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Sunday, January 25, 2026

2026-01-25

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


Economic and Market Fare:

It was convenient to transfer painful choices to central bankers --who functioned as the government's banker-- allowing governments to blame others or claim credit depending on the outcomes.



............... And then there is the comparison between real GDP growth and real gross domestic income (GDI) growth, the latter measuring income actually received by workers and capitalists. GDI rose only at a 2.4% annual rate in Q3 compared to the headline GDP figure of 4.3%. The GDI yoy rate was 2.4%, the same as real GDP growth yoy. As for the average Americans’ income, as measured by real personal disposable income (ie after tax), that was flat in Q3 and is up only 1.5% yoy, the slowest rate in three years.  So the headline growth figure that Trump boasted about is misleading. Underlying real GDP growth is much more modest, running just above 2% a year – not bad, but hardly blockbuster. And income growth for working families is slowing to a standstill.

............................. But maybe inflation will not accelerate despite the import tariffs.  The US job market has slowed down significantly. In 2025, payroll employment rose by 584K, corresponding to an average monthly gain of 49K, only one-quarter of the increase of 2.0 million in 2024. Indeed, the latter half of 2025, there were zero job increases and the unemployment rate ticked up.

................. What about corporate profits?  Will this boost investment and thus economic growth? Corporate profit mark-ups (profits per unit of output) remain near historic highs at 22.4%. And corporate profits in Q3 2025 were up sharply by $166bn after falling in H1. But again, the headline figures are misleading. Despite the sharp Q3 rise, non-financial corporate sector profits are still down 2.5% from Q3 last year.

Most profits are concentrated in the tech, banking and energy giants. The rest of the US corporate sector is making little.  ..............





For some nine months now, the TACO trade has proven a reliably winning one on Wall Street.

Short for “Trump Always Chickens Out,” it emerged in the wake of the US president’s global tariff rollout — and rollback — last April. It quickly became the rallying cry for investors tuning out the more extreme White House threats as they kept buying risky assets.

There’s just one problem with the trade, though, as some on Wall Street are beginning to appreciate. If TACO means investors don’t need to panic when Trump signals aggressive policy action after another, then there are no market collapses violent enough to spook him into backing down like he did on tariffs last year. ..........


................ Some strategists remain unshaken. “The ask is always aggressive and then he ends up somewhere between the ask and the status quo,” said Michael Purves, chief executive of Tallbacken Capital Advisors. “It’s about ultimately whether the policies are going to be constructive for earnings, or the opposite of that.”







The Greenland crisis was logically always likely to end quickly, to market approval, due to European geostrategic weakness, but still herald a new world order that markets don’t understand and won’t like once they do. That’s exactly how it’s now played out. .................................

.............. As such, it’s down to the realpolitik of who has the best cards. Canada’s PM Carney, who didn’t meet Trump at Davos, earlier made a much-publicized speech which stated: “Many countries are drawing the same conclusions - that they must develop greater strategic autonomy: in energy, food, critical minerals, in finance and supply chains. And this impulse is understandable. A country that can’t feed itself, fuel itself or defend itself has few options. When the rules no longer protect you, you must protect yourself.” That sounds exactly like Trump.

Yet as George Magnus points out, Carney citing Czech anti-communist dissident Vaclav Havel’s ‘The Power of the Powerless’ to call out Trump and the polite hypocrisies of the liberal world order doesn’t sit easily with him heading to China to strike trade deals. That’s Trump’s game, played with far weaker cards. Today, the powerless are… powerless.



................. A union in which member states retain full sovereignty is only as strong as its weakest member. And that’s Germany right now. Given the state of Germany’s economy, and its dependence on the US, it would be utter madness for the EU to retaliate against Trump’s tariffs.
 


As our senior strategist Ben Picton underlined yesterday, the US has total escalatory dominance in its clash with the EU over Greenland, which all emotions aside, is not in the EU or even in Europe: geographically, it’s in the Western Hemisphere / North America.

There is no field where the EU can hurt the US more than it hurts itself. In trade - it’s a net exporter; in tech - it uses US systems in the absence of its own; in energy - it now relies on US LNG, not Russian; in finance – it’s deeply interwoven into the Eurodollar system, which the US controls; and in defence - it still needs the US in Ukraine, and NATO, and can’t defend itself, nor Greenland… and certainly not from the US. This is not to be provocative, just to look at raw facts.


Climbing walls of worry!



You can’t look at valuations in a vacuum

Over the last year, we’ve harped on a simple truth: valuations need context. They’re also a terrible market-timing tool.

Markets can stay “expensive,” “overvalued,” or “in a bubble” far longer than most investors expect. As the saying goes, beauty is in the eye of the beholder. So are valuations.

What consistently gets lost in the shuffle is why investors are willing to pay higher multiples in the first place.

Time and again, markets have shown a willingness to pay a premium for quality and predictability – and these two factors tend to show up in the same places: returns on equity, margins, and earnings durability. When those metrics are rising or structurally higher, multiples don’t collapse. They evolve.

That’s why simply pointing to a 22x forward multiple on the S&P 500 and declaring “bubble” misses the mark. You have to look at valuations alongside profitability.

The scatter plot below shows the forward P/E multiple against forward net margins for the S&P 500 index, broken into four-year intervals going back to 2005. The relationship is remarkably consistent: as margins expand, multiples drift higher


And that brings us to a second misunderstanding about today’s market.

If this were a bubble, you’d expect returns to be driven primarily by multiple expansion – investors paying more and more for the same dollar of earnings.

But that’s not what’s happening. Earnings have done the heavy lifting. ..........


Chris Hohn just posted a record year. His industry didn't.

No hedge fund manager in history has made more money in a year than Sir Chris Hohn. Last year, his fund, TCI, generated profits of $18.9 billion for investors, exceeding even what John Paulson achieved in “The Greatest Trade Ever”. Its record performance takes TCI’s lifetime gains to $68.4 billion, catapulting it into the top five hedge funds of all-time – up there with Citadel and Millennium 

........ Hohn espouses a simple philosophy. He looks to buy companies that are immune from competition and disruption. He likes growth, but thinks it’s over-rated. “I think this is something a lot of people get wrong,” he says. “They think it’s about growth, often. Or something new. Neither of them, those things in themselves, to us, matter by themselves. The most important thing for the types of investing that we do, is high barriers to entry.”

Hohn lists the kinds of barriers he looks for: irreplaceable physical assets, intellectual property, an installed base, scale, network effects, brands, customer switching costs. His holdings often encompass a number of them. .............................



A.I. Fare:

What matters in the AI economy is the applicable value of labor.

.............. The populist movements that have risen to power across the West today, particularly in the U.S., did so largely on the coattails of the backlash against globalization. Over the course of the U.S.-led free-trade policies during the post-Cold War decades, the rise of China as a cheap-labor manufacturing power with export access to the markets of advanced economies hollowed out the industrial base across large swaths of America and Europe — and the jobs it provided.

Some worry the AI shock will be even more devastating. Autor sees the similarity and the distinctions. What makes them the same is “it’s a big change that can happen quickly,” he says. But there are three ways in which they are different. ...............

As we have often discussed in Noema, it is precisely this dynamic where productivity growth and wealth creation are being divorced from jobs and income that is the central social challenge. Increasingly, the gains will flow to capital — those who own the robots — and decreasingly to labor. The gap will inexorably grow, even with those who can earn higher wages and salaries through work augmented by AI. ................



