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Monday, March 2, 2026

2026-03-02

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


Economic Fare:

In our 2006 outlook, the only scenario where 10s would fall below 4% was much weaker than expected growth, cyclical stocks look offsides and the Fed is behind the curve, again
  • Markets flashing growth concerns: Despite strong year-to-date performance in non-tech cyclicals, earnings expectations for 1Q26 have been cut sharply, and the Treasury bull flattening (falling real rates, deeper curve inversion) signals markets are aggressively marking down the “run it hot” growth outlook.
  • Earnings narrowing to AI beneficiaries: S&P 500 earnings growth remains near historical mid-cycle averages overall, but most strength is concentrated in tech and communication services tied to AI, while broader 4Q25 cyclical earnings growth was tepid and 1Q26 expectations were revised lower.
  • Bond market signaling Fed easing: The drop in 10-year yields and deepening 3m–2y inversion suggest rising economic weakness and increasing policy restrictiveness, with markets implying the Fed needs to resume rate cuts.
  • Credit stress emerging but not systemic: Weakness in BDCs, CLO equity tranches, and high-yield duration points to strain among lower-quality, floating-rate borrowers; however, overall credit growth remains subdued, making risks more idiosyncratic than systemic.
  • Capex boom not yet broadening: Regional Fed manufacturing and services surveys show tentative stabilization in current orders, but capital expenditure plans have weakened. S&P 500 capex remains heavily concentrated in the technology and communication sectors, suggesting broad-based investment remains elusive despite the powerful tax incentives in the One Triple B Act.
  • Payroll Payback: We preview next Friday’s employment report, in short, we see little evidence demand for labor has strengthened. A weak report should put rate cuts back in play despite resistance from Biden appointees and the regional repo rate resistance.
  • Cautious but not bearish outlook: While equities are vulnerable to a cyclical “growth scare” correction—especially in midterm years—we are less bearish than a year ago but are maintaining elevated cash positions looking for a better entry point to capitalize on our expectation of broader capital investment beyond AI later in 2026.

Conflict has exposed how much growth depends on energy supplies through the Strait of Hormuz

 

......... The “textbook” response for central bankers facing a surge in oil prices is to “look through” the increase rather than reacting, given that the longer term impact can be disinflationary as consumer spending power is sapped by higher energy costs.



Market Fare:


............... For market technicians, the pattern is uncomfortably familiar. Market-topping processes throughout history, from 2000 to 2007 to 2021, have been preceded by precisely this kind of internal deterioration: narrowing leadership, defensive outperformance, and a growing divergence between price-weighted and breadth-based indicators. The question is whether history is rhyming again, or whether the analogy is misleading.

The most compelling argument that equities are in a market-topping process begins with the market’s internal structure. When investors rotate aggressively into utilities, staples, and healthcare sectors prized for their dividend yields and earnings stability rather than their growth prospects, it is typically a signal that institutional capital is seeking shelter. ...................

Lastly, credit markets, while not yet flashing red, are showing early signs of strain. Investment-grade and high-yield spreads have widened modestly from their tightest levels, and dispersion within the high-yield market, particularly in private credit, has increased. Historically, credit leads equities, and the subtle deterioration in risk appetite in fixed income is difficult for equity bulls to dismiss entirely. ..............

Markets rarely announce their intentions clearly, and the current environment is no exception. The bearish case rests on pattern recognition, the eerie similarity between today’s internal deterioration and the breadth collapses that preceded the last three major market topping processes, and on the arithmetic of valuation, which suggests that the margin of safety for equity investors is thinner than it has been in over two decades.

The bullish case rests on fundamentals that remain, for now, constructive: earnings are growing, the Fed is friendly, the labor market is intact, and sentiment is depressed enough to provide contrarian fuel. History shows that expensive markets with rising earnings can stay expensive far longer than value-oriented bears expect, and that defensive rotations within a secular uptrend are more often buying opportunities than exit signals.

The honest answer is that the market is at an inflection point where the evidence supports both interpretations. What will resolve the debate is not opinion, but price.






A.I. Fare:

We need to give models knowledge that anchors their behavior to the realities of our world.



Quotes of the Week:
“We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.”


Charts:
1: 




(not just) for the ESG crowd:


.................................... The extreme fires, floods, “snownadoes“ and “firenadoes“ draw our attention, but yo ain’t seen nuttin yet.

At 1.5°C, a marker we passed in 2024, we’ve triggered tipping elements—self-reinforcing feedback from destabilized natural balances. Polar ice melts, darkening the reflective surface, absorbing more sunlight. Dissolving permafrost and shallow clathrates releasing methane that is 20 to 80 times more effective at warming the planet than carbon dioxide from fossil fuels. Coral reefs. The Amazon rainforest. The Indian Monsoon. Australia burning. Siberia burning. Each tipping element feeds upon others, adding more to the mix, sustaining the acceleration. ...........



What civilization needs to maintain complexity is a source of energy that has a high ratio of energy returned on energy invested (EROI). If it takes you one oil barrel to transport and refine a barrel of oil you extract from the ground, you can’t maintain a civilization. You can find estimates that the minimum EROI for economic growth to occur has to be at least 11.

The entire green energy transition we’re pursuing now, results in a low EROI. The consequences of this are not immediately obvious. Sure, you can add solar panels to the grid. Sure, you can ride electric vehicles. Sure, you can even store your solar energy using batteries. And then you can charge your electric vehicles using the energy stored in those batteries. But as you do all of this, the overall EROI of your infrastructure declines.

In Germany (and thus the Netherlands too), the EROI for solar panels is 3.9. If you want to store the solar energy, you’re left with an EROI of 1.9. With subsidies you can add such energy sources to the grid, but you can’t build a civilization on the back of such numbers. For stored wind energy, you’re looking at an EROI of 3.9. This is not immediately obvious when you begin your transition. It’s only with high saturation of the grid, that the EROI problem reveals itself, as until that time you’re just mixing it in with high EROI fossil fuels. ...............................

