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Sunday, April 5, 2026

2026-04-05

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


Economic Fare:


…... Several major bond fund managers, including JPMorgan Chase & Co. and Columbia Threadneedle Investments, reckon that higher bond yields this month are misjudging the risks of a slow down, according to Bloomberg News. “What tends to begin as an inflation shock can quickly migrate into a growth shock, and we are on the cusp of seeing a significant weakening in the economy,”



In its latest review of the impact of the Middle East conflict on the world’s economies, the IMF summed it up: “Although the war could shape the global economy in different ways, all roads lead to higher prices and slower growth.” .......




Red Sea supplies are also at risk now the Houthis have joined the Gulf war

......... Trump says America “doesn’t need” the Strait of Hormuz.

Who put that idea in his head? The US imports eight million barrels a day (b/d), either refined products or heavy crude to balance its refineries. It has four times the petrol dependency per capita of the UK.

............ Trump says the bombing campaign has already achieved “regime change” in Iran. Indeed it has, consolidating the power of the most virulent bitter-enders. It has scotched the snake, not killed it.

“What we are seeing in Iran is a transformation within the regime itself, one that has made it more extreme,”

......... Vali Nasr, the author of Iran’s Grand Strategy, a political history of the country, says the White House has misunderstood the country on every level. The hated clerical regime was dying and would have collapsed internally if outsiders had left it well alone.

The US-Israeli attack – and Trump’s hideous delight in inflicting violence – has given it a new and more dangerous lease of life.

...... JP Morgan says the world is facing a “ticking time bomb” as physical shortages hit fresh regions one by one: first South Asia, then the Far East, then Europe and finally the Western Hemisphere, reflecting tanker travel days from Hormuz.

Every corner of the globe will be hit by Apr 20 or thereabouts. Regional prices will converge via arbitrage and there will then be a planetary oil crisis with very few places left to hide.


Albert Edwards: SocGEN: Global Strategy Weekly: “Crisis? What crisis?” (via The Bond Beat)

…I’ve been reading a lot of scenarios about what might happen in the Iran war with President Trump making many contradictory statements – even on the same day (the $64,000 question for me is what happens if Trump pulls the US out, but Israel continues to bomb Iran). Most commentators and investors appearto not expect this war to wreak the economic havoc some of us still remember from the 1970s. That smacks of complacency to me…........

.... as @PeterBerezinBCA points out on X, “The forward P/E ratio for the S&P 500 has fallen from a high of 23.1 in late October to 19.5 at present. About one-third of the decline in the P/E ratio has been due to the drop in stock prices, with the rest being explained by the rise in forward earnings estimates. The fact that earnings estimates have continued to increase in the face of growing macroeconomic uncertainty is less reassuring than it might appear. Historically, earnings estimates have lagged broader macroeconomic developments. Perhaps even more importantly from an investment perspective, earnings estimates have also lagged stock prices.”

…And that’s the problem. The equity market may be looking in the rear-view earnings mirror and taking comfort from such robust profits growth, especially in the Tech/AI-related sectors (see left hand chart below). Indeed, I see loads of commentary talking about buoyant US profits upgrades. By contrast I have seen only one comment (and believe you me I look at a lot of stuff) that concurs with my contention that profits momentum has begun to stall (right hand chart). It's the second derivative that matters here. And just like in 1974, the market will catch on eventually.


"The centre cannot hold; Mere anarchy is loosed upon the world..."

I’ll cut to the chase. The Trump-Epstein-Netanyahu War could cause more deaths than any war in history, including World War II. This will not be via its direct casualties, but via deaths caused by its economic and agricultural consequences across the planet. For someone who exalts in superlatives, Trump may be responsible for causing more deaths than any previous tyrant in human history.

This is because the world economic system resembles Trump himself: its self-image is one of robust power, but its inner nature is one of incredible fragility. One month ago, many people would not even have heard of the Strait of Hormuz—which Trump, in his bravado, has just referred to as “the Strait of Trump”. Now everyone knows where it is—if not precisely why it matters. We are about to learn the hard way, via the consequences of cutting off this vital artery in the global economy’s circulatory system. 

This should have been common knowledge. But, just like Trump himself, our understanding of the global economy is based on an elaborate set of delusions. ............


Andre Chelhot: What If?
What If America Loses the War

To understand what it would mean for America to “lose the war,” one must first understand the system it built after the collapse of Bretton Woods, because what is at stake is not a battlefield outcome but the architecture of global power itself, and that architecture was reconstructed in the early 1970s when the United States, having severed the dollar from gold under Richard Nixon, faced the urgent need to anchor its currency in something else, something that would preserve global demand for dollars in the absence of convertibility, and what emerged, quietly, strategically, and with extraordinary consequence, was the alignment of energy, security, and capital flows into what later came to be known as the petrodollar system.

This system was never simply about pricing oil in dollars, as is often repeated in simplified narratives, but rather about creating a closed loop in which every economy that sold energy needed dollars and every economy that needed energy needed dollars, and every economy that sold energy accumulated those dollars and needed a place to store them, and that place was the United States, whose financial markets provided depth, liquidity, and political protection, while in return the United States guaranteed something far more valuable than any monetary arrangement: it guaranteed security, of regimes, of infrastructure, and of the maritime routes through which energy flows, and this implicit contract, oil for dollars, dollars for Treasuries, Treasuries for security, became the foundation of the modern global system.


Sleight of hand

You’ve heard it. Trump says it. Energy secretaries say it on Fox News with straight faces. “America is energy independent. We produce more oil than we consume. We’re a net exporter”.

It sounds great. It’s also, at best, a half-truth dressed up in a tuxedo.  ..............

The US produces a lot of crude. Record amounts, actually - around 13.6 million barrels a day in 2025. Nobody produces more. And yes, the US does export some of that crude to other countries.

But the US also imports crude. A lot of it. 6.2 million barrels a day, to be exact.

Do the math: 6.2 million barrels coming in, 4.0 million barrels going out. The US is a net importer of crude oil by 2.2 million barrels every single day. .............

Now here’s where it gets structurally weird, because even the crude picture has a twist.

The US produces light, sweet crude. “Light” means it flows easily. “Sweet” means low sulphur. It’s actually the good stuff - easier and cheaper to refine. The shale boom that made the US the world’s largest producer? Almost entirely light, sweet crude coming out of places like Texas and North Dakota.

The problem is that American refineries weren’t built for it.

Back in the 1970s and 80s, when the US was deeply dependent on Middle Eastern and Venezuelan oil, it built refineries to handle heavy, sour crude - the thick, high-sulphur stuff that’s harder to process but was widely available cheaply from abroad. Nearly 70% of US refinery capacity is optimised for that heavier crude. Then the shale boom happened, producing an ocean of light crude that most of those same refineries can’t efficiently process.

So the US does something that looks insane on the surface: it exports the light crude it produces to European and Asian refineries that can use it, and simultaneously imports the heavy crude its own refineries need.

Upgrading a refinery to switch between crude types costs between $100 million and $1 billion per facility. No1’s rushing to do that.

The result is the US running both sides of a crude oil swap trade with the rest of the world. Every day.

It’s not irrational. But it’s not called energy independence either in my book. ..............

The US shale miracle is real.

The energy independence narrative built on top of it isn’t.

And when you hear a government official say “we produce more oil than we consume” - ask them what kind of oil, processed through what kind of refinery, and what happens to the 6.2 million barrels a day that still needs to be imported from abroad. .....



Market Fare:

While a near-term bounce is possible, investors should position for more weakness ahead as deterioration has been significant but not yet extreme

As indexes pull back from their peaks, we tend to label the drawdowns based on their intensity. When an index is 10% off its high, it is “officially” in a “correction.” Once it is 20% or more below a peak, the “bear market” label gets used. The problem is that these “correction” and “bear market” designations serve only to confirm what has been experienced. They become study-able periods for historians, but there is little utility in telling investors that they should have reduced risk exposure a few weeks or months ago. Investors don’t need confirmation, they need real-time indicators that provide evidence of bull market and bear market behavior. ...........