China Fare:

Rising Use Value in an Age of Slowing Growth

For much of the past four decades, China’s rise has been narrated through the lens of GDP growth. Double-digit expansions became shorthand for dynamism, power and transformation. Now, with growth rates slowing into the mid-single digits, commentary in the West and even among some domestic analysts has turned toward crisis talk: “peak China,” “secular stagnation,” and “the end of the miracle.”

This narrative misses the real story. GDP is a measure of exchange value - that is, the monetary value of goods and services produced. It is not, and never has been, a direct measure of real prosperity. By focusing on exchange value alone, mainstream analysis risks obscuring what is actually happening in China today: the country is producing more goods, services and infrastructure than at any point in its history, generating and using more electricity than ever before, while the prices of many of these outputs are falling in real terms. The paradox is clear: China’s material prosperity, its use value, is expanding even as its GDP growth rate plateaus.

Far from crisis, this suggests something else is going on. One wonders whether China may be pioneering a mode of economic development in which prosperity is no longer tightly bound to perpetual acceleration in GDP expansion, but is underpinned by energetic surpluses and relative abundance.  ............


Quotes and Tweets of the Week:

DT: “People thought I would use force. I don’t have to use force. I don’t want to use force. I won’t use force”


I don't love Bessent's takes on a lot of things, but can't disagree with him here:
U.S. Treasury Sec. Scott Bessent just PUMMELED Mark Carney.
“He’s virtue signaling to his globalist friends at Davos.”
“I don’t think he’s doing the best job for the Canadian people.”


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Charts:
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(not just) for the ESG crowd:


For 50 years literature has been accumulating pointing out the contradiction between the pursuit of economic growth and ecological sustainability, although this has had negligible impact on economic theory or practice.   A few, notably Herman Daly (2008), have continued to attempt to get the notion of a steady-state economy onto the agenda but it has only been in the last few years that discussion has begun to gain momentum. Jackson’s Prosperity Without Growth (2009) has been widely recognised, there is now a substantial European ”De-growth” movement (Latouche, 2007), and CASSE (2010) has emerged.

The argument in this paper is that the implications of a steady-state economy have not been understood at all well, especially by its advocates.  Most proceed as if we can and should eliminate the growth element of the present economy while leaving the rest more or less as it is.  It will be argued firstly that this is not possible, because this is not an economy which has growth; it is a growth-economy, a system in which most of the core structures and processes involve growth. If growth is eliminated then radically different ways of carrying out many fundamental processes will have to be found.  Secondly, the critics of growth typically proceed as if it is the only or the primary or the sufficient thing that has to be fixed, but it will be argued that the major global problems facing us cannot be solved unless several fundamental systems and structures within consumer-capitalist society are radically remade.  What is required is much greater social change than Western society has undergone in several hundred years.

Before offering support for these claims, it is important to sketch the general “limits to growth” situation confronting us.  The magnitude and seriousness of the global resource and environmental problem is not generally appreciated. Only when this is grasped is it possible to understand that the social changes required must be huge, radical and far reaching.  The initial claim being argued here (and detailed in Trainer 2010b) is that consumer-capitalist society cannot be reformed or fixed; it has to be largely scrapped and remade along quite different lines. ......................



When it comes to the exploitation of non-renewable resources, what’s up for debate is not if the rate of harvest will peak and decline, but when this peak will occur.

Here, some recent history seems relevant. Back in the mid 2000s, peak-oil theorists stridently predicted that world oil production would soon peak. In hindsight, these folks were wrong … but not entirely so. The production of conventional oil peaked in 2005, more-or-less as predicted. However, total oil production did not peak, largely because the production of non-conventional oil exploded. Since this non-conventional oil more than made up for the decline of conventional oil production, talk of ‘peak oil’ basically died.

From this episode, there is a wrong lesson and a right lesson to be learned. The wrong lesson is that oil is so abundant that its exhaustion is nothing to worry about. The right lesson is that oil production will peak, but the timing is difficult to predict, because it depends on technological and social factors that early peak-oil theorists failed to appreciate.

Because the United States is at the epicenter for the growth of non-conventional oil production, it seems useful to use it as a case study. While the timing of the second peak of US oil production remains uncertain, there are signs that all is not well in the US oil patch. Let’s have a look. .......

........ While it may be peak ‘oil’ that is infamous, these days peak gas is arguably more important. The backstory is that for over a century, natural gas has been slowly replacing oil as the dominant fossil fuel powering industrial society. Figure 2 shows the transformation in the United States. ............



....... There’s almost as much hype about “soaring power demand” as there is about the AI supposedly driving it. Yes, data center electricity use could roughly double by 2030. But it’s doubling from a small base.

Data centers use about 1.3% of global electricity today, and the IEA sees that rising to only around 2.4% by 2030 (Figure 1). Over the same period, total world electricity demand is expected to rise on the order of 24%. So the idea that AI is the main driver of global power growth is badly overstated.

Most of the growth is boring, broad, and structural: industry and buildings (especially cooling), plus the steady electrification of transport and heating (Figure 2). Data centers matter operationally because their load is fast and geographically concentrated. But they’re still riding on top of a much bigger wave. ...............................

Joseph Tainter’s The Collapse of Complex Societies should be required reading for anyone who thinks more technology is the default solution to society’s problems. In his work across roughly 4,500 years of history, he argues that civilizations fail for a common reason: complexity becomes too expensive to maintain.

His core thesis is simple and brutal. Societies are problem-solving organizations. They build layers of administration, infrastructure, specialization, and control to manage challenges. At first, those layers pay off. But over time the marginal returns decline. Each new fix costs more energy, materials, and coordination than the last, while delivering less benefit. Eventually the system becomes fragile: a larger share of its resources goes to upkeep rather than real progress.

Specific triggers vary—resource depletion, invasion, climate shocks, financial breakdown—but those are excuses, not the underlying cause. The root problem is the rising maintenance cost of complexity itself. In that context, collapse isn’t mysterious or moral. It’s an economic adjustment: a forced simplification when the costs of complexity exceed what the society can afford. For Tainter, collapse is a loss of complexity, not the end of society. ...............


Hansen: Mavericks


The Repo Market Has Started Pricing In Energy Transition Risks


Beyond The Mordor Economy - Part II

Last week we discussed how the world economy has turned into a real life version of Mordor, and how it’s on an unstoppable march towards what I call the Empty Quarter, driven by a rapid increase in entropy. This week we will examine what that Empty Quarter might look like, how we will most likely get there, but most importantly, how it’s not the end of the world. ....................

