Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

The Next Big Crash Is On Its Way

By

On October 1, 2025

Comments

Ever since Greenspan took over the Fed and the 87 crash when they figured out their playbook, the US has only had unavoidable stock market crashes. The Fed is always there to juice markets higher and to jump in at the least sign of a normal (pre-Greenspan) market correction.

But sometimes the irrational stupidity overwhelms even the Fed, because they are both stupid and ideologically unwilling to ever force a correction. This happened twice: the dot-com boom and crash and the Mortgage backed security boom and crash (if we bundle shitty mortgages based on lies together, they become not shitty, because we’re pretending they aren’t all basically the same thing!)

Now we’re going to get the AI Boom crash. I’m well over 90% on this. The AI booms is in the “wildly stupid over-claiming” stage. It’s not that token based AI isn’t a real tech, or that it doesn’t have some uses, but the claims of it completely changing everything (replacing a third of the workforce, acting without human help to run things, being able to cure cancer and make huge theoretical breakthroughs) are obvious over-reaches. So far every academic study that comes in shows that AI isn’t even good at the one thing everyone anecdotally agreed it was good at: writing code. Right now it seems to mainly be a good way to cheat at university, to have a fake relationship, or to bypass Google’s shitty search (which is what I use it for.) It hallucinates, the hallucinations cannot be removed because they are integral to the tech, and the code it produces, even when it works, is a huge mess that will cause massive maintenance issues.

In addition:

  • Since it doesn’t actually mostly reason, it requires data sets bigger than all the data in the world if it is to keep improving;
  • If it uses the data it itself produces, it experiences model collapse.
  • None of the American AI companies make money per query. Every query costs more than they can charge.
  • It requires a vast build-out of energy and data centers, of the “over a trillion dollars” variety. There literally isn’t enough money to pay for OpenAI and Anthropic’s dreams, and there isn’t a product at the end of it that could pay back all that money.
  • About 40% of the US stock market is now based around NVidia and the AI companies.
  • NVidia has now invested in Open AI, so that they can turn around and buy more NVidia cards.
  • The Chinese offer an open source AI which is almost as good and with costs somewhere between one fifteenth and one-thirtieth as much, so that it might actually be profitable AND since it’s open source, Trump can’t have a mini-stroke and decide to cut you off at his whim.

It’s my annual fundraiser. This allows us to cover the changeover of hegemony from America to China, environmental collapse, internal US fascism, what a better society would look like, Gaza, AI, the coming stock market crash and various other issues. As of this writing we’ve raised about $2,700 out of a $12,500 goal, from over 25 people. It’d be great if you can help out (please don’t donate if your financial situation is dire.) You can Subscribe or Donate here or contact me at admin-at-ianwelsh-dot-net if you need another way to donate (mail, usually. A lot of cash apps don’t work in Canada.)

Throwing all this money at AI if it really was the epochal “tech to end all techs, the singularity, dude” that the tech-bros claim it is might make sense. But I don’t see the evidence that this is the case, and even if it is, why not use the Open Source Chinese variety?

In fact, my guess is that this version of AI, based on this model and this generation of chips, is not even as big a deal as the internet was. Everyone was right that the internet was going to be HUGE, they just over-invested before it was and before people knew who the winners (Google, Facebook, Amazon) were going to be.

But so far AI doesn’t even look as important as the internet, but the spend is way larger than the internet build-out of the turn of the millennium.

But even if AI turns out to be a HUGE deal, it’s going to crash out of this bubble and we’ll find out later who can make money doing what.

The Fed will paper the AI market crash over, making hundreds of billions or even a trillion out of thin air to save the rich from their own stupidity and greed. Again. But this will be the LAST crash the Fed will be able to save the capitalists from. The one after will either wipe the capitalists out, wipe out America, or both.

If You Use A VPN, You May Need To Turn It Off To Subscribe or Donate

By

On September 30, 2025

Comments

What is says in the title!

