Ask HN: Should I be panicking about jobs in Europe?
I contract with a lot of European game studios. I've noticed many contracts were terminated suddenly including my retainers for cost reasons.
Is the energy crisis that bad ? Are multiple industries affected right now or is it just planning ?
194 comments
[ 4.6 ms ] story [ 191 ms ] threadRegardless, panicking won't change the situation. Taking them time to step back, look at your other options, and proceed calmly (though with a sense of urgency) is a better way to go.
But maybe they did?
prepare for the AI/robot apocalypse
Yes, panic.
Nord Stream 1 has been shut down indefinitely and Germany requires it to keep their economy, heat and power supply going so lots more companies will follow.
My family is going to stock up on firewood for our fireplace soon, so at least the house will not be cold come november-december when the Netherlands will run out of their gas supply in just about 2 weeks time tops.
Could not find any news about that. Which company do you mean?
[1] https://www.focus.de/finanzen/news/kronach-kronach-neuses-au...
a) they are not bankrupt yet, they merely filed for government protection while they reorganize
and
b) it's only 2000 jobs
That's what Chapter 11 bankruptcy is in the US - I assume Germany has an equivalent.
Russians are very good as sowing discord and creating panic among the population, but if you look at the facts things are not so bleak.
- If closing down Nordstream would really lead to the collapse of the German economy then the EU would have lifted the sanctions. While they can accept some hardships to beat Russia, they would not kill their economy to do so.
- Just look at the gas futures price in the EU: https://www.theice.com/products/27996665/Dutch-TTF-Gas-Futur... Since the full closure of Nordstream gas prices have actually gone down showing that the gas market has already priced the closure, and as time will pass it will go down even more (since people will see that we have enough gas & Putin's threats are taken less and less seriously mostly because he has run out of things to threaten with)
So dont panic and trust Western leaders a bit more.
In the business/tech centers, there practically IS no business/tech centers, with all this moving out of Russia into the western nations and baltic states -- there will be huge growth after the war is over in most EU countries that aren't Russia or Belarus.
Short term, I think it will be a struggle, long term I think weaker Russia is good for the whole world, I'm hoping china begins to decline too - esp with the real estate crash they have looming, if they lose their ass on foreign real estate our housing prices might go to some semblance of normalcy. Here in Utah, the average home price went from 200k 10 years ago to 600k now, only way I'll ever own a home is if I buy land and build a $10k earthbag home lol.
Yeah I agree that the future looks bleak for Russia, actually regardless of how well they fight. They lost, long term, when they didn't take Ukraine in 3 days. They showed a weak hand and I suspect even their ally China will treat them as a second partner and with some contempt. Perhaps the best outcome would be the Russian government falling again and this time western powers actually helping out, but I doubt they'll collapse in a way that lets that happen, or that society there will accept help, or that western countries would be interested in helping anyway.
China will decline, they're not in a great place demographically. And this is my personal opinion: China had the opportunity to become great, with just a little more freedom they could have leveraged their hi-tech manufacturing base and encouraged innovation. But instead the leadership got scared that they were losing power and sent thing in the wrong direction. It's not that they aren't innovative, it's just that has been tempered enough that they won't take the lead and all the other issues - demographic, geographic etc will take them downhill. Which is a shame because instead of a (slightly) freer world we get nationalism and unpredictability; who knows now what they'll do if they can't deliver on better living standards and an ever improving economy? Invading Taiwan would be stupid from many perspectives, but as a way to drum up and hold support of the population maybe it works?
I don't think the war will be over until US and EU decide to stop sending weapons to UKR. Now, in terms of UKR prevailing, no matter how you spin it, they lost 20% of their country and the majority of their fighting ability if not for external support. Doesn't look like prevailing to me. Basically any chance they had to be "independent" state are gone, either they are occupied or in heavy debt/reliance to the EU/US.
Yes future looks bleak for Russia indeed, but the same is the outlook for EU. A broken relationship with Russia never worked with Europe historically, and for good reasons. Also, Russia cannot be "helped" from the "west", its not "yet another" country. Whoever I know that has been there, can confirm that its a special place with dynamics that are not entirely understandable by western values.