Before we delve deep into the topic, let’s review quickly the grounding principles first (laid out in detail in Beyond The Mordor Economy):
  1. Machines, and civilizations writ large, need high grade energy to operate efficiently. The higher the temperature, electricity (or other form of energy) gradient, the higher value it represents for society.
  2. Fossil fuels and electricity (once generated) are both sources of high grade energy. Wind, solar irradiation, geothermal, hydro are all low grade energy resources.
  3. Downgrading a high grade energy resource (e.g. burning fossil fuels in an engine) is cheap, easy—and wasteful. Upgrading a low grade source of energy (e.g. sunlight) into high grade electricity, on the other hand, is hard, costly, material intensive—and even more wasteful.
  4. The same is true for raw materials: extracting high grade ores (with high metal contents), or high quality, easy-to-get coal, oil, and natural gas, is cheap and profitable. On the flip side, low grade, depleted material resources need more and more energy and technology to get.
  5. Energy and matter cannot be created nor destroyed—only changed in form. With that said, every material and energy transformation comes at the cost of producing waste heat and material waste streams. In other words: material and energy use—while creating order temporarily—ends up increasing disorderliness (or entropy) on a far larger scale. Think: degrading a once rich mineral deposit or energy resource and turning much of it into waste streams and pollution. Resource depletion, worsening energy returns on investment, and the damage to the environment are thus a direct, physical consequence of material and energy use—a.k.a. technology—not something we can choose to avoid.
  6. Degradation, or in other words: a rise in entropy, is the natural order of things. Everything, the Universe included, drifts towards a dead state, where all the high energy gradients and concentrated materials will have been dissipated. This is what gives time a direction: pointing from a highly organized state towards a maximally disorganized, homogeneous one.
  7. Complex societies, thanks to their increased energy throughput, are true entropy-accelerating machines. Rock weathering, plate tectonics, biological epochs are all happening on timescales measured in millions of years—thanks to the low grade energy used in the process (sunlight, geothermal heat) and the thick layers of insulation (the atmosphere, and Earth’s crust). Civilizations, especially modernity, use very high grade, concentrated energy sources at a very high scale, which propels them towards ever higher levels of entropy. This will ultimately take us to the Empty Quarter (where all high grade energy and minerals have been used up) a million times faster than natural processes alone would.
  8. Building “renewables” leads to an even faster degradation of “our” resource and energy base, and thus are no solution to this predicament. Recycling also requires high grade energy, and comes with its own losses and waste streams. As much as we want, we cannot sidestep entropy. As long as we remain addicted to using high grade energy (be it from any source) we will keep increasing entropy on an exponential scale.





Sci Fare:


The short version of the story is: We’re still seeing the SARS2 virus evolve towards complete escape from the neutralizing antibody response.

The immune landscape is still governed by the mass vaccination experiment. For this we can look at this study. ...............

So the whole Western population is still stuck with an immune response that struggles to neutralize Omicron variants, persistently recalling the wrong antibodies, even after multiple Omicron exposures.  ....................



U.S. B.S.:


The new 2026 “National Defense Strategy,” released yesterday, contains a lot of airy rhetoric about finally transitioning to “hardnosed realism,” and away from the misbegotten “grandiose strategies” of yesteryear, wherein the US had foolishly set out to “solve all the world’s problems.” More tangibly, however, the document doesn’t call for a single discernible reduction to America’s comically-large global military footprint. In fact, it calls for expanding that footprint, rather dramatically.

Among these expansions will be for the US to “erect” new military installations in close proximity to China. Per the jargon of NatSec Speak, this means establishing “strong denial defense” in the “First Island Chain” — which may sound like a modestly-sized region to the unschooled reader, but actually encompasses Japan, the Philippines, Taiwan, and perhaps a smattering of other places like Vietnam and Malaysia, depending on what the cockamamie Grand Strategists decide to theorize and war-game next.

There will also be unspecified measures to “guarantee US military and commercial access” to what is now described as the “key terrain” of Greenland and Panama. On top of “deepening” US military involvement in the Middle East, so as to “enable integration between Israel and our Arabian Gulf partners.” ............

.............. Back in some version of “realist” reality, these “strategy” documents are really only notable insofar as they give some morbid insight into how presidential subordinates are required to haphazardly “ideologize” whatever their superior is doing at any given time. A well-worn heuristic would be much simpler, and more instructive: “America First” is still whatever he says it is.


The Trap of Blindly Defending Jerome Powell

The Trump administration is not like any we’ve had before. They are uniquely lawless. Uniquely shameless. Uniquely corrupt. Uniquely bad for this country. I want that out of the way first.

Now.

Friday, the Department of Justice hit the Federal Reserve with grand jury subpoenas. They’re threatening to indict Jerome Powell. The excuse is something about building renovations going over budget. The real reason is Powell won’t cut interest rates to 1% when Trump tells him to.

Powell put out a video Sunday night. Called it what it is. A pretext. He’s right. Using prosecution to bully the Fed chair into rate cuts is wrong. It’s dangerous.

But none of that makes Jerome Powell a hero.

Here’s the trap. Trump does something lawless. We oppose it. Then opposing the method becomes defending the target. Suddenly we’re not just saying “you can’t prosecute the Fed chair to get rate cuts.” We’re defending the Fed itself. Treating Powell like some guardian of integrity instead of asking what his institution actually did.

So let’s ask. ...............

.............. But look at what we did. Trump kidnapped Maduro. Killed more than a hundred people doing it. Used a plane disguised as a private aircraft to blow up a boat. This is what we do now. Whatever we want because we can.

Meanwhile China’s building. Infrastructure in Latin America. Clean drinking water in Africa. Electrification. Technology. They’re winning contracts and making friends across the planet. Not with missiles and bombs and kidnapping. With roads and power plants.

We’re backing another lawless regime. This time it’s us.

.................... So here we are with two fights ahead of us. Both massive. Both necessary.

We fight authoritarianism. Trump’s lawlessness. The DOJ as a weapon. Kidnapping foreign leaders. Killing people in our streets. Methods matter. Rule of law matters. At home and abroad.

And we fight the system that opened the door for him. The Fed that failed us. Regulators owned by industry. A Supreme Court that said presidents are above the law. Fifty years of our country being sold off.

Do just one and we lose.

Beat Trump but save the captured institutions? We get another Trump. Smarter. More disciplined. Riding the same desperation because nothing underneath changed.

Tear it all down but let an authoritarian hold the tools? We get what we have now. Power used to take, not to build.

We have to do both. ...............



............... The rule of law’s obvious break-down began with pardoning Nixon.

.............. On the non-governmental side the crimes of the rich are almost never prosecuted.

................ 
The US is an oligarchy. An oligarchy where there is no rule of law if someone powerful enough wants to break the law.

There is only one road back from this.Mass prosecutions, starting at the top, with Trump and Vance and the cabinet members and family members who engaged in corruption like Jared Kushner and going right down to every ICE brownshirt who violated citizens rights and every prosecutor who went along. Every violation of rights, every major corrupt action.

Of course this means first that the Supreme Court and other parts of the judiciary which aided and abetted by ignoring clear constitutional directives need to be impeached and removed and if possible then themselves tried for crimes. Clearly draconian laws like the one allowing warrantless searches within 100 miles of the border must be repealed. 

I don’t pretend that this suggestion is easy or likely. I think the odds of it happening are tiny. But it’s what’s necessary if the Bill of Rights, the Constitution and common law protections for for ordinary people are to mean anything. And it MUST include the powerful. If it’s just a few ex ICE agents getting their knuckles rapped it will mean nothing. ...............



Geopolitical Fare:

Our latest study explores how the decline of Global North hegemony has shifted the geopolitical landscape and opened new possibilities for emergent organisations of the Global South.

It has been a scant 30 years since the ‘end of history’ was declared by bourgeois ideologists in pantomimes of wish-fulfilment for sensing the inviolability of United States imperialism. For peoples’ struggles and movements feeling the boot of imperialism on their necks, no such end was in sight.

