Individual Economists

Sunday Night Futures

Calculated Risk -

Weekend:
Schedule for Week of July 6, 2025

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 22 and DOW futures are down 112 (fair value).

Oil prices were up over the last week with WTI futures at $66.50 per barrel and Brent at $68.30 per barrel. A year ago, WTI was at $84, and Brent was at $89 - so WTI oil prices are down about 21% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.09 per gallon. A year ago, prices were at $3.46 per gallon, so gasoline prices are down $0.37 year-over-year.

NATO's Rutte Warns Of Chinese-Russian Red Dawn As Medvedev Suggests He's "On Magic Mushrooms"

Zero Hedge -

NATO's Rutte Warns Of Chinese-Russian Red Dawn As Medvedev Suggests He's "On Magic Mushrooms"

NATO Secretary-General Mark Rutte has gone full 'Red Dawn' - warning that China and Russia might orchestrate simultaneous invasions of Taiwan and Europe to destabilize the Western alliance.

If Xi Jinping would attack Taiwan, he would first make sure that he makes a call to his very junior partner in all of this, Vladimir Vladimirovich Putin, residing in Moscow, and telling him, ‘Hey, I’m going to do this, and I need you to keep them busy in Europe by attacking NATO territory,’” Rutte claimed in a recent interview with The New York Times. “That is most likely the way this will progress, and to deter them, we need to do two things.”

To counter this perceived threat, Rutte advocated a comprehensive dual approach aimed at fortifying NATO’s resilience and expanding its strategic partnerships.

One is that NATO, collectively, being so strong that the Russians will never do this,” he explained, emphasizing the need for a robust collective defense posture to dissuade any Russian adventurism. “And second, working together with the Indo-Pacific—something President [Donald] Trump is very much promoting, because we have this close interconnectedness, working together on defense industry, innovation between NATO and the Indo-Pacific.”

Rutte further heightened concerns by highlighting Russia’s rapid military rearmament, which he described as a pressing geopolitical challenge. “We have an enormous geopolitical challenge on our hands,” he told the Times. “And that is first of all Russia, which is reconstituting itself at a pace and a speed which is unparalleled in recent history.” The NATO chief claimed that Russia is “now producing three times as much ammunition in three months as the whole of NATO is doing in a year,” a statistic he attributed to Moscow’s deepening partnerships with North Korea, China, and Iran in sustaining its war against Ukraine.

Dmitry Medvedev, a senior Russian official, took to X to mock the NATO leader, writing, “Rutte has clearly gorged on too many of the magic mushrooms beloved by the Dutch. He sees collusion between China & Russia over Taiwan, and then a Russian attack on Europe.” Medvedev added, “But he’s right about one thing: he should learn Russian. It might come in handy in a Siberian camp.” The caustic response reflects Moscow’s broader strategy of deflecting Western criticism with ridicule, though it offers little clarity on Russia’s actual strategic calculations.

Since Russia’s invasion of Ukraine in 2022, Trump has pressed NATO allies to significantly increase defense spending, successfully pushing for a new target of 5% of GDP, a sharp increase from the previous 2% benchmark. This demand, coupled with heightened concerns over European security, has driven countries like Britain and Germany to bolster their military budgets.

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Click pic... buy seeds... take food supply into your own hands... Tyler Durden Sun, 07/06/2025 - 15:45

What Prevents Trump From Implementing The "Chainsaw" Approach Like Milei?

Zero Hedge -

What Prevents Trump From Implementing The "Chainsaw" Approach Like Milei?

Authored by Daniel Lacalle,

In recent months, many libertarians have criticised Donald Trump’s economic policies, arguing that he is not implementing drastic public spending cuts like Javier Milei has done in Argentina.

However, this comparison ignores key structural and contextual differences between the two countries and their governments. Below is a detailed explanation of why the situation in the United States under Trump is different from that of Argentina under Milei and why criticisms of Trump’s strategy are unfounded.

1. The Committed Budget: Biden’s Legacy

It is hard to understand why European libertarians fail to grasp such a basic concept as the “fiscal year”. The U.S. fiscal year begins on October 1, and the Biden administration took advantage of this to ramp up spending.

When Trump took office in January 2025, 97% of the federal budget for that year was already committed or spent. This was due to the Biden administration’s approval of several “Full Year Continuing Resolutions”, which left most funds and expenditures locked in for fiscal year 2025. Thus, Trump had no room to make immediate and drastic cuts, as most of the budget was untouchable until the next fiscal cycle.

Despite this, in 2025, discretionary spending reductions equivalent to $541 billion were carried out, and the accumulated deficit between April and May 2025 was 97% lower than in the same period of 2024.

2. Mandatory and Discretionary Spending

Mandatory spending (which includes programs like Social Security and Medicare) had already been increased by the Biden administration, and this increase took effect between February and December 2025. The U.S. fiscal year starts in October, and Biden implemented most of these increases through Continuing Resolutions (CRs) and the extension of existing programs, consolidating and, in many cases, increasing federal spending in key areas.

These resolutions included over $100 billion in funds for federal disaster assistance programmes, $29 billion for FEMA’s Disaster Relief Fund, and $10 billion in economic assistance for agricultural producers.

At the end of 2024, Biden approved a $54 billion (8%) increase in major mandatory spending programmes such as Social Security, Medicare, and Medicaid, as well as the extension of Obamacare, all applicable to 2025.

The Environmental Protection Agency (EPA) budget grew by $21 billion (700%), and the Trump administration was only able to act on $14 billion that was discretionary.

It is essential to remember that Biden did all this without a new budget law, simply by maintaining and extending existing allocations.

Biden’s proposed 2025 budget included additional increases, but these were blocked because they did not receive congressional approval.

Trump needs congressional approval to reverse these increases and reduce spending. That is what the “Big Beautiful Bill” includes. On the other hand, discretionary spending, especially in defence, was also committed, further limiting the new government’s immediate room for action.

The Big Beautiful Bill includes the first reduction in mandatory spending in the last sixty years—$1.6 trillion—and $2.4 trillion in discretionary spending.

3. Initial Fiscal Results

Despite these restrictions, the Trump administration achieved certain advances: in April, the second-largest fiscal surplus in history was recorded, and although a deficit reappeared in May, the deficit between March and May has been slashed compared to 2024. This indicates that measures were already being taken to improve the fiscal situation, mainly through higher revenues from trade agreements and private sector growth.

4. The “Big Beautiful Bill” and Deficit Reduction

It is astonishing that some libertarians and Austrians criticise the Big Beautiful Bill by buying into the Keynesian narrative that there will be no improvement in revenues, growth, employment, or investment from deregulation, trade agreements, and tax cuts.

That some libertarians deny the Laffer curve and the boost from deregulation surprises me. The Big Beautiful Bill incorporates $7 trillion in committed investments from trade negotiations, which also attract $4 trillion in tax revenues over the legislative period and a stimulus effect on the economy that results in an increase in tax revenues in the baseline scenario of $1.2 trillion.

Contrary to what some critics claim, the “Big Beautiful Bill” will not increase the deficit but will significantly reduce it.

A reduction of $1.6 trillion in mandatory spending and $2.4 trillion in discretionary spending is expected between 2026 and 2027. Additionally, an increase in tax revenues is anticipated thanks to deregulation, tax cuts, and new trade agreements, which will strengthen economic growth and employment.

We liberals, libertarians, and Austrians should be less critical of the greatest effort in reducing the State, liberalisation, deregulation, spending cuts, and tax reduction since 1990, but above all, some should not buy into the narrative that denies the positive effect on revenues and growth from deregulation, tax cuts, and trade negotiations.

5. Comparison with Milei: Similarities and Differences

Milei was able to implement immediate cuts because he inherited an open budget and extremely high inflation, which allowed him to reduce public spending in real terms by not adjusting it for inflation. Argentina’s budget does not include the provisions that the Biden administration incorporated, so President Milei was able to carry out a 30% reduction in public spending immediately and with unquestionable success, especially by eliminating subsidies, public works, and non-automatic transfers.

In contrast, Trump inherited a budget that was already committed and much lower inflation (less than 2.5%), limiting the impact of not adjusting spending for inflation.

If we compare both administrations, a very similar effort has been made. Trump has reduced public spending by 5% in the first quarter, and savings exceed $540 billion. By the end of his term, President Trump will have carried out a reduction in public spending equivalent to Milei’s.

Both leaders have promoted policies of tax reduction, deregulation, and the promotion of investment and employment. However, Trump’s tools and room for manoeuvre have been conditioned by the U.S. institutional structure and the decisions of the previous administration.

6. Conclusion

The policies of Trump and Milei share the goal of reducing public spending, fostering growth, and improving employment, but the starting circumstances are radically different. Criticising Trump for not applying an immediate “chainsaw” ignores the budgetary and legal constraints he faces in the United States. What matters is recognising that, within his constraints, Trump is implementing historic cuts and pro-growth policies that will positively impact the U.S. economy in the medium term.

My messages to those who attack the Trump administration for not being liberal enough are as follows:

  • Name a single U.S. administration that has successfully implemented a comparable approach to deregulation, tax cuts, and spending reduction while also passing a significant reduction in mandatory spending through both Congress and the Senate.