I don't see China declining, the opposite actually. Yes COVID hit them (which for me screams "Cui bono" to the whole covid thing, but thats off topic) and they are doing bad demographically, but their struggles are not in vacuum. Europe is getting hammered and its even worse demographically, US is in a "esoteric mode" dealing with problems from within.
You don't seem to follow recent economic developments then
> Basically any chance they had to be "independent" state are gone
Ukraine is more independent now than it ever was 2013 or 2021 and all is telling that it will be even more so after the war, so I'm not sure what you are smoking there
The future looks better for Europe/Ukraine than you'd expect over a 4 year term.
Not so much for Russia. Putin made Russia a pariah state like North Korea
While I'm not sure about Europe, Ukraine seems lost: they're at the mercy of the IMF and had to give up their economic independence. In the best case, they can emerge like Bulgaria, Romania, etc in a decade or more - moderate brain drain, industry bought off, moderate corruption. In the worst case, they'll suffer massive brain drain, all their industry will be bought out or lost, high levels of corruption and they'll be reduced to providing labour and raw materials for the EU.
The war will likely strengthen the nationalist and extremist factions in the country and make it even more difficult for the government to reach a compromise. It's not clear if the fledging democracy will survive this war. Beforehand there were concerns that the president has too much power, now with political parties banned it's uncertain how a meaningful opposition would look like.
On the military side, even ignoring that they've lost a large chunk of territory, they are still neighbouring Russia. And despite the optimist messaging, Russia has many ways to make Ukraine's life harder or even snuff it out. From targeting energy and industry, to chemical weapons and even nukes.
Additionally, in 4 years time they will have insane profits from gas, where the pipelines have already been laid. Europe will be able to stop all payments to Russia and change it to Ukraine.
In the future, they will probably do similar preparations like Finland did ( since Finland got invaded hard also in the past).
Russia is already the pariah state. And while Europe is harboring fleeing Ukranians, we are tightening ties and exponentially tieing their future WITH Europe ( eg. The English language).
Ps. The future of Ukraine tied to Russia would have been a joke, just check Chechnya and Syria. They are way better off if they are open to it. Just check GDP growth of Poland, that's what partnering with Europe means and can do.
I disagree with your line about independence. America funded the rebuilding of Europe and Japan after WWII. It is way more in the interests of us in the west to have independent states rather than vassal states. This is where Russia is failing - if they make Ukraine a vassal state and install a government the people there will forever agitate and cause trouble, it will always be a thorn in their side. They'd have to attempt Russification once again, and how well has that worked out?
Small states are never independent completely, but internally independent and being rebuilt by western allies is surely a lot better than vassal state of Russia. Especially as the majority of Ukraine wanted to loosen ties with Russian and join the EU - thus why we're where we are.
China has a worse demographic problem than Europe. Fastest ageing country. Yes Europe has some similar problems, but the worst place in Europe for that is Russia.
How does this reconcile with warnings by the Belgian government that we can expect between 5 and 10 hard years? Or the comment by the French president, that the "end of abundance" has arrived - which perhaps wouldn't be so bad, if it really were an era of abundance for large parts of EU societies.
That the EU has 2 choices in the long term:
1. bow to Russia's demands and lift the sanctions. Gas will be turned on and its price will fall, but now Russia knows that they have a weapon that they can and will use against the EU when they see it fit. Also it would result in a huge uproar, most EU states are very pro-sanctions despite the hardships.
2. Do not lift sanctions. In this case the gas price will stay high, but will certainly fall long term. Also Russia will have no leverage against the EU. Also the situation is not so dire as it seems: Russia supplied ~15% of the energy to EU, so if the EU can lower its energy demand by a bit and get a bit of energy from extra sources they are set. People did the math and its possible, likely in 2 years there will be a minimal effect of no gas flowing from Russia.
As for the "hard years", its not just the energy crisis caused by Russia turning off the gas valve: After the constant boom of the 2010s its time for the bubble to burst. Global warming effects are starting to hit hard, the supply chain issues starting with COVID and getting worse with the war made governments realize that you cannot outsource everything; moving back production to the West will casue lots of price hikes. Also boomers are now starting to retire causing the most experienced part of the workforce to shrink drastically and being replaced by pensioners who just cost states money.
