Bait and Switch Gaza deal dead. WW3 risks rise.

 MEDIA EVENT WITHOUT REAL SOLUTIONS

NO ONE CAN BE TRUSTED, NO GOOD FAITH

It is clear that the deal for Gaza will not be accepted, nor will it be renegotiated. It has been revealed that the Arab community which tentatively approved a deal, saw a far different deal when displayed on national Tv. It seems after meeting with Netanyahu, the deal was changed to make it unacceptable to Hamas and the other Arab leaders, probably intentionally. Of course, now it can be blamed on Hamas and the killing can continue. The deal basically required surrender and perpetual subjugation by Israel.

It also appears that a major attack on Iran is in the works and there is speculation that this will be coordinated with escalation in Ukraine and even a possible attack on Venezuela. Is the plan now to cut oil supplies to China from the middle east, destabilize Iran as vital link in the belt and road initiative and tie up Russia in Ukraine to avoid intervention? A complicated and dangerous plan with many risks. 

There is little doubt that an attack on Iran is being prepared, it seems large amounts of materials and resources moving to the middle east can not be concealed. At the same time we see France illegally boarded and detained a Russian ship in international waters with the public acknowledgment that they want to destabilize Russia's supply chain, an act of war.  Estonia also is advocating embargoing all sea traffic out of St. Petersburg, another illegal act. All this is coupled with political election shenanigans in Romania and Moldova to possibly open another front over Ukraine. There are continuing reports of expanded U.S. preparations for an operation on Venezuela to control that oil and deny it to China and other buyers.

One can expect the subjects of these attacks understand these realities better than anyone, and one must wonder when they may come to believe that they would be best served with a massive pre-emptive attack.

While for a time it appeared we had moved back from a potential WW3, any such plan will indeed be WW3, once it starts, the odds are in favor of ending in a nuclear confrontation.

Is Venezuela a threat to U.S. ?

 WHAT'S UP WITH POSSIBLE WAR WITH VENEZUELA?

DO WE NEED MORE FIRES TO DEAL WITH?

Speculation abounds that the U.S. is expected to take military action with Venezuela. We know that opposition to the government of Venezuela has been a hot topic ever since the election of the socialist government of Hugo Chavez in 1998. Chavez put in many policies of redistribution and nationalized much of the industries in the country. It seems he was elected in a democratic elections and popular with a majority of the country, by a small margin.  He died at an early age in 2013 and was followed by Nicolas Maduro, as he was vice president.  He was elected later in a special election with a narrow margin of 1.5%. In later elections the last which was in 2024 there have been accusations of corruption and fraud. In 2019 many claimed that the country was moving to a dictatorship and the U.S. and Organization of America States considered the president of the Assembly, Juan Guaido as the legitimate president. 

Accusations by Maduro of assassination attempts and internal unrest fanned by the CIA have been prevalent for years. John Bolton under Trump advocated military intervention in Venezuela in Thump's first term. At that time the accusation was spreading communism or his human rights violations in Venezuela.

Recently there have accusations of Venezuela being a major drug supplier to the U.S. While we can expect that there is drug business in Venezuela it is most likely dwarfed by such business in Mexico, Columbia, Canada, and even the U.S.  

As for Communism and socialism, I do recall the whole reason for the war in Viet Nam was the spread of communism, the  domino theory. Today Viet Nam is still a dedicated communist country with government advocacy for communism on the internet, yet it is visited by American presidents and has most favored trade arrangements. I expect, like much like our middle east policy, it is all about oil. Oil that Venezuela would sell in any amount, one would desire to buy.

The biggest method of the continuation of dictatorships and communist dictatorships in particular, is the always continuous external threats, sanctions and fear of foreign intervention.  Communism and socialism are failed economic policies that will in time fail, as in the Soviet Union and even in the western democracies. Foreign intervention and threats will usually unify the citizens around even the leaders they despise and thus prolong their power.

Secondly any military intervention in South America will raise red flags and anti-Americanism to new level in other places that view the U.S. as a bully and needs to be feared, opening the door for real opponents to take advantage.

I suspect that U.S. has enough crisis that it needs to address, without looking for more. Venezuela is not Panama or Grenada and the world is far different than in the 1980's. 

Military reform, a positive move for military morale.

HOPEFULLY THE END OF SOCIAL ENGINEERING IN THE MILITARY 

ALL STANDARDS TO BE BASED ON MERIT

Yesterday, Pete Hegseth, the head of the defense department, made his big speech before the high ranking members of the military. It was a surprisingly well delivered and appropriate speech in an effort to restore the integrity and morale of the United States military. It was in effect declaring the end of social engineering in the military, an end of all woke policies and return of uniform standards for all without special cutouts or exceptions, especially for combat soldiers.

All soldiers would need to qualify on a semi-annual basis, combat standards would be based on male expected performance. Uniform and personal hair and beard standards would be uniform as in former times. He stated that these standards would be the same for all members of the military.

I would hope that there would be still exceptions for the older commanders of the military, if look at the past we have seen in war some of the best commanders would not have been able to compete physically with 20 year old soldiers, General Schwarzkopf and in fact the present commander in chief would be good examples. Many of the high ranking generals of the past were valuable for their experience and decision making ability rather than physical ability. 

I watched all of Hegseth's speech and part of Trump's, I think it would have been best to have let Hegseth have his day, Trump did his usual political highlighting of accomplishments. The major statement he made was reiterating that the U.S. is in effect, out of the Ukraine conflict. Weapons would be sold to the EU members and they can do what they want with them. He made it clear that there will not be any more aid to Ukraine. We will see if this is true.

Many believed this was some sort of preparation for war, but I believe it was just the much needed reform to make the military a high morale and cohesive fighting force, as in the past.

Gaza peace? Iran war part 2, imminent. Escalation in Ukraine.

 PEACE, PEACE, WHEN THERE IS NO PEACE

WORLD OPINION HAS FORCED TALK OF PEACE

Yesterday we saw the unveiling of Trumps 21 point peace plan for Gaza. It seems there is some sort of agreement between Netanyahu and Trump, but only time will tell, if any of this will come to reality. One may suspect that world opinion and U.S. public opinion in particular forced at least a public acceptance, with the hope that it will cool off the opposition to Netanyahu's plans. It contradicts much of Netanyahu's speech at the UN. 

At the same time we hear U.S. aircraft refueling tankers are heading to the region an indication that the next strikes of Iran are imminent. U.S. personnel in Iraq are set to be withdrawn by the end of September. It is reported that Iran fully expects and is doing all that it can to prepare for this attack. One wonders if this was the priority that was talked about in Washington.

A war with Iran will most likely be far more intense this time and may have an increased assistance from the U.S.. It is doubtful that any ground operations will be involved other than possible sabotage efforts. Some believe the attack on Venezuela will be coordinated to replace oil supplies lost from the region in case of a closing of the Hormuz straits.  All of this is of course speculation based on the movements of resources, but it is generally assumed that war with Iran is a priority for Israel. This has the possibility to bring in many players in the region particularly in the gulf where there are U.S. bases. 

Then there is talk of Tomahawk missiles to Ukraine, if it should  happen it would be the biggest escalation in this conflict. These missiles are strategic  nuclear capable missiles and  these missiles which would be manned by U.S. personnel and U.S. targeting assets, it would be very close to a declaration of war by the U.S. against Russia. Most believe this is another bluff particularly since the sanctions against China and India have died a quiet death. If this should happen the whole situation in Ukraine will become much more violent.

Russia has called this operation a Special military action, it has not declared war on Ukraine. Russian policy is very much guided by descriptions of actions and pre ordained polices.  Contrary to western narrative, this has not been an all out war by Russia, it had one call up of reserves and has grown and maintained its troop strength by voluntary enlistment. It has not placed the Russian economy and assets in a total war footing. It has refrained from attacking government buildings in Kiev or the vital bridges over the Dnieper river. It has been a war of attrition hoping to degrade the Ukrainian military and the ability of NATO keep up the supplies. It has been generally successful. Russia has more devastating conventional assets it has not used,  and of course huge nuclear assets. U.S. strategic missile attacks will undoubtedly cause Putin to give in to the internal forces that have been calling for the decisive end to this conflict by all out total war. If that happens, no one can predict where it will end.

This can only bring to mind the bible verse in Jerimiah, " Peace, Peace, when there is no peace"  talking about the insincerity of those who talk about peace but want war.

Comey indicted by Grand Jury.

 SEEKING JUSTICE OR TRUMP REVENGE

THE NATION NEEDS ACCOUTABILITY TO RESTORE CREDIBILITY

The indictment of James, Comey, former FBI director, is the first indictment in the hope of having complete disclosure and accountability in the Russian Hoax scandal. There may be many other Grand Juries underway as there is a long list of government officials who have obviously lied under oath and conspired to destroy the Trump first term.

There is lots of video evidence against Comey and others, plus documented proof that the FBI knew before Trump's inauguration that the Steele dossier was fabricated by Christopher Steele, a former MI6 agent, working for lawyers of the Hillary Clinton campaign.

