Ian Welsh

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

Category: Economics Page 1 of 94

The Promise Of Automation and Abundance

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On November 19, 2025

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For a long time after the Industrial Revolution, many thinkers believed that automation would lead to us living lives of leisure. Twenty hour work weeks, or even less, and many people wouldn’t need to work at all, but would still live good lives.

It never happened.

Economists will tell you this is because there’s always more work to be done, but economists are the priesthood of capitalism, not scientists, not even social scientists.

Most of us are well aware that many jobs are, in David Graeber’s memorable phrase, bullshit jobs. They either don’t really need to be done or are actively harmful. Everyone working in private equity. All the engineers optimizing ads. Almost everyone who works on Wall Street or in shadow banking. Most bankers, for that matter. The jobs which are actually necessary, “essential workers”, are badly paid and treated, but if they don’t show up, as we find out in a garbage, nurse, transit or teamster strike, disaster ensues.

If the janitors don’t show up, everyone’s in shit. If the CEO doesn’t show up, life continues and most people don’t care. Indeed, without CEOs most companies would run better than they do, and you’d be in a lot less danger of losing your job.

We could easily work 20 hour weeks already, if that was a priority.

But the structure of capitalism makes this impossible. We create goods which are designed to wear out quickly and be replaced. “Planned Obsolesence.” We need people to have jobs to get money to buy these shoddy goods. We buy fast food crap because we’re too busy, rather than cooking good food, and most people spend their lives doing work they’d never do if they didn’t need money to survive.

So we find more bullshit jobs, and more harmful jobs for people, and the machine churns on, destroying the environment, making people sick and unhappy and forcing us into wage slavery. Most people spend most of their waking hours doing what they’re told. Or else. Then when you’re old, you might be allowed to retire, and enjoy your declining health. Might.

We have more houses than we need, far more than the number of homeless. America throws out one-third of its food, yet people go hungry. There’s more than enough, literally more than enough food for everyone in the world to have a full and healthy diet.

KT Chong recently wrote an article about humanoid robots, in which he hopes that the Chinese will use them to allow lives of leisure, to institute a good guaranteed income. 

Perhaps they will, I hope so. To do so, however, they will have to move away from capitalism towards true communism, where everyone shares in the benefits of automation, and not just a few.

There is no reason why this isn’t possible. It could have been done any time in the last century or so, had we wished to.

Remember this: you work like a dog, obey some manager’s orders and don’t do what you really want to do because our system, and our leaders require it when it isn’t actually necessary.

Capitalism might (or might not) have been necessary for industrialization. But it is a set of leg irons weighing all of us down now, and threatening to destroy the very conditions required for life to continue on Earth.

But it doesn’t have to be that way, and the task of the next generation of leadership is to figure out how to run modern societies without it, without wasteful over-consumption and without destroying the environment, while making sure everyone has what they need and can live fulfilling lives: lives they choose, where most of their time is their own to do with as they would, not as some boss desires.

May it be so. The other options are far, far worse, likely catastrophically so.

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Short Take on What I’d Be Doing To Prepare for the Pending Economic S**t-show

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On November 17, 2025

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I’ll keep this mercifully short. One commenter in my Friday night econ news post asked, in a kind of oblique way, what would I do in this environment.

Okay, I’ll play — but not without stating firmly and loudly that I am not dispensing investment advice, nor am I licensed any longer to do so. We clear on that?

A liquidity crisis is already here. But this may not be like your father’s ’08 crisis. In ’08, the USD rose — counterintuitively — against every other major currency. Why? The need for USD to cover credit losses was global, and NYC became a literal blackhole for USD. I made an absolute killing on the USD during the ’08 crisis, and afterwards even more on the banks and zero coupon bonds. I made several people fortunes they still retain.

But the crisis now unraveling doesn’t look like one of confidence, it looks like an animal out of a medieval grotesque, certainly not something the Fed can backstop.

Fire in the hole!

Sure, the Fed might do QE. But Congress can’t do a bailout with almost $1trillion in interest payments on US debt imminent and Trump offering $2k bribes to every citizen in America. It’s impossible. What would one call inflation with QE?

What would you call that?

Hyperinflationary?

It’ll be damned ugly whatever happens; whatever you want to call it.