The EROI problem isn’t just a problem for renewable energy, it’s a problem for fossil fuels too. We extracted the best and easiest fossil fuels first, so now we’re left with the poor quality stuff ...........

This problem doesn’t reveal itself in the form of high oil prices, because the economy can not sustain those high oil prices, high oil prices are only temporary until they result in a collapse in demand and prices go down again as a result.

As the high EROI sources of energy are exhausted on our planet, with them gradually goes the ability of this planet to sustain a complex civilization like ours. ............

The reality is that we would be best off if we would try to conserve the scarce sources of energy this world has to offer. There is no magical source of abundant energy ahead of us. Unfortunately American elites tend to believe otherwise. The former CEO of Google thinks climate change goals should be abandoned to focus on AI, because AI will then solve climate change for us.

This won’t happen, because AI can not change the laws of physics for us. We live in a world of physical limits. If we don’t respect those limits we will suffer the consequences.


China's newest battery runs on salt, and powers vehicles in extreme cold climates
  • China is in mass production of a sodium-ion battery, which opens vast new markets for electric vehicles.
  • Lithium-ion batteries drive most electric vehicles, and lithium has a long and complex supply chain. The refining of lithium is expensive, and poses severe environmental challenges.
  • Sodium is abundant, everywhere, and sodium batteries perform far better in cold climates.


War Fare:


This is the definitive war of choice. It is the exact type of war that Trump and his movement spent a decade vowing to end. And the potential for destruction is infinite.

.............. In lieu of outlining any clear mission statement for this new war, let alone a cogent exit strategy, Trump offered a laundry list of flamboyantly violent vows. 

............... The false claims behind this new war with Iran are ones we have extensively documented. In Trump’s war announcement this morning, he claimed — as he did at Tuesday’s State of the Union address — that Iran refuses to promise that it will not obtain nuclear weapons. The exact opposite is true: Iran has stated this clearly, unequivocally and repeatedly, and did so as recently as this week.

........... It is hard to overstate what a massive fraud Donald Trump, his campaign and his political movement are. For more than a decade, Trump has ranted and raved against the evils of regime-change wars and neoconservative dogma, only to launch a new war that most perfectly encapsulates and aggressively advances both. He spent years falsely warning that former President Obama would start a war with Iran because of how weak and inept Obama supposedly was at negotiation and diplomacy, only to now do that himself

.......... In contrast to the lie-driven 18-month public campaign of Bush and Cheney to convince the American public to support an invasion of Iraq, there has been virtually no attempt made, as I documented this week, to even explain to the American public why a new war with Iran is necessary or desirable. There has been no Congressional approval sought let alone obtained, notwithstanding the U.S. Constitution’s exclusive assignment of war-making powers to the Congress.

In his novel 1984, George Orwell highlighted the dangerous insanity of war propaganda with this leading example: “WAR IR PEACE.” Yet that is precisely the rationale invoked by various Trump supporters to somehow depict this new war as aligned with Trump’s vows of peace



........... "In my view, if you’re going to do something there, you better well make it about getting new leadership and regime change," the leading Republican Senator said ...... 

A big problem with this viewpoint, which ensures Washington stays in the business of 'nation building' and democratizing foreign lands (akin to the Neocon Bush era), is that almost all regional analysts say regime change is next to impossible through a purely aerial mission. Instead, this would require US boots on the ground - something the American people surely would not stomach, and which the Trump administration has pledged not to do time and again.

........ In the meantime, House and Senate Democrats announced Thursday that they will force a vote next week on War Powers Resolutions to block President Trump from launching military action against Iran without congressional authorization, as required under the Constitution. .........



............ Time is a fucking circle.

Empire is going to empire. 

And so bombs from a 70-year old colony of thieves, and a 250-year old loutish experiment are raining down on a 2,500 year-old civilisation. On historic towns and cities. On some of the most beautiful architecture, modern and ancient, in the world. .............

If there is any lingering doubt about the nature of western empire, about its duplicity and depravity, and about the sub-human nature of our leaders, it should now be put to bed. Deceitful and deceptive, they are willing to tell any lie and undertake any action, no matter how illegal or murderous, to get what they want.

But this is not how western media will ever analyse or explain the behaviour of our leaders.

On the contrary, over the coming days and weeks, western media is going to try and convince us that two countries, one led by a wanted war criminal, the other led by a conman, fraudster and rapist, are liberators coming to save Iran. The men who committed an actual genocide, we’ll be told, are humanitarians. As the civilian deaths rise, the empire that has killed literally tens of millions of people in the last fifty years will be framed as essentially benign.

All the liberal outrage over Trump when the crosshairs of US empire were directed on Greenland is already dissipating in real time, like bomb smoke in the morning breeze. This morning Mark Carney, the man who not two months ago was being lauded by liberals as the guy to lead a new world order in defiance of US imperialism, backed Trump’s illegal war.

It’s not that liberals don’t care about seeing brown bodies blown apart and lands illegally attacked and invaded, it’s that they support it.

Liberals like Carney are utter frauds, motivated to speak out under very specific conditions and only when their narrow interests are under threat.  ..............


From Ethiopia to our times: The Eternal Folly of Demographic Expansion

........ It is still too early to understand what’s going on with the attack on Iran and how things will evolve. What I think can be said is that the Israeli leaders are locked in an obsolete overpopulation paradigm that leads them to dream of an impossible territorial expansion by military means.

There are two distinct uses of the term “Greater Israel,” one referring to Israel plus the West Bank and Gaza, and a second, much larger, stretching from the Nile to the Euphrates. Currently, these ideas seem to be gaining ground among Israeli far-right politicians. .................


After again pretending to engage in diplomacy with Tehran, the US and Israel launch a new catastrophe in West Asia.

............... “It’s going to be hard,” Rubio said during a visit to Hungary. “It’s been very difficult for anyone to do real deals with Iran because we’re dealing with radical Shia clerics who are making theological decisions, not geopolitical ones.”