It was also documented that Adam Shiff and others knew that the Russians did not hack the Democrat National committee, but was copied from the DNC computer in Washington and then handed to WikiLeaks. It became obvious when lawyers for the Russians asked to set a court date and demanded disclosure that the whole thing collapsed.

Many today want to believe that Trump won against Clinton because of Russian help, a weak excuse for the loss. 

This last decade of lawfare and fake prosecutions is unique in that many were conducted or had the assistance of government officials, it has resulted in the loss of creditability of most every institution of the government. We witness the result today with many believing that there is no justice or ability to count on a unbiased intelligence or legal system. It is a very negative environment for meeting the challenges that need to be addressed by the country. 

Only a full disclosure and accountability for those who intentionally broke the law, will be a first step in restoring the necessary credibility of government agencies. 

Can the new Geopolitical realities be accepted without war?

 THE WORLD HAS CHANGED, COULD IT BE A POSITIVE DEVELOPMENT?

MUCH OF THE WORLD IS ALREADY ACCEPTING THE NEW REALITIES

Watching many of the speeches at the UN meetings this week, it is a window into the changing world that is no longer reversible. Can a new geopolitical and economic world be a positive development, for all those who are willing to understand the realities of the dying present system.

The breakup and the reinvention of the former Soviet Union into a functional and prosperous  reality should be viewed as an example of the possibility of a peaceful transition. Of course, today this is heresy in the western world, Russia is evil and must be confronted and contained or else the world is at risk.  Most are not willing to accept that Russia made a conscious decision to end communist rule and move to a better place for their citizens and attempted to become part of the world community. A naïve idea in retrospect, no one becomes part of the present community without  one major compromise, total submission to the present dominion.

The same goes for China, no matter that China has become the undisputed manufacturing giant in the world, it has not fully submitted to the present ruling class and must be held in check, or even destroyed.

The reality is that the democratic socialist countries of western Europe and the United States are no longer the masters of the universe. Since it seems marital unions are now a new description of alliances, the majority of the world is in the process of a, hopefully peaceful, divorce from its abusive spouse.

While Europe continues to talk of war with Russia, they are delusional, because they no longer have the economic or political strength or unity to engage in such a war. Daddy is making it clear, that the U.S. is not going to engage in war with Russia. I suspect there is a unspoken acknowledgment in high places that this is the reality. Europe needs massive reforms to, in fact survive, in the coming new economic global environment. They should be apologizing to Russia and hoping that they will renew long term energy contracts to allow them to economically survive.

The end is coming to all former rails of domination, the dollar is nearing the end of its dominance, because it is backed by $37 trillion in debt and rising by the day. Military dominance is now often neutered by modern cheap weapons and countermeasures to negate the advantages of expensive and complicated weapons. The same old truths about war are still real, in that without actual conflict and defeat of the enemy on the ground, it is only a temporary and fleeting victory. Unless of course, one is willing to go all out with nuclear devastation. That is the fear and possibility, when great powers find they are no longer able to dominate the world.

Without the use of nuclear weapons, the west cannot defeat Russia, in fact, if Russia would be on the verge of defeat, they would either use these weapons themselves or, China, knowing that they are in the same lifeboat with Russia, will come to their aid.

Same goes for Iran, no one is willing to attempt to engage in a land war with Iran, just look at a map, A deadly quagmire for any rational analysis. Only a devastating nuclear attack can result in a very hollow victory.

Everyone has now witnessed the process of regime change chaos and devastation, it is now a defunct policy.

We see that Africa is finally becoming unified enough to end all the leftover colonial rules. They see new possibilities with better economic and trade deals with China, and other countries in the global south. While many are still on the fence, they are more and more leaning to a new era of global cooperation and mutual prosperity rather than being controlled and dominated or else. 

Of course the emerging new powers in the world may become obsessed with power and control just as the former, but if objective, we all need to admit the present dominion is no longer possible, due to the economic irresponsibility and an unwillingness to address the need for reform and changes internally.  The sooner that a policy of mutual respect, cooperation and a goal of mutual prosperity for all, becomes the new vision for the future, the sooner the world can accommodate the inevitable transition that is underway, without a massive toll of death and destruction. 

Crunch time for Middle East.

STANDOFF ON MANY FRONTS

NO SIGN OF COMPROMISE FROM ISRAEL 

This week we witnessed the recognition of a Palestine state by the major powers of Europe, Netanyahu's response was a quick and definite NO. This is sure to be followed by economic sanctions and other efforts directed at Israel. The reality is that the formation of a Palestinian state is far more complicated today than it would have been 3 years ago. At the same time, world opinion both from the middle east region and the majority of the world has solidified in opposition to Israel's polices in GAZA and its proposed policies in the west bank.

We hear more everyday about Israel's plan for a "Greater Israel". This would call for the expansion of Israel to include GAZA, the west Bank, Sinai peninsula, parts of Jordan, Syria and Lebanon. This plan has been voiced by members of the Israeli government and never denied. Some even include further expansion, if this not a real Israeli proposal, it should be made clear.

Then we are again back to Iran, it is no secret that Israel has attempted to instigated a possible war with Iran and the United States for over 30 years. So far, every president has rejected going to war with Iran, the pressure is coming again in the coming weeks. In the negotiations about nuclear enrichment, originally the deal was to limit enrichment to what is needed for nuclear energy. When it appeared that Iran was on the verge of accepting that deal, the anti was raised to end all nuclear enrichment, placing Iran at the mercy of outside sources for their nuclear energy and desalination projects, a limitation that has not been placed on any other country. This was pushed by Netanyahu, who knew it was a affront to Iran's national sovereignty and could not be agreed to. These negotiations ended when Israel attacked and assassinated the leadership in Iran. Some believe that Israel hoped the U.S. would then step in and destroy Iran.

This week Iran made it clear that they will not accept having no ability to be independent for their nuclear programs. They also will not allow IAEA inspectors who they believe, and are probably correct, that these inspectors identified Iran's nuclear scientists and residences for assassination. We can expect this will lead for calls for military action against Iran.

Some months ago Iran entered into a mutual cooperation deal with Russia and it is reported that Russia offered them a mutual defense pack which was rejected by Iran. Iran it seems does not want to become dependent on Russia and believing that they have the resources for their own defense.  

Since the June war, Russia has made available to Iran,  new jets, S400 anti aircraft systems and electronic counter measures, all defensive weapons. China has also been furnishing Iran with updated weapons. We can expect all this knowledge is made available to Israel via U.S. satellite intelligence and every day Iran become more able to counter an attack. Both China and Russia consider Iran a pivotal player in their future commerce plans and while they may not directly militarily intervene they have a huge stake in an independent Iran. They also could have a strong ability to enable compromise from Iran.

In the June war it is clear that Trump did not come to Israel's aid and Israel suffered some severe damage to its infrastructure and depleted its defensive missiles. Again, there are reports that Netanyahu told Trump to end this or they would resort to a nuclear attack on Iran. We then had the attack on Iran's nuclear facilities, a prearranged ceasefire negotiated by gulf countries with Iran and Trump declared victory. We can now expect, particularly since Israel's position is now more precarious, that we will see a replay or attempted replay. It is possible that Netanyahu cannot politically back down and it is not clear if Trump will commit to war with Iran. Can Netanyahu trust Trump to come to Israel's rescue?

Again, like in the Ukraine conflict, Trumps power is in saying no, rather than yes, to military assistance. Every day the pressure for Israel will get more pressing and also the pressure on Trump to promise assistance. The real danger for Israel is that Trump will say yes, but then say no.

While nuclear weapons against Iran would not directly affect Israel from fallout, they are unusable against other regional powers, one would expect that if Israel uses nuclear weapons, they will be attached conventionally from all sides. It is doubtful they could last a week, even with U.S. assistance. Most believe Israel has a closing window on being able to attack Iran.

Trump tells Ukraine they can win, without U.S.

 WITHOUT U.S., WAR BECOMES UNLIKLEY

TRUMP TRIES REVERSE PSYCOLOGY

Yesterday Trump told Ukraine they can win back all their territory with the help of the EU and NATO. In effect, he told them what they have been saying for years, refusing to admit the futility of further conflict. As for the EU they are willing to go to war, if the U.S. is the major combatant. Lets see if they are ready to mobilize for real war. My guess is they will not, cannot, and now they will have to try another strategy other than sucking the U.S. into war with Russia.

Trump has made it clear he is willing to sell them all the weapons they want, it would be good for the U.S. economy.

The speeches at the UN indicates that the majority of the world is in favor of intervention to end the GAZA crisis, again, the U.S. probably can make that happen, if Trump is willing to confront the Israeli leadership, so far he has not. Most watchers believe Israel has not given up on war with Iran, a war that will depend on U.S. assistance to be successful. Trump has given indications that he is unwilling to go to war with Iran. That may give Israel only one option and it is not good.

It is clear the resistance to Israel's policies in GAZA has solidified. The speeches by the Mideast countries indicate that they are near taking a unified military approach to his issue, without clear backup from the U.S., Israel may come to the conclusion that it time to send a message to the region that they will  not be deterred.

One might expect that discussions are underway in Tele Aviv on the possibility of a all out devastating nuclear attack on Iran. They may conclude that no one will do much about it and it will conclude their goal of regime change in the region.  The repercussions are not easily calculatable. 

