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Sunday, August 16, 2026

2026-08-16

 ***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic Fare:

AI Duration, Fed Reform and the Long End. The flawed target, benchmark and model. Bank equities are pointing to more constructive monetary policy in the US and Japan.
  • The Fed’s inflation target, benchmark and model are all flawed. The 2% PCED target was a crisis-era commitment that became permanent policy without adequate consideration of second-order effects, while the reliance on revision-prone PCED and a monetary-policy-centric inflation model ignores the fiscal origins of the postwar, 1970s and pandemic inflation shocks. Chairman Warsh understands the institutional problem, but reforming the Fed’s framework will require moving carefully against a deeply entrenched status quo.
  • Mother Market got the inflation and policy setup right. July CPI, PPI and retail sales were consistent with cooling inflation momentum, lower odds of a September rate hike and a clean market forecast of disinflation that does not depend on additional Fed restraint. The end of reserve management purchases is a step toward balance sheet reform, but it remains modest relative to the Fed’s ongoing footprint in longer maturity Treasuries.
  • AI infrastructure spending is rate sensitive, just not primarily to the Fed funds rate. The Big Spenders’ capex plans are already responding to changes in the cost of equity, credit spreads and long real rates, while AI-related duration supply is likely to remain an important pressure point for the Treasury market. If policymakers respond with policy-rate hikes rather than balance sheet restraint, they risk strengthening the AI impulse while tightening financial conditions for the rest of the economy.
  • Government interest expense is not yet the Treasury market’s central problem. Deficits remain large, but outlay growth is running below nominal GDP and swap spreads suggest the rise in long real rates is not primarily a Treasury supply story. The risk is that higher short rates and another turn toward fiscal expansion after the election push the government closer to funding interest expense with still more debt.
  • The market data have improved, but the long end has not yet cooperated. Payrolls, CPI and retail sales were all bond-friendly, yet the back end of the Treasury market failed to rally, likely reflecting ongoing AI-related supply concerns and investors waiting for post-Labor Day issuance. We are not giving up on longer maturity USTs, while financials—especially regional banks—remain a favored expression of a bull steepening curve and coming regulatory relief. Japanese equities are likely to respond favorably to rate hikes, banks are the key tell.






Trump doubles down on sanctions and a blockade while Tehran bets high oil prices will force Washington to relent

................... “Tehran has drawn a simple lesson from every game of chicken with Washington: Hold your nerve long enough, and America swerves first,” said Ali Vaez, the International Crisis Group’s deputy program director for the Middle East and North Africa. “For a system that believes it is fighting for survival…existential threats tend to harden resolve, not impose a price ceiling on resistance.” ..................



Market Fare:

42Macro: Is Bubble Risk High?

First of all, bubbles aren’t necessarily bad things.
A lot of investors get frustrated during a bubble because they’re constantly waiting for it to pop. Disciplined investors understand that bubble risk can be high while conditions supporting markets remain positive.
This distinction matters more than ever.
Bubble risk is rising across financial markets, but rising risk is not the same thing as an imminent pop. Investors who spend all of their time trying to predict or time the top can miss the returns bubbles generate as they inflate. ...........


Yardeni: History Lesson

........... The breakout is a good moment to ask where this bull market fits in the historical record. The answer is that it’s in the middle. That is a more bullish finding than it sounds. Bull markets do not die of old age or of accumulated gains. They usually die when earnings roll over. 






Part 1 of 2 · Gold broke a six-month decline last week on heavy volume. Why the cycle points to $8,000 an ounce, why $10,000 is not the crazy number. Part 2 — the 5 gold miners — follows tomorrow.

In the last week of January, gold touched just under $5,600 an ounce and silver went through $120. Then both of them came apart.

For six months after that, the most exciting corner of the market was the quietest. Gold fell more than a fifth. The miners gave back a fifth in a single quarter. Silver lost close to half. Everybody who had arrived late went home, and the people who write about gold for a living stopped being asked about it.

On Friday it stopped being quiet. Something bought gold, and bought it in size.

Nobody rings a bell to say who. There is no announcement, no register, no list of names — and the people large enough to matter are the ones with the most reason to stay out of sight while they work. Which leaves you with an old problem: how do you work out who came through, and how many of them there were, when you did not see it happen?

A scout never sees the army.

He arrives after it has gone. What he has are traces — the depth of the ruts, the width of the trampled ground, how far the fires have burned down. From those he works out three things he did not witness: which way they went, how many they were, and how long ago they passed.

Markets work exactly like that. You never see who bought. You see what the buying left behind, and it leaves precisely two traces.

Price is the direction. Volume is the number. Almost everybody reads the first trace and stops there.

Last week, in gold, the trail was wide.

Gold rose more than 7% in five trading days, to around $4,340 an ounce, on volume some 44% above its normal level. The largest gold-miner fund gained over 20%, on volume up 37%. Agnico Eagle, one of the biggest producers in the world, added 23% on volume 41% heavier than usual. Those are weekly figures, not daily ones.

A word on that second number in each pair, because it is the one that matters and the one most people skip. Volume is simply how much changed hands. When a week’s volume runs more than 40% above normal, we call it heavy — and heavy is our evidence that large institutions were doing the buying, rather than a thin summer market drifting upward on nobody in particular. A price can rise on almost no participation. It cannot rise on a week like this one without somebody large having made a decision.

And that buying arrived out of a specific shape on the chart — a falling wedge, six months in the making, running all the way back to the January peak. We explain what that is, and why it matters less than most people claim, further down.

So here is the number this piece is built around, stated at the top rather than buried.

We think this cycle ends with gold above $8,000 an ounce. We think $10,000 is the upside case rather than the fantasy. And we think the ounce is the worse way to own it.

That is a large claim and it deserves arithmetic rather than adjectives, so most of this piece is the arithmetic. It comes from one place: the two comparable secular bull markets in gold, and what happens if this one merely repeats the weaker of them. Tomorrow’s part two takes the same number and runs it through five mining income statements, which is where the money actually is. ..................

If you did not want to buy the June dip, and a good number of you wrote to say exactly that, the tape has now handed you a different sort of message. Pro-cyclical instead of contrarian. You are no longer trying to catch something on the way down; you are following something that has already turned in front of witnesses. .......................

One rule governs everything we do, and it has a name: Good Story & Good Chart.

The Good Story is the business — the moat, the returns on invested capital, the balance sheet, whether management allocates capital like owners. The Good Chart is the market’s verdict on that business — the trend, the relative strength, whether large institutions are accumulating or distributing. We act only when the two agree. A great business with a broken chart is a watchlist item, not a position. A great chart on a mediocre business is somebody else’s trade. 

Gold and the gold miners spent the last six months as the first of those. Last week they started becoming the second. That transition is the entire reason this piece exists, and it is why we score both halves as numbers rather than argue about them in prose — more on that, and on where you can look them up yourself, further down. .....................

