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Record Global Debt: A Ticking Time Bomb for the World Economy

Record Global Debt: A Ticking Time Bomb for the World Economy

The relentless increase in global debt is an enormous problem for the economy. Public deficits are neither reserves for the private sector nor a tool for growth. Bloated public debt is a burden on the economy, making productivity stall, raising taxes, and crowding out financing for the private sector. With each passing year, the global debt figure climbs higher, the burdens grow heavier, and the risks loom larger. The world’s financial markets ignored the record-breaking increase in global debt levels to a staggering $313 trillion in 2023, which marked yet another worrying milestone.

In the Congressional Budget Office (CBO) projections, the United States deficit will fluctuate over the next four years, averaging an insane 5.8 percent of GDP without even considering a recession. By 2033, they still expect a 6.9 percent GDP budget hole. Unsurprisingly, the economy, even using optimistic scenarios, stalls and will show a level of real GDP growth of 1.8% between 2028 and 2033, 33% less than the 2026–2027 period, which is already 25% lower than the historical average.

Some analysts say that this whole mess can be solved by raising taxes, but reality shows that there is no revenue measure that will fill an annual financial hole of $2 trillion with additional yearly receipts. This, of course, comes with an optimistic scenario of no recession or economic impact from a higher tax burden. Deficits are always a spending problem.

Citizens are led to believe that lower growth, declining real wages, and persistent inflation are external factors that have nothing to do with governments, but this is incorrect. Deficit spending is printing money, and it erodes the purchasing power of the currency while destroying the opportunities for the private sector to invest. The entire burden of higher taxes and inflation falls on the middle class and small businesses.

…click on the above link to read the rest…

‘Do not play with fire’ Yemen warns EU as Brussels embarks on Red Sea mission

‘Do not play with fire’ Yemen warns EU as Brussels embarks on Red Sea mission

EU warships have set off for the Red Sea, where the US navy is waging its largest conflict since the end of WWII in support of Israel

(Photo Credit: Getty Images)

A high-ranking Yemeni official has warned the EU against “supporting the American devil to protect [Israel]” following the formal launch of the Aspides naval mission in the Red Sea.

“For Europeans, do not play with fire. Take a lesson from Britain,” Mohammed Ali al-Houthi, a senior member of Yemen’s Supreme Political Council, said via social media on 20 February.

“You do not need the support of the American devil in protecting the occupying entity so that it can exterminate the people of Gaza with no disturbance,” Houthi added, stressing that “international navigation is safe.”

His message followed an announcement by Brussels of the official launch of the EU naval operation codenamed Aspides – Greek for shield.

“I welcome today’s decision … Europe will ensure freedom of navigation in the Red Sea, working alongside our international partners. Beyond crisis response, it’s a step towards a stronger European presence at sea to protect our European interests,” European Commission President Ursula von der Leyen said via social media.

France, Germany, Italy, and Belgium have said they will contribute ships to the EU mission in support of Israel.

The bloc’s top diplomat, Josep Borrell, described the mission as “bold action to protect the commercial and security interests of the EU and the international community.”

With a mandate initially set for one year, Aspides will see the deployment of EU warships and airborne early warning systems to the Red Sea, the Gulf of Aden, and surrounding waters. According to officials in Brussels, the mission will be exclusively defensive, and its forces will not partake in US-led attacks against Yemen.

…click on the above link to read the rest…

Iraqi parliament calling to ditch US dollar for oil trade

Iraqi parliament calling to ditch US dollar for oil trade

Washington has exercised strict control over Iraqi oil revenues for the past two decades

(Photo credit: INA)

The Finance Committee in the Iraqi parliament made a statement on 31 January calling for the sale of oil in currencies other than the US dollar, aiming to counter US sanctions on the Iraqi banking system. 

“The US Treasury still uses the pretext of money laundering to impose sanctions on Iraqi banks. This requires a national stance to put an end to these arbitrary decisions,” the statement said.

“Imposing sanctions on Iraqi banks undermines and obstructs Central Bank efforts to stabilize the dollar exchange rate and reduce the selling gap between official and parallel rates,” it added.

The Finance Committee affirmed its “rejection of these practices, due to their repercussions on the livelihoods of citizens,” and reiterated its “call on the government and the Central Bank of Iraq to take quick measures against the dominance of the dollar, by diversifying cash reserves from foreign currencies.”