So no matter what we do with Russia the next 15 years will be hard -- I'd say that the belgian government was optimistic with the 5-10 years estimate.
What have Western leaders done in the last 20+ years to earn such trust?
I mean, China is the only successful country that isn't western, not even in spirit (like India, Japan, or Korea) and their run seems coming to an end lately, with all their debtors defaulting.
They are successful and follow the "western spirit" more than the rest of Asian countries.
The Indian trading companies seem to have left the west in a very good position.
If Germany loves one thing, it's being richer than the rest of Europe. They just throwing their weight around.
https://www.reuters.com/markets/commodities/europe-imports-m...
https://www.argusmedia.com/en/news/2349110-australia-leads-n...
It's the western leaders who are keeping both Nord Stream 2 and 1 closed: NS2 because Germany won't license it, and NS1 by sanctioning Russia so they can't work with the companies that repair the broken components.
In fact there are at least 5 gas pipelines into various parts of Europe which are all closed by the west or western actions:
https://swprs.org/is-russia-limiting-gas-flows-to-europe/
The stupid thing is, somehow these facts seem to have got lost somewhere along the line and the European countries are convinced this is 4D chess by Russia instead of the exact outcome sanctions were intended to create.
Not true. While Canada who repaired the turbine first refused to give it back to Russia now they are willing because of German pressure. Siemens (the operator of the turbines) has stated multiple times that there is no technical issue in running NS1. Russia is not supplying gas trough NS1 because of political reasons:
- Russia's main goal is to make the EU stop supporting Ukraine, thus they can make a favorable peace agreement. Their main goal is to get the EU states oppose the war.
- They are doing this by trying to sow panic and chaos in the EU by turning NS1 lower and lower (now its off) and other things like releasing ridiculous videos like https://www.youtube.com/watch?v=kcbcBrL4ju4
- This panic also results in high gas prices which is harmful to EU's economy and good for Russia's pockets.
The west should not bow to Putin's will, if it would lift the sanctions Putin would use gas as a weapon against the EU whenever he wants; the only good choice is to get rid of any Russian dependency.
Trust the western leaders, they did the math. The EU will have enough energy for the winter. Also USA is bringing out the big economical guns too, they started to lower the price of oil which will result in crushing Russia's #1 income source (they can produce oil for around $50) and this will also bring down energy prices.
This and the next winter will be still hard for the EU, but after that things will stabilize. But seriously what did you expect, how could a Russia, a country with a total GDP around Italy beat the EU, Japan, USA, Australia, South Korea in an economic war?
In any case, presenting this as a fight between Russia and the EU/US/etc is a bit of a red herring. In the end, it doesn't matter that Russia "loses" or is hurt worse, if the EU economy's in shambles and governments are voted out and replaced with more extremist political parties for example.
I would not say so. Compared to most other countries the EU did very well:
- Got the best vaccines with the 2nd fastest (USA was better because the EU did not mandate Pfizer to build a factory in the EU, thus Trump could block most of the vaccine exports for a few months until the USA was mostly vaccinated). Compare this to e.g. China where they still have to do lockdowns, likely because of their subpar vaccine that is ineffective in the elderly. Or to Japan where like 2% of the population was vaccinated by the time of the olympics.
- Was among the best for keeping the virus under control until it was not necessary with the right amount of lockdowns. For bad examples see Russia where lockdowns were not enforced/declared too late or Brazil where they declared it a hoax.
So who did better?
- Israel with securing the very first batch for a price of playing guinea pigs, which was a big gamble.
- Island states like New Zealand or Australia because they can just lock down airports and ports to prevent spread. EU could not do this, too many land borders.
Compared to some ideal world where we would have a global lockdown for 2 weeks and the virus is gone everyone was doing pretty shitty of course. But compared to other countries EU was among the best.
Outcomes that are likely this winter are blackouts, bankruptcies for businesses and for individuals financial ruin and losing one's savings. The question is to what extent those will happen and which percentage of the population will be affected.