This is why we keep saying that volume is the only part of a chart that cannot be manufactured. Price is an opinion until somebody has to fund it. A 20% week on heavy volume tells you that large pools of capital reached the same conclusion in the same five days, and that they were willing to pay up rather than wait for a better fill. That is the behaviour of a buyer with a mandate, not a trader with a hunch. .....................



→ Yesterday’s number, today’s consequence. Part one argued this gold cycle ends above $8,000 an ounce. This one asks what that does to the companies that dig it up.

→ The leverage is arithmetic, not sentiment. Sector costs run under $2,000 an ounce against gold near $4,340. Move gold to $8,000 and inflate costs by a third — harsher than any current guidance — and the operating margin still expands by 124%.

→ Which means the 2027 consensus is describing a different world. Analysts model a flat gold price beyond the current year. That is why estimated earnings growth collapses to single digits in 2027 on several of these names, and why an eleven-times multiple is either a bargain or a trap depending entirely on your gold view. ............

..................... Second, the downside case still works. VanEck’s stress test holds gold flat and raises costs 10–15%, and the sector still generates substantial free cash flow per ounce. So the question in front of you is not solvency or survival. It is how much of a very large margin the market is willing to capitalise, and at what multiple.

The honest limit of this arithmetic: margin per ounce is not earnings per share. Production volumes are flat to declining across the majors, royalties are struck on the gold price and rise with it, tax take rises with it, and several of these companies will spend part of the windfall buying reserves rather than returning it. Call it leakage. Even generously assumed, it does not come close to consuming a 124% margin expansion. .................



............ Last month, the Federal Reserve released a report that updated earlier efforts to quantify the level of hedge fund involvement in the US government debt market, and attempted a rough taxonomy of their different trades and strategies. This is the research mentioned in the introduction, and it was a bombshell.

The report — authored by a senior central bank economist called Phillip Monin — estimated that the gross exposure of hedge funds to US Treasuries had doubled between 2023 and September 2025, and amounted to $4tn by then. Of this, $1.6tn were short positions (meaning that hedge funds were betting on Treasury prices falling) and $2.4tn were long positions.

The latter means that hedge funds now own 8.5 per cent of outstanding US Treasuries. ........


At 2.7%, Japan's Share of Treasury Debt Is Too Small To Impact US Rates



A.I. Fare:

Things could get bad if this all falls apart



Last November, in Bubble Trouble 2, we looked at AI chips as the font of a new asset class. At the time, their prices weren’t going up, hence the cautionary title. But nine months is a long time in AI and as demand for compute has accelerated, legacy GPU prices have inflected.

“Everyone in 2024 and 2025, even if you were really bullish, you thought that GPU prices would decline slowly,” said tech investor Gavin Baker on a recent podcast. “If you were bearish, you thought they would decline precipitously. I don’t think anyone in ‘24 or ‘25 thought that the prices of old GPUs would be going vertical.”

Yet they are. According to Silicon Data, the price to rent a Nvidia Hopper H100 chip for an hour has risen to $2.71, up from $1.96 at the end of November. And there’s no sign of a slowdown ..............





Investing  Fare:


A recent paper tries to develop a unified theory of trend-following by classifying trend-following into three groups; see “The science and practice of trend-following systems”. 

The authors break trend-following into three types: European, American, and Time Series Momentum.  .............




........ a Collective member sent me a conversation with Emily Haisley, the psychologist who leads behavioral finance at BlackRock. Her mandate, in part: keep the firm’s portfolio managers in a state of mind and body worth trusting with risk.

Her team’s instrument is a consumer wellness gadget: the Oura ring. Managers wear them day and night; Haisley overlays what the body reports on what the portfolio does. In lab studies, a week of elevated cortisol measurably tilts preferences toward risk aversion. Stress does not simply feel bad; it silently repositions portfolios. And her data shows it live .................




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(not just) for the ESG crowd:

Deadly heat, wildfires, and drought are a preview of the escalating catastrophe to come

.................... Scientists are increasingly rejecting the palliative mainstream consensus that this horrific summer represents the “new normal.” It is “just the beginning,” said Johan Rockstrom of the Potsdam Institute for Climate Impact Research in Germany. “It will inevitably get worse. It will get worse and worse and worse.” ..................




Don't believe the hype - we are still firmly on course towards climate catastrophe

.................... I am more than baffled at what some sections of the climate science community have been doing in the midst of this crisis. Over the past few years we have seen the quite astonishing spectacle of this community tying itself up in knots trying to decide what constitutes a worst case scenario when it comes to future heating. ...............


... and Operation Economic Fury

What is happening to the US dollar? Why has the Federal Reserve set up a ‘pawnshop’ on its estate? Why do Japan’s low rates of interest threaten the US? Why are Europeans angered by US Treasury Secretary Bessant’s not-so-stealthy hedge-fund-style moves? And what has that all got to do with the AI bubble and Silicon Valley’s vast mountains of debt?

Above all, what has that to do with you or me? Those are the themes of this post.

But first. Writing is hard for a woman of my great age when the reality and the expected outcome of our converging crises portends a grim future - one widely foreseen and understood.

Like many others, I am grieving.

Many of us know that both the economic and eco systems will soon confront societies, our children and grandchildren with even bigger, well predicted and destructive shocks. But who will lead? Where are the great economists that could follow in the footsteps of John Maynard Keynes? And how will societies mobilise to storm the gates of private power and put a stop to the giant, globalised roller coaster that is finance and fossil capitalism?

Professor Kevin Anderson reminds us that that civilisations have collapsed in the past and all thought they weren’t going to - until they did. .............




Cold blob south of Iceland deflects polar jet stream northward, parking heat domes over Europe each summer





Well, this is some grade-A bullshit.

In December 2025, James Hansen predicted a temperature of 1.7 degree above pre-industrial for 2027.

Hausfather was predicting 1.57 back then, but moved his estimate to 1.7 above pre-industrial for 2027 too.

Well, have a look at what Hausfather is now predicting:


In 2027, we’re going to be a decade ahead of where we’re supposed to be.

Global warming, has accelerated. It’s very obvious on the graph, somewhere around 2010, it begins speeding up.

And look, this has real consequences, for real people. ...............


********** Tindale: The Copper Residual
Sulphuric Acid Deficits, Thermodynamic Reality, and the Impossibility of Decarbonization.

We are trying to build a world powered by green energy and AI, but the physical materials needed to support that goal remain unavailable and are, by any reasonable analysis, unobtainable by any means.

During the mining industry’s most productive recent decade (2014 to 2024), global copper supply grew by an average of 0.38 million tonnes a year. Over those same ten years, everyday copper consumption grew by 0.46 million tonnes a year. Normal demand outpaced supply exactly when the mining industry was expanding the fastest.

Now add AI data centres. AI requires an extra 0.13 million tonnes of copper every year until 2040. A single large data centre takes roughly 50,000 tonnes just for power and cooling. This one new technology demands a third of our total historical supply growth.

Add the 0.46 million tonnes of normal demand growth to the 0.13 million tonnes for AI, and subtract our 0.38 million tonnes of new supply. The number falls below zero.