The limits to growth are starting to weigh more heavily that the risk of inflation.

Bonds’ Silver Lining
Assumptions were made to be broken. An oil price spike automatically raises prices, so it’s bad for inflation. That generally causes bond yields to rise, as the assumption is that central banks will have to raise rates to combat the higher prices. But it also acts like a tax hike, forcing consumers and companies to spend less on things other than oil. All else equal, that justifies a rate cut, and lower yields.

Further, the logic of bonds is that they act as a shelter in times of stress — which means investors buy them during extreme uncertainty and conflict, like the past month. Thus it’s always been strange that the bond market unambiguously reacted to the Iran war’s inflation risk, but not to the threat to growth, and sent yields higher. Until now. .........


The Reflexive Rally Was Not Surprising

........... The difference between a durable recovery and a dead-cat bounce is almost always visible in the underlying fundamentals, not the price action alone. Right now, the fundamentals argue for caution.

Goldman’s own scenario analysis puts a moderate slowdown path at 6,300 on the S&P 500 and a severe oil-shock path as low as 5,400. Neither of those scenarios is priced into current earnings estimates. S&P 500 companies are still being modeled at roughly $309 per share in earnings for 2026, figures built on assumptions about GDP growth and energy costs that the past eight weeks have materially challenged. When earnings revisions begin in earnest, they tend to hit in waves. We’re likely in the early innings of that process, and it will impact forward returns. The reason is that the market trades off forward earnings expectations; if those expectations fall, the market reprices for lower earnings growth.



In his televised address last night Trump said the US was going to keep bombing Iran for another two or three weeks, and if Iran didn’t make a deal, the US would bomb them “back to the Stone Age.”

More on that phrase later.

But first a bit on the economics.

Promising to keep doing the thing that has brought the world to the brink of a global economic catastrophe, and threatening maximum escalation, didn’t go down well with the people who make numbers go up or down. The oil price rocketed, and markets sank. It seems the people behind the screens might finally be waking up to the looming disaster. They might be realising, belatedly, that very soon the molecules are simply not going to be where they are wanted and needed in the quantities required.

You can’t decouple the numbers from the atoms forever and you can only deny physical reality for so long.

And the physical reality is stark and stunning.  ............



Private Credit Fare:




A.I. Fare:





Shady, shifty, unethical chatbot behavior is rising fast, and now we know why. Call it the ‘No Body Problem.’


Regurgitated texts produced by technology are 85pc to 90pc similar to the original, study finds



"AI psychosis" or "delusional spiraling" is an emerging phenomenon where AI chatbot users find themselves dangerously confident in outlandish beliefs after extended chatbot conversations. This phenomenon is typically attributed to AI chatbots' well-documented bias towards validating users' claims, a property often called "sycophancy." .........


Heavy users of artificial intelligence report being overwhelmed by trying to keep up with and on top of the technology designed to make their lives easier


Experiments show large majorities uncritically accepting “faulty” AI answers.



Yesterday Dana, the kids, and I went to the theater to watch The AI Doc: Or How I Became An Apocaloptimist, the well-reviewed new documentary about whether AGI will destroy the world. This was surely the weirdest family movie night we’ve ever done. Firstly, because I personally know probably half of the many people interviewed in the film, from Eliezer Yudkowsky to Ajeya Cotra to Liv Boeree to Daniel Kokotajlo to Ilya Sutskever to Jan Leike to Yoshua Bengio to Shane Legg to Sam Altman and Dario Amodei. But more importantly, because this is a documentary that repeatedly, explicitly, earnestly raises the question of whether children now alive will make it to adulthood, before unaligned AI kills them and everyone else. So pass the popcorn, kiddos!

(We did have popcorn. And if the kids were scared — well, I figured we can’t shield them forever from the great questions of the world they’re entering. But actually they didn’t seem especially scared.)

I thought that the filmmaker, Daniel Roher, did about as good a job as can be done, in fitting into a 100-minute film a question that honestly seems too gargantuan for any film — the question of the future of life on earth. He tries to hear out every faction: first the AI existential risk people, then the AI optimists and accelerationists like “Beff Jezos,” then the “stochastic parrot” / “current harms” people like Emily Bender and Timnit Gebru, and finally the AI company CEOs (Altman, Amodei, and Hassabis were the three who agreed to be interviewed), with Yuval Noah Harari showing up from time to time to insert deepities.

Roher plays the part of an anxious, curious, uninformed everyman, who finds each stance to be plausible enough while he’s listening to it ...........



Quotes of the Week:

anon: “The market’s consensus seems to be that 30-50% of Gulf energy infrastructure getting wiped out will have zero lasting consequences. No plastics shortages, no fertilizer crunch, no chip supply issues from helium depletion. The tail risk is so catastrophically bad it can’t really be priced — so the default is just buy the dip and pray everything goes back to normal.”



Charts:
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(not just) for the ESG crowd:



From the Pacific Northwest to Antarctica, it’s extraordinary warmth that’s punching through climate norms with the most force.


And is there still potential?



Sci Fare:






U.S. B.S.:


The New York Times has printed an article with the headline “A North American Treaty Organization Without America?”, apparently having spent the entire Ukraine war completely unaware that NATO stands for North ATLANTIC Treaty Organization.

At the same time, CNN ran a segment on an American bomber whose plane was shot down over Iran in which analyst Amy McGrath suggested that the Iranians might help the pilot because they’re “happy” he’s bombing their country, saying the pilot would be worried because they don’t know “if you’re gonna be picked by somebody who is going to turn you over to the Iranian forces that are gonna use you and capture you, or is the population happy that you’re there?”

Really illustrates how fucked western journalism is, doesn’t it?

I mean, this is some serious baby-brained thinking on display here. That New York Times headline made it through multiple checkpoints before publication without it ever even occurring to anyone to at least do a quick Google search to find out if the A in NATO really does stand for “American”, and, if so, why are there so many European countries in it? That CNN analyst really does have such an infantile, children’s cartoon worldview on American wars that she thinks the people being bombed by American pilots will want to hug them and kiss them and give them presents when they emergency eject into enemy territory. It’s kind of amazing that any of the people involved in either of these incidents are working in news media at all.

If you’ve ever wondered why so many Americans are so ignorant about what’s going on in their world, it’s because for generations these have been the kinds of people informing them about world events. These are the news outlets who’ve been responsible for creating an informed populace. And their reporting is shared with the entire western world.

I constantly criticize the western press for its role in propagandizing the public to manufacture consent for evil wars and normalize an abusive political status quo. You cannot despise these manipulators enough for their role in the world’s dysfunction today. But these two incidents highlight the fact that the people running the western press aren’t just evil — they’re also really, really stupid. ........



War Fare:


“If this scenario is right, Israel fails. She brings down the Philistine temple, but hers is the only death, a suicide.”
—Yours truly

This is a Unified Field Theory of the Israel-Iran War. I think I know where it’s going, where it will likely (but not certainly) end, and why. Let’s take a look.

Note: This doesn’t present what I think will happen. It presents what I think is most likely. Please read in that light.

Background: Players and Goals
The players involved have these goals.

Israel wants Iran’s permanent destruction. This means all of the following:
  • The war must run until Iran surrenders, and any ceasefire must work entirely to Israel’s advantage.
  • U.S. military must stay engaged to the end.
  • All other potential regional threats must be neutered.
Iran wants an enforceable end to Israeli and U.S. attack. This means all of the following:
  • Withdrawal of the U.S. military from the whole Middle East
  • Permanent Iranian control of the Strait of Hormuz (like Egypt or Panama’s control of their own canals)
  • A ceasefire with Israel that Israel cannot break
Iran’s additional goals, like reparations and sanctions relief, may be negotiable.