Washington imposed sanctions on Iraqi Al-Huda Bank this week, under claims of laundering money for Iran. Several other banks have been hit with similar sanctions over the past year.

The statement came the same day a senior US Treasury official said Washington expects Baghdad to help identify and disrupt the funds of Iran-backed resistance factions in Iraq.

“These are, as a whole, groups that are actively using and abusing Iraq and its financial systems and structure in order to perpetuate these acts and we have to address that directly. Frankly, I think it is clearly our expectation from Treasury perspective that there is more we can do together to share information and identify exactly how these militias groups are operating here in Iraq,” the official stated. 

…click on the above link to read the rest…

Dominoes: After NYCB, Shares Of Japanese Bank Implode On Massive US CRE Writedown

Dominoes: After NYCB, Shares Of Japanese Bank Implode On Massive US CRE Writedown

Following a profit warning from New York Community Bancorp on Wednesday, partially attributed to turmoil in the commercial real estate sector, Japan’s Aozora Bank Ltd. slashed the value of some of its US office tower loans by more than 50%, according to Bloomberg.

New York Community Bancorp’s move to slash its dividend and bolster reserves led to a 38% plunge in its shares yesterday, also triggering the largest drop in the KBW Regional Banking Index since the collapse of Silicon Valley Bank last March.

Like rows of falling dominoes, Aozora Bank, the 16th largest in Japan by market value, recorded a 20% plunge in shares on Thursday after reporting a net loss of 28 billion yen ($191 million) for the fiscal year. This was in stark contrast to its earlier projection of a 24 billion yen profit.

Aozora wrote down the value of its non-performing office loans by 58%, including a 63% reduction in Chicago and between 51% and 59% in New York, Washington D.C., Los Angeles, and San Francisco – all of these cities are plagued with violent crime and controlled by radical Democrats.

US office loans totaled about 6.6%, or approximately $1.89 billion. It said 21 office loans worth $719 million were classified as non-performing. It increased its loan-loss reserve ratio on US offices to 18.8% from 9.1%.

Several months ago, we pointed out: “Next bank failure will be in Japan.”

“It’s a shock,” said Tomoichiro Kubota, a senior market analyst at Matsui Securities Co., adding, “The expectation was the worst was over and that the bank had set aside enough provisions.”

For lenders, this development is a major warning sign that a tsunami of office loan defaults could be on the horizon. Many landlords struggle to repay or finance existing loans in an environment with high-interest rates. Some are simply walking away from properties.

…click on the above link to read the rest…

The US Is Living on Borrowed Time

The US Is Living on Borrowed Time

In late December, I published a final report on the themes of 2023 while looking ahead at their implications for the year to come.

I repeated my claim that debt markets and debt levels made the future of Fed policies, currency moves, rate markets and gold’s endgame fairly clear to see.

Of course, as facts change, opinions change as well.

But the facts are only worsening, which means my opinions in late 2023 are only growing stronger as we conclude the first month of 2024.

Then as now, the debt-soaked US is tilting ever more toward policies which will weaken its currency, wound its middleclass and reward its false idols (and false markets) with even greater desperation.

In particular, some recent facts below are emerging which further support my otherwise sad conviction that the American economy (not to be confused with its Fed-supported stock exchanges) is literally living on borrowed time.

The Latest Bits of Crazy from the CBO

Almost a year ago to date, I was shaking my head and rubbing my eyes as the Congressional Budget Office (CBO) announced a staggering $422B Federal budget deficit for Q1 2023.

Now that’s a lot of borrowing in a short amount of time…

For some strange reason, this bothered me in early 2023, as I was still under this odd impression that debt, and hence deficits, actually mattered.

Fast forward to January 2024, and that same CBO has just announced a $509B Federal budget deficit for Q1 2024.

Folks, that adds up to annual deficit run rate of $2.2T.

Please: Re-read that last line again.