Replacing all fossil fuels requires roughly 4.5 billion tonnes of copper. Known world reserves sit at 880 million tonnes. We currently mine about 25 million tonnes a year. At this pace, it will take 187 years to extract enough copper for the energy transition.

Even if we engineer miraculous ways to reduce metal usage, we remain radically short of the volume required to alter climate trajectories. It’s ironic, but the models we’ve used to address climate change assume hidden assumptions about miraculous technology being developed to absorb CO2 in some distant future.

The idea that we could change our climate trajectory by changing our energy systems never had a bill of materials to achieve it. ..................

....................... The IEA warns of a 25% shortfall by 2035. S&P Global forecasts a 10 million tonne deficit by 2040.

The only number that matters is supply growth minus incumbent demand growth. This calculation leaves nothing for the energy transition.

We lack the physical bill of materials to construct the new grid, guaranteeing our inability to escape climate change. It’s a policy misadventure because the Earth can't supply the materials for it to succeed, and policymakers never checked.

The policy class designed a system to avoid climate consequences by converting to green energy while entirely ignoring whether the materials to construct that system existed. .....................

........................... Today the choke point sits at refining, and China holds it. As the deficit deepens, the bottleneck migrates upstream from the smelter to the mine gate. When concentrate becomes scarce, the commercial market stops clearing, and allocation becomes a function of the state.

This phase is already active policy.

In July 2026, the United States invoked the Defence Production Act to institute export restrictions on recoverable critical minerals and materials. The state recognised the physical deficit and established absolute capital controls over physical matter. The commercial market no longer dictates where materials flow; sovereign necessity dictates it.

The primary actor securing these supply chains is no longer the environmental lobby. It is the defence apparatus. .................



Sci Fare:

A novel AI model can use information collected during routine sleep studies to identify patients’ long-term health risks, according to a study published in Nature Communications. Developed by a multidisciplinary research team, the model uncovered hidden sleep patterns linked to higher odds of heart disease, cognitive decline and death.





U.S. B.S.:


............................. It should be noted that AOC was not some bystander during all of this. As she has done for every similar moral panic of the left — the incalculably deranged Russiagate conspiracy theories, the life-destroying and due-process-free #MeToo persecutions, COVID censorship — AOC supported and participated in the most extreme woke excesses because she does not have an iota of courage to resist social and political pressures.

............. If someone wants to stand up and say that they went along with and advocated a bunch of “crazy” ideas and demands because they simply got swept up in the hysteria of the moment — as AOC and her allies are now attempting to suggest — then that is a rather serious self-indictment. I can hardly think of a worse trait in a political leader, or a human being of any kind, than a lack of internal fortitude or personal courage to resist moral panics and accompanying demands for full submission by a gathered mob. .........




As it extends into other countries, the administration’s campaign will fuel the brutality and authoritarian tactics of regional governments.



The unhinged nature of Trump’s Iranian debacle continues to descend into something truly bathetic.

It calls to mind the popular description of the fall of Rome, one variation of which reads something like: “The average Roman citizen hadn’t noticed their empire had collapsed until one day the roads and bridges simply stopped being repaired.”

In this case, American society lives in a state of Normalcy Bias, as spray-tanned politicians bleat about some kind of ‘Golden Age’, while virtually everything associated with the American empire slowly goes to hell in a hand basket ............



War Fare:

Zelensky’s 40-day influence operation provoked Putin into rendering Ukraine de facto landlocked.

................................... Readers shouldn’t forget that the catalyst for this scenario sequence isn’t Russia’s new strike campaign in Odessa Region per se, but Zelensky’s 40-day influence operation earlier this summer that sought to coerce Russia into an unconditional ceasefire, but which provoked Putin into “escalating to de-escalate”. The ever-cautious Russian leader eschewed making Ukraine de facto landlocked for 4.5 years already but was finally pushed into doing so after Zelensky’s new Trump-backed and drone-driven “war of attrition”.

Zelensky is therefore responsible for setting into motion what might be the next Polish-Ukrainian grain crisis, not Putin ...........



Vid Fare:

Debunking 6 Key Myths



China Fare:

As US-China strategic rivalry intensifies, declining cultural literacy increases the risk of misreading Beijing’s intentions



Until about a decade or so ago, I bought the whole western line about China — that their governments were ideological and oppressive, that they kept millions of Uyghurs in forced labour ‘reeducation’ camps in Xinjiang, killed Hong Kong protesters without a second thought, and ruthlessly persecuted the people of Tibet and Taiwan. That government corruption and incompetence had produced whole ‘ghost cities’ of fenced-off uninhabited buildings while nearby citizens were left homeless. And that everything they made was inferior, cheap junk. The endless propaganda from expat and CIA-funded anti-communist organizations like the Falun Gong’s Shin Yun religious right-wing ‘dance’ company didn’t help.

I believed all this shit until I actually met and started talking with people who actually lived, and live, in China. I’m now quite ashamed of some of the Sinophobic crap I posted on this blog in its early years, and I leave it up as a constant reminder of the dangers of believing things just because you don’t hear (for a variety of reasons) any contrary perceptions or information. But substantially everything I believed about China was utterly wrong. It joins the long list of things I was wrong about. .....................

............................................ If I had a lot of money and no responsibilities, I would be really tempted to go to China for an extended time and employ someone there to teach me enough Mandarin to get by, and let me see for myself what is clearly a completely different way of life from the increasingly homogenized and precarious life of the west. China will of course be caught up in the global collapse of industrial civilization like everyone else, in the not-too-distant future. But I have a sense that their citizens’ pragmatic worldview, attitudes, skills, knowledge, innovativeness, openness and all-round competencies, might enable them to cope with, and adapt to, accelerating collapse, perhaps better than the citizens of any other nation in the world.



Lit Fare:

His 1960s science-fiction visions are a guide to our age of erratic billionaires, wild space fantasies and glitchy, invasive technology

........................... Technology in Dick’s world is invasive and glitchy, sometimes telling us that it refuses to work, or holding us to ransom. At the start of his 1969 novel Ubik, the apartment door smugly demands a payment for opening and closing. The protagonist, after losing the negotiation, decides to unscrew the door from its frame, prompting the latter to threaten a lawsuit. When characters in Dick’s world yell at the TV, the TV sometimes yells right back. The speech modules of our personal devices don’t yell, but they are beginning to combine alert attention with dim-witted obsequiousness, anticipating our needs while profusely apologising for irretrievably wiping our database.

Machines can be mistaken for humans and humans for machines. In Do Androids Dream of Electric Sheep? (1968), the basis of the film Blade Runner, human bounty hunters come to resemble the soulless androids they hunt down for money. In the movie, as in many of Dick’s short stories, they are unsure whether they might be androids themselves. ........



Other Fare:


It’s hard to wrap your mind around the abusiveness of the imperial status quo, partly because it’s all we’ve ever known, and partly because it’s too big to perceive all at once.

The statistics don’t show you the true human impact. The personal anecdotes just show you small snapshots of individuals suffering in their own lives. A working single mother crying in her car in a TikTok video because the endless toil necessary for survival is all-consuming and overwhelming. A news report about child labor in DRC cobalt mines. An Instagram reel about a father in Gaza carrying plastic bags he’s been told contain the remains of his daughter.