The U.S. is mixed in its wants:
  • Neocons want to break Iran to secure control of all Middle East oil.
  • Zionists like House Speaker Johnson want to bring on imagined “end times.”
  • Most people with ongoing state power — like military and intelligence pros — want to avoid a loss that will end the Empire.
President Trump wants all of following:
  • To enrich himself and his family
  • To not be exposed via release of Epstein files and tapes
  • To not be labeled a loser (one of his great fears)
  • To live to the end in “a state of insatiable self-worship”
Players and wants, some of which overlap. Keep this in mind as you read on.

What Would End the Fighting? Only Defeat
For the war to end, all players must stop fighting. What does that mean in practice?

Iran must meet all of its goals before it will stop. Otherwise, there’s no guarantee the attacks won’t restart. Yet for Israel to stop, Iran must be completely defeated.

This alone guarantees that the fighting will go on until one of these two collapses — either Iran loses the ability to fight and its government surrenders, or Israel collapses as a state and a secular Palestine rises from what remains.

This could be the last big Middle East war for years. Its outcome could remake the world. .......





.................... Now, Saddam’s revenge.

If you’re old enough you remember the first Gulf War. Iraq invaded Kuwait. Saddam had asked for permission from the US and the response was one Saddam believed was positive. And, after all, Saddam had fought an entire very destructive war against Iran for the US: he was an American proxy. Kuwait was created explicitly over a huge oil reserve as a way of keeping it from Iraq, which it really should be part of: it’s a colonial era legacy state.

Well, the US didn’t approve and the Iraqis got slaughtered, their power, sewage and water infrastructure was systematically destroyed, then Clinton subjected them to savage sanctions which killed million. Estimates of child casualties were over 500,000, based on population studies. Clinton’s secretary of state, Madeline Albright, when asked about this, infamously replied that the deaths were “worth it.”

Anyway, Kuwait’s military is a joke, it’s right next to Iraq and conquering it would be trivial, since there’s no easy way for the US to get troops there. So, switch to China and the Yuan, finish kicking the Americans out, and conquer Kuwait. (No one will cry, Kuwait’s rulers are absolute scum.)

This is a historic opportunity for Iraq, and they should take it.



Geopolitical Fare:


............... But by the 90s the last smart competent American elites were dead or retired, and the triumphalism over the fall of the USSR made them think, a la Fukuyama, that their system was superior, their shit didn’t stink, and they’d be on top forever. Everyone would have their system, and everyone would just keep buying and selling in dollars no matter what: it no longer mattered where things were made.

The key moment was when Clinton let China into the World Trade Organization (WTO) with developing world status. ...........

And that, folks, is the end of the Western order. No one needs to buy from us any more. They’d still like to sell to us, sure, but they don’t need to because they don’t need dollars. If it’s something they need they can get it from China or, to a lesser extent Russia, India and so on. We don’t have a monopoly on anything that matters any more: the last real one was chip manufacturing, but the Chinese are catching up fast and confident that in a few years they’ll be there. In the meantime, they can make all but the most advanced chips and those are the ones that go in almost all manufactured good: the most advanced stuff is only useful for things like AI, and China’s find its way around that.

Now we come to Iran. Iran is showing that a fairly modest kit: missiles and drones, is sufficient to keep the US navy and air force far away and make any attack prohibitively expensive in men and material. Plus everyone knows that expensive US military gear needs Chinese supplies: the West doesn’t have the full kit any more, the Chinese can and in some case have, cut the West off any time they want. All those expensive radars the Iranians blew up? Well it’s not the cost (that’s irrelevant) it’s that they require materials on the Chinese have. They get rebuilt if the Chinese let America and there’s basically nothing the US can do about that. ..........

Anyway, the structure of Western dominance is now dismantled, by Westerners. Perhaps the Chinese could have industrialized fully without us, but it would have taken a lot longer and as long as we had our own industry and tech stack, it would have just meant a cold war situation with two blocs and, absent de-industrialization, perhaps the West could have held its own, though China is innately stronger than the USSR ever was, especially with Russia as an ally.

We did this to ourselves, or our elites did, because of sheer stupidity and arrogance. Don’t underestimate how bad this will be. I’m in the “better China as hegemon than America” crowd. I think they’ll kill a lot less people. But be clear, they are going to be a hegemon, at least in industrial terms and this is going to mean a serious standard of living drop in much of the West. .........


As shown by the Iran crisis.

I have argued previously that the defeat the West has been suffering in Ukraine is above all an intellectual one: not being able to understand what we are seeing means it’s impossible to respond effectively to it. But the problem goes beyond the fighting on the battlefield, to the nature of that War itself, and in particular its economic and political dimensions. This is even more the case with Iran, where not only is there no overall US strategy (as opposed to half-formulated fantasies and wish-lists) but where in addition Washington appears to be incapable of understanding that the other side does have a strategy with economic and political components, and is implementing it. As a result, all the media concentration recently has been on the movement of US troops to the region and their possible uses, as though that in itself was going to decide something. Yet in fact, the real issue is the development and deployment by the Iranians of a new concept of warfare, based on missiles, drones and defensive preparations, and the inability of the West, with its platform-centric mentality, to understand and process these developments. ...............

I’ve referred several times in previous essays to theories about changes in human consciousness over the millennia, and what this might imply. Iain McGilchrist has famously written about the increasing role of the left side of the brain (the Emissary) at the expense of the right side (the Master.) In his conception the left brain, which is concerned with precision and detail, should be the servant of the right brain, which deals in the “big picture” and is capable of setting objectives. He argues that the left-brain with its technocratic orientation has become increasingly and dangerously powerful in recent times. I would add that this increase in power is not necessarily experienced in the same way in all cultures, and that in the West it is very far advanced indeed. Why is this? .........................


No Plan for Hormuz, No Off-Ramp -- a New Phase has Begun



Other Fare:

Strategies for Employment, Housing & Loneliness

As the first fully online generation, Gen Z rejects pretty lies. As I documented in my piece on the increasing unattainability of the middle class, economic life is much harder for the rising generation, and they’re angry about the WWII and subsequent generations’ pulling up the ladder to enrich themselves and shifting inequality to extremes. I’m still working on an upcoming piece on the “postwar consensus,” but a lot of the more extreme positions taken by this generation are, in my view, driven by frustrating economics. When they see a narrowed path to family formation, little opportunity beyond hustling to get rich or die trying, and of course, all exacerbated by the envy engine of social media, they will reject the myths of a society that has, it seems, rejected them.

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Saturday, March 28, 2026

2026-03-28

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


Economic Fare:


Those Westerners who hate Donald Trump seem to be happy to fight him to the last Iranian. And those who push for renewable energy seem to be happy to see the Middle East destroyed, since they believe that it will force the energy transition on us. Few people realize how dire the situation is. Antonio Turiel is one of the sharpest minds on this planet, and he is not shy about telling how things stand. He correctly says, “Given the current situation, suggesting that the answer is a renewable energy transition is like a house fire breaking out and thinking it’s a good time to call a builder to install fire doors.” To say nothing about having handed power to a band of criminal psychopats devoid of even a shred of moral restraint. Unless some kind of miracle occurs that stops the war now, we are facing the Seneca Abyss.


Dead man walking
From Antonio Turiel’s Blog - 23 March 2026

The Iran conflict enters its fourth week. Once again, to avoid panic and a widespread stock market crash at the opening of Monday’s session, a fabricated story has been concocted to calm the market. In this case, Donald Trump has declared a five-day truce (only on the American side; Israel is proceeding independently), supposedly thanks to fruitful talks with Iran over the weekend (talks already denied by Iranian authorities).