President Trump’s own record with Iran shows his top diplomat’s claim to be false. The US reached a deal with Iran in 2015 that constrained its nuclear program in exchange for sanctions relief. After Trump took office, multiple US government bodies, including the State Department that Rubio now heads, certified that Iran “continued to adhere” to its commitments until Trump withdrew from the pact in 2018.

In his dismissive portrayal of a “radical” clerical government in Tehran unable to make agreements, Rubio was also projecting. Just days later, Trump’s Israel Ambassador Mike Huckabee declared that when it comes to stealing Middle Eastern territory, including that of Gulf allies, Israel is biblically entitled to “take it all.” Huckabee’s comments illustrated that the Trump administration contains radical, theological elements in lockstep with an even more openly extremist Israeli government. ................



................. What is unfolding with Iran is not just a regional flare-up. It is a stress test of the broader global order. Russia has condemned the strikes rhetorically while avoiding direct military intervention, underscoring the limits of its partnership with Tehran and the constraints of a fragmented world. China, heavily dependent on Middle Eastern energy but cushioned by diversified supply and strategic reserves, is critical in tone yet cautious in action. Both powers are balancing economic exposure against strategic positioning.

This is the reality of a more fractured system. Russia’s strategic alignment with Iran reflects an effort to counter U.S. dominance, yet it has stopped short of material military support. China’s relationship with Iran and Russia sits alongside deep trade ties with the United States and Europe. The multipolar narrative runs into hard economic interdependence.

That is why Hormuz matters beyond tanker counts.

This moment sits at the intersection of energy security, great-power rivalry, and global fragmentation. Higher oil and gas prices are the immediate signal. Insurance repricing and idled cargoes are the operational expression. But the deeper story is structural: a world in which supply chains are politicized, alliances are conditional, and shocks ripple across multiple theaters—from the Gulf to the Indo-Pacific.

In short, the Iran crisis is not just about chokepoints or missiles. It is a microcosm of a more brittle global system where energy, industrial capacity, and geopolitical competition are inseparable. Markets are pricing disruption. ............



...................... What the Gulf States, especially, are recognizing is that US bases don’t protect them, they make them a target and that the US doesn’t actually care about them and won’t bother to defend them. They’ve gone from satrapies under US protection (which they were, remember that Gulf 1 was to save Kuwait) to expendable meat shields for the Empire.

.................. If the US loses this war it is America’s last great hurrah. Everyone will move away from them: they can’t defend their allies, they can’t be trusted to negotiate or keep agreements, and their military will be defenseless for years against the signature weapons of modern warfare: drones and missiles.

Empires die ugly. But America’s empire is dying.

And finally, Iran is in the right here, morally. We all know it.



I just read that sixty girls died in a US or Israeli airstrike on a girls’ elementary school in southern Iran today, not counting those still buried under the rubble.

Who knows if the US/Israel intentionally bombed the school or if it was hit by accident. Maybe someone will claim it stood atop tunnels full of terrorists or an arms depot (the excuse for bombing nearly every school and hospital in Gaza), or that the Iranians blew it up themselves to generate sympathy. Maybe someone will explain that it is one of those unfortunate accidents of war, “collateral damage,” and therefore the fault of the Iranian government for failing to capitulate to the United States. Probably, most Americans will hear nothing about it at all. ........


The US president has not understood the lessons of past wars for regime change in Iraq and Afghanistan



So now the U.S.A., with the madman Trump at the helm, has started another criminal and evil war ....

Few Americans want to hear the truth about the U.S. They never have.

What has been obvious for a very long time is simply unacceptable. That the U.S. is a ruthless, murderous, imperialistic nation built on waging war all around the world is anathema. It is the American Way and simply can’t be accepted, for it would necessitate a real American revolution: A massive non-violent disconnect from the reigning political, economic, and commercial system. An abandonment of any hope in the politicians and their parties that serve the interests of the ultra-rich power elite who own the country. The facts have long been evident, from Hiroshima through Vietnam and September 11 and Iraq to Iran, etc.

Only the willfully blind still cling to their illusions. What do they think the 750 + U.S. military bases all around the world, supported by a bi-partisan consensus, are for? 



.......... I don’t even know what to write about this one, honestly.

What am I supposed to say? “Hey everybody, they’re lying to us about this war”? Everyone already knows that. Even the people who support this war know all the justifications for it are lies.

They know Iran isn’t building nukes.

They know Iran poses no threat to the United States. ............

Everyone already knows this, and it’s happening anyway. They’re just doing whatever evil things they want to do, without the slightest regard for public opinion or consent.

They’re just going right ahead with a military operation to topple Tehran, after decades of inertia for fear of the horrific consequences it would unleash. ..............

There’s an old Frank Zappa quote that’s been popping into my head more and more lately:
“The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.”
We’re seeing a lot more bricks these days. .........



...... Only the United States could bomb a country, kill its leader, massacre its children, declare the intention to destroy its military and topple its government, and then call that country’s retaliation against US military bases “unprovoked”.

.......... It must be such a surreal experience to be a serious diplomat appearing on a foreign news show to speak to professional newscasters, and suddenly finding yourself having to explain to fully grown adults that your nation is fighting the US military because the US military attacked your nation.

The western press are a fucking joke.

❖

Imagine still being a Trump supporter in March 2026. Think about what a desolate wasteland of spirit you’d have to have inside you to keep supporting that ghoul after all this.

You’d have to stand for absolutely nothing. .... You can’t lie to yourself and pretend he’s anti-war anymore. You can’t lie to yourself and pretend he’s fighting the Deep State and sticking up for the little guy. You can’t lie to yourself and pretend he’s making the world a better, more peaceful place. ...........