Do the Math: DC is Getting Even Dumber

…click on the above link to read the rest…

Mess In The West: ‘Army Of God’ Convoy Heads To US Border While EU Farmers Block Cities

Mess In The West: ‘Army Of God’ Convoy Heads To US Border While EU Farmers Block Cities

In the US, a convoy of truckers, calling themselves “God’s Army,” is preparing to embark on a journey from several locations across the Lower 48 to the southern border as tensions soar between Texas and the Biden administration. Meanwhile across the Atlantic, farmers are bearing down on Europe’s capitals – from Bucharest to Warsaw to Brussels – venting frustrations about climate policies. These social instabilities are breaking out ahead of key European and US elections this year.

The organizers of the “Take Our Border Back” convoy are “calling all active & retired law enforcement and military, Veterans, Mama Bears, elected officials, business owners, ranchers, truckers, bikers, media and LAW ABIDING, freedom-loving Americans” to “assemble in honor of our US Constitution and Bill of Rights” at the southern border, in protest against the federal government’s inability to secure the border, according to the convoy’s website.

“Fellow citizens and compatriots … I call on you in the name of liberty, of patriotism and everything dear to the American character to come to our aid with all dispatch,” Pete Chambers, one of the coalition’s leaders, wrote. “If this call is neglected, we are determined to sustain ourselves as long as possible and act like soldiers who never forget what is due to our own honor and that of our country.”

The convoy plans to “send a message” to government officials at all levels about the need to secure the board amid the multi-year invasion of millions of illegals. Chambers believes Americans are “besieged on all sides” by evil “dark forces.”

…click on the above link to read the rest…

Draining America First—The Beginning of the End for Shale Gas

Energy Aware II

The United States is the biggest producer of natural gas in the world and recently became the largest exporter of LNG. The industry is scrambling to build LNG (liquefied natural gas) export terminals as fast as permitting and funding will allow.

This couldn’t come at a worse time. Instead of having an almost infinite amount of natural gas as many believe, we may be witnessing hard limits to that supply.

Figure 1 shows that shale gas plays have reached an apparent peak and may be starting to decline. It’s not a good sign although some of this may be related to seasonal effects or regulatory matters. At the very least, the rate of production growth is slowing.

Shale gas plays have begun to decline as U.S. becomes biggest world LNG exporter.
Figure 1. Drain America FirstShale gas plays have begun to decline as U.S. becomes biggest world LNG exporter. Source: EIA, Enverus & Labyrinth Consulting Services, Inc.

Any decrease in the growth of shale gas could become an acute problem because it accounts for 82% of U.S. dry gas production (Figure 2).

Shale gas accounts for 82% of U.S. dry gas production.
Figure 2. Shale gas accounts for 82% of U.S. dry gas production. Source: EIA, Enverus & Labyrinth Consulting Services, Inc.

I am frankly less concerned about whether or not shale gas production is currently in decline as I am about what will happen to supply in five or ten years.

That concern is based on plans for increased LNG and pipeline exports. Net LNG exports are expected to increase +6.4 bcf/d by 2030 & another +7.1 bcf/d by 2035 (Figure 3). Total net exports are projected to increase +15 bcf/d by 2035 from 13 to 29 bcf/d.

Total net exports to increase +15 bcf/d by 2035 from 13 to 29 bcf/d.
Figure 3. Net LNG exports expected to increase +6.4 bcf/d by 2030 & another +7.1 bcf/d by 2035Total net exports to increase +15 bcf/d by 2035 from 13 to 29 bcf/d. Source: EIA & Labyrinth Consulting Services, Inc.                                     

Let’s take a quick look at production from the three biggest pure shale gas plays (Figure 4).

…click on the above link to read the rest…

Maersk Warns “Significant Disruptions To Global Shipping Network” As Red Sea Attacks Persist

Maersk Warns “Significant Disruptions To Global Shipping Network” As Red Sea Attacks Persist

President Biden’s second week of military strikes against Iran-backed Houthi anti-ship missile bases and continued attacks on commercial vessels in the Red Sea by the rebels have raised serious concerns about supply bottlenecks jeopardizing global growth.

On Thursday, top container shipper AP Moller-Maersk sent a memo to customers, warning how the global shipping network is fracturing because of the elevated risks in the Red Sea:

“While we hope for a sustainable resolution in the near-future and do all we can to contribute towards it, we do encourage customers to prepare for complications in the area to persist and for there to be significant disruption to the global network.” 

