Tag: economics

Germany Bankrupts Itself

Apparently all those migrants did not, in fact, turn out to be good for the economy:

Germany has recorded its highest number of corporate bankruptcies in more than two decades, with nearly 5,000 companies filing for insolvency in the second quarter of 2026, according to the Halle Institute for Economic Research (IWH).

A total of 4,996 companies filed for insolvency in April-June, up 9% from the previous quarter and marking the highest second-quarter figure since 2005, the institute said in a report published on Thursday.

The increase spanned almost all major sectors, including construction, real estate, trade, hospitality, and services, affecting around 45,500 jobs.

In June alone, 1,702 companies filed for insolvency, 20% more than a year earlier and 80% above the pre-pandemic average for the month.

The fundamental problem with all the Smart Boy reasoning about things is that they always try to reduce everything to a simple binary with no tangents or consequences. Even now, as services are overextended, housing prices are shooting through the roof, and unemployment is rising, you will hear the government policy-makers mindlessly intoning “we need more immigrants for the labor force”. And less-intellectually challenged ones will try to add a caveat about only “high-skill labor” or some other such nonsense.

But the reality is, has always been, and will always be that a high-skill foreign laborer comes attached with a low-skill wife, several useless children, three criminal cousins and two sets of useless parents. Except when the high-skill foreign laborer is coming from a similarly-advanced and compatible culture, the net impact is usually very negative, as we’re now seeing in Germany, the UK, the United States, and even Japan.

When Korean immigration into Japan continues to be an observable problem 70 years after the fact, there is no chance that the various third-world immigrations into the European world are going to end well for anyone. They never should have been permitted in the first place, and the ultimate responsibility for the inevitable outcome rests with those who permitted and encouraged it.

UPDATE: The current government isn’t going to fix the problem. Especially when all they have to do is rebuild the Russian pipeline and start buying Russian natural gas again.

The German government will introduce an energy levy to fund the construction of a national gas reserve. German industry, which is already struggling with soaring energy costs, will bear the brunt of the levy.

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The Consequences Cometh

  • Cuba has been hit by another island-wide blackout, leaving roughly 10 million people without power. Officials say the cause is under investigation as the country’s aging electric grid continues to struggle and fuel reserves run low. It’s the second nationwide blackout this year.
  • She said nothing new is coming in and some tanks are shut down and the rest are running out. I asked how much longer it’ll last for New Jersey, and she said nobody knows. She said nobody at work wants to talk about it at all, its like people can’t face what is coming and are just blocking out reality. She also mentioned that motor oil is gone. She is in the section for giving rebates on past huge taxes on motor oil, but there isn’t any more being bought.
  • The first report has come in claiming 60% of the pumps at Buc-ee’s in Melissa, TX are SHUT OFF and “most Diesel pumps are closed.”
  • A nationwide power outage occurred in Zimbabwe today, Monday 6 July at 1824 hours.

Further evidence that trying to fight Israel’s war with Iran was the dumbest idea of the Trump administration since the decision to renege on the promise to release the Epstein files.

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Why Chicago Lost the Bears

I very much doubt that Chicago is going to be the last minority-dominant Blue city to lose its professional sports franchise. This is nominally about economics, but it’s actually about immigration and demographics.

Chicago lost the Bears this week. A team that’s been in the city since 1921.

They didn’t lose them to a bigger market or a better deal. The Bears decided they’d rather be a tenant in Indiana than deal with Illinois for one more year. Think about how badly you have to run a place for that to be the smart move. They lost them for two reasons. The people running Illinois would rather villainize a builder than keep one. And they’re bad at their jobs.

In 2021 the Bears spent $197M on the old Arlington Park racetrack. Before they could break ground, Cook County valued the empty lot at $192M (Bears said $60M). They were salivating at the chance to extort a building that didn’t even exist yet. That fight dragged on for years.

The Bears were ready to put $2B into the stadium. All they wanted was a promise the county wouldn’t reassess them into oblivion, plus $855M for infrastructure everyone uses. Roads, transit, utilities. A $3B project, two thirds of it private money pouring into Illinois. Springfield had since 2021 to get this done. They dragged it to the final night of session, passed it through the Senate at 3:39AM, and the House went home without voting. So now it’s all gone.

