Forgive me. I know the stated purpose of this Substack is to cover stories the mainstream media neglects, but sometimes I just need to vent.

Bad things are happening in the world.

In England and Europe, fires have forced hundreds of thousands of people from their homes. Droughts have destroyed crops all across Europe. Recurring heatwaves have killed thousands of people. River levels are so low that river freight travel is being curtailed, and nuclear power plants are being shut down.

In the United States, fires have already burned through seven million acres - larger than the state of Maryland - and the fire season is just getting started. Droughts are causing crops to wither. The Hoover Dam has dropped 180 feet over the past few years, to an all-time low, causing its power output to drop markedly. If the water level in Lake Mead falls a further five feet, eight of the thirteen Hoover Dam turbines will become unusable, and the dam’s power outlet will instantly fall by a further 70 percent. (Then you can say bye-bye any AI data center in the Southwestern United States.)

The extended closure of the Strait of Hormuz has pushed many of the poor countries of the world to the brink of economic disaster. England, Japan and Europe aren’t far behind. With Ukraine and Russia no longer exporting grain through the Black Sea, and El Nino combined with fertilizer shortages expected to reduce crop yields in much of the world, tens of millions of poor people face hunger or outright starvation over the next year.

In a rational world, these crises would have become the top priority of world leaders. Instead UK Prime Minister Andy Burnham ignores what’s happening in his own country, and doubles down into trying to provoke Russia to go to war with Europe. As if Europe didn’t already have enough problems!

And Donald Trump has decided to slowly strangle the Iranians by keeping the Strait of Hormuz closed. Never mind that diesel costs have already gone sky-high, and will feed through to higher costs all across the US economy in months to come. Never mind that American sailors are going hungry of becoming suicidal - he clearly doesn’t care. Never mind that global oil stocks are creeping ever closer to tank bottoms - which will make a global recession inevitable, if it hasn’t already.

Donald clearly has his priorities, and you’re not it. Scuttlebutt has it that White House Press Secretary Karoline Leavitt was ticked off that she got left on Airforce One as a decoy for Iranian missiles, while Trump’s alleged paramour - Natalie Harp - was spirited away in the catering cart with Mr. Trump. Despite her ‘love letter’ to him, I personally find it difficult to believe that anyone would want to have coitus with a beached whale of questionable continence, the aphrodisiac qualities of billions of dollars notwithstanding.) But who knows? Perhaps the correct title for this post should have been “Diddling While Rome Burns.”

I don’t see any of the leaders of the West - not Trump, not Carney, not Burnham, not Merz, not Macron, not Meloni, not Takaichi - being willing to put aside their incessant war-mongering to attend to the pressing needs of their own people.

I keep wondering: how long will it take before ordinary people in the West realize how completely they have been abandoned by their leadership? Why aren’t they hopping mad? Or have we already reached the point of hopeless despair?

PS: New poll numbers suggest despair is rampant:

The majority of Americans hate both parties:

The only good news for Democrats is that people hate Republicans more:

Americans think Democrats are awful on the issue of affordability, but Republicans are even worse:

Most people think the younger generation will have a worse life than their parents:

The slide in optimism for the future is even worse among young people:

What a huge shift in just 25 years!

PPS: Arguably an out-of-control national debt represents a bigger threat to ordinary Americans’ long-term security than Russia, China, or Iran. “It took the US 200 years to reach its first $1 trillion in debt. It took 95 days to add its last.”

An upstairs neighbour is a big Trish Regan fan. He’s convinced that the moment Iran develops a nuke, they will immediately incinerate Tel Aviv or Washington. He’s so utterly convinced of this, he won’t even listen to counterarguments. Now, I knew millions of Americans were that stupid, but it hurts my Canadian pride to think of a fellow Canadian being that brain dead.

Why don’t we play out the scenarios:

1) Iran builds a couple of nukes and immediately bombs Tel Aviv and Haifa. What happens next? Best estimate is that Israel possesses something on the order of 90 nukes, most of which we can guess are kept sea-born on submarines so they cannot be destroyed. Israel immediately fires off all of its nukes, turning every city in Iran into molten slag.

2) Iran nukes Washington. US ICBMs turn all of Iran into molten slag within hours, leaving much of the Middle East radioactively toxic.

Are we to assume that the Government of Iran would act in a way that would end up vaporizing tens of millions of its own citizens in horrible deaths within hours? Demonize the Iranians all you want, they’re not THAT crazy.

We don’t have to fear the Iranians nuking us for the same reason we don’t lose a lot of sleep worrying that the Russians, the Chinese, the Indians, the Pakistanis or the North Koreans will nuke us; It would be suicidal to do so. Hell, if Japan had had nukes, it would have been folly for America to bomb Hiroshima and Nagasaki.

Yes, I know that Donald Trump pretends he is dreadfully concerned that Iran might develop a nuclear bomb. The reality is simply that Iran stands in the way of Israel’s expansionist plans. The nuclear-Iran bogeyman gives Israel’s most craven servant an excuse to “bomb Iran back to the Stone Age.”

Which brings us to the 2026 version of Mutually Assured Destruction.

Donald Trump has threatened repeatedly to bomb bridges, power plants, water desalination plants, and gas and oil refineries all across Iran. He makes those threats, and then, at the last minute, he backs down, as he did again last weekend.

Why he backs down - and then pretends it is for ‘negotiations’ - it quite obvious.

Iran has produced detailed lists of the facilities in the Gulf States and Israel that it will destroy if counterpart facilities in Iran are destroyed; bridges for bridges, desalination plants for desalination plants, refineries for refineries.

Unlike Mr. Trump, Iran does not make idle or inflated threats. And it has a track record of doing what it says it will do.

With its devastating attacks on US bases, Iran has shown that its missiles are both accurate and very hard to stop. Recent Houthi attacks on refineries in Saudi Arabia have underlined just how vulnerable those energy facilities are.

Rather than indulging in massive showy strikes, Iran has fired off its missiles and drones at a steady, controlled pace. While it is possible that Iran is running low on both missiles and drones, it doesn’t seem likely.

If Iran were to match whatever damage it suffers with corresponding damage to the Gulf States and Israel, the results would be truly catastrophic. Take out power plants and desalination plants in the Gulf States and Israel and those countries would become almost uninhabitable. Take out oil facilities across the Gulf and a years-long global depression becomes unavoidable.

Donald Trump is trapped. He is unable to prevent Iran from keeping the Strait of Hormuz closed. Each day the Strait remains closed, the risk of the global economy sliding into recession ratchets a little higher. Try to militarily bludgeon Iran into surrender, and Iran will default to its Mutually Assured Destruction option.

My sense is that Donald Trump is by character unable to accept that level of failure and helplessness. I suspect that eventually he will massively attack Iranian infrastructure on the fingers-crossed hope that Iran doesn’t have many drones or missiles left. If he gets it wrong, he will completely Hoover himself - and the world.

PS: I’m not sure that America even has enough offensive weapons left to massively destroy Iranian infrastructure. I suspect any major attack would require the US to use close-in bombing techniques which would mean a lot more American casualties. Any full-on campaign would leave US weapons stocks so depleted as to leave America extremely vulnerable. All of which must make the US military extremely nervous. Perhaps the US military have also been pushing Mr. T to TACO.

PPS: The picture at the top is Major Kong riding a nuclear bomb down to Mutually Assured Destruction in the movie classic Dr. Strangelove.

The fire sale on Korean stocks I wrote about last week is continuing. The KOSPI is now down 44% from its high a month ago. Yesterday alone, it slid as much as 12.6 percent. We can assume another couple of million Koreans saw their life savings wiped out overnight as their holdings were liquidated in margin calls.

Why is the carnage continuing?

Theory 1: China’s new AI platform Kimi 3 is as good as Western AI at a fraction of the cost. Even better, it’s open source. Not only will most of the world use Chinese AI platforms, but these platforms will almost certainly be built using Chinese-made memory chips. There will be far less need for the Korean-made memory chips that inflated the value of Samsung and SK Hynix stocks.

Theory 2: The Japanese yen is is big trouble. Realistically there is only one way to save the yen: Repatriate the trillions of dollars worth of investments that Japanese pension and insurance companies have made in overseas stocks and bonds.

For decades, interest rates in Japan hovered near zero - so the only way for Japanese investors to make a decent return on investment was to invest overseas. Now, with Japanese long bonds paying 4% interest, those pension and insurance companies can make a decent return with no exchange-rate risks by bringing their investments home.

The Japanese Government is now pressuring all Japanese investors to do so. We can guess the Japanese Government will actively seek out ways to reward Japanese investors who repatriate their investments, and punish those who do not. Big drops today in both Korean and US stocks may signal that Japanese investors have obediently begun to sell off their foreign stock and bond holdings to raise cash to buy Japanese long bonds.

Theory 3: Though Western mainstream media considers is barely worth mentioning, Houthi rebels have struck Saudi refineries in Jazan and Yambu, as well as the huge Aramco refinery. Days later, all three refineries are still on fire.

Quite aside from any long-term damage which might have occurred to Saudi refinery capacity, the Houthi attacks have highlighted how completely vulnerable all the Gulf States’ energy facilities are. Iran could set every one of them ablaze in a single afternoon. For a nation as dependent on Middle Eastern oil as Korea is, that’s a terrifying prospect.

My Pet Theory:

A Korean court has ordered billionaire SK Group Chairman Chey Tae-won to pay his ex-wife more than $640 million in a divorce settlement. (That’s her above.)

Talk about a soap opera. She was the daughter of the former Korean President, who undoubtedly pulled lots of strings to help his son-in law get rich. (Chey Tae-won left his wife of 20 years for a much younger woman who bore him a love-child.)

My theory is that the ex-wife recently received, say, 100 million dollars in SK Hynix stocks as part of the divorce settlement. In my imagination, she asked asked her financial advisor what would happen if she dumped all those stocks in one day. He tells her she could lose as much as ten million dollars. She then asks how much dumping her shares would knock off her ex-husband’s much larger portfolio. When her advisor replies aghast that it could easily cost her ex-husband 100 million dollars, she smiles grimly, and says: “Then sell all my shares, NOW.”

PS: It should be noted that theories 1, 2, and 3 above all have negative implications for North American stocks. It is therefore well within the realm of possibility that the Korean stock market could easily prove to be the canary in the coal mine for stock markets here.