  • Buying into the Keynesian estimates of fiscal impact is curious. Denying the positive impact of reducing imports, increasing exports, and collecting more from trade agreements is surprising. Denying the economic and fiscal boost from deregulation and tax cuts is unforgivable.

Tyler Durden Sun, 07/06/2025 - 15:10

Merchant Ship Attacked With RPGs In Southern Red Sea Chokepoint

Zero Hedge -

Merchant Ship Attacked With RPGs In Southern Red Sea Chokepoint

On Saturday evening, air raid sirens sounded across the Dead Sea region and parts of the West Bank following the launch of a ballistic missile from Yemen toward Israel. The launch, attributed to Iran-backed Houthi forces, marks an alarming expansion of their missile capabilities beyond the Red Sea maritime chokepoint. 

Hours later, on Sunday morning, the UK Maritime Trade Operations (UKMTO) received a report that a merchant vessel transiting 51 nautical miles southwest of Al Hudaydah, Yemen, came under attack by multiple boats armed with small arms and rocket-propelled grenades. The vessel's onboard security team returned fire. The incident remains ongoing.

UKTMO wrote:

UKMTO has received a report of an incident 51NM southwest of Al Hudaydah, Yemen. The vessel has been engaged by multiple small vessels who have opened fire with small arms and self-propelled grenades. Armed Security Team have returned fire and situation is ongoing. Authorities are investigating. Vessels are advised to transit with caution and report any suspicious activity to UKMTO.

The missile launch and maritime attack appear to be coordinated escalatory actions by the Iranian proxy group across multiple domains—air and maritime.

An update on Iran-Israel-U.S. tensions: The situation has calmed since the U.S. stealth bomber airstrikes on three Iranian nuclear facilities. However, President Trump stated on Friday that Tehran has yet to agree to nuclear inspections or cease uranium enrichment. 

Trump told reporters on board Air Force One that he believed Tehran's nuclear program had been "set back permanently," although he warned Iran could restart at a different location. 

Looking ahead, Israeli Prime Minister Benjamin Netanyahu is scheduled to visit the White House on Monday, where a potential ceasefire deal could materialize to end the 21-month war in Gaza. Trump has previously announced a "final proposal" for a 60-day ceasefire. 

Tyler Durden Sun, 07/06/2025 - 14:35

Turkey Arrests Three More Opposition Mayors, After Istanbul's Imamoglu Detained

Zero Hedge -

Turkey Arrests Three More Opposition Mayors, After Istanbul's Imamoglu Detained

Via Middle East Eye

Three opposition mayors have been arrested in Turkey in what the Republican People's Party (CHP) have a branded a "political operation". Adana Mayor Zeydan Karalar, Antalya Mayor Muhittin Bocek and Adiyaman Mayor Abdurrahman Tutdere were all arrested on Saturday as part of an investigation into corruption allegations that have already seen the imprisonment of Istanbul Mayor Ekrem Imamoglu.

It follows the arrest of more than 120 people earlier this week as part of an investigation into alleged corruption in the opposition stronghold of Izmir, the country's third-largest city.

The CHP, the largest opposition party in Turkey, has accused the ruling Justice and Development Party (AKP) and President Recep Tayyip Erdogan of targeting them after widespread success in the 2024 local elections and polling suggesting Imamoglu could unseat the president in a future election.

Mansur Yavas, CHP mayor of the capital Ankara, criticised the arrests on X, saying his party would not bow to "unlawfulness".

"In a system where the law is bent and twisted according to politics, where justice is applied for one segment and ignored for another, no one should expect us to trust the rule of law or believe in justice," he wrote. 

According to the state-run Anadolu Agency, the mayors of Adana and Adiyaman were linked to a case involving alleged tender-rigging and corruption.

Police also arrested Ahmet Sahin, deputy mayor of Istanbul's Buyukcekmece district. The mayor of Antalya was detained in a separate investigation into corruption allegations, while police also arrested his son.

The left-wing Peoples' Equality and Democracy Party (DEM Party) also condemned the arrests on social media.

"This persecution of elected officials must stop," wrote Tulay Hatimogullari, co-chair of the party, on X.

"Failure to recognise the will of the people is causing deep divisions within society -  these operations are not a solution, but rather block the path to a democratic Turkiye."

Typically the interior ministry only has the power to replace elected mayors if they are suspected of terrorism offences.

Under the municipal law, if a mayor is suspended over corruption investigations a deputy mayor is selected by the city council and since the CHP holds a majority in the councils of all three cities they will not lose control.

On Monday, an Ankara court began examining a case involving allegations of vote-buying in the party's 2023 primaries.

The move could lead to the annulment of the election of its leader Ozgur Ozel, who has become well-known for organising protests against the imprisonment of Imamoglu.

Tyler Durden Sun, 07/06/2025 - 14:00

Zelensky's Latest Call With Trump Was 'Most Productive' He's Ever Had

Zero Hedge -

Zelensky's Latest Call With Trump Was 'Most Productive' He's Ever Had

The White House rhetoric on Ukraine could be slowly shifting, after President Trump said he was "very unhappy" with a Thursday phone call with Russian President Vladimir Putin.

After a single night's record drone attack of some 500 UAVs sent on Ukraine, Trump said "It just seems like he wants to go all the way and just keep killing people. It's not good. I wasn't happy with it" - in reference to Putin.

Via Sky News

But it should be remembered that the White House just days prior halted some shipments of defense aid, which speaks louder than words. European allies are predictably upset and Kiev is now dealing very carefully with Washington, and handling Trump with kid gloves, given it is in a precarious situation on the battlefield.

Ukrainian President Volodymyr Zelensky, announced Saturday that his latest conversation with Trump this week was the best and "most productive" he has ever had.

"Regarding the conversation with the president of the United States, which took place a day earlier, it was probably the best conversation we have had during this whole time, the most productive," Zelenskiy said in his nightly video address.

"We discussed air defense issues and I'm grateful for the willingness to help. The Patriot system is precisely the key to protection against ballistic threats," he added.

Zelensky has also been asking Washington to slap more sanctions on Moscow, something Trump has so far resisted in order to give better space for peace negotiations to take off.

Asked by reporters over whether Zelensky's request for more Patriot missiles would be honored, Trump replied, "They're going to need them for defense... They're going to need something because they're being hit pretty hard."

Trump had further said of the Zelensky call, which happened Friday, "We talked about different things... I think it was a very, very strategic call."

This suggests that some new decision-making could be afoot regarding supplying Ukraine. There have been recent reports, however, that Trump is prioritizing defense of Israel, even diverting arms and ammo away from eastern Europe for that purpose. Trump has been expressing deep frustration at lack of momentum in US-backed peace efforts, for which he's criticized both warring sides.

Tyler Durden Sun, 07/06/2025 - 13:25

Tchir: The Risk For Stocks Is That The Administration Decides It Was Correct All Along On Tariffs

Zero Hedge -

Tchir: The Risk For Stocks Is That The Administration Decides It Was Correct All Along On Tariffs

By Peter Tchir of Academy Securities

Big, Beautiful Production For Security

The “Big Beautiful Bill” is now law (which always brings back childhood memories of Schoolhouse Rock – yes, we had that in Canada too). If you don’t know the “I’m Just a Bill” song it is well worth a quick search.

We are taking the view that the new tax law is a big positive for the economy and markets.

  • Yes, we can all argue who benefited the most and who got hurt by the bill. We can worry about the deficit. The law is probably far from anyone’s ideal vision of a “perfect” law, but we don’t think that is the main point.
    • It is too early to worry about some “calculated” deficit that would occur over several years, under certain sets of conditions, that may or may not occur.
    • Also, we will continue to highlight the Tariff Revenue Chart, which is adding real revenue for the Treasury and is NOT included in the CBO projections.
  • A bill, passed by the House and Senate, and signed into law by the President, is a big deal. We can now plan. So far, much of what has been driving the economy and markets has relied on Executive Orders. While Executive Orders are useful, we have seen how easily they can be changed or even challenged in court. This law gives us certainty for many important aspects of the economy for at least the next 4 years. Maybe we should focus more on the details, as the “devil is in the details,” but this time, that might be “missing the forest for the trees.” What it says is less important than the fact that it now exists. Some degree of uncertainty for the economy has been removed.
    • From what we can tell, it seems that some of the growth-oriented benefits are front-loaded. To the extent that plays out, it will help propel the economy in the near-term.

Peace through Strength seems to be holding with the ceasefire in the Middle East and NATO increasing their spending.

Both of these developments (the new tax law and renewed respect on the military front) should help unleash some Animal Spirits in the Economy. The markets have had no shortage of Animal Spirits, but that does not seem to be entirely the case with the economy.

The Jobs Data was better than we expected (and what virtually every other economist was expecting), and as we described in that report, it was more consistent than prior reports. Having said that, there are some things to quibble about, but all that can change if we really start to reignite the Animal Spirts, which the administration seems to be doing.

