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As the summer of 2022 came to a close, countries in nearly every continent were impacted by historic heat waves and droughts that not only threatened lives, but also threatened economies reliant on water for energy production.
Gerald Celente, the publisher of The Trends Journal, has identified these acts of nature as “wild cards” and not possible to forecast.
Today, weather around the globe has created a new hurdle for economies. Parts of Europe continue to suffer their worst drought in 500 years. Last month, Celente painted a grim picture if the heat wave persists. He wrote “this wild card being dealt by nature will cripple countless businesses, spike inflation, inflict unprecedented restrictions and difficulties on entire populations…which in turn will escalate into political unrest.” (See “ECONOMIC UPDATE – MARKET OVERVIEW.”)
The pain has been compounded by the energy war with Russia.
The drought has exposed some ancient stones on the beds of lakes and Nazi warships in the Danube River. One rock at the bottom of the Elbe River in the Czech town of Dêčćin, had an inscription that read, “Wenn du mich siehst, dann weine,” which translates into, “If you see me, then weep.”
Besides soaring temperatures on land, the National Oceanic and Atmospheric Administration issued a report on 31 August stating that global ocean heat content hit the highest ever recorded in 2021.
AFGHANISTAN/PAKISTAN: At least 1,325 people, including 466 children, died in major seasonal flooding in Pakistan that was sparked by melting glacier ice and monsoons.
The severity of the flooding has been unprecedented and about one-third of the country is submerged, about the size of Wyoming.
The economic destruction from the flooding is hard to quantify, but 1.2 million homes have been destroyed and the total damage to property is expected to be about $10 billion. About 33 million people have been forced to flee from their homes.
Two weeks ago, the Logar province was hit with major floods and one of the village elders told The Associated Press that the flooding was unlike anything he’s ever seen.
“It destroyed all the people’s animals, houses, and agricultural lands. People are homeless, they have been forced to take refuge in the mountains,” Del Agha said.
One 23-year-old resident from Haji Manik Khan village, which is in the southern province of Sindh, told Al Jazeera that he was supposed to be attending university, but has been living in a tent with 18 other family members. He said his family’s crops—worth about $8,000—were completely destroyed.
The flooding will likely not recede for months, and will cost the family another wheat harvest. The student’s father said he will be unable to provide for his family on his meager pension and may have to keep his son home.
The flooding in Afghanistan has been caused by seasonal rains, which begin in July and continue through September. Video emerged on social media that showed fast-flowing waters carrying trees and other debris.
These flash floods have caused at least 400 deaths and injured over 100. The UN’s Office for Coordination of Humanitarian Affairs, reported that the flooding has displaced at least 8,000 and damaged 3,000 homes.
The flooding hit farmers hard, and swept away dozens of cattle; wells in towns have filled with water.
Martin Griffiths, the under-secretary-general for Humanitarian Affairs and Emergency Relief Coordinator at the UN, said Afghans need an injection of $770 million to survive the upcoming winter months.
More than half of the country’s 39 million are at risk of famine and more than one million children are believed to be “suffering from the most severe, life-threatening form of malnutrition and could die without intervention.”
TRENDPOST: The New York Times reported that a woman wearing a blue head scarf in Tai Qamari village, which is in the eastern province of Parwan, visited a nearby village to borrow clothing for her children. Water wells in her town were filled with mud, and there was no easy water access.
“My nerves are broken,” she told the paper. “My whole being is destroyed.”
The country has been suffering for a year since the U.S.’s disastrous withdrawal. The U.S. is still the single largest humanitarian donor in Afghanistan, and provided more than $774 million in humanitarian assistance in Afghanistan and for Afghans in the region since mid-August, according to USAID.com.
Afghanistan is also one of the countries that could be impacted by the decline of freshwater storage in the Tibetan Plateau, which could impact 2 billion people. The world’s largest freshwater reserve could run dry and impact those living in these countries by the middle of the century.