PPS: I am reminded of an old Russian joke. Dmitri is out walking one day and stumbles upon an old lamp. A genie comes out. The genie says: “You can have one wish for absolutely anything you want with one condition.” When Dmitri asks what the one condition is, the genie says: “Your neighbour Ivan will receive twice what you do.” The genie then asks: “What is your wish?” Dmitri immediately replies: “Break my arm.”

Over the past three weeks, three percent of the Korean population lost their life savings. (Not three percent of investors; three percent of the whole population!) That number could rise sharply in weeks to come.

I would urge anyone who has invested in the US stock market, either directly or through their 401K, to watch this video from Andrei Jikh for a very cogent explanation of what happened in Korea, and why US stocks face parallel risks. (For those short of time, I will outline Jikh’s basic argument below.)

Look at the graph above. The South Korean stock market KOSPI went up massively over the twelve months that ended in June.

What happened? Real estate in Korea was too expensive for potential home-buyers to get into the housing market. So 14 million Koreans put their life-savings into the stock market instead. A way to make more money was to borrow between 2 and 5 won for every won of their own money they had invested. (If you borrowed 3 won for every won you invested, every time the market rose by 1%, the value of your holdings rose by 4%.)

This leverage created a flood of new money into the market which pushed stock prices higher and higher. The higher the market went, the more retail investors jumped into the market as leveraged investors.

Look at the chart above. It goes up and up. That’s what happens when a veritable flood of money is chasing a limited number of stocks for sale. The two biggest stocks on the KOSPI - Samsung and SK Hynix - manufactured memory chips in great demand because of the AI build-out. That gave a plausible rationale for those who claimed it wasn’t a classic stock market bubble. (The value of Samsung stocks quintupled; SK Hynix stocks went up by a factor of ten.)

Then, last month, US AI companies started to scale back their purchases of memory chips. The Korean bubble burst:

Leverage works both ways. If you were leveraged with three times as much borrowed money, every time the stock market fell by one percent, you lost four percent of your investment.

When the KOSPI dropped 27% in recent weeks, 1.2 million leveraged investors got margin calls, i.e. their stock holdings were automatically sold off because the money they had invested was largely gone. Brokers were required to sell the stocks before the money that investors had borrowed also disappeared. (At its worst, the KOSPI lost 10% IN A SINGLE DAY!)

Of course, all those forced sales has just put further downward pressure of the KOSPI in a kind of doom loop. At what point the market crash will stop is anyone’s guess. At a minimum, so many investors losing everything will be a gut punch for a Korean economy already reeling because of high energy prices.

Why is this a cautionary tale for US investors? Because South Korea isn’t the only stock market which has been artificially inflated with borrowed money.

This historical chart of US margin debt should be keeping US investors awake at night:

Do you see all of those marked peaks in margin borrowings? Every one previews either a stock market correction or an outright bear market.

US stock market leverage is now at an all-time high. As in Korea, if anything causes the market to fall sharply, forced selling will create a doom loop driving markets lower and lower.

One other question: Do you see anywhere on the above chart where margin debt peaks and stays there for an extended period of time? (That would be represented by a flat top on any of the peaks.) Yes, the mini-peaks shown in 1968 and 1972 saw margin levels remain elevated for a number of months, but every single time there was a BIG increase in margin borrowing, a financial crisis very quickly caused massive deleveraging - either willing or forced. Who wants to bet their life savings that this time will be different?

Donald Trump is maintaining that buoyant US stock markets are a barometer for the health of the US economy. But what if it just evidence of stock market bubbles caused by AI hype and massive amounts of borrowed money?

Chinese AI is now almost as good as American AI at one-fiftieth of the price. Rising bond interest rates are driving mortgage rates higher in a housing market that is already tanking. The Strait of Hormuz remains closed as public and private oil reserves near tank bottoms - and now the Red Sea may be closed too. Any or all of the above could cause the stock market to falter. Once stock markets fall below a certain point, Korean-style forced selling will keep them falling.

The richest 10% of America is responsible for nearly half of all consumer spending in America. Much of what that rich 10% is spending has come from stock market gains. If those stock gains suddenly turn into sharp losses, spending will dry up fast, and recession will quickly follow.

Am I saying that any of this will happen tomorrow? No. A great many investors have gone broke betting that irrational markets could not continue to behave irrationally.

I am saying that what happened in Korea could just as easily happen in the US. It’s probably not a wise time to buy or own stocks on margin, or to buy or own a leveraged ETF.

The trouble with a one-page Memorandum of Understanding is that brevity leaves a great deal unsaid. Clearly there was a yawning chasm between how America interpreted the MOU and what Iran believed had been agreed. Or maybe , as JD Vance intimated, America never intended to keep its side of the bargain; it was just a way to buy some time.

In any case, after 28-days, the ‘ceasefire’ based on the US-Iran Memorandum of Understanding is now well and truly over. War in the Middle East is getting hotter with each passing day.

The first thing that should be noted is that oil flows out of the Strait of Hormuz during the ‘ceasefire’ averaged less than half what was passing through the Strait prior to February 28th. So, however many days away the world was away from going off an “energy cliff” before the MOU was signed, we are now at least two weeks closer to that bleak outcome.

I think we can assume that Iran and the US will again stop almost all traffic passing through the Strait in the days ahead.

Massive releases of global oil reserves have greatly reduced the impact of the closure of the Strait until now. At some point those reserves will run out. Oil market prices have remained surprisingly low throughout the crisis. Diesel prices, on the other hand, have shot way up - up to the point they would normally be if oil cost $140 a barrel. So, perhaps low paper oil prices have lulled us into a false sense of security.

I suspect, if the Strait is closed for another six weeks, that will on its own be enough to cause a severe global recession.

That said, a number of factors could bring us to that endpoint sooner.

Throughout the Hormuz crisis, the UAE has been able to export a couple of million barrels of oil a day through a pipeline to Fujairah port, which has reduced the effect of the Strait’s closure. Yesterday Iran struck two UAE tankers leaving Fujairah. If oil flows out of Fujairah are also halted, it will choke off global oil supplies even further.

The Houthis and the Saudis are now fighting. If the Houthis make a concerted effort to close the Bab El-Mandeb choke point, shutting off all Red Sea Traffic, Saudi oil exports through the Saudi pipeline become problematic. That’s another five million barrels of oil a day that will have difficulty getting out.

Ukraine has had some success damaging Russian oil facilities, with the result that Russia has now stopped exporting diesel and gasoline, and may soon reduce its oil exports. Given that, until now, increased exports from Russia had offset a good chunk of the losses from the Strait of Hormuz closure, stopping those exports will aggravate the effects of Hormuz closing again.

At this point, I have a hard time imagining Iran trusting the United States enough to sign any new agreement which would get the oil flowing again. I see no military way America can re-open the Strait. So the clock is running.

We have to hope that neither America nor Israel attacks Iranian oil infrastructure. If they do, it’s a given that Iran will damage refineries in all the Gulf States. Then the damage to the global economy would be an order of magnitude greater - and last for years.

P.S.: I have focused here on the kinetic risks. I could have written a whole separate post on the financial risks. What passes for prosperity in the United States today is built on the consumption of the richest ten percent of America, which is contingent on the AI and stock market bubbles continuing, the bond market remaining somewhat stable, and real estate prices not collapsing. None of those is guaranteed at the moment.

If we see contagion due to currency crises in Japan, South Korea, Turkey, or all three, the deleveraging that takes place could take a wrecking ball to the global financial architecture well before oil stocks hit zero.

I have a good friend with metastasized prostate cancer. His doctor retired recently and my friend instantly became one of the half million British Columbians without a family doctor. My initial assumption was that the BC medical system would recognize him as a high-need patient and find him a doctor. Not so. Despite his life-threatening cancer, my friend is SOL.

Simultaneously, a Ukrainian MD who isn’t allowed to work as a doctor in BC is working as a supervisor at the group home where my wife works on call. That borders on criminal negligence by the BC healthcare system, as far as I am concerned.

Nova Scotia has addressed this issue. Their PACE program funds foreign doctors through a three-month supervised residency program. Three months of supervision is sufficient time to determine whether an immigrant’s MD’s clinical skills and English are up to scratch. Nova Scotia is making sure that any immigrant to Nova Scotia with an MD gets to work as a doctor if they have demonstrated competence. Lower hospital wait times and fewer Nova Scotians without a family doctor is the result.

Why doesn’t BC have a program like that?

Foreign nurses should have a similar program. Current working conditions for nurses in Canada are so stressful that 40% of nurses under the age of 35 have left the profession.) One in ten Canadians are now waiting over 14 hours in Emergency rooms. There’s a crisis here. Why isn’t the BC Government tapping into the available pool of foreign medical professionals?

The other day, I saw Canada’s Housing Minister saying the Canadian Government did not want housing prices to fall. Which is another way of saying the Carney Government wants home ownership to remain unaffordable for most Canadians. Mark Carney is now talking about bailing out Vancouver Condo developers. The reason condos in Vancouver aren’t selling is because they are way more expensive than most people can afford. Once prices come down far enough, all those condos will sell.

Back in the 1980’s, the Canadian Mortgage and Housing Corporation loaned billions of dollars to housing co-ops. A lot of very affordable - and convivial - housing got built. The Canadian Government eventually got all its money back - with interest! What prevents Mr. Carney from doing that again now?

Victoria is a growing city, which means traffic volumes are growing too. The City of Victoria’s response? Convert hundreds of existing traffic lanes into bike lanes.

Though I ride my bike everywhere, I’m not happy with the result. In a City where many streets were already overcrowded, the City has managed to create horrific traffic jams all over town.

I’m sure there are ideologues at City Hall who think everyone should ride a bicycle. Their smug sense of superiority blinds them to seeing the simple truth that most people are continuing to drive cars.

I’m sure that the bureaucrats implementing the program are convinced it will reduce greenhouse gas emissions. But I can see that traffic congestion means driving anywhere in Victoria takes much longer. There’s stop-and-go traffic everywhere. I’m virtually certain the program will result in increased greenhouse gas emissions. Not to mention the thousands of extra hours Victorians now spend stuck in heavy traffic every day.

I think one of the strongest arguments why a thorough review of Government COVID responses is needed, even at this late date, is because the COVID pandemic was where uppity bureaucrats really came into their own.