In the face of violent repression, such as Brazil’s Carajás Massacre in 1996, the Landless Workers’ Movement led the reclamation of land for popular agrarian reform through occupation and production, challenging agribusiness behemoths, such as the US multinational Monsanto. A ‘soldier who shook the continent’, Hugo Chávez won the popular vote in 1999, a sharp left turn that was followed by others in Latin America. This included a wave of mass mobilisation of millions of workers, peasants, Indigenous, women, and students that defeated the proposed US Free Trade Areas of the Americas in 2005, a direct challenge to nearly 200 years of the US Monroe Doctrine.

In 2002, Nigerian women gathered at the gates of Shell and Chevron to protest environmental destruction and exploitation in the Niger Delta. Haitians refused the centuries of humiliation in mass demonstrations following the US ousting of Jean-Bertrand Aristide and US occupation in 2004. Millions of Nepalese celebrated the toppling of the monarchy through armed resistance under the leadership of the communists in 2006. When fruit vendor Mohamed Bouazizi set himself on fire in 2010, the Tunisian people revolted against the neo-liberal system that had caused him to take such extreme measures.

In subsequent years, changes – sometimes small and imperceptible, at other times volatile and explosive – unfolded. These involved both popular movements and state actors, in some cases extremely powerful ones. The US was confronted by a rising economic powerhouse in China, growing economies in the Global South (which overtook the Global North’s GDP in PPP terms in 2007), years of domestic capital investment neglect, the financialisation of the economy, and the loss of manufacturing superiority.

The rise of the Tea Party in 2009 signalled internal fracturing of US domestic politics. Internationally, the US failed to achieve soft regime disruption in China and de-nuclearisation or regime change in Russia. After a temporary reduction in military spending with the end of the disastrous war on Iraq (2003–2011), the US shifted to the use and threat of military power as a central pillar of its response to these changes.

Hegemony is historically lost in three stages: production, finance, and military. The United States has lost hegemony in production, though it still has some remaining areas of technological hegemony, including those related to the military. It is seeing its financial hegemony challenged, though still in the very early stages and revolving around the status of the US dollar. Even though the economic and political aspects of its decline might be accelerating, it still retains military power – creating a temptation for the US to attempt to overcome the consequences of its economic decline by military or military related means.

The US has defined China as its strategic competitor. The minimum programme of the US is the containment and economic diminishment of China, sufficient to guarantee the US’s own perpetual future economic hegemony.

From its own point of view, US capitalism is rational in its attempts to limit China’s rise. Failure to do so would erode the relative advantage the US has in controlling higher levels of productive forces and the resulting monopoly privileges that control entails. There is almost complete alignment amongst the US state actors to continue to manage decoupling from China (despite the near impossibility of fully re-modernising US productive forces domestically) and to advance military preparations against China.

The February 2022 movement of Russian troops into Ukraine – a result of the continued violations of US assurances on the non-expansion of the North Atlantic Treaty Organisation (NATO) and the continuing civil war between Kyiv and Donbas – marked an explicit new phase in world military alignment for the US. In a series of rapid-fire moves, the US openly subordinated all the Global North countries and, in so doing, further subordinated the military apparatus of those states. It established itself as the open military hegemon of what is euphemistically called NATO+, which includes all but three members of the former Eastern Bloc. Those who attended the 2023 NATO summit in Vilnius, Lithuania, as a member or observer – including Australia, New Zealand, Japan, and the Republic of Korea – are de facto members of NATO+. Only Israel (excused from attendance for political expediency) and a few smaller countries of the Global North did not attend.

Beginning in October 2023, Israel began a campaign of displacement, ethnic cleansing, collective punishment, and genocide of Palestinians with the full and shameless support of the United States government. The developments in Ukraine followed by the recent escalations in Gaza are significant markers reflecting that there has been a qualitative change within the imperialist system. The US has now completed its economic, political, and military subordination of all the other imperialist countries. This has consolidated an integrated, militarily focused imperialist bloc. It aims to maintain a grip on the Global South as a whole and has turned its attention to dominating Eurasia, the last area of the world that has escaped its control.

It is not a matter of exaggeration to say that the Global North has declared a state of open hostility and war on any section of the Global South that does not comply with the policies of the Global North. This is seen in the joint declaration on EU-NATO Cooperation published on 9 January 2023:
We will further mobilise the combined set of instruments at our disposal, be they political, economic, or military, to pursue our common objectives to the benefit of our one billion citizens.
The Palestinian people in Gaza are certainly feeling the palpable barbarity of NATO+ and the forced ‘mass consensus’ of which the Global North is capable. As Palestinian liberation leader Leila Khaled put it recently:
We know that they speak about terrorism, but they are the heroes of terrorism. The imperialist force everywhere in the world, in Iraq, in Syria, in different countries… are preparing to attack China. All of what they say about terrorism turns to be about them. People have the right to resist with all means to it, including the armed struggle. This is in the Charter of the United Nations. So, they are violating the rights of people for resistance because it’s their right to restore their freedom. And this is, and I say it always, a fundamental law: where there is repression, there is resistance. People will not live under occupation and repression. History taught us that when people resist, they can keep their dignity and their land.
***
Imperialism has begun its transformation to a new stage: Hyper-Imperialism. This is imperialism conducted in an exaggerated and kinetic way, whilst also subject to the constraints that the declining empire has foisted on itself. The spasmodic quality of its exertion is felt by the millions of Congolese, Palestinians, Somalis, Syrians, and Yemeni living under US militarism, whose heads instinctively jerk for cover at sudden sounds.

Yet, this is not the full-blooded march across the globe that the Cold War initiated, fought in proxy battles that were followed by economic imperialism through the World Bank and other development institutions. It is the imperialism of a drowning billionaire who firmly believes he ought to be back on his yacht. It flexes the muscles of power that are still strong – the military. However, absent productive power and knowing that financial power is at a tipping point, the full suite of imperial technologies of control that the US once had is no longer at its disposal. It, therefore, channels its efforts through the mechanisms it has most at hand: culture (the control of truth) and war. ..............................





............ Ursula von der Leyen, President of the EU Commission, responded to Trump’s threat to take Greenland:
‘Territorial integrity and sovereignty are fundamental principles of international law.
‘They are essential for Europe and for the international community as a whole.’
Her ostensible concern for international law was absent when it came to the recent outrageous and illegal US kidnapping of the Venezuelan president, Nicolás Maduro. Even worse, her concern for international law has been conspicuously lacking during Israel’s ongoing genocidal assault on the Palestinians in Gaza.

In fact, Mark Carney, the Canadian prime minister, strongly alluded to the fact that the supposed framework of international law, territorial law and sovereignty had been a sham all along. ..........

No mention, however, of the appalling costs of that American hegemony to much of the world’s population.

Carney then added:
‘We participated in the rituals. And we largely avoided calling out the gaps between rhetoric and reality.
‘This bargain no longer works.’
A ‘bargain’ for the comfortable in privileged parts of the world, perhaps; but not for those who have suffered US-inflicted wars, regime changes, ‘humanitarian interventions’ and much else besides.