Major shipping companies like Maersk and Hapag-Lloyd have diverted hundreds of vessels on lengthier and costlier routes around the Cape of Good Hope to avoid Houthi rebels. Shell was the latest company to suspend all Red Sea shipments earlier this week.

Maersk CEO Vincent Clerc told Reuters on the sidelines of the World Economic Forum in Davos on Wednesday that global shipping networks will be disrupted for at least a few months:

“So for us this will mean longer transit times and probably disruptions of the supply chain for a few months at least, hopefully shorter, but it could also be longer because it’s so unpredictable how this situation is actually developing.” 

Earlier this week, Stifel shipping analyst Ben Nolan told clients, “Red Sea issues are getting worse, not better.”

The knock-on effects of Red Sea disruptions have pushed companies to rent more vessels, thus reducing capacity, which has increased shipping rates in recent weeks.

“This week saw a scramble for prompt tonnage,” said MB Shipbrokers (formerly Maersk Broker) in a market report on Friday, referring to ships that can be chartered immediately.

…click on the above link to read the rest…

Pepe Escobar: How the West Was Defeated

Pepe Escobar: How the West Was Defeated

US and European flags float in front of the European Commission headquarters in Brussels 22 February 2005 - Sputnik International, 1920, 18.01.2024
Emmanuel Todd, historian, demographer, anthropologist, sociologist and political analyst, is part of a dying breed: one of the very few remaining exponents of old school French intelligentzia – a heir to those like Braudel, Sartre, Deleuze and Foucault who dazzled successive young Cold War generations from the West down to the East.
The first nugget concerning his latest book, La Défaite de L’Occident (“The Defeat of the West”) is the minor miracle of actually being published last week in France, right within the NATO sphere: a hand grenade of a book, by an independent thinker, based on facts and verified data, blowing up the whole Russophobia edifice erected around the “aggression” by “Tsar” Putin.
At least some sectors of strictly oligarch-controlled corporate media in France simply could not ignore Todd this time around for several reasons. Most of all because he was the first Western intellectual, already in 1976, to have predicted the fall of the USSR in his book La Chute Finale, with his research based on Soviet infant mortality rates.
Another key reason was his 2002 book Apres L’Empire, a sort of preview of the Empire’s Decline and Fall published a few months before Shock & Awe in Iraq.
Now Todd, in what he has defined as his last book (“I closed the circle”) allows himself to go for broke and meticulously depict the defeat not only of the US but of the West as a whole – with his research focusing in and around the war in Ukraine.
Considering the toxic NATOstan environment where Russophobia and cancel culture reign supreme, and every deviation is punishable, Todd has been very careful not to frame the current process as a Russian victory in Ukraine…

…click on the above link to read the rest…

Eagle Ford Shale–A Preview of Permian Decline

Energy Aware II

The Eagle Ford Shale was the hottest play in the United States a little more than a decade ago. In mid-2012, there were twice as many rigs drilling horizontal wells in the Eagle Ford as there were in the Permian basin.

U.S. Shale Plays
Figure 1. Map showing U.S. shale plays. Source: EIA.

Now its decline is probably a preview of what to expect from the Permian basin a few years from now.

The Eagle Ford still produces more than a million barrels of oil (mmb/d) and 5 billion cubic feet of gas per day so that’s the first thing to expect about the future Permian. Plays don’t crash and burn but follow an undulating path downward over years or decades.

Eagle Ford production climbed steeply after 2010 and peaked at 1.6 mmb/d in September 2015 (Figure 2). Much of its decline over the years that followed were because of low oil prices. Although output increased again in 2018 and 2019, it never reached its 2015 level. The Pandemic in early 2020 resulted in a second period of decline and recovery. Production has fallen about 6% since August 2020.

Many people think that advances in technology and ingenuity will somehow reverse the inevitable decline of shale plays like the Eagle Ford. Indeed, those factors have made some difference. The estimated ultimate recovery (EUR) for the average well increased through 2021 despite falling field production levels (Figure 3). That was mostly because operators drilled longer laterals and used more effective fracking methods. The advances were impressive but the technology wasn’t free and well costs increased.

Since then, however, well performance has fallen below levels before 2021. Wells that began production in 2022 will produce about 26% less than 2021 wells and the most recently drilled wells will probably produce more than one-third less oil.