If a full evaluation of national COVID pandemic responses were done, the evidence is pretty clear. Sweden’s response to the pandemic was often painted as laissez faire, bordering on negligence. What Swedish bureaucrats did was to give the public detailed information and recommendations, and then left it up to ordinary Swedes to manage their own risks.

It’s not as though Swedes didn’t change their behaviour during the pandemic. But they did so voluntarily on an individual basis, based on their specific risks and needs. With the result that, compared to other countries, Sweden suffered far less economic damage during the pandemic, with less social isolation, less educational and developmental damage in kids, and a lower overall mortality rate. All because Swedish bureaucrats were respectful, unlike the power-mad we-know-better-than-you bullies who ran amok here in North America.

Canada’s private-debt-to-GDP ratio has now reached 216%. What that means is that individual Canadians collectively now owe - in mortgage, credit card card and line-of-credit debt - more than that twice the value of all the goods and services sold in Canada in an entire year. (Please note that this figure does not include the combined debts of Canada’s Federal and Provincial Governments - an additional 110% of GDP!)

For a point of reference, the Japanese economy collapsed in 1990 when Japan’s private-debt-to-GDP ratio stood at 214%, and the US economy collapsed in 2008 when America’s corresponding ratio stood at 175%.

There are two stories here. The first is that whatever mediocre economic growth Canada managed to achieve over the past decade was a false prosperity based on Canadians sliding deeper and deeper into debt.

I have a modest income as a pensioner, but my various credit card providers would quite happily loan me a total of about $35,000. (And this after my turning down various offers to raise my credit limits even higher!) My wife has a somewhat better income as an educational assistant, but a shorter credit history in Canada. I haven’t checked with her recently, but I suspect her credit limits are similar to mine. So our collective credit card limits are somewhere in the range of $70,000.

The two of us could look like we were rich for a number of years if we both gradually maxed out our credit cards - as a great many Canadians have been doing. (Interest rates kept artificially low have encouraged millions of Canadians to spend money they didn’t have!)

House prices in Canada were on an up escalator for many years. A great many Canadians bought houses and condos they couldn’t really afford because it would only get harder to buy the longer they waited. Until a couple of years ago, interest rates on those mortgages were low enough that it softened the pain.

All that said, appearing to be rich and being rich are not the same thing. What’s more, once your credit cards are maxed out - suddenly your ability to live beyond your means is drastically curtailed. That’s what happened in Japan in 1990, and that’s what happening in Canada today. That’s the second story - a false prosperity that is built on increasingly levels of debt eventually hits an end point.

It gets worse. When interest rates rise sharply - as they have done in recent months - Canadians’ minimum monthly credit card payments jump painfully too - so other spending must be cut back.

In Canada, unlike the United States, most mortgages are negotiated with 5-year fixed-rate terms. So millions of Canadians in the next few years will have to renew mortgages based on a 3% interest rate at something closer to 6%. Monthly payments they could only barely cover before, will then rise by 50% or more.

On top of that, forced sales and foreclosures are suddenly making it difficult or impossible for Canadians to sell a house they suddenly can no longer afford. Canada’s real estate escalator is now dropping sharply.

All of this goes a long way towards explaining why Canada saw negative GDP growth over the last quarter of 2025 and the first quarter of 2026 - a technical recession.

Canada is the canary in the coalmine. It’s private-debt-to-GDP level is the highest in the developed world. But other countries are also carrying unsustainable levels of private debt: in particular the US at 140%, Australia at 129%, and China at 198%.

The US stands out because it has unsustainable levels of BOTH public and private debt. Last year, the US Government had a deficit equivalent to 5.8% of GDP, Despite that, real US GDP grew by only 2.1% last year. Take away the money the US Government borrowed and the US economy would have shrunk by 2.7 percent last year. (David Stockman does a great job here in summarizing how unsustainable - and unfixable - the US Government debt situation has become.)

Add the worst oil shock in modern history to the above picture, and it could get really ugly.

PS: The other vulnerability is that almost half of US consumer spending comes from the richest 10% of Americans - often predicated on stock market gains. If the AI bubble pops, or if stock markets were to tank because the Iran War blew up again, the whole US economy would collapse like a house of cards.

Capitalist free markets are very good at delivering products at the lowest possible price. Granted, the lowest possible price is often associated with abysmal wages and minimal environmental standards. But worse than that, free markets have a strong tendency to put too many eggs in too few baskets, which makes them fragile.

The Gulf States can produce oil and gas products very cheaply. Which means an inordinate amount of global energy production has come from the Middle East. Which leaves the whole world vulnerable if those supplies are cut off. Critical shortages of oil, natural gas, diesel and jet fuel are just the beginning.

Sulphuric acid is used in the refining of copper, nickel, cobalt, zinc, rare earths and lithium. It is essential to the production of phosphate fertilizers. Sulphuric acid has literally dozens of key industrial uses.

Sulphur is a pollutant in most crude oil. It needs to be removed before that oil or its byproducts can be burned cleanly. The Middle East refines such massive quantities of crude oil that it produces a great deal of sulphur as an almost-free waste product. Though it is quite possible to mine sulphur directly, it is expensive to do so. Most sulphur mined underground cannot compete on price.

As a result, the Middle East produces an inordinate amount of the world’s sulphur, which is then used to produce an inordinate amount of the world’s sulphuric acid.

The closure of the Strait of Hormuz has kept a massive amount of sulphuric acid off world markets for the past 82 days. Whatever inventories mining and fertilizer companies had, is now gone. Though some sulphuric acid is produced in other places, there’s not enough to meet the demand.

Indonesia can produce nickel cheaper than anywhere else, so free market forces result in Indonesia producing more than 60 percent of the world’s nickel.

Because the Iran War has also locked up substantial Middle East aluminum exports, it has caused prices for aluminum to rise by 12 percent. That makes it more cost-effective for Chinese companies in Indonesia to use the available electrical power to make aluminum rather than nickel. The high cost and limited availability of sulphuric acid for nickel refining creates a further incentive to produce aluminum rather than nickel.

Indonesia reducing nickel production has driven up global nickel prices by 3 percent overnight. Nickel is used in batteries, and for making stainless steel, both of which will now be more expensive to produce.

Hydrogen is an impurity in natural gas. Again, the massive amounts of natural gas produced in the Middle East means massive amounts of almost-free hydrogen. Hydrogen can be used to create ammonia using the Haber-Bosch process, which can then be used to create urea, the most common nitrogen-based fertilizer. Though it is quite possible to create hydrogen through the electrolysis of water, hydrogen made that way is more expensive, with the result that 36 percent of the world’s urea fertilizer is produced in the Middle East.

The Iran War has trapped massive amounts of urea fertilizer stocks in the Middle East. Qatar shutting down its natural gas production has also halted hydrogen and urea fertilizer production since the early days of the war. Once again, having so much of the world’s nitrogen fertilizer sourced from one place creates a fragility in supply chains. Urea prices have risen by more than 50 percent since the closure of the Strait of Hormuz. Farmers worldwide are struggling as a result, and higher food prices are on the way.

I could go on and on - motor oil for your car, hydraulic fluid essential to forklift maintenance, aluminum and plastics for packaging, helium for computer chip production - all are in increasingly short supply since Middle East producers were cut off. All are more expensive if they can be found. Each day the Strait of Hormuz is closed it gets a little bit worse.

I cannot tell you on which day the tipping point will be reached. But every day the Strait of Hormuz is closed, the world is one day closer to a painful economic unravelling. The clock is ticking.

The COVID pandemic, made an order of magnitude worse by panicked governments’ shutdown mania, was a harsh lesson in the fragility of global supply chains in 2020 and 2021.

The war in Ukraine, and more importantly the boomerang sanctions which accompanied that war, created yet more economic stress tied to supply chain fragility, mostly strongly in 2022, but really all the way through to 2026, particularly in Europe.

An unprovoked war of aggression against Iran, brought to you by an American President slavishly serving Israel’s expansionist goals, will create unprecedented levels of chaos and deprivation throughout the remainder of 2026, given the ugly math that each day the Strait of Hormuz has been closed will require three days of recovery before energy markets can return to something approaching normal.

Most analysts are saying that a global recession/depression will be inevitable if the Strait of Hormuz remains closed for another month. Ditto if Trump makes good on his threats to attack Iran again. Either would extend the current economic mayhem well into 2027.

If nothing else, the past six years should convince us that the ‘bargains’ created by long and lopsided supply chains can be very expensive in a less-than-orderly world.

I’m not sure how to build a more resilient system than the one we now have. I am sure, that if don’t figure out how to do so, more pain, chaos and deprivation lies ahead.

PS: Left to its own devices, the free market cares only about profit. Crude oil is now being refined to maximize jet fuel production as the most lucrative petroleum product, which means less gasoline and diesel is being produced. Which is great for globe-trotting vacationers, but not so good for farmers, truck drivers and the poor plebs who have to drive to work. Free markets make better servants than masters.

This is the calm before the storm. A variety of misleading signals have created a false sense of security.

Many pundits will point to buoyant stock markets as evidence the Iran crisis is contained.

Here’s the problem with that. Today’s stock markets are like a self-driving car. Seventy percent of the trades of North American stock markets are now done by computers using algorithms. Those algorithms are no longer concerned with what human traders will do, because humans make up less than one third of all trades. Instead the algorithms are set to respond to what other computers’ algorithms do.

Those other algorithms are set to buy instantly whenever ‘good news’ hits the airwaves. If Donald Trump says that Iran is collapsing and the war will be over tomorrow, the computers’ algorithms cause them to buy immediately. It doesn’t matter if Donald Trump is delusional, or lying through his teeth. What matters is that every stock-trading computer acts based on what it predicts other stock-trading computers will do - and that is to buy every time there’s ‘good news,’ no matter how shaky or suspect that ‘good news’ is. So, the fact that stock markets are near all time highs tells you nothing about the actual state of the economy.

The posted prices for oil are also misleading. If you look at standard oil futures one month out, they don’t too bad - currently $116 a barrel. But if you actually want to buy oil today for delivery as soon as possible, you’re likely paying $140 a barrel or more, which far more accurately reflects the crisis in oil markets.

Oil tankers move slowly around the globe. Until recently, tankers from the Middle East were still arriving with oil, gas, diesel and jet fuel, which created a false normality. That flow has now stopped entirely.