The admission that ‘we’, a term which really means Western leaders and their media cheerleaders, have ‘largely avoided calling out the gaps between rhetoric and reality’ is significant. Obviously, any reasonably-well informed person has known this all along. But the media preferred to skip merrily past this crucial aspect of Carney’s speech, as we will see below.

The rise of US imperialism, especially since the end of the Second World War, has been accompanied and promoted by grandiose assertions about spreading democracy, peace and prosperity. The self-serving ideology has underpinned all of the following horrors and many more: ...........

............ All of the above is but a fraction of the crimes committed by the US empire over many decades. For more information, read any number of books by Noam Chomsky, Edward Herman, William Blum, Howard Zinn, Michael Parenti, Naomi Klein, John Pilger, Seymour Hersh, Media Lens and others. ..............



............. The Donroe doctrine is not just some whim of Trump.  It is embedded in the US administration’s latest National Security Strategy.  As Trump said: “Under our new national security strategy, American dominance in the Western Hemisphere will never be questioned again.” Trump went on: “For decades, other administrations have neglected or even contributed to these growing security threats in the Western Hemisphere. Under the Trump administration, we are reasserting American power in a very powerful way in our home region.”

.................... The supposedly harmonious capitalist world of global cooperation, led by a hegemonic state in alliance with other capitalist ‘democracies’ that set the rules for others, is over.  Now it is every nation for itself, looking for new alliances in a multi-polar world. Nothing is certain or predictable any more. No wonder gold, that safe haven asset of the past, is at a record high price.



.................... The U.S. already operates a permanent military base in Greenland: Pituffik Space Base, a Cold War-era installation now staffed by about 200 personnel, down from a peak of 10,000. The base is critical for missile defense and space surveillance, but Trump argues that full U.S. control is needed to deter Russia and China, despite existing defense agreements with Denmark that allow for expanded U.S. military presence.

As Statista's Tristan Gaudiat notes in the map below, the U.S. also currently maintains over 50,000 troops across around thirty permanent bases in Europe (area of responsibility of the United States European Command), with important air hubs like Keflavik (Iceland), Ramstein (Germany) and Lakenheath (United Kingdom), or naval stations like Rota (Spain) and Souda (Greece).


Doomberg: Borrowed Time
The European Union is now at war with everybody. Political heads must roll.

............ For most politicians—at least those with even a minimal capacity for shame—revelations of such rank hypocrisy would have sunk their careers. Indeed, with her polling numbers plummeting and calls for her resignation as Prime Minister growing louder, it looked for a while like she was finished. Inexplicably, the power brokers in Brussels instead felt Kallas had earned a promotion, and she was promptly positioned to ascend to the role of High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the European Commission (EU), a role she formally assumed on December 1, 2024. The job is widely considered the third most powerful in the EU system.

Compounding the fact that Kallas had little in the way of relevant experience to be the EU’s top diplomat was the belief among many that the role itself should not exist. After all, EU foreign policy is ultimately controlled by its 27 member states under unanimity, and the position overlaps with the European Council president, the Commission president, and national foreign ministers. This creates duplication, confusion, and invariably battles over turf, all hallmarks of Kallas’ tumultuous time in the job. As any corporate leader can attest, major mismatches between accountability and control are recipes for organizational failure. 

While the trajectory of EU diplomacy was a train wreck long before Kallas failed upward, few would argue that it hasn’t been a terrible, horrible, no good, very bad 14 months for the Union’s foreign affairs since she assumed her role. Incredibly, the EU now finds itself at loggerheads with essentially every major power in the world, drifting through the global game of geopolitics with no strategy, failing economies, deep resentment at home, and shaky access to crucial energy supplies from abroad. ..........


In the final, bloody decades of the Roman Republic, political form survived long after political substance had rotted away. As Europe enters 2026, the parallel is no longer academic.

.............. Europe today confronts the same question Rome once did: not whether to preserve institutions, but whether those institutions are still capable of governing reality.

The EU’s problem is not a lack of ambition. It is an excess of misdirected governance elevated to dogma. Over time, regulation has ceased to be a tool and has become an ideology in itself — a substitute for strategy. ..............

Augustus succeeded where the Republic failed because he grasped a fundamental truth: institutions matter only insofar as they function. His genius lay not in ideology, but in empirical realism. ..............


As Israeli forces killed 11 Palestinians in Gaza and bombed Lebanon, Netanyahu said he would join Trump's so-called "Board of Peace," revealing the framework's true purpose.



Canadian Fare:

Can you govern the world like a reality TV show?

..................... As Prime Minister of Canada Mark Carney warned in his harbinger Davos speech:
Let me be direct: we are in the midst of a rupture, not a transition. Over the past two decades, a series of crises in finance, health, energy, and geopolitics laid bare the risks of extreme global integration. More recently, great powers began using economic integration as weapons. Tariffs as leverage. Financial infrastructure as coercion. Supply chains as vulnerabilities to be exploited. You cannot “live within the lie” of mutual benefit through integration when integration becomes the source of your subordination.
You cannot live within the lie. The Great Moderation seems to be officially wrapping up. Carney underscores that the “rules-based international order” has always been not real, but people believed it was real because it was useful. After all, as Reagan said, “the greatest leaders in history are remembered more for what they said than for what they did.” But now, as Carney says, the gap between rhetoric and reality is closing. ..............



I think this is worth posting in full. Once again Carney and Canada are moving faster than any of America’s vassals, which is fascinating because Canada is the most vulnerable to the US of all the vassals. But then, that’s why, plus some luck.

Carney was the UK’s and Canada’s central banker. He did a terrible job, blowing two housing bubbles. I backed him in the last election because he was saying the right things, and the alternative was a Trump style conservative with a room temperature IQ who would spread wide for Trump.

Carney spends much of his time in this speech pointing out that the old order was full of hypocrisy. He should know, he had to say all the mealy mouthed lies, you can’t have the jobs he had otherwise. But he didn’t have to say this now, he didn’t have to point this out, he could have just moved to the fact that there’s a rupture. .............. 

{full Carney speech}



Canada’s prime minister Mark Carney got up on stage in Davos and admitted the liberal world has been complicit in the breakdown of international law, war crimes and mass atrocities, but that the west was happy to go along with it while the brutality of empire benefitted them.

His speech was showered with praise by the liberal establishment and legacy media who in Carney have found themselves a new hero to make sense of the world.

The elites in the hall gave it a standing ovation. Many outlets including The New York Times and The Guardian, which called it “unflinching realism,” reprinted it in full. The Financial Times labelled it “timely and bold” and said it demonstrated “real leadership.”


But not for the reasons the liberal intelligentsia is crowing about.

Carney’s speech is worth reading for its confessions. For its confession that liberal centrism is an ideology of cynical self-interest, that its symbols are fake, its rhetoric designed to deceive. For its admission that the rules-based order is a lie, that western neoliberal governance is a hideous, hypocritical creation ...........

............ Where to start?

First of all, the assertion that the west pursued “values-based foreign policy” under a “rules-based order” because the US protected that order is a joke, unless your values are regime change, invasions and mass murder. If that is the case, then yes, having the US on your side definitely helped you do that. Canada itself has been no stranger to imperial adventures, having participated in numerous acts of barbarism in recent decades, including the invasions of Afghanistan and Libya. ...............

The message really couldn’t be clearer. Yet this message has been lauded for its bravery rather than excoriated for its depravity.