Genius act, Stablecoin and U.S. debt.

 MORE KICKING THE CAN DOWN THE ROAD

MODERN METHOD OF EXPANDING DEBT

While many understand that the debt problem in the United States cannot be solved without a change in fiscal policy, a change requiring more responsibility, it seems the latest scheme is to finance more debt by the use of Stablecoin.

This law was passed in July 2025 and the idea is that those licensed to promote Stablecoin, big banks, will issue 1 Stablecoin for 1 dollar, not a real coin, but a digital entry for as many coins that one wants to purchase. It is in reality a digital coin or crypto currency that can be used to purchase items or services from anyone who is willing to accept them. Its positive is that it could allow users to skip using credit cards that has fees to the receiver in electronic transactions. I would expect the government will encourage it use and allow it to be used for government transactions.

These stable coins would be exchanged for dollars on demand from the issuer. The issuers would have to keep the reserves in dollars or U.S. treasury debt. The issuer would be able to profit by the interest earned on the assets held. 

The plan is hoped to allow the U.S. to continue engaging in deficit spending by opening up a new approach for finding buyer for U.S. debt. Stablecoin buyers would provide the financing and the providers would earn the interest, at least as long as those payments can be made.

One wonders what may happen when debt is bought by the providers and suddenly many want to exchange their Stablecoins for dollars, thus requiring a sale of Treasury debt. 

The other part of the plan is that it will require the use of dollars and also hope to prop up the use the dollar as an international currency.

Again, it is hoped to support the ability of the government to continue to engage in deficit spending that will continue to increase the debasement of the currency and hence a rise in inflation. It also hopes to encourage the demand for those increased dollars for use in the scheme rather than making the dollar a sound store of value.

Time will tell if this plan will be successful, while it does have the power and influence of the U.S. government to promote this, many are now aware of such ideas and it will become common knowledge around the world in a short time.

Sooner or later the debt crisis will need to be addressed, hopefully in a responsible and moral way. It seems no one is willing to endure the pain that responsibility may require and all efforts to kick the can down the road will just make solutions more difficult and more painful.

Expanded Mideast war may be inevitable.

 LOTS OF PLAYERS NOW READY TO GO

LOOKS LIKE END OF PASSIVE SPECTATORS

This week seems to have been a turning point in the Mideast situation. Israel's attack on Qatar and their doubling down on voicing their right to attack anyone, may be the impetus for a large scale multifront conflict, possibly within weeks, if not days. 

In last week's meeting in Qatar the voiced result was economic sanctions on Israel, but the closed door military meetings were never made public. Directly after, Saudi Arabia and nuclear capable Pakistan signed a comprehensive mutual defense treaty insuring they will be all out allies in any future military conflict. 

Egypt, in effect, has scrapped its 50 year treaty will Israel. Israel has been complaining that Egypt has moved 40,000 troops and other resources into the Sinai, a non militarized zone, according to the treaty. Egypt this weekend told Israel any plan to push people from Gaza into the Sinai will result in war. Some in Israel believe that Sinai should be part of Israel, Egypt has made it clear it is part of Egypt.

It seems everyone expects Israel to resume hostilities with Iran within the coming weeks. In the last few days Iran has again rejected nuclear watchers from the IAEA from entering Iran as they actually were instrumental in Israel's targeting the assassination of Iran's nuclear scientists and their families in June. This will be used as an excuse for the planned attack.

Israel is complaining to the U.S. about Turkey's rhetoric toward Israel, asking for intervention by Trump.  The reality is that it seems the situation is ripe for a widespread conflict at any time, only a dramatic new diplomatic effort can cool off the situation.  It would probably need some concessions from Israel, which seems unlikely. Netanyahu is headed for Washington again, most likely expecting Washington's assurance that it will come to their military assistance in case of war.

With Zelensky also heading to Washington in hopes for security guarantees, it may be time for Trump to to have to make some clear signals as to Washington's commitments. I suspect Zelensky will not get guarantees from Trump, Netanyahu probably, but with concessions. 

You have many in the U.S., in the Christian community, who are diehard supporters of Israel, believing that modern Israel is a creation of god and that its existence will be preserved by divine intervention, if necessary. They believe that an all out conflict will bring about the return of the messiah, Jesus Christ. Some Jews also believe that a messiah will preserve the state of Israel. There are some in the Muslim community, who also have a similar belief, but with different results.

I would expect a different result would be devastating test of their faith. We must remember that Israel, with a population possibly with similar beliefs, was destroyed over 2500 years ago. Is it possible that Armageddon with a biblical view always viewed from Jerusalem, could be a regional event rather than a global event?

Also remember that the Jews of Christ's time rejected a spiritual savior in favor of their hope of a warrior savior. Is Netanyahu their warrior savior today? 

Russia and China's blended economic systems are working for them.

 COPYING U.S. SUCCESSES, PLUS INOVATION

U.S. PROVED THE VALUE OF ECONOMIC FREEDOM

I believe the U.S. constitution and the freedom it provided to its citizens is the time tested best system, if it is strictly followed. The reality is the U.S. system has been plagued with top down government control and central planning by bureaucratic and regulatory control. American cars may be built by independent companies but regulations severely regulate design and stifle innovation. Small business and entrepreneurship is almost made impossible by zoning and regulatory costs. The small foundries and machine shops have almost become extinct in this country. These were the business's that made rapid shifts to increased production possible in former times.

I don't fully understand all the polices of Russia's economic system, but it seems to be a 3 tiered system. At the top is government control of natural resources which provide capital to 2nd tier manufacturing companies which many are privately controlled. The 3rd tier is small business, retail and other individually owned business which it seems to be free to innovate and make their own decisions. It was interesting that many of these small business were able to quickly repurpose to make components for Russia's drone production. One making wooden propellers, others making the frames or wiring harnesses, often small business's with a handful of workers, very similar to what was possible in the U.S. in former times.  

In China, the Chinese Communist party is very much in control, but many of the businesses are free to innovate, make profits and their owners and workers to prosper. The party rule seems to be, you can make as much money as you want, but do not attempt to become involved in politics, the consequences can be severe. The party has copied the system of the U.S. in former times where originally the branches of the federal reserve were free to set interest rates and provide capital to business in their areas. That system in the U.S. has morphed into primarily funding the national debt. In China funding is available for innovative and growing companies.

While many believe that the Chinese are working at slave labor rates, the reality is this system, has in a short time, brought a huge number of its citizens out of poverty. The savings rate of Chinese average near 30%. While the U.S. has always been an example for many around the world, many third world countries are now looking at the progress and opportunities that are displayed by China and others.

While both countries have moved away from totalitarian communism, it has been evolutionary process that one can expect has not yet been completed. Much of what happens in these countries is also influenced by the real or perceived threats brought against them by outside forces.

In many ways western capitalism has moved more toward central planning by regulation and a blending of big business and government that traditionally was labelled fascist.  Big Government regulation requires big business to lobby to protect their interests with money and influence. Legislation can promote some business and eradicate others. I suspect the cost of government in the west is far higher than either of the former communist countries. When government is the biggest player in the country it never ends well.

While the internet has bypassed many of the costs and regulations in the U.S., it has been bright spot, allowing entrepreneurs to conduct business from their homes and garages in a fashion reminiscent of former times. I suspect that this is a world wide phenomenon. 

The reality is that economies of countries around the world are evolving at a quick pace and those who are hindered from innovation and adapting will fall along the wayside.

Russia to launch satellite based internet service.

 SIMILAR TO MUSKS, "STARLINK" 

WILL SATELITE BASED SYSTEMS DOMINATE IN THE FUTURE

Russia has announced that they have completed their testing phase of their satellite based internet system. They have announced the first satellites will be launched in December and within 2 years they will have 1200 satellites in space. It is expected it will be able to offer service to many remote areas and particularly in the global south. Of course, one can understand that Russia is vast and such a system will be very useful in connecting their country.

Starlink is now available in 140 countries and has over 6 million users, Its cost has been declining and one can expect that this approach will not only provide internet but entertainment, telephone and other information. It has both civilian and military capabilities. 

The Russian system will provide communications to Asia, Africa and other places now having limited communication systems. 

The move to streaming and other electronic communications may make cable and other wire type systems obsolete in the future, but there may be the risk of the ability to cut service very easily and quickly.

The Russian system is reported to be a laser based system that may be actually  more reliable than the present Starlink system, but not being an expert on these things we will surely see a debate about this in the future.

The people I know with Starlink view it very favorably and the system is compact,  and can be used during travel in multiple homes and remote locations. 

Russia has experience and technology with rocketry to efficiently put such a service in operation. They may partner with China to manufacture the home terminals in large quantities. It will be interesting if anyone else will want, or be able, to compete with these 2 systems that may dominate communications in the future.

Are Ukraine counter offensives sustainable?