It’s not just oil and LNG shipments which have stopped. Supply chains for everything from aluminum to diesel, jet fuel, ethane, plastics, sulphuric acid, urea, helium and prescription drugs are being seriously disrupted.

Even if the Strait were to open tomorrow, it will take weeks for tankers to arrive with new stocks. Weeks in which shortages will only get worse and worse. Businesses will shut down. Workers will get laid off, or have no way to get to work.

Already we are seeing thousands of flights cancelled. Global tourism - airlines, hotels, resorts, and restaurants - will take a huge hit.

Much of the world’s fertilizer came from the Middle East. Fields are being planted with less or no fertilizer. Significantly smaller crops will result. Food prices across the planet will rise. Millions more will go hungry.

American farmers were already having a hard go of it. As luck would have it, much of America is facing a severe drought this year. Fertilizer costs are way up, as is the cost of diesel to run farm machinery. A lot of farmers will go broke this tear. Some will choose not to plant. Food costs in North America will rise sharply in coming months.

GDP and energy consumption move pretty much in tandem. If global GDP goes up by 5 percent, so does global oil consumption. I suspect the inverse is also true. We’re already at the point where global oil shipments have fallen by almost 5 percent this year. A 5 percent reduction in global GDP this year would be a very serious recession.

Economic slowdowns typically have knock-on effects. Stock markets lose their levitation abilities. Weak banks go under. Bond markets are stressed. Weak currencies get hammered. North American real estate was already in trouble. Ditto for commercial real estate. Ditto for private credit. Unravelling can be contagious, wherever it occurs.

Donald Trump is making a bad situation worse. Trump is sure that he can pressure Iran into surrendering by blockading the Strait of Hormuz.

Trump’s reasoning goes as follows. If the Strait is closed long enough, Iran will run out of places to store its oil. Then Iran would have to shut its wells. Oil wells that have been shut are hard to get going again. Sometimes they never return to full production.

Here’s the thing, though. Iran is able to ship significant amounts of oil by rail to China. The other Gulf States don’t have that option. With the exception of Saudi Arabia, the other Gulf States will all have to shut their wells before Iran does. Which means the longer the Strait is closed, the more long-term oil production across the Middle East will be damaged. If Trump eventually succeeds in damaging Iran’s oil production capacity as well, that will make the reduction in Middle East oil production after the Strait re-opens even more catastrophic.

Every day the Strait of Hormuz remains closed, the greater the price the global economy must eventually bear - not just in terms of the cumulative shortfall in petroleum products not shipped, but because Middle oil production will take months to recover, and may never fully return.

It’s a very dangerous and stupid game you’re playing, Mr Trump. Granted, if you were to attack Iran again, and if Iran were to retaliate by attacking energy infrastructure across the Gulf, that would expand the timeline of economic devastation from months to years. So it’s not the worse possible outcome.

The news today is that Trump is still considering a short, sharp military strike on Iran. I can just see Donald Trump in a couple of months arguing that America is ‘winning’ because the recession in America is less severe than everywhere else, conveniently ignoring the fact that it was his actions which caused the global recession.

If a modern jetliner runs out of fuel at altitude, the pilots can shift to back-up power and glide down smoothly for dozens of miles even as they radio a Mayday to air traffic control. Passengers who are dozing or distracted may not even realize that anything is wrong. Some passengers will try to delude themselves that the sudden eerie silence is not important. Any passenger who is paying attention knows the calm is deceptive, that a hard emergency landing is coming, or worse.

Fasten your seat belts, folks.

Part-time Catholic J.D. Vance tried to upbraid Pope Leo for not understanding Saint Augustine’s concept of a “just war.”

The US Catholic bishops’ chair for doctrine has reminded Vance in a statement that the Pope was well-known for his scholarly study of the writings of Saint Augustine. He suggested Vance should perhaps try reading Saint Augustine, given that the first and foremost criteria for a ‘just war’ is that the war must be defensive, and that unprovoked wars of aggression - like the US attack on Iran - are never “just wars.”

The Bishop actually let Vance off lightly. Under the UN Charter - which the US Government is legally bound to honour after ratifying it in 1945 - an unprovoked war of aggression is actually a war crime.

Jeffrey Sachs has pointed out that much of the Nazi leadership which survived World War Two were hanged after the Nuremburg trials based on being convicted of two crimes: complicity in starting an unprovoked war of aggression, and complicity in genocide. Donald Trump and Bibi Netenyahu are arguably every bit as guilty as those Nazi leaders were.

The laws against war crimes attempt to create some shared limits on the brutality of war. The principle that armies should make strong efforts to avoid casualties among noncombatants - especially women, children, and the elderly - put limits in place which offer a measure of protection for all sides in a war. The principle that all prisoners of war should be treated humanely does the same, as does the principle that schools, places of worship, essential infrastructure and hospitals are off-limits to attack.

If any of these provisions were accidentally transgressed, an acknowledgement of that error, with efforts made to understand how the transgression had occurred, and how it could be prevented in the future, would honour the agreed limits to warfare even in the breach.

We can hope the slaughter of 165 Iranian schoolgirls by the US military was accidental. If the US Government had expressed regret, apologized to the Iranians, and conducted an investigation to determine how an elementary school was struck not once but twice, it would have at least upheld the principle that every effort should be made to avoid casualties among children.

As it is, Donald Trump’s brazen and patently false denial that America was responsible for the attack on the school sent a very different message: that schools are fair game. In bombing schools, hospitals and universities in Iran, the US Government instead sends the message that all are legitimate military targets.

I’m sure that if Iran finds some way to send drones via Mexico to bomb an American school or an American hospital, the US media will be outraged by the “Iranian terrorists.” They will never admit that Iran was only playing by the new norms that America had established through its actions.

Agreed limits to war have one further purpose: they place limits on the level of destruction caused by war. If there’s a principle that schools, hospitals, residential housing, and power and water infrastructure are all off-limits, it places very real and important limits on the level of devastation caused by war for all sides in a conflict.

Donald Trump has threatened to ignore those normal limits to war; to bomb Iran ‘back to the Stone Age.’ The problem is that ignoring those limits will not be a one-way street. We should assume that if power plants and water facilities are bombed in Iran, Iran will bomb their counterparts in both Israel and the Gulf States. We should assume that, if more oil and gas refining facilities are bombed in Iran, Iran will bomb oil and gas infrastructure in Israel and in the Gulf States. If all that happens, the world will suddenly be facing absolutely unprecedented levels of deprivation, dislocation, unemployment, hunger and starvation.

It is apparent to me that, whatever Donald Trump’s protestations of having ‘won the war’, he knows he has no good options; that he is stuck in a trap of his own making.

If he signs any agreement which would be acceptable to Iran, the humiliation of that would undoubtedly be the end of his Presidency, even though it would arguably be the least damaging outcome for both America and the world, and the least bad outcome for Trump’s place in history.

If he simply keeps extending the ceasefire with the Trump blockade in place, the economic damage caused by the Strait being closed will get larger and larger with each passing day. He can’t remain in that limbo forever.

If he follows through on his threats to bomb every bridge and power plant in Iran, the economic catastrophe the world faces will very quickly be a full order of magnitude larger. Though that would undoubtedly cement Donald Trump’s place in history, I am sure it will not be how Trump would want to be remembered.

I would not be surprised if any attempt to bomb Iran ‘back to the Stone Age’ were be final straw that pushes the International Court of Justice to charge Trump and Netenyahu with war crimes. Though we can assume that neither America nor Israel would allow their leader to be extradited, it would be the bitterest pill imaginable for the guy who was so desperate to win the Nobel Peace Prize to be confined to the United States by an international war crimes conviction.

Perversely enough, tens of millions of Americans seem not to care either about the genocide in Gaza, the war crime of an unprovoked war of aggression, or 165 dead schoolgirls. So it is not just Donald Trump and the Epstein class who lack any semblance of moral clarity.

Far and away the most important issue for most Americans is inflation. The irony here is that Trump’s war crimes in Iran are creating enough inflation that that issue will likely see both the House and the Senate with Democrat majorities after the midterm elections in November, leaving Donald Trump as the lamest of lame ducks.

Which I suppose would be a justice of sorts.

PS: Two updates. First, the Secretary of the Navy has either resigned or been fired suddenly in the midst of a war. Not a good look. Second, Trump has TACOed yet again as his least bad (temporary) option.

PPS: Former US Treasury Secretary David Stockman does a great job here of outlining the fundamental lie the Iran War is based on.

Israel has a military doctrine called The Samson Option. In the Bible, when Samson pulled down the pillars at the entrance to the temple of the Philistines, the resulting collapse killed not only Samson, but all of the Philistines inside the temple.

Supposedly, if Israel becomes convinced that the State of Israel faces total destruction, Israel will nuke all of the neighbouring countries it considers enemies, even though the resulting radiation cloud would be just as fatal to Israelis.

Iran has multiple economic Samson options available to it. And, unlike Israel, Iran is partly protected from whatever disasters it creates.

Iran’s first protection is its economic isolation. Forty years of sanctions have created an Iranian economy that is remarkably self-sufficient. Iran trades so little with the rest of the world, they have very little to lose if global trade collapses.

Iran’s second get-out-of-jail free card is that it didn’t start the war. Even if Iran’s actions create a major global recession/depression, most of the world will blame America and Israel for that outcome, not Iran.

Donald Trump has announced that he is now going to completely close the Strait of Hormuz. This is the same Donald Trump who last month said he had to allow Iranian oil exports to keep oil prices from spiking too high. As it becomes clear that Iranian and Iraqi oil have been removed from global oil markets, we should expect oil prices to jump back up to the $125 per barrel range, and global stock markets to resume their downward slide. This is called shooting yourself in the foot.

Trump is again threatening to attack Iran’s power plants and oil refineries. (Israel will do so, even if America doesn’t.)

That’s where Iran’s other Samson options come in. I see those options on a scale.

Iran’s first and most obvious option is to take out multiple pumping stations on the two oil pipelines which cross the Saudi Peninsula. This would immediately remove a further seven million barrels per day from global oil supplies. That one step would be enough to send oil prices well North of $150 per barrel - the price most economists predict would cause a global recession. Taking out these pipelines is Iran’s best option for two reasons; first, it is relatively temporary in its impact, and second it makes re-opening the Strait of Hormuz even more crucial.