Citation needed
https://nos.nl/artikel/2443284-gasvoorraad-nu-op-80-procent-...
Unless you're cutting down trees and splitting them yourself, and have done so in the past, why are you waiting? You know a surge in demand is going to happen, and there's a limited supply.
Since the rates were hiked, they are also the biggest victims. I doubt this has much to do with the energy and more with the recession.
The CDU sold us out to Russia, and it's not gonna change immediately. What we can do now is plan accordingly, and try to move to solar power as soon as possible. And by that I mean, yesterday.
Bills exploded for private households, social media shows regularly pictures of ridiculous bills like 1600EUR+ for a month of heat for a simple family household. That's where it's at right now. Lots of people laugh or mock at the plus of 18EUR/month for Kindergeld that you can now get, because it's basically worthless in comparison.
Prepare yourselves, this is going to be a war of cyber and energy. In my personal opinion it's inevitable, because Putin and his propaganda of the supposed "growing Nazism in Central Europe" has been going on for decades after the revolution attempt of the opposition. It's only a matter of time until Putin wants a strategically easier-to-defend Moscow, because the mountains in Poland and Finland sure look juicy to him.
Always keep in mind: Whoever controls the oil and gas supply, controls the planet economically. The reason for the invasion of the North-East Ukraine was the oil fields, and the independence of oil supply for Europe was too high a risk for Putin's strategical control over the European Union.
https://www.zeit.de/wirtschaft/2022-09/zwei-atomkraftwerke-s...
1. Did nobody think about that nuclear plants can't be switched on and off like nothing?
2. They want them in standby because they fear that north-south energy transport could be overloaded. Well, let's have some blackouts in Bavaria then, maybe they'll start cooperating with the rest of the country then.
3. Nuclear plants can't really substitute what might be missing in gas, if I remember correctly.
4. With all the half-assed things that are happening in Germany, let's just do ONE thing consequently and stop using nuclear power. It will be fine if it isn't already.
- Current reactors are EOL
- No new reactors have been built since ages, although political constellations might even have been in favor to do so
- No solution for permanent storage of nuclear waste
Nuclear power is no solution at all.
There are super-safe and rather cheap ways of treating and storing nuclear waste!
It’s essentially a scaremongering talking point.
Geological repositories are an excellent solution. Those place are geologically stable, and can contain thousand of years of wastes. It’s not very expensive to collect wastes there, as well!
Whatever Putin’s reason for the war, at this point any attempt to use it for control has spectacularly backfired.
So after we funded Ukraine's war, sanctioned Russia into oblivion, froze hundreds of billions $ of their money, forced our companies to leave their market, and even seized their belongings it's them weaponizing assets?
I'm all for the sanctions and support, but making Russia the bad guy for our economic crisis because they are retaliating sanctions is really biased. It's not a weapon, it's a trade and they leave money on the table everyday. Lots of money.
Russia is the bad guy for both the war and their reaction to the sanctions. Your comment is like saying "don't get mad at a criminal for shooting at the police chasing him".
Just so that we're clear, calling the West as "the police" as you do with your analogy just reinforces Russia's claim that we now live in a unipolar world, of which the US is the policeman (hence Russia's desire to split it all into a multi-polar world, no police chasing bad guys without international due-process there).
https://news.ycombinator.com/newsguidelines.html
Nothing in the world justifies a Russian invasion of Ukraine, because this isn't the 18th fucking century.
Stop trying to justify the Russian invasion of Ukraine.
Plus, you furthered his point by calling the western atrocious as “conflicts”.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
It's ridiculous to me we went all in on sanctions pretending they would bend over and keep doing business with us, but only on things we want them to, after we deny them machinery, computers, software, cars and steal/freeze their assets.
Your analogy doesn't work, we aren't police and they are not shooting, they quit doing business and decided they are okay without our money.
Even Putin was honest enough to call it an invasion and limited his lies to attempts to justify it.
Yes retaliation for sanctions can be expected. But Russia is still the bad actor here.
As stated, I support both supporting Ukraine and the sanctions.
