Tag: economics

Immigration and Economy

It’s been eleven years since Angela Merkel imported about a million young immigrants who were supposed to help the German economy and make up for the failure of Germans to have the children required to sustain the German social welfare system. And the verdict is not a positive one.

German auto giant BMW is planning to slash some 8,000 jobs globally by the end of 2027, according to several news media outlets, including Reuters and Bloomberg. German workers are expected to be particularly affected as the manufacturer is dealing with high production costs in Europe, as well as plunging sales in China, according to the reports.

The automaker employed 87,436 people in Germany as of late 2025, which accounted for more than a half of its global headcount. The company has already been making gradual reductions, with a reported decrease of 2.3% compared to 2024, according to Bloomberg.

It comes just a day after another German carmaker, Porsche, announced plans to eliminate another 5,000 jobs by 2035, bringing its total planned reduction to around 9,400 positions. Its parent company, Volkswagen, is considering slashing up to 100,000 jobs amid a protracted industrial slump caused by high energy prices. The Federation of German Industries (BDI) warned last week that the nation’s industrial sector was losing 15,000 jobs every month in what it described as a “critical” situation.

The “immigration is good for the economy” lie cannot be hammered hard enough. It was always false, but it was just barely possible to appeal to the abstract theory in the absence of any conclusive evidence refuting it. But, as with Darwin and DNA, the evidence is now available, and it conclusively and comprehensibly refutes the Post WWII-era justification.

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Immigration Economics

In which Germany demonstrates, again, that mass immigration is not, and has never been, actually good for the economy:

Friedrich Merz’s desperate attempt to appear tough on migration took another blow this week, after it was revealed that close to half the taxpayer cash spent on the Bürgergeld (citizens’ allowance) continues to go to individuals without German citizenship. Figures show that the Federal Employment Agency handed out almost €47 billion in benefits in 2025, and that 46.6% of this went to foreigners.

Right-wing news site NIUS on Wednesday reported that “the massive influx [of migrants] from non-European countries”—especially since 2015—“is increasingly pushing Germany’s social welfare system to its limits.” That is despite German Vice-Chancellor Lars Klingbeil (SPD) insisting last month that “the migration of recent years has significantly stabilised the German social security system—even if some give the impression that the opposite is true.”

Payments cover basic income support, as well as housing and heating costs.

The devil, as always, is revealed in the contradiction between the theory and the subsequent numbers. The idea that immigration boosts the economy is trivially true because it is a tautology dependent upon a definition of the economy as something measured by Gross Domestic Product.

C + I + G = GDP.

So, if you allow 10 immigrants and the government gives them money to spend, both C (consumer spending) and G (government spending) automatically go up. It’s financed by increasing the debt. The economy “grows” and the immigration is “good for the economy”. This is true whether there is one immigrant or one billion; if economists actually believed their own nonsense, then they would advocate for encouraging the entirety of India to immigrate.

And yes, it’s just possible that Canadian economists are actually that dumb, which would explain a lot about the current state of Canada.

The problem is that because immigrants primarily consume and do not produce anything except crime – the service industries in which the employed minority predominantly work is, by definition, not productive – they observably, inevitably, and structurally weaken the economy. As the sclerotic economies of all the countries that immigration has theoretically enhanced are now beginning to show.

All that mass immigration has really accomplished in economic terms is provide new debtors, thereby allowing the banks to remain pseudo-solvent for an additional decade or two. But not only has it not solved any problems, it has significantly exacerbated the existing ones.

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Guns or Gas?

Larry Johnson thinks he’s figured out why the President and Pentagon called off this weekend’s expected attacks on Iran:

The New York Times published a piece by Eric Schmitt and Jonathan Swan that offers one explanation for Trump’s latest TACO. They write:

President Trump has set aside, at least for now, plans to sharply escalate the American military assault against Iran, with particular concern that intensifying the war could dangerously drain the Pentagon’s already diminished stockpile of Patriot antimissile interceptors and other air defense munitions in the Middle East.

The threat to interceptor stockpiles is one of many considerations that has made a return to major combat operations a hugely risky endeavor, administration officials say. Mr. Trump and his top aides are also uneasy about the prospect of a widening war in the Middle East, the alienation of key Gulf allies who are vulnerable to Iranian attack, a global economic crunch, and growing energy and refugee crises.

But there may be another consideration — one that does not exclude the reasons offered by the NY Times reporters — that involves the US fuel supplies. An economic brief prepared by Karl Miller investigates how the US military’s covert fuel procurement and export operations are depleting the nation’s diesel and jet fuel reserves, particularly during a period when domestic stocks are already critically low. The report details that from May to July, nearly 161 million barrels of distillate and jet fuel were exported, with the East Coast’s buffer falling to less than half its pre-pandemic norm. Much of this fuel is routed through opaque channels, such as the Rotterdam transshipment hub, where the final military or foreign allocation is not publicly reconciled, leaving the American economy exposed to shortage risks while military and foreign operations receive priority access.