We’re in extra time. In the coming weeks, the last ships that left the Strait of Hormuz before the closure will arrive, and when they do, the shortages will become painfully obvious. In fact, things are already going terribly wrong. The list of countries experiencing fuel supply problems or even imposing rationing measures ( Japan , Australia , New Zealand , India , Thailand , etc.) is growing by the day. China has restricted fertilizer exports , and in the US, it’s estimated that this season will be short between 25 and 35 percent of the fertilizers typically used . The helium shortage will cause a sharp drop in chip production within weeks , not to mention the disastrous situation with aluminum and copper, to name just a couple of raw materials. But really, everything is affected. Unsurprisingly for regular readers of this blog, diesel is currently one of the most scarce things, and that affects absolutely everything, including the supply chain of all kinds of raw materials.

There doesn’t appear to be an easy solution. Iran won’t back down without a credible non-aggression pact from the US and Israel, guaranteed by major powers like Russia and China, and war reparations commensurate with the damage inflicted. It can’t settle for less, because it knows that if it gives in now, they’ll attack again in a few months, having rearmed. But these conditions are completely unacceptable to the US and Israel. There really is no easy way out of this impasse. Everything suggests that immense structural damage will be inflicted on the global economy.

Putting myself in the context of Spain and Europe, let’s be honest, unless something unimaginable happens right now (literally a miracle), we’re going to crash. No other outcome is conceivable. We’re going to suffer a very long-lasting, perhaps even permanent, loss of 25% or more of our energy consumption, and it’s going to happen over the next few months. We’re going to see a good portion of our industries collapse, never to recover. We’re going to see unemployment skyrocket. And in the advanced stages of this debacle, we’re going to see shortages of fuel and even food.

Perhaps the powers that be have mechanisms we can’t even imagine, perhaps they have ways to stop this war in its tracks and, with it, this disaster. I don’t know. I neither know nor can I know these things. What I do know is that, without a radical change of course, we are going to sink, and sink very deep. And even if that miracle were to happen, the damage already done would have severe consequences in the coming years. Although, of course, nothing compared to the current collapse.

Right now, we’re losing around 20 million barrels of oil and petroleum products per day, which is about 20% of global consumption and, more importantly for us, represents 40% of the oil available for export. There’s also a shortage of about 20% of liquefied natural gas, 30% of nitrogen fertilizers, 30% of helium, 30% of aluminum, and 30% of sulfur (which is needed to make sulfuric acid for industrial processes, including copper extraction). There’s an incredible backlog of containers in the area. The shortage of medium crude oil in the Persian Gulf region is particularly affecting diesel production, as well as kerosene. In fact, some airlines are starting to cancel flights. What will happen to tourism next, only time will tell.

This is not going to be just another crisis. This is going to be an economic catastrophe. Combined with the bursting of the enormous financial bubbles that have inflated over the last few years, it’s difficult to grasp the magnitude of what’s about to happen. .....................


Truck drivers in the U.S. are feeling some of the first economic effects of the rapid surge in the cost of diesel. Broader economic impact could hit soon






 
Oil is likely to surge to extreme highs in 2026, but that does not mark the beginning of a long-term structural bull market. It’s a wartime spike inside a debt-saturated global economy. The higher prices go, the more they tighten credit, weaken growth and destroy demand. Oil is more likely to peak with the crisis and then follow a weakened global economy into a longer period of softness.



Market Fare:








A.I. Fare:


.......... Take a look at the numbers here. The Nvidia Blackwell Ultra delivers 35 times lower cost per token than the previous generation, the Hopper platform. The Hopper platform is what most of the data centers are currently using. After the Hopper, we’re going to get the Blackwell chips, which will drive the cost per token down by 35 times.

After Blackwell, we get Rubin. Rubin brings the cost per token down another tenfold, compared to Blackwell. What this means is we’re looking at Jevon’s paradox: AI is now going to get so cheap, that its use will increase massively. We saw this with coal. With every efficiency improvement in the steam turbine, coal use merely went up. Because you could do the same amount of work with less coal, we started using steam turbines for more jobs, so overall coal use went up.

There may be an AI bubble currently, just like there was an Internet bubble that popped in the year 2000. But you know what happened after the Internet bubble popped? The infrastructure that was built became integrated into our everyday lives. The popping of the Internet bubble didn’t stop the use of the Internet, it just meant that the companies that built the Internet lost a lot of money.



In a matter of only a few years, AI chatbots have become a common part of many of our daily lives, even though they remain deeply flawed systems.

The reality is that chatbots like OpenAI’s ChatGPT, Google’s Gemini, or Anthropic’s Claude still make regular mistakes. According to an October study by the BBC, even the most advanced AI chatbots gave wrong answers a whopping 45 percent of the time.

But many users don’t understand that reality.



Quotes of the Week:

Blind Squirrel: I think we are now at the stage that every single day that the Strait of Hormuz is closed you should sell some more long positions. That’s what we will be doing.

Delwiche: In times of strength, optimism can stay elevated for extended periods, oscillating between excessive levels and healthy resets in sentiment. In bull markets, optimism bends but doesn’t break. Price weakness accelerates when sentiment breaks down and bulls head for the exits. That is the negative feedback loop we are seeing emerge in the data right now.



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6: 




(not just) for the ESG crowd:

Despite being a renewables superpower, China continues to permit and build new coal-fired power plants at a rapid pace. Analysts say the nation’s new five-year plan will ensure further coal plant expansion and jeopardize China’s ability to deliver on its climate promises.



U.S. B.S.:


.... Trump is like the mobster Vincent Gigante who walked around Greenwich Village in slippers, pajamas, and a bathrobe in an effort to convince federal prosecutors that he was crazy. Trump’s babble is a similar act. Only a very stupid person would be fooled by it. The Iranians are not stupid, nor should we be. ..............

This war is moving inexorably toward a most dangerous phase, and as Americans and growing numbers of U.S. soldiers oppose it, the chance of a false flag attack in the U.S. to generate outrage toward Iran from Americans grows with it. Former CIA analyst Ray McGovern has just warned of that possibility. 

For years, the general consensus among the mainstream and the independent media has been that Trump’s rise twice to the presidency has been a break with tradition because he is so bizarre a character with no political experience, etc. This assessment has come from those who love or hate him. I have argued the opposite for years: that he is an establishment figure from the start, dressed in costume, so to speak. Few have agreed. I recently wrote:
Some say that is because he is a complete anomaly and was able to twice become president by some strange twist of fate. If that is so, it would be the first and second time in modern history that it happened. A man with no political experience, a comical reality-tv joke, a bombastic fat party boy with weird dyed hair who talks like a version of an East Coast Valley Girl, a womanizer, a very wealthy New York real estate wheeler and dealer, etc. gets the votes of middle Americans who are losing their farms and factory jobs and are angry at the government. All sorts of explanations have been given for this “anomaly,” except that it was not one, except in appearance.
Now it seems that others may be coming around to the same opinion. In a recent article, Seeing Trump Clearly, Craig Murray, the former British diplomat, author, and Scottish human rights activist, who attended and reported on Julian Assange’s extradition trial, wrote:
It is comforting to see Trump as a buffoon, to accept the facade he presents of a blustering and ill-educated ignoramus, who swings wildly between policy options, and who does not understand the world of geopolitics.

But that is nonsense.
Although Trump seems to be a clown, Murray says, it would be a terrible mistake to take seeming for being, for Trump is vicious and very dangerous and wholly intent on destroying the Palestinians in Gaza and the West Bank, Iran and the Iranians, while supporting Israel’s takeover of Lebanon and Syria for Greater Israel and the United States. Yes, it is true that Trump and his venal family are also making a financial killing swinging deals throughout the Middle East, but his policies are part of a long-term U.S. strategy. Most importantly, Murray writes:

It is essential not to lose sight of the bipartisan nature of the United States’ long term plan. In a very real sense Trump is continuing – if greatly accelerating – the policy under Biden ................