Were I still advising investors I’d be putting them in Yuan interest bearing accounts, I’d be buying silver on the dips, JPY, SKW, and buying way out of the money puts on S&P 500 and NASDAQ. In short, if you can find an affordable way to buy puts on things that are impossible to happen, buy them, because one or two will hit big, and you’ll rake in the money. 

Silver’s in what’s called a secular bull market, not a cyclical one — cyclical means three to five year cycles, whereas secular means, “We don’t fucking have any idea how long ‘dis bitch is going up or down.” This particular secular bull is being driven by a massive externality: China’s draconian export controls of the metal. The problem, right now, from a technical trading perspective, is a failed double-top breakout. This is bearish in the near term, so an under $40 buying opportunity might be realistic. As a side note: China has a VERY long history with the white metal, but not so much the yellow one. I can recommend a good book if you are interested. 

You can invest in the Yuan in several US banks/investment firms. Some accounts are interest bearing, others are just a pure play on the currency. If you want specifics, send me a DM. But the current T-bill replacement is silver, but buy it under $45 if you can. Under $40 is best.

But, for fuck’s sake, avoid paying premiums for silver. What does that mean? If you buy silver coins, buy 99 percent silver grade coins — not the overpriced ones from the US Mint. Buy the off-market ones. Otherwise, the US silver cartel will clean out your gains before you even begin.

Your Late Friday–ermmm, Early Saturday–Dose of Crap Economic News

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On November 14, 2025

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~by Sean Paul Kelley

Good heavens, the economic bad news is piling up like a bad car wreck. So, let’s do some serious rubbernecking, folks, because there is a lot of fucked up shit to watch. Just don’t step in it, okay?

We begin with widepsread reports of large institutional investors (hedge funds, investment banks, boutique investment firms) selling off services stocks like leisure, luxury, hotels, and some retail outlets, like Home Depot. That’s a lot of cash leaving equities. But for what safe harbor? It certainly isn’t private credit, like Blackrock which lost 100 percent on one investment. UBS also lost 100 percent on another private credit deal. Now, Blackrock lost $150 million on the deal, which, for Blackrock, is naught but a silly little rounding error, but as they say, $150 million here, a $150 million there and pretty soon you’re talking real money. That cash won’t go into US treasuries, that’s for damn sure. Seriously, who’d invest in US dollars? I wouldn’t fuck a US treasury with Magic Johnson’s dick.

Yeah, I said it. It needed to be said.

Want news even more ominous: JP Morgan Chase, Goldman Sachs and my alma mater (for full disclosure) Morgan Stanley were the lead underwriters of a $1 billion increase in AI firm Coreweave’s $2.5 billion revolving credit facility. The term sheet expands the maturity date from 2028 to 2029. Just a year? Did they attempt any due dililgence on Coreweave’s burn rate? It’s gotta be a fuckton fast — see, Americans can do metrics. FTW!

But really, you know that kind of high-tech equipment becomes obsolete and depreciates faster than that loan reaches maturity. There is zero, zilch, nada, niente, nyet, nein, no way Coreweave’s earning increases that rapidly. To quote Yoda, “Coreweave, Apple certainly not you are.”

Apple’s so profitable it prints money.

I mean, seriosuly, Christ on a popsicle stick: Where’s the due diligence? Do investment firms even have compliance departments any more? Where are the regulators?

Yeah, yeah, I know, I know.

But it gets worse: On Nov. 4, Meta agreed to an off-balance sheet $27 billion loan (also known as a Special Purpose Entity, henceforth SPE) from Blue Owl Capital (OBCD). This is financial shenanigans and identical to the accounting legerdemain that led to Enron’s ruin. Pay attention, people. This is getting ugly. Enron butt-hurt ugly is how bad this is starting to look. Let me break this down for you, in case you forgot. An SPE is off-balance sheet. That means the company is under no obligation to report it on its SEC required filings. Get it now? Investors have absolutely no way of knowing how much off-balance sheet debt a particular company has. SPEs = bad juju.

To wit: Oracle has a debt-to-equity ratio approaching 500 percent, and that’s just what’s on the their balance sheet. Has Oracle borrowed any money where the debt is accounted for in an SPE?

Guess what, folks? There is literally no way to know if Oracle has any SPE loans outstanding.