The funniest part? This started because Cook County tried to grab the tax early. They knew a built stadium would pay $53M a year. Now they get under $4M on a vacant lot. No jobs, no buildout, no new anything. Congrats on fighting for scraps and losing the whole prize.

Pritzker: they’re “an $8.5B valued business” that doesn’t need propping up. But be smart for a second. Almost every NFL city throws in public money for a stadium. Not charity. The return is real. Tourism, hotels, restaurants, jobs, game days, property tax on a huge development. The math works. Indiana did the math. While Illinois sat on it for years, Indiana passed a bill in months, put up $1B, and took the team. And the Bears took a worse deal to get there. In Illinois they were going to own their stadium. In Indiana they rent it from the state. A team that wanted to build its own home gave up ownership just to escape Chicago.

Nobody won but Indiana. The Bears lost their stadium. Illinois lost the team, the $2B, and $53M a year in taxes.

Pritzker after they left: “I wasn’t willing to give up billions of dollars of taxpayer money to give it to a billionaire-owned family or team.” There it is. “Billionaire-owned.” That’s how Democrats talk about any business right before they run it out of town. Call them a billionaire, act like you’re saving working families, take a victory lap while the tax base drives across the state line. Meanwhile they’re running the whole state into the ground. And you already know how this ends. You’re living in it. Pensions are $143B in the hole, worst in the country and not close. You pay $6,285 a year in property taxes, double the $2,969 national average, for a city that’s $1.15B in the red. The mayor called its finances “the point of no return.”

When you run things this badly, you sell what’s left.

They leased the parking meters for 75 years to Morgan Stanley and a sovereign wealth fund in Abu Dhabi. Took $1.15B and burned through it in two years. The investors already made it all back, with 58 years left to collect. Sold the Skyway. Sold the downtown garages. Every asset that made money, gone for one check. But a fixed property tax rate for a team that’s been here 106 years? That’s “propping up billionaires.”

Companies are leaving. Boeing for Virginia. Caterpillar for Texas. Citadel for Miami. In 2023 alone Illinois lost 56,000 people and $6B in income to other states. The ones who left earned a third more than the ones who moved in.

Indiana didn’t outbid anyone. AAA credit, 16 years straight. A $676M surplus. Fourth-lowest debt per person in the country. They just weren’t a disaster. Illinois could have collected $53M a year. It chose zero.

Immigrants and minorities are intrinsically parasitical in Western societies. This isn’t to say they can never be beneficial in certain circumstances, or that they are inevitably negative, but they can never be, in the favored language of the AI systems, “load-bearing”.

There are no societal systems as such. The Chinese implement communism very, very differently than Russian, or German, or South American communists. So changing the demographics necessarily means changing the societal structure and the society itself. Different peoples have different priorities, as they should and as they always will; no one would ever mistake the way Real Madrid and FC Barcelona are run for an NFL operation.

NIL is going to compound this effect. Already universities in California are suffering badly in the recruiting process because no 18-year-old athlete wants to throw away 13.3 percent of his income. The Big 10 schools are presently riding high because their massive alumni bases allow them bigger budgets, but it won’t be long before the state income taxes begin to penalize them as well.

Chicago may be the first to lose its professional sports team over taxes, but it will not be the last.

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The AI Layoff Trap

Neither this paper nor the underlying idea are particularly new, but since non-economists are now starting to discuss it, I should probably take a look at it:

Two economists just published a mathematical proof that AI will destroy the economy.

Not might. Not could. Will — if nothing changes.

The paper is called “The AI Layoff Trap.” Published March 2, 2026. Wharton School, University of Pennsylvania. Boston University. Peer reviewed. Mathematically modeled.The conclusion is one sentence.

“At the limit, firms automate their way to boundless productivity and zero demand.”

An economy that produces everything. And sells it to nobody. Here is how you get there. A company fires 500 workers and replaces them with AI. A competitor fires 700 to keep up. Another fires 1,000. Every company is behaving rationally. Every company is following the incentives correctly. And every company is building a trap for itself.