 UKRAINE  CONFICT  INTENSIFIES 

SHIFTING TROOPS TO STOP RUSSIAN ADVANCES 

For the last year, Russia has been in the process of advancing in all areas of the eastern front. Ukraine has slowly been pushed back and has been in danger of effectively being cut off in many of these areas. The situation is dire in the Pokrovsk area. In recent day Ukraine has shifted troops from other areas to slow and even retake some of the ground in this area. They have also moved troops to strengthen the Zaporizhzhia area. It seems some of these troops are also their elite troops who have been in the Kiev area. It may be a desperate attempt to slow and neutralize the Russian advance.

Recently it has been reported that Russian reconnaissance squads have crossed the Dnieper river in the Kherson region and found little resistance, obviously the troops from this region have been moved elsewhere. Russia does not hesitate to withdraw to defensive positions if counter attacked, but usually brings up additional resources that eventually prevail. It is expected that Russia is going to cross the Dnieper and reopen the Kherson attack and threaten Odessa, which would require Ukraine moving troops that they do not have.

At the same time Russia has made massive aerial attacks on munition depots and energy supplies all across Ukraine. It appears that Russia is not going to engage in Blitzkrieg attacks or defeat Ukraine with overwhelming attacks. One must conclude that they do not expect to militarily defeat every major city, but just keep up the war of attrition until Ukraine can no longer resist. While this could happen in the near future, interviews of Russian military leaders expect that they may be fighting for another year. This would fulfill the Russian objective of making the  Ukrainian army non threatening in the future.

It is unlikely that Ukraine can replace its troops, nor can NATO keep up with replacing the loss of equipment and supplies. The European economies are steadily deteriorating and neutral countries are unwilling to commit economic suicide to weaken Russia. Then there is the reality that other BRICS countries, especially China, will not sit by, even if defeating Russia would be possible. Escalation will bring a response that may be far worse than what is happening now. It is time to end this for the sake of the poor people of Ukraine, Russia and the world.

 

 

Arab and Islamic leaders meet in Doha.

 REPRESENTITIVES OF 57 COUNTRIES MEET TO DISCUSS ISRAEL

ASIAN, MIDDLEAST, AFRICA AND FAR EAST LEADERS

Yesterday an emergency summit was held in Doha, Qatar prompted by the Israeli attack on Doha, Qatar. These attendees were made of members of Arab League, Organization of Islamic Cooperation and the Gulf Cooperation council. While the complete cooperation statement has not yet been officially released, it seems they have agreed to jointly increase economic pressure on Israel. Some of the major members are expected to have private meetings to form some sort of joint defense agreement, similar to NATO. 

Much of the emphasis was on the continuing plight of the citizens in Gaza and the general chaos and instability caused by this ongoing crisis. Contrary to the existing narrative, while many are not supporters of an Israeli state, they are not advocating the destruction of Israel as has been the situation in decades past. It is clear that like most governments today they are emphasizing economic cooperation and mutual prosperity. The ongoing crisis in Gaza is disrupting those objectives for everyone in the region.

The focus was intense and without redeeming narrative on Benjamin Netanyahu and his government, especially since Netanyahu has publicly stated that Israel will continue attacks on any nation that harbors Hamas. So far, no one is advocating military action against Israel, but they all desire some kind of conclusion to the ongoing crisis. Diplomatic relations between these attendees and Israel are now at an all time low.

Before the Hamas organized attack on Israel 2 years ago, relations may have been at an all time high.  Hamas was becoming increasingly irrelevant and garnered little support by these countries. Even Iran was moving to a more main street position by improving relations with others in the region and focusing more on economic prosperity. That all changed after the Hamas attack and the situation in Israel may be the worst for the state of Israel in its history. The response by Israel has been more damaging to Israel than the attack itself and there is no end in sight.

While some want to declare this situation as an organized and cooperative assault on Israel, all parties attacked Israel after their incursion and destruction of Gaza. It seems now that all parties are committed and cannot find an off ramp. Attacking those who attempt at some sort of negotiations is a bad policy and cannot help end this situation.

Any objective observer must conclude that Israel is in a far more dire situation now than they were before the Hamas attack. Doubling down will not make anything better.

Trump, don't count on US to aid war.

 CAN TRUMP AVOID PRESSURE FOR MORE WAR?

CAN NATO COMPLY WITH TRUMP'S DEAL?

In the last few days we have seen the possibility of escalating war increase, both in Ukraine and Israel. In Europe we see hysteria over unarmed Russian drones that entered Polish and Romanian airspace. Russia volunteered to have meetings with the Polish military to discuss this, but Poland refused. It is still possible that this is all a false flag event engineered by Ukraine, but if so, also encouraged by NATO members. 

We also see riots in the UK and France, who often talk about troops and war, but are not likely to be any position to actually bring it to reality. One must suspect that they are covertly hoping that they can entice Poland to put troops in Ukraine, they would offer verbal encouragement. Then there is the push to rearm Germany, a dangerous effort for many reasons. I suspect that they would also hope to give support in case of war with Russia. The reality is that there will not be an escalation of the war in Ukraine without a U.S. commitment and it does not look that is going to happen.

Trump poo-pooed the hysteria over unarmed drones, then offered his deal for more sanctions on Russia. He told NATO that he is willing to increase sanctions and tariffs on Russian oil buyers, if NATO members will stop buying all oil originating in Russia, I suspect that they economically cannot. They would also have to put 100% tariffs on China, again an economic impossibility. It is clear, Trump has no intention of being dragged into a war with Russia. 

In the middle east, the Arab counties, including Egypt, are meeting today and it seems they are going to agree to form a cooperative army to counter Israel's expanded strikes on other countries, in its effort to defeat Hamas. The latest strike on Qatar seems to have been sort of the last straw. Trash talking by Israel against Turkey and Egypt have increased tensions with both counties and the imminent attack on Iran may very well unify the opposition to Israel. The reality is that Hamas is not popular with any of these countries, but there populations are increasingly outraged at the GAZA situation. Israel has lost even its weak support from Egypt and Jordan, and it seems the rest of the world, except the U.S.. It may be that Israel needs to change direction or it is possible that any further escalation will be met with unified military action.

Again, without U.S. commitment, Israel will need to change some of its policies, if not its government.  I suspect that Trump understands that an escalated mid east war will most likely end in a world economic crisis and possibly nuclear confrontation. Not to mention, an end to his vison of a reinvigorated America and even his presidency. 

Friday's thoughts on the past week.

 U.S. TO LOSE INVESTMENT DUE TO ISRAEL'S ATTACK

RUSSIA'S DRONES DID NOT TARGET POLAND

Unrest in France continues even after resignation of the PM and replacement. The problems in France are not going to be solved by replacing another PM. They could be lessened with a serious election change of direction, but it seems elections in Europe are more symbolic than real, this applies to the UK and Germany. We can expect escalation as their economies continue to weaken.

The great headlines concerning Russian Drones in Polish airspace are mostly just hopes by Ukraine of NATO intervention. These were decoy drones without munitions and were most likely sent off course as result of electronic warfare. One can expect that Ukraine may also at some time salvage Russian drones and then use them for a false attack.

It appears that Qatar is considering cancelling over $ 1 trillion in promised U.S. investment due to Israel's attack on their territory that caused the death of some of their citizens. It is reported that the UK refueled Israel's jets in midair and also oversaw this operation. It is understood that the U.S. knew of this and allowed the use of U.S. controlled airspace. Netanyahu is unapologetic and claims they will attack their enemies anywhere they choose. Most of the governments in the region have been attempting to be restrained in this ongoing conflict, but their populations are becoming increasingly enraged, sooner or later we can only expect escalation. 

In the Charlie Kirk assassination, one has to wonder how someone can enter a university building with a rifle and move to a roof top unnoticed. One can only conclude that this was planned for some time and the rifle may have been prepositioned with the help of university personnel. There are reports of coordinated diversions in the crowd that also gave the suspect time to escape.

The rumors of foreign players are everywhere, It is reported that Kirk is on Ukraine's infamous hit list, due to his criticism of Ukraine. Tucker Carlson and Scott Ritter are other Americans on this list.

Israel is also being talked about due to Kirk's connecting Epstein to Mossad and his criticism of Israeli policies. Only a real arrest of a suspect will end these speculations. If this is a domestic inspired shooter he will most likely be arrested. If it is a foreign inspired and directed one, he is most likely no longer in the country. If no arrest is made, it will cause unlimited speculation and conspiracy theories, possibly more damaging than even the tragic and despicable event. 

Silencing the opposition escalates.

 ASSASSINATION BECOMING NEW FORM OF SILENCING

DESPERATION WHEN LOSING THE DEBATE

Yesterday was a sad day, as we witnessed the assassination of a young man who appealed to the younger generation by encouraging an intellectual debate rather than the usual appeal of emotional reactions. Charlie Kirk's murder is an escalation of the ongoing attempts to stifle debate on college campuses.  The hegemony of the left on college campuses, which began in the 1950's and 60's, is under assault. The reality is the left is losing the debate and is desperate to silence those who challenge their supremacy by any means possible. 

While the assassin is still at large, we can assume this was not the usual lone deranged gunman.  The planning and likely assistance needed, at this time signifies, a more organized effort. It reminds us that we still have had little revealed about the Butler shooter and the other effort to assassinate Trump last year. This is while Trump is now head of the government.