Individually, such stories are heartbreaking and enraging. But they are not merely personal anecdotes from separate individuals. These stories are unfolding all around the world, every moment of every day, affecting the lives of billions of human beings in different ways and to varying degrees.

If we could see it all, it would radicalize everyone against the empire instantaneously. ..............

The only thing keeping the heads of the oligarchs and empire managers attached to their necks is the limitations of human perception.

Which of course is why they work so hard to maintain the present limitations of human perception. All the propaganda, internet censorship, AI shenanigans, algorithm manipulation and government secrecy we see from the capitalist empire is there to keep us from seeing too much, because unadulterated truth tends to have a radicalizing effect on the mind.

That’s why they’re scrambling to roll out police drones, AI mass surveillance and autonomous weapons systems while doing everything they can to slow down our access to information and insight: it’s a race to get us fully locked down in a capitalist dystopia policed by militarized robots before humanity’s unprecedented ability to share inconvenient facts and ideas lets us see enough to awaken a revolutionary zeitgeist in our collective consciousness. ..................


Welsh: How I Learned About Leaders & Human Nature

......................................... Then I got involved in politics, and I can count the number of politicians I’ve met who I’d trust to walk my dog on one hand.

But what all this taught me is that leaders really, really do matter and nothing matters more to how well anything functions than who leads it. Nothing matters more than how we select our leaders.

We, of course, select them badly. But what was interesting to me was watching, over decades, as the number of good leaders declined and as the niches where they could operate were reduced in number. Every year, just a little. Over decades: massive.

Good groups are possible. Better societies are possible. But it all starts with who leads us and figuring how to select the right people.



..................................... Intellectual honesty is “I don’t know if we can find a better solution but I also don’t know that we can’t, and I do know that humans have often found new ways of doing things.”

A better world is easy enough to imagine. And that’s the first step to change: find a pole star and navigate by it. We chose “let’s organize our society around greed” as a polestar and it changed the world. Now it’s running us off a cliff.

Perhaps there are other polestars which would work better?

Humans generally change societies radically after a crisis. But when they do so, they reach for the ideas that are hanging around. If those ideas aren’t good ones (neoliberalism in the 70s, for example) humans will turn a crisis into something worse by choosing a cure that is worse than disease.

So the job is to make sure good ideas hanging around. ........


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Sunday, August 9, 2026

2026-08-09

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic Fare:

Higher oil imports from Russia, US have partially offset fall in total shipment




Market Fare:

  • Our Macro Risk Indicator remains “risk-on” with G3 growth LEIs rebounding. US earnings estimate revisions are rising again, while low savings rates continue to sustain spending and profits.
  • We believe the Situational Awareness stop-out marks a tradeable low in semis and AI. Semis remain capital scarce on our capital cycle models, while their crowding score has now reset to more neutral levels.
  • The consensus reaction to the July Fed hold is that Warsh is going to be tested by markets in the coming months, pressuring him into a September hike. We lean against a hike this close to the mid-terms, as we expect core inflation to remain capped.





The Namazu stirs






Commodity Fare:


A quiet revolution is occurring on the balance sheets of the world’s largest gold producers, and the broader financial markets are completely missing the story. For the first time in a quarter of a century, the big 3 mining giants are sitting on a massive pile of net cash.

Newmont, Agnico Eagle, and Barrick Gold have collectively accumulated an astonishing $7+ billion dollars in positive net cash, meaning their cash reserves now exceed their total debt obligations.

This is a historic anomaly in a capital intensive industry that has operated with a net debt position for every single year over the past 25 years.

These senior producers are currently generating free cash flow at an unprecedented rate, yet their stock prices remain heavily discounted, largely ignored by a generalist investor base still fixated on technology multiples.

This $7+ billion dollar war chest represents far more than just financial stability; it is the fuel for an inevitable wave of industry consolidation. The major producers have spent the better part of the last 15 years prioritizing balance sheet repair over exploration, resulting in a severely depleted pipeline of new projects.

They are facing a looming production cliff and desperately need to acquire growth to replace their depleting reserves. With a mountain of cash at their disposal and a junior mining sector trading at generational lows, the stage is set for an aggressive acquisition cycle. ...........



A.I. Fare:

China’s clever upstarts are keeping pace with their American counterparts for a fraction of the cost




AI’s greatest mathematical successes have come from answers to problems posed by a mid-20th century iconoclast. By examining what makes the Erdős problems unique, mathematicians are trying to understand how AI might change the rest of math.




Tweets & Quotes of the Week:




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(not just) for the ESG crowd:

Global warming is making many places hotter, drier and more combustible.


The prime minister should consider the potential outcomes of siding with his Bay Street buddies and oil industry bigwigs over climate-beleaguered Canadians.




Unusually hot weather is bad for you, your temper, your economy and your business. Climate change means you're going to get lots more of it.



There’s a big dispute in climatology, in regards to equilibrium climate sensitivity: How much does the Earth warm up, when you double CO2 in the air?

The IPCC maintains an estimate of 3 degree Celsius per doubling. Some, like James Hansen, think the number is much higher. He thinks it’s 4.8 per doubling, but many of the climate models the IPCC uses sit even higher, above 5 degree. The general idea is that these models “must be wrong”, so they’re not given the same weight when it comes to making predictions for how much warming we will get in the future as models that predict less dramatic warming get.

The main argument given to dispute the credibility of these models, is that they don’t properly reproduce the warming we have seen so far.

The dispute between models mostly comes down to differences in how the clouds are expected to respond. The “hot models” predict that the warming we experience from more CO2 results in a reduction in clouds that reflect sunlight. Thus these models are said to have “positive cloud feedback”.

But not everyone believes these models get it right of course, that’s why there is a scientific dispute. If these “apocalypse predicting” hot models were right, the Earth should be warmer than it actually is right now, that’s the idea upheld by those who are not convinced the hot models get it right.

The counter-argument to this idea, is that the hot models predict greater warming than we have seen so far, because there is other stuff we’re doing that is still keeping temperatures down.

So what are those things? One of them is the temperature reducing effect of air pollution, an effect known as global dimming. .......................................................

....................................... The last time CO2 concentrations in the air were as high as they are now, was between 14-16 million years ago.

The tropical grassy biomes only developed into expansive, dominant regional biomes roughly 8 to 3 million years ago. Today they support a fifth of the world’s human population.

With the climate trajectory we are on, there is essentially no guarantee, that the Earth will be capable of sustaining grassland ecosystems, including the artificial ones we depend on for our food ....................

Our animals are not safe either. A healthy young adult can survive a wet-bulb temperature of about 31 °C for a few hours in the shade. Cattle standing in an open pasture, with no shade and no relief overnight, start dying around 26 °C. They just don’t have bodies that can sweat as effectively as ours.

These conditions we are now dealing with, are not conditions under which we can sustain agriculture. ..................