One Eye on Tariffs

The July 9th date is rapidly approaching and there are indications that the “extension” of the “pause” may not be a given. It makes me very nervous that my social media stream is FULL of people mocking anyone who was afraid of tariffs. “Record highs despite the tariffs,” scream report after report. Hmmm.

Let’s not forget that the stock market rally started when we “paused” tariffs from levels that seemed insanely high and based on “dubious” (to be extremely polite) logic. 10% on most of the world, with China at 35%, wasn’t much worse than where many thought we were headed – reciprocal tariffs. We continue to highlight the wide variety of tariff mitigation strategies being employed which are also softening any blow. But it is disingenuous to claim the “tariff policy” worked and the bears “missed it.”

The President backing down on tariffs is what allowed for the rally.

Since then, we’ve had the tax law and Peace through Strength, which are additional positives.

The spending on AI continues unabated as companies crave efficiency, whether or not the economy is doing well.

We only mention this as there does seem to be some risk that the administration will decide to take “another bite at the apple” on tariffs. That seems like the biggest risk to the market in the coming days. That we go back to some policy that employs tariffs at levels that will not be manageable. That risk is increasing as the number of victory laps on tariff policy is growing. Finally, that Tariff Chart we mentioned, which is bringing in revenue, also shows that very little money, relative to the size of the economy, has been spent on tariffs so far, so it is too early to judge (even at the “pause” rates) what the impact will be on the economy.

Finally, while “sectoral” tariffs have dropped from the headlines, some tail risk remains with those (depending on how the administration decides to use them). It seems that the more formal process in place for these reduces any tail risk, but it is another thing on the tariff front that seems to have more downside than upside, given how comfortable markets are.

National Production for National Security

If I thought it was intimidating being in London with Admiral Sir George Zambellas (former First Sea Lord and Lord Warden of the Cinque Ports), it was about to get even more intimidating.

We finished our London trip as part of the keynote address of an event held by Q15. Katy Martin of the FT moderated a panel with me and Baroness Dambisa Moyo, who had to zoom in as there was an urgent matter being debated in the House of Lords. She also serves on the boards of Chevron and Starbucks.

Despite our dramatically different backgrounds (and degrees of success) we seemed to reach similar conclusions on the concept of National Production for National Security. We get to similar conclusions (described somewhat differently, but close enough for these purposes) via different processes. To me, that makes it resonate even more.

The U.S. is not the only country that needs to be taking steps toward figuring out what is required for a “no fail” state and then doing something to ensure that this occurs.

Not every country needs to be (or can be) isolated for all of its needs. Even some crucial necessities will require trade. But the more that can be done with allies, or friends, or even just countries in close proximity, the better. It is, as we’ve seen, easy for “adversaries” to use your critical needs to your disadvantage. Even allies, who might not do it on purpose, could face unforeseen events for themselves that limit their ability to continue to trade as before.

My fervent hope is that the administration dedicates as much time and energy to this pursuit as possible. Ideally shifting away from tariffs as the main tool to get domestic growth higher and focusing on DEREGULATION and Targeted Spending to really jumpstart these efforts.

We have seen some things done on the semiconductor side, and apparently on the steel side (not sure if the things being done regarding steel will turn out to be useful, but it is out there).

Yet there doesn’t seem to be the urgency I would expect.

The latest trade negotiations with China scream:

  • We are at risk of being held hostage by processed and refined rare earths and critical minerals.
  • Academy has been writing about this for years: Rare Earths - a National Security Threat was published back in February 2021 – and yet, it still feels like the nation is in its infancy with regards to overcoming this risk.
  • DEREGULAITON can go a long way. As a property developer this seems like it is in the President’s Wheelhouse. The Commerce Secretary also seems well suited for this battle. We have imposed regulation after regulation over the years. The question is whether all these regulations make sense in an era where we are in direct competition with China. The U.S. had the luxury of being the sole superpower for decades, so it is valid (even necessary) to revisit a lot of things now that we must look at global competition from a different perspective.
  • We may need to spend money. Offer contracts. Take a variety of financial initiatives (beyond some things like accelerated depreciation in the newly passed tax law) to get these industries that are important for national security (chips, medicines, certain commodities, etc.) to grow as rapidly as we may need them to grow. While deregulation is definitively in the Trump playbook, it is less clear that this is. However, we look back to Bessent’s “three legged stool” analogy, where he seems to realize it and may be able to help on that front while others tackle deregulation.
  • We cannot hammer home the point enough that refined and processed commodities are at the forefront of our fear. We usually get some “snickers” when we point out that oil is useless. And yes, the statement is designed to illicit that response, but the reality is that Gasoline and Diesel are extremely useful, but oil in its raw (or crude) form is just not that useful in everyday life. Again, yes, the statement is a bit over the top, but it is meant to get people really thinking about what we need - and that is the refined (or processed) versions of commodities. We’ve lamented that many reports indicate that 90% of the oil released from the Strategic Petroleum Reserve was sent outside the country to be refined.
    • Yes, getting access to rare earths and critical minerals is important, but if you cannot process them or refine them yourselves, you are leaving the most important step to someone else – in this case China. It depends on the specific commodity, but using AI, it seems fair to say that somewhere between 80% and 90% of mission critical materials for “things” we need (on many fronts) is still controlled by China.
    • We don’t need to be able to procure and refine every last ounce of what we use, but we are so far from that, and we need to take urgent steps as the lack of processing and refining is becoming a very visible weakness (and not just in the U.S. but also in many other major countries, who have possibly been “too comfortable” to do some of the “heavy lifting” that they really need to do).

It is a good time to paraphrase one of my favorite lines from COVID. I believe it was the CEO of Whirlpool who said something to the effect of “a product that is 99% done, is still not done.” Just think about that statement in the context of where we are with respect to many rare earths, critical minerals, semiconductors, medicines, etc.

Bottom Line

A focus on national production for national security (something every country needs to be thinking about) would go a long way to supporting the economic momentum delivered by the tax law and rejuvenated defense posture of the United States.

The risk is that the administration decides it was correct all along on tariffs and that we see more “Big Beautiful Tariff” policies in the coming days and weeks as we near some deadlines.

Markets seem “ahead” of the economy, which is fine if we continue to put forth policies that encourage the economy to catch up. We seem to be on the right path for “Animal Spirits” to rise within the economy, but not if there is a renewed focus on tariffs.

It should be another interesting week and hope you are all having a great 4th of July weekend!

Tyler Durden Sun, 07/06/2025 - 12:50

Tropical Storm Chantal Makes Landfall - All Eyes On Possible NYC Path

Zero Hedge -

Tropical Storm Chantal Makes Landfall - All Eyes On Possible NYC Path

With deadly Texas flooding dominating headlines this weekend, we now shift focus to Tropical Storm Chantal, which made landfall near Myrtle Beach, South Carolina, early Sunday. This marks the first tropical storm to make landfall in the 2025 Atlantic hurricane season—and the earliest to do so since 2022.

Chantal is the third tropical storm of this year's hurricane season, following Andrea and Barry, both of which formed in June. The new storm appeared on our radar Friday, with spaghetti models showing a potential path up the U.S. East Coast, through parts of the Mid-Atlantic, and possibly over southern New Jersey and New York City.

Updated spaghetti models posted by meteorologist Ben Noll on X show a strong level of confidence in Chantal's track into the Mid-Atlantic and Northeast, where severe weather could be seen next from D.C. to New York and Boston.

"In addition to being the first of this season, Chantal's landfall was the earliest in the season since 2022 in the United States," Knoll noted in a weather post featured in the Washignton Post.

Additional forecast models show a high level of confidence that Chantal will track up the East Coast before spinning out into the Atlantic. Models are subject to change. 

The months of August and September tend to be the most active for hurricane activity. 

If you have travel plans along the East Coast this week, keep a close eye on Chantal.

Tyler Durden Sun, 07/06/2025 - 12:15

UK Restores Formal Diplomatic Ties With Syria After Grooming Sharaa For Power

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UK Restores Formal Diplomatic Ties With Syria After Grooming Sharaa For Power

Via The Cradle

Britain reestablished full diplomatic relations with Syria on Sunday as part of the visit of UK Foreign Secretary David Lammy to Damascus to meet the country's new de facto leader, Ahmad al-Sharaa (Jolani).

In a video message on X, Lammy claimed the UK had an interest in Syria's recovery after 14 years of war. "It matters that it's stable, because if it's not, the terrorism that can happen here washes up on our own streets back at home," he said.

Image: FCDO

He also stressed the importance of addressing illegal immigration, noting that "it's hugely important we continue to support progress here."

"This is a country that is ancient, made up of many different people. The future has to be an inclusive one. It has to be a peaceful one. And I hope for prosperity for all of the Syrian people," he said.

Britain played a key role in sparking the war in Syria in 2011, which killed hundreds of thousands, and in bringing the current government, led by Sharaa, to power in December 2024.

Sharaa previously fought for the Islamic State of Iraq (the precursor to ISIS) after the 2003 US invasion. He was detained in Iraq in 2006 and released by US officials in 2008.

After his release, Sharaa was appointed head of Islamic State operations in Mosul Province, dispatching suicide car bombers to kill Shia Muslims and Christians. In August 2011, he was dispatched to Syria by Abu Bakr al-Baghdadi to establish the Nusra Front.