A recent study found that, without intervention, there could be a total collapse of the water supply for those living in central Asia and Afghanistan.
ALGERIA: Wildfires broke out in the northeast mountains of Algeria and much of the country from 17 August to 21 August that killed at least 43 people, injured 200, and destroyed about 100,000 acres of land.
Many residents in the provinces complained to Algiers that the government was not taking the risk of these fires seriously enough and much of the damage could have been prevented. Al Jazeera reported that fires broke out along the Algeria-Tunisian border.
Last month, about 34 people were found dead there, including a family of five who was located inside a home. The report also said eight people were found dead on a public bus, many of whom were vacationers there to “enjoy paradisiac beaches and enchanting landscapes,” according to Aïmene Benabderrahmane, the prime minister.
He vowed to support the families of the victims and renovate property destroyed in the fires. He was quick to make the announcement because his government faced criticism for not investing enough in firefighting technology. Algeria was forced to ask neighbors for firefighting help.
An unnamed fire official told the Agence France-Presse (AFP) that Africa’s largest country was once home to 22 aircraft capable of fighting these fires, but they had been “sold on the cheap, without any alternative solution being proposed.”
Algeria used helicopters leased from Russia to combat the fires, the UN said.
But climate change has been recently blamed on changing the country into an arid “tinder box.”
Hundreds of people were forced to flee the fires that vex the country every year. About 107 fires have broken out in the country since the beginning of the month. Last year, 90 people died in these blazes, and 100,000 hectares of woodland was consumed. The government blamed arsonists for the fires last year.
TRENDPOST: Said Sadek, an Egyptian political sociologist, who lives in Tunisia, told Voice of America that the temperatures in Northern Africa have been unprecedentedly high and have contributed to these fires.
“The whole area of North Africa from Morocco to Algeria to Tunisia [is] facing big challenges,” Sadek said. “The weather is changing, and they are suffering from water shortages and extreme heat, rising heat, that are pushing that.”
Algeria’s National Meteorological Office said last week that temperatures in the eastern part of the country could hit 116.8 degrees Fahrenheit. António Guterres, the UN secretary-general, noted last month that people in Africa, South Asia, and Central and South America were more than 15 times more likely to die from extreme weather events, the Times reported.
NORWAY/GERMANY: Norway produces more than two-thirds of its electricity from hydropower and—like most European countries—is dealing with a severe drought that will add even more pressure to its future supply.
Sverre Eikeland, the chief operating officer at Agder Energi, a Norwegian energy group that deals with hydroelectric power, took a reporter from The New York Times on a tour of a reservoir last month. He pointed to a row of vegetation that was about 50 feet above the water’s surface.
“That’s where the water level should be,” he said.
The paper said hydropower output from the country, which sells its electricity to neighbors, is at a 25-year low for the country, which means prices are increasing. The problem has been compounded because Russia has halted gas flows into Europe. Russia warned that gas prices could top $4,000 per 1,000 cubic meters after spot prices surpassed the $2,500 mark.
The country has already announced that it will reduce its exports in order to prevent domestic power shortages if the water levels continue to sink. In a normal year, Norway would ship about a fifth of its output.
German Chancellor Olaf Scholz said the country made the right decision to secure its own power supply during a visit in August to Oslo.
“I very much understand the Norwegian decision making processes, they have to secure electricity production with water and this is a very good job they are doing for the whole of Europe and for Norway,” Scholz said. “They must make sure that there will always be enough water for electricity production in Norway.”
Germany is facing its own power crunch. The country, which relied on Moscow for about half of its gas imports before the 24 February invasion, has since turned to coal. But lower water levels on the Rhine last month added to some concerns because it prevented coal-hauling barges from sailing on the river, thus coal-burning power plants have had a shortage. (The water levels at key spots along the river have since improved and a total crisis was averted.)
The Rhine is considered Western Europe’s most important waterway and Germany relies on the river for 80 percent of its water freight, NPR reported.
“Ships that usually take 2,400 metric tons of freight are now taking only 500 tons so they don’t run aground—that’s a massive reduction in load,” Stefan Merkelbach, a ship captain, told the outlet last month.
Adrian Schmid-Breton, of the International Commission for the Protection of the Rhine, told the outlet that water levels in 2018 were about as low, which cost German industry about $3 billion in goods that were unable to get to their destination. Some economists in Germany predict a coal shortage and Berlin’s economic output falling 0.5 percent in the third quarter, the report said.
“This is particularly problematic now, as Germany attempts to wean itself off Russian gas and needs coal plants as a backup,” Guido Baldi, a researcher with the German Institute for Economic Research, told NPR. “If the transport of coal is hindered, we’ll see electricity shortages starting in September.”
TREND FORECAST: As the Ukraine war continues, Europe’s dependence on Russian gas becomes more urgent.
If Europe enters Dragflation, our Top 2022 Trend in which prices rise and economic activity contracts, the Western alliance holding the sanctions regime together will begin to crack.
The more gas Russia shuts off, the more the alliance will shatter.
Since the Ukraine war began, we have said repeatedly in articles such as “West Paralyzes Russia’s Economy and West’s Economy is Paying the Price” (8 Mar 2022) and “War Scrambles Europe’s Hopes for Economic Recovery” (15 Mar 2022) that sanctions will harm the West in the near and long term more than Russia.
FRANCE: Paris dealt with its most severe drought in recorded history last month and the country is considering the impact that the severe weather condition will have on its economy.
Euronews reported that a group of France’s agricultural federations said it will need “2 to 4 billion euros” to recover from the droughts. The French energy company EDF said it had to cut its nuclear power production because these plants use rivers to cool reactors and require a steady stream of water.
Five reactors in France have received emergency approval to release hot water into rivers to make up for the low water supply, which Bloomberg noted may have been in breach of environmental standards. Energy prices in France are near record highs as a series of heat waves impacted essential rivers used to carry fuel and cool these power plants, the report said.
These facilities will have to monitor water temperatures and, if they get so high that they could hurt the ecosystem, could have to halt output. Some plants in Rhône and Garonne have already cut output because rivers have become too hot. EDF said it also has to limit output due to maintenance that was put off due to COVID-19 staffing issues. The company, which is 84 percent owned by France, anticipates its lowest output in 30 years, The Guardian reported.
Paris relies on nuclear power for about 78 percent of its electricity. The country has already told store owners that they must close doors when using air conditioners or face fines.
Fabian Ronningen, a senior analyst at Rystad Energy, told Business Insider that energy problems are beginning to pile up in Europe.
“From one to ten, I would probably give it eight. I think that’s how bad it is at the moment. Scary is a good way to describe it,” he said last month.
Reuters reported that Dutch wholesale natural-gas prices, which is considered the benchmark for Europe, hit $341 per megawatt hour in the spring, but have since fallen to about $225, which still marks a 300 percent jump since January.
TRENDPOST: CNN posted satellite images showing how droughts across much of the northern hemisphere have impacted water levels on some of the most well-known bodies of water, including France’s Loire River, the River Po, which cuts across northern Italy, and the Yangtze River in China that flows past Wuhan. The report noted that China announced its first drought in nine years and its longest heat wave in decades.
Fortune ran a headline that read, “China Just Ran Into Something That Could Be Even More Devastating for its Supply Chains Than COVID-19 Lockdowns: A Record Heat Wave.”
The magazine, citing the Sichuan Provincial Department of Economics and Information Technology, reported that Sichuan province, which is a manufacturing powerhouse, has been dealing with a drought that forced it to cut its hydropower output.
The province uses hydropower for 80 percent of its electricity. The province announced earlier this month that factories in 19 cities would be forced to close so power could be used for residential purposes.
Mirko Woitzik, global director of intelligence solutions for Everstream Analytics, a supply-chain insights and risk analytics company, told the magazine these latest shutdowns have the potential to be equally if not more impactful on supply chains and the general economy than COVID-19 lockdowns.
“Everyone’s depending on the same hydropower, so the entire region is really affected by it. And there’s no white list at the moment of exemptions. So it’s really the indiscriminate nature compared to the targeted COVID lockdowns that make this much more harmful,” he said.
TREND FORECAST: Considering the levels of equity market and national/global economic criminality, it is difficult to forecast the precise time and date for the market to crash. Much of it depends on how fast and how much the Federal Reserve raises interest rates.
Having denied inflationary pressures for nearly two years—and long failing to raise interest rates despite inflation sharply exceeding its made-up 2 percent target—should the Fed come up with a reason not to raise rates, they will keep them low. Should they only raise rates by another 100 basis points by year’s end, it will signal continued market growth.
But again, there are the wild cards! And as socioeconomic and geopolitical conditions—and should those being played by nature—continue to deteriorate across the globe, the markets will come tumbling down.
UK/ITALY: Italian businesses have begun self-rationing their energy use due to soaring costs due to a plethora of factors, including the Russian war with Ukraine.
Rome said it intends to be gas independent from Russia by 2024, but in the meantime, the country is struggling with a massive drought that has been tied to climate change. Euronews reported that the country has essentially had no rainfall and snowmelt and has been hit with soaring temperatures.
The Po has “all but dried up,” which is hurting the country’s food production.
The report said farmers in the region have already lost billions in euros due to the conditions. There has even been a tug of war between the farmers and tourism industry, the report said. For example, officials allowed some of the water from Lake Garda to flow into smaller rivers, but as the lake hit historic lows, that initiative stopped because of a strong tourism season.
Officials in Britain have announced that parts of England and Wales are experiencing drought conditions as the UK experiences a heat wave and drought. Places like Yorkshire have banned hose use at homes.
Britain is also being impacted by the drought in Norway because the UK receives hydroelectric power from Oslo.
The Guardian reported that hydropower from Norway can power about 5 percent of British homes each day. Terje Aasland, the UK’s oil and energy minister, said that electricity production in Norway was down 18 percent last year and production in south-west Norway last week was the lowest seen this year so far.
“This results in historically high electricity prices and a situation where, for the first time in many years, we cannot completely rule out a period of electricity rationing in the spring. But our professional authorities emphasize that the probability of this is low,” he said.
U.S. Drought Could Raise Food Prices
Agriculture industry executives said last week that it would take two years of strong harvests to ease the pressure from a slow U.S. harvest due to high temperatures and drought, which was compounded by the Ukraine War.
“When it comes to the global food-supply situation, I think things are going to continue to be tight for the time being,” Werner Baumann, the chief executive at Bayer AG, told The Wall Street Journal.
The Grain Belt in the U.S. faced intense heat during the late part of the summer and the nationwide corn-production estimate for August ended 3 percent lower than what was projected. The report noted that the futures prices for wheat last week were up 17 percent year over year and corn prices jumped 28 percent.
Food prices have negatively impacted poor countries and the report noted that there was a 10 percent increase in food-insecure people—or 1.3 billion—from 2021.
Cow ranchers in Texas have also dealt with extreme heat and sold cattle herds due to unsustainable drought conditions across Texas.
The Hill reported last month that the American West was experiencing “its driest period in human history.” The news site said the region is “withering pastures, wrecking feed harvests, and endangering a quintessential way of life.”
The report said these farmers have to decide whether to sell now for less money or pray for rain. The paper said beef prices will likely be impacted for the next two years and eventually result in smaller, family farms going under.
“The implications of fewer cows giving birth to calves are that over the next few years there will be higher beef prices,” Peter Bozzo, vice president of Chef’s Warehouse, a food purveyor to high-end restaurants, told The New York Post.
As of last week, 99.77 percent of California is experiencing drought, according to the U.S. Drought Monitor.
TRENDPOST: As we have noted in our previous issue, although inflation cooled slightly in July, the cost of food hit their highest rate of growth in 43 years. Food prices jumped 13.5 percent in August.
CHINA: China had its hottest August since keeping track of the weather and its third-driest August ever recorded.
Major cities like Shanghai opted to turn off some of its lights in an effort to conserve electricity.
“The average number of high-temperature days was abnormally high, and regional high-temperature processes are continuing to impact our country,” CCTV reported, citing the country’s weather service.
Provinces have already announced efforts to conserve power as record temperatures hit parts of the country. Authorities in Shanghai announced that they will turn off “landscape lighting” at the Bund, the waterfront area in central Shanghai, on Monday and Tuesday to save electricity, according to Phys.org.
The report noted that there are stretches along the Yangtze River, its most important waterway, that have reached unprecedented levels due to the drought. Rainfall in the Yangtze basin has been around 45 percent lower than normal.
China also dealt with brush fires that broke out last month in Chongqing, in the Sichuan Province. The local government deployed 5,000 firefighters and transported 1,500 people out of zones considered to be in danger, China’s Global Times reported. Temperatures in the region have consistently hit 104 degrees in recent weeks.
The Associated Press noted that factories that produce processor chips for smartphones, auto components, solar panels, and other industrial goods. The report said some analysts commented the output “will be depressed while others say supplies to customers are unaffected.”
To put the heat into perspective, Chongqing had an overnight low temperature during the heatwave that was a few degrees hotter than its normal August daytime high of 94.8 degrees.
The Chongqing Economic and Information Commission told the paper that it ordered shopping malls in the area to limit their hours from 4 p.m. to 9 p.m. to conserve power.
China is experiencing a heat wave that has hit 70 straight days. Axios noted that there is no “parallel in modern record-keeping in China, or elsewhere around the world for that matter.”
The website reported that 530,000 square miles of China saw temperatures rise above 104 degrees, which is about the size of Texas, Colorado, and California combined.
EAST AFRICA: Countries in eastern Africa are dealing with failed rainy seasons that have increased the likelihood of famine in some areas. The Wall Street Journal has reported that meteorologists see the potential of another dry rainy season.
Across Ethiopia, Kenya, Somalia, and the autonomous region of Somaliland, 10.7 million people are facing severe hunger, Oxfam said. The report noted that droughts are not all that uncommon for the region, but their length and severity has been blamed on climate change.
Oxfam said many see this current drought as worse than the one in 2011, when 250,000 people died and “vast herds of livestock completely wiped out.”
The Journal’s report noted that aid groups have said they lack the funding to sufficiently help these individuals due to funding and the rise of food prices in general.
Adam Abdelmoula, the United Nations humanitarian coordinator for Somalia, told the paper that given the current level of resources on hand, “it will be a miracle to see how we can avert a full-blown famine by October.”
MIDDLE EAST: Parts of the Middle East and Eastern Mediterranean have seen their temperatures increase at nearly double the rate of other areas around the world.
The Wall Street Journal, citing the Reviews of Geophysics, reported that the per-decade global average is a 0.49 degree increase, while these countries have seen an 0.81 jump. This is blamed, in part, on the high levels of carbon emissions in the region.
Last August, Abadan, the Iranian city, set the record for the highest temperature this year when it reached 127 degrees, CNN reported. Some of these areas are reaching temperatures not suitable for human life.
The report noted that the measure of heat combined with humidity is called the wet bulb temperature. Tapio Schneider, a professor of environmental science and engineering at the California Institute of Technology, told the outlet that, “The wet bulb temperature is the lowest temperature that can be reached by evaporative cooling.”
“It is a hard threshold for survivability in that independent of age and fitness, humans cannot survive in those conditions; they will die within hours without special exertion,” said Schneider.