Tag: economics

Foreign Affairs Throws in the Towel

Clown World is beginning to grasp that the US military can’t even defeat a second-rate power anymore.

For 47 years, the Islamic Republic has bedeviled U.S. presidents. The 1979 Iran hostage crisis helped doom Jimmy Carter’s reelection bid. The Iran-contra scandal in the mid-1980s badly tarnished Ronald Reagan’s foreign policy record. And Barack Obama’s 2015 nuclear deal with Iran, the Joint Comprehensive Plan of Action (JCPOA), led to an unprecedented situation in which the U.S. Congress invited a foreign leader, Israeli Prime Minister Benjamin Netanyahu, to Washington to argue against it.

In February, when he launched his war against Iran, President Donald Trump declared that he intended to break this embarrassing pattern once and for all. By crushing Iran militarily and effecting regime change, he boasted that whereas other presidents had only talked about the Iranian threat, he was taking decisive action to end it. But six months later, Trump has become yet another U.S. president facing a dangerous humiliation related to Iran; the fallout from his excursion threatens his party’s prospects in the midterm elections. Now, perhaps in desperation, Trump is attempting to squeeze an economic noose around Tehran. But as it is constructed, this economic-pressure operation poses a greater threat to U.S. credibility than it does to Iran’s economy.

The irony of Trump’s failed war on Iran—and his stop-start negotiations to try to end it—is that it has so severely weakened Washington’s ability to exert pressure on Tehran that no future administration will ever be able to revert to the traditional U.S. playbook. But that could also be the only upside of a war that has already exacted a heavy toll on U.S. munitions and the global economy. The war could—and should—force a broader reckoning with 47 years of failed strategy and change Washington’s approach for good.

The combination of strategic 5GW and the ability of Iran to control the Strait of Hormuz has nullified both the USA’s military and financial power. This, combined with the fact that China now surpassed US economic and industrial might, and Russia now exceeds the USA’s ability to project power into Europe, means that the post-WWII era is officially over. What comes next remains to be seen, but Americans should look to post-WWII Britain to better understand what their domestic future likely holds.

And the sooner Trump, or whoever is pulling the short, fake Trump’s strings, understands that continued conflict will only make things worse, the better. The financial system already looks as if it is on the verge of breaking this fall; October could be very ugly beyond just the financial markets. Getting the oil flowing and getting gasoline and diesel prices down will at least help somewhat cushion the economic blow.

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The China That Can Say No

China is the first Iranian trading partner, but will not be the only one, to reject the USA’s desperate attempt to win on the economic front what it lost on both the military and the economic fronts:

Islamic Republic of Iran Broadcasting: Donald Trump has threatened to wage a full-fledged economic war on Iran. Many say the economic threat is aimed at making up for the failure of the war, in the military domain, that the U.S. and Israel waged against Iran. What’s your take on that?

Lin Jian: Sanctions and pressure tactics are not the solution. China calls on parties to act responsibly and stick to the political and diplomatic approach. 

Islamic Republic of Iran Broadcasting: Iran has endured years of sanctions imposed by the U.S. The Islamic Republic has either managed to bypass or find alternatives. And now it is said that Trump has no tangible card to enforce what he claims as “toughest sanctions.” What’s your viewpoint?

Lin Jian: China believes that military means, sanctions and pressure tactics are not the solution. On the contrary, they will only lead to escalation that serves no one’s interests. We call for efforts to solve disputes through dialogue and negotiation.

AFP: A follow-up on Iran, U.S. Treasury Secretary Scott Bessent urged China to join Washington in putting strong economic pressure on Iran. This was in an interview yesterday. Bessent noted that China has historically imported much of its energy from the Gulf. Does the foreign ministry have a response to these comments by Bessent?

Lin Jian: I answered a similar question yesterday. Let me reiterate, China opposes illicit unilateral sanctions that lack basis in international law and UN Security Council mandate. We call on parties to act responsibly and stick to the political and diplomatic approach.

In other words, China will continue to ignore US demands and it will continue to support its ally and trading partner, Iran.

In not entirely unrelated news, I was rather impressed with the geopolitical analysis of US-China relations on the third episode of the fourth season of Lioness. I also found it amusing how assiduously the show avoided making any reference to Israel whatsoever in its discussion of intelligence operations in the United States.

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Sound and Fury Signifying Desperation

Short Fake Trump jacks up the rhetoric again:

No one has given the Islamic Republic of Iran a greater opportunity to make a Deal than me. TRAGICALLY, for them, they hâve failed to take it. Therefore, today, I am announcing the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY! This will be Economie Warfare and Isolation on an unprecedented scale. Their navy is gone, their air force is destroyed, their military factories are now rubble, their currency is worthless, and their country is hanging by a thread. Today, I am also announcing that ANY country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face TREMENDOUS Economie Conséquences. Oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies — It ail needs to stop NOW. You know who you are. This will be an ECONOMIC D-DAY, and we need ail of our Allies to stand with the United States of America to isolate, and defeat, the Iran threat. These maniacs are on the ropes, and these HISTORIC MEASURES will cripple them and their ability to Project terror worldwide. IRAN WILL NEVER HAVE A NUCLEAR WEAPON. THANK YOU FOR YOUR ATTENTION TO THIS MATTER.

So after demonstrating the inability of the US military to the world, now he’s going to demonstrate the intrinsic weakness of the US financial system. All this accomplishes is to ensure that BRICS intensifies its process of replacing the US dollar and further weakening the economic influence of the USA.

Doubling down is not a strategy born of strength and success, but weakness and failure. This sounds like projection combined with pure desperation devoid of ideas.

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A Negative Indicator

Trucking companies are starting to go under.

Ten freight and freight-dependent businesses filed for Chapter 11 bankruptcy in the same two-week window. The most alarming is Eagle Logistics, a large carrier with 151 trucks and over 240 drivers, which operated a dedicated U.S. Postal Service route. Eagle listed assets of less than $50,000 and liabilities of up to $10 million. That’s a catastrophic insolvency. Also on the list are intermodal drayage carriers, livestock haulers, and warehousing providers. The crisis is national: California, Michigan, Wisconsin, New Jersey—the map of distress is spreading.

These bankruptcies tell us that companies can no longer pass on the cost of fuel to their customers, and they can no longer absorb the losses themselves. They are simply shutting their doors.

It’s always a concern when the economic pipelines start seizing up. Playing more financial games isn’t going to prop the faltering real economy up much longer.

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The Aerial Blockade of Odessa

I’ve always thought Odessa is Russia’s primary objective. And now they’re using 5GW to enforce an aerial blockade of Ukraine’s most important ports, including Odessa:

I just returned from Odesa, where an unprecedented Russian aerial offensive has completely blocked Ukrainian ports on the Black Sea, threatening an economic disaster that, at the moment, appears underestimated by international media. In the city, one witnesses paradoxical scenes, with Russian drones and missiles flying over beaches full of swimmers, or being shot down off the coast, in view of thousands of smartphones pointed at the sky.

For about ten days now, Moscow has begun systematically targeting all vessels approaching the port, with no regard for nationality. Now, neither captains nor shipowners dare to approach the three major Ukrainian ports: Odessa, Chornomorsk, and Pivdenny.

For Ukrainian farmers, it risks being a disaster. With exports blocked at the peak of the harvest season, their warehouses are overflowing, and agricultural commodity prices in the country have collapsed. With the sunflower harvest starting in just a few days, the situation risks becoming critical.

After having been targeted by it for decades, Russia and Iran clearly understand how to wage economic war better than the West.

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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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