That same year, UK intelligence facilitated the travel of British extremists of Libyan and West and South Asian backgrounds to Syria to fight against the government of Bashar al-Assad. Many joined the Al-Qaeda-affiliated Nusra Front and ISIS.

The same year, former UK Prime Minister Tony Blair's chief of staff, Jonathan Powell, founded the NGO Inter Mediate, a Foreign Office-funded project aimed at establishing secret channels with insurgent groups. 

He boasted that his group worked closely with the UK foreign office and UK intelligence. Powell personally met multiple times with Sharaa in Idlib Governorate in an effort to rebrand his terrorist image and groom him as Syria's next leader.

The Nusra Front was later rebranded as Hayat Tahrir al-Sham (HTS). Sharaa and HTS captured Damascus in December, ousting Assad.

Syrian analyst Malek Hafez told the Syrian Observer that Powell, who became UK National Security Advisor in November, has a team running a media office inside the presidential palace, "reportedly run by two women – one British, the other of Lebanese-British heritage."

As Hafez concludes, "The rise of Ahmad al-Sharaa was not spontaneous – it was carefully engineered through a long-term, western-backed strategy, in which Britain played a disproportionately influential role among western powers."

Since Assad's fall, Syria has moved toward becoming an extremist Islamic state based on the violent ideology of the medieval Islamic scholar Ibn Taymiyyah.

In March, extremist Islamist gunmen affiliated with Syria's Ministry of Defense and General Security massacred at least 1,500 Alawite civilians, often referring to them as pigs and dogs before killing them.

Tyler Durden Sun, 07/06/2025 - 11:40

Rickards: Superintelligence Will Never Arrive

Zero Hedge -

Rickards: Superintelligence Will Never Arrive

Authored by James Rickards via DailyReckoning.com,

Readers know at least two things about artificial intelligence (AI).

The first is that an AI frenzy has been driving the stock market higher for the past three years even with occasional drawdowns along the way.

The second is that AI is a revolutionary technology that will change the world and potentially eliminate numerous jobs, including jobs requiring training and technical skills.

Both points are correct with numerous caveats. AI has been driving the stock market to record highs, but the market has the look and feel of a super-bubble. The crash could come anytime and bring the market down by 50% or more.

That’s not a reason to short the major stock indices today. The bubble can last longer than anyone expects. If you short the indices, you can lose a lot of money being wrong. But it is advisable to lighten up on equity allocations and increase your allocation to cash in order to avoid the worst damage when the crash does come.

On the second point, AI will make some jobs obsolete or easily replaceable. Of course, as with any new technology, it will create new jobs requiring different skills. Teachers will not become obsolete. They’ll shift from teaching the basics of math and reading, which AI does quite well, to teaching critical thinking and reasoning, which computers do poorly or not at all. Changes will be pervasive, but they will still be changes and not chaos.

The Limitations

Artificial Intelligence is a powerful force, but there’s much less there than meets the eye. AI may be confronting material constraints in terms of processing power, training sets and electricity generation. Semiconductor chips keep getting faster and new ones are on the way. But these chips consume enormous amounts of energy, especially when installed in huge arrays in new AI data centers. Advocates are turning to nuclear power plants, including small modular reactors to supply the energy needs of AI. This demand is non-linear, which means that exponentially larger energy sources are needed to make small advances in processing output. AI is fast approaching practical limits on its ability to achieve greater performance.

This near insatiable demand for energy means that the AI race is really an energy race. This could make the U.S. and Russia the two dominant players (sound familiar?) as China depends on Russia for energy and Europe depends on the U.S. and Russia. Sanctions on Russian energy exports can actually help Russia in the AI race because natural gas can be stored and used in Russia to support AI and cryptocurrency mining. It’s the law of unintended consequences applied to the short-sighted Europeans and the resource-poor Chinese.

AI Lacks Common Sense

Another limitation on AI, which is not well known, is the Law of Conservation of Information in Search. This law is backed up by rigorous mathematical proofs. What it says is that AI cannot find any new information. It can find things faster and it can make connections that humans might find almost impossible to make. That’s valuable. But AI cannot find anything new. It can only seek out and find information that is already there for the taking. New knowledge comes from humans in the form of creativity, art, writing and original work. Computers cannot perform genuinely creative tasks. That should give humans some comfort that they will never be obsolete.

A further problem in AI is dilution and degradation of training sets as more training set content consists of AI output from prior processing. AI is prone to errors, hallucinations (better called confabulations) and inferences that have no basis in fact. That’s bad enough. But when that output enters the training set (basically every page in the internet), the quality of the training set degrades, and future output degrades in sync. There’s no good solution to this except careful curation. If you have to be a subject matter expert to curate training sets and then evaluate output, this greatly diminishes the value-added role of AI.

Computers also lack empathy, sympathy and common sense. They process but they do not really think like humans. In fact, AI does not think at all; it’s just math. In one recent experiment, an AI computer was entered into a competition with a group of 3- to-7-year-olds. The challenge was to draw a circle with the tools at hand. Those tools were a ruler, a teapot and a third irrelevant object such as a stove. The computer reasoned that a ruler was a drafting instrument like a compass and tried to draw a circle with a ruler. It failed. The children saw that the bottom of a teapot was a circle and simply traced the teapot to draw perfect circles. The AI system used associative logic. The children used common sense. The children won. That result will not vary in future contests because common sense (technically abductive logic) cannot be programmed.

High-flying AI companies are quickly finding that their systems can be outperformed by newer systems that simply use big ticket AI output as a baseline training set. This is a shortcut to high performance at a small fraction of the cost. The establishment AI companies like Microsoft and Google call this theft of IP, but it’s no worse than those giants using existing IP (including my books, by the way) without paying royalties. It may be a form of piracy, but it’s easy to do and almost impossible to stop. This does not mean the end of AI. It means the end of sky-high profit projections for AI. The return on the hundreds of billions of dollars being spent by the AI giants may be meager.

Sam Altman: Innovator or Salesman?

The best-known figure in the world of AI is Sam Altman. He’s the head of OpenAI, which launched the ChatGPT app a few years ago. AI began in the 1950s, seemed to hit a wall from a development perspective in the 1980s (a period known as the AI Winter), was largely dormant in the 1990s and early 2000s, then suddenly came alive again in the past ten years. ChatGPT was the most downloaded app in history over its first few months and has hundreds of millions of users today.

Altman was pushed out by the board of OpenAI last year because the company was intended as a non-profit entity that was developing AI for the good of mankind. Altman wanted to turn it into a for-profit entity as a prelude to a multi-hundred-billion-dollar IPO. When the top engineers threatened to quit and follow Altman to a new venture, the board quickly reversed course and brought Altman back into the company, although the exact legal structure remains under discussion.

Meanwhile, Altman has charged full speed ahead with his claims about superintelligence (also known as advanced general intelligence (AGI) with the key word being “general,” which means the system can think like humans, only better). One way to understand superintelligence is the metaphor that humans will be to the computer as apes are to humans. We’ll be considered smart, but not smarter than our machine masters. Altman said that “in some ways ChatGPT is already more powerful than any human who ever lived.” He also said he expects AI machines “to do real cognitive work” by 2025 and will create “novel insights” by 2026.

This is all nonsense for several reasons. The first as noted above is that training sets (the materials studied by large language models) are becoming polluted with the output from prior AI models so that the machines are getting dumber not smarter. The second is the Law of Conservation of Information in Search I also described above. This law (supported by applied mathematics) says that computers may be able to find information faster than humans, but they cannot find any information that does not already exist. In other words, the machines are not really thinking and are not really creative. They just connect dots faster than we do.

A new paper from Apple concludes, “Through extensive experimentation across diverse puzzles, we show that frontier LRMs [Large Reasoning Models] face a complete accuracy collapse beyond certain complexities. Moreover, they exhibit a counter-intuitive scaling limit: their reasoning effort increases with problem complexity up to a point, then declines despite having an adequate token budget.” This and other evidence point to AI reaching limits of logic that brute force computing power cannot overcome.

Finally, no developer has ever been able to code abductive logic; really common sense or gut instinct. That’s one of the most powerful reasoning tools humans possess. In short, superintelligence will never arrive. More and more, Altman looks like just another Silicon Valley salesman pitching the next big thing with not much behind it.

Tyler Durden Sun, 07/06/2025 - 10:30

It's Official: Elon Musk's 'America Party' Registers With Federal Election Commission

Zero Hedge -

It's Official: Elon Musk's 'America Party' Registers With Federal Election Commission

Update (Sunday):

A new filing with the Federal Election Commission (FEC) confirms that Elon Musk's America Party (AMEP) is now official, as the billionaire sets out to challenge the entrenched "uniparty" duopoly in Washington.

Musk has voiced deep frustration with GOP lawmakers over their failure to codify DOGE cuts and President Trump's "Big Beautiful Bill," which was signed into law on Independence Day.

FEC Filing:

Filing #1898441 states that AMEP will be headquartered at 1 Rocket Road, Hawthorne, CA 78725—the same address as Musk's rocket company, SpaceX, according to public records.