Planning for 3°C doesn't make it survivable - but it makes it seem so

..................... Yet destabilisation of this kind is framed as something that might happen if action falls short. Instead, it’s the context in which the plan will be delivered. Warming once judged unacceptable has become the baseline assumption for plans, and the planning assumes governments that can still deliver, when the impacts of the warming are going to make delivery much harder. 

Moreover, not long ago, 3°C functioned as a warning, a threshold invoked to illustrate the scale of failure that must be avoided. Now, 3°C is being presented as a new baseline. .........................



U.S. B.S.:







War Fare:

........................... At midnight on Monday, US Southern Command retired Joint Task Force-Southern Spear and put in its place Joint Task Force-Western Hemisphere (JTF-WHEM), with the stated goal of “build[ing] on a legacy of excellence to secure the region and defeat all threats.”

......................... “Naked Machiavellianism”

Established in the Trump administration’s 2025 National Security Strategy, published in November, the Donroe Doctrine seeks to secure hemispheric dominance of Latin America and the Caribbean for US interests by asserting a hardline US sphere of influence across the region. It also explicitly aims to shut out strategic competitors — primarily China, but also Russia and Iran — from controlling vital infrastructure, resources, or military positioning in the region.

We have already seen this in action in Marco Rubio-controlled Venezuela. “Brazen thuggery” and “naked Machiavellianism” were the four words Prof. Jeffrey D Sachs used to describe the US’ new (but not that different from the old) security doctrine ............


Your humble blogger had wondered at the timing of Iran moving forward in its talks with Oman on management of the Strait of Hormuz, particularly since Iran made clear this had nothing to do with the MOU, which expires later this month. The Trump administration piled on aggressively, using it as another opportunity to engage in misleading messaging and successfully push paper oil prices even lower. One trope was that the Iran-Oman pact would lead to the opening of the Strait pronto. In fact, as Iran repeatedly explained, any normalization of traffic depended on the US meeting MOU conditions and now even more yet-to-be articulated ones (the formulation now is that adhering to MOU provisions is “necessary but not sufficient”). ................


................. This has always been the problem Ukraine faces: Russia is just more powerful. Putin was very restrained for most of the war, not taking out dual use infrastructure, letting power stay on, etc, etc… This is the sort of stuff that the US usually takes out first, as it did in both Iraq wars. Russia didn’t.

But while Putin has been remarkably humane for a wartime leader, there is an implicit quid-pro-quo here: we leave certain things alone and you return the favor. Ukraine, knowing it was slowly losing by accepting that status quo has broken it multiple times and each time Putin’s release of constraints on the Russian military has meant that Ukraine was hurt worse than Russia. ............

Ukraine needs a comprehensive peace deal. Much like America in the Middle East, this is a war it cannot win and which hurts it more than it hurts Russia. When you can’t win a war, you make concessions and go to peace. Denial of reality is not a war plan, it’s a way of marching to doom. At some point the Ukrainian army will collapse, and the conditions that Russia imposes in an unconditional surrender scenario are a lot worse than those they’ll get, even now, in a negotiated peace.

The same is true in the Middle East. Yes, Iran can’t conquer America, but what happens when diesel and gasoline and fertilizer and plastic and medicine shortages all hit the US mainland? The deal America gets in that situation is worse than the deal it gets if it makes peace now.

When you’ve lost a war, you’ve lost the war. Making your opponent prove it across the board will never lead to a better outcome.



Geopolitical Fare:


.................. Xi, in this light, is just an extension of Deng: actually making Deng work. Deng’s policies caused rapid technological advance and improved light industry massively, but the principles were not actually being enforced.

Xi enforces them. Not just anti-corruption but changes in how the party recruits and trains and promotes, all intended to keep the CPC on the path to socialism.

Will they succeed? Well the transition will come, if it does, with the next leader, most likely. Xi is putting his successor in a good position. AI and robotics are being directed towards physical activities, there are dark factories with no workers, and so on.

Genuine socialism means people shouldn’t have to work a lot if they don’t want to, and should still live a good life. AI and automation, done properly, offers that possibility.

Of course huge problems around distribution and production remain and will have to be figured out. If China stays the course they’re trying to create something which has never existed: something genuinely new. Westerner’s might call it “fully automated luxury communism” though I don’t know if it’ll get that far. ................

......... China is the future. It’s success or failure will determine what political/economic models are considered usable and successful. The age of liberal democracy is near its end.



Other Fare:

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Sunday, August 2, 2026

2026-08-02

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic Fare:

HUDSON BAY RESEARCH: A Return to Monetarism?
Peter Ireland · Stephen Miran · Nouriel Roubini

Executive Summary
Due to the instability of money demand, monetary policy implementation in the United States has held a smaller and smaller role for analysis of money, to the point that the Federal Reserve and therefore market participants rarely if ever mention it. However, new Fed Chairman Kevin Warsh has clearly indicated a view that money supply is relevant for monetary policy. Our contention is not that a return to targeting monetary aggregates is imminent or appropriate, but that monetary aggregates contain useful information for forecasting growth and inflation and this information should not be discarded, as it currently is.

Because they generally follow the Fed, financial markets are ill equipped to understand the return of monetary analysis. We aim to bring them up to speed. We first review monetarism and its rise and decline at the Fed. Next, we survey the state-of the-art in this unjustly neglected field of macroeconomics. There is significant evidence that Divisia monetary aggregates outperform simplesum aggregates. Finally, we extend the frontier of monetary analysis to current data through an application of the Greenspan-era P-star model.

Under benchmark assumptions for the supply side, most monetary aggregates indicate monetary policy is at present approximately neutral in its effect on inflation. ...........


A sustained oil price surge could drive inflation fears, or even spark a global recession, analysts say.

......................... The International Energy Agency agreed in March to make a record 400 million barrels of oil from strategic stockpiles available after a surge in global crude prices sparked by the Iran war. This week, the agency said that around 290 million barrels have already been released. Meanwhile, the United States’ Strategic Petroleum Reserve fell to around 310 million barrels last week (its lowest level since 1983) as the government continues a 172-million-barrel emergency release program.

“This brings us into a more dangerous phase versus March,” says Christopher Haines, global head of oil at Energy Aspects. “We have drawn down 300 mb [million barrels] of crude oil stock since March, including 170 mb of SPR [Strategic Petroleum Reserve], so global stock levels are far more constrained.”

............... “If there’s no de-escalation, if the conflict continues, if the Strait remains effectively closed, how does the world reach a balance in this new equilibrium? And the answer is very high prices, because you need to destroy demand,” says Alan Gelder, senior vice president of refining, chemicals, and oil markets at Wood Mackenzie. “That just drives the global economy off a cliff. So we go into this energy-induced global recession.”





.......................................................................... But physical matter does not obey political communication indefinitely. One can influence the financial price of oil for a few weeks, perhaps a few months. One cannot create barrels that do not exist. If stocks fall, if refineries produce less, if refined products become scarcer, sooner or later the market must ration demand. And rationing takes place in two ways: through political decision-making, with conservation measures, or through price, by making fuel expensive enough to destroy demand.