The movement of the younger generation to a more conservative political position is not only happening on college campuses but because of the younger generation is rejecting previous sources of information. The younger generation most likely has never subscribed to a newspaper, a periodical or watches cable TV.  They are far more likely to be listening to or streaming Joe Rogan, Tucker Carlson, Jordon Peterson, Lex Friedman or many others who have far more watchers, than CNN, Fox or MSNBC. 

Most of these personalities also engage in live, in person, debates and speeches, a forum that makes them vulnerable to those who desire to engage in violent silencing. We can assume that those who desire to silence these people will be further encouraged by what has happened yesterday. Only time will tell if this type of silencing will work in their favor or further strengthen the appeal of the alternative sources of information.

Some of the attempts to control and silence debate on social media have been reversed. It has been proven that the FBI, CIA and foreign intelligence actively pursued such control in the last few years and we can only assume forces are still at work often by misinformation and disinformation in attempts to make the truth much harder to find. This is now a worldwide phenomenon, as the world is the process of a historical geopolitical change.

While yesterday's event hit home, we often don't take notice to the assassination attempts of the Slovak leader Fico, Khan in Pakistan and others in South America and the current 17 deaths of political opponents in Germany. Many of these attempts are encouraged by foreign states to further their political objectives. It seems Ukraine has connections to the Fico assassin and the potential golf course shooter of Trump The assassination of political leaders is now the preferred modus operandi of the state of Israel, who is willing to strike in any country in the world.

I expect these precedents will only be retaliated to, or copied by others, as those who have had a position of power are in the process of losing that power. 

Is Assassination now the new norm?

 NETANYAHU MAY NEED TO STAY IN A BUNKER

U.S CREDIBILITY TAKES ANOTHER HIT

Yesterday we saw that Israel proudly attempted to assassinate the Hamas negotiating team in Doha, Qatar. The negotiators were there to consider the Trump administrations ceasefire plan for Gaza. I expect this will end any attempt at any negotiation, not only for Gaza, but for most any conflict worldwide. 

We saw the Ukraine attack on the Russian strategic nuclear deterrent while negotiations were ongoing in Turkey. We saw Israel decapitate much of the leadership of Iran while Iran was in negotiations with the U.S. With this attack yesterday, we can only assume that this is the new policy of the U.S. and Israel. So far, none of these attacks have had any serious effect on ending any conflicts, but it may very well translate to ending conflicts in future, nearly impossible. Maybe that is the convoluted hope of amateur Machiavellians or out of control intelligence agencies.

We can only also assume that what is good for the goose is good for the gander, and if this is the new norm, we can expect lots assassinations in many diverse places. I suspect it will not be positive development for anyone. 

One must wonder what Israel is thinking, how is such an attack going to further their cause? I actually can not put my finger on what is their cause anymore. World public opinion it seems is irrelevant, does being a U.S. ally create the impression that opinion is no longer relevant. 

As for the U.S. what is the U.S. policy in all these attacks. Does it help plan, coordinate and endorse these policies? Are there rogue forces that allow these plans to go forward? So far, there is only weak, denials and attempts at deniability. If these plans are not green lighted by the white house, they better make that clear and those responsible made accountable. I suspect that the ability to engage in negotiations by the U.S. with anyone, both friends and foes, concerning anything, is being greatly diminished. Is that the real goal by those who advocate for these policies?

I suspect that the leadership of Israel does not want an end to this Gaza crisis, they want them all dead or gone, any way it can be accomplished. I suspect the same applies to the west bank. I still think a better approach would be raise the funds to buy these properties from those people, rather than spend it on bombs. At least then these people without options would have a nest egg to accomplish a voluntary resettlement.

As for Hamas, they have no choice but to fight to the last, as any surrender will  end in execution for anyone labeled as Hamas.  I suspect we will see the IDF enter Gaza and begin a systematic annihilation of everyone. It may be the end of Hamas, and probably Israel, as we know it. 

French government collapse, more to come?

NO CONFIDENCE VOTE MAY LEAD TO NEW ELECTIONS

PM OUT FOR ATTEMPTING TO CONTROL SPENDING

The current PM of France, Francois Bayrou has resigned after a no confidence vote from parliament. This followed protests about his plan to cut $52 billion in spending to address the increasing debt. He is the fourth Prime Minster to resign in the last 20 months. Macron says he will appoint a new Pm in the next few days. Protests are continuing with calls for Macron to resign and other grievances.

There is trouble in the major countries of the EU with rumblings in Germany with new elections coming up on Sept. 14 in Rhine-Westphalia region. 7 candidates of the AFD party have died in the last few weeks, all reportedly of natural causes, a statistical impossibility. Other parties have also suffered losses with the total for all now at 16 due to unexpected death. Chancellor Merz has rejected another $5 billion in aid to Ukraine and like France and UK, the government is at historic low popularity. One can expect serious changes are on the horizon in the EU.

The increasing debt, coupled with a loss of manufacturing jobs due to high energy costs and plans to increase military spending are all adding up to economic and political crisis. China and Russia just signed a huge pipeline deal, that both will cooperate in building, that will move the gas that was intended to serve Europe through the destroyed North Stream pipeline. It is likely that Europe may never restore its energy supplies from Russia. It will create conflict within by those who want to end fossil fuel and nuclear energy use and those who are becoming unemployed.

The calls by some to rearm Germany may be on ominous sign for the future of Europe. It will raise red flags internally and with Russia.

An end of the Ukraine conflict may have some relief in these countries but will also, if viewed as an EU and NATO defeat, raise other political and economic issues. This may be the most unsettled and dangerous periods for Europe since WW2.

Historic world order realignment inevitable.

 PEACEFUL TRANSITION, OR WAR?

CHANGES HAPPENING AT AN ACCELERATED PACE

Inevitable changes are underway, the question is, can there be a peaceful and mutually beneficial transition.  In the last week we witnessed India decide that if given a choice of refraining from buying oil from Russia or suffering increased tariff's from the U.S., it chose to keep buying energy from Russia. If this policy did not work with India it will not work with China or Brazil. I suspect that this will be the end of punitive tariffs as a bargaining tool for political purposes. 

At the same time, we see that the end of the dollar being the world reserve currency. Much of the world is transitioning to a system that settles transactions in 7 seconds and reduces costs. They can then periodically settle accounts with gold. It is expected that in the future there may be gold backed currency that is independent of national origins. While many like to portray that this is an attack on the US it is in realty the natural reaction to the irresponsible US policy of currency debasement. The dollar no longer is considered "As good as Gold".

We also are witnessing the crisis of "Democratic Socialism" in the western world. Massive debt, loss of manufacturing capacity, a weak work ethic and the inability to sustain the promised social benefits. This coupled with a policy of unlimited expenditures in an effort to rule the world is all unsustainable. Reforms and changes are either going to be by self will and consensus, or collapse and limited choices. 

We see that China, who is portrayed as a threat to US, is finding more countries willing to cooperate in a mutually beneficial economic atmosphere. China has been outperforming the west in its diplomacy. India is a perfect example, a country with a border with Russia and China, a mutually beneficial trade cooperation is viewed as better than an adversarial relationship. The same situation is growing with Japan, South Korea and even Australia. The much anticipated attack on Taiwan is not as likely as some would like to advertise, it too is in a similar situation.

Western Europe is failing, economically and politically. Its refusal to reverse course on the Ukraine war has put them on the road to economic ruin. There once favorable access to long contracts of Russian energy has disappeared, by their own choice, with no alternative in sight. This coupled with unrestrained immigration and short sighted environmental policies have place them in a precarious situation. It will take a change of political leadership to give any hope for a stable future.

These changes will not be avoided, but it can be a peaceful transition to a more realistic world order. The US. is in the enviable position of being shielded by two oceans, a potentially self sufficient economy with most of the needed resources. A loss of the world reserve currency will bring painful but needed fiscal responsibility back to the federal government. It will also require a military withdrawal from much of its foreign presence.  It will require a new reality of diplomacy and mutual respect in its dealings with other nations.

Quietly, some are envisioning a new era with spheres of influence, cooperating for  mutually economic prosperity. It is possible, but difficult, as there are forces that would rather continue confrontation and desire for hegemony rather than recognize mutual respect and others self interest. I expect we will witness which way all this will evolve.

EU, From common market to Socialist Autocracy.

 FROM PROMISES OF ECONOMIC PROSPERITY TO TOTAL CONTROL

MORE REGULATIONS THAN THE FORMER SOVIET UNION

The European Economic community was formed in 1957 by the treaty of Paris. Its founding members were France, West Germany, Italy, Belgium, Netherlands and Luxembourg. Its purpose was to eliminate tariffs and restrictions on trade and promised prosperity for its members. It was successful at increasing trade and improving the economic well being of its members. It slowly expanded and the EU or European community was formed in 1993 with 12 members and has now expanded to 27 members. 

The EURO or European Currency Unit was formed in 1999 and actual coins and currency was issued in 2002. At that time there were 12 members. Adoption of the Euro, which members needed to reach certain economic balances, led to the liquidation of gold by prospective members and drop in the gold price to near $200,  only Britain refuses to adopt the new currency.