If any of Iran’s oil or gas facilities are attacked, Iran can take out oil and gas production facilities across the Gulf States. (Lord knows, it doesn’t take much to set oil facilities ablaze) They’ll start with facilities that are co-owned by American corporations like Exxon.

Israel has only two oil refineries and two gas fields. All four are vulnerable to hypersonic missile attack.

The four million Israelis who live in Tel Aviv are completely dependent on one large power station, and one large water desalination facility. If Iraqi power plants are attacked, they become obvious targets.

If Israel were to nuke Iran, or attack the Bushehr nuclear reactor in Tehran, Iran can drop half a dozen hypersonic missiles on the Israeli nuclear reactor at Dimona with less than five minutes warning - too little time to initiate a shutdown. (If a nuclear reactor is shut down before it is bombed, the radiation damage would be be awful but somewhat localized. If an active nuclear reactor is hit, expect a Chernobyl-level disaster to spread radiation across most of Israel and parts of Egypt and Jordan.)

Iran’s position has been helped by America continually demonstrating to the world that it cannot be trusted. The US tried to pretend that Lebanon was not part of the ceasefire agreement even though the President of Pakistan says it clearly was. After Donald Trump tweeted that he had accepted Iran’s ten-point plan as a basis for negotiations, White House Press Secretary Karoline Leavitt says the US had thrown that ten point plan in the garbage. The world sees all this.

American treachery in Iraq has already created very some serious karma for America.

Americans troops in Iraq were subject to frequent attacks by Iranian-backed Iraqi militias. The US negotiated a 24-hour ceasefire with these militia groups so they could evacuate US troops. After which, the US promptly bombed the headquarters of said militias, killing several of their leaders.

This despicable act absolutely infuriated the Iraqi Government. They have begun sending aid to Iran, and have given the Iranian-backed militias carte blanche to attack the Americans and the Israelis any way they can. Overnight, Iraq has gone from being neutral in the conflict to being a strong ally of Iran.

One can guess that when the war is over the Americans will not be coming back. I wouldn’t be surprised if Iraq nationalizes the holdings of any American oil companies in Iraq - after inviting the Chinese to open a large naval and air base there, of course, to make sure the Americans don’t try a Venezuela on them. Oh, what a tangled web we weave, when first we practice to deceive.

PS: While it must be said that Iran doesn’t have many friends across the Middle East, many nations have depended on Iran to restrain Israel’s expansionist tendencies. The nations of the Middle East do not want the war to end with Iran destroyed and Israel intact. If it becomes clear that Israel is almost out of offensive and defensive weaponry, it would serve the interests of Turkey, Syria, Egypt, Iraq, and Jordan to gang up on a weakened Israel. Turkey’s Ergodan just today compared Netenyahu to Hitler. That’s Iran’s other hope: if they can deplete Israel enough to be relatively defenceless, Israel’s neighbours will suddenly find their courage.

PPS: China has thrown down the gauntlet, saying it will continue to buy Iranian oil via the Strait, and the US had better not interfere - or else. WW3 might be closer than we think.

PPPS: This is one of the best explanations I’ve seen yet for why the economic costs of what has already happened could be much greater than most economists are predicting:

https://www.zerohedge.com/energy/strait-hormuz-crisis-exposes-fatal-flaw-economic-thinking

PPPPS: Megan Kelly tells it like it is:

AND - when a former Trump supporter and US military officer talks about Trump like this, you know Donald is in deep doo-doo:

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Today I’m remembering Waist Deep in the Big Muddy, an old Pete Seeger anti-war song from the Vietnam era, about plunging deeper into a losing path when tactical retreat is the only viable option.

If you only watch Foxnews, you may think that once the Strait of Hormuz re-opens energy markets and energy prices will quickly return to normal. Not so.

The world is only just starting to feel the pain of the biggest energy crisis of all time. There was a modest energy glut before the war started. The last tankers to leave the Strait of Hormuz before the Strait are only arriving now. It is only when they are gone that the true impact of what has happened fully begins to be felt.

Even if the Strait of Hormuz were to fully open to oil and gas tankers tomorrow - which isn’t going to happen - it will be the better part of a month before those tankers are unloaded in Asia, Africa, Europe and South America. So a minimum of a month without oil or liquified natural gas is already baked in. In addition, several gas and oil refineries across the Middle East have been damaged and/or shut down. A lot of wells had to be shut-in; they will be coming back online only slowly. In the best case, it will be several months before global energy supplies return to something even approaching normal.

In the interim, millions of people across the globe will lose their jobs. Hundreds of thousands of small businesses will shut down. In two months, the number of additional people who go to bed hungry every night could be measured in the hundreds of millions; some will starve to death.

Each day the Strait remains closed, the greater the odds of a global recession. The Gulf States alone have already seen economic damage reported to be in the range of 200,000 million dollars.

Though Americans will suffer far less than most of the world, losses in the United States will be far from trivial. Already the average American family is paying an extra $100 a month in increased gasoline costs. Within months, we can expect grocery costs to rise by a similar amount. Job growth in the US was already very weak. If the rest of the world slides into recession or depression we should expect the same to happen in the United States.

In John Mearsheimer’s assessment, the best case scenario - for both America and the world - is for Uncle Sam to cry ‘uncle’, stop dropping bombs, leave the Middle East, stop giving money and arms to Israel. The Strait of Hormuz could then re-open as a toll passage - much like the Suez canal.

Mearsheimer figures the odds of that happening are approximately zero. American pride, Trump’s delusional state, and Israeli intransigence are all pushing in the opposite direction. Having brought so many ground troops into the region, Trump will be under huge pressure to use them in some way.

If those ground troops attack Kharg Island, the two million barrels of oil that Iran is now exporting every day will abruptly stop - which will immediately bump up the price of oil to $125 per barrel or more. If Kharg Island is attacked, Iran will almost certainly play its one remaining trump card; take out both of the pipelines that cross the Saudi Peninsula to the Red Sea. That will instantly remove a further seven million barrels a day from global oil supplies, which will almost certainly push the price of oil past $150 per barrel.

Even if Trump just restricts himself to just attacking Iranian energy facilities, we should expect Iran to retaliate by taking out electrical infrastructure all across the Gulf States, as well as attacking Gulf refineries and port facilities. Those two steps together would have just about as bad an effect on global oil prices.

I’ve heard multiple economists identify $150 oil as the tipping point for a guaranteed global recession. That outcome is looking more likely with each passing day.

If either of the above scenarios comes to pass, all of the Gulf States will be pushed to the brink of economic collapse. They will need to sell trillions of dollars of US stocks and bonds just to stay afloat. That will not have a salutary effect on the US stock market, the US bond market, or the US dollar. The United States could find itself going for broke in more ways than one.

PS:

If you have friends who get their news of the world from either The New York Times or Foxnews, you might want to pass this post on to them.

Bureaucrats in the US are undoubtedly very nervous to be the bearer of bad news these days. The analysts at Statistics Canada have much greater job security. This week StatCan presented their assessment of the economic costs of Trump’s illegal war: roughly $1,000 for the average Canadian family over the next year, a number that goes up the longer the war drags on. We can guess the war will cost the typical American household a similar amount. On top of the 200,000 million dollars Hegseth’s War Department is now asking US taxpayers to fork out as a ‘top-up.’

The head of the International Energy Agency said today that, even if the Strait of Hormuz were opened tomorrow, the entire world faces several months of severe energy dislocation. Too much oil and gas has already been kept off the market. Forty major hubs of energy infrastructure have been damaged, or shut down in ways that will be slow to re-open. The world is facing an “unprecedented energy shock.” The global economy is “under major threat” and “no country is immune.” The longer the Strait of Hormuz remains closed, the greater the odds the whole world will slide into a deep recession.

Two other stories are worthy of note.

First, Israel has been using draconian censorship protocols to try to hide the the true impact of Iranian missile strikes. Julian MacFarlane is today questioning the official Israeli reported death toll of 17-21 civilians and 2 soldiers. McFarlane reports that “The Hebrew website of Tasnim News Agency has concluded that the number of casualties in the occupied territories has surpassed 1,280 people.”

On a normal day in Israel 150 dead are buried. For the past three weeks, an average of 211 dead have been buried daily in major Israeli cemeteries. (In Israel, it is traditional for burial to take place within 24 hours of a death.) That’s 1,281 burials more than would be expected in normal times.

One has to strongly suspect that the US military is also lying about the number of deaths in the US military, given the number of Iranian attacks on US military bases - including soldiers’ barracks. (Perhaps there are a couple of hundred brain-dead US service personnel being kept alive with heart-lung machines in German field hospitals - technically. they’re still alive.)

The second story worthy of note is that Iran’s new Fatah 2 hypersonic missile is proving to be virtually unstoppable. Three were fired in the past twenty-four hours; all three got through. Normally Iran launches missiles in large volleys to try to overload Iron Dome anti-missile defenses. These missiles were fired on their own, one at a time, as a test. A total of 11 anti-missile interceptors were fired to try to bring down the three Fatah 2 missiles; they all missed. The Fatah 2 changes course repeatedly during flight; anti-missiles can’t get a lock on it.

Most missiles take 12 minutes to travel from Iran to Israel giving time for an air-raid warning. The Fatah 2 takes just 4 minutes from launch to impact. For all three strikes, Israel’s warning to seek shelter came out 2 minutes after the missile had already struck its target. Not only can the Fatah 2 not be stopped, there’s no way to reach shelters before it hits.

It is likely that Iran has a limited number of Fatah 2 missiles; somewhere between 30 and 50. Still, that means Iran can hit between 30 and 50 sites of its choosing across the Middle East, and there’s nothing the US or Israel can do to prevent those missiles from reaching their targets - and reaching those targets before any warning can be given.

Perhaps that explains why Donald Trump today TACO-ed on his threat to take out every Iranian power plant - knowing that Iran has an unstoppable capacity to retaliate by taking out the power grids of Israel and every Gulf State. Doing so would instantly convert the growing likelihood of an impending global recession into an absolute certainty - making Donald Trump the most unpopular person on the planet. (Assuming he hasn’t already achieved that dubious honour!)

The global economy was not in good shape even before the current Mideast war began. Canada, Japan and most of Europe were near or already in recession. That said, most politicians are craven, opportunistic creatures. Don’t expect any of them to admit their economies were already in trouble. The temptation for national leaders to label any future downtown as the “Trump Recession” will be irresistible. I expect that’s how history will record it. No wonder Donald Trump is desperate to find an off-ramp.