........... Donald Trump is a US president who is doing US president things. US presidents consistently murder people with unforgivable acts of mass military violence, mistreat immigrants and marginalized communities, and promote tyranny for the benefit of corrupting special interests in defense of the US empire and the capitalist status quo. That’s what their job is. If they weren’t willing to do these things, they wouldn’t get the job.

Trump is not some freakish aberration; he is the product of the same American political status quo as his predecessors. He became president the same way they did, and the powers he now wields were given to his office via mundane executive, legislative and judicial decisions and precedents before he was ever elected.

But because the “No Kings” protests are organized by liberal defenders of that same political status quo, the demonstrations cannot address any of this. The whole thing is designed to be as large and inclusive as possible while also ensuring that it doesn’t disrupt the established order in any meaningful way. ......

They are not protesting against the US empire. They just want a more polite, photogenic empire.

They are not protesting the corrupt oligarchic political system which gave rise to Donald Trump. They just want the corrupt oligarchic political system to give rise to presidents who make them feel less uncomfortable.

The problem is US presidents, not kings. The problem is the US empire, not Trump. The United States needs drastic, revolutionary change, not daytime protests designed to be as inoffensive as possible. As long as Americans are protesting against fictional monarchies and easily replaceable oligarchic puppets instead of resisting the actual imperial machine, the abuses are going to continue.

The war in Iran is the most obviously evil American war in generations. People should be flooding the streets in every major US city. Washington DC should be on fire. Soldiers should be deserting en masse. Instead we’re seeing these stupid fluffy lib theater conventions where people get together to do nothing.

Americans of conscience should be feeling deeply embarrassed right now.



War Fare:

The longer-term meaning of the Iran war.

Now that the Weekend War That Wasn’t is in its fourth week, it’s becoming clear that just about everything to do with its progress, as well as its origins and its potential consequences, is covered in hopeless confusion. Confusion about exactly how the conflict started and why, confusion about what kind of conflict it is, confusion about what its originators were trying to achieve, confusion about what those who claimed to be, or have been identified as, the originators thought they were trying to achieve, confusion about what has actually happened, confusion about the meaning of what has apparently happened, insofar as it is known, confusion over what “victory” means for various actors, confusion over whether some of the parties even have a concept of victory, let alone if it’s a feasible one and how it can be evaluated, confusion about how the fighting can be stopped, if it can be, and confusion about all of the manifold interacting political, economic and military consequences. Not bad for something that was supposed to be finished before the markets opened on the Monday.

Some of this confusion is inevitable in any major politico-military crisis, and I’ll explain why in a minute, and what the consequences of that might be. More of the confusion is the result of pundits competing with each other to protect their business models by trying to convince you that they alone know What This is All About, and that the explanation for all of the above confusion just happens to be based on one of their pet obsessions. I’ll start by trying to dissipate some of this confusion, and look at what this implies for an “end” to the conflict. I then want to talk about the difference between Aspirations, Consensus and Plans, and how that helps us understand what appears to be happening and may follow. I finally want to talk about some of the more likely practical results of the conflict, which is important in the sense that I don’t think we have been in a more dangerous moment since 1914, and the consequences of this conflict could be equally far-reaching. ...............................................

......... And of course as I suggested a couple of weeks ago, crises like this acquire a momentum of their own beyond a certain point, and it is easier to go forward, no matter how dangerous, than it is to go back.

This interpretation clearly has major implications for a resolution of the crisis, because it means that it will be very difficult—indeed it may actually be impossible—to arrive at a consensus in Washington that the fight is over, the US has lost and must act accordingly. .........................

For this reason, as for others I’ll touch on, it seems highly unlikely that there will be a “deal,” with Iran, let alone a detailed agreement. If you can’t even decide what you want, it’s hard to persuade someone to give it to you.

So a United States which was not prepared for this war and had no agreed objectives for it, finds itself with its fingers caught in the wringer. What could it do? Well, for the first time perhaps in its modern history, Washington cannot just “declare victory” or silently acknowledge defeat, and go home. The VietCong could not pursue the Americans back to Washington, the Taliban were happy for the US to leave Afghanistan. But the regime in Tehran has a vote here, and they also have a policy. (Recall that the Persian Empire stretched from India to Libya at one point.) As a minimum objective, Tehran will want to evict all foreign forces from the Gulf, and become the undisputed regional superpower. In the past, Israel was the main threat to these ambitions, but it’s not clear how far that that country will be in any shape to resist them in a few months time. If that is indeed one of Iran’s ambitions, then there are two reasons why the US, and the West in general, is not going to be able to frustrate it. The first is to do with the developments of new technologies. .................

.............. In other words, the platform-centric West may be about to hit a hard limit of capability. Even in principle, it isn’t possible to build platforms that can counter the sheer numbers, simplicity of manufacture and relatively low cost of projectile-based defences, or to resist such projectile technologies being used aggressively. In the short term this is going to benefit Iran, both in defeating the US and Israel and in its regional ambitions. In the longer term, it is going to have a massive effect on the strategic balance in the world and, as usual, nobody is thinking seriously about it.


As of March 23, 2026, the major developments in Iran over the past 24 hours center on a fragile pause in U.S. strikes against critical infrastructure and escalating retaliatory missile exchanges with regional adversaries. President Trump announced a five-day delay for planned strikes on Iranian power plants and energy infrastructure, citing “productive talks” aimed at a resolution. The common consensus on intelligent sites is that this is absurd. The Iranian Foreign Ministry has officially denied any direct dialogue with Washington, labeling reports of talks as “fake news” intended to stabilize energy markets. This is surely the more believable statement.

Only lunatics would trust in the value of any kind of negotiation with Trump or his bloodied henchmen Witless and Kushion, and the Iranians are not lunatics (although investors probably are). .........

............ The five day delay follows a 48-hour ultimatum for Iran to reopen the Strait of Hormuz. There are very few indications at this time that Iran will reopen the Strait today, in five days, or in five weeks. If he was sane, and there are no indications that he is, Trump would be extremely concerned about the increasing chatter in responsibile places of the inevitability of a global recession

........... A sane response to this crisis, which will surely get much worse the longer the Strait is closed, would be to do anything to stop it, given the highly negative consequences for energy prices, fertilizer, helium and other commodities essential for the global economy, the inevitable inflationary pressures such high prices will cause ....................


yeah, this is not great

.................... At this point, it’s an economic suicide pact. Let’s take away the question of whether we take Kharg Island or decapitate the Iranian leadership. It’s very clear that it’s who can withstand the most economic pain. And this is dangerous because it’s quite clear that we probably can’t.



The illegal war launched by the United States and Israel against Iran has triggered the mother of all commodity-supply shocks. In response to the unprovoked onslaught, Iran’s closure of the Strait of Hormuz, the narrow waterway between Iran and Oman’s Musandam peninsula, has brought to a standstill the delivery of huge amounts of the world economy’s critical inputs. 

Iran is the seventh country to undergo US military intervention in the first fifteen months of Trump’s presidency; five of these seven are rich in oil. Oil wars might make sense if American companies actually wanted to drill more. But they are hesitant to do so when oil is oversupplied and under-demanded. The raid on Caracas in January earned little interest among international oil majors, who were unenthused about the prospect of resuscitating Venezuela’s decrepit infrastructure and bitumen-like oil reserves, despite White House exhortations. 

The world has never seen an interruption on this scale to the supply of stuff. It easily surpasses the 1979 oil crisis, sparked by the Iranian revolution, in which crude oil production declined by 4 percent. ........... 

........... For now, global commodities markets are in Road Runner mode, and afraid to look down at the abyss. Prices of crude oil futures, LNG, fertilizers and other commodities have not even reached their nominal record levels. ..............




........... Iran has some simple needs to be willing to declare peace, the most important of which is “this is the last war”, the second of which is “no more assassinations and no more attacks” and the third of which is “since we can’t trust you to keep any agreement we have to make you incapable of attacking us again or too terrified to do it.”

