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.