I am guessing that tens of million Americans - mostly over the age of fifty - get all their news from Fox. I’m sure most of them believe Will Cain and Sean Hannity when they says the war is almost over and America has won.

Unfortunately for Fox News and Donald Trump, the internet provides an abundance of alternative news sources. Here’s a few of my favourites:

Yves at Naked Capitalism has been providing a detailed daily summary of the war.

Former US intelligence officer Larry Johnson over at sonar21.com also provides regular updates, as does Bernard at moonofalabama.org.

Lena Petrova is doing a good job of laying out the economic implications of the Iran War, as does Sean Foo.

George Galloway’s Mother of All Talk Shows eviscerates Donald Trump twice a week. (Warning: it’s two hours long!)

Redacted often covers stories that others miss.

I have no idea who puts out Daily Reports. Wherever it comes from, the analysis is some of the best I’ve seen.

MAGA is fracturing. Judge Napolitano used to be a fervent Trump supporter. Now he interviews guests every day about Trump’s disastrous war. Former Trump allies Tucker Carlson and Megan Kelly are eloquent in their opposition to the war.

There are dozens more good antidotes out there to the pro-war slop that Foxnews dishes up up every day. Please feel free to leave some of your favourite links in the Comments section.

In other parts of the world, the media is savaging Trump.

Here’s a very short video from the British news network LBC:

Here’s more:

This tells you everything you need to know about how America’s closest ally sees Donald Trump.

The rest of the world doesn’t have a government controlled press. Vantage is the the flagship show of India biggest English-language channel WION. Just listen to how Palki Sharma savages Donald Trump in this 9-minute video:

The WION piece is the tip of a very large iceberg. Much of the most stridently anti-Trump news coverage is not in English so it has limited visibility in the West; it is nonetheless galvanizing global opinion against America.

The entire world is paying a price for the gratuitous chaos that Trump has created - and they’re not happy about it. Whatever anti-American feeling existed in the world before this is now on steroids. Tariffs won’t matter if much of the world’s population spontaneously refuses to buy American products.

When Trump approached America’s allies for help in opening the Strait of Hormuz the silence was deafening: “You made this mess - you fix it”, was their tacit response.

Every day the Strait of Hormuz remains closed, the likelier it is that the whole world will slide into a deep recession.

Israeli’s have been huddling in bomb shelters for seventeen nights now. The Iron Dome is nearing depletion - more and more Iranian missiles are getting through. American bases across the Middle East are in ruins. A US carrier is retreating after catching fire.

If Israel continues to attack Iranian oilfields, I think we should assume Iran will attack oil infrastructure across the Gulf States. The Saudi and UAE pipelines across to Red Sea ports are particularly vulnerable - take out one pumping station on each and there is no alternative to the Strait of Hormuz. If that happens, there’s no avoiding a global recession, even if the Strait of Hormuz were to re-open immediately.

If Israel persists in attacking the Bushehr nuclear power station in Iran, the Dimona nuclear power station in Israel will undoubtedly also be hit - and the world could tomorrow be facing two Chernobyl-level nuclear disasters simultaneously.

If you’re only watching Fox pro-war propaganda you probably don’t know any of that. You’re cruising blind into an uncertain future. There are so many more reliable news sources available to you. The truth is out there.

P.S.: Foxnews will want to ignore the fact that this war is costing American taxpayers roughly a thousand million dollars every day.

By tomorrow the price tag will have hit 25,000 million dollars and counting:

https://iran-cost-ticker.com/

PPS: There are those who say Russia isn’t doing anything to help Iran. This credible source says otherwise, and it will cause the US a world of hurt if true:

https://vtforeignpolicy.com/2026/03/russias-900m-missile-system-just-landed-in-iran-america-has-no-defense-against-it/

Decades ago, a little program called Murphy’s Law would display a short aphorism every time I turned on my computer. One of my favourites was: “If you can remain calm while everyone around you is panicking, perhaps you don’t understand the situation.”

I have to wonder: Is Donald Trump lying through his teeth to keep stock markets from crashing, or is he so delusional as to think the Iran war will end soon? I‘m not sure which of those possibilities is scarier.

Donald Trump is nothing short of triumphant: “We’ve knocked out their navy, we’ve knocked out their airforce. We’ve knocked out their anti-defence. Their leaders are gone.” Trump claims the war will be over in a matter of days, and that the jump in energy prices is just a temporary glitch.

Will the war be over soon?

America has twice now attacked Iran in the middle of peace negotiations. Iran will never again trust anything the United States says. Iran’s only real option is to make the war so painful to the US and Israel that neither will ever attack again.

The war has already been costly for both Israel and the United States.

The Israelis must be getting very tired of running to bomb shelters several times a day. Iran claims to have destroyed Israel’s biggest oil refinery, as well as port facilities in Haifa, and a number of electrical power stations. The censorship in Israel is so strong we won’t know if all this is true until the lights go out all across Israel.

I’ve seen reports that this war is costing the US almost a billion dollars a day. Iran claims to have reduced to rubble pretty much every US military base in the Middle East, killing or wounding hundreds of US military personnel in the process. Again, we likely won’t find out how true those claims are until the war is over.

So, yes, Donald Trump must be wishing and hoping this war ends soon.

America and Israel are both running out of anti-missiles. What happens if they run out of anti-missiles before Iran runs out of missiles and drones? At that point, everything that Iran fires lands and causes damage. I’ve also seen estimates that Hezbollah still has somewhere between 130,000 and 150,000 missiles. Most of those missiles are slow and unguided, but if Israel’s Iron Dome fails, Haifa and Tel Aviv will soon look like Gaza North.

Mr. Trump also has to hope that Russia and China don’t run out of patience. There’s basically nothing that would prevent Russian or Chinese hypersonic anti-ship missiles from sinking a US warship. (My guess is they’re more likely to sink a destroyer than a carrier to reduce of the risk of escalation - but even that would make a war already unpopular with Americans even more unpopular - in an election year.)

Is the jump in energy prices just a temporary blip?

The Strait of Hormuz has been closed for over a week now. Each day it is closed represents about twenty million barrels of oil that doesn’t go out to global markets. How high does the price of oil need to go to reduce global comsumption enough to make up for that 140 billion barrel shortfall? I’ve seen estimates that number is 150 dollars per barrel - or higher.

All across the Gulf, oil storage tanks are filling up rapidly. A number of Gulf states have already had to reduce or shut down production. Restarting production once the Strait re-opens will take weeks. The world’s largest liquid natural gas refinery in Qatar has also been closed for several days. That has already caused LNG costs to spike in Europe. Again, when the Straits of Hormuz do finally open, it will take weeks to restart that LNG facility and get it fully operational.

This is already the biggest oil shock in recorded history. Every additional day that the Straits of Hormuz remain closed, the shortfall gets bigger, and the higher the price of oil must go to create the required “demand destruction”. Every day the Straits remain closed, the greater the likelihood the whole world - including the United States - will sink into a stagflationary recession.

What happens if Trump is right, and Iran quickly surrenders “unconditionally”?

Let’s look at what happened after previous American ‘victories’ in the Middle East.

In the early stages of the Afghanistan war the US government crowed about having ‘defeated’ the Taliban. In 2021, after the deaths of 2,400 soldiers, with perhaps a further 100,000 US troops physically or mentally crippled, having spent something on the order of three trillion dollars, the United States fled Afghanistan with its tail between its legs, leaving behind several billions of dollars of US weapons for the Taliban to use.

After the US quickly defeated Iraq in the Gulf War, George W. Bush announced “mission accomplished” from the deck of a US carrier. In the twenty-two years since George Bush made that speech, 4,400 US soldiers have been killed, with another 100.00 or so physically or mentally crippled, at a cost of roughly two trillion dollars.

Iran’s population is more than the combined total of Iraq and Afghanistan. The IRGC is a huge, radicalized army with an abiding hatred of America.

Let’s imagine three weeks from now, Iran is so broken it surrenders “unconditionally.” Will that be the end of the war? No. We should assume that many tens of thousands of elite IRGC soldiers will sneak off to mountain hideouts, taking as many weapons and explosives with them as they can. A protracted insurgency will begin almost immediately. It is well within the realm of possibility that the eventual cost in blood and treasure of that insurgency could exceed the total cost of the insurgencies in Iraq and Afghanistan combined. The only thing worse for America than losing the war with Iran might be winning it.

Iran doesn’t need to win this war. They just need to refuse to lose.

Well, the possibility I warned about in my last post has come to pass.

Fox News has been almost unbelievable in its relentless cheer-leading for war. America’s left-wing press may be having a field day with old clips of Trump’s promising not to get America involved in ‘stupid’ foreign wars - but I’m guessing most Fox viewers won’t see them. I feel the need to lay out some of the salient facts of the situation, and point to resources more grounded in reality.

Let’s start with the basics. Under the US constitution, only the US congress can declare war. In going to war without Congressional approval, Donald Trump broke American law. Since the early 1980’s, assassinating a foreign leader is illegal under US law. Donald Trump broke that law too. Under the UN charter, starting an unprovoked war of aggression is a war crime: Donald Trump and Bibi Netenyahu have made themselves war criminals. (Again!).

Trumps feeble excuse is that Iran was planning to attack America and Israel at any moment. Never mind that Iran had been led to believe that negotiations to end the war were succeeding - after Iran made major concessions. Final negotiations were scheduled in Geneva for TODAY. Why would Iran attack when it thought it could achieve its goals through negotiation? If Iran was planning an imminent attack, why was the Ayatollah is his house with his whole family around him? Only Americans could be stupid enough to believe that the Iranians were just about to attack.

A delusional Donald Trump wants to believe the Iranians will either quickly fold in surrender or overthrow their government.

Let’s imagine the inverse situation. In the mist of peace negotiations, the Iranians have murdered the US President. They’ve slaughtered 150 American schoolgirls. And they’ve murdered the Pope. How many Americans do you think would want anything other than revenge? Why would the Iranians feel any different?

Perhaps the best summary of the situation I’ve seen is Judge Napolitano’s interview with Jeffrey Sachs.

The war against Iran will have serious economic impacts. Iran has now struck a total of six tankers in the Strait of Hormuz. Under those circumstances, no insurance company in the world will insure any vessel to pass through the Straits, effectively blocking 20 percent of the world’s oil from leaving the middle East.