Manjier has a lot of contacts in the Resistance, here’s the list he published:

............ Notice that it includes stopping the war/genocide on Libya/Hezbollah and Gaza. There’s no way the Israelis will agree to that unless they have no choice.

I don’t see any way this war ends before Israel is a smoking ruin, and the Gulf States are so terrified of Iran they declare they’ll never allow US bases in their countries again.

Can Iran enforce this? I think so. The US and Israel seem to be running out of interceptors a lot faster than Iran’s running out of missiles and drones. China’s in their corner, quietly supplying them with all the “non military” equipment they need. And Iran’s pain tolerance is extremely high: the decision makers know that if they don’t win decisively again Israel will just assassinate them later ..........

The problem, as has been stated many times, is that no “deal” is possible. America will not keep them. Israel will not keep them. So they must be defeated for Iran and its leaders to be safe. The victory must be crushing. If I were in Iran, I would be making the exact same calculation. ....



Of all the wars I’ve covered in my writing career, this one has been the hardest in the sense that figuring out what’s true and what isn’t is difficult. The baseline assumption is that nothing the US says about the war can be trusted. Most of what Iran says in concrete terms about what they fired and hit can be trusted. AI images and video have proliferated, so the old “show me picture” routine doesn’t work unless y0u’re a good image analyst and willing to spend hours. Trump, of course, lies about everything. Iranian official media exists, but it’s often censored by the West so reading their official statements is often difficult.

All that said, I think it’s time for something different: a collection of propaganda videos that are Pro-Iranian. Because of all the above, it’s unclear to me if these are official, but they’re interesting nonetheless.

The first appears to be official, was published by Russian “news” outfit RT, and makes the ethical case: .........



...



Geopolitical Fare:



"Iran was a chew toy the Russians and British tussled over"



Other Fare:

The hero nation, the mirror principle, and why war is becoming obsolete despite current appearances

How can I speak of an age of peace? My nation has been almost continuously at war my entire life. One of my earliest memories is of sitting in front of the television with my father watching images of guns and tanks from the Vietnam War. He was so infuriated he leapt from his chair to shout at the television screen.

The few years of peace that followed the Vietnam War ended with the mini-wars, covert wars, and proxy wars of the Reagan-Bush era: Grenada, Nicaragua, El Salvador, Panama, Angola, Libya, Lebanon, Honduras, the Philippines, Kuwait. Then came Clinton’s wars: Bosnia, Serbia, Kosovo, Somalia, Haiti, Afghanistan, Sudan (Operation Infinite Reach), and Iraq (Operation Desert Fox). This low-level simmer of post-Vietnam conflict finally erupted after 9/11 into the War on Terror under George W. Bush, starting in Afghanistan and Iraq (and neighboring countries), plus Somalia and the Philippines, launching the era of borderless global war. Next came Obama, who added major military operations in Libya and Syria and expanded Bush’s incessant low-level drone wars in Yemen, Somalia, Pakistan, and elsewhere. Trump continued most of these operations, as did Joe Biden, who contributed the proxy war against Russia via Ukraine and supported Israel’s genocidal campaign in Gaza.

Finally we have Donald Trump, who in defiance of his numerous anti-war campaign pledges has continued his predecessors’ globalized omniwar and added a catastrophic new one in Iran. Let us also mention his campaign across Latin America, ostensibly against the drug trade: “Operation Total Extermination.”

......... Pragmatic critics of America’s imperial wars are fond of observing that the United States has not waged a truly successful war since World War Two. Korea, Vietnam, Iraq, Afghanistan, Syria, Libya… each was left in worse shape than when the war began; in none of them were the stated objectives achieved.1 Of course, to the extent that the real goals like enriching defense contractors, sowing chaos, or justifying domestic surveillance and control, then these wars succeeded admirably. Nonetheless, the aggressor would have at least liked to achieve the appearance of victory. Why was it unable to? Why can’t the world’s most powerful nation not actually win a war against far weaker adversaries? If it were just Vietnam, or just Iraq, we could dismiss it as an aberration. But every war? There must be a deeper reason why war isn’t working the way it used to. ....................



Pics of the Week:

Posted by at No comments:

Saturday, March 21, 2026

2026-03-21

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


Economic Fare:

Agency’s head Fatih Birol says recovery of oil and gasfields in Gulf region could take more than six months

The Iran war has caused the gravest energy shock of all time, the head of the International Energy Agency warned, adding that it could take six months or longer to fully restore oil and gas flows from the Gulf.

Fatih Birol, whose role at the IEA has put him at the heart of efforts to keep energy flowing despite the loss of one-fifth of the world’s oil and gas, told the FT the conflict was “the greatest global energy security threat in history”.

Birol, who also helped shape Europe’s response to a gas crisis following Russia’s full-scale invasion of Ukraine, said the volume of gas that has been cut off by the fighting is twice as much as Europe lost from Russia in 2022.

More oil has been lost, he added, than during the twin shocks of the 1970s that triggered recessions and fuel rationing around the world.  ......


The US-Iran conflict has reignited recession fears. Here's what the data from five decades of geopolitical shocks actually shows about when or how these events matter.

...................... The US-Iran conflict deserves serious attention. It is a real event with potential economic consequences, particularly through its effect on oil prices and energy costs. But serious analysis requires separating what is knowable from what is speculative, and what is signal from what is noise.

The historical record is clear: geopolitical shocks do not write their own recessions. They accelerate deterioration that is already in motion, or they pass through economies that have the underlying strength to absorb them.

It goes without saying that a shock can be large enough to overcome any set of initial conditions, like economic lockdowns. Shocks definitely come with varying magnitudes, and that matters.

Today, the important cyclical engine of the economy has been weakening for 20 months, which is a real vulnerability. The weakening has been long in duration but mild in magnitude.

On the other side, corporate profit margins are at historically elevated levels.

The economy does not enter this shock from a position of strength in the cyclical sectors, but it also does not enter it with completely depleted buffers that were present in 2001 or 2008.

Market Fare:



Malinen: Deprcon Warning
Financial market collapse: Second warning

............. But make no mistake, if the war does not end soon, the markets will catch up. We expect volatility, in all markets, to increase notably next week. We urge you to prepare accordingly. 



............................. Most expect gold to do well in environments as these. Speculation is that it is ME/Asian selling, however this isn’t clear.

What it does show is that single macro asset return distributions are relatively static and don’t change often. This isn’t an unusually weak month for gold.

What it does show is that it is leaning on cross-asset correlations in a portfolio is what can get you undone. If you were holding gold as a hedge, you were probably too long equities at the same time.


The chart above shows the oil-equities correlation in different oil environments. If anything, it shows that the damaging negative correlation can increase more if past episodes are a guide.


A critical week for the world economy lies ahead

The coming week will be absolutely critical for the world economy as it faces a binary road that either moves it away from, or over the figurative cliff. This post explains the reasoning behind this and the investment implications

To cut straight to the chase, the origin for this pivotal moment is the Iran conflict, and in particular the blockade of the Strait of Hormuz, through which c. 20% of global oil traffic and many other essential inputs such as fertilizer, LNG or helium flow. This creates a setup akin to a ticking bomb, where every shut day causes gradually more damage, until a large rupture occurs

To illustrate this dynamic, please follow me on the below simple math, focussed solely on oil for now:
  • Daily global oil demand is ~105m barrels per day. Most of the oil produced in Iraq, Kuweit, Bahrein, Saudi, UAE and Iran, 21mbd in total, is shipped to global markets via the Strait of Hormuz
  • Oil is an inelastic good i.e. we really need it irrespective of the price. It is mainly used transportation (cars, trucks & planes) and industrial purposes (plastics, energy production)
  • The current flow of ships through the Strait has decline from ~140 to 3-6 per day. Thus, Hormuz oil volume has collapsed to c. 2mbd (mostly Iranian ships to China) vs the 21mbd pre-conflict. In other words, a 18mbd deficit is now at hand
  • However, a range of offsetting measures has been introduced. A pipeline that cuts through Saudi with spare capacity is now fully utilised (+4mbd), and more oil now flows from Iraq to Turkey (+0.5mbd) and from UAE to Oman bypassing the Strait (+1mbd). A globally coordinated release of strategic oil reserves (“SPR”) adds ~2mbd
This leaves a daily deficit of ~10mbd if counted generously. For an inelastic good this is a huge gap. Economic theory stipulates that to balance the market, the oil price would have to go high enough for 10% of consumers to give up, i.e. not use their car, halt the factory assembly line, not take that long haul flight etc. The price to do this would be very high, in particular on the industrial demand side ($200-300bbl?)