Because the workers who were fired were also customers. When they lose their jobs faster than the economy can absorb them, they stop spending. Consumer demand falls. Companies respond by cutting costs — which means automating more workers — which means less spending — which means more falling demand — which means more automation.

The loop has no natural exit. The researchers tested every proposed solution. Universal basic income. Capital income taxes. Worker equity participation. Upskilling programs. Corporate coordination agreements. Every single one failed in the model. The only intervention that worked: a Pigouvian automation tax — a per-task levy charged every time a company replaces a human with AI, forcing them to price in the demand they are destroying before they pull the trigger.

No government has implemented this. No major economy is seriously discussing it. Meanwhile the numbers are already tracking the curve. 100,000 tech workers laid off in 2025. 92,000 more in the first months of 2026. Jack Dorsey fired half of Block’s workforce and said publicly: “Within the next year, the majority of companies will reach the same conclusion.” Nobody is doing anything wrong. Companies are following their incentives perfectly. That is exactly the problem.

I don’t have an opinion yet, since I haven’t read the paper, but I expect that I will find two things:

  1. Overrating the productivity of AI. I’m already using older AI models because they work better than the newer ones.
  2. An erroneous demand model.

But that may not be the case. Regardless, I will read it, Red Team it, and share my conclusions when they are ready.

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War and the Failure of Economics

Steve Keen points out how the economic models that Western military strategists are using are outdated and incorrect Neoclassical economic models that are going to make the ramifications of the war in the Middle East considerably worse regardless of the outcome for the US military:

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. I am looking forward to the howls from mainstream “Neoclassical” economists when they hear that I blame most of those delusions on them.

Neoclassical economics has always lulled us into a false sense of security by its asinine assumption that most industries are “competitive”, as they define competition. A “competitive” industry, according to Neoclassical economics, is one in which there are a multitude of producers producing a homogeneous product. This definition is doubly delusional: most industries are dominated by a small number of very large firms; and all products are highly differentiated.

In the Neoclassical world, taking out a few producers would have only a trivial impact on total production, because there are thousands—millions!—of producers, and every producer’s output is a perfect substitute for all other producers’ output. In the real world, most industries are dominated by a handful of large firms, and one firm’s output cannot be easily substituted for another.

We are now finding this out the hard way in the TEN War: Venezuelan oil cannot replace oil from the Persian Gulf, and the key facilities which have been damaged—such as Qatar’s LNG processing plants—can only be repaired by a handful of companies.

Worse, those repairs will take years, whereas the canonical “supply and demand diagram” of Neoclassical economists completely ignores time. In the Neoclassical world, if you want to produce higher output, just increase the price and, hey presto, you move up the supply curve and produce a higher quantity.

In the real world, if you are 25 percent below the desired level of output of LNG—as the world is now, with not only the wartime destruction Qatar’s plants, but also the impact of tropical cyclone Narelle on Australia’s LNG plants—then it will take several years to move up that “supply curve”.

It’s insane to go into what is an industrial war of attrition with knowingly faulty strategic models, because it guarantees that no matter what decisions you are making, they are going to be suboptimal at best, with real potential for catastrophe.

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The Bubble is Popping

ITEM: The American economy right now is running on a single, dangerously powerful engine — artificial intelligence. The latest macroeconomic data reveals a reality that should make investors deeply uncomfortable. While GDP figures look respectable on the surface, they mask a severe and spreading weakness underneath. The expansion of AI has been responsible for roughly half of total US GDP growth this year. That alone is staggering, but it becomes genuinely alarming when you strip out the frantic spending on data centers, information processing equipment, and software tied directly to the AI boom. Non-residential capital investment that has nothing to do with AI has contracted by about 3% over the past year.

ITEM: Uber’s operations chief, Andrew Macdonald, said it was becoming harder to justify AI costs within the company. He said that, based on talks with Uber’s senior engineering leaders, he realized higher token usage did not translate into a proportional increase in useful consumer features.

ITEM: Duolingo walked back its decision to include AI usage in performance reviews.

This is why I think many, if not most of the planned data centers will never be built. The massive investment into AI is the only thing presently propping up the US economy besides military spending, and the corpocracy’s demand for it has already peaked.