A central finding is that the US government operates a parallel, largely unauditable military allocation system that siphons fuel from the civilian market. Public data merges commercial and military fuel categories, and certain military shipments are exempt from standard export reporting, making it impossible to track the true end-use of exported fuel. The report highlights that US taxpayers are subsidizing foreign military fuel needs, notably for Israel, through both direct and likely indirect channels, while the government does not disclose the full extent or funding split of these deliveries. Meanwhile, critical sectors like trucking, agriculture, and civil aviation are left with a diminished safety margin and increased disruption risk.

Miller concludes that the crisis is not due to a collapse in refinery output or a fabricated inventory, but rather a combination of structurally low inventories, high ongoing exports, and fragmented public reporting that obscures the military’s draw on national fuel supplies.

Americans are already angry about being forced to go to war again for Israel. And I suspect that even the great champions of antisemitism recognize that if they are deprived of their ability to drive as the economy gets further hammered by this insane, unnecessary, and ill-fated war, no amount of rhetoric, propaganda, and legal pressure is going to keep a lid on all that irrational, totally unprovoked hate.

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Escalation in the Red Sea

The third front in the War of the Straits is heating up again:

After the Encelia attack (Wednesday) and a further strike Friday on the Saudi vessel NCC MASA (minor hull damage, continued to destination per SPA), the Saudi-led coalition struck Houthi-held Hodeidah late Friday July 24. Al-Maliki framed it as a “proportionate military response against legitimate military targets” — sites used to threaten commercial shipping — and pointedly insisted the port itself wasn’t hit and remains open. The Houthis see it differently: Al Masirah says the strikes hit state telecommunications facilities in Hodeidah city and Kamaran Island (one woman injured there), with explosions reported at the port by Reuters. The Houthi Foreign Ministry warned Riyadh has made “escalation for escalation” the defining feature of the coming phase and that the strike “will prove costly.”

And sure enough, within hours, the Houthis launched 5 ballistic missiles launched at the ARAMCO oil terminal at Jazan Port, Saudi Arabia. The Saudi Aramco facilities in Jazan (also spelled Jizan) represent one of the company’s most ambitious and technologically advanced downstream projects — a fully integrated refinery, petrochemical complex, and power generation hub located in the far southwest of the Kingdom, on the Red Sea coast. The refinery is a full-conversion refinery, meaning it can process heavy crude into high-value light products rather than simply separating crude into fractions. Jazan is the largest gasification-based power facility in the world.

The Jazan complex is not merely a refinery — it is a fully integrated energy ecosystem that converts crude oil into refined products, petrochemicals, electricity, hydrogen, and industrial metals, all while minimizing waste and emissions. It represents Saudi Aramco’s vision of a smarter, lower-carbon downstream future and serves as the economic anchor for one of the Kingdom’s most ambitious regional development initiatives. In other words, the Houthis hit an extremely important Saudi Arabian energy asset.

The ball is now in the Saudi court. Will they escalate and attack the port facilities at Hodeidah or will they decide to call a halt to military operations and seek a diplomatic resolution? The smart move will be to go the diplomatic route. If they choose to strike more targets in Houthi-held territory then the Houthis’ next logical target would be the oil terminals at Yanbu.

Rather like Hitler in the Berlin bunker, Clown World is so desperate to keep its claws on the controls that it is not only risking its own fate, but the entire economic fate of the West on wars that are objectively unwinnable. And it appears that they will be attempting their own run for Argentina before they throw in the towel.

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Never Give Up Cash

The problems of paper money pale in comparison with those of a cashless economy.

Credit cards could not be used at convenience stores and other merchants across Japan for hours on Thursday following a system outage that also affected some transportation companies’ credit card-linked electronic money apps. Major credit card issuer Mitsubishi UFJ Nicos Co. said the trouble began around 8 a.m. when card payments could not be processed at some merchants, while Sumitomo Mitsui Card Co. reported a similar problem.

The card companies said the trouble was caused by an outage in an international credit card brand’s network connecting merchants with card issuers. Sources familiar with the matter said the outage occurred within Visa’s network.

Every nation should go to the maximum extremes, including adopting constitutional measures, to ensure that the banks are never allowed to force the people into using digital payment methods. Just their dependence upon electricity is sufficient to demonstrate the absolute need to avoid a digital payments monopoly.

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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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