For obvious reasons, this scenario would crush the world economy and lead it into a deep recession. So why is the oil price not there yet? Three reasons:
  1. The main reason is that there is still a lot of inventory that gets eaten into first
  2. A secondary reason is a disconnect between paper and physical markets, and the focus on US benchmark WTI. Many refined oil products as well as oil originating in the Middle East (e.g. Dubai/Oman) are already at nosebleed levels
  3. Markets are pricing in some odds that the conflict ends shortly
......... Summary: If the Strait of Hormuz is not opened very shortly, enormous damage will be inflicted on the world economy .......



Silver is down 25% this month. Gold is off 13%. The world’s largest gas field just got bombed. Energy infrastructure is burning across the Gulf. Central banks have been stacking gold for three years straight. The structural case for precious metals has never - and I mean never - been more obvious.

So naturally, we’re selling.

“Efficient Markets”, ladies and gentlemen.

Subscribe now

Let me walk you through the exquisite logic of it all, because it actually does make sense, even if it requires a brief visit to the asylum to understand.

The textbook says war = buy gold. Geopolitical panic = safe haven flows. Every finance professor that didn’t enlist will tell you this. And the theory is actually correct. Reality just doesn’t agree with it. What they’re not accounting for is what happens when the war is your income stream. ..........

........... This war turbocharges the case for silver.


So the market’s response is, logically, to sell silver 25%.

I can’t even argue with this. I can only observe it, take a deep breath, and reach for my IBKR account. ............



A.I. Fare:



The evidence that artificial intelligence is a big fat bubble has, confusingly, gotten much stronger and much weaker at the exact same time.








QOTW:

Darius Dale:
Is it safe to buy the dip? 
Not Likely.
The US-Israel-Iran war remains far from resolved, and global liquidity will likely continue to ebb for as long as it persists. With the conflict exhibiting few signs of de-escalation, the probability that it devolves into a multi-month overhang for markets increases. Our deep study of economic and geopolitical history leads us to conclude that militaries don't destroy empires. Egos and excessive debt do.



Tweets of the Week:

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Charts:
1: 
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...



(not just) for the ESG crowd:



The South Pars Pulse: Why the ‘Energy War’ is Actually a Thermodynamic Singularity

The global media and geopolitical analysts are currently in a state of panic over the Israeli kinetic strikes on Iran’s South Pars gas field and the Asaluyeh onshore hub. Brent crude has breached $108 a barrel. Pundits are debating the economic fallout of blocked LNG shipments, the threat of Iranian retaliation against Saudi and Emirati refineries, and the implications for the upcoming US midterm elections.

They are entirely missing the point.

By treating the destruction of the world’s largest natural gas reservoir merely as a ‘supply chain disruption’, the geopolitical establishment is exhibiting a fatal, terminal blindness. We are no longer dealing with economics; we are dealing with physics.

The strike on South Pars is not an ‘energy war’. It is an unmodelled Thermodynamic Pulse that threatens to liquidate the biological carrying capacity of the entire Persian Gulf. .........

............... The methane forcing from the South Pars venting threatens to act as a localised atmospheric accelerator. If this localised greenhouse spike pushes the regional basin past the 35°C wet-bulb threshold during the upcoming summer solstice, the baseline carrying capacity of the region drops to zero. ............




Sci Fare:




U.S. B.S.:


Trump has escaped other predicaments of his own making, but there is something different about this one. The attack on Iran is so wildly inconsistent with the wishes of his own base, so diametrically opposed to their reading of the national interest, that it is likely to mark the end of Trumpism as a project. Those with claims to speak for Trumpism – Joe Rogan, Tucker Carlson, Megyn Kelly – have reacted to the invasion with incredulity. Trump may entertain himself with the presidency for the next three years (barring impeachment), but the mutual respect between him and his movement has been ruptured, and his revolution is essentially over.



War Fare:


................  The point is, though, that neither staying the course and trying to somehow outlast Iran via some attritional strategy, nor declaring “victory” and pulling out, is going to actually end the war. 

Even if Trump (with or without allied help) reopens the Hormuz Strait, declares victory and then simply suspends US airstrikes, Iran will remain at war with the US. It will look for every opportunity to strike back at the US and its allies including the Gulf states, and will do so with increasing creativity. ..................



Things really hit the fan earlier today after Iran’s largest natural gas field, the South Pars, was struck by Israel. This field reportedly accounts for 75% of Iran’s natural gas production and 80-85% of its electric grid. .........

............ But the claims that the Strait blockage doesn’t affect the US because the country doesn’t get its oil from there are specious: the countries that do get their oil from the Strait are not only intrinsically tied into the globalized economic system and supply chain network, but they provide products the US relies upon whose prices are tied to oil production in many direct and indirect ways. In short, the skyrocketing oil prices will have many second and third-order consequences beyond the limited ken of Donigula and his posse of myopic gnomes. ..........

Trump’s threats against Iran’s South Pars field and other oil and gas infrastructure are either hollow bluster or the rattles of terminal madness, because Iran’s response would likely finish off the region’s most critical energy hubs and send the world spiraling into an economic abyss for which the feckless orange bandit himself would be held accountable. .......


God help us all

........... Simplicius put it concisely enough that I’ll just quote the frame: Israel’s strategy is running on two tracks simultaneously. Kill the moderates to guarantee that only hardliners remain. Strike Iran’s most sensitive sites to guarantee that Iran retaliates against Gulf infrastructure, dragging the whole region into a fire large enough to force the world to “finish Iran off”. The South Pars strike this week - on the facility that powers 75-80% of Iran’s electricity grid - and the immediate Iranian retaliation against Qatar’s Ras Laffan LNG hub, were not accidents. They were that strategy, executing.

......................... Iran has thirty-plus speedboats patrolling the strait, boarding vessels, forcing unauthorised transits to turn back. “The Persian Gulf is now an Iranian lake”, as one analyst put it. That’s no exaggeration. It’s the geography, stupid.


......... The fact that Trump and Netanyahu seem momentarily chastened does not change the underlying dynamic. This war is a test to destruction. Reader ISL pointed to ISL March, 16-19: diplomatic impunity by NO1. This section summed up the state of play:

Iran’s declared terms are: reparations, closure of all US bases in the GCC, guarantees against future aggression.

The US’s declared goal is: regime change, denuclearisation, dismantlement of the “Iranian terror regime”.

Neither side has moved an inch. The only people who might have found a middle lane are either dead or sidelined.


batshit crazy:


I don't buy it (the supposed solution), but at least I like how he contextualizes the problem:



Israel just hit a major Iranian oilfield. Iran has said it will now hit Gulf oilfields in retaliation. Ali Larijani, probably the last person in the Iranian administration who could have negotiated an off-ramp, has been assassinated.

This war is about to enter the economic devastation phase. ...........

............ over the next few months expect shortages and increased prices and in some parts of the world straight up energy brown outs.

Unless you’re Chinese or Russian, don’t expect your government to do anything competent to protect you. Even if it can, it won’t, unless you’re part of the 1% at least.

Prepare. Perhaps we’ll be lucky, but don’t be count on it.




