Author: Ian Welsh Page 4 of 448

Oilpocalypse Incoming

On July 25, 2026

So, it seems that Ansar-Allah (the Houthis) struck an oil refinery in Jizan, Saudi Arabia. They also took a shot at a refinery in Yanbu, apparently intercepted by a battery the Greeks had there (what?)

Anyway, this is getting real. Between the Ukrainian strikes on Russian refineries, which have been very successful, Iranians hits, and now the Houthis, I don’t see how we avoid serious shortages. It’s the refineries that matter most: crude is worthless without refineries and they’re expensive, take a long time to build and aren’t always easy to repair, depending on what exactly got hit.

I also don’t see how we avoid massive famines and increased food prices in places that don’t have a formal famine. A lot of fertilizer runs from oil thru refineries.

The irony here (conspiracy theorists of elite intentions to depopulate the world, here you go) that Trump confirmed he OK’d the Saudi strike on the Houthi airport which set Ansar-Allah off. They’ve closed the strait and they’re going right for the jugular vein with these refinery strikes. If they keep shooting, the missiles will get thru. The defenders have to be lucky every time, they only have to be lucky on occasion.

Beans and rice. If you need distillates like diesel or motor oil, stock up now. It’s hard to stock up on medicine, but a lot also used petrochemicals, so do what you can: even simple things like aspirin are included.

Anyway, I don’t think Trump is together enough to have a diabolical super villain plan. To the extent he can plan at all, it’s about his next corrupt scam or bribe. But it amounts to the same thing in the end.

It’s hard to overstate how much this will destroy all goodwill for America in the globe. I mean all of it. Everyone knows the US started the war and refuses to stop it, whatever their reasons are. And when people can’t eat, the hatred will be immense. Iran will catch some backlash, but most people get that they’re defending themselves.

Empires end ugly and stupid. The rule of incompetence in late Imperial rulership maintains its record. I expected stupid, but it’s still flabbergasting to witness late Imperial Roman levels of moronitude.

Amazing.

Amazing is not a synonym for good.

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Nothing Can Be Done When People Believe Lies

By Ian Welsh

On July 23, 2026

36 Comments

Former CIA Agent John Stockwell on the CIA’s propaganda war on Cuba:

“We pumped dozens of stories about Cuban atrocities…we didn’t know of a single atrocity committed by the Cubans. It was pure false propaganda to create an illusion of communists eating babies for breakfast.”

One of the most fundamental reasons the world is screwed up is that most people believe a bunch of lies. This can be flagrant, like the “drones of death” Iraq supposedly had, ore that Iran killed 50K protestors or that Iraqi troops bayoneted babies in Kuwait.

But it can also be subtle. The generations long understatement of inflation in the consumer price index, for example, means that people lost a third of their actual purchasing power (or more) while the government gaslit them.

Everyone’s walking around talking about stats which have no relation the real world and which predict nothing. It’s like GDP: “Spain’s GDP is about the same as Russia’s.”

So? GDP measures the market value (price) of what your country is spending money on. That’s all. It doesn’t tell you how much industrial capacity they have: how many drones, artillery shells and weapons they can create. Whether or not they can generate their own energy without imports. Whether they can feed themselves. Whether their energy grid could survive mass adoption of air conditioning (hello Britain.) Britain’s water companies added a lot to GDP while flushing sewage into rivers.

American intelligence recently noted that Iran had repaired most of the damage from the first part of the war. But Iran’s GDP is tiny.

Turns out, however, that since they couldn’t buy industrial and construction goods for so long, they became good at making them themselves. Sanctions mean they mostly can’t sell to foreign markets, so they don’t show up much in GDP, but they have the capacity. Meanwhile the US has a massive GDP and takes years to build or repair a bridge that China can fix in weeks or building in months.

We’re swimming in a sea of toxic bullshit. The “facts” our decision-making apparatus uses are often just straight wrong. The population is lied to even more systematically.

If I were writing laws it’d be a mandatory prison sentence for a politician or government official to knowingly lie to the public. No one can make good decisions with bad facts.

