708: European industrial collapse - focus on energy and car manufacturing
12-04-2024
UK and European Collapse Has Started – Energy Prices Too High, Big Government, Woke Policies
We have done a deep dive research into the European economies of the biggest countries like the UK, Germany, France, Italy and Spain – and regrettably, we’d like to announce the economic collapse has just started in earnest. The underlying reasons are multiple:
1. Energy Prices: Ridiculously high energy prices caused by woke policies driven by the climate change agenda – that has led to Germany closing down it’s Nuclear power plants, the UK taxing the North Sea to death and sanctions on Russia creating high inflation and skyrocketing gas and electricity prices.
2. Intermittent and unreliable solar and wind power has exacerbated the situation particularly in the UK – and especially in the winter when it gets very cold – which is when the wind does not blow and there is almost zero solar power.
3. Bloated Public Sector: Expanding government and public sectors that have sucked the life out of private sector businesses – with higher taxes and wasteful public spending. The opportunity value lost by having so many talented employees sucked into useless public sector jobs is putting a dampener on private sector growth.
4. Over-Regulation: The gigantic increase in regulations, rules, punitive sanction, overreaching judicial systems, fines against the private sector and individuals, and a legalistic non trusting business environment has driven investment to the Americas, South Asia, Australasia, Africa and the Far East.
5. Slack Working Practices: Post Covid slack working practices – especially the advent of home working – has led to an entitled low productivity world in both the public and private sectors. The lack of integrated teamwork in a productive office environment has lowered growth and productivity whilst escalated costs and reducing value added. In the UK – the new Labour government announcement that “we need to get away from the work culture of presenteeism” is exacerbating the issue. These is viewed badly by most business leaders and many hard working sole traders – this is the culture Labour wish to generate within the public sector – “we can all work from home to reduce our climate change footprint”.
6. Communist View on Agriculture: The European bureaucrats and UK Labour government are assaulting farmers with fertiliser restrictions, inheritance tax grabs, climate change legislation and over-inspecting farms. It’s almost as if they are willing the private sector farm businesses to fail – so they can take them over as nationalise land-farms. We think this is just the beginning of a rather sinister borderline communist type land grab – a vindictive attack on the ultra-hard working families that are the stewards of our countryside that put food on our tables – a disgrace.
7. Innovation: In the UK, the older industrial areas are now in terminal decline as most talent has left, innovation has been stifled and an aging population and bloated public sector makes large areas and regions in the UK economically unsustainable. In the UK, only the London area, Cambridge-Oxford, Bristol, Manchester and possible Leeds and Newcastle seem to have any significant centres of innovation and new technology. 80% of UK regions are in steep industrial and economic decline.
8. Car Manufacturing: The European car manufactures made a huge mistake around 5 years ago. They were slow to innovate, watched as Tesla and the Chinese “stole a march” – tampered around the fringes with high cost variants like hybrids, electric cars built on ICE foundations and even hydrogen cars. Battery innovation has been low compared to Tesla and China. The European and other ICE manufacturers are 7 years behind Tesla on AI/autonomous driving-databases, and have absolutely failed - now making around a $5k loss on each electric car sold – now having to scale back production because they can’t afford the losses made on each vehicle – as demand for their poor performance products has waned. The ICE (internal combustion engine) manufacturers will all go bankrupt in the next five years – our research concludes. The younger generation won’t be interested in the “boomer brands” like BMW and VW – their loyalty is far less – and they will flex by buying Tesla and Chinese electric vehicles by 2028. Brands like BYD will take over from VW. The ramifications for European business is colossal – because car manufacturing has historically been such a big employer, GDP and national tax generator. Whole car manufacturing cities will be decimated with the car factory closures - this will have a huge economic and societal impact because of tickle down from this factories through supplier, services and contractiers.
Our prediction is these ICE brands will go bust - or need huge unsustainable government cash injections to save them from going bust - in the next 3-5 years:
Fiat, Citroen, Peugeot, Volvo, VW, Skoda, Aston Martin, Opal, Vauxhall, Ford, Nissan, Toyota, Mazda, Lexus.
Other more luxury manufacturers that will struggle: BMW, Mercedes, Audi, Volvo, Jaguar.
Niche Manufacturers that might survive are: Land Rover/Range Rover – only because rich people love huge monster status cars.
All the above companies are shorting opportunities on the stock market. Long Tesla, short everyone else – it’s simple.
It's worth noting, car manufacturers like in BYD in China are not necessarily good investment because they need huge government hand-out to boost their global market share - eat up the competition they will, but it doesn't mean these companies will make any money. It's just they will boost Chinese global economic dominance.
UK Zero Tariffs on Chinese EV cars. It's worth pointing out - this is rather galling - the Labour government are residing over a no tariff policy against Chinese EV cars - the only developed G7 nation to have zero tariffs. Another example of how the Labour party are destroying UK businesses. They tax the North Sea oil and gas at 86% - mandate intermittent wind and solar - therefore we have electricity prices six times higher than the USA whilst we allow cheap Chinese EV car imports with no tariffs - from a country that is building a new coal burning power station every week to supply cheap electricity for their EV car manufacturing. You couldn't make it up if you tried! They seem intent on doing everything in their power to destroy UK businesses.
The summary is - it's best to invest in the USA and avoid investing in Europe, particularly the UK that has four years of socialist Labour policies that will lead to a currency collapse and high inflation as the industrial decline accelerates.
We hope this Special Report gives some key insights - and our next Special Report will be far more upbeat - describing and share the very best safest high return global investments we can think of.