Since that time the Union has in effect created a massive regulatory bureaucracy. While it preaches democracy the leadership of the Union is actually appointed by a non democratic procedure. With the breakup of the Soviet Union many newly freed nations quickly joined the EU with the hope of  increasing their prosperity in exchange for their national sovereignty. Many lost their former industries like fishing in the Baltics due to regulation. Today they have very high taxes, massive regulation on every possible activity and a common policy on immigration and social engineering. It may have more central control and regulation than the former Soviet Union, but with a nice face.

Increasingly it has engaged in censorship and punitive actions against members who hope to preserve their cultural identify. Originally all members had veto power and that is under assault as they hope to bypass members who do not conform.  We see increased intervention in elections in an effort to strengthen control from Brussels.

The EU now seems bent on forming some type of European military structure that will be advertised as a defensive alliance, but may have the power to force conformity from members. I would expect severe penalties for any members who should decide to leave the union.

While the original members and real European powers formed this union the newly freed former soviet countries, in effect, traded their masters in Moscow for masters in Brussels. I suspect they should have avoided joining until they were better able to adjust and explore other options with better ability to control their destiny and preserve their freedom. Many have witnessed the flight of their educated and young to the major metropolitan centers and much of the rest of the country is made up of the old and poor. Many of their traditional industries have been eliminated by regulation.

It can be expected that big changes are on the horizon for the direction of the EU as its high unemployment, high taxes, inability to finance its social benefits and declining industrial base will require some serious reforms.

Is Trump easing the U.S. into accepting a multi-polar world?

 NOT WHAT HE SAYS, WHAT HE DOES

IN THE END, A MULTIPOLAR WORLD IS INEVITABLE

It is true,Trump's words are often contradictory and often cloud his intentions or indicate that there is no plan. For a better indication, one must stop looking with a magnifying glass and step back and look at a bigger picture, there are many examples.

The big meeting in Alaska with Putin is often characterized as meaningless and unproductive. While the Ukraine conflict continues, we can assume that decisions where in fact made. One, we stepped back from the edge of WW3 and there is at least some communication with Russia. We witnessed the coming to Washington of the EU and Zelensky and they immediately rejected the framework put forth by Putin and Trump. While we may hear talk of Washington escalation, it is unlikely, and I suspect Trump is going to focus on other priorities rather the Ukraine. The EU and Zelensky will not be ready until collapse is underway.  Russia is prepared to continue for years if necessary and neither the EU or Ukraine is in that position. 

In the middle east, everyone was outraged when Trump called for Israel to evacuate Gaza and then make Gaza into the Riviera of the region. This is exactly Netanyahu's plan and sadly for the residents, it is sort of giving Netanyahu more rope to meet his end. Israel has been at this for 2 years and there is no end in sight. Trump cannot politically confront Netanyahu, due to his base support by Israel supporters and Christians who hope for an end time conflict. A real tightrope of political maneuvering. 

As for Iran, it is clear that Trump let Israel  feel the effects of the 12 day war and then declared victory and attempted to move on. While it is all still brewing, how long can Israel keep this up, economically, politically and even militarily? 

Then there is the latest fiasco, the implementing of large tariffs on the buyers of Russian oil. This was a plan put forth by Lindsey Graham and the Senate that threatened to put this into law. It forced India to choose Russian trade or U.S. trade and they clearly chose to continue and even increase trade with Russia. I suspect that Graham and the Senate can only end this idea. 

This weekend we witnessed the meeting in China, a real lovefest of leaders who are moving into an alternative economic cooperation agreement that is most likely unstoppable. Maybe more will realize that the world has changed and the U.S. and western Europe can no longer force acceptance and  a continuation of the current order.

After listening to speeches by even Rubio and also Vance it is clear that they understand that the world has changed and sticks no longer work as well as carrots, the sooner that this reality becomes the consensus, the better off we all will be. We are not there yet, but any objective viewer should be able to conclude that cooperation and respect are needed to adapt to the changing world environment.

Can the Fed control interest rates on the debt?

 LOWERING FED RATES MAY ACTUALLY RAISE INTEREST ON DEBT

MARKETS CONTROL INTEREST RATE ON DEBT

In recent days we have heard that if the Fed lowers interest rates it will save the government on its interest rates on the debt. The fed rate is the rate for loans between banks and lowering them may help to stimulate the domestic economy, but will not directly affect the rate on the national debt. It is possible that lowering the fed rate will actually cause an increase in the interest on bonds as it may encourage buyers to pay less for those bonds and actually raise the yield or interest rate.

The massive deficits in the budget indicate that the government is increasing the money supply and this will cause less interest in bond buying and a rise in the yield. At present the 10 year is yielding 4.279% and the 30 year is 4.974%. At present the interest rate on the debt is becoming the biggest part of the budget and it is going to get bigger, because their is no way that these deficits can be reduced in the short term.  Raising taxes will cause economic decline and cutting spending will have the same effect. 

Of course uncertainty and prospects of war and other political disruptions will also cause an increasing or decreasing demand for bonds and will also raise or lower yields or interest rates on the debt.

It is a dilemma and only an increase in productivity and creating of wealth can increase revenues without negatively affecting the economy. While that is possible it may take a long time to change that dynamic. Increasing wealth and a restraint on spending is the only way to move to a more positive outcome. At present it seems there is no national consensus by anyone to take the required steps to change the direction of these factors.

Chip war escalation or China self sufficiency?

 CHIP COMPANIES IN FOR A ROUGH ROAD

CHINA MAY HOLD THE BEST CARDS

Last week, we saw the U.S. government purchase a 10% stake in INTEL, the premier U.S. technology company. This is in effect a bailout, as this company and other U.S. chip manufacturers are feeling the effects of the effort to restrict sales of their products to China, it is likely to get a lot worse in the near future. China has recently banned the import of chips from the U.S. around 40% their business.

This began under the Biden administration, when U.S. companies were restricted from selling sophisticated chips to China, it was labeled a nation security action.  China responded by building a massive modern technology park and soon was selling the bread and butter chips that are used in auto's, appliances and other electronics at a reduced price, making U.S. manufactures uncompetitive and taking much of their business and placing them in a serious financial bind. China is now set to become self sufficient in chip manufacturing and is working on making those sophisticated chips for AI and military applications.

The most recent escalation concerns ASML, a Dutch company, the only manufacturer of the latest photolithography equipment. China has been a customer for years and has made up 27% of ASML's business around $10 billion in 2025. The U.S. has now pressured ASML to not only end sales to China but to cancel its service contracts with China. China it seems is done with this and is now informing ASML that they have breached their commercial contract and they desire to return all their machinery and expect $28 billion in refunds.  Rather than go through years of litigation and hoop jumping China is also informing ASML that if they don't comply, their contracts with China also make their patents and copyrights null and void, indicating that China is now prepared and possibly equipped to copy all of ASML's latest equipment, a development that would have dramatic effects on the chip business worldwide.

We have seen how restrictions on exports of targeted items by western countries has backfired, an indication of who is actually dependent on who. Japan lost billions of exports to China of machine tools after being pressured by the U.S. to restrict certain tools. China has either made them themselves or found another source. China has ended its purchase of U.S. grains and are now buying them elsewhere. China has also restricted its sales of rare-earths, another retaliation. It is becoming a long list and is going to have severe consequences on many businesses. 

China is also developing a new type of chip, based on Indium Selenide, that will address the limitations of silicon chips, It is a new technology, with much more expensive materials and China has reported they have been successful at making this work, but only at the laboratory level. If able to produce this product it would be superior for high end uses. 

While hoping to replace China business with domestic manufacturing may be sound idea, it will probably take decades if actually possible at all. In the meantime the trade disputes are leading to a new world were the west could be isolated from the developing world, as more countries opt out of taking sides.

Friday thoughts, War, Debt, money.

WILL WAR SOLVE FINANCIAL CRISIS? 

FEAR OF EXCHANGING ASSET PROFITS FOR DEVALUING CURRENCY

The adedge that war is a great stimulus to a struggling economy may no longer apply. France, Uk and Germany all have Debt to GDP ratios over 100%, the U.S. is 125%. In former wars, money was borrowed to finance the war and then stimulated the economy from the increase in deficit spending. Most western countries are already in serious debt problems, they would have to attempt to confiscate assets to fund a war. The head of the EU has suggested using the EXCESS savings of citizens to fund war. I suspect such attempts to fund more war will be resisted very strongly. By the way, Russia has a 19% debt to GDP ratio.

BRICS countries average around a 50% Debt to GDP ratio.

In former wars these countries had extensive manufacturing capacity, no more, it is unlikely they could produce enough for a long war. Leaving only resorting to nuclear weapons as a strategy.

We see all markets at record highs, and without the underlying real value, this would indicate that it would be good time to take profits. Problem is, it feels uncomfortable to take profits, pay taxes and exchange these assets for dollars with an uncertain future. I suspect this is, at least for now, keeping these markets up.

Central banks, on average,  now have the majority of their reserves in gold and not treasury bonds.

It is being reported that the U.S. is withdrawing troops from Iraq, Russia has quietly evacuated its diplomats from Israel. Large amounts of weapons and supplies are being accumulated. Iran is feverishly preparing its defense. Some believe that another Israel/Iran engagement is imminent. Is this why Trump has handed management of the Ukraine conflict over to the EU?