Now perhaps, perhaps, you could make an argument for Carney’s words as bold if the prescription flowing forth had been matched in its boldness.

You could argue for this unflinching diagnosis if the prescription had been equally as stark.

But it wasn’t.

The prescription he laid out was the geopolitical equivalent of ‘meet the new boss, same as the old boss.’ ...............

A truly visionary future of less tax, more guns, tanks, mines and global neoliberalism! Get on board!

And not one mention of ecological disaster, not one mention that Canada being an energy superpower, as he described it, is dooming billions of people to increasingly unsurvivable futures. ...........

Carney’s speech was a masterclass in avoiding responsibility for his and the west’s part in the selective application and breakdown of international law.

It was a masterclass in rhetorical sleights of hand, positioned as a fresh vision for the future while rehashing the core tenets of global imperialism and neoliberalism. ................

Carney was not challenging the old order as much as he was attempting to rescue that order from Trump. .....



.................... And that’s the key to understanding Carney. He’s not a left winger. He’s not a post war liberal. He’s a neoliberal technocrat, and the job of neoliberal technocrats is to keep making the rich richer. It really is almost that simple and if you use that as your guide to their actions you’ll be right most of the time.

............ What makes Carney different from most current elite concierges is that he is actually competent, not a worthless courtier, and that he’s able to see the hypocrisies of the system. He’s self-aware.

I supported Carney in the last election and I still support him because while he’s far from what I want, he’s at least doing some of the right things. Enough of the right things to be worth supporting. That doesn’t mean I like him, or even think he’s a good person. He isn’t. But he’s competent and has enough guts to move away from the US. While he does so he’s making a lot of compromises ................


Armed Forces envision insurgency tactics like those used by Afghan mujahedeen, sources say. But officials and experts stress a U.S. operation is unlikely, and the scenarios are conceptua



Book Fare:


......................... One Day is a non-fiction work that interposes events from his life with reflections on the coverage in the West of the most recent Israel-Palestine conflict. It is a book of rage and disappointment – how can, he repeatedly asks, liberal societies so constantly fail to live up to their ideals when it comes to “foreign” conflicts, especially the Israel-Palestine one? Why did the West so consistently fail to act, or even to do something so basic as to call things what they are, when it became clear that what was happening in Gaza was a genocide?

El Akkad has a number of answers for this question, but what I’m going to discuss here is not necessarily the source of this willful ignorance, but rather its cost for us perpetrator/bystanders, of this seeing but not seeing.



Other Fare:


............................................. The proposal of this body of research is that we can understand the nature of neoliberalism, in part, through investigating the way that self-described neoliberals understood their own actions influencing the world. The set of thinkers that included Friedrich Hayek, Milton Friedman, James M. Buchanan and others were engaged intellectuals, who saw ideas having special relevance in moments of perceived crisis. Here, one is obliged to recount the famous quote from Friedman that the ‘basic function’ of intellectuals is ‘to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable’.

While Friedman was discussing intervention in a crisis, ‘Montpelerinians’ also believed it was in moments of non-crisis when ideas seep slowly into the social system through channels of what Hayek called ‘professional secondhand dealers in ideas’. Here, one thinks of the influence of columnists, authors and professors but, above all, think tanks, which are the archetypal actors and agents of change in these narratives of neoliberalism. The overlap between histories of neoliberalism and more mainstream histories of conservatism is strong here with British and US organisations like the Institute of Economic Affairs, the Centre for Policy Studies, the Heritage Foundation and the Cato Institute playing starring roles ......................




Yves here. Normally I am loath to have a video as a cross post, but I suspect most of you will agree that this one merits being showcased. It describes the extent and severity of the collapse in critical thinking skills and even basic information acquisition among most children due to device dependence and AI addiction. Teachers are resigning in droves.

The narrator in passing wonders what sort of society is coming, since a minority of children, those of the affluent and above all, the progeny of the tech elite, are being brought in a more traditional way, with no or limited device use until their teens, to acquire fashioned cognitive skills. But what of the rest of the dull eaters? What role if any will be allotted to them?

A conservative colleague said the use of AI to create addiction and device dependency was evil. That is an understatement. These kids rely on ChatGPT not just for information but also to make choices, and for many, that seems to extend to every aspect of their lives. Sam Altman makes clear in video clips below that this extreme loss of independence, of personal autonomy, is deliberate.

That means unless these kids can find a way to break free, they are cognitive serfs that can be told to do anything. How to vote. Whether to sign up to die in a hopeless war. Whether to take a job in a unsafe meatpacking plant and risk loss of limbs.

This widespread abuse is far worse than what the Sacklers and other opioid peddlers did to mainly working class pain victims, or what the British did to China in the Opium Wars. At least with opioid addiction, it is possible for the victims to recover even if the withdrawal process is painful. The evidence is mounting that even for adults, regular use of AI diminishes reasoning skills and attention spans.

These children are being turned into automatons, incapable of independent thought and action. It’s widely known in developmental psychology that if certain patterning does not happen at critical ages, the deficit is permanent. ....................



R.I.P. Fare:


Pics of the Week:

A series of graphics reveals how the Trump administration has sought historic cuts to science and the research workforce.



Posted by at No comments:

Sunday, January 18, 2026

2026-01-18

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


Economic and Market Fare:

The last time we saw this degree of collective exuberance was in late 2007, and we all remember how that turned out

..............  The very absence of recession forecasts is itself a leading indicator of complacency.

The equity strategy community has somehow managed to outdo even the economists in their collective exuberance. Every single major sell-side strategist has a bullish year-end target for the S&P 500. Every single one. The average target implies double-digit upside from current levels. The range of estimates, which normally spans several hundred points, has compressed to the narrowest band I can recall.

This is what happens when career risk trumps intellectual honesty. ............

Now, to be clear. I am not predicting an imminent crash. But it’s always about respecting the probabilities and the entire range of possible outcomes, and respecting John Keynes’ simple adage that markets can remain irrational far longer than most skeptics can remain solvent.

I have been humbled far too many times in my professional career not to understand that basic concept .............

The margin of safety has evaporated. Valuations, by almost any reasonable metric — price-to-earnings, price-to-sales, price-to-book, market-cap-to-GDP (the Buffett ratio), the Shiller CAPE — are in the top decile of historical readings.

That doesn’t mean markets can’t go higher; it means that the starting point matters for long-term return potential, and the current starting point is a poor one. There are a whole lot of things that need to go right. And when your upside scenario requires perfection, you’re no longer investing; you’re speculating.

History may not repeat, but it does rhyme, and the current verse sounds awfully familiar. The sequence is almost always the same: a period of strong returns breeds complacency, complacency breeds excessive risk-taking, excessive risk-taking compresses risk premiums to unsustainable levels, and eventually — always eventually — something triggers a repricing. ...........