Now, I personally find AI to be incredibly useful and productivity-enhancing. But when I look at how the vast majority of the people I know are using it, to the extent that they’re using it at all, it’s little more than a search engine and a toy. It’s not the basis for a central economic engine upon which the stock markets have gambled.

Which is no doubt why the AI companies are beginning to alter the deal in preparation for a post-Bubble landscape.

On May 20, Meta laid off approximately 8,000 employees, roughly 10 percent of its global workforce, with notifications beginning at 4 AM Singapore time and rolling westward through Europe and the Americas. The company simultaneously eliminated 6,000 open positions and reassigned another 7,000 employees into AI-focused divisions. These cuts arrived during Meta’s most profitable quarter on record: $26.8 billion in net income on $56.3 billion in revenue for Q1 2026, a 33 percent increase from the year before.

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Replacement Theory in Britain

Remember when they said a) mass immigration was good for the economy and b) without immigrants there wouldn’t be enough workers?

Mass immigration is directly fuelling the crisis for young people trying to find work, research reveals. A staggering 27 migrants from outside the EU aged under 25 are hired for every British youngster, according to the analysis.

And while the young British workforce has grown by less than 1 per cent since 2020, the number of non-EU youth on the UK payroll has increased by 355 per cent in that time, the research from The Centre for Social Justice (CSJ) found.

Reform UK’s home affairs spokesman Zia Yusuf said last night that British workers are ‘being pushed to the back of the queue while mass immigration continues’. He added: ‘Young Brits should be first in line for jobs, training and opportunities in their own country, not forced to compete against record levels of imported labour.’

The CSJ think-tank’s research shows how young migrants are taking up roles at a much faster rate to young Britons, with them snapping up three times as many jobs as young Britons.

Between 2024 and 2025, the number of non-EU under-25s on payrolls increased by 33,200, while the number of UK-nationals of the same age fell by 32,200.

This is despite almost one million 16- to 24-year-olds in the UK currently not currently in education, employment or training (NEET).

And the research shows that migrants are mostly taking entry-level positions despite Alan Milburn saying today that the first rung of the career ladder is ‘simply out of reach’ for young Britons after he was commissioned by the Government to review soaring levels of youth unemployment in Britain.

The fact that the man speaking for the British youth is named “Zia Yusuf” is not a confidence-inspiring sign that Reform UK is the answer, though.

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Rethinking University

Now even women are beginning to realize that a college degree is a terrible investment of time and money that accomplishes little more than put a young person into lifelong debt. And this is in the UK, where the degrees are less expensive and the debt can be eliminated after 30 years.

I was 18, full of hope and expectation, with three years ahead of me studying English Literature and the authors I loved, from Chaucer and Shakespeare to Virginia Woolf.Seven years on, though, and life looks very different.
Yes, I had a great time. I read a lot of books, made lifelong friends and played masses of sport. But was any of it truly worth it? Financially, professionally, socially and even in terms of ‘real’ education – would I have been better off turning around, dumping my gown on the floor of my halls, heading back down the M1 and buckling down to a proper job?
Let’s take the money first. By the time I’d finished my undergraduate degree in 2022 – followed by a one-year Masters in English Literature at Bristol University then a journalism qualification – I’d borrowed nearly £60,000, despite doing part-time jobs throughout.
Two years on from finishing my further education, and now that I’m earning a fairly typical graduate salary, thanks to the appalling interest rate my student loan balance stands at £76,227.49. In the past five months, I’ve contributed £335 towards the loan, yet the total amount has risen by £627.49.
I’m essentially paying a ‘graduate tax’ of nine per cent of my gross income for the course of my working life. I may never pay the loan back – 44 per cent of graduates won’t, according to the Government’s own figures – and it’s only scant comfort that the debt will be wiped after 30 years.
Durham is generally seen as one of Britain’s better universities, perhaps second only to Oxbridge. So if I feel like this, what about the 2.86 million other students currently enrolled in other universities across the country?

Only ten percent of men used to attend university back in the time when a university degree actually meant something, and that was largely because only the true cognitive elite attended. There is absolutely no reason for most men and virtually all women to pursue a university degree, as doing so virtually guarantees a suboptimal life track compared to not wasting 4-5 years out of the workforce, gaining no experience, being ideologically indoctrinated by wicked retards, and ending up saddled with lifelong debt.