Leadership:

AMEP's Custodian of Records and Treasurer is listed as Vaibhav Taneja, who also currently serves as CFO of Tesla, per publicly available filings.

The Filing:

.    .     . 

One day after his latest poll asking his followers on X whether the USA needs a new political party, Elon Musk announced on Saturday that the "America party has formed."

"By a factor of 2 to 1, you want a new political party and you shall have it!" Musk wrote. 

"Today, the America Party is formed to give you back your freedom."

The announcement comes after 1,248,856 people voted 'yes' to whether he should "create the America Party."

The announcement comes one day after President Donald Trump signed his signature tax and spending bill, which Musk has vehemently opposed for weeks, and which resulted in a very public falling out with Trump - whose campaign Musk spent hundreds of millions of dollars promoting. 

Musk also led the Department of Government Efficiency (DOGE), which found billions of dollars in waste, fraud and abuse - virtually none of which was included in Trump's so-called "Big Beautiful Bill."

While the Trump-Musk spat has simmered in recent weeks, Trump earlier this week threatened to cut off billions of dollars in subsidies to Musk's companies. 

Meanwhile, Musk foe Steve Bannon tore into the plan for a third political party - saying on his "War Room" podcast on Friday: "The foul, the buffoon. Elmo the Mook, formerly known as Elon Musk, Elmo the Mook. He’s today, in another smear, and this — only a foreigner could do this — think about it, he’s got up on, he’s got up on Twitter right now, a poll about starting an America Party, a non-American starting an America Party." 

"No, brother, you’re not an American. You’re a South African and if we take enough time and prove the facts of that, you should be deported because it’s a crime of what you did — among many," Bannon added. 

Musk, meanwhile, wrote on Friday that "The fat, drunken slob called Bannon will go back to prison and this time for a long time. He has a lifetime of crime to pay for."

Tyler Durden Sun, 07/06/2025 - 10:15

Tesla Sales Drop 60% In Germany In June

Zero Hedge -

Tesla Sales Drop 60% In Germany In June

Tesla's sales in Germany dropped 60% in June to 1,860 vehicles, according to the KBA. For the first half of 2025, sales fell 58.2% year-over-year to 8,890 units, despite overall growth in battery EV sales., according to Reuters.

Tesla has also now seen six straight months of declining sales in France, Sweden, Denmark, and Italy. Chinese EV maker BYD saw its German sales nearly quadruple in June to 1,675 and surged over fivefold to 6,323 year-to-date.Recall, Tesla's company-wide Q2 delivery numbers came in at 384,122 vehicles last week, just below the estimate of 389,407. 

While estimates had been lowered multiple times, the number was still better than whisper numbers as low as 350k or 360k that were starting to make their way around the street.

Production beat expectations. Tesla built 410,244 vehicles, compared to the forecast of 400,083. Model 3 and Model Y deliveries totaled 373,728, slightly under the estimate of 377,295. The “Other Models” category — including the Model S, X, and Cybertruck — showed Tesla delivered 10,394 vehicles, below the expected 14,644.

Production of these models also came in slightly under, at 13,409 compared to the estimate of 13,616.

Model 3 and Y production reached 396,835 units, higher than the expected 383,567, suggesting Tesla had ramped up output of its most popular models.

Deutsche Bank analysts noted late last week that the surprise upside came mainly from the U.S. (likely due to tax credit pull-forward) and stronger sales in parts of Asia, though China was weaker than expected.

Model 3/Y deliveries outperformed forecasts, while S/X/Cybertruck lagged. Energy storage deployment missed estimates. Deutsche Bank sees potential margin upside from the delivery beat but notes that full-year volume growth remains challenging due to policy headwinds and Model Q delays. Elon Musk’s renewed focus on U.S. and European sales could help in H2, the bank said.

As we noted last week, ahead of Tesla’s Q2 2025 delivery report, expectations were subdued amid signs of continued demand weakness and investor concerns over the company’s growth trajectory. Analysts widely anticipated another disappointing quarter, despite hopes pinned on the rollout of a refreshed Model Y and the company’s long-term robotaxi ambitions.

The Bloomberg consensus projected Tesla would report global deliveries of 395,328, representing an 11% year-over-year decline, though still higher than the 336,700 vehicles delivered in Q1. Production was expected to hit 443,321 units, up from 410,800 in the same period last year.

Tyler Durden Sun, 07/06/2025 - 09:55

Trends in Educational Attainment in the U.S. Labor Force

Calculated Risk -

The first graph shows the unemployment rate by four levels of education (all groups are 25 years and older) through June 2025. Note: This is an update to a post from several years ago.

Unfortunately, this data only goes back to 1992 and includes only three recessions (the stock / tech bust in 2001, and the housing bust/financial crisis, and the 2020 pandemic). Clearly education matters with regards to the unemployment rate, with the lowest rate for college graduates at 2.5% in June, and highest for those without a high school degree at 5.8% in June.

All four groups are slightly above pre-pandemic levels now.

Unemployment by Level of EducationClick on graph for larger image.

Note: This says nothing about the quality of jobs - as an example, a college graduate working at minimum wage would be considered "employed".

This brings up an interesting question: What is the composition of the labor force by educational attainment, and how has that been changing over time?

Here is some data on the U.S. labor force by educational attainment since 1992.

Labor Force by Education Currently, almost 67 million people (25 and over) in the U.S. labor force have a bachelor's degree or higher.  This is 45% of the labor force, up from 26.2% in 1992.

This is the only category trending up.  "Some college", "high school" and "less than high school" have been trending down.

Based on recent trends, probably half the labor force will have at least a bachelor's degree sometime next decade (2030s).

Since workers with bachelor's degrees typically have a lower unemployment rate, rising educational attainment has pushed down, by my rough calculation, the unemployment rate by 0.3% to 0.4% over the last 30 years.

Also, I'd guess more education would mean less labor turnover, and that education is a factor in lower weekly claims over time.

A more educated labor force is a positive for the future.

To Make America Great Again, Start Here

Zero Hedge -

To Make America Great Again, Start Here

Authored by Charles Hugh Smith via OfTwoMinds blog,

Our status quo is so thoroughly corrupt that it's no longer even seen as corruption, it's just BAU--business as usual.

It's a big ask, but let's depoliticize the phrase "make America great again" and consider what this would actually entail, not as a lobbyists' grab-bag of tax breaks for the wealthy and arcane giveaways in 500-page Congressional bills, but as a restoration of the fundamental foundations of greatness.

In the conventional contexts of the current era, this boils down to ideology and finance. If we dial back culture-war over-reach and free up "market forces," for example, this will restore America's greatness.

The problem with all this kind of thinking is it's superficial and banal, for it ignores the real source of America's decline: the moral rot that has eroded every institution and every nook and cranny of our society. Whenever I mention this moral rot, I get immediate push-back of this sort: corruption has always been around, so today is no different from previous eras.

While it's self-evident that self-interest and greed manifest as corruption, it's not true that the systemic corruption of the present is no different from previous eras--it's worse, much worse because it's now normalized, and so we accept the most outrageous forms of corruption as "normal."

So private equity buys a company, loads it with debt, transfers all the borrowed cash to the private equity "owners," and then leaves the company a sinking hulk that soon declares bankruptcy. Or when private equity snaps up hospitals and healthcare clinics and prices rise not for better service but to "reward the owners," this plundering of "healthcare" is just good solid MBA-school maximization of shareholder value.

What few seem to notice is the barriers that limited the pillage and plundering of the private and public-sectors have all eroded or been hollowed out. The legal framework is now a mirror-image of the financial sector, a series of facades that mask the pillage and plundering: of course it's profitable, but it's also legal.

The social barriers have also been dismantled. There are no taboos left, as "anything goes" is the modern zeitgeist. The notion that corporations have a social responsibility to the community they're embedded in is now a quaint whiff of nostalgia, along with the notion that corporations have an implicit responsibility to serve the larger national interests as well as "shareholder value."

Every institution has been hollowed out by self-service. Is it any wonder than younger generations have near-zero trust in institutions, given that their PR veneer of "public service" is just a cover for milking the system for private gain?

If you read histories of capitalism--for example, Fernand Braudel's three-volume Civilization and Capitalism, 15th-18th Century ( Volume 1Volume 2Volume 3you discover that "capitalism" only functions as advertised if it is embedded in a moral order, something Adam Smith understood.

In early European capitalism, Christianity (Catholic and Protestant) provided this moral order. In China, Confucianism provided the moral foundation of the society and the economic - political structures.

Consider Xi Jinping's campaign to unify Confucianism and Marxism. This is not an anachronism, it reflects Xi's understanding that Marxism does not provide the moral foundation needed to limit the corruption undermining China. Only restoring a Confucian moral order can do that.

I explored this in some depth in this essay Pieces of the China Puzzle (April 27, 2024).

Here is an excerpt:

As the author noted, "his attempted synthesis of Marx and Confucius has prompted bafflement, even mockery, among observers outside and inside China."

To me, there is nothing baffling in this synthesis; it not only makes perfect sense, it can be understood as essential in the broader context of China's history and culture.