The second scenario is the most brutal. If the system has to reduce consumption through price, then the current level might not be enough. Oil – or rather, refined products – would have to rise high enough to force households, businesses, airlines, hauliers and governments to cut back on their use. In that case, the crisis would no longer be hidden away in storage facilities, but would become visible in everyday life: reduced flights, more expensive fuel, higher freight costs, inflation, local shortages and emergency measures.

The geopolitical crux remains the Strait of Hormuz. As long as the strait remains closed or virtually closed, a return to normality is impossible. Even if a reopening were announced, a return to normality would take months. .......................



So, it seems that Ansar-Allah (the Houthis) struck an oil refinery in Jizan, Saudi Arabia. They also took a shot at a refinery in Yanbu, apparently intercepted by a battery the Greeks had there (what?)

Anyway, this is getting real. Between the Ukrainian strikes on Russian refineries, which have been very successful, Iranians hits, and now the Houthis, I don’t see how we avoid serious shortages. It’s the refineries that matter most: crude is worthless without refineries and they’re expensive, take a long time to build and aren’t always easy to repair, depending on what exactly got hit.

I also don’t see how we avoid massive famines and increased food prices in places that don’t have a formal famine. A lot of fertilizer runs from oil thru refineries. .............



I have been on record as "higher for longer" against the naysaying Team Transitory for a few years. Thus, I pushed back hard on the late-2025 expectation of three FED rate cuts.

To my chagrin, I was more right than anticipated, and I now offer that the FED should hike their rate by 50bps after tomorrow's meeting.

I will say I can offer no economic support for a 50bp hike, rather I am looking solely at market psychology and politics.



....................... Dr. Lacy Hunt is a living economist who has had a profound influence on me over the years, particularly as it pertains to the interaction of debt, money, savings, velocity, and economic growth.  His understanding of how excessive government borrowing crowds out productive investment and stunts long-term economic growth is remarkable, and the work he has done, in my opinion, in this domain is unparalleled.

Dr. Hunt has been a long-time proponent of the view (which I share) that the long-term inflation range has been compressed by the twin effects of fiscal and monetary policy interventions.  I refer to this dynamic as “Japanification” and argue both from history and economic theory that excessive government indebtedness, followed by the elixir they use to treat it all (fiscal and monetary interventions), puts downward pressure on economic growth, and in that sense is either disinflationary (best case) or deflationary (Japan’s generational experience).  Regardless of the outcome to the price level, the impact on both nominal and real growth is erosive, and undermines the economic potential of a country (such as ours).

Lacy has recently argued that the structural range of U.S. inflation is likely to move higher after 30+ years of this lower equilibrium range due to a “steady erosion of the disinflationary architecture that dominated the 1990-2020 period.”  He frames his argument for a new inflation range around the death of globalization.  Essentially, the argument is that:
  1. Globalization accounted for the prior period’s disinflation
  2. Globalization is dying
  3. Therefore, the prior period’s disinflation will be gone
.............. I want to suggest to Dividend Cafe readers that we can agree globalization contributed to disinflation (it is undeniable), and we can even agree that globalization has seen its peak (though I need to comment more on this shakier premise in a moment).  But what I believe warrants further scrutiny is whether or not globalization explains all disinflation of the prior generation, and if it doesn’t, whether or not the other contributing factors are also seeing a paradigm shift.

I want to suggest that old deflationary factors still exist in spades, and that new deflationary factors may very well be coming – for good or for bad. .....................................



Market Fare:







......................................... Another pivot is underway, in the stock market’s attitude to the capital expenditures building out artificial intelligence. The hyperscalers — Amazon.com Inc., Alphabet Inc., Meta Platforms Inc., Microsoft Corp. and Oracle Corp. — that are trying to build a dominant position in the new technology saw their shares rally for years after the launch of ChatGPT. That is over. Their share prices have gone nowhere for the last 12 months as the excitement moved to chip manufacturers, the suppliers that stand to benefit most.

Last week, there appeared to be a further pivot, when Alphabet announced revenues and earnings ahead of expectations but also said that it would be further stepping up capex. Both the hyperscalers and their suppliers are falling. All the constituents are still sitting on huge gains for the ChatGPT era, but at least implicitly the market is now asking whether the hyperscalers will really go through with their capex plans, and are cutting back on the chipmakers accordingly ........

It’s way too early to say that the AI trade has peaked, and this week’s results from Apple, Amazon, Meta and Microsoft should shed further light. But note that the nerves over AI are happening even as overall earnings remain remarkably strong.


Diverging internals, widening credit spread, rising inflation vol…

Summary: Internals, credit, and short-term breadth are all deteriorating. Add rising inflation volatility and a run of news failures, where earnings beats are getting sold in names like MU, INTC, GOOG, and ASML. That’s enough to stay defensive into this week’s FOMC, where the market may be underpricing a surprise 50bp hike. .......................

13. We’re not bearish but we are increasingly cautious. Add the deterioration in credit to the list (chart from Jason Goepfert / SentimenTrader).

14. Internals continue to deteriorate. We still haven’t seen enough in the weight of the evidence to call a major trend change, but the backdrop points to more near-term weakness and volatility. If Bassman is right and the Fed hikes this week, let alone 50bps, we could be in for a volatility pocket.

15. Our preferred short-term breadth measure, the McClellan Summation and Oscillator, have both rolled over. That confirms what internals and credit are telling us. Be defensive and wait for clarity or a positive catalyst. We’re comfortable holding high cash and will reassess post-FOMC.



The S&P 500 spent most of the year riding above its 50-day moving average, and we have warned for the last couple of weeks that a break lower would be worth paying attention to. That break occurred on Thursday, as the index closed the week at 7,411.98, roughly 0.8% below the 50-DMA at 7,467, marking its first decisive break below that line in months.

Momentum has clearly rolled over. The 14-day RSI sits in the mid-40s, below the neutral 50 line but not yet oversold, suggesting there is room for further downside before the tape gets stretched. The MACD agrees with the signal line crossing bearish about a week ago, and the histogram keeps widening to the downside. This is what the early innings of a pullback look like, not the middle or the end.

............. The bigger trend is still intact. The 200-day moving average sits at 7,001, and the index remains almost 6% above it. A slide to the 50-DMA or even the July closing low near 7,354 would be entirely normal inside an ongoing uptrend. The line that matters is the 200-DMA. Lose that, and the conversation changes.

............... Be honest about the near-term risk first. Valuations are not cheap. The broad market still trades well above its long-term average multiple, and the megacaps carry a premium on top of that. Free cash flow is under real pressure, and Alphabet just posted negative free cash flow of $5.9 billion and paused buybacks to fund the buildout. Capex guidance keeps getting revised higher, not lower, which means the deferred depreciation bill I described earlier is still growing. Add a tape below its 50-day average and the worst three-month stretch of the calendar dead ahead. More downside over the next quarter or two would not surprise me.

............ Those are not the numbers of a dying business. They are the numbers of businesses that cannot build capacity fast enough to meet demand.