Geopolitical Fare:

....... This is the second stupidest war decision I’ve seen in my entire life. (The first was Ukraine refusing a very generous peace deal and, as a result, losing the majority of its fighting and breeding age male population.)

The war is lost. It was lost the moment Iran proved it could keep fighting and wouldn’t accept a peace without achieving its aims. The Americans, with, it appears, help from NATO nations, are going to try and open the Strait militarily. They will fail and it will be a military clusterfuck of epic proportions. There is approximately zero chance of opening the Strait, and if they are stupid enough to try and land marines, those marines are DEAD.

.................. America’s empire was doomed by Reagan and Clinton. Trump’s just bringing it to a messy end. But the decline could have taken another twenty years and been much, much less painful. Trump has decided to end it in the most spectacular and stupid manner unimaginable to anyone with the intelligence of a door-mouse. Meanwhile, Europe’s pygmy leaders are feeding Europe’s economy into a woodchipper, foot first and greasing the gears, “why is this machine so slow!? What can we do to speed it up?”

Welcome to the end of Western hegemony. It’s stupider, more venal and more darkly funny than I could ever have imagined.


The AI Bubble in 2026 (2/4)

............... For those who dream in marble, Pax Romana (Latin for “Roman Peace”) and its two-century span represents Western Civilization’s golden age: a period of relative peace bracketed by the rise of Augustus in 27 BC and the death of Marcus Aurelius in 180 AD. Nevermind that the Pax featured some of Rome’s bloodiest civil wars, foreign adventures, and revolts against imperial rule—the violence is the point, not a contradiction. Pax Britannica ran from the Napoleonic Wars to World War I and Pax Americana from the end of World War II through the Cold War—both are hailed as Long Peaces between major powers, even though revolts, genocides, and wide-ranging proxy wars were central features of these eras of supposed tranquility. To the marble fetishist, this is the selling point. A lack of scruples about using force to crush rivals abroad and irritants at home is the only way to deliver peace, justice, freedom, and security to our new empire. Every Pax has meant the same thing: the conditions an empire imposes on everyone within reach, named as though they were a gift.

............... Pax Romana had Britannia. With Pax Britannica, we have our pick of the litter but one resonant example might be the two Opium Wars against the Qing dynasty to force China into accepting British trade terms (buy from us the opium that is ravaging your society or else). For Pax Americana, we could craft a long list from Korea to Indonesia to Indochina to Latin America to swaths of Africa to Europe’s doorsteps—there are too many piles of corpses killed by Americans and their proxies to count. What will Pax Silica hold? As Helberg and company articulate in unambiguous terms: the targets are broadly any country that does not bend the knee—but specifically China. China controls roughly 90 percent of global rare earth processing—the materials refined into the chips that the entire AI edifice runs on—and so we must band together (on America’s terms) to undermine our great rival.

In his December briefing, Helberg said: “Our strategy is to create a competitive edge so steep, so insurmountable that no adversary or competitor can scale it.” We’ll speak in the language of peace but move with the logic of siege. Pax Silica will bind allied nations into a “coalition of capabilities”—Israel, Japan, South Korea, Singapore, the UK, and Australia signed on first—conditioning access to advanced chips on alignment with American supply chains and, implicitly, American foreign policy. It is, as Helberg said without apparent irony, a “new consensus” in which “economic policy flows from national security.” The Washington Consensus packaged structural adjustment as development. The Silicon Valley Consensus will package dependency as partnership.

Pax Silica does not need Pacific Rim signatories to be successful, however. It needs the Gulf. Qatar signed the Pax Silica declaration on January 12. The UAE followed on January 15. Between them, the Qatar Investment Authority and the UAE’s constellation of sovereign vehicles (Mubadala, ADQ, ADIA, MGX) control north of $1.5 trillion. Saudi Arabia’s PIF alone has nearly $1 trillion in assets. They also offer what few, if any, other partners can: patient capital at sovereign scale, cheap dispatchable energy to power the data centers that train the models, and a geographic position at the center of the India-Middle East-Europe Corridor (IMEC) that Washington has been trying to repurpose as a digital trade route. “For the UAE and Qatar,” Helberg told Reuters, “this marks a shift from a hydrocarbon-centric security architecture to one focused on silicon statecraft.” The dependency doesn’t shift, then. It deepens. Under oil diplomacy, the Gulf priced crude in dollars and recycled surpluses into Treasuries. Under silicon statecraft, the Gulf finances AI campuses, hosts American chips under American export licenses, and locks itself even more tightly into an architecture whose terms are set in Washington. ...................

All that aside, it’s worth asking: how long will Pax Silica last? Romana spanned two centuries, Britannica just shy one, Americana a measly half century. This is the multi-trillion dollar question that will determine what the next century looks like.

Six weeks, it turns out.

That’s how long the ink on the Pax Silica declaration was dry before the US-Israel strikes on Iran were followed by Iranian strikes on nearby Gulf states hosting American military bases and Big Tech infrastructure, as well as a closure of the Strait of Hormuz (through which 20 percent of the world’s oil passes through) and reports that Iran may be considering letting tankers through if they conduct trade in Chinese yuan instead of American dollars. .............



R.I.P. Fare:


................ As a scholar of communications and environmental history, I see Ehrlich’s difficult fight for the environment as emblematic of the vast chasm between science on one side and political culture influenced by the mass media on the other side.

And I see Ehrlich’s passing – along with others of his generation, such as Carl Sagan, E.O. Wilson and Jane Goodall – as a loss for a world that needs visionaries and public scientists now more than ever. Public understanding of science and technology is critical for political discussion, for environmental preservation and, in the words of British physical chemist C.P. Snow, for the sake of “the poor who needn’t be poor if there is intelligence in the world.” ..........



Other Fare:

Aurelien: The Morally-Challenged In Charge.
And it's getting worse.

.................... As it happens, and for reasons quite unconnected with these essays, I’ve been preparing to write something about George Orwell, whom I have always admired greatly as a person and writer, and I was struck once more by the way in which Orwell’s moral vocabulary, and even universe, now seem so utterly removed from ours. For Orwell, the greatest virtues were honesty and authenticity, and his philosophy could be described in one word as “decency.” He didn’t really care what people thought about what he thought, and what he wrote, which is why he was a relatively unsuccessful journalist until the end of his life, attacked from all sides. Likewise, Socialism, I think, was for Orwell primarily a question of the creation of a decent society, where people didn’t have to starve or live in unhealthy conditions. (He was always very critical of Utopianists of all persuasions: as he said, the point of Socialism was not to make things perfect, but at least to make them better.) Winston Smith’s famous observation 1984 that “if there was hope it lay in the proles,” was not a fantasy of some future revolution, but a pragmatic judgement that for any kind of society to survive at all, it was necessary to rely on the decency found among ordinary people, which the Party had abandoned as thoroughly as our current ruling class has.


The laudable loneliness of the Spanish prime minister.

............ Sánchez, Spain’s Socialist primer ministro since June 2018, has distinguished himself and his nation these past few years by taking strong stands against the Zionist terror regime’s genocide in Gaza, against the West’s support of it, against wasteful defense budgets, and more recently against the U.S.–Israeli war of aggression against Iran. He is currently in an excellently public confrontation with President Trump for his refusal to let the U.S. Air Force use bases on Spanish soil to service its bombing sorties over the Islamic Republic.

And here’s the thing—well, two things actually: By all appearances Sánchez revels in the isolation that befalls him due to his principled positions on the large questions of our time. And by all appearances this poised 54–year-old, an economist by training, shows up the rest of Europe’s purported leaders as a congeries of cowards who would not know a principled position if one were to bite them all on their backsides.

......................... But it is Sánchez who appears to have the larger picture in mind. Along with his government and his people, the Spanish leader signals repeatedly that the time has come to challenge the trans–Atlantic status quo and ultimately the world order altogether. .........



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