If we truly want to make America great again, as opposed to using the slogan as cover for more grift and graft, then we have to start by recognizing the moral sinkhole we're in. Institutions, the government and corporations have all lost our trust because they're all cesspools of self-serving corruption.

No, this is not "normal" or "the way it's always been." Those are the excuses we deploy to avoid facing the truth: our status quo is so thoroughly corrupt that it's no longer even seen as corruption, it's just BAU--business as usual.

There will be consequences, for a society that lacks a moral foundation is a society shorn of value, a society of fakery, PR and narrative control designed to mask maximizing my gain regardless of consequences pillage and plunder.

When a hard rain finally falls, it will surprise us, for in our grandiosity and hubris, we imagined we were gods, immune to the fatal consequences of our corruption.

*  *  *

Check out my new book Ultra-Processed Life and my new fiction/novels page.

Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

Tyler Durden Sun, 07/06/2025 - 09:20

Which Countries Invest In The US The Most?

Zero Hedge -

Which Countries Invest In The US The Most?

Foreign direct investment flows have steadily climbed in recent years, fueled by the expansion of multinational companies.

A growing share of that capital is now concentrated in a small number of economies, including the United States.

This graphic, via Visual Capitalist's Kayla Zhu, visualizes foreign direct investment (FDI) into the U.S. by country or region of origin in 2023.

Data comes from Citigroup.

Which Countries are Investing in the U.S?

Below, we show 2023 FDI inflows into the U.S. by country or region.

The U.S. attracted $311 billion in foreign direct investment in 2023, making it the top global recipient by far.

According to Citi, the U.S. saw a growth of 13% between 2023 and 2024 while most other regions saw declines. The U.S. also recorded the highest growth in greenfield projects, including Taiwan Semiconductor Manufacturing Company’s $65 billion investment into constructing a new chip plant with three fabs in Arizona.

The European Union accounted for the largest share of FDI into the U.S. at $140 billion, or 45% of the total.

European companies like Volkswagen have long invested heavily into the U.S., including Volkswagen’s recent investment of around $800 million to electrify its Tennessee assembly plant.

Japan, Canada, and the United Kingdom were also major investors, each contributing over $35 billion in FDI.

The U.S. has consistently ranked among the top recipients of global FDI in the past decade alongside China

To learn about the global FDI landscape, check out this graphic that visualizes the decline of FDI into China.

Tyler Durden Sun, 07/06/2025 - 08:45

Jaguar Sales Plummet By 97.5% After Awful They/Them Rebrand

Zero Hedge -

Jaguar Sales Plummet By 97.5% After Awful They/Them Rebrand

Authored by Steve Watson via Modernity.news,

Yet another stunning example of ‘go woke, go broke’ has come to pass after high end car brand Jaguar has seen vehicle sales fall off a cliff following a mind blowingly stupid non-binary rebrand.

Sales in Europe dropped by a whoppping 97.5 percent year-over-year in April 2025,  figures from the European Automobile Manufacturers’ Association (AECA) reveal.

Jaguar sold just just 49 cars in April 2025 compared to almost 2,000 in April 2024. Year-to-date sales from January to April have also plunged by more than three quarters with just 2,665 vehicles sold.

Around the world, Jaguar sold under 27,000 vehicles for the 2024/25 financial year, 85 percent fewer than just six years prior.

It’s the most catastrophic decline in the history of the company, and it comes as a surprise to absolutely nobody.

The company had a glorious history of producing sleek and iconic cars associated with James Bond and Steve McQueen, yet the handed their branding over to an LGBTQ activist who decimated it by ditching the classic big cat logo and designing a car that looks like a big pink cardboard box.

Worse still, they announced this rebrand with a commercial featuring cross dressers that look like they belong on the set of Dune.

The stock price of the company instantly sank.

Formula One racing legend Johnny Herbert commented on Jaguar’s bizarre rebranding of itself into some sort of LGBTQ activist campaign, calling it ‘confusing’ and revealing that no one he’s spoken to in the auto world understands what the company is doing.

“I would say the biggest problem is the Jaguar product. It is not selling,” Herbert added, further noting that “To take the cat off Jaguar just seems the most unbelievable marketing decision I think I have ever seen.”

Following the immediate backlash, the new weirdos at Jaguar declared “you’ll soon see things our way.”

Jaguar is insisting that the collapse in sales has nothing to do with the rebrand, claiming that “Comparing Jaguar sales to 2024 is pointless as we are no longer producing vehicles in 2025 with low levels of retail inventory available. Jaguar’s rebranding is not related to a sales decline.”

“A spokeswoman said: ‘”Jaguar’s transformation towards a new portfolio of pure-electric vehicles was announced as part of the Reimagine strategy in 2021. JLR always envisaged a period when the current range would ‘no longer be on sale’ before the introduction of the new Jaguar collection,” the company further declared.

Rest assured, no one is buying this car.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Sun, 07/06/2025 - 07:00

France's Fiscal Reckoning: Is The Eurozone's Second Giant Next In Line?

Zero Hedge -

France's Fiscal Reckoning: Is The Eurozone's Second Giant Next In Line?

Submitted by Thomas Kolbe 

France is caught in a debt spiral. Now the president of the French Court of Auditors is warning of the consequences of political inaction.

Pierre Moscovici has served as president of the French Court of Auditors for five years, overseeing regular audits of the nation's public finances. From 2012 to 2014, he was France’s finance minister and then spent five years as EU Commissioner for Economic and Financial Affairs, Taxation and Customs. The man knows his way around empty coffers.

On Wednesday, Moscovici called on Prime Minister François Bayrou to take urgent steps to consolidate public finances. France’s budgetary situation, he said, has spun out of control, especially in 2023 and 2024. If a turnaround is not achieved soon, the capital markets will force one. “We can still act voluntarily,” he warned the government, “but tomorrow, the markets may impose austerity.”

For Now, Calm in the Bond Markets

Once the dominoes start falling, it goes fast. Investors dump French government bonds en masse. Yields spike, prices plummet, and refinancing the country’s massive debt becomes even more costly. Already, interest payments consume 10.6% of France’s state budget—roughly the same as education spending. As debt levels rise, fiscal maneuvering space shrinks.

With sovereign debt at 114% of GDP, the trap could snap shut unexpectedly. For now, European officials still point fingers at the U.S., whose debt ratios are similar. But no one can say how long that deflection tactic will work. Credit risk materializes suddenly—usually without warning.

Point of No Return

What we do know is this: historically, a debt ratio above 100% of GDP is already considered critical. At that point, even ambitious reform efforts are rarely enough to grow out of the mess. And unless the indebted country happens to issue the world’s reserve currency, capital markets will deliver their verdict—as we saw during the Eurozone debt crisis fifteen years ago.

What follows is familiar: central bank intervention to keep government finances liquid by running the printing presses—transferring the bill to citizens through inflation.

France has never been known for fiscal conservatism. Years of political stalemate, shifting majorities, and unstable coalitions have pushed annual deficits far beyond the Maastricht 3% threshold. In 2024, the deficit reached 5.8% of GDP. Even with early consolidation steps, it is expected to remain at 5.5% this year—far above the target.

No Economic Comeback in Sight

If French policymakers are banking on a comeback in economic growth, they may be disappointed. In May, the Purchasing Managers' Index (PMI) for manufacturing came in at 48.1 and for services at 49.6—both in contraction territory. PMIs reflect business sentiment, with readings above 50 indicating growth and below 50 signaling decline. They are considered early indicators of economic and industrial trends.

In other words: despite—or perhaps because of—massive government spending, the French economy is stuck in recession.

Contagion Risk

France’s brewing fiscal crisis is more than a national tragedy. Alongside Germany and Italy, France is under close scrutiny from analysts and investors worldwide. Can Paris pull off fiscal consolidation? Confidence in France’s creditworthiness has been shaky for years. In 2023, Moody’s was the last major rating agency to downgrade France’s AAA status, assigning a negative outlook.

If capital markets further downgrade French debt, the consequences would spill across the Eurozone. Here, the old rule applies: hang together, or hang separately. Bond markets tend to move from one weak link to the next, rigorously reassessing creditworthiness in crisis situations. Those who falter pay higher interest—or lose market access altogether. Moscovici knows this.

The pressure is mounting on national governments: either push through tough budget reforms or increase the tax burden on citizens.

The French Exception

France is a special case. With a government spending ratio of 57.3% of GDP, it ranks among the top welfare states in the world. Accordingly, the overall tax burden has risen to 45.6%—well above the EU average of around 40%. Citizens are already surrendering nearly half their income to maintain Paris’s welfare illusions.

Social peace is being purchased with money that no longer exists—financed by debt and propped up by the illusion of fiscal sovereignty. When even the nation’s top auditor demands consolidation, one thing is clear: it’s about to get serious. The social budget—the bedrock of the political quiet pact keeping unrest in the banlieues at bay—is at stake.

History teaches us: when governments cut social programs in France, social peace crumbles. Then the suburbs—from Paris to Marseille to Lyon—go up in flames.