The former and recently assassinated Supreme Leader of Iran, Khamenei, was anything but an evil man. Evil is a term better reserved for those who murder dozens and dozens of elementary schoolgirls, or who murder people in small boats without evidence and without any kind of due process; or for those who blockade entire countries even unto death; or for those who steal the wealth of formerly sovereign nations; or for those who call for a return to colonization of the global majority; or for those who aid and abet their allies’ genocides and their seizure of the territory of their victims; or for those who meddle in the affairs of other sovereign nations with a view to destabilizing them, perhaps splitting them up into smaller cantons with a view to manipulating them and expropriating them of their natural wealth; or for those who assassinate the leaders of other countries with whom they pretend to be negotiating; or those who would block evidence of crime and corruption on the part of elites; or for those who kill US citizens merely because they are protesting these and comparable evils; or those who abuse underage girls or cuddle up close to those who do.

No, Khomeini was not evil. He was an extremely brave and moral man whose sense of morality wrongly, if understandably, led him to stand in the way of Iran obtaining a nuclear weapon, which it is now bound to do ..............



Geopolitical Fare:

Archaeology, Identity, and the Politics of Origins in the Levant

................................. Let’s be blunt.

This debate is not purely academic.

The modern state of Israel invokes ancient Israelite continuity as part of its national narrative. Critics challenge that narrative by emphasizing Canaanite continuity and shared ancestry with Palestinians.

Both sides selectively emphasize parts of the historical record.

Ancient history does not grant modern moral legitimacy.

Political legitimacy emerges from contemporary ethical frameworks — international law, human rights, sovereignty, self-determination — not from Iron Age settlement patterns.

Weaponizing archaeology to justify present policy is ideological theater. ....................

If there is any honest conclusion, it is this:

No modern political project owns antiquity.

The past is not a deed to land. It is a record of human struggle, survival, and reinvention.

And if we’re serious about historical accuracy, we must resist the urge to turn archaeology into ammunition. 


China Fare:

Milanovic: The ideological implications of China’s economic success
Sinified Marxism and its future



Other Fare:

How we feel about a night’s sleep can have a bigger impact on mood and grogginess than actual hours of rest. Here’s how to change your mindset to feel more energised



Pics of the Week:




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Saturday, February 28, 2026

2026-02-28

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


Economic Fare:

Pathways, Risks, and Strategic Considerations for North America’s Economic Future



Market Fare:

BNP Gold: Lifting our forecasts on physical demand, geopolitical/macro risk (via The Bond Beat)

Heading higher: Persistent macro and geopolitical uncertainty prompts us to lift our forecast for the average 2026 gold price by 27% to USD5,620/oz – with a peak above USD6,250/oz likely by year end. We now see the average 2027 price at USD6,060/oz, versus USD4,900/oz previously




At first glance, such comparisons of liquidity issues looks silly. But this is what happens when market regimes change across assets, in real time.


Private capital’s insurance playbook has spread everywhere, raising concerns among those who pioneered the trade



In October 2025, the Ohio-based auto parts manufacturer First Brands ran into trouble with its debt load. The financial press picked up on the story not because First Brands was particularly unique, or particularly important to the US economy, but because various financial institutions began to realize that their exposure to this company—through their private credit funds—was higher than they had previously thought. Because, unlike banks, private credit funds are unregulated, it was difficult to see the potential for intertwined risks, or to carry out due diligence, or to assess the reasonableness of the loans. As the UK’s financial regulator Simon Walls, the executive director of markets, pointed out: “There isn’t a very clean distinction between the banking sector and the non-banking sector”—yet regulators can only deal with one or the other. 

The First Brands episode turned out to be the harbinger of a broader trend. Now, in early 2026, the financial press has begun to ring alarm bells about the “stress” in private equity and private credit. Private-equity firms hold $3.7 trillion in unsold companies, and sales are slowing down, prompting leading pension funds and other institutional shareholders to lower their private-equity portfolio allocations. These are symptoms of a structural change. Unregulated finance is becoming the center of gravity in financial markets, which are increasingly drawing non-wealthy households into their vortex.  Our entire financial system is moving not just into the shadows, but into the dark, with the activities of such firms highly opaque and largely protected from public scrutiny. ...............



Bubble Fare:



A.I. Fare:

Market maker scrambles to rebut the Monday Substack post, “THE 2028 GLOBAL INTELLIGENCE CRISIS" by Citrini Research, which must have struck a nerve.

Conclusion
For AI to produce a sustained negative demand shock, the economy must see a material acceleration in adoption, experience near-total labor substitution, no fiscal response, negligible investment absorption, and unconstrained scaling of compute. It is also worth recalling that over the past century, successive waves of technological change have not produced runaway exponential growth, nor have they rendered labor obsolete. Instead, they have been just sufficient to keep long-term trend growth in advanced economies near 2%. Today’s secular forces of ageing populations, climate change and deglobalization exert downward pressure on potential growth and productivity, perhaps AI is just enough to offset these headwinds. The macroeconomy remains governed by substitution elasticities, institutional response, and the persistent elasticity of human wants.


A tongue-in-cheek China version.



Artificial intelligence has rapidly become a central arena of geopolitical competition. The United States government frames AI as a strategic asset on par with energy or defense and seeks to press its apparent lead in developing the technology. The European Union lags in platform power but seeks influence over AI through regulation, labor protections, and rule-setting. China is racing to catch up and to deploy AI at scale, combining heavy state investment with administrative control and surveillance.

Each of these rivals fears falling behind. Losing the AI race is widely understood to mean slower growth, military disadvantage, technological dependence, and diminished global influence. As a result, governments are pouring money into chips, data centers, and national AI champions, while tightening export controls and treating compute capacity as a strategic resource. But this familiar race narrative obscures a deeper danger. AI is not just another general-purpose technology. It is a force capable of reshaping the very meaning of work, income, and social status. The states that lose control of these social effects may find that technological leadership offers little geopolitical advantage.

History suggests that societies unable to absorb disruptive economic change become politically volatile, strategically erratic, and ultimately weaker competitors. The central question, then, is not only who builds the most powerful AI systems, but who can integrate them into society without triggering a societal backlash or an institutional breakdown.