Just a few things to think about over the weekend.

Are new tariffs on India, the last straw?

 INDIA APPEARS UNWILLING TO SUBMIT

WILL IT NOW FOCUS ITS FUTURE ELSEWHERE?

Yesterday the Trump administration at the behest of Lindsey Graham and the U.S. senate put 50% tariffs on India. It is supposedly because India is buying oil from Russia. Oil that mostly ends up being shipped to Europe. India has claimed hypocrisy, as the U.S. is till buying fertilizer, uranium and other products from Russia. It seems both the U.S. and Europe are willing to exempt items that they feel are essential for them, but India cannot. It is reported that Trump called Modi 4 times in recent days, but got no answer or call back. India and others may soon make the decision that trade with the U.S., while important, can be eliminated by nurturing trade with its neighbors and more friendly partners.

We also saw this week a result of trade wars, Intel, once the symbol of the U.S. much touted technology economy, being in effect bailed out by the U.S. government.  Much of this is the result of U.S. government forbidding sales to China of certain silicon chips. China retaliated by going full steam into the chip business and now outselling  U.S. producers by a wide margin. We also see China reduced purchases of U.S. grain and moved their business to Brazil, Argentina and Russia. Then Europe is also being pressured to adopt U.S. policy and with their economies already on life support, it can be expected to cause further loss of market share. The hope of isolating certain countries may end up isolating the 750 million population western countries from the other 6 billion of the world's population. 

India has been in consultation with both Russia and China in the last weeks. India has sought a position of neutrality and non-alignment, while under extreme pressure to take geopolitical sides. Neutrality is no longer allowed, the Bush doctrine of " You are either with us or our enemy " is still in effect. India is already considering cancelling it F-35 orders and buying aircraft somewhere else.

This weekend is the 25th summit meeting of the Shanghai cooperation organization in Tianjin, China. It will be attended by 20 world leaders and 10 international organizations. Xi, Putin, Modi and leaders or representatives of Egypt, Iran, Pakistan, Malaysia, Indonesia, Vietnam, Cambodia, Laos, Myanmar, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Belarus, Afghanistan, Mongolia, Turkey, Sri Lanka, Turkmenistan, Armenia, Azerbaijan, Maldives, Nepal and representatives of the gulf nations. Un.secretary Guterres will also attend. The theme is viewing the multi-polar world.

This makes up the vast majority of the Asian nations and one must wonder how this is viewed by South Korea and Japan, who are also under severe pressure to take sides by supporting Ukraine and sanctions on China. It may become a very hard decision, since they do much business with these countries.

Japan who was pressured by the U.S. to stop selling certain machine tools to China resulted in China cancelling billions in orders and sourcing them from Russia.

We will see how all this works out, can the west pressure the rest of the world to submit or will it end in the isolation of the west from a majority of the worlds commerce.

The EU coalition may be willing, but not able.

 INFIGHTING AND ECONOMIC CRISIS WILL END UKRAINE SUPPORT 

INTERNAL THREATS MORE REAL THAN RUSSIA

We hear all kinds of proposals for the European "coalition of the willing" claiming they are ready to give support to Ukraine. So far Hungary and Slovakia have made it clear they are out, as far as more support for Ukraine. Ukraine has now retaliated by cutting off their oil that transits through Ukraine, even though they are dependent on electric energy from those countries. There is real threat of escalation of this situation between Ukraine and Hungary and Slovakia. 

Poland announced this week that it is cutting off much of the aid to Ukrainian refugees as they can no longer sustain this drain on their resources. Poland also is very doubtful to place their troops at the disposal of this coalition.

Germany, now under Merz is still saber rattling at the same time he has announced an increase taxes, maybe a wealth tax, cutting of pensions, and other social benefits. At the same time he has pledged another 9 billion to Ukraine and a massive plan of rearmament. One must wonder if there is something wrong in those calculations. The German economy is floundering,  mostly due to massive increases in energy costs, due to there embargo on purchasing Russian energy. As the war drags on, they will be getting weaker, not stronger.

Then there is the Uk, where many are predicting actual economic collapse and a need to be bailed out by others. Their debt is exploding, social services suffering and there bond market is suffering. It is amazing that they are still talking massive military spending and recruitment, It appears to be all wishful thinking.

France's economy and military may be in better shape, but they are having serious social problems that can only be magnified by any move to send troops to Ukraine. Much of their country is powered with nuclear energy and has proved to place them in a better place than its neighbors.

Indications are that Italy is not going to war in Ukraine.

Talk of being willing is very costless, anything more will become more unlikely as the days go by.

How the debt and dollar crisis is unavoidable. Part 2.

 INTEREST PAYMENTS TO EXPLODE

EXPORTED INFLATED DOLLARS TO RETURN HOME

The 1970's saw an average inflation rate of 6.8% and a peak in 1979 of 13%. In 1980 it was 12.5 %. Some of this was due to the policy of OPEC, the "Organization of oil exporting countries", seeking to control the price of oil by production regulation. Before OPEC, the price was set by the New York and London commodity markets and was manipulated to never account for the inflation of the currency. The 1970's saw an increase in the price of imported oil and a embargo in 1974, in reaction to U.S. policy in Israel and an effort to offset inflation of dollars that was the currency that oil was traded in.

Also in the 1970's we saw the introduction of the "Clean Air Act" and OSHA, the "Occupational health and safety act" The increase in energy price and stability,  coupled with these new laws, which were often implemented without any consideration for the ability of many foundries, steel mills and other manufactures to absorb these costs quickly began the deindustrialization of the backbone of a manufacturing economy. Small operators were first to go, but in 2 decades these industries were importing products from Japan and soon China, after the Nixon's softening relations in 1972. 

Manufacturers soon realized they could import products for less costs and avoid the risks of government regulation, labor disputes and unstable material prices. The economy transitioned to a consumer market and manufacturing was replaced by services, entertainment and paper financial transactions. I argue that wealth is created by the combination of materials and labor to produce a product of more value than the imputed materials and labor. China is a perfect example of that reality, as it was for the United States in late 19th and 20th centuries.

At the same time government realized that the combination of lower priced imports and the exporting of inflated U.S. dollars to pay for those goods, kept domestic inflation under control. This was also coupled with taking out of the price index items like energy and other costs that reveal actual inflation.

Exporting countries soon found they had lots of dollars and often placed them to earn some interest on U.S. debt. Government debt was advertised as the safest investment in the world, even though, due to inflation, its buying power was steadily decreasing.

The dissolving of the Soviet Union in 1991, was an opportunity to change direction and address the unsustainable path of debt. It was labeled, " The peace dividend" and the government came close to balancing the budget in 1993, but it was short lived, as there are incentives for more spending and debt. More spending often translates to more political power and more debt is a major industry of Investment Banks who earn steady commissions on all those transactions.

Soon after the collapse of the Soviet Union, many in government saw the opportunity of being the only remaining Superpower to use that power to fashion the world as they saw fit. Again the ability to finance, now war and and rapidly increasing debt was aided by exporting inflated dollars around the world. 

As the 21st century arrived it was becoming apparent to many that the country was on an unsustainable financial path. This coupled with the increase in policy of the U.S. to intervene in the financial and political affairs of other countries to force social, and cultural changes and assume control of the resources of other countries. It began a period of endless war and support for war, all financed with more debt.

The U.S. dollar which was the world reserve currency due to its being, "as good as gold" was now often used as a weapon to force submission to U.S. will and soon there was in increase in resistance to that policy.  This resistance was coming from allies and competitors. 

Japan, China and other holders of U.S. debt began to feel U.S. debt may not be a good investment and started lower their holdings of that debt. At one time transactions in world trade were conducted in over 80%  with dollars, it is now near 50%. Settlements are increasingly being made in other currencies and in platforms not controlled by the U.S. and EU. 

The interest on the debt is now exploding and is the biggest item in the budget and it is about to get much bigger when debt that matures that was 1%, is now going to be over 4%.  $9.3 trillion matures in the next 12 months and 70% of U.S. debt mature in the next 5 years, all at much higher rates than before. This can only result in more deficit spending and more debt, an unsustainable reality.

The other shoe that will drop is that as the world moves away from the dollar transactions and liquidates U.S. debt, where are all those exported dollars going to go? They are going to attempt to be repatriated back to the U.S., one way or another.

We have seen gold buying by central banks around the world with Gold now trading at over $3350. an oz., silver is now beginning to also increase as is other stores of value.  Much of this is caused by the liquidation of dollar reserves into precious metals and other assets.

It took 50 years for the U.S. to export inflated dollars around the world, but it will not take 50 years for holders to attempt cash out. While they can spend those dollars on many things around the world, it may be a declining demand for dollars and then there will be attempts to use them in the U.S.  The U.S. stock market may explode and real estate prices increase, at least until the desire to unload those dollars in realized. 

It is possible that real estate will become unaffordable for Americans and Stocks will be in the stratosphere, but when those dollars are finally repatriated, demand will inevitably disappear and those exported dollars will evaporate, like the dew exposed to the morning sun. 