* * * 

About Thomas Kolbe: for over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Sun, 07/06/2025 - 07:00

10 Sunday Reads

The Big Picture -

Avert your eyes! My Sunday morning look at incompetency, corruption and policy failures:

The first rule in Trump’s Washington: Don’t write anything down: A new culture of secrecy in government is taking root — among career staffers and new political appointees alike. (Washington Post)

How Republican E.V. Cuts Could Put U.S. Carmakers Behind China: China’s lead in electric vehicle technology, which is already huge, could become insurmountable if incentive programs are slashed, auto experts and environmentalists say. (New York Times) see also Tesla’s Global Vehicle Deliveries Plunged in Second Quarter: Global vehicle sales fall 13.5% as the electric-vehicle maker struggles to reverse months of declining sales. (Wall Street Journal)

Who profits most from Medicaid? Employers like Walmart and Amazon, many of whose workers rely on the program: These corporations are enormously profitable. Last year, Walmart earned $19.4B on sales of $681B; McDonald’s earned $8.2B billion on sales of $26B, and Amazon earned $59B on sales of $638B. Yet millions of their full time workers rely on public assistance. If the Republican Congress pursues its campaign to strip access to government programs away from more Americans, more of those workers will be trapped in a poverty spiral. (Los Angeles Times)

Housing market at risk of “sustained downturn” as price growth cools: Home prices rose 2.7% in April, compared with a year earlier, down from a 3.5% jump in March, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index released Tuesday. (Axios)

Taliban bride: Women in Afghanistan are prisoners in their own homes. This is the story of Marjan, married at 12 to a Taliban fighter. (Aeon)

China Steals Language and Home Life From Tibetan Kids as Young as 4: Beijing is building a broad network of preschools across Tibetan areas, seeking to inculcate loyalty to the Chinese Communist Party early in life. (Wall Street Journal)

That Dropped Call With Customer Service? It Was on Purpose. Endless wait times and excessive procedural fuss—it’s all part of a tactic called “sludge.” (The Atlantic)

The alarming rise of US officers hiding behind masks: ‘A police state’  Mike German, an ex-FBI agent, said immigration agents hiding their identities ‘highlights the illegitimacy of actions’ (The Guardian)

How to Wreck the Nation’s Health, by the Numbers. After decades as a physician studying the factors that determine our risks of getting sick and how long we live, I am convinced that the actions of the Trump administration will cost lives. Researchers like me know the data. For years we have warned that Americans have shorter life expectancies and higher disease rates than people in other high-income countries. Now, the poor health of Americans is about to get worse. (New York Times) see also The seven things that make ADHD much worse: Experts point to a range of lifestyle and environmental triggers that can worsen this neurodevelopmental disorder. Here’s how to fix them (Telegraph)

A Pro-Russia Disinformation Campaign Is Using Free AI Tools to Fuel a ‘Content Explosion’ Consumer-grade AI tools have supercharged Russian-aligned disinformation as pictures, videos, QR codes, and fake websites have proliferated. (Wired)

Be sure to check out our Masters in Business next week with Kate Moore, Chief Investment Officer of Citi Wealth; responsible for overseeing investments, portfolio strategy and asset allocation for the trillion dollars Citi Wealth manages. Previously, she was Head of Thematic Strategy and PM for the Global Allocation Fund at BlackRock.

 

More Americans are out of work longer, as employers hold back on both hiring and firing

Source: Sherwood

 