We’ve raised a little over $1,500 over the last day, from sixteen people, out of our goal of $12,500. This helps us cover the changeover of hegemony from America to China, environmental collapse, internal US fascism, what a better society would look like, Gaza, AI, the coming stock market crash and various other issues. It’d be great if you can help out (please don’t donate if your financial situation is dire.) You can Subscribe or Donate here or contact me at admin-at-ianwelsh-dot-net if you need another way to donate (mail, usually. A lot of cash apps don’t work in Canada.)

The Mainstreaming of Nick Fuentes

By

On September 30, 2025

Comments

In the aftermath of Charlie Kirk’s death, there is a frenzied competition to replace him as the face of the young American right.

Nick Fuentes, who largely built his following by trolling Charlie Kirk for his support of immigration and Israel, seems to be the biggest immediate beneficiary.

The Bulwark has a good backgrounder on the relationship between Kirk and Fuentes before September 10, 2025. It was called “How the Groypers Won: In the clash between Charlie Kirk and Nick Fuentes, the Pepe people prevailed” and was published in June:

“I’ve noticed people like Charlie Kirk and Matt Walsh are now calling for an immigration moratorium,” Fuentes said, in comments first noted by Media Matters. “That means they want to shut down all immigration. And suffice to say, the groypers have won. It’s just not even a question at this point.”

Fuentes has a point. After nearly a decade of being treated as the skunk at the Grand Old Party (so much so that even Trump had to claim not to know him after the two had dinner with Kanye), some of the Republicans’ leading thinkers have adopted his ideas.

No one better symbolizes the right’s surrender to Fuentes than Kirk.

The day before Kirk’s murder, Fuentes got the classic New York Times soft-focus feature article.

The Times featured some red-hot quotes from Fuentes bashing Trump:

“When I was a teenager, I thought he was a Caesar-like figure who was going to save Western civilization,” Mr. Fuentes, 27, said in an interview. “Now I view him as incompetent, corrupt and compromised.”

Specifically, he has criticized the president for showing solidarity with Israel over the war in Gaza, for refusing to release the Epstein files and for considering extending student visas to Chinese nationals. On Labor Day, Mr. Fuentes posted on social media, “Trump 2.0 has been a disappointment in literally every way but nobody wants to admit it.”

In the immediate aftermath of Kirk’s death, as I posted at Naked Capitalism, Fuentes reacted sharply to widespread allegations that Kirk’s accused killer, Tyler Robinson, was one of Fuentes’ groypers:

He seems to have bounced back, maybe this piece by Graeme Wood of The Atlantic calling the accusations of Kirk’s accused killer being a groyper “outlandish” turned things around.

SUBSCRIBE OR DONATE TO IAN’S 2025 FUNDRAISER

And things are on the up for Fuentes, as Wired reports:

In the aftermath of Kirk’s death, Fuentes struck a more conciliatory tone, urging followers not to pick up arms, but also repeated that he believes Kirk was “complicit in the Israeli capture of the right wing for a very long time.”
Rather than damaging Fuentes’ popularity, Kirk’s death has accelerated it. His X following has grown by almost 175,000 since Kirk’s death, and he has seen his following on Rumble increase by more than 100,000.

His livestream commemorating the death of Kirk was among his most watched by far, with over 2.5 million views. His livestream the following Monday discussing who was responsible for Kirk’s death also saw a higher-than-normal viewership. In the space of less than an hour, Fuentes earned over $5,500 from the top 50 Super Chat donations made by supporters…

Despite being suspended from most major social media platforms, last year Fuentes was reinstated on X by Musk, who wrote that he could stay on the platform “provided he does not violate the law, and let him be crushed by the comments and Community Notes.”

Rather than being crushed, Fuentes has seen his following skyrocket from 168,000 at the time his account was restored in May 2024, to almost 925,000 today.
…

Despite his growing influence within the GOP and the Trump administration, as well as his rapidly rising support among young white men in America, Fuentes has repeatedly said that in order for his movement to make an impact, it needs to operate in the shadows.