That doesn't make our policy makers any less ridiculous and short sighted in their expectations.
In English "Ukraine's war" give the ownership of the war to Ukraine, making them responsible for it.
If this isn't your intent then good, and I apologize for calling you a Russian apologist.
Countries neighbouring Russia dealt with similar issues multiple times already.
Why would Russia need European money if the EU either steals them (they call it 'freezing') or doesn't exchange it for what Russia needs (advanced tech)?
And if Russia don't need European money, why do you expect Gazprom to keep selling gas to the Europe?
I would expect job cuts in high cost locations to come first.
Why make a guess when data already exists?
https://equitablegrowth.org/the-most-exposed-workers-in-the-...
Why? Because asset prices in europe are down hard, and the exiting holders are reluctant to accept dilution by taking adequate funding now. The new investors would get a better price than them and erode their share of the company excessively, so they'd rather push management to raise less, cut costs, and try to limp through to better times.
The other side of this is that venture firms / PE had an amazing 2021, so now they have loads of cash and not many opportunities. They can hold off for a while but the money needs to be committed before this dip is realistically over.
This is the case for my employer
Hoarding euros? Converting to USD? $SPY? Gold? The same as always?
This. Yes, there's about 8% inflation in Germany but for people with higher incomes, it's not that bad (yet). My ETFs/stock portfolio has even gone up after a ditch when the war started, no real need to worry.
Stocks, bonds, gold, new car. Maybe buying a house, as long it is going down.
Sure, buying real estate is seen as an investment, but it's also a spot to live and to keep all stuff to help or hedge your enjoyment of life.
Some people just want to live, debt free, and be left alone.
If I ever have to leave my doomed home with only what I can carry, I'd rather owe as much as possible at that point in time. I think that debt owed to human beings is strictly better than the same amount of equity just vaporized with no possible recourse.
Let's say you owe 100000 EUR for a 200000 EUR house, pay 2% interest, inflation rate of 10%. Your net worth is 100000 EUR in the first year.
If you repay 8000 EUR, the next year you owe 92000+2%*92000=93840 EUR and your net worth is 220000-93840= 126160 EUR.
If you repay 4000 EUR and invest 4000 EUR in gold, next year you owe 100000-4000+2%*96000=97920 EUR, your gold is worth 4400 EUR after inflation and your net worth 220000-97920+4400=126480 EUR. Plus you have improved liquidity.
If the inflation rate is higher than the interest of your loan, it's often better to invest in inflation-proof assets.
Assuming you have a fixed rate mortgage at a low interest rate, not only will the value of your debt be inflated away, but you retain optionality. Meaning you can use that big chunk of money as a hedge against a job loss or other negative event, you can use it to invest as your see opportunities, etc.
Of course the flip side of this argument is if you do pay off the mortgage, you get a guaranteed rate of return equal to your mortgage interest rate.
So the same as it is now basically.
Hoarding euros would be horrible idea, euro will go lower, should keep only necessary amount in euros and keep everything else in USD.
And German and other eurozone exports will increase. It is temporary bad for EU citizens but in the long run I don't see economy suffering as much as fearmongers predict
You can drop contractors on a whim. And it seems that some studios are doing that.
At least mobile game studios are doing just fine, their main customers (whales) are in the US anyway.
But panick? not unless you live in the UK. I'd expect mainland EU to continue almost as usual, with maybe a few high-energy factories shutting down. But since most of the jobs are service sector anyway, I wouldn't worry too much.
I heard the news that in Germany a car part supplier started bankruptcy proceedings. But that's only 2000 jobs out of 84 million people. And all those coal and steel factories were only very few jobs, too.
I notice public figures saying (paraphrasing) "why shouldn't the current bout of inflation be like the 70s". And I think "because they were trying to maintain the gold standard for way too long and that's what got it going?"
Spending vast amounts on "stabilizing energy prices" seems like essentially the same sort of mistake.
I wonder why other countries falter in emulating the Federal Reserve, which seems to have learned something from history despite all its critics.
https://edition.cnn.com/2022/08/19/energy/energy-prices-uk-e...