Now this isn’t to say that often we do have good facts and do the wrong thing anyway. I’m old enough to remember the doctor shortage in Canada being predicted back in the late 80s, especially the shortage of family physicians. Same with the nurse shortage.

The solution was obvious: train more doctors and nurses. This takes time: more medical school slots, more residencies, etc… But we knew well in advance. We did nothing except think “we can steal doctors and nurses from the third world”, then make it hard for them to work in Canada.

So good facts alone won’t save you. But bad facts make it hard to do the right thing even if you wanted to. Just before the Iraq War over 70% of Americans thought that Iraq was behind 9/11. There is zero evidence of that. There was zero evidence of that back then. But if you believe a lie, you may act on the lie and so Americans supported the war.

For going on 40 years we’ve been making our statistics not reflect reality. This was deliberate, because low inflation stats meant low adjustments to pensions, wages and so on. GDP goes up as the only statistic that mattered concealed that the industrial base was being offshored, which made some people very very rich.

Some people knew the lies were lies, but many didn’t, and the longer the lies continued the more people forgot they were lies.

Till reality (that grocery bill) became impossible to ignore, but compromised stats made it nearly impossible to make the argument to do something.

Lying is a primal sin exactly because it makes even understanding a problem either impossible or much worse. I lie is how we change the world into something fake but better for us. It’s one thing to say “my dog ate my homework”, it’s another for public officials to lie so that some people benefit and others (always a much larger group) suffer. If it was up to me a politician or government official knowingly lying would carry a mandatory prison sentence.

Our “masters” have completely forgotten that democracy is supposed to be about service to the people. Politicians work for the public, not the other way around.

At least in theory. But the further the theory moves from practice, the more politicians act for any reason other than the common weal, the more they need to lie so they can do what they really want. In this era, mint more billionaires.

The complete normalcy of government lies, politely called propaganda, conceals the sort of rot which destroys civilizations, and it’s helping destroy ours.

America’s Losing the AI Race Hard

By Ian Welsh

On July 21, 2026

32 Comments

Amazing stuff, and sooner than even I expected. China’s Kimi is now about equal to GPT and Claude:

For the first time, a Chinese model Kimi K3 has taken #1 on the Frontend Code Arena and is scoring at or near the frontier on other benchmarks.

And the majors are noticing:

there it is – microsoft will use kimi k3 to power their flagship copilot ai assistant saving up to 60% per token or $600M on every $1B spent on inference spend.

if microsoft chooses to self-host the model once Kimi open sources it on the 27th then this cost reduces even more… pic.twitter.com/BwrXXZvAim

— Ejaaz (@cryptopunk7213) July 20, 2026

Meanwhile Trump is talking about banning Chinese AI.

Alternatively, the smart lads at Open AI have a regulatory plan:

I would guess that the Trump Administration will at some point realize that their best strategy here would be to create large amounts of regulatory risk around the use of open-weight Chinese models. You don’t need to “ban open source” (one of the dumber motifs of AI policy discussion). You just need to direct every agency to issue soft law that creates FUD. “A Federal Reserve Advisory Bulletin found that there may be backdoors in Chinese AI models.” It needn’t be that well justified. You just create enough regulatory risk that every regulated enterprise backs off. You probably don’t want to create so much regulatory risk that you scare off the hyperscalers from serving Chinese models; this will just drive startups to sketchier providers. There’s a happy middle ground here. I’d assume they will do some version of this.

Even more fun, the Feds want to approve all AI releases and not allow everyone the full models.

The Trump administration has taken new steps to assert more control over the rollout of future artificial intelligence model releases by dictating which companies and entities are allowed access to the latest frontier models, two people familiar with the matter told CNBC…

….

This week, the administration launched its own program, dubbed “Gold Eagle,” aimed at collaborating with the private sector to find and fix cyber vulnerabilities.

The so-called clearinghouse would put the White House in charge of greenlighting which companies can access new AI models, according to a person familiar with the matter, who spoke on condition of anonymity in order to discuss information that is not public.