Karl Polanyi’s The Great Transformation, published in 1944, explains why the capacity to “socially embed” new market forces determines national strength. By “embeddedness,” Polanyi meant that markets have historically been subordinate to social and political institutions, rather than governing them. The nineteenth century idea of what he called a “self-regulating market” was historically novel precisely because it sought to “disembed” the economy from society and organize social life around price and competition rather than social obligation. As Polanyi put it in his most succinct formulation, “instead of economy being embedded in social relations, social relations are embedded in the economic system.” ....................


The global economy hinges on this fingernail-sized silicon chip.

Hidden inside every swipe, search, and AI prompt is a fingernail-sized slab of silicon — etched with billions of switches — built in $20 billion factories using machines so precise they border on science fiction. And because only a handful of companies (and a few chokepoint countries) can make the most advanced chips, the semiconductor supply chain has become the real front line of the AI race and U.S.–China competition.

In this full length interview, Chip War author Chris Miller explains how microchips are made, why their production is so insanely hard to scale, and why the world’s economic future may hinge on a technology most of us will never see.


The economic devastation that hit the Rust Belt is coming for your office (or home office). I know, because I grew up in it.

I want to tell you a story about where AI is taking us. It might seem outlandish. But I’ve lived it, and that’s why you need to hear it from me.

If you’re in the top 20%, that means your household is bringing in somewhere around $130,000 a year or more. Maybe you’re a project manager making $95,000 married to a marketing coordinator making $45,000. Y’all are a $140,000 household. You’re taking vacations. You can afford healthcare. You can afford housing. Your kids are wearing whatever name brand kids are wearing these days. You feel fairly secure, but not totally secure. And both of your jobs are done on a screen.

Here’s what you may not realize. You’re living the life that factory workers lived in the 1950s, ‘60s, and ‘70s. You’re living the life that auto workers in Detroit lived. That steel workers in Pittsburgh lived. That chemical workers across the Northeast and Appalachia lived. Back then a single income could buy a house, raise kids, take a vacation, and retire with a pension. A GM line worker in the early ‘90s was pulling the equivalent of about $43 an hour in today’s money. That life, the one you’re living right now, used to be the baseline for millions of Americans.

I can tell your future, because for me, it’s a rerun.

I grew up in Appalachia, living in the shadows of what had been. ..............................

The birthplace of the American middle class went bankrupt.

There were no other jobs. What was left was Walmart. CVS. McDonald’s. Harder work for less money, and our towns decayed. Despair set in. People turned to drugs to numb the pain, Big Pharma got rich, and 800,000 of our neighbors died. Not in a war. Not in a natural disaster. From opioid overdoses, in the very places where the factories closed and the jobs disappeared. ..................

Now the information and administration economy is next.

The economic devastation that happened over 40 years in labor is coming after white-collar workers in four. And it’s coming for the same reason. It makes no more sense to have humans doing work that can be done by machines or programs or robots. They are much, much less expensive. They don’t get sick. They don’t have drama. They don’t have needs.

I know how fast this is moving because I’m living it..... AI is building things for hundreds of dollars that would have cost hundreds of thousands. That’s not a prediction. That was Tuesday. ..............


Leading AIs from OpenAI, Anthropic and Google opted to use nuclear weapons in simulated war games in 95 per cent of cases



Quotes of the Week:

Barclays (via the Bond Beat): 
Although equities are well bid overall and growth is picking up, bonds are seeing more demand too, in fact outperforming equities for the first time since Apr'25. Investors are indeed moving away from enjoying the AI build-out phase, which should be positive for growth/productivity, to worrying about fast-growing AI disruption, which may lead to deflation. Concerns about more companies falling into the 'AI losers' camp and getting out of business are weighing on credit markets, with waning flows in the HY space and financial stocks. We doubt the two narratives will be able to coexist for too long. Something has to give, and we have more sympathy for the former than the latter, hence our preference for equities over bonds. But the jury is out and tail-risk hedges seem wise, as risk assets are arguably not priced for deflation.



Charts:
1: 
2: 
3: 
5: 
6: 




(not just) for the ESG crowd:

***** Berman: The End of Certainty

What is true? What is certain? Einstein’s answer, in effect, was that it depends on the model you’re using.

The first time I visited a deepwater drilling rig, what amazed me wasn’t the raw engineering wonder of that much steel drilling in thousands of feet of water, hundreds of miles from land. It was the stabilization system: how a massive, free-floating structure could hold position as if the ocean were solid ground. It did that with a model. Computers continuously estimated the rig’s location using acoustic transponders on the seafloor, then fired thrusters to correct drift relative to those fixed points far below (Figure 1). The model wasn’t trying to explain the ocean. It had one job: preserve stability in a field of constant motion.

That’s also how most of us manage our lives. We choose a few reference points, build a story that feels coherent, and use it to feel stable in the turbulent ocean of life. But then, from that fragile, provisional stability—created by a model—we get strangely confident. We make bold pronouncements about what’s true, what’s certain, and what’s going to happen. It’s amazing, and a little presumptuous, when you realize how much of what we call certainty is really just a stabilizing algorithm for the psyche.

Rig stabilization is a good metaphor for our modern worldview. If the rig drifts, the system detects it and corrects it. If climate change pushes sea level high enough to threaten coastal cities, we’ll build walls and run pumps. If temperatures climb too far, we’ll spray reflective aerosols into the upper atmosphere to cool the planet. Drift, detect, correct.

What’s missing from that worldview is time, and the obvious fact that most things are irreversible. Our adages about the road not taken, or that the only constant is change, are folk versions of a deeper truth: we can’t always fix our way out of our problems. .............................................

That’s why talk of depletion, biophysical limits, and limits to growth often triggers scorn. Because the crash hasn’t happened yet, and because past warnings were sometimes wrong in timing or detail, we dismiss the whole concern as Malthusian pessimism. But from the standpoint of physics, those concerns are necessary and appropriate. They describe the default behavior of complex systems over time, even if we prefer to believe that this time will be different. ........................



