraine", it's to stand with whoever is next. The threat of sanctions should be enough to prevent the future use of force, but you have to be prepared to pull through when they're ignored for that to work.
(1) We shouldn't conflate current deterrent & future deterrent. Putin may be all in already, but you can signal to a future autocrat that he'll risk the stability and safety of his rule if he follows in Putin's footsteps. Selfish autocrats don't want to die.
(2) Some targeted sanctions are actually effective. You hamper their military industry supply chain, which they need for a long war.
08.12.2014 https://www.reuters.com/article/baltic-gas-idUSL6N0TS2T32014...
17.10.2018 https://www.washingtonpost.com/world/2018/10/17/eastern-euro...
03.02.2022 https://news.err.ee/1608487619/estonia-suspends-all-oil-tran...
Ukraine is neither in NATO, nor the EU. The best course of action is supporting it while it frees itself with its own means, which is what is happening.
Poland was offering intervention, Ukraine refused.
They want weapons. Offensive, long range weapons for counteroffensives. They have plenty of very motivated and capable men.
NATO can do that easily. We just adhere to some imaginary list of things that can and can not be delivered.
The cost of gas shortages are many times the cost of weapons and weapons make actual, immediate difference for people on the ground.
Support and sanctions are two seperate things.
We also can't keep being vulnerable to Russian black mail.
We need to increase investment in renewable power and build more nuclear power plants.
How do you do that with 40% less gas in 1 year? You can't, because you will have rioting in the street, you will have people literally freezing to death, and no green politician will ever get elected again.
Oh, and btw, what's the answer now to this gas shortage? Burning more coal and firewood. So your proposed vision is doubly going in the wrong direction.
This isn't like switching from windows to linux. It takes years, and people actually die in the meantime if you get it wrong.
EU leaders have to start behaving like we are in an economical war, because we are.
My country Poland offered military intervention during the first trip to Kyiv after invasion, Ukraine refused.
Ukrainians want weapons. Last I check they were asking for stuff like ATACMS.
Listen to what Ukrainians are saying. They know what is the best for them in the current situation.
Poland was offering something of the form of peacekeeping mission and Zelensky was afraid that it could lead to freezing of the conflict based on his own reporting in an interview with Meduza. Ukrainians wanted to go on counteroffensive from the beginning.
Everybody who had a part to play in Russian defeat is going to be patting themselves on the back. Sanctions may have had only a small part in that, but it was a part, and anybody complaining about sanctions is going to be on the wrong side of history.
If gas or tomato prices are going up such that everything that uses gas or tomatoes goes up. You could say that's inflation because gas and tomatoes are so widely used.
Or you could just say it's a price signal. You need to use less gas/tomatoes as they are in short supply.
It doesn't seem to be as circular as the wage based inflation, where the higher wages and the higher costs are the same thing and recurse.
In reality, higher costs may eventually be followed by compensating higher pay, but in the interim everyone just works the same for the same (devalued) pay with a steep drop in discretionary spending because the step function to 'unemployed' is so painful that everyone would rather handle the price feedback through attrition. And in the meantime we get the shittification of all service that wasn't previously operating at high margins, because everyone is making do with understaffing.
And, of course, tomatoes are ridiculous equivalency to attempt. Transportation, energy, and agriculture all lie directly downstream of oil/methane costs, to name a few obvious examples.
They have all that's required to be self sufficient and even exporters in terms of energy:
- little heavy industry
- very low population density in rural areas
- mostly centralised heating networks in urban areas
- plenty of cheap biomass, mostly for use in winter
- a fairly decent bit of sun, mostly for use in summer
- plenty of hydro power [0]
- fairly good hvdc interconnects
- plenty of cheap EU cofinancing
- a population largely ready to stick it to the godfather in Moscow
[0] https://en.wikipedia.org/wiki/List_of_power_stations_in_Latv...
I don't know the answer to your question for certain, but let me make an educated guess:
- Some electricity production in Latvia is natural gas based cogeneration, meaning it needs to run for inhabitants to have hot water.
- At Pļaviņas hydro station [0], the biggest in the Baltics with 894 MW, water levels were lowered from July 11 until August 20 for maintenance work. Production might not have resumed yet.
- Latvia has an extremely large natural gas storage facility at Inčukalns [0]. This might have something to do with it.
[0] https://lv.wikipedia.org/wiki/In%C4%8Dukalna_pazemes_g%C4%81... (sorry, Latvian only)
I only know about the situation in Latvia in detail. There, installing small scale solar really is quite lucrative. You can use the amount of excess electricity produced in summer in winter, paying only the very low standard network infrastructure fee on top. Plus subsidies: up to 4k€ for your solar install, up to 4k€ for buying an electric car, and up to 4k€ for a heat pump install.
If it costs $250EUR to deliver a barrel of oil, and you cap it at 100EUR, what happens?
If you were an oil company and the government says you can only sell your 250EUR barrel of oil for 100EUR, what would do?
These are all problem can be solved by capping oil price. Oil is a buyer's market, the US and Canada are producing so much of it, if OPEC+1 reduces output, it just amounts to a suicide for them.
I'm all for having renewables when the technology is ready, but it's not and high energy prices will start killing old people that can't afford to heat their homes.
Are you saying there's no space in Estonia for ~1466 wind turbines? That's before we include offshore wind, solar, geothermal, nuclear, hydro, and storage... Basically, you're spreading FUD.
>> That's before we include offshore wind, solar, geothermal, nuclear, hydro, and storage... Basically, you're spreading FUD.
Yeah, one of those is not like the other. Not sure how you slip nuclear in there given that Greens are against it. Storage isn't a solved problem either.
The UK is solving that problem by putting most of the turbines in the sea. Seems to be working well so far.
One suggestion would be politicians to be chosen by jury, for periods of say a year to lock them out of having so many fingers in lobbyists pies...
Renewables definitely have their place, but they are nowhere near being able to replace the continuous production of FF and nuclear plants. Moreover, the grids were neither designed nor built to deliver power from massively distributed, massively variable sources.
There's a third problem too, which ecologically-minded people seem to overlook: renewables are only "renewable" if you consider the real estate they occupy to be infinite.
Again, there is an important place for these technologies, but it is not the case that we simply should have built more.
EU are considering capping the price roof in order to address this so that energy prices start to match that of production costs. The European grid also need overproduction if we are to have market forces driving down prices, and you need large and effective transmission lines in order to distribute the renewable energy without bottlenecks. We also need to have reduction in energy usage when renewable energy production is low, and we need to reduce the dependency on the quite aged hydro power installations in the northern parts of Europe. The water reserves at those hydroelectric stations is also in a historically low levels, likely caused by a combination of climate change and poor management.
We need more of everything if we are to disconnect the Russian gas from European energy market.
I doubt it, however. Even fossil fuel companies know we are transitioning away from oil over the next few years, and don't want to staff projects anyway. This is classic behavior at a tech switch.