China is going to eat America’s lunch on this. If they ban Chinese AI (harder than it seems, given it’s open source) all that means is writing off the rest of the world. And since American models are handicapped, smaller American companies will be stuck with worse AI.

Since Chinese AI is far cheaper, as well, I’d expect American companies to set up subsidiaries overseas to use it, rather than be stuck with American AI.

The entire situation is a complete clusterfuck. Major companies have taken on serious debt in order to build data centers which have a lifecycle of five to seven years, and often less (since new generations of GPUs are much better.) But the Chinese product is cheaper, open source, lacks nearly as much sovereign risk and I’ll bet multiple models will soon be about as good as Anthropic and OpenAI’s.

Where’s the business case that spending all these trillions of dollars is going to produce enough revenue from US AI to pay for all of it?

There isn’t one. It doesn’t exist.

And that means that, at least in America, this is an AI bubble. All bubbles burst and this will not be an exception. If the government bails them out it will be the last major US bailout.

This is also very likely one of the last major tech revolutions which will start in the US (which it did.) Going forward they China will produce the vast majority of them.

This is the endgame. The turning point where China obtains not just the industrial base but the absolutely undisputed tech lead. From now on China will like America in the 1950s — it’s where almost everything new is created, the dynamic center of the world, and soon people will be competing to move there, because everyone knows it is the future.

America Doesn’t Have Enough Missiles To Fight Iran

By Ian Welsh

On July 20, 2026

51 Comments

Readers will remember that at the start of the Iran war I said that if it got serious, the Iranians would win, because they would run the US out of missiles, especially air defense missiles.

The math is simple. If Iran keeps firing, and the US/Israel does not take out the launchers and missile stockpiles in large numbers, Iran will run the US and Israel (it has its own variants, but the same supply issues) out of interceptors. At that point Iran hits everything it shoots at.

If Iran just keeps going long enough, it WILL win the war. The main danger is Iran’s leaders accepting a cease-fire too soon.

Well, confirmation from within the government:

“The U.S. is planning for a wider war,” said one U.S. official familiar with internal administration discussions, adding that the Pentagon was increasing the number of military aircraft in the region.

But the official, speaking on the condition of anonymity because they were not authorized to talk to the media, cautioned that the expansion of U.S. operations will be limited by dwindling stockpiles of air defense and long-range munitions and constraints on the ability to surge more troops and aircraft into the area because of battle damage.

“We do not have enough to safely sustain operations, and I don’t think the White House is aware of that,” the official said.

You will notice that I said the main mistake the Iranians could make was going to peace too soon. At least militarily speaking, there were diplomatic reasons to do so, since both Pakistan and China wanted a peace deal, and Pakistan has a defense pact with Saudi Arabia. Iran needed to prove that they had made all possible efforts, to continue receiving the support they need from China and to keep Pakistan out of the war.

There were also significant internal political reasons. What most people don’t understand is that the supreme leader almost never over-rides government consensus. Elijah Manjier is reliable on this (part behind a paywall). He has a lot of contacts in Iran, Hezbollah and Hamas.

The Leader of the Islamic Revolution, Sayyed Mojtaba Khamenei, never trusted the Memorandum of Understanding negotiated with Washington that was too good to be true. From the outset, he reportedly expressed reservations about American real and honest intentions and questioned whether the United States would ultimately implement its commitments. Nevertheless, despite his scepticism, he did not impose his personal assessment on the country’s political institutions or prevent the agreement from proceeding once it had secured substantial institutional support equivalent to the majority of the National Security Council voting.

In doing so, Sayyed Mojtaba Khamenei reportedly followed the political approach adopted by his assassinated father, Ayatollah Ali Khamenei, during the negotiations that produced the 2015 Joint Comprehensive Plan of Action. Although the late Ayatollah Ali Khamenei repeatedly warned that the United States could not be fully trusted, he allowed President Hassan Rouhani, Foreign Minister Mohammad Javad Zarif and the majority supporting them within the Supreme National Security Council to pursue the nuclear agreement because they believed diplomacy remained preferable to confrontation.