In 2025, we worried that the trade war and immigration restrictions would lead to stagflation.
With those headwinds fading, the list of tailwinds keeps growing, and we are starting to worry about overheating in 2026.
The bottom line is that there are significant upside catalysts to growth and inflation over the coming quarters.
US economic outlook: 10 tailwinds in 2026
  1. Trade war uncertainty fading
  2. Strong AI and data center spending
  3. High AI stock prices boosting wealth effects for consumers
  4. Dollar depreciation
  5. Falling oil prices
  6. The Soccer World Cup
  7. One Big Beautiful Bill eliminates federal income tax on overtime pay and tips
  8. One Big Beautiful Bill increases the child tax credit to $2,200 dollars per child
  9. One Big Beautiful Bill extends 100% expensing for equipment and factories to encourage capex and hiring
  10. Tax refunds for households will be larger because the total tax liability for 2026 is lower


The US labor market has evolved in an unusual way over the past several years. A “no hire, no fire” dynamic has prevailed for the better part of two years, leading to a slow rise in the unemployment rate without the recessionary sting of mass layoffs. .......................

To conclude 2025, the cyclical portion of the labor market remains weak, with most of the downward pressure coming from the manufacturing sector.

The major question for the economy in 2026 is whether the monetary easing we’ve seen so far is enough to arrest the labor market declines in these cyclical sectors before they accumulate to several hundred thousand and cause downstream stress in the less cyclical and larger areas of the economy.

The increase in the unemployment rate over the last few years has fallen primarily on the youth, with more than a 3-percentage point increase from early 2023. This fits perfectly with the “no hire, no fire” labor market. ..............



One of the joys about writing about bond markets is that I always get questions in real life about whatever crisis du jour is being spread about bond markets. The thing to keep in mind: if you are a developed country with a freely-floating currency that you control, it takes a concentrated dose of stupidity to create crisis in your government bond market. Unfortunately, concentrated doses of stupidity are in great supply in the 2020s.

However, if we avoid stupidity, do we need to worry about debt levels? The answer is: one needs to worry about inflation created by fiscal and other policies (looking at you, tariff policy), but the debt-to-GDP ratio will take care of itself.

Let us take a look at the American debt-to-GDP ratio in the figure above. The latest figure (from the second quarter of last year) is at around 118%. For some reason, people get into a panic about a debt-to-GDP ratio of 100%, but that is a superstition and/or relying on a bogus study (see the appendix). ...............



A.I. Fare:

AI layoffs are looking more and more like corporate fiction that’s masking a darker reality, Oxford Economics suggests

Despite breathless headlines warning of a robot takeover in the workforce, a new research briefing from Oxford Economics casts doubt on the narrative that artificial intelligence is currently causing mass unemployment. According to the firm’s analysis, “firms don’t appear to be replacing workers with AI on a significant scale,” suggesting instead that companies may be using the technology as a cover for routine headcount reductions.


Marcus: How generative AI is destroying society
An astonishingly lucid new paper that should be read by all

Two Boston University law professors, Woodrow Hartzog and Jessica Silbey, just posted preprint of a new paper that blew me away, called How AI Destroys Institutions. I urge you to read—and reflect—on it, ASAP. ........


Big Tech sways too many economic development officials, and local residents are fed up.



Quotes of the Week:

...... This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation. .......



Charts:
1: 
2: 
4: 
5: 




(not just) for the ESG crowd:


Yves here. It is depressing but climate engineering, aka geo-engineering, is inevitable. Our putative betters are not just not doing remotely enough to try to slow the pace of global warming but are going pedal to the metal in making matters worse with their AI fevered dreams and related energy-hogging data center buildouts. Even with them using electricity, the demands are so high that it seems heroically optimistic to posit that all can or will come from solar or nuclear. ...............




Ocean Iron Fertilization — what's right about this solution is also what's wrong

......... The climate crisis, now nascent, concerns us all, even those who feel its effects but deny its cause. No one wants their home to be uninsurable; no one wants to watch their coastal town eaten by ocean erosion or murdered by storms. New York is a coastal town, as are Miami, L.A., Mobile and a great many more. That’s a lot of property owners who could lose everything.

But where’s the solution that’s acceptable to the billionaire class, the only people with power?

MIT-trained physicist Peter Fiekowsky thinks he has one, Ocean Iron Fertilization (OIF), and it sounds pretty promising. It’s a “hacking the planet” idea, which I’m generally against, but unlike most geo-engineering proposals, this appears to be low risk with potentially high reward. It’s also fast.



Welcome to the twilight of the Industrial Age. Growth is ending. That was the blunt thesis of a recent essay, and the signals are already here—deindustrialization, grid stress, financial instability, and rising geopolitical conflict.

The Honest Sorcerer’s argument is simple: growth depends on ever-faster drawdown of energy and materials as population and complexity increase. If extraction slows, growth slows. Growth becomes stagnation, then decline.

Vaclav Smil adds the physical reality beneath the abstractions. Modern civilization rests on four industrial pillars: cement, steel, plastics, and ammonia. Cement is the platform for cities and infrastructure. Steel is the universal structural and machine metal. Plastics are the lightweight, versatile base material embedded in packaging, electronics, and healthcare. Ammonia, through the Haber-Bosch process, is the foundation of nitrogen fertilizer and therefore modern food production. If one pillar weakens, the system strains. If several weaken at once, strain becomes systemic risk.

Those pillars are hitting limits .............

............. Rana Faroohar argues we’re in a new Great Game: the U.S. and China competing for resources, territory, and influence without open war. The flash points are places like Venezuela, Ukraine, Greenland, and the Arctic, along with the routes that move energy, goods, data, and weapons. It’s a scramble for minerals and fossil fuels, but also for ports, seabed claims, undersea cables, and logistics corridors.

How should we understand that in the context of the twilight of the Industrial Age: a world running into energy and material limits?

I see a long chain of events pointing to the breakdown of the old world order that include the Vietnam War, the oil shocks of the 1970s, and the end of Bretton Woods. The shift to a fiat, debt-based monetary system and globalization created the illusion that stability and growth had returned. The collapse of the Soviet Union seemed to confirm the triumph of Western economic ideology. Peak oil and the Global Financial Crisis were treated as setbacks that shale, central banking, and expanding debt could paper over. .............



Sci Fare:




U.S. B.S.:




There’s only so much grist one can get from pointing out over and over again that Tulsi Gabbard has systematically flouted the deeply-held convictions she once claimed to hold. After a while, it starts to get redundant, and a bit too formulaic to even be worth harping on anymore. Yes, we’re aware that she previously made opposition to “regime change” and its offshoots the centerpiece of her presidential campaign, Congressional tenure, and entire existence as a nationally-prominent political figure. We know she used to vehemently denounce the concept of US intervention in Venezuela, Iran, and so forth, but now she’s participating in (and openly supporting) exactly those policies. Still, though: shrieking “hypocrisy” ad nauseam will eventually have diminishing returns. You can fish out all the speeches and tweets you want from several years ago, demonstrating that a particular politician had once purported to believe something diametrically opposite to what they’re doing today. But people already expect inconsistency, or even outright “hypocrisy,” from political figures. By incessantly highlighting examples of this, there’s a sense in which you’re telling people something they’ve already been conditioned to know. Which can get a bit dull. Furthermore, the notion that any politician will maintain perfect consistency across time is often derided as not just unrealistic, but undesirable, since politicians are expected to adapt to changing circumstances, absorb new information, and adjust accordingly. To exhibit “flexibility” in this regard can even be lauded as a virtue. Only a hardened zealot would insist on stubbornly clinging to their erstwhile beliefs for all eternity. Or so the argument might go. In any event, dwelling on a politician’s myriad hypocrisies, no matter how incontrovertible the evidence for them might be, can come across like beating a stale drum. ............