“No rallies, no protests, we don’t need to show everybody how many of us there are because the second that we do, they will identify, isolate, and destroy us,” Fuentes said on a recent livestream. “We want them to have no clue how many Groypers there are, where they are, who they are. We want them to be completely in the dark.”

…

Fuentes’ disdain for many of his supporters appears to have no impact on his popularity, but the 27-year-old is clear that what he refers to as the “grug-level” supporters are not what is needed in order for his movement to take control. Instead, Fuentes speaks about attracting “elite human capital,” supporters who will then become part of an “officer class” of “super intelligent, entrepreneurial” people.

“Once we get 1,000, 5,000 of those guys, those are going to be the party officials, party apparatics as an analogy,” Fuentes said. “I’m kind of interested in inspiring those people, indoctrinating those people. They watch a show, they get the ideas, they get the inspiration, they kind of take a project into their own hands.”
Great.

Fuentes certainly bears watching.

Other things I’m watching/reading:

2025 Fundraiser

By

On September 29, 2025

Comments

This blog runs on reader subscriptions and donations. Reading it is free, and always will be, but it does take money to run the site and keep myself fed and sheltered. Every year (except one time when I was sick and forgot) I do an annual fundraiser, and the funds raised are what make the blog viable.

Over the last few years I’ve been writing mostly about the hegemonic changeover from America to China. Long predicted, this is still a rare event, happening only every century or so, and it’s fascinating to be living thru it. I still plan on covering it, but I think regular readers get the point.

What I plan on writing more about is what the future looks like, and what it takes to run a “good” society. We don’t have a lot of those right now, and putting down the markers for what is required to create one is important. Equally, we need to understand how good societies fail. As an example FDR created a much better America for Americans, but he left open some “windows of wealth” like taxing capital gains at much less than income. It took a while for the rich to turn into oligarchs by driving a tank thru this opening, but they managed it.

China before Xi was in vast danger of turning into an oligarchy. Corruption was rampant, and China was minting billionaires, and they were using their wealth to buy influence and power. Xi shut that down, hard. China avoided a trap which would have turned its rise, at best, into a Chinese Gilded Age and might well have derailed it entirely.

Many such traps come along, and sometimes countries recover before the harm is insoluble.

Sometimes they don’t.

So I’ll be writing more about such issues, about the future effects of climate change on governance and general life and so on.

We have two new writers, Sean Paul Kelley and Nat Wilson Turner. They cover issues I only touch on, Sean Paul is a trained historian, and former institutional broker at Morgan Stanley who has visited more countries than not–65 and counting, and Nate is good at the “bloggy” stuff, as well as (though he hasn’t written about it yet for us) the principles of ideology and how it determines history.

We’ll also make some serious predictions. Most of the big picture events I predicted over the last twenty years have either come to pass, or are in process now, like the rise of China, the fall of America, the immiseration of Americans, the rise of authoritarianism, undeniable climate change, the fall of Crimea, the 2008 financial collapse and so on. We’re due for another financial collapse, and I’ll discuss why, how it will most likely play out, why it’ll be the last one which can be “papered over” and put it in the context of the US’s demotion to regional great power.

In terms of fundraising goals, for every two thousand dollars we raised, I’ll write a long article on one of the “Laws of Heaven”, the principles which create and sustain good societies, in Machiavelli style dictums.

One of these is the “Law of the Predator”.

Anyone who will take what they want from someone weaker than them cannot be allowed to have any power.

Rules such as these, and “keep the rich poor” are foundational. When we don’t follow them, usually without realizing we are, our societies inevitably rot and turn into something hellish for the majority of people.

Readership is up a fair bit this year, even after removing bots. People want to read what is written here. But to write, money is, alas, necessary. I hope you will subscribe or donate. The goal is $12,500, the same as last year. If you’re personally in financial trouble, if food or shelter is an issue, please don’t give. If not, and you value this blog, please do.