...................... So as stark as those estimates are, they also tell us how challenging a degrowth strategy will be to implement given that it requires significantly reduced energy usage, which, in turn, means that policy action must be targetted towards the high ends of the wealth and income distributions in the wealthier nations. ................

The practical policy problem is to get governments to start dealing with the inequality as an essential step in a degrowth trajectory.

Of course, my confidence level on achieving that requirement is very low.

The neoliberal period ended the several decades of inequality reduction that had been achieved through social democratic government policy aimed at increasing transfers, providing cheap and high quality public services, expanding public education and health, and ensuring wages growth was able to reflect productivity growth (meaning real wages grew considerably).

The neoliberal takeover of governments sought to reverse or retrench these initiatives to allow the share that capital gets out of national income to rise again. ...................


...



Sci Fare:

An ancient, fast-feeding quasar is breaking the rules of how black holes consume matter and generate galaxy-shaping jets.


Researchers keep discovering more about the long-term neurological effects of SARS-CoV-2.



U.S. B.S.:

Call your Senators and Representatives, right now.


How the tactics of war and surveillance perfected abroad are now being turned on American citizens—and what it means for the future in an increasingly technocratic state, fueling toward civil war.

There seems to be a systemic crisis rooted in the nature of the U.S. American empire, resulting in an “Imperialist Boomerang”—a consequence of decades of interventionist foreign policy. This concept, inspired by the work of psychoanalyst Carl Jung but applied geopolitically, describes the process by which the methods of control, violence, and surveillance developed and exported by the U.S. for use in foreign interventions—from the Cold War proxy battles to the post-9/11 occupations—are now being systematically re-imported and deployed against the American population. The discussion has long stopped being about political disagreements, but rather exists as a striking fundamental shift where the state begins to treat its own citizens as an occupied population, using the same legal justifications, technologies, and even personnel that were once reserved for overseas battlefields. The new realities are a turning point for both civilians and government factions that will define how the evermore technocratic U.S. navigates a digital future surrounded by global capital rat race for limited resources—particularly rare earth minerals needed for the techno-feudal future. .................

................ Ultimately, yes the U.S. as the one unilateral world power is in decline amid the rise of a multipolar world but what that means is not a rose-colored, hero vs villain Marvel film. The disappointing fact is that there is a rise in power that is not collapsing, but strengthening and that power is coalescing around a very close-knit group of people with no ideology but money, and no loyalty to anything but capital. There is now, and this will become much more apparent soon, a global struggle for resources which has led to the emergence of a new world order—unfortunately, not the one we needed or thought. But it is up to us to increasingly understand our sobering reality, so we can better face it with a clear head.


*** It’s a Good Life                                                           
History reminds us that there exists a greater proximity between laughable and dreadful than calmer times would admit. (Albrecht Koschorke)
The rapid rise of the carnivalization of politics is quickly emerging as the most consequential political transformation of the past twelve months. Through a temporary suspension of hierarchy, social norms, and authority and by infusing unseriousness, absurdity, and theatricality into public discourse, both the government bodies and media organizations have effectively marginalized a considerable segment of the population, thereby impeding their participation in meaningful political dialogue. Although this trend is not an entirely novel phenomenon — having been present since the Reagan era — its current intensity and pervasiveness have assumed such extreme levels and bizarre form that it has fundamentally (and qualitatively) altered the nature of political engagement. 

The ubiquitous frivolousness and dilettantism as well as transgressive energy of political narratives and actions now serve as a litmus test for loyalty and a measure of allegiance. Recognizing that a diminishing number of discerning individuals accept the prevailing narrative, politicians and media outlets have ceased efforts to engage such audiences — there is no longer an expectation that intelligent/thoughtful individuals will endorse it. Rather than attempting to persuade the population and shape consensus, the current strategy is one of selection — the simplistic and cartoonish nature of their ideological appeal serves as a deliberate filtering mechanism.

This shift signals a profound change in the relationship between authority and the public, where legitimacy is no longer derived from open discourse or convincing argument, but from the compliance of a carefully selected segment of population. As the narrative becomes increasingly insular, those outside its boundaries find themselves excluded not by debate, but by design, reinforcing a divide that is sustained by intentional disregard and systematic alienation. In that climate, the act of questioning is rendered irrelevant, and the separation between the governed and the governing grows ever wider. ............................

At this juncture, the contours of the ideological core begin to take shape and become discernible.  Capitalism creates desperation and victims who are ready to embrace fascism’s fraudulent promises in the absence of real solutions. The principal deficiency of capitalism in its neoliberal phase has been its propensity to generate pervasive poverty and adversity. After decades of its reign, approximately two-thirds of Americans have been marginalized, not only with respect to income or accumulated assets, but also in essential measures of quality of life, including healthcare, life expectancy, and social welfare. While one-third of the nation maintains parity with other developed countries, the remaining two-thirds continue to fall further behind, creating a disparity that appears insurmountable. 

The recent rise of fascism in the United States represents a foreseeable result — one that can be directly traced to neoliberal policy decisions. This connection offers valuable insight into current developments. ..........

The legacy and the lasting damage of this annus horribilis is a fundamental departure from how politics had been conducted in the past. Instead of expanding the Overtone window to gain broader support, the government now appears to be contracting it intentionally to maintain control over a strategically selected segment of the population: The political leadership has effectively narrowed the range of acceptable discourse within their base, while simultaneously pushing the boundaries outward for those who demonstrate unwavering loyalty. This created an insular narrative where questioning becomes irrelevant and consensus outside the selected group is dismissed. 

With each passing day, the executive branch has been isolating itself from other branches of government, from the people, and from shared reality, relying increasingly on their cult following. They are no longer attempting to adjust their policies and governing to the interests of the country and its people, but are in a search of the public willing to support the reality they invent.