In addition, Iran’s attack on the giant Ras Laffan gas export facility in Qatar, which ships 20% of the world’s liquid natural gas, has caused Qatar to shut that facility indefinitely. The upshot is we can expect the price of natural gas to double very quickly. (Europe, which is very low on natural gas stocks at the moment, may have trouble purchasing natural gas at any price.)

Iran has also attacked the largest Saudi oil refinery, causing it to be shut down, as well as a number of other oil facilities across the Middle East. Oil prices will also go up. Though we can guess the Trump administration will do what it can to buffer any increase in gas prices - probably by emptying the US national oil reserve - you should expect gasoline prices to go up soon, and go higher and higher the longer the war goes on.

If the global economy weren’t already in danger of sliding into recession, rapidly increasing oil prices will for certain create that outcome - Canada and the United States included.

It’s probably useful to mention a few stories the mainstream Western media would prefer not to talk about.

First, there’s the fact that the US bombed a girl’s elementary school in Iran, killing 150 girls and wounding 100. (When the US media does report such events, they tend to report it in ways that call it into question by embedding it with taglines such as “Iranian State Media reported,” as if this wanton slaughter was just a propaganda ploy by the Iranian Government.)

Next, there’s the murder of the Ayatollah. The Ayatollah was not just the leader of Iran, he was also the spiritual leader of tens of millions of Shia Muslims. In terms of the damage to America’s standing in the Muslim world, it was the equivalent of how the Christian world would react if America had murdered the Pope. What’s worse, America has just murdered the single person most responsible for Iran never building a nuclear bomb. Beyond stupid!

Then there’s the fact that the Kuwaitis accidentally shot down three American F-15 fighter jets valued at 30 million dollars each in an incident reminiscent of the Keystone Cops. (One can guess that if Foxnews reported this at all, they certainly didn’t linger on the story.)

Finally, the Iranians are doing a lot more damage than Foxnews will admit. They’ve hit US bases all across the Middle East - which makes it likely the death toll is considerably higher than the half dozen US deaths so far reported. Though Israel has worked hard to censor reports on damage to that country, there’s abundant evidence that a lot of Iranian missiles are getting through.

Finally, it should be pointed out, the longer this goes on, the more dangerous it gets for Israel and for America. America, Israel, and the Arab nations all have limited numbers of (very expensive) anti-missile systems. If they’re gone before Iran runs out of missiles, everything Iran fires will get through. If America also burns through most of its offensive weaponry attacking Iran over the next month, it would be extremely vulnerable to any attack from China. (Wars in Ukraine, Gaza, and the 12-day war mean the US started this new war much depleted.)

My guess is that China will encourage Iran to attack the American warships every day or two - like buying lottery tickets to one day get lucky. Though Iran is far more likely to sink a US destroyer than a US carrier, even that would make a war that is already unpopular with Americans even more unpopular.

Then in three weeks or so, once America’s weapons stocks are extremely low, China could give Iran a couple of dozen of their hypersonic silkworm anti-ship missiles along with targeting assistance, so Iran can sink both US carriers. The Americans would be furious knowing the Chinese were involved, but they would also recognize the utter futility of declaring war on China when their weapons stocks were empty and China’s were full. Among the various stupid risks Donald Trump is taking as Israel’s servant, that’s probably the most dangerous. (Actually, I suppose the worst risk is Israel’s Sampson Option - which could end in World War 3.)

PS: I had been developing a certain grudging respect for our new Prime Minister Mark Carney. Which vanished completely when I heard him supporting Trump’s stupid and illegal war. You failed the character test, Mark, and exposed Canada as just another grovelling vassal state, like most of Europe.

PPS: If you have any illusions that America can fight a long war in the Middle East, please watch this from Money over History.

PPPS: Julian McFarlane has an interesting exploration of how and why governments do such obviously stupid things.

China doesn’t want a military conflict with the United States. China is playing the long game - preferring to fight and win an economic war instead. Russia would also very much prefer to avoid war with America, particularly now when it is still fighting in Ukraine.

That said, both countries recently signed a mutual-defence agreement with Iran. They have a treaty obligation to support Iran if Iran is attacked. What’s more, Iran is strategically important for both its location - central, and on trade routes - and for its abundant natural resources. If Russia and China do nothing, America may continue to pick off Russia and China’s friends one by one - a la Venezuela.

And though none of the countries in the wider Middle East particularly like Iran, they all see Iran as the only thing stopping Israel from attacking even more of its neighbours. So they will be strongly pressuring Russia and China to not abandon Iran.

By Saturday, roughly one-third of America’s military might will be within striking distance of Iran - two aircraft carriers, hundreds of warplanes, several destroyers and thousands of military personnel. Ostensibly, they’re there to pressure Iran into making a “good deal” - i.e., one that capitulates to America’s demands.

Iran has insisted it will only negotiate the nuclear issue. It is not willing to give up its missiles, or stop support for its various proxies. This is not acceptable to Israel, which will do everything it can to sabotage the peace process.

Donald Trump has boxed himself in. Iran is only willing to sign a nuclear agreement that is more or less a copy of the JCPOA agreement Trump walked away from in 2018. It will be extremely hard to sell a re-run of the JCPOA as a great victory that warranted moving vast amounts of military hardware thousands of miles.

Iran has made clear it has no interest in a pretend war of limited, choreographed strikes this time. If there is war, Iran will strike American targets, and do its best to destroy Israel. Iran has also made clear that America and Israel should prepare for a long war of attrition.

Trump is savvy enough to realize there are some big risks at play here. Israel could be devastated. Hundreds of American military personnel could be killed. Worst case scenario, one or more US warships gets sunk. (Even the aircraft carriers face some risk - which is why they are being positioned hundreds of miles from Iran.)

If Iran were to close the Strait of Hormuz for an extended period of time, the price of oil could double - which would be a body blow to the US economy in an election year.

Americans will have far less tolerance for protracted war losses than the Iranians do. Even if America suffers only a fraction of the economic and personnel losses that Iran suffers, it would likely be enough to end Donald Trump’s Presidency.

All that said, having brought so much military hardware to the region, combined with the relentless demonization of ‘evil’ Iran, Donald Trump will be hard-pressed to find a face-saving way to avoid going to war with Iran. And if Trump does try to chicken out, we can be reasonably sure Israel will attack Iran on its own, and America will get drawn into war “defending” Israel. Larry Johnson and Moonofalabama are both now predicting that war could start as early as Saturday.

As long as Russia and China don’t become direct combatants, a war between America/Israel and Iran could serve the interests of both Russia and China.

America’s ordinance supplies, already badly depleted by supplying Ukraine and Israel, would be depleted even further. War will stoke a lot of anti-American feeling all around the world. If US warships are sunk - or better yet, an aircraft carrier damaged - the myth of American military invincibility will be punctured.

An expensive and prolonged war could heighten the already sharp divisions within America. War would put downward pressure on the US dollar, and upward pressure on US Treasury interest rates.

The trick will be to keep it as a proxy war. Russia and China can ‘sell’ lots of state-of-the-art weaponry to Iran on a buy-and-pay-much-later plan and claim its simply a business transaction. They can quietly provide satellite and radar imagery to assist Iran in targeting American hardware. Maybe Russian or Chinese “advisors” or “volunteers” or “mercenaries” will help operate the most complicated weapons they ‘sell’ to the Iranians.

If America complains, Russia and China simply ask: “How is this any different from what NATO nations have been doing in Ukraine these past three years?”

Though Donald Trump will be furious if Russia and China assist Iran in a proxy war that bleeds and drains America, he’ll be reluctant to declare war on either because he would likely then be at war with both. That would a very BIG war - with the ever-present risk that that war could go nuclear at any moment.

Donald Trump tried very hard to block release of the Epstein files. When that didn’t work, he hoped starting a new war every week might distract America.

As I survey the internet this past week, I’d say he failed miserably. Everywhere I look, the dirty laundry from the most recent Epstein files drop is on display. Not only are Donald Trump’s almost 5,000 appearances in the files getting a lot of airplay, half of his cabinet appointments are also in the files, along with many of his billionaire buddies. Some of the stuff coming out is really tawdry; some downright disgusting. (Joe Rogan, Kim Iversen, the Young Turks, and the Breaking Points crew have all been working overtime.)

For me, there’s only one issue which has received inadequate attention, and that it the incredible miscarriage of justice which occurred in Epstein’s first trial in 2008

It is striking how many of the most recent Epstein files are from the period between 2009 and 2019. An entire second cohort of under-age girls had their young lives ruined during this decade. And all the rich and famous men who appear in the files during this decade knew exactly who Jeffrey Epstein was, so they have no excuses.

The only reason all those files exist - and all those lives were blighted - is because the American legal system was criminally negligent and corrupt in 2008.

The front-line cops had done their job well. They had signed statements from 36 women saying they had been forced into sex with Epstein so young it was statutory rape.

If you or I had had 36 charges of statutory rape filed against us, I’m pretty certain we’d be spending the rest of our lives behind bars.

Jeffrey Epstein served only 13 months in a country club of a jail - which he was then able to leave each day to go to ‘work’. Even more incredibly, Epstein’s plea agreement required that none of the rich and famous within Epstein’s circle of rapists and abusers would ever be charged. Talk about a Get-Out-of-Jail-Free card!

How could this happen? Alexander Acosta, the prosecutor in the case, claimed in public hearings that the case was handled as it was because he was told “Epstein belonged to intelligence.”

Acosta’s explanation raises way more questions than it answers. There is considerable evidence within the released files that Epstein was an agent for Mossad. What was the CIA doing protecting an Israeli spy? (An Israeli spy who was actively gathering information which could be used to blackmail American politicians and business leaders!)

And, if Epstein was, in fact, an American spy, why the hell was he gathering compromising information on American politicians?

And even if Epstein served some purpose for the US Intelligence Services that was so important to America’s national security that it was worth destroying the lives of hundreds of young women, how does that justify letting off Scot-free all those billionaires who also raped and abused young women?

Bill Clinton has suggested the only way to really put the Epstein files behind us is to have a full set of public hearings. I agree.

Epstein wasn’t the only criminal here.

A whole slew of very rich men should be going to jail.