SUBSCRIBE OR DONATE TO IAN’S 2025 FUNDRAISER

(Afterword. If you had a subscription and think it’s still running, please check. When credit cards change, the subscription ends. I always let people know, but email messages don’t always get thru. If you can’t use paypal to donate, let me know. Snail mail still works or if you’re Canadian, an Interac transfer. (Most US cash apps do not work in Canada. You can reach me at admin-at-ianwelsh-dot-net, about this or anything else.)

Week-end Wrap – Political Economy – September 28, 2025

By

On September 28, 2025

Comments

Week-end Wrap – Political Economy – September 28, 2025

by Tony Wikrent

Trump not violating any law

‘He who saves his Country does not violate any Law’

Trump Stuns By Saying ‘I Don’t Know’ When Asked Directly NBC’s Kristen Welker ‘Don’t You Need to Uphold the Constitution?’

Joe DePaolo, May 4th, 2025 [mediaite.com]

‘An Egregious Abuse of Power’: Trump Orders Troops to Portland, Ore; OKs ‘Full Force’

Olivia Rosane, Sep 27, 2025 [CommonDreams]

In his latest attempt to turn the US military on an American city, President Donald Trump said on Saturday that he was sending troops to Portland, Oregon and had authorized them to use “Full Force, if necessary.”

“At the request of Secretary of Homeland Security, Kristi Noem, I am directing Secretary of War, Pete Hegseth, to provide all necessary Troops to protect War ravaged Portland, and any of our ICE Facilities under siege from attack by Antifa, and other domestic terrorists,” Trump wrote on Truth Social….

Tear gas used on protesters at Chicago-area ICE site as immigration crackdown escalates 

[NBC News, via Naked Capitalism 09-21-2025]

Stephen Miller Claims Simply Calling Trump Authoritarian ‘Incites Violence and Terrorism’

Stephen Prager, September 25, 2025 [CommonDreams]

Trump Says Critical Coverage of Him Is ‘Really Illegal’

Luke Broadwater, Sept. 19, 2025 [New York Times]

President Trump said Friday that news reporters who cover his administration negatively have broken the law, a significant broadening of his attacks on journalists and their First Amendment right to critique the government.
A day after asserting that broadcasters should potentially lose their licenses over negative news coverage of him, Mr. Trump escalated his condemnations of the press, suggesting such reporters were lawbreakers….

We Are All Domestic Terrorists Now — Here comes the iron fist.

Hamilton Nolan, Sep 26, 2025 [How Things Work]

Trump’s new EO is the formal declaration of the rabid fascist war to crush political opposition. It is a statement of the administration’s intention to designate any institutions organizing and funding political opposition as agents of domestic terrorism, and then to use the toolset of “anti-terrorism” to harass, disrupt, and destroy them. The order first lists off some disparate recent events—the killing of Charlie Kirk and United Healthcare CEO Brian Thompson, the pot shots taken at Trump during his campaign, the (half ass, not really) “assassination attempt” on Brett Kavanaugh—along with quasi-imaginary “Riots in Los Angeles and Portland” to paint a picture of a crisis of political violence….

New York Times v Sullivan: the 60-year-old Supreme Court judgment that press freedom depends on in Trump era

Emma Long [The Conversation. via SCOTUStoday 09-23-2025]

A 1964 Supreme Court ruling looms large in President Donald Trump’s effort to win a libel and defamation lawsuit against The New York Times, two Times journalists, and Penguin Random House, whom he’s accused of trying to damage his reputation and disrupt his 2024 campaign, according to The Conversation. The court’s decision in New York Times v. Sullivan made it clear that public officials have to clear a high bar to win defamation suits, proving not just that there were factual errors, but also that false information was published “with knowledge that it was false or with reckless disregard of whether it was false or not.” The ruling “provided the press in the US with one of the most protected spaces in the world in which to operate.”

Trump Gets His Indictment

Joyce Vance, Sep 25, 2025 [Civil Discourse]

This afternoon, a grand jury in the Eastern District of Virginia returned an indictment against former FBI Director James Comey. The two-count indictment is about a page and a half long. It charges Comey with….