As wholesale costs ballooned last year, 31 smaller UK energy companies — who traditionally offered competitive prices — went bust, forcing millions of customers onto the books of bigger suppliers, and to pay higher bills.
The way the British government designed the energy market made this more likely, Henning Gloystein, director of energy, climate and resources at Eurasia Group, told CNN Business.
I'm not sure of the state of the market, and I've never tried changing my supplier, but I do notice the electricity supply rate has more than doubled year-over-year.
My understanding is that most of the power here comes from Canadian hydro, so that seems to tell you something about the usual explanations for price changes.
Aside from ridiculous increases in energy costs, it's really not feeling any different.
That's a pretty enormous aside. Some countries like France are capping energy prices to make sure people can afford to get electricity and heating. Meanwhile in the UK you've already had energy prices go what, double? triple? And it's not even winter yet! If you now suddenly have a chunk of the population who can't afford energy, things aren't doing great.
Still, there is a lot of jobs, most of the people being laid off already have a job. I think we all are going to recover from this but RU.
The demographic trend is what it is: baby boomers are retiring en masse and the influx of a new qualified employees is simply too low. Unemployment remains low. Jobs will be fine.
I will apply Occam's razor here - investors don't want to gamble their money on crappy software. SaaS vendors were playing on easy mode before 2022, but it's over for obvious reasons.
If you want to succeed, it's time to increase that engineering budget and let your sales people sell something that actually works.
The problem is that it's not limited to just one crisis:
1. Inflation - It turns out that you can't just keep printing money for about a year to pay for people not to work, and expect the currency to not suffer from inflation. It's a miracle it is not further inflated (although I might be speaking too soon). As inflation increases, your monthly pay becomes worth less whilst everything around you becomes more expensive.
2. Global recession - This is coming. The euro is now below the dollar and continues to fall. The dollar will crash soon too. Shorts are increasing by the day (open any stock graph).
3. Energy crisis - Companies are already looking to migrate away from the EU during winter. Those that stay will have to battle with high-priced, unreliable (read: rolling blackouts) energy supply. I would expect work-from-home becomes a requirement. I read that the EU are looking to subsidize energy and cap non-natural gas to 200 euros a MW, but this is doomed to fail.
4. Increased social issues - Lower quality of living, less funding for social programs, less funding for police, etc, will lead to higher crime. Schools have already said they will not be able to heat schools and therefore would have to send students home. Suddenly you have millions of bored teenagers whilst their parents are at work.
5. Food crisis - This one is yet to hit. There is a bill to pay for the energy crisis, droughts, fertilizer shortages, decreased global food supply, increased shipping costs and more. I suggest everybody start slowly (not panic) buying in some excess basics like rice and flour. Worst case, it's a bad prediction and you slowly use it over the next year. Worst case, it could serve as the base of your meals during hard times.
6. Strikes - People will want to strike, but this will likely only make things worse. We will see strikes from more and more critical roles, which will only further stall the economy and make recovery further away. If you don't believe in the power of a few people striking, jog your memory to the Canadian trucker strike. Believe it or not, it could be far worse.
7. Financial commitments - Europe won't be the first to fall and will likely be obligated to help out other Countries. For example, if the EU doesn't help with the Pakistani floods, these are potentially future asylum seekers, which will exasperate the situation. You also have financial commitments to military defense and the Ukraine-Russia war. As times get tougher, things will likely get worse.
8. War - The West (US + EU + friends) are currently heavily involved in international peace commitments. It is highly likely that Countries biding time will seize on the weakness of the West and further their own agenda. I expect to see China increase their timeline to invade Taiwan (this is a matter of pride and future financial + neighbor security). I would also suggest to watch Africa which is largely debt trapped. There are quite a few other places.
There are also quite a few other factors, but this is already too long. I highly suggest to take actions now to ensure basic survival.
- It's a good time to go on diet, the economy will help you
- Align your meditation time with power cuts so you can meditate in true quiet candlelight
- Consider moving to the south living in a tent or sth. Warmer even without heating
- Work from home (or from aforementioned beach tent)
- Invest in chickens (not the chicken companies, the ones that make eggs)