My bet: They do.

Speaking of shit credit, or is it credit shit?

Whatever. Moving on.

JP Morgan notes AI-linked debt now accounts for 14 percent of its investment grade corporate index (CGI IG), surpassing US commercial banks as the dominant sector. Who the fuck knew US commercial banks have turned into stingy mozafukas? Can haz dolerz, puleeze?

“What does it mean?” you query, doing your best to ignore my increasingly insulting expletives.

“I know I’m right about the housing market,” he says, repeating it like a mantra.

Well, it means that not only are AI firms taking on loads of traditionally-financed debt, they are also bulking up with the anabolic steroid equivalent of debt: unknowable and NON-REPORTABLE SPE debt. They pump this iron to finance AI hyper-scaling. No wonder the main character of the (mostly) true movie, The Big Short, Michael Burry, is closing his fund. Dude shorted Palantir and Nvidia and got caught with his pants down. Sadly, Burry forgot John Maynard Keynes keen paroemia (from the ancient Greek, meaning maxim or proverb) from when he lost all his money in the 1929 crash: “Markets can remain irrational longer than you can remain solvent.”

Also: Beware neologisms created on Wall Street. Today’s new phrase is “data center credit.” Sounds positive, aye? It ain’t. It’s a bullshit phrase referring to debt financed for the AI sector by private credit shops. Tons and tons of bullshit, yes?

“Ha-ha,” he said. “Stupid, stupid!”

There is also news that insurers are placing more than 50 percent of the assets needed to guarantee/backstop annuities and life insurance policies into private credit shops. This is a terrible idea. Annuities are insurance policies designed to pay out in the event you live too long. Life insurance is, well, insurance against not living long enough. This is stupid. Epic stupid and civilization-ending risky. It’s like giving the nuclear football to Beevis and Butthead stupid.

Oil prices are soft/down to flat. Texas rig counts are down again this month (rig counts are considered a leading economic indicator).

Now to news out of the Big Apple tonight, that absolutely shrivels me testes. Say it with me like a pirate! As my little sister used to say to me, “You are so not fun.”

Anywho: The head of the NY Fed convened an emergency meeting of bank heads to discuss one of the Fed’s key lending facilities. I’m almost certain this is in response to the rising private credit losses, and how they resemble Bear Stearns blowing up two subprime hedge-funds in 2007, the precise moment the 2008 financial crisis began.

Most distressing is today’s down volume high. It’s one like we’ve never seen before. The downward volume and amount of stocks closing on the downside blew out a 35 year high. This screams louder than Rob Halford singing “Victim of Changes” live at the US Festival in 1983. It’s also an indicator of deeper stresses affecting equity markets.

This is what we now call, in the algorithm-trade dominated age, a mechanical sell-off. All of Wall Street’s proprietary algorithms saw red and initiated the mother of all sell offs. This already spectacularly, terrifyingly narrow advance is getting narrower, and it is growing more brittle by the day. Why worry? Are markets worried about private credit shops lending to off-balance sheet AI SPEs? Is liquidity getting tighter? Risk limits getting ripped to shreds? Doesn’t really matter. It’s a big signal that should overpower the noise. But it won’t. 

Wall Street’s useful idiots will do their duty and cheer until the real crisis begins to unravel. Sooner now, than later. You can bank on that. Just don’t do it in US dollars. That would be dumb. Epic-like dumb. 

Piling the shit higher and higher: Sallie Mae off-loaded $6bn worth of student loans to KKR recently. How better to clean up a balance sheet than selling debt with a 10 percent non-performing rate? Makes sense to me, but I’m just some guy in pajamas.

More great economic news: Large corporate bankruptcy filings, as of mid-November, rise to a 15 year high. That’s higher than the COVID-19 crisis. To date, 655 public companies have filed for bankruptcy. Good times, aye?

Finally, a positive thought, in a manner of speaking. The only thing the equity markets have going in their favor right now is this: the almost impossible to prevent or deny Christmas rally. It’s damn near as reliable as the Monsoons.

So, if the econ shit does hit the fan, it’ll happen after January 1.