This is where Howard Marks and his second-level thinking earn their keep. The easy call is to sell what just went down. The harder and usually more profitable call is to buy durable franchises when the crowd has decided the story is over. The hyperscalers are not dead. They are expensive, early in the payback, and briefly out of favor, which is a very different thing. We’d use this weakness to build positions in the names where cloud growth and backlog clearly justify the spend. And we’d do it in pieces rather than all at once.



I. On Industrials
Investors are suffering from AI fatigue. They’ve concluded that there is no way to estimate whether all the capital spending on AI infrastructure will generate good ROIs in the coming years. What they do know is that hundreds of billions of dollars are being spent on AI capex in the here and now. That explains why S&P 500 Industrials is the second-best-performing of the 11 S&P 500 sectors with a gain of 17.7% ytd (chart). That’s ahead of the 15.4% gain for the S&P 500 Information Technology sector…. Within the S&P 500 Industrials sector, several of the industries have benefited from the AI capex boom, especially Construction Machinery, Electric Equipment, and Industrial Conglomerates (chart). They should continue to do so, and we continue to recommend overweighting the sector.


Big Tech Debt Flood Is Taking Over Risk In Market: Credit Weekly
  • Big Tech's appetite for AI investment is driving a wave of bond sales, having a bigger impact on the US corporate bond market than might be obvious.
  • Debt from the six biggest tech companies represents 8.6% of the duration times spread for the US high-grade corporate market, more than the 7.3% for the six largest banks.
  • The biggest tech companies are expected to issue around $285 billion of investment grade debt globally this year, with some investors welcoming the tech-led issuance wave and others expressing concerns over concentration and potential risks.


Bubble Fare:

One day the bust will be the big one, but for now the pullback in AI-related stocks has been almost completely offset by gains elsewhere

..................... My best guess on the reason for all these bubbles is a mix of easy money, the gambling instinct and hopes for new technology. These are the standard ingredients of bubbles from canals and railroads to the Great British Bicycle Bubble. But they’ve been on steroids since the 2007-09 financial crisis.

............ “The banking system is in rude health,” says Russell Napier, a global macro strategist and keeper of the Library of Mistakes, an Edinburgh-based collection of books on financial history. “That means there’s always more credit to do the next bubble.”



A.I. Fare:

The AI “bear case” isn’t one argument; it’s three. Burry on earnings. Bernstein on circular financing. MIT on revenue. Two are half right. One falls apart on the data.




Recently I saw a piece from popular AI Boom commentator Ed Zitron entitled “The Subprime Data Center Crisis”. I’ve long been critical of how often the topic du jour is analogized to the Great Financial Crisis of 2007-2009 so I knew I would read the piece critically and likely feel the pull to write about it. I did, hence the piece you’re reading right now.  .................


Nvidia is falling. The mood has changed.





CDS spreads have started to widen out for names in AI, and the market is asking three fundamental questions:

1) Will the AI capex pay off, and how quickly? With trillions committed to data centers, chips and power up front, the question is whether AI monetization ramps fast enough to clear the cost of capital before the assets depreciate, or whether it’s an overbuild whose ROIC never catches up to its WACC on a massive, front-loaded outlay. For more, see also here.

2) How is all of this being financed, and at what spread?  .............





Crypto Fare:

The Bitcoin forecast a pension actuary is obliged to make


...................... For a decade the question was whether serious institutions would ever put Bitcoin on the list. They are on the verge of something stranger: putting a number next to it, in a document with an audit trail, that binds them for three years at a time. When that number appears, it will not be the market’s best estimate of what Bitcoin is worth. It will be one profession’s most defensible estimate of what it can be blamed for. How much of the price should be set by a figure chosen for its defensibility?



Vid Fare:







Quotes of the Week:

Rabo: Markets have a habit of explaining every move with the most obvious narrative available. This week, that narrative was earnings. Investors spent days dissecting cloud growth, AI capex, free cash flows, and also Fed messaging, while some of the most dramatic price action of this summer was being driven by something else entirely. 


I saw a post on Reddit that said that “The underlying purpose of AI is to allow wealth to access skill while removing from the skilled the ability to access wealth.” And I don’t think I’ve ever seen AI described so incisively.



Charts:
1: 
2: 
3: 





(not just) for the ESG crowd:




How the many converging crises lowered the prospect of keeping all 8.3 billion of us alive

Happy Earth Overshoot Day Everyone!
Yesterday, on July 30, we humans have consumed the last bit of ecological resources what Earth had the capacity to regenerate within our current calendar year of 2026. From yesterday on we are living on borrowed time—as we have been doing so every single year since 1971—drawing down the last remaining stocks of fisheries, top soils, forests, you name it in the process. At the same time we were merrily burdening the biosphere with an ever increasing amount of pollution as if there’s no tomorrow, overloading Nature’s capacity to cope. How bad could it be? Well, in case you were wondering: climate change, biodiversity loss, and extreme weather events (just to name a few symptoms of this planetary scale overshoot) are not a result of CO2 emissions alone but a direct consequence of the sum of our agricultural, mining, industrial etc. practices we call ‘modernity.’ And even if all 8.3 billion of us lived like an average Honduran or Cambodian we would still live up a year’s worth of natural resources in eleven months. Sounds sustainable? Not to me. 


............



............ And you have to keep in mind, we’re not done yet. The big jump in food prices still has to happen. The Strait of Hormuz, is shut down again right now. This results in higher fertilizer prices, which results in higher food prices. The Bab El Mandeb is now also shut down.

Since my last post on the topic, it has become clear that we’re now facing a bigger El Nino than anything ever seen before. The median forecast is 0.8 degree Celsius above the previous worst El Nino we’ve ever had.




To understand where climate change is heading, we have to look at the planet’s distant past and appreciate the disturbing uniqueness of our situation




What Is a Fire Cloud and How Are They Making Europe's Wildfires More Dangerous?

..................... Described by NASA as a “fire-breathing dragon of clouds,” fire clouds are created by the intense heat of wildfires, generating an updraft of superheated, fast-rising air that can trigger powerful storms. Jean-Baptiste Filippi, a researcher at the French National Centre for Scientific Research (CNRS), tells TIME that the clouds fall into two categories: pyrocumulus and pyrocumulonimbus (also known as pyroCb). He explains that pyrocumulus is the first stage of a fire cloud. As the wildfire releases large amounts of heat, the air near the ground heats up and rises rapidly, generating a strong upward current.

.................................. Pyrocumulus and pyrocumulonimbus remain relatively rare in Europe. Further afield, fire clouds were observed during Australia's 2019-20 bushfires and in California's 2020 wildfire season. Filippi warns, however, that climate change could make these events more common in Europe. "You need stormy conditions, and then you need fire. We are going to have more stormy conditions, and we are going to have more fire. So the probability of having both together, at the same place and at the same time, is higher," he says. ...............



Sci Fare:

Sleep disturbances are far more common among workers in mid-later life than previously believed, according to a study that links work-related stress to a range of wellbeing issues.