This short-sighted policy is not designed to catalyze a change, but to prevent it. Its main problem is that the costs of maintaining the present system in this way exceed the benefits. The deliberate introduction of incompetence and stupidity on an industrial scale into an already fragile system, coupled with the consolidation of power within the executive branch, while dismantling established checks and balances in favor of sole reliance on the judgment and morality of a leader who has clearly demonstrated a lack thereof, is certain to yield significant consequences and will almost certainly lead to predictable outcomes.



Geopolitical Fare:

Due to its systemic decline, US-led capitalism is further arming itself in multifaceted ways, accelerated by the younger, even more aggressive faction of capital embodied by current US President Donald Trump, followed by his nervous, equally failed vassals, primarily in the EU and Asia. How, then, can cooperation among the much larger "rest" of humanity regarding international law and human rights be deepened and expanded, including at the non-state level?



From Vietnam to Iran and every U.S. war in between, the same propaganda narratives are deployed, no matter how discredited and debunked they are from all the prior times they were exposed as lies.

When President Lyndon B. Johnson decided in 1965 to significantly increase the number of American troops to fight the growing war in Vietnam, he felt obligated to justify this major escalation to the American people (this was from a quaint, obsolete era when Washington believed public support was mildly important for starting or escalating American wars). On April 7 of that year, Johnson went to Johns Hopkins University to present his definitive case for why the U.S. must fight a war on the other side of the world, against a country that had not attacked and could not meaningfully threaten the U.S.

Johnson presented the American war as one of benevolence, selflessness, and a noble desire to liberate the world’s oppressed peoples from a uniquely murderous, tyrannical regime. .................................

To say that the U.S. war in Vietnam helped nobody beyond the U.S. military industrial complex — and that it certainly did not “help” the Vietnamese people — is a drastic understatement. ..................

Despite all of this, the same exact propaganda and deceitful tactics used to sell, justify, and glorify that war have been used for selling every new American war since then. As discredited as these war justifications proved to be, those in the American government and media have never changed the script even slightly for subsequent wars: from Iraq and Afghanistan to Libya and Syria, and now the latest ones in Venezuela and Iran. ........................



On February 24, 2026, Russia’s foreign intelligence service (SVR) accused the United Kingdom and France of preparing to provide Ukraine with nuclear components or a “dirty bomb.” ..........................

Returning to the most recent SVR claims, Britain and France are said to believe that giving Ukraine a wonder weapon would allow Kyiv to negotiate more favorable peace terms. ...............

Some skeptical voices wonder that the US could possibly greenlight such a plan but they may underestimate the fanaticism of British and other European agencies that have gotten them into the mess they are already in but cannot escape. .................


And hoping for miracles.

.............. No, what I have in mind here is a problem of ignorance combined with a problem of incoherent thinking. I’ve touched on each before, as part of my argument that the defeat of the West is as much an intellectual one as anything else. So let’s take the problem of ignorance first, distinguishing as we go between the refusal to acknowledge defeat, which is essentially political, and the incapacity to understand defeat, which is an intellectual failing. In each case, the process of thinking starts at the end, from a predetermined conclusions, and works forwards, flailing around in the search for evidence to support the imposed conclusions from which you began. Let’s take the first first. ...........................


The neo-fascist in the White House is attempting to bring the Caribbean island and its government to its knees, strangling it economically once and for all, killing its people with darkness and scarcity. But this is not “just” a war against Cuba and its revolutionary tradition. It is the continuation of the war against the sovereignty of all Latin American countries and Latino peoples within the United States. Scheinbaum, Lula, Petro, Orsi and the social democratic governments must emphatically oppose this crime in all international forums and organisations.




Other Fare:


.......................... Appreciating the beauty of this terrestrial experience likewise takes practice. Everything is crackling with beauty all the time, but we don’t notice it because our attention gets wrapped up in mental stories. Just make a conscious practice of noticing beauty at every opportunity, and your aperture for appreciating beauty will get wider and wider. You can learn to live your whole life in this way, from moment to moment.

If you can get the hang of these two skills — appreciating beauty and feeling your feelings all the way through — then there will be nothing stopping you from living a joyful and fulfilling life while also having an entirely truth-based relationship with reality.



............................... We live in a time of severe socio-economic contraction and corresponding spiritual anomie, where the system’s reproductive fatigue generates a plethora of what Antonio Gramsci called “morbid symptoms”: phenomena that do not herald transformation but function to mask societal decay. Libidinal investment in such phenomena tends to deepen subjugation, as moral outrage becomes emotional attachment while collective misery is reproduced through the very spectacles that appear to expose it. The Epstein files belong to this morbid landscape, not because they are unimportant, but because they dramatize and conceal systemic decline in one fell swoop.

The first point to stress is that these are not just “Epstein files,” but the archival trace of a civilisation that has systematically reproduced itself through organised forms of violence. Capitalism and sexual abuse are driven by the same predatory logic: the capacity to dehumanize others and exploit vulnerability for profit. Within such a system, the traits that make someone a successful billionaire are disturbingly adjacent to those that enable rape, paedophilia, and genocidal violence. To be clear, then, capitalism does not simply tolerate predatory personalities; it breeds them. In this sense, Epstein’s network functions as a metonymy for the human relations that a greed-driven civilisation promotes – a laboratory exposing the inevitable convergence of economic and sexual predation. What appears as aberration is, in fact, a magnified image of the “rules of the game”. The fundamental reason why the Epstein scandal should shock us is that it reveals, in concentrated form, the rotten core of the system itself. .................

.......................... In this context, scandal cycles begin to resemble a kind of assisted social death. They do not name catastrophic collapse, but progressive anaemia. Institutions remain operative, elections continue to take place, markets appear to function. But the underlying social organism loses resilience; it loses its shared purpose, the expectation that the future will be better than the present.