Trump Has Achieved Biden Levels of Delusion and Denial

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On November 11, 2025

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I mean…

Not to mention firing BLS workers because he didn’t like the stats, which even Biden didn’t do. Given how dubious most BLS stats relating to inflation are already, that’s some impressive cope.

The fact is that prices keep going up, and if you aren’t in the golden AI Ponzi Scheme, the economy sucks.

Rosenberg Research did some analysis:

If they aren’t in expansion, they’re in contraction. This is also known as a recession, even if they didn’t shade it.

Some further supporting data:

 

Sure doesn’t look like those tariffs are causing manufacturing to flood back into the US, does it? Data centers and power station building are both AI-related, and as for hospitals, they are part of a protected oligopoly, or, they were until the ACA subsidies were cut. That’s not likely to be good for the health “industry,” which would be wonderful — except that people will die and suffer as a result. “Get rid of part of the shitty way we provide health care now without replacing it with something else.”

Anyway, unless you’re in a monopoly/oligopoly, and have some control, or you’re connected to the AI spigot, the economy is ass. And remember, major tech companies are engaging in mass layoffs, so just working for tech companies won’t protect you; the reverse is true. Unless you’re actively working on AI, you’re first to the gallows, as their workers are where they’re starting with the replacements.

For decades, I warned coders (“engineers”) that their days of being King Shit of Turd Island, pretending their skills were super-special, would eventually come to an end. The moment senior management could figure out how to replace them, they would. Unless you’re truly at the very top of your field, you’re always replaceable — mediocre isn’t as good as average, but it’s usually a LOT cheaper.

Anyway, the end days are nigh. There isn’t much left of the middle class in America, with little left for the rich to steal. The US either changes its politics radically (and Trump has always been a billionaire whose policies are good for billionaires) or the US continues its descent to becoming an unutterable shithole for about 80 percent of its population.

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It’s Difficult to Overstate How Concentrated Wealth Is in the US

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On November 10, 2025

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These two charts tell a story. First, the top .1%.

Next, the top 1%. This chart is only to 2023.

Now what you’ll notice is that the top .1% holds about half the wealth of the top 1%.

It’s like this all thru the economy. Everything is flowing to the top, because that’s how the economy is set up. This is sheer insanity, among other things, especially when combined with AI sucking up jobs, its likely to lead to a demand depression. Most rich people don’t get, but a few are waking up.

Meanwhile Trump just went to the Supreme Court to not pay for SNAP food aid. “Starve, peons!” History tells us that food riots are the greatest danger to rulers and it doesn’t take long for them to happen.

As I said before, there is only ONE issue now. Cost of living. People keep telling me Zohran style policies can’t win outside of NYC. Well…

And the Republicans have a shutdown going to make health care even more unaffordable.

Crazed.

Things are going to start changing politically now, and over the next few years. This is the change, which I said decades ago would start in the mid 2020s. Again, it’s here now, though there’s a lot of slogging to go. It’s not a sure win, of course. Neoliberals or fascists may win (more likely fascists), but really the two main options are left wing populism or right (fake) wing populism. The generational pivot is here, and the “we can’t take it any more, you’ve destroyed the middle and working class” is here.

Oh, and one more pretty chart: the effect of our AI overlords on electricity bills:

What can’t go on, doesn’t. There’s not enough middle class wealth left to steal. The US either un-develops or there is a radical change in politics. Either way, politics is going to get a lot more turbulent. There’s a reason why most Trump’s cabinet lives (hides) on military bases now. They know how much they’re hated.

Yes, Canadians Did—Did Think America Was A Friend & Yes, Trump Is Good For Canada

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On October 30, 2025

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These numbers are astounding:

36 per cent of Canadians currently view the United States as a friend, compared to 60 per cent at the end of 2020 and 89 per cent in 2013, and that 27 per cent of Canadians presently view the U.S. as an enemy, a number that stood at 11 per cent in 2020 and as low as one per cent in 2013.

Notice that 1% figure regarding the US as an enemy in 2013, and 60% viewing it as a friend as late as 2020. When I say I was a lone voice screaming that we couldn’t trust America, I’m not exaggerating by much.

My position was half “America has never been trustworthy to anyone, and it ignores NAFTA rulings and destroyed our aviation industry” and half “countries have interests not friends.”