This position reflected a broader principle within Iran’s strategic decision-making system. The Leader establishes the general direction of national policy, but crucial security decisions are debated within institutions that include officials elected directly or indirectly by the population and their representatives, among them the president, the parliamentary speaker and senior government and military representatives. When a substantial institutional majority supports a particular course, the Leader permitted that collective judgement to be tested, even where it conflicts with his personal assessment of the risks involved.

However, the MOU’s failure strengthens those in the government who thought it was a waste of time.

The damage extends beyond the current political leadership. Future Iranian governments, regardless of their ideological orientation, will judge the risks of dealing with Washington against the combined experiences of the JCPOA and the more recent Memorandum. Even officials inclined towards negotiation may conclude that engagement carries prohibitive domestic costs unless future arrangements include enforceable guarantees, simultaneous implementation and mechanisms preventing one party from receiving concessions before abandoning its own obligations…

…Yet diplomatic options have not disappeared completely. The Memorandum itself showed that both sides remain capable of negotiating when the military, political and economic costs become sufficiently high. Any renewed process, however, would require a substantially different structure based on reciprocal implementation, verifiable sequencing, the release of assets alongside measurable Iranian steps, and guarantees sufficiently credible to survive political change in Washington or Tehran.

Manjier’s connected. I’d assume the last paragraph reflects what the Iranian government wants said about any possible new agreement.

Meanwhile in the war itself the Iranians are concentrating on taking out US bases, radars, supply depots, command/communications centers and so on. They’re systematically degrading the infrastructure the US uses. Note that they have started attacking in Jordan, which they had rarely done before. Jordan could be considered the “last shield” before Israel, and Israel’s basing of US assets is the next big goal, I suspect.

It seems clear that Iran is taking apart US logistics and command and control, and depleting weapon stocks faster than the US is doing this to Iran.

Again, the simple math.

Anything can happen in war, but I don’t see any way for the US to win this war if Iran stays the course, and we haven’t even included all the shortages coming down the line, especially now Ansar-Allah has closed another strait. The only people with serious leverage over Iran are China and Pakistan (and Pakistan’s is limited. There’s a deal, but they’d have mass riots if they tried to attack Iran. Pakistan’s population support for Iran polls around 80%.)

If America were even marginally competently run this would be the point where Congress would impeach Trump. He won’t admit defeat and oil stockpiles are running low. He has no viable part to victory, but keeps acting as if he does. He’s turning a military defeat into an economic catastrophe thru his delusional disconnect from reality, or perhaps because he’s being blackmailed. Whatever the reason for his behaviour, he needs to go. (Yes, I’m aware this won’t happen, that’s the point.)

In all my life, and I’m getting old now, I have never seen a stupider war or an American elite more determinedly detached from reality.

Open Thread

By Ian Welsh

On July 18, 2026

43 Comments

Use to discuss topics unrelated to recent posts.

Xi Lays Out His Principles for AI Development

By Ian Welsh

On July 17, 2026

16 Comments

There were rumors recently that China was going to put export restrictions on AI. That now seems… unlikely. Here are the principles Xi laid out:

First, adhering to the principle of openness and win-win cooperation while boosting innovation-driven development. Xi highlighted the importance of encouraging open-source, openness, collaboration and sharing to facilitate technological innovation, industrial development and scenario-based application of AI. (My emphasis.)

Second, strengthening risk awareness and ensuring that AI is secure and controllable. Stressing the need to ensure that AI is always under human control, Xi urged all sides to jointly oppose overstretching the national security concept in the field of AI or placing one country’s security over that of others.

Third, encouraging inclusiveness and promoting mutual learning among civilizations. AI development and its application should not erode or undermine the diversity of world civilizations or the uniqueness of cultures of different countries, according to Xi.

Fourth, advocating solidarity and improving global governance. The important role of the United Nations should be recognized, Xi said, calling for further alignment and coordination on AI development strategies, governance rules and technical standards.

I’ve predicted, for a couple years now, that Chinese AI models will be the main models used in most of the world, including in much of the West, assuming they aren’t banned outright, because they’re open and cheap. Costs of running them are about twenty times lower than the US frontier models made by OpenAI and Anthropic. They’re almost as good, and they aren’t that far behind.