This results in a feedback loop in which increasingly obscene spectacle becomes necessary to stabilize an increasingly bankrupt “new normal”. The deepest obscenity is not the scandal itself. It is the insistence, repeated endlessly through institutional language and media ritual, that everything is fundamentally still working. If this is the phase we have entered, the defining political question will be whether societies can learn to recognize these spectacles as symptoms of systemic exhaustion. Because the ideological endurance of declining systems lies in its ability to convert decline itself into an endless series of emotionally absorbing events. And if that is true, then the real danger is not sudden collapse. The real danger is a civilization that learns how to fade while believing it is still doing fine.


***** Eisenstein: From Depravity to Redemption

The word power can mean many things: moral power, spiritual power, the power to heal, the power of love. Here I will speak of another kind, the kind we use to refer to presidents and billionaires and the people in Jeffrey Epstein’s black book. It is the power to subject others to your will, to direct their actions, and to rise above the rules that others must obey. This sort of power is naturally attracted to depravity.

Some who pursue domination will naturally take it to its extreme. Even if one doesn’t pursue power, but is born or brought into it, depravity exerts an insidious pull. It may start with a subtle sense of one’s own superiority, an aloofness, a patronizing attitude toward inferiors, a tendency to associate with other powerful people as peers while subtly dehumanizing the rest. From there, under the right circumstances, with nothing to limit its drift, it may progress toward its fulfillment: the most heinous acts of complete domination of one human being over another.

The dehumanization that is so routine in modern society—that turns us into consumers, functionaries, market opportunities, profit centers, voters, sex objects, characters in degrading political narratives, occupants of racial, gender, or ethnic stereotypes, and so on—seeks somewhere to take on its most extreme forms. Any society that commodifies nature and normalizes dehumanized relationships will necessarily harbor, in its darkest recesses, in its prisons and concentration camps and black sites, behind the closed doors of its normal-seeming houses, in the recesses of its family secrets, and in the fortified compounds of its elites, the most grotesque violations of human dignity. It is an organic necessity. Abnormalized degradation complements and completes the normalized. It is impossible for a world that has one, not to also have the other.

The Epstein files are a ringing indictment of our society, but no such indictment is necessary for those of us who have studied the normalized exploitation and degradation of human beings (and other-than-human beings) on earth. We never believed the system was sound. We saw the sweatshops, the toxic waste dumps, the slums, the landless peasants, the refugee camps, the child labor, the neoliberal extraction and the wars, prisons, death squads, and torture regimes needed to maintain it. We saw the conversion of life, earth, beauty, community, and imagination to money. We didn’t need the Epstein files or notions of Satanic cabals to reject it. But for most people, these costs to humans and nature were relatively invisible, hidden behind global supply chains and ideologies of progress, of development, of the ascent of humanity. The Epstein files pierce that obscuring haze. They show us the true nature of power, in its distilled form. 

The files arouse a feeling of confirmation, of vindication, that does not depend on the factual truth of the specific claims surrounding them. The smaller truth is: “Aha! I knew it! Inhuman elites are running the world.” The larger truth is: “Something inhuman is running the world.” The second truth contains the first, neither denying nor depending on it. If the elite predators are byproducts of something greater, if they are its functionaries, if they are among its symptoms, then the task before us is much larger than merely to send them to the guillotine. ...............





................................. Whatever one thinks of China, the fact is that its elites concentrate on making the population more prosperous and the country stronger in real terms. They aren’t offshoring their steel production. They can build ships. They lift people out of poverty, they don’t shove people into it. There aren’t massive homeless encampments everywhere. They arrest senior party members and billionaires for corruption and even execute them for crimes.

They are better people than Americans. Doubtless that will outrage many, but if you think otherwise you’re engaged in special pleading. How many countries have they invaded and destroyed? How many people have they killed or impoverished, including their own people? They’re expanding education and healthcare, working hard to make housing cheaper, etc, etc…



.............. A human life, even a long one, isn’t very long. Human history operates on generations, with three and seven seeming to be the numbers which matter most.

A normal sub-ideological cycle (New  Deal and post-war liberalism, neoliberalism) is about 3 generations. Sometimes they can go longer, but making a bet of about fifty to sixty years for a run will usually work. The changes FDR made stayed substantially in place till 1980 with Reagan. Neoliberalism is dying as we speak. There’s always an overlap period, where the old order is dismantled, but substantial spars remain in place. It takes till the late 90s to repeal the major market reforms of New Deal liberalism, for example. .........

I predicted the ways that the neoliberal order would end, and was right about almost all of it: the rise of China, the end of dollar hegemony, elite capture, the effects of surveillance and electronic money, but in terms of a human life it has all felt like very a long time.

It isn’t, really, in historical terms. Fifty years isn’t very long, unless you’re living thru it. .............

................ Trump and the people around him don’t even pretend to be honest, good or honorable. They’re all cruel bastards looking out for number one and willing to hurt or kill anyone, and they don’t even pretend otherwise.

One can see that as preferable to the hypocrisies of Clinton, Bush and Obama, and in some ways it is, but it’s also an indication of how far we’ve fallen, that our lords and masters (and they are our masters, and we are their slaves) don’t even pretend to have any virtues. The only virtue left is being rich or powerful, if you’re neither, you’re nobody and if you’re nobody, in the eternal words of George Bush Jr, “who cares what you think?”

......................... This is nothing new, of course. Confucius felt this way, and died convinced he was a failure. “Stop doing all these evil things,” he screamed, and no one listened. The Chinese are good at this. They recognize there are times when public affairs are so evil that good men and women can do nothing but withdraw and try and live good lives, because any success in public affairs can only come at the cost of one’s character. 

................... Now we come to the rise of the Chinese century. I wonder how much I’ll see, and how weird it will be to no longer be a member of the important, ruling civilization, but only a barbarian, watching my civilization collapse and the glory and the future move elsewhere.

May the Chinese do more good than evil with their time in the Sun, and may they remember too, that the sun always sets.

And I’ll keep watching, because while most of this has sucked, the one virtue of interesting times is that they are interesting, and age’s great advantage is perspective.



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