Only one prosecutor signed the indictment, which is unusual. Trump’s newly appointed U.S. Attorney and former criminal defense lawyer, Lindsey Halligan, signed. Typically, the signature of the U.S. Attorney is accompanied by those of the prosecutor or prosecutors who worked on the investigation and will be handling the guilty plea or trial that comes next….

…We have a system of “notice pleading” in our criminal justice system, which means a defendant is entitled to notice of the charges against them so they can prepare a defense. It’s likely Comey’s lawyers will ask for a bill of particulars, which will force the government to specify the precise statements he is charged with making and the factual basis for the charges….

A sharp picture of the personal nature of Trump’s disregard for the rule of law

Chris Geidner, Sep 21, 2025 [LawDork]

The Trump Stablecoin – Building Power and Profits from the Inside

[publicbankinginstitute.org, September 23rd, 2025]

Donald Trump’s latest foray into financial innovation, the proposed USD1 Stablecoin, raises serious concerns about conflicts of interest and the potential looting of the U.S. Treasury. As advocates point out, if Trump were to consolidate control over what could soon become the largest stablecoin exchange, he would gain a private channel to influence and profit from dollar-denominated digital transactions worldwide. While the venture is not yet the dominant player, the combination of presidential authority and business ambition makes its rapid ascendance almost inevitable. What looks like a new tool for global finance could instead become a funnel for enriching Trump and his allies.

The danger becomes clearer when considering Trump’s control over the Treasury itself. The Department is responsible for deciding which stablecoin issuers are permitted to purchase U.S. Treasuries as the “backing” for their digital coins. By blurring the line between state power and personal enterprise, Trump could ensure that his exchange enjoys privileged access to government debt instruments, securing liquidity and legitimacy while starving competitors. This mechanism effectively transforms public debt—paid for by taxpayers—into a private revenue engine. In other words, Trump would wield Treasury policy not for national stability, but for personal enrichment.

“Extremely Disturbing”: What Does Trump’s “Antifa” Executive Order Actually Do?

Schuyler Mitchell, September 26, 2025 [Mother Jones]

…I spoke with Chip Gibbons, policy director at the nonprofit civil liberties advocacy organization Defending Rights & Dissent, about the Trump administration’s playbook for crushing free speech.

Gibbons has spent a decade submitting Freedom of Information Act requests to the FBI—including asking for the FBI’s antifa files in 2017—in an attempt to shed light on its domestic surveillance activities….

Trump Declares War on Left With “Domestic Terrorist” Designation 

[Ken Klippenstein, via Naked Capitalism 09-23-2025]

ICE Detains Des Moines Public Schools Superintendent

Brad Reed, Sep 26, 2025 [CommonDreams]

The Department of Homeland Security claims that Roberts was taken into custody as part of a “targeted enforcement operation.”

Alligator Alcatraz Is an ‘Extrajudicial Black Site,’ Immigrant Advocates Say as Detainees Disappear

Stephen Prager, Sep 26, 2025 [CommonDreams]

According to the Miami Herald, over 1,000 detainees in Florida’s immigrant internment camp have effectively “disappeared,” with family and attorneys unable to track their whereabouts.

It’s Happened: The United States of America Is No Longer a Democracy

Michael Tomasky, September 22, 2025 [The New Republic]

…We learned of all this the same day that Trump decided it was time to just stop pretending and ordered Attorney General Pam Bondi to prosecute three specific individuals: New York Attorney General Letitia James, Democratic Senator Adam Schiff, and former FBI Director James Comey. He declared all three “guilty as hell” and wrote on social media: “We cant [sic] delay any longer, it’s killing our reputation and credibility.”….

…The Justice Department is being destroyed—slowly at first, and now all at once. Most of the lawyers in the Civil Rights Division have left or are leaving. Ditto the Federal Programs Branch, the office that’s supposed to defend an administration’s claims in court. Reuters confirmed in July that 69 of 110 lawyers in that branch were skedaddling. The exodus figure for civil rights back in May was a similar 70 percent….