The problem with US models is not just that they’re expensive (though that’s huge, there are tons of reports of AI use being cut back) but that they are CLOSED: meaning you can easily be cut off, or have prices raised, or have the model changed on you with no recourse. Open models you can adapt the model, you can run it on your own servers, or various server companies can, will and do run them for you on their servers which you rent.

It’s clear that Xi gets this, and thus that the CPC understands it as well. Open Source isn’t a liability, there’s a reason why Linux runs most of the world’s servers: closed tech is the liability. Open Source is the advantage.

Notice the second bit: on AI always being under control. I wonder if Xi is thinking of Israel and the US for military targeting and how that has possibly contributed to hitting civilian targets like schools. (Possibly because Israel and the US are run by psychopaths and I bet they’d do it anyway. But no human in the loop may make it even worse.)

The third principle is about avoiding US (and Chinese) cultural hegemony. A nice thought, and open source certainly could be adapted to different nations and cultures, so that AI models aren’t all giving the same generic results.

Finally, the fourth principle. I’ve always found it interesting just how much China plays up the United Nations. I don’t know if the respect is genuine, but the words are consistent. Honestly, I think the UN should move its main HQ out of America. America’s been pulling stunts like denying diplomats visas. Not sure if it should go to China (though if it did Shanghai or Hong Kong seem like good fits) but they’d be better stewards than the US, and in any case, if the UN is going to be in the most important great power, that’s now China. (That said, I’d favor something more neutral. Perhaps Singapore.)

China just keeps coming across as smarter, more strategic and more human than the West. It’s sad, in a way, but it is what it is.

And I remain convinced that Chinese AI will be the winner over American.

Manipulating Numbers Rather Than Logistics (Oil Version)

By Ian Welsh

On July 16, 2026

32 Comments

If you’ve been following oil prices since the Iran war started you’ve probably been surprised at how low prices have often been. I certainly was, at first.

The issue is fairly simple: most governments are worried about the price of oil, and not the supply of oil. So they’ve taken various measures to keep prices low. Some of those have been manipulative financial and some of them have been massive releases of oil from reserves.

IEA chief Fatih Birol told Bloomberg that a historic 400-million-barrel emergency release, equal to roughly 2.5 million barrels a day, helped push oil prices down by $20.

The price of oil, though, isn’t really the issue. One part of it is refinery capacity. A fair bit went off line in the Middle East, but ironically, even more in Russia. Why is Russia systematically destroying ever gas station in Ukraine? It’s retaliation for constant hits on Russian refineries.

Marathon Petroleum’s own management flagged on the Q1 earnings call that roughly 6 million barrels per day of global refining capacity is offline, about 6% of the world total. Ukraine’s drone campaign against Russian refineries is the largest single piece, but Middle Eastern facilities inside the Persian Gulf export corridor, and Chinese refiners voluntarily throttling to preserve inventory, add to the shortfall.

As a result Russia is no longer exporting diesel. And even though oil prices are low, gasoline prices are not as low as one would expect, because short refinery capacity means this:

Amusingly the Europeans and Americans have been encouraging Ukraine to hit refineries.

Now you may think “but America is an excess oil producer.”

Yeah, but it doesn’t matter. What matters is refineries and the type of crude oil involved. We aren’t just talking about gasoline, diesel, jet fuel and bunker fuel (ships), we’re talking about fertilizers, sulfuric acid (used for amazing amounts of processes) and so on. This cascades out into medicine (your aspirin for example), packaging, semiconductor production (hey, even higher prices) and whatnot.

But with rare exceptions (hello, China, again) most governments have not managed the actual supply situation.

In a rational economy prices and supply of crucial goods would be managed. For example farmers would get fertilizer and diesel at subsidized prices. Truckers shipping important goods would get subsidized diesel. Drug manufacturers would get guarnteed supplies (though not subsidized in most cases, they make tons of profits, just force them not raise prices.)