How the debt and dollar crisis is unavoidable. Part 1.

 50 YEAR ROAD TO FINANCIAL CRISIS

NO LONGER ABLE TO POSTPONE OR MANAGE

The United States now has a national debt of $37 trillion and is growing by the day.  While many now believe this has been talked about forever and the system is still functioning, they assume it can be maintained forever. This crisis has been in the works for over 50 years and all the opportunities to seriously address it have been postponed or managed by covering up with financial gimmicks.

The debate between Keynesian economics and the Austrian school of economics was conducted in the early part of the 20th. century, with the Keynesians winning out in most of the western countries. The Austrians were firm believers that money was an asset and the best store of of wealth was gold and silver. That if the money was secure, market forces would be able to minimize distortions and excesses in the economy. 

The Keynesians believed that the economy could be controlled and stabilized by raising and lower interest rates. Raising rates in periods of overstimulation or speculation and lowering them when the economy stagnated. They also believed that debt accumulated by the government in stimulating the government through deficit spending would be paid off in times of prosperity. 

While all this occured before my time, I did witness the debate in the 1960's and 70's about the idea of engaging in a practice of perpetual deficit spending, targeting a 2% annual inflation rate. The sound money advocates vehemently opposed this idea and the advocates sold the idea that gold and silver backed currency was an antiquated idea and could not allow growth in a modern economy.  While there never was a vote by anybody or a definitive moment of this change in monetary policy, it did happen. 

The results of this debate was already going on in that in the early 60's, the price of silver began to exceed the face value of the currency or coins. Some, my brother was one, who had a lower middleclass income, began picking up bags of silver at the bank and either hoarding them or as more wealthy often did, had then melted and refined, with a profit in paper currency. This led to the elimination of silver by the treasury in 1964. While silver was no longer minted by the treasury, it was still legal to be owned.

This was reminiscent of the executive order by President Roosevelt in 1933 for citizens to turn over their gold coins, under penalty of law, in exchange for a paper $20 currency. One year later, in 1934, He revalued gold at $35.00 an oz., thereby devaluing those paper $20 notes by 60%. The poor and uninformed turned in their gold and were instantly made poorer, while the more sophisticated hid their gold. It was illegal for citizens to own or trade gold until 1974 when it was again allowed by law, under Gerald Ford.

The last balanced budget of the U.S. government was in 1969, much of this had to do with new social programs passed in the late 60's and the Vietnam war. The U.S. has not had a balanced budget for 56 years. 

While citizens were not allowed to own gold, the government still respected their promise that paper dollars could be exchanged for gold at $35 an oz. by foreign governments. Foreign governments soon saw what was happening and began to exchange paper for real gold. This was stopped by Nixon in 1971 when he temporarily closed the gold window, it has never reopened.  He then revalued gold to $42. an oz, another default,  and it remains officially price at $42. an oz. when the market price is now over $3300 an oz.. Question, did gold up in value, or did the currency become less valuable? These developments ended any real connection of paper money having any real backing. In effect, money became a debt instrument of government, rather than asset in your control.

At the end of WW2 the U.S. was the only unscathed developed economy in the world. Many nations had changes of governments, devalued currencies and many were destitute. The U.S. dollar, backed by gold, was considered, " as good as gold" It became the preeminent store of value all around the world. Again, all that began to change in 1969. 

At the end of WW2, the U.S. was the manufacturing giant in the world, It had a world were materials and machinery were needed to rebuild the world and the U.S. was in a position to satisfy that demand. Little competition and growing demand at home and around the world. The best situation possibly in U.S. history.

At the same time as the U.S. began the policy of permanent deficit spending, the world was recovering from WW2. Japan and Germany were growing and soon began offering manufactured goods that were very competitive around the world, including the U.S.  Imports of quality cars, motorcycles, electronics and appliances began to compete with U.S. products, both at home and around the world.

Part 2 tomorrow.

Is Trump moving the U.S. from a co-belligerent to a mediator?

 MOVING THE RESPONSIBILITY FOR UKRAINE TO THE EU

IF U.S. IS OUT, THE UKRAINE PROJECT IS OVER

It is becoming increasingly clear that Trump is in the process of exiting direct involvement in the Ukraine conflict. While he has pledged to continue making weapons available, they are to be sold to the EU countries and then given to Ukraine.  We will have to wait to see if they can come up with the Euro's or if the U.S. can provide the weapons due to a severe shortage of some weapons for the U.S. defense stockpile. 

While we keep hearing that the EU countries are in dread fear of Russia, we see little material evidence that they have increased troop strength, instituted a mobilization or actually increased spending. They have made pledges, but pledges are meaningless without action.

Then, without U.S. overseeing the EU, it can be expected that squabbling will increase to see who is going to exert leadership, the usual, French, who have a bigger army and the English who still think they are the British empire and worst of all, are they really ready to encourage German rearmament. That will be another story in itself.

It is unlikely that any of the current EU leadership is capable of engaging in negotiations with the Russians. They may have all burned their bridges. It may require new leadership, but the reality is that a fire is under their behinds as Russia is continuing to move west every day. Someone has to step up and open up communications with Russia. I expect that Trump's strategy is for them to start talking to Russia.

Then the question is, is the U.S. going to pull their advisers out of Ukraine? These are people that operate sophisticated Hi-Mars and Patriot systems. Then there is a large number of CIA and other operatives in the country. One of the reasons for a call for a ceasefire is Russia is now more effectively targeting NATO personnel. When you see apartment buildings and hotels hit, you can assume they are housing foreign advisers.

Of course, this will all be severely objected to by those who are willing to fight to the last Ukrainian.

As for Ukraine, the proposed meeting between Putin and Zelinsky is not yet scheduled, We can expect that Trump wants Zelenitsky to open a dialogue with Putin and then he will act as mediator. It would be a very difficult meeting.

A leaked document from the Ukrainian defense department revealed that Ukraine has suffered 1.7 million deaths and missing. It was 188.500 in 2022, 405,400 in 2023, 595,000 in 2024 and so far 621,000 in 2025. It can be expected these numbers will find their way into the Ukrainian public.

It seems Russia has not altered their strategy of just exerting continuous pressure everywhere. Ukraine has launched several counter offensives and Russia has moved back, as has been their policy. Inevitably Russia will retake those areas in the future. Russia seems to believe that time is on their side as Ukraine and its supporters are being weakened by this attritional strategy.

Are security guarantees NATO expansion by another name.

 EUROPEAN SECURITY ARCHITECTURE SHOULD INCLUDE RUSSIA 

STILL STUCK IN US VS THEM

We now hear that Russia proposes that negotiations on security guarantees need to include Russian input.  This is considered by the European countries as outrageous and impossible. Any peace deal that does not address the long standing and divisive political situation will only insure more war in the future. And more war can inevitably lead to a catastrophic result for Europe and the world. 

In every discussion with the EU its always about maintaining and strengthening a military alliance in opposition to Russia. With the end of the Soviet Union in 1991 there was a opportunity for another arrangement to replace the cold war and the NATO/Soviet Union situation. There is much evidence thats what Russia wanted, but it seems there were many in the west who desired the cold war to continue. That fear of a permanent villain enabled continued military expenditures and covert intrigue for power to actually never end. There now may be second chance to pursue a new agreement that leesens this mentality and is the only real opportunity for lasting peace.

A peace deal to end the hostilities in Ukraine without a serious reevaluation of the political situation will only be temporary respite. It seems the EU wants a ceasefire or temporary pause to rearm and continue this confrontation with Russia. Sadly, many here in the U.S.  have the same desires. 

This Ukraine project, which was born in the U.S. intelligence and state department, has moved to divide the world. While they want to blame Russia, the result has been a Russian/China alliance and the escalation is now pushing India into a military alliance with Russia. It has encouraged a growing economic alliance that further divides the world. The western world has been weakened politically, economically and militarily, yet refuses to acknowledge that only decline and disaster will be the result.

While Russia proposed a new architecture before the breakout of the Ukraine conflict, even discussion was rejected, there is now another opportunity and it may be the last.

It would need to address covert political interference that seeks to deny any country to seeking a neutral status, The Bush policy of you are either with us or our enemy is a juvenile, divisive and destructive policy. The expansion of NATO to include the former Soviet countries is just one example. The same mentality is at work in southeast Asia, South America and Africa. Switzerland and Sweden were neutral countries for decades with great success and a stabilizing influence. 

We as Americans have witnessed the covert policies of the U.S. intelligence agencies, perfected around the world,  being employed right here at home for political advantage. Not only the world, but this country will not survive if a change of direction is not made, now.  Limiting the CIA to the collection of  accurate intelligence information would be good first step.

We have witnessed the demonization of many counties and political leaders by our media in cooperation with their intelligence community handlers and it is till going on. An independent media should have no connection to covert intelligence operators. 

While many will reject and deny any reevaluation, particularly if it is proposed by Russia, it is now an opportunity for a new era of cooperation and mutual prosperity. Why are they so afraid to engage in discussion and negotiation? What good can come of a policy that refuses to listen and hear and only demands submission and compliance? Are they afraid that possibly others may make valid points that they cannot refute?