............................................................. As you might have gathered from following the news lately, Trump’s regime change initiatives in Venezuela and Iran are moving ahead with little constraint. Except this time, Tulsi Gabbard is magically in favor of them. She’ll even fudge intelligence to justify Trump’s quest to bomb Iran, as she infamously did during the June 2025 war — “phase two” of which appears like it could be coming imminently. And if the pattern holds, she’ll be on call to dutifully provide whatever assistance might be required. By any reasonable metric, that June 2025 episode was a “crossing the rubicon” moment for Tulsi Gabbard — proving beyond any lingering doubt that she’d abandoned all remnants of her prior, putative self. Because if she’ll happily volunteer to have her own “Colin Powell moment,” what wouldn’t she do?  ..........................



Geopolitical Fare:

Canada has cut a trade deal with China. This is what I have been suggesting for ages, and it’s finally happening. (Not, of course, because Carney reads me, but because it’s the obvious play and of all Western leaders he’s been the most resistant to Trump’s threats and blackmail.) 

............. This will break the ice for many nations. As I have argued for ages, even before Trump came to office, everyone needs to cut a deal with China because it’s the rising power. It’s already the most powerful nation in the world in many ways, and it will be in all ways that matter in less than ten years. Perhaps five.

.............. But it’s also that you can make a deal with the Chinese. They keep their deals unless you cross very clear red lines like supporting Taiwanese independence. Even before Trump the US did not keep its deals. As a Canadian I’m aware that America just ignored trade rulings against it in favor of Canada even twenty years ago. America is simply untrustworthy, they don’t really believe they have to obey even rules they themselves have agreed to. Trump is “ignore inconvenient rules on steroids” but pretending he hasn’t just ramped up an already existing American characteristic would be delusional. ..............









....... Today pro-government marches are held in all major cities of Iran. They are much bigger than anything the opposition could ever assemble. The Iranian system has again demonstrated that it is astonishingly stable. Not one official has changed side.



.................................. In the circles I move in you often hear people talk about how the US empire is on its way out and getting weaker and weaker, but I dunno man. It sure has racked up a lot of wins lately. Maybe they’re just grabbing up as much global power as quickly as they can before things heat up with China, but whatever the reason, they’re certainly not acting like they’ve lost the ability to dominate world affairs right now.

Whether they have or not, the work remains the same: wake the public up to the unacceptable nature of the empire, and to the truth that a better world is possible. .....



The electricity and heat supply in Ukraine has stopped in large parts of the country. Kiev had already been on scheduled blackouts where groups of consumers received for example four hours of electricity to then be cutoff for eight hours. That scheduling has ended. The blackout has become permanent.

Over several weeks Russian attacks had isolated the electricity supply in Kiev from other parts of the country. It then attacked generating stations within the city. There is now less than 10% of electricity supply available than the city would normally use. Public lighting has been shut down as much as possible. Factories have closed down. Schools and Universities are on prolonged holidays. Many shops have closed as running their private generators is costing more money than they can make while open. ....................

For three years Russia had mostly refrained from attacking Ukrainian infrastructure. Electricity and heat supply operated at peace time levels. Only during the last year did attacks increase. In March 2025  President Trump announced a 30 day infrastructure ceasefire. Russia committed to it. Ukraine didn’t.

In November 2015 Ukraine blew up transmission pylons that supplied Crimea. 75% of its populations were left without electricity. A brewery in Lviv celebrated that by creating a dark beer named ‘Crimea by night’.

In 1999 NATO bombed Serbia to further split up Yugoslavia. NATO bombing started on March 23 1999. It took out some 80% of Serbia’s electricity and water supply. ...............



Students of propaganda learned a great deal about the evolution of their subject matter from the multi-decade Western regime-change operation in Syria, especially as this played out from 2011 onwards.

Perhaps the fundamental lesson is that subtle propaganda is not so much about the message or, perhaps, is about the message only at the end of a much longer process. Rather, the main deal is about purposefully shaping “reality,” and perceptions of reality, or even creating a new reality, or simulacrum thereof. This is intended to impact interpretations of “evidence” by selected audiences by means of representations fed to mainstream media that are pre-primed (through corporate ownership, transactional deals with power, preferred ways of doing journalism, recruitment and training) to align with how the interests of the main centers of power would like events to be interpreted (despite various obfuscations, distractions and narrow windows of permitted “controversy” and and “disagreement” that serve to disguise the fundamental alignment). This does not mean that these strategies are always successful.



....................... The US power alliance is unquestionably the most destructive and abusive entity in our world, and it also happens to be the power structure under which I live. This gives me a special responsibility to oppose its abuses.

The only reason everything I just said isn’t completely obvious to everyone is because we live in a mind-controlled dystopia where people are aggressively propagandized from birth into believing our rulers are more or less the Good Guys and the nations they target are more or less the Bad Guys. 

..................... Regime change the United States. Not its fake official elected government: its real government. The oligarchs and government agencies which actually run the thing. Replace its empire managers and empire management institutions with real democracy which gives the American people real authority over the actions of their own government, rather than the fake decoy elections they have now.

Regime change the United States, and regime change all its imperial member states. Australia. The UK. Israel. Canada. The EU. The entire imperial core.



Other Fare:


.............. Now, in a blunt way, we call that point in life retirement, but because people who are in the pre-retirement era are very likely to be amongst the highest earners in society, and therefore those about whom these claims are being made , we are misinterpreting the situation. People, in fact, don’t want to retire at a blunt point of time.

As people now are getting into their fifties and maybe a bit beyond, because people do work well into their sixties, they find they’ve reached a point where their housing is secure, their pensions have become credible, and their basic material needs are met largely because the children have left home if they ever had them. At that point in time, they suddenly realise that there are things more valuable than money, and that is the phenomenon that we are observing.

People realise that money can accumulate without limit, but time cannot, and health,   relationships, meaning, and care, all require an alternative investment, particularly if retirement is going to be long and meaningful, because there is plenty of evidence that those who work flat out to retirement day and then stop and do nothing thereafter have quite short lives as a result; the shock is too great to manage.

So rational people are beginning to manage what is scarce, and this has literally nothing to do with tax. Choosing fewer hours of work as you get older is not irrational. It’s logical. ............


........................................ But Alexander succeeds in reconciling all this with Adams’ achievements: it’s all just consequences from the starting axiom that the world is ruled by morons, and that he, Scott Adams, is the only one clever enough to see through it all.

Is my epistemology any different? Do I not also look out on the world, and see idiots and con-men and pointy-haired bosses in every direction? Well, not everywhere. At any rate, I see far fewer of them in the hard sciences.

This seems like a good time to say something that’s been a subtext of Shtetl-Optimized for 20 years, but that Scott Alexander has inspired me to make text.

My whole worldview starts from the observation that science works. Not perfectly, of course—working in academic science for nearly 30 years, I’ve had a close-up view of the flaws—but the motor runs. On a planet full of pointy-haired bosses and imposters and frauds, science nevertheless took us in a few centuries from wretchedness and superstition to walking on the moon and knowing the age of the universe and the code of life.

This is the point where people always say: that’s all well and good, but you can’t derive ought from is, and science, for all its undoubted successes, tells us nothing about what to value or how to live our lives.



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