UPDATE: Here is a comprehensive return-on-investment calculator for virtually every institution of post-high school learning in the USA, but keep in mind that the return-on-investment doesn’t include debt, so the debt calculations need to be compared to the hypothetical ROI.

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Who’s Locking Out Who?

The EU attempting to sanction China tends to remind one of Rorshach. They’re not locking China out of the global economy, they’re locking themselves out of it.

The European Union has taken yet another step in its long-running confrontation with Russia. But what now stands out is not only the scale – it is the restless, almost reflexive expansion of sanctions as a default instrument of policy. In April, EU authorities unveiled their 20th round of sanctions targeting Russia and Belarus, while pointedly extending their reach toward China.

What was once framed as a targeted response now resembles a sanctions regime without clear geographic or strategic limits. By including 56 designations tied to Russia’s military-industrial complex – 17 of them in China, the United Arab Emirates, Belarus, and Central Asia – the EU has effectively dissolved the boundaries of its own confrontation. Another 60 entities now face tightened export controls tied to alleged contributions to Russia’s defense sector.

For the first time, even a Chinese state-owned entity has been targeted by anti-Belarusian sanctions. In Brussels, this is justified through the language of “dual-use” goods. But outside Europe, the perception is of a growing tendency toward economic coercion that stretches legal authority across borders, fueled by an escalating appetite for pressure.

China’s response was swift: officials condemned what they described as “long-arm jurisdiction,” rejecting the EU’s attempt to discipline Chinese firms operating far beyond European territory. More importantly, Beijing read the move as a signal of the EU’s shifting posture toward China itself. Within a day, China placed seven European entities on its control list over arms sales to Taiwan, imposing restrictions that mirror the EU’s own extraterritorial reach. These measures prohibit the transfer of Chinese goods to the targeted firms, extending the ripple effects well beyond those directly sanctioned.

These EU leaders don’t seem to understand that they don’t really matter anymore. They can preen and posture all they like, but there is nothing that Europe has that China needs. It’s understandable if the US politicians don’t grasp that they’re no longer the center of global power, since the lessons of the recent debacle in the Middle East are still being learned.

But all the nations of Europe can’t even defend themselves against invasion from the south and east; their ability to do anything at all about China is nonexistent. They can’t even do much about Russia except hold their own breath, refuse to buy Russian energy, and kill their own economies.

It does seem that those whom the gods would destroy, they first make mad.

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Two Can Play That Game

China will seize property of corporations that respect US sanctions:

On April 7 and 13, 2026, China’s State Council enacted two new regulations, [Decree No. 834 (Supply Chain Security)] and [Decree No. 835 (Countering Foreign Improper Extraterritorial Jurisdiction)], allowing the seizure of assets from foreign entities deemed to violate China’s anti-sanctions laws or disrupt industrial supply chains.

These regulations, effective immediately, allow for freezing assets, restricting transactions, and visa bans, targeting companies that comply with foreign sanctions against China.

Key Aspects of the New Regulations

Regulations on Countering Foreign Improper Extraterritorial Jurisdiction (Decree No. 835): Focuses on preventing foreign states’ sanctions from being enforced on Chinese entities and allows for lawsuits against those enforcing such measures.

Regulations on the Security of Industrial and Supply Chains (Decree No. 834): Targets “malicious entities” that disrupt Chinese supply chains through unfair restrictions or, for example, complying with US-led, or similar, “de-risking” efforts.

Targeted Measures: Authorities can seize or freeze assets located in China, restrict transactions with Chinese partners, and ban entry to individuals connected to the targeted foreign entities.

Malicious Entity List: A, created list will identify foreign organizations or individuals that act in ways that are deemed harmful to Chinese sovereignty or security.

Context: These measures expand on the 2021 Anti-Foreign Sanctions Law (AFSL), providing a legal framework for retaliation against foreign governments and firms.

These rules increase risk for multinational corporations, particularly those in high-tech sectors, as compliance with foreign sanctions may directly violate Chinese law.

And so the Great Bifurcation continues. Now we get to find out who the real economic big dog is.

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