Combine this with what happened last week to Jimmy Kimmel, and I think we can now just say it. The United States of America is no longer a democracy. It’s not a totally authoritarian state. I’m obviously writing these words of dissent, as are hundreds, thousands of others like me. We’re still having elections, so far. Most courts are still functioning normally. At many levels where the White House can’t just do turnkey autocracy, there is ferocious resistance. And there is a defiant public making their voices heard, alongside a not-insignificant faction of Trump voters who are growing disillusioned with what they’re seeing. And as the polls tell us, the mad king is failing to win people over, and public opinion, at least much of the time, still matters too. These facts can reassure us….

Strategic Political Economy

The enshittification of solar (and how to stop it)

Cory Doctorow, 25 Sep 2025 [Pluralistic]

…In McKibben’s telling, everything about solar is going better than anticipated. Solar efficiency is increasing exponentially with prices falling through the floor. The material bill for solar is also in freefall. Everything surrounding solar is going amazing, too. Battery capacity is improving even faster than solar generation, and the best new batteries use the incredibly abundant element sodium (not lithium) to store those useful electrons. Long-haul transmission lines are crisscrossing the world.

Hyper-reliable electric cars keep getting cheaper, and the batteries are lasting much longer than we used to think they would. Some of these vehicles are nigh-miraculous, from the ebikes that get 5 miles to the penny, to the world’s heaviest EV, a dump truck that shuttles to a quarry atop a hill where it is loaded with rocks, then regeneratively brakes its way back down the hill, accumulating enough charge to get back up to the top again (a perpetual motion machine!). Heat pumps and induction tops are actually more efficient than burning natural gas – in other words, it’s cheaper to convert sunshine into electrons and electrons into heat than it is to just burn gas…

Then there’s the capacity. China’s solar capacity growth is insane – the solar equivalent of a new coal plant is coming online every eight hours. But it’s even more intense in poor regions of the global south, like in Pakistan, where a legion of installers have learned their craft from Tiktok videos set to songs from popular musical films, leading to one of the most rapid electrification rollouts in human history. The closer a country is to the equator, the more sense solar makes, of course, so solar is sweeping some of the poorest countries in the world, liberating them from the need to attract foreign currency they can use to buy dollar-denominated barrels of oil….

Fossil fuels are valuable because they are a chokepoint on the entire productive economy. Anyone who’s seen the Mad Max documentaries knows how this goes: even the most mid, paunchy, straw-haired boomer with volcanic bacne and shitty dress-sense can seize power over the whole population if he controls the supply of one of life’s essentials.

The fossil fuel industry is a magnet for people who love a chokepoint. These people are born tollboth operators and they never stop hunting for turnpikes. They are landlords for ancient corpses, charging the whole world rent to keep the lights on. They are chokepoint-trophic.

Read More

Chinese Companies Compete For Market Share & That’s Why Starbucks Is Toast

By

On September 27, 2025

Comments

Starbucks sells expensive sugared drinks, and some of them have coffee in them. It’s been very profitable and despite some declines, remains so. The CEO was paid about $96 million last year. He was brought in to “turn Starbucks around”, and his main moves have been towards returning Starbucks to its roots as a “third place”, which is to say, somewhere other than work or home where people spend time.

That’s a good idea, actually, because if all Starbucks sells is expensive drinks, which most people pick up, then it’s a lousy value proposition for consumers, especially for the mass of consumers who are seeing a lot of inflation and effectively decreasing wages. The average drink at Starbucks probably comes in around $5 and it’s easy to spend $7, and that’s just on the drink.

Now here’s the issue: American companies are most interested in profits. They want to make large net profits and pay their executives well, which they do by giving them stock options and in most cases juicing share prices by spending massive amounts on stock buybacks.

 

 

American companies are in the business of making whoever controls them rich. Sometimes they’re willing to make a long play and compete for market share, but generally ONLY if they think there’s a possibility of achieving a monopoly or oligopoly position. So there was tons of money for Uber & Lyft, because investors knew that in the end, they’d be able to reap monopoly profits, which they now are.

But in markets where there doesn’t seem to be that possibility, corporations are much less willing to compete aggressively for market share by beating the competitor on price. They prefer to compete in other ways: the third place, for example, or a product that is perceived as better and effectively “price clump”. If an upstart tries to break into an established industry they may briefly drop prices to keep them out, but that’s as far as they’ll go.

Now here’s the problem, Chinese companies compete aggressively for market share based on price. Starbucks used to be the player in the Chinese coffee house market. Then they had their coffee drunk by an upstart named Luckin. Luckin is opening about 10x as many stores as Starbucks. It has 16,000 stores to Starbucks 7,000, and its drinks, which include fancy ones, are about 30% cheaper. Starbucks definitely makes more per store, but Luckin makes more gross. There’s no “third place” about Luckin, they’re kiosks, you order your drink, usually thru your phone (which offers constant discounts) and pick it up.

Because they have massive scale, their unit costs are low, and they benefit from the usual “no one can beat the Chinese at scale” advantage. (Though Starbucks could have done the same, they just wanted to be a more luxury brand and get the extra profits.)

Gadallion goes into this in detail, if you want the nitty gritty, but this chart shows the speed of Luckin’s growth.

 

Now Luckin has come to America. The drinks are cheaper and Starbucks does a lot of pick up business. If you’re just going to pick up a drink, why not go to the cheaper alternative, assuming the drinks are about as good? And unlike China, American consumers are squeezed big time. (China’s 2nd and 3rd tier city consumers are doing well, Beijing and Shanghai consumers are currently under pressure from the housing bubble being smashed, but should recover in the next year or two.)

For now Starbucks has more stores worldwide than Luckin. But their unit costs are higher even now. If Luckin keeps expanding, and especially expanding in the US and S.E. Asia, Luckin’s unit costs are likely to keep decreasing.

It’s hard to see how this doesn’t end badly for Starbucks, unless they get Congress or Trump to intervene. There’s momentum with Starbucks: people are used to going there and keep doing so. But if there’s something cheaper, that’s about as good?

If they compete on price, they lose a lot of their profit margins and investors are already squealing about the minor drops they’ve recently experienced. If they don’t compete on price, Americans who are price sensitive and don’t need “the third place” move to them, and they lose massive amounts of volume. There’s certainly a niche and a fairly large one for “buy a drink and stay at the coffee shop to enjoy it”, and I suspect it’s pretty profitable, but it’s smaller than what Starbucks is right now, and what’s to stop Luckin, after it wins the price sensitive customers from opening “Luckin Luxury Cafes” or somesuch, offering actual premium drinks and comfy chairs and tables and laptop charging, and using their unit cost advantage to out compete the “third place” Starbucks?

This is a specific case of a general rule: Chinese companies want scale and compete on price. They’re like American businesses in the 50s and 60s. They offer value and they aren’t trying to maximize profits by maximizing prices, because they’re used to an economy which has actual price competition.

I used to spend a lot of time in Starbucks, because they had stores in book shops, and I’d buy a coffee and read books for a few hours every day. I’d still be interested in that sort of thing and I have some emotional fondness for Starbucks because of what are, for me, good memories.

But it’s hard to be sanguine about their future. The third place stuff is fine, but if they want to survive, they’d better start competing on price while they still have a size advantage.

Most US companies are in a far worse situation: they’re already smaller than their Chinese equivalents. They can’t compete on price, it’s not possible, because they don’t have scale economies and can’t get them. As China catches up in quality and in many industries surpasses, they’re toast unless protected from Chinese competition, usually by law, geography or trade barriers. Businesses which aren’t, however, are about to experience what other countries experiences when Coke and McDonalds, in the 80s and 90s, came to town, or manufacturers experienced in the 50s and 60s before the rise of Japan.

Developing countries, with lower costs, have an ironic advantage when it comes to survival of many businesses. But high profit, high cost countries like America and most European ones?

Toast.

***

I appreciate everyone who donates or subscribes to keep this site (and Ian) running. Readership is up over 40% this year, and I’m very grateful. If you want to help the blog, please share the articles you like and if you can afford it, and like the content, please Subscribe or donate.

Open Thread

By

On September 27, 2025

Comments

Use to discuss topics unrelated to recent posts.

“How Can You Not Be Romantic About Baseball?”

By

On September 24, 2025

Comments

Fans of the Dodgers and fans of the Yankees–that would be me–know we are witnessing two of the greatest young men to ever play the game of baseball. But do the rest of you realize this? How rare and special this moment is? As we gouge out each others eyeballs over politics, let’s take a simple moment to celebrate two outstanding young men. Sound okay to you?

First I start with Aaron Judge, now entering the prime of his career, in a non-steroid era has already broken many outstanding records. In 2017 he became the first rookie to hit 50+ home runs in a season. He is the fastest player in MLB history to hit 300 home runs. And the fastest to hit and 350 home runs. He also broke Roger Maris’s single-season home run record of 62, without steroids. Personally, I believe that Barry Bonds, Mark McGuire and Sammy Sosa should all have an asterisk by their names and the footnote about it should be in all caps.

Judge is only one of four players, those players include Babe Ruth, Mark Maguire and Sammy Sosa, with four seasons of 50+ home runs. His rookie year, as I already wrote, he hit 50+. In 2022 he slammed in 62 home runs. He rocketed 58 home runs in 2024. And so far in 2025 he’s slugged in 51, counting tonight.

I’m a Yankees fan, but I also love baseball. I played the game from T-ball at 6 years-old well into high school. I never thought I’d see Godzilla in America but damn if he is not out on the West Coast right now. You do know I am talking about Dodger’s pitcher and hitter Shohei Ohtani, right? Simple fact: he’s probably the most amazing player we’ll ever see play the game. He’s just that fantastic. He electrifies crowd’s the way Michael Jordan did back in the day–and I saw MJ play several times.

Not since Babe Ruth has a hitter been such a dominant pitcher. That’s more than 100 years. Otani is simply unreal. This season alone he’s hurled 58 strikeouts and slugged in more than 50 home runs. No one has ever done that.

Last season, he hit more than 50 home, runs and stole more than 50 bases. That’s never been done. He’s created two new two clubs, one of which no baseball player will ever enter again. That was last season when he stole 50 bases and hit 50+ home runs. Judge, at 6’7″, 282 lbs., is an amazing hitter but simply doesn’t have the speed to steal bases like Otani, at 6’3″ 210 lbs., does.

Ohtani has something else Judge does not: a wicked pitching arm. He’s had 100 career starts on the mound in MLB and slugs like the Babe. He threw five no hit innings a few nights ago and yesterday threw 6 scoreless innings with 8 strikeouts. Unreal.

The only reason I post this is because I think that any baseball fan who’s reading this ought to take a silent moment of gratitude for the fact that we are witnessing two players unlike any we have ever seen in the game before. And also recognize that Shohei Ohtani is singular and unique, and we will never ever see his like play the game of baseball again.

To paraphrase, it’s just damn hard not to be romantic about baseball.

P.S. I’d be remiss, nay, negligent, if I failed to add The Big Dumper’s 60 home run season this year. We are truly witnessing baseball’s Golden Age. Only one non-Yankee in the American League has hit 60 homers in one season: Cal Raleigh, aka The Big Dumper.

If you’ve read this far, and you’ve read some of my articles and most if not all of Ian’s, then you might wish to Subscribe or donate. Ian has written over 3,500 posts, and the site, and Ian, need the money to keep the shop running. So please, consider it.

Page 1 of 478

Next

Powered by WordPress & Theme by Anders Norén