…click on the above link to read the rest…

The End of the Colombian Age

The End of the Colombian Age

We are witnessing the end of an era in history spanning half a millennium; the end of Western dominance in geopolitics. For those who understand the role of resources and energy in economics, culture and politics, it comes as no surprise that this shift in global power has an awful lot to do with resource depletion in particular, and overshoot in general — not unlike the many major shifts in human history. What we are facing here is something akin to the fall of the Soviet Union, but this time on steroids, and with global consequences affecting every nation on the planet to boot.


We live in truly remarkable times. Most people born into a middle of an era expect things to continue smoothly, with the past being a reliable guide for the future. Those who have the “fortune” to born into the very last decades of an age tend to think similarly, and fail to recognize that they are witnessing something which future historians (if there will be any) will commemorate as an end to a period, and a beginning of a new era. Perhaps its no exaggeration to say, that what we see here is the collapse of modernity in two acts, the first being the fall of the West.

Let me start with Erik Micheals and his fine blog Problems, Predicaments, and Technology, where he has recently shared an interesting story about us, Rationalizing, Storytelling, and Narrative-Generating Apes. He closed with citing historian Joseph Tainter, author of the book The Collapse of Complex Societies, on how civilizations end. Incidentally, I also closed my last article with a definition and description of civilizational decline, so I think this is a good place to pick up the thread.

…click on the above link to read the rest…

Will The Texas Power Grid Survive Next Week’s Polar Vortex?

Will The Texas Power Grid Survive Next Week’s Polar Vortex?

The National Weather Service’s Climate Prediction Center forecasts extreme cold weather “across the heart of the country this weekend and is expected to continue into next week.” We previewed this cold blast in a note titled Gobsmackingly Bananas”: Weather Models Predict Polar Vortex Invasion Into US.

Whenever cold air spills south from Canada into the Heartland, attention usually shifts to Texas.

Next, power demand forecasts from the Electric Reliability Council of Texas, the power grid operator for Texas, are analyzed to see if demand forecasts exceed supply. Current forecasts show ERCOT faces the first major test of grid stability for the new year.

And this:

ERCOT has warned its 26 million Texas customers about the upcoming cold blast this weekend into next week. The grid operator assures customers, “Grid conditions are expected to be normal, and ERCOT expects to have sufficient supply to meet demand.”

Energy-focused research firm Criterion Research told clients in a note Wednesday that ERCOT will likely survive the big cold shot:

 ERCOT has issued an Operating Condition Notice (OCN) for the upcoming cold weather event forecast from January 15-17, 2024. The OCN is the first of four levels of communication provided by the agency ahead of a possible Emergency Condition – the following three levels would be Energy Emergency Levels 1 through 3.

ERCOT’s current forecast run shows extreme demand conditions starting on Tuesday, January 16, 2024. That includes a projected peak load of 85,587 MW at 7 AM that morning. However, renewable generation from wind and solar are expected to help out as demand pushes to a seasonal record, with early morning wind + solar contribution 14,137 MW.

…click on the above link to read the rest…

Iran Warns Against US ‘Adventurism’ After Parking Cruise Missile-Armed Warship In Red Sea

Iran Warns Against US ‘Adventurism’ After Parking Cruise Missile-Armed Warship In Red Sea

The Red Sea continues to grow busy with the presence of naval assets, as the West and its allies attempt to keep international shipping lanes open despite the threat of Houthi missiles and drones launched from Yemen. This has lately included nations such as Denmark, Pakistan and Sri Lanka sending military ships to regional waters as well.

US Secretary of State Antony Blinken while meeting with Arab leaders over the weekend before he arrived in Israel Monday evening said, “These attacks are having a real effect on the prices that people have to pay for food, for medicine, for energy. Ships have to get diverted to other places. Insurance rates go up.”

Maritime and industry analyst Sam Chambers has observed, “Over the weekend, the number of transits through the Suez Canal fell to the lowest since the waterway was blocked by the Ever Given containership in early 2021, according to Inchcape Shipping Services.”

Iranian warship Alborz, file image, Fars News Agency/AP

But amid the heavy presence Western coalition military ships, there is now an Iranian frigate parked in the Red Sea after its arrival starting nearly a week ago. “2024 was only a few hours old when Iran dispatched a warship, the frigate Alborz, to the Red Sea,” FP recently noted. “Its arrival was yet more bad news for shipping, already facing a crisis from the Iran-backed Houthi attacks on merchant vessels.”