Sign up for our reads-only mailing list here.

~~~

To learn how these reads are assembled each day, please see this.

 

The post 10 Sunday Reads appeared first on The Big Picture.

US Support For Israel Comes At A Staggering, Multifaceted Price

Zero Hedge -

US Support For Israel Comes At A Staggering, Multifaceted Price

Via Brian McGlinchey via Stark Realities

When asked about the cost of their government’s support of the State of Israel, some Americans will say it’s $3.8 billion a year — the amount of annual military aid the United States is committed to under its current, 10-year “memorandum of understanding” with Israel. However, that answer massively understates the true cost of the relationship, not only because it doesn’t capture various, vast expenditures springing from it, but even more so because the relationship’s steepest costs can’t be measured in dollars.

Since its 1948 founding, Israel has been far and away the largest recipient of American foreign assistance. Though the Ukraine war created a brief anomaly, Israel generally tops the list every year, despite the fact that Israel is among the world’s richest countries — ranked three spots below the UK and two spots above Japan in per capita GDP. Driving that point home, even when using the grossly-understating $3.8 billion figure for US expenditures on Israel, America gave the Zionist state $404 per person in the 2023 fiscal year, compared to just $15 per person for Ethiopia, one of the poorest countries on Earth and America’s third-largest beneficiary that year.

Source: Council on Foreign Relations

Israel’s cumulative post-World War II haul has been nearly double that of runner-up Egypt. What most Americans don’t realize, however, is that much of Egypt’s take — $1.4 billion in 2023 — should be chalked up to Israel too, because of ongoing US aid commitments rising from the 1978 Camp David Accords that brokered peace between Egypt and Israel. The same can be said for Jordan — America’s fourth-largest beneficiary in fiscal 2023 at $1.7 billion. US aid to the kingdom surged after it signed its own 1994 treaty with Israel, and a wedge of Jordan’s aid is intended to address the country’s large refugee population, comprising not only Palestinians displaced by Israel’s creation, but also masses who’ve fled US-led regime-change wars pursued on Israel’s behalf.

Then there’s the supplemental aid to Israel that Congress periodically authorizes on top of the memorandum of understanding (MOU) commitment. Since the October 7 Hamas invasion of Israel, these supplements have exceeded the MOU commitment by leaps and bounds. In just the first year of the war in Gaza, Congress and President Biden approved an additional $14.1 billion in “emergency” military aid to Israel, bringing the total for that year to $17.9 billion.

One must also consider the fact that, given the US government runs perpetual deficits that now easily exceed $1 trillion, every marginal expenditure, including aid to Israel, is financed with debt that bears an interest expense, increasing Americans’ tax-and-inflation burden.

On top of money given to Israel, the US government spends huge sums on activities either meant to benefit Israel or that spring from Israel’s actions. For example, during just the first year of Israel’s post-Oct 7 war in Gaza, increased US Navy offensive and defensive operations in the Middle East theater cost America an estimated $4.86 billion.

Those Gaza-war-related outflows have not only continued but accelerated. For example, earlier this year, the Pentagon engaged in an intense campaign against Yemen’s Houthis. In proclaimed retaliation for Israel’s systematic destruction of Gaza, the Houthis have targeted Israel, and ships the Houthis said were linked to Israel. In response, America unleashed “Operation Rough Rider,” which often saw $2 million American missiles being used against $10,000 Houthi drones, and cost between one and two billion dollars.

President Trump’s military strikes on Iranian nuclear facilities — amid a war initiated by Israel on contrived premises — cost America another one to two billion dollars, according to early estimates. Even before the attack on a nuclear program the US intelligence community continues to assess is not aimed at producing a weapon, the Pentagon was already spending more money on Israel’s behalf, helping to defend the country from Iran’s response to Israel’s unprovoked aggression. The run-up to US strikes itself entailed a massive and costly mobilization of American forces and equipment to the region, as the Pentagon readied for multiple scenarios.

Propelled by Israel’s powerful US-based lobby, by Israel-pandering legislators, and by a revolving cast of Israel-favoring presidents, cabinet members, and national security officials, the United States has consistently pursued policies in the Middle East that place top priority on securing Israel’s regional supremacy.

Among the many avenues used to pursue that goal, none has been more costly than that of regime change, where an outcome that results in a shattered, chaotic state is seemingly just as pleasing to Israel and its American collaborators as one that spawns a functioning state with an Israel-accommodating government — and where the cost is often measured not only in US dollars but in American lives and limbs.

A Marine weeps at a 2005 memorial service in Iraq honoring 31 comrades killed in a single day (Anja Nedringhaus/AP)

Of course, the most infamous such regime-change effort was the US-led invasion of Iraq in 2003. “If you take out Saddam, I guarantee you that it will have enormous positive reverberations on the region,” current Israeli Prime Minister Benjamin Netanyahu assured a US congressional hearing. Doing his part to aid a Bush administration dominated by Israel-aligned neoconservatives bent on taking out one of Israel’s regional adversaries, Netanyahu also said there was “no question whatsoever” that Hussein was “hell-bent on achieving atomic bombs.”

The drive to topple Syria’s Iran-allied Assad government is another prominent example of regime change on behalf of Israel, as the two countries sought to sever the “Shia Crescent” that — due in great part to Saddam’s ouster — presented a continuous pipeline of Iranian influence extending to Israel’s borders. To the contentment of the US and Israeli governments, Syria is now led by an al Qaeda alumnus who’s reportedly poised to relinquish Syria’s long-standing claim on the Golan Heights, which Israel captured in 1967.

Taken together, the price tag of US military operations in Iraq and Syria, including past and future medical and disability care for veterans, totals $2.9 trillion, according to Brown University’s Costs of War Project. The human toll has been even more mind-boggling: upwards of 580,000 civilians and combatants killed, with perhaps two to four times that number indirectly perishing from displacement, disease and other factors. More than 4,600 US service-members died in Iraq, and 32,000 were injured, many of them enduring amputations and burns. Alongside mass suffering, these and other US interventions undertaken to ensure Israel’s regional supremacy have fomented enormous resentment of the United States across the region.

Infantryman Brendan Marrocco lost all four limbs in a 2009 roadside bomb explosion in Iraq (Ruth Fremson for the New York Times via NBC News)

Those resentments help drive another massive debit in the Israel’s account with the United States: Any thorough assessment of the costs of the relationship must reflect the fact that US backing of Israel is a principal motivator of Islamist terrorism directed against Americans, and there’s no greater example of that fact than 9/11.

From Osama bin Laden to the hijackers, anger over US support of Israel was one of Al Qaeda’s foremost motivators:

  • In his 1996 declaration of war against the United States, bin Laden cited the First Qana Massacre, in which Israel killed 106 Lebanese civilians who sought refuge at a UN compound. He said Muslim youth “hold [the United States] responsible for all the killings…carried out by your Zionist brothers in Lebanon; you openly supplied them with arms and finance.”

  • Bin Laden said he was initially inspired to strike American skyscrapers when he witnessed Israel’s 1982 destruction of apartment towers in Lebanon.

  • The 9/11 Commission said mastermind Khalid Sheikh Mohammed’s “animus toward the United States stemmed not from his experiences there as a student, but rather from his violent disagreement with U.S. foreign policy favoring Israel.”

  • 9/11 hijacking ringleader Mohammed Atta signed his will on the day Israel began its 1996 Operation Grapes of Wrath attack on Lebanon. A friend said Atta was furious and used his will as a means of committing his life to the cause.

  • An acquaintance of hijacker-pilot Marwan al-Shehhi asked why neither he nor Atta ever laughed. He replied, “How can you laugh when people are dying in Palestine?”

  • Addressing the motives of the 9/11 hijackers, FBI Special Agent James Fitzgerald told the 9/11 Commission, “I believe they feel a sense of outrage against the United States. They identify with the Palestinian problem…and I believe they tend to focus their anger on the United States.”

The 9/11 attacks killed 2,977 people, resulted in roughly $50 billion in insured losses, and opened America’s Global War on Terror. In addition to its use as a false pretext for invading Iraq on Israel’s behalf, 9/11 prompted the US invasion of Afghanistan and the ensuing 20-year Fool’s Errand that took the lives of 2,459 US service-members (among 176,000 people in all), and cost $2.3 trillion.

With dread, we must now wonder what price may be extracted by terrorists motivated by US support of Israel’s ongoing, bloody rampage in Gaza, which has killed more than 56,000 people — more than half of them women and children — and deliberately rendered much of the territory uninhabitable.

The death and destruction is being meted out with American-supplied weapons, from F-15s, F-16s, and F-35 fighters to Apache attack helicopters, precision-guided munitions, artillery shells and rifles. No weapon has figured more heavily in the shocking civilian death toll and catastrophic physical destruction than US-supplied 2,000-pound MK-84 bombs, which have a lethal radius up to 1,198 feet. Even after outside observers were taken aback by Israel’s use of the bombs in densely-populated areas, the US government continued to ship more of them to Israel.

Israel has engaged in mass destruction of civilian infrastructure, rending much of Gaza uninhabitable (Ashraf Amra -UNRWA)

As if the death and destruction weren’t enough to incite deadly retaliation against Israel’s sponsor, depraved Israeli soldiers have used social media to document themselves gleefully demolishing entire residential blockssmashing shops, toys and personal possessions, and — in a disturbingly widespread trend — dressing in the lingerie of displaced Palestinian women. All along, Israeli politicians, pundits and citizens openly endorse ethnic cleansing, forced starvation and other war crimes. Last week, multiple Israeli soldiers confirmed that, under orders, troops have been routinely using lethal weapons — including artillery shells — as a barbaric form of crowd control at food distribution points.

If innocent Americans are someday victimized by terrorists seeking to avenge the horror visited upon Gaza’s two million men, women and children with US-supplied weapons, watch for a perverse dynamic in which the attack is cited as a reason to redouble American support of Israel. Given the effectiveness of that spin, terrorism against the United States is a boon to the State of Israel. Reflecting that dark dynamic in the immediate aftermath of 9/11, Netanyahu seemingly struggled to contain his enthusiasm as he spoke to the New York Times:

Asked tonight what the attack meant for relations between the United States and Israel, Benjamin Netanyahu, the former prime minister, replied, ''It's very good.'' Then he edited himself: ''Well, not very good, but it will generate immediate sympathy.''

This self-perpetuating phenomenon — in which terrorism motivated by American support for Israel is used to promote American support for Israel — isn’t the only example of warped thinking about the relationship. America’s approach to the Middle East is awash in circular, Israel-centered logic. For example, Americans are told Israel is a critical ally because it serves as a “bulwark” against Iran — and that America needs a bulwark against Iran because it’s an adversary of Israel.

In the aftermath of 9/11, Iranians held a mass candlelight vigil in Tehran's Mohseni Square to express their condolences to the American people

In one of several observations about Israel that led to him being relieved of his position leading the US Joint Chiefs of Staff Levant and Egypt branch in June, Army Colonel Nathan McCormack summed up the relationship this way:

“[Israel is] our worst ‘ally.’ We get literally nothing out of the ‘partnership’ other than the enmity of millions of people in the Middle East, Africa and Asia.”

Bit by bit, that realization is spreading throughout American society, as citizens observe Israel’s conduct in Gaza, scrutinize the Israel-Palestine conflict as never before, and grow increasingly wary of Israel’s attempts to drag the United States into another major war launched on false pretenses. That latter dimension has special resonance with countless US combat veterans who’ve come to the terrible realization that their sacrifices and those of their fallen comrades were ultimately made for the benefit of a foreign government — and to the detriment of America’s security.

Earlier this year, Pew Research found a majority of Americans now have a negative view of the State of Israel, with the most jarring shifts observed within Israel’s strongest bastion of support: the Republican Party. Guaranteeing that Israel’s standing is poised for more deterioration, bad feelings about Israel among Republicans under age 50 soared 15 points in just three years, with half of them now having an unfavorable view of the country.

In 2010, Meir Dagan, who headed Israel’s Mossad spy agency, warned a Knesset hearing that "Israel is gradually turning from an asset to the United States to a burden." Fifteen years later, Israel’s status as an enormous, multidimensional burden on the American people is more evident than ever.

Stark Realities undermines official narratives, demolishes conventional wisdom and exposes fundamental myths across the political spectrum. Join more than 3,500 Stark Realists who benefit from ad-free, monthly insights at starkrealities.substack.com

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Views expressed in this article are opinions of the author and do not necessarily reflect the views of ZeroHedge

 

Tyler Durden Sat, 07/05/2025 - 23:20

US Reassesses Relations With Colombia As Crime And Cocaine Surge Under Leftist Regime 

Zero Hedge -

US Reassesses Relations With Colombia As Crime And Cocaine Surge Under Leftist Regime 

The Trump administration recalled its top diplomat in Colombia, John McNamara, for "urgent consultations" on Thursday in response to what it described as "baseless and reprehensible" statements from senior Colombian officials. While the State Department did not specify which remarks prompted the move, it indicated that further actions would follow. In response, Colombian President Gustavo Petro recalled his country's ambassador to the U.S., citing the need to reassess the bilateral relationship.

Tensions between the two nations have been rising, exacerbated by the recent shooting of opposition Senator Miguel Uribe, which U.S. Secretary of State Marco Rubio blamed on inflammatory rhetoric from Colombia's far-left government.

Earlier in the year, President Petro refused to accept deportation flights from the U.S., prompting President Trump to threaten tariffs and sanctions; however, that dispute was ultimately defused. Colombian Foreign Minister Laura Sarabia resigned amid the diplomatic fallout. 

The deterioration in bilateral relations comes as Colombia's security situation has deteriorated under President Petro's leftist regime. Once a close ally of the U.S., Colombia has descended into crime and chaos, with coca cultivation surging. 

Coca cultivation rose 10% last year to 253,000 hectares — enough to produce more than 2,600 tons of the drug. The National Liberation Army, or ELN, capitalized on the boom, seizing full control of the Catatumbo region near the Venezuelan border, one of the world's most prolific drug corridors. -Bloomberg

Petro's "total peace" policy—centered on negotiating with drug cartels—has deeply frustrated the Trump administration, which has spent several months seeking to dismantle cartel command-and-control networks across the Americas to stop the flow of illicit drugs into the U.S. 

According to Bloomberg, citing a person familiar with the matter, Petro's perceived lack of cooperation on narcotics trafficking is a significant source of the tension with Washington. The situation has led to a pending decision in which the Trump administration may decertify Colombia as a reliable partner in the war on drugs, as early as this fall. 

"Washington's relationship with Bogotá is rapidly going from bad to worse," Geoff Ramsey, a senior fellow at the Atlantic Council in the U.S. capital, told Bloomberg. 

Petro has publicly accused "right-wing extremists" of plotting to overthrow his government—an allegation that underscores internal power struggles and suggests growing political instability within the country. 

Tyler Durden Sat, 07/05/2025 - 22:45

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