At minimum, Alexander Acosta should be disbarred. Maybe he should also be in jail. Who in the US Government ordered that Jeffrey Epstein be given a sweetheart deal? Was money involved? Was that person being blackmailed by Epstein, or by Mossad?

How did the plea deal come to include a clause that let all those billionaires off the hook? Were bribes involved? How about blackmail?

America needs to understand how Epstein’s corrupt 2008 plea deal came about, and why no-one in the system intervened to challenge it.

The Epstein saga should have ended in 2008. It was the complete and utter failure of the US legal system to deliver justice which enabled Jeffrey Epstein and his privileged cronies to continue their debauchery and depravity for a full decade more.

What happened in 2008 stank to high heaven. If it isn’t cleaned up, I’m afraid the phrase ‘criminal law’ will come to take on a whole new meaning in America.

Donald Trump wants America to move on. But there’s a swamp - or perhaps a giant, fetid cesspool - that must be drained first before any real closure is possible.

PS: The mainstream press will now try to distract by claiming that Epstein was in Putin’s pocket. Simplicius does a great job of debunking this scurrilous claim:

Simplicius's Garden of Knowledge

Damage Control: Epstein a Russian Spy According to New Corporate Press Spin Cycle

The new Epstein trove dump has revealed quite some interesting things about the secret behind-the-scenes maneuverings of Western elites vis-a-vis the Ukrainian conflict. It confirms most of the suspected “tropes” about a kind of cabal of insider elites working to undermine Russia while strip-mining Ukraine for their own profiteering motives…

Read more

7 months ago · 349 likes · 128 comments · Simplicius

Today I’d like to address a big-picture issue that has been inadequately covered in the mainstream press.

For most of the 20th Century, profits represented a relatively modest segment of the global economy, and a large chunk of those profits were recycled into investments in one or other form of business expansion.

It is only in the 21st Century that the rapid growth of billionaire class wealth has outstripped the ability of the economic system to absorb that new wealth.

This has had several impacts:

First, billionaires pouring their homeless billions into stock markets has artificially inflated the value of US stocks for a decade and a half. (The AI bubble is the most obvious symptom of this.) The underlying value of stocks becomes moot: if enough homeless money is poured into stocks, stocks will go up. (Yes, there’s a limit on how big any bubble can grow without crashing; so far big investors have succeeded in keeping stock markets under that breaking point.)

Second, vast amounts of homeless money also flowed into US real estate and farmland purchases for a many years, creating an extended bubble in US real estate prices.

Third, though the United States is clearly on a path to fiscal ruin, the bond market vigilantes have not punished the US Government’s profligacy. Billionaires parking many of their homeless billions in short-term US Treasuries has kept short-term US bond interest rates much lower than they otherwise would have been. (Though the value of long-term US bonds has collapsed by half or more, the assumption remains that the United States will continue to honour its debts during the lifespan of short-term Treasuries.)

Finally, the above money flows have enabled the US economy to muddle through the past fifteen years without a major economic downturn. Though the bubble in real estate prices is now clearly at risk of collapsing, it created a great deal of paper wealth while it was inflating. Interest rates held artificially low enabled massive consumer borrowing to create a simulacrum of a growing economy.

Roughly half of the the Silent Generation and Baby Boomers had accumulated significant assets during prior decades. Those who slip-streamed the stock and real estate portfolios of the billionaires have made a lot of money over the past fifteen years. More than anything else, those generations spending their stock and real estate earnings has kept afloat a Special K economy which otherwise would have tanked long before now.

The bottom line of all this is that the market distortions created by so many homeless billions have flummoxed a great many economic observers over the past fifteen years -myself included. Predictions of recession, dollar collapse, and other forms of economic Armageddon have all come to nought. The North American economy may have been underwhelming - with much of the population complaining that their paychecks haven’t kept up with the cost of gas, groceries or rent - but no great disaster has occurred.

Going forward, those same distortions will continue. That said, those distortions have created a number of risks:

Though it is quite that possible a “crack-up boom” - also called a “blow-off top” could drive the stock market even higher in the short term, it would be the last hurrah before the bubble finally bursts. The big money has lots of high-priced advisors ready to alert them when it it time to exit the stock market. The slipstream investors of older generations will mostly be left holding the bag, along with a lot of pension funds and a great many 401K owners.

Donald Trump is desperate to come up with some sort of mortgage relief program to prevent the current real estate slowdown from turning into an outright collapse. So long as rents and/or mortgage payments remain above what ordinary Americans’ budgets will permit, expect real estate markets to remain shaky at best.

Trump is also wanting to cap credit card interest rates at 10%, knowing that tapped out consumers unwilling or unable to spend could bring a recession just in time for the mid-terms.

If foreigners start to unload US assets, that could tank both the US dollar and stock markets. That said, the United States dollar is not the dirtiest shirt in the laundry. So long as money is fleeing the Korean won, the Japanese yen, the Indian rupee and the Turkish lira, we can expect a lot of foreigners to continue to seek the (relative) safety of the US dollar.

Then there’s geopolitics. Donald Trump seems determined to piss off the entire world. War with Iran could close off the Straits of Hormuz, driving oil prices into the stratosphere. If Trump follows through on his plans to invade Greenland, Europe could decide to sell off the trillions of US bonds it holds. If Donald Trump gets into a full-on trade war with the BRICS countries, it’s hard to imagine the US would escape unscathed. An ugly and expensive guerrilla war with Venezuela is not out of the question. (And who knows what new crisis Mafia Don might stumble into by next week!)

If there’s one bright spot, it’s that a recession or a stock market crash won’t necessarily create a crisis in the market for short-term US bonds and T-bills. Money leaving the stock market and real estate has to go somewhere; Treasuries are one of the few safe options left. And money piling into Treasuries will likely prevent the US dollar from sliding as far as it otherwise might.

It is my strong impression that the levitating effects of the homeless billions are now stretched very near the max. I think we can assume a US stock market crash would cause a recession, and vice versa. That said, I suspect at least one major geopolitical domino will need to fall before the current faux prosperity comes to an end.

It is clear that China is outraged by Trump’s actions in Venezuela. They have now demanded FOUR TIMES that the US release Nicolas Maduro.

I think we should assume China will find ways to hit back for the illegal kidnapping of Maduro. They will not do so tomorrow, and perhaps not even this month. Unlike the current President of the United States, China tends to think through carefully the consequences of any foreign policy actions.

What are China’s options?

Covert Support for a Guerrilla war: I don’t see China actively taking part in any war between Venezuela and the United States. The supply lines are just too long. That said, the Venezuelan army is chock-a-block with Chavistas who passionately support the Bolivarian revolution. Even if the Venezuelan Government caves to Trump’s demands, we should expect tens of thousands of Venezuelan soldiers to melt into the jungle. The oil industry is extremely vulnerable to sabotage - and random murders of American oil company personnel. (If they want to play really dirty. they’ll attach a large limpet mine to an oil tanker headed for Houston - and blow up the mine somewhere near the coast of Texas.) China can covertly provide all sorts of logistic and hardware support to any insurgency that develops within Venezuela. (If caught, they can argue they are not doing anything different from what the US has done in Ukraine.)

War With Iran: If Israel were to again attack Iran - which seems increasingly likely - Russia and China are both close enough to have manageable supply lines. Though I doubt either Russia or China would declare war directly, each could supply Iran with massive amounts of hardware. If Israel starts to lose badly, it is hard to imagine the US not entering the war. Hypersonic missiles are extremely difficult to stop. A volley of them could almost certainly sink a US carrier. The vulnerability of America’s carrier fleet would then be obvious to the entire world. Though Trump might be tempted to declare war on both Russia and China, wars in Ukraine and the Middle East have left American ordnance supplies seriously depleted. America would lose any war that lasted more than about three weeks.

Divest From US Bonds: China holds something on the order of 800 billion dollars worth of US bonds. Unloading those bonds at, say, 100 billion dollars per month, would crash the US dollar. (Yes, America could just seize China’s bonds as was done with Russia’s reserves, but American companies have a LOT of assets in China, which China could seize.) What’s worse, trying to block China from selling its bonds would likely cause a great many nations to unload most or all of their dollar reserves.

De-dollarization: Already credit systems are coming into place which by-pass the dollar. Linked international credit card systems will automatically convert between currencies. More and more international trade is taking place in local currencies. China is providing loans in rembini at a lower interest rate than can be borrowed in dollars. The fewer transactions take place in dollars, the less demand there will be for dollars. If the US dollar continues to fall in value, it will make it very unattractive for foreigners to hold US stocks, bonds, or real estate. (A huge amount of foreign ownership has until now inflated the value of American assets; that could change very quickly.)

BRICS: I’ve seen a lot of bloggers saying that Trump’s actions in Venezuela will cause nations all over the world to fear antagonizing America. However, I suspect it will make joining BRICS even more attractive for any nation that has a less-than-warm relationship with the United States. If I were Russia or China, I would deliberately invite Nicaragua, Colombia, North Korea and half a dozen other countries to join BRICS, knowing how much that would infuriate Donald Trump. I think we can assume Mr. Trump would then slap at least a 50% tariff on every BRICS country. That would give all the BRICS countries the legal right to slap a 50% tariff on all American imports. The roughly 30 BRICS countries would each essentially lose one large trading partner - the US - but the United States would lose 30 trading partners that, between them, represent the majority of the global population. Trump’s promises of a golden age of great prosperity would evaporate very quickly - as would Republican mid-term prospects.

New Military Alliances: China could invite the various BRICS countries to become part of a formal military alliance, a la NATO. At minimum, China could sell a great deal of military hardware to countries which feel threatened by America belligerence. Setting up at least one major military base in Africa and one in South America would piss Trump off royally. I’m not expecting anything beyond lots of weapons sales - unless China has decided to draw a line in the sand, whatever the cost.

Take Taiwan: America is now publicly arguing that its security depends on not having any hostile countries in its immediate neighbourhood, and that important resources nearby America should not be under the control of foreign actors. China could use exactly those same arguments to justify taking over Taiwan by force. Doing so would give China full control of Taiwan’s chip-making industry - including the fastest AI chips - which would immediately deflate the AI bubble in a spectacular crash. I’m not expecting China to actually do this, but publicly arguing that America has set a precedent in this regard might crash the AI bubble in any case.

I’m expecting China will take two or more of the above steps in coming months. If readers think China best response lies in some other direction, I’d be curious to hear what you think that would be.

PS: