Monday, May 14, 2007

Kyoto Accord May Sink European Economy

Hmm this should give some pause to all those people investing in Europe. Also Kyoto might be especially hard on the German economy:
Germany is extremely vulnerable to imposed energy caps. It is strongly
opposed to plans for replacing its coal-fired power plants with gas-fired
facilities, as such a move would only increase its already precarious dependency
on Russian gas imports. Furthermore, successive governments have agreed to shut down all nuclear power plants, which account for a third of Germany's
electricity generation. The Greens' anti-nuclear achievement has thus turned
ideological triumph into an energy nightmare.

Thus it might be a bad idea to start investing in the iShares MSCI Germany ETF. I think some energy based inflation may start to creep into the European economy no matter how fast they raise their interest rates. However that part about shuttering the nuclear plants may get reversed if they are on the hook for billions in fines. That means more uranium demand and thus higher then $130/lb uranium.

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