Rational governments would say “OK, what parts of the economy are actualy important (food, medicine, transport)?” and act to protect those parts of the economy, and would ration and subsidize those goods.

Instead our elites manipulate the price numbers and make the actual physical situation worse as they do so, by not allowing high prices to lower use and by not allocating key parts of the economy what they need at reasonable prices. Oh, and by releasing absurd amounts from the reserve to manipulate prices rather than using the reserve for actual necessities. They’re so used to an economy where just manipulating prices seems like all you need to do because there’s a global market with surplus. They don’t know how to handle an economy with actual, genuine shortages.

Anyway, as best I can tell if the Strait stays closed we are now weeks to about two months away from actual physical shortages in the first world. (They’ve already hit in the developing world.)

Then the fall harvest comes in and we get terrible numbers from that, and food prices surge.

This is the stupidest war of my entire lifetime and I’m old enough that this includes Vietnam, which was stupid beyond belief, but not one-tenth as moronic as the Iran war. A war of complete choice which the US has lost, won’t admit it has lost and is in danger of running the world into a decade long depression.

If it stops now or soon, it will suck, but we’ll get thru. But if Trump dismantles Iranian infrastructure like he’s threatened (by no means sure, this is Trump, but also not impossible, this is Trump) the Iranians have said they will respond by dismantling Gulf infrastructure: that means refineries that will take years and years to rebuild. Oil fields. Facilities producing helium. A decade of not enough fertilizer.

There is a real goddamn economy and if this happens, a lot of people will DIE due to famines and fuel shortages. Tens of millions. Maybe much more. You can’t just take 20 to 30% of the world’s supply of key resources offline and think “it’ll all be OK, the market will sort it out.”

I mean, the market will, sort of. But along the way will be a LOT of deaths and suffering

If the US had an even remotely operational governing system Trump would be impeached and removed in record time. He’s a fiasco, and he’s one itchy trigger finger away from being a catastrophe.

Our Carefully Designed Hell Society

By Ian Welsh

On July 15, 2026

14 Comments

I was amused, in a “oh for fucks sake” way today when I found out that over 80% of workers experience anxiety on Sunday, thinking about return to work on Monday.

Then on Monday heart attacks spike. Thirteen to twenty-five percent higher than normal depending on the study.

Work is anything you do due to coercion. If you wouldn’t do the job if you didn’t need the money, then you’re being coerced by what Max called the whip of hunger. (These days also homelessness.) This is different from being a hunter-gatherer: nature didn’t deliberately set up a system where if you don’t work you die, it’s accidental. And hunter-gatherers are famous for not working when they have a surplus. (To be fair this is partly because it’s hard to store surplus, but many such societies actually forbid creating large private surpluses, as they understood where that leads.)

Now work because it’s truly necessary is fine, but as we all know, and as the late Graeber pointed out, something close to half of jobs are “bullshit jobs”. They either don’t need to be done, or they make the world actively worse. (That would include 90% of people working in finance, for example.)

What Graeber found is that people with “real” jobs, even janitors, might be unhappy, but they were a lot less unhappy than those in bullshit jobs making equivalent wages, because at least they felt like their job really needed to be done.

But this is a pattern that goes beyond jobs. The suicide pattern of teenagers is instructive: suicides drop a lot during summer vacation.

They also dropped during the Covid shutdowns, which I predicted at the time.

Because school sucks. You spend all day doing boring things that teacher tells you to. In the US at least you don’t even learn much, with massive rates of illiteracy because you aren’t really being taught (if that was the goal, it could be achieved much faster and more effectively) you’re being conditioned to do what your told, when your told, to give teacher what they want in the way teacher wants, and to keep your mouth shut when not called on.

You’re being turned into a good little wage slave. It takes years of coercive conditioning to make humans willing to put up with wage slavery and creating those people is the job of schools and teachers. Professors put the finishing touches on those who will wind up being senior wage-slave supervisors or otherwise entrusted with minor bits of power and expected to use it in the interests of the masters.

Adults have heart attacks because work sucks so much. Kids kill themselves.

We created this, as a species. We did this to ourselves. Is there truly no better way we can come up with?