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Energy And Money

Source: unsplash.com

Recently our world is facing energetic problems. Some say it is caused by the war in Ukraine. Others say it is about the wrong policy about green energy. Overall we are facing a crisis that can be worse than in 2008. Such frustrating news can easily get people depressed especially when the taxes are increased and prices in the shop on standard products increased double times. To avoid this stressful situation check the live sports betting and try to win your first jackpot.

Money That Needed

The vice president of US oil giant Equinor told Bloomberg that at least $1.5 trillion of liquidations must be provided to European energy companies due to margin guarantees. He is conservative.

The energy producers and traders sell gas futures. The hedge deals between the US and Europe for the period while occupying the ocean. More details to insure against a situation in which the company buys LNG from the Americans for $3,000, and by the time of delivery, the cargo drops to $2,000. The company opens a short position on LNG futures.

However, with the market in a frenzy like never before and the price of gas going up and down by $1,000 a week from just about $200 relatively recently, the requirements for sensitive positions in clearing houses have changed. And in order not to catch margin calls that can pay a huge profit, it is necessary to supply the energy of the company with liquidity for one and a half trillion dollars. And this is dead capital tied to derivatives.

Crisis Is Rising

Source: unsplash.com

The crisis will cover the entire stage. If one of the big companies collapses, then there are fears that an effective house could grow. Just imagine yourself in the place of the financial director of a trading house. Such money is not borrowed even for Trafigura. And in general, you need to understand that when you need so much, that is, there is a very limited number of borrowed ones that, in principle, can help you.

The problem associated with one paper load is just one of the problems that are associated with the surcharge to the energy sector in Europe. Supply companies sell some of the electricity in the air to get a certain price, but must use a cash deposit on the exchanges in case of default before the electricity has been generated. Soaring electricity prices have forced firms to hold larger margin deposits.

That is, on the one hand, the “cash squeeze” is caused by the requirements of clearing centers for the export of derivative financial instruments. On the other hand, to the requirements of energy exchanges. The prevailing rather satisfied consumers or wind farms, because their cost of energy production has not changed. That cannot be said about those who work with fossil fuels. And many companies are currently struggling to replicate their short-term leveraged media.

Financial Drop

Source: bloomberg.com

Not green power sources that there are only two ways out of the situation. Either powering government loans or changing the regulatory rules of your choice. One single German company, Uniper, gives out $30 million daily and requires $9+ billion to help with the calculations. Germany has already given away $100 million in stimulants since March. In September, Sweden, Finland, Switzerland, and Austria announced emergency assistance to the energy sector. The UK is discussing a $172 billion aid plan.

And now they are wondering what is happening in the financial report of Europe now if the ECB intensifies discussions with bank leaders about their approach to the forecast for a surge in corporate defaults. That is, the question has long been not whether it will be bad, but how bad it will be and whether the banks are sufficiently capitalized.