U.S. B.S.:




There’s a powerful new documentary out called Earth’s Greatest Enemy by Abby Martin about the ecocidal abuses of the US war machine, and it addresses the most pressing existential hurdles we face as a species like nothing I’ve seen before.

The film breaks down how the US military has become the single most environmentally destructive institution on our planet by an extremely massive margin, walking the audience through the many ways the Pentagon and its global metastases have been churning out carbon emissions, pouring toxins into the air and water, wiping out precious ecosystems for gratuitous military bases, and pummeling our sea life with sonar and noise pollution, all while gleefully salivating at the prospect of plundering the resources which lay hidden beneath our planet’s rapidly thawing polar ice caps.

Martin skillfully ties the planet-devouring behavior of the US military to the global systems of capitalism and imperialism it was built to uphold. The viewer is left with a crystal clear picture of the ways ecocide, militarism and capitalism are inseparably intertwined, and an understanding that meaningfully opposing any of these malignancies necessarily entails opposing them all. The liberal fiction that one can be pro-environment while also supporting the US military is forcefully exposed for the absurdity that it is.

It’s a jarring film with extremely dark subject matter, but it also manages to be a work of transcendent beauty and optimism. A deep love of humans and all of earth’s creatures shines through in shot after shot, while slick editing and an inspired soundtrack allow the movie to zip along at a lively and entertaining pace. Martin concludes with a galvanizing call to use our outrage to loosen the empire’s already weakening grip on humanity’s collective consciousness, because our entire world depends on it. ..............



War Fare:


Trump ordered the US military not to carry out new strikes on Iran Friday night, despite approving earlier a "Gates of Hell massive attack" on Iran. The US has now requested a new temporary ceasefire with Iran and is seeking a return to the collapsed and suspended MoU, with discussions to include Yemen, and with Trump seeking to make AnsarAllah a party to the negotiations.

Clearly Trump is angry, and fears that that the war is consuming his Presidency (and his legacy). Iran comprehensively rejected all negotiations throughout this last week and confirmed it will not start negotiations under any circumstances. Put simply, why would Iran consent to give the US time to regroup and rearm before launching another round of strikes on Iran when it has the US “on the run.”

A return to the MoU whose credibility Trump repeatedly has shredded? Unlikely.

Will Schryver notes that rumors are swirling that the Pentagon is pressuring Trump to call off the war with Iran because the US has nearly exhausted its stockpiles of air-defence interceptors and stand-off strike missiles. ...........


That's one way to deal with data centers.





Geopolitical Fare:


An aspect of the current clash of civilizations that goes largely unnoticed in the US is that there is only one civilization, if we can call it that, doing the clashing. That would be the US and its arrangement of vassals that emerged from WWII. As if participating in an exploitation video called good vassals gone bad, the former liberal governments of Europe have moved hard to the foreign policy right. Through near complete reversal of the Western liberal order, the West is back to fighting WWII. Only without any defensive missiles. Or competent leaders. ...............

............ That US military planners didn’t foresee this suggests that competence isn’t their strength.

Not that Americans would know anything about it. No news or low-quality propaganda are what we are fed. For one-and-one-half-trillion-dollars-per-year (Pentagon budget), higher quality propaganda should be the least that we get. ........................


Why western leaders refuse dialogue with their adversaries while pursuing unwinnable wars

................................................................................... George Orwell used the phrase “History is written by the winners” in a 1944 essay. And yet modern conflict defies outright victory. It seems unlikely that any side will claim outright victory in either Ukraine or in Iran.

Few believe the USA will conquer Iran and by the same token Iran can only inflict severe damage on America’s standing in the world and its alliances in the Gulf, without undermining its position, for now, as the preeminent military power.

Britain and Europe’s attempts to defeat Russia in Ukraine will ultimately prove to be unsuccessful and also self-defeating, as Ukraine is turned into an angry failed state on its periphery. Nevertheless, Russia simply doesn’t have the means either fully to conquer Ukraine or indeed, Europe, an even more fantastical idea.

But herein the central truth of the western post-diplomacy model.

The US, Britain and Europe refuse diplomacy because this would require an admission of failure to their publics who they have repeatedly assured of victory.

When a clear victory appears unachievable, they settle for ongoing war and media manipulation to ensure that their voting publics maintain their support.

By claiming stalemate as success, they can position Russia and Iran as both losing, even if western powers aren’t winning.

History, however, will likely record the wars in Ukraine and Iran as catastrophic for western powers in terms of their global standing and credibility. ................



History has cycles. When dealing with ideas about how to organize societies there are ideological and sub-ideological cycles. Various nations have been capitalist since the 16th century, but what the means kept changing, usually every 50 to 80 years. Britain started very protectionist. It had periods where imperialism and capitalism were very intertwined. It had laissez faire periods. All of these were forms of capitalism, but they were quite different from each other. The Roman Empire is an empire from Augustus to the end, but the Rome of Augustus is very different from future Romes, with their serfs (something Augustinian Rome didn’t have), their German legionnaires, and so on.

In our times there are people alive who remember two and a half transitions:
  • The transition from laissez-faire (in America) to New Deal.
  • The transition of New Deal to Neoliberalism.
  • The transition of neoliberalism to whatever the new system will be called. (This is not the old system, Trump’s crazed tariffs, export controls to major buyers, the severe cutting of research, etc… all show that.)
In China they remember:
  • The change from warlordism and Republicanism to Maoism.
  • The change from Maoism to Dengism.
  • The recent change from Dengism to Xiism.
Globally we remember multiple transitions as well
  • The transition from the multi-great power world centered on America/Europe to the Cold War world dominated by the USSR and US. (Note this transition involved two world wars.)
  • The transition from the cold war world to the unipolar superpower world with the US the world hegemonic power.
  • The current transition from the American hegeomonic world to whatever will replace it.
................



..................... Things are happening. Big things. If you want the official “big collapse” well, it’s not here yet for the first world, but the death by a thousand self-inflicted wounds continues. As much as I admire what China has done, and as impressed as I am by solar and so on, they are still an industrial society based on planned obsolescence and over-production and are about to hit a demographic cliff (good in the long run, but it will cause issues.) The only escape from much of the resource trap would be large scale off world mining. Musk isn’t going to manage it. The Chinese are taking a shot, we’ll see. That wouldn’t, by itself, fix ecological collapse, however and won’t supply all necessary resources. It’s also unlikely to come on line in time, if at all.

You’re living thru an epochal period, similar to the WWI thru WWII period: everything is changing, but this time including serious environmental issues. There’s also all the social issues related to AI, phones, the collapse of reading and reasoning ability in some societies, mass surveillance and the rise of authoritarianism, even as civil liberties are contracting in almost every country in the world.

The post-war and post-cold war orders are dying or dead. The negative consequences of the industrial revolution are hitting home after we got the goodies for a couple centuries.

Things are happening. More things will happen over the next couple decades. If you can’t see that, you’re blind.



Vids:






Other Fare:

How the US's long push to deregulate outer space led to SpaceX's dominance of the skies

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