Iran’s Foreign Ministry has issued a new statement warning Israel and America against ‘adventurism’ which will expand war in the region:

“Iran issues a stern warning against any US adventurism that could endanger regional peace,” Ambassador Amir Saeid Iravani said Tuesday in a letter directed to the US and its allies, a week after Iran’s Navy deployed a cruise missile-armed warship in the region.

…click on the above link to read the rest…

US Debt Hits A Record $34.001 Trillion

US Debt Hits A Record $34.001 Trillion

The US Treasury has a morbid habit of revealing big, round numbers of debt around major calendar milestones, and the new 2024 year was no different because according to the latest Treasury Daily Statement published after the close today and reflecting the US Treasury’s financial statements as of Dec 29, 2023, total US debt as of the end of the year was – drumroll – just over $34 trillion for the first time ever, or $34,001,493,655,565.48 to be precise.

Since this is a topic we have covered more or less daily for our 15 year existence, we don’t need to say much suffice to show a chart of total US debt since zerohedge launched in Jan 2009, when total US debt was only $10.6 trillion. We sure have gone a long way since then.

Some context: US debt increased by…

  • $1 trillion in the past 3 months
  • $2 trillion in the past 6 months
  • $4 trillion in the past 2 years
  • $11 trillion in the past 4 years

… and so on. You get the exponential picture. At this point everyone knows how this ends – certainly the CBO does…

… but since there is no way to reverse the catastrophic outcome, there is no point in even talking about it. At best, one may only prepare for the inevitable hyperinflationary outcome, which would be good news to what is now over $1 trillion in interest expense: after all, someone has to devalue the currency all that interest is payable in.

And since there is no longer a way out, we may as well joke about it so consider this: in the third quarter when US GDP supposedly grew at a 4.9% annualized rate – hardly the stuff of recessions – rising $547 billion in nominal (not real) dollars, the US budget deficit increased by a whopping $622 billion.

This not only explains where US “growth” has come from, but begs the question just how much debt will be needed when the US falls into an official recession.

Or actually not, because at this point the best anyone can do is polish the brass on the titanic while waiting for the inevitable, captures so vividly by the following endgame chart.

“It’s Disgusting What They’re Doing”: Tucker Carlson Describes Visit With Julian Assange

“It’s Disgusting What They’re Doing”: Tucker Carlson Describes Visit With Julian Assange

As Julian Assange approaches his ‘final’ appeal against extradition to the United States, where he faces some 18 counts related to the release of vast troves of damning and embarrassing evidence against the US government, the 52-year-old WikiLeaks founder received a visit from Tucker Carlson to discuss his situation.

Carlson describes Assange as “one of the greatest journalists of our age,” who has “spent his adult life bringing previously concealed facts to the public about what our leaders are doing.”

Perhaps most notably, Assange published internal emails from the Democratic National Committee, revealing among other things that the Hillary Clinton campaign conspired to cheat against rival Bernie Sanders. These leaks, claimed by Democrats to be Russian hacks, were actually internal leaks, according to Carlson.

What’s more, Carlson noted how a fabricated, media-amplified sexual assault charge in Sweden was used against Assange, who spent more than seven years in asylum at the Ecuadorian Embassy in London. And when he exposed the CIA’s spying apparatus, former CIA Director Mike Pompeo discussed kidnapping or assassinating him while not being charged with any crime in the US at the time.

Watch below as Carlson lays out the Assange situation…

Subscribers to the Tucker Carlson Network (which of course, everyone should be) can watch the rest of the segment, in which Carlson describes sitting down with Assange for around an hour (no cameras allowed). He also discusses the situation with Assange’s wife, Stella.

Highlights:

  • “We talked about why he is in prison, and my first question to him was: ‘what do you think this is actually about?’,” to which Assange replied that he “first became famous when WikiLeaks published documents and videos that the US government had kept secret from the wars in Iraq and Afghanistan that were politically embarrassing to the Pentagon…

…click on the above link to read the rest…

Olduvai IV: Courage
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Olduvai II: Exodus
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