The moment it wasn’t in America’s perceived interest to be friends, it wouldn’t be, and empires are always implicitly enemies of their vassals, seeing them as useful tools, not friends.

But I want to emphasize how grateful I am to to Trump. If he had played along, given the appearance of friendship while slowly screwing Canada over, the way most recent administrations have, Canada would have gone along with it. If the past 45 years have taught us anything, it should be that people will tolerate a slowly eroding situation for ages, the metaphorical frogs in the slowly heating pot. (Frogs aren’t actually that stupid, not being humans.)

Canada spent the 90s and 00’s making nice with China, then reversed on a dime under US pressure, arresting the daughter of Huawei’s CEO for America and slapping 100% tariffs on Chinese EVs.

Then came Trump with his talk of annexation and his lies about Fentanyl (the same lies being used against Venezuela, you’ll note. Trump is not very imaginative. One lie for all seasons.) The truth is that Canada is exactly the sort of trade partner that America should want: yes we have a surplus, but it’s because we sell oil and minerals to the US. In the far more important manufactured goods area, we’re net importers.

If we were to cut the US off from Canadian crude, multiple refineries would be shuttered and there wouldn’t be enough gasoline. (Ironically, Venezuela is the other big supplier of the sort of heavy crude these refineries are set up to use.) You don’t want it? You don’t have to buy it, it isn’t competing with US crude.

But lately Trump may have gone too far for even Canadian politicians, though to be fair, Canada has been far more resistant to tariff blackmail than almost any other country except China. Japan and the EU buckled far more easily.

Two important events: first Stellantis said it was going to move a factory to the US from Canada. Reshoring industry and all that. Canada and America’s auto industries have been integrated since World War II under the Auto Pact. This is why Canadian politicians were ready to hit China with that 100% EV tariff, they were protecting Canadian jobs since Chinese cars are half the price of American made ones.

Then, in response to Ontario Premier Rob Ford’s ad quoting Reagan as against tariffs, Trump slapped on another 10% tariff on Canadian goods, and stopped all trade talks.

Thank God for Trump. Canadian politicians want to capitulate, if they can get surrender terms that don’t amount to “you won’t be re-elected” and he keeps not letting them.

So word is that the Feds are considering ending the 100% tariff. Presumably the idea is to try for the same sort of deal Mexico got: assembly plants in Canada for Chinese EVs.

If we can’t have American car manufacturing jobs, why not Chinese? Bonus, happy consumers/voters when they can get better cars for half the price.

Trump just keeps giving, just not to anyone who voted for him who isn’t worth 7 figures. Canada should have been pivoting to China hard years ago, and now, thanks to Trump it may well happen.

I just hope that after Trump gets on his knees and begs Xi to let him off the China trade war hook, that he doesn’t let us off the hook and give Canadian pols a way to avoid the pivot.

All praise Trump. He’s a genocidal monster, has the attention span of a dementia patient and betrays anyone stupid enough to trust him who can’t afford to bribe him, but he may just save Canada yet.

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Development Politics in Central and South America

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On October 29, 2025

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~by Sean Paul Kelley

Most of you probably know I lived in Nicaragua for a time—about six months—overseeing renovations to my father’s house, where he lives even now.

Me? I’m no fan of the country, nor its politics, nor do I romanticize the pervasive, grinding subsistence poverty in the countryside and sad, soul destroying poverty in the cities. About two dozen rapacious families guarantee Nicaragua’s place as second poorest nation in this hemisphere.

Nicaragua is not without its charms. I have a deep respect for the people of one of three nations in this hemisphere who, one, told the United States to fuck off and two, have largely succeed in keeping the US at arms length. The Spanish spoken in Nicaragua is, in two words, incomprehensibly unique. They distinguish between beans and rice and rice and beans. Seriously they make up two distinct dishes, although I can’t tell the difference. They eat some crazy vegetables—they have ten different varieties of squash, which I detest. But, they know how to cook meat in ways as diverse as barbecue, stew, seared and broiled. Chicken, pork, beef (no lamb or goats) and of course gallino de palo (tree-chickens AKA iguanas) make up the usual tasty fare.

Nicaragua’s best aspect is its untapped collection of perfectly sized waves, best on the Central American Pacific Coast by my estimation; waves for beginners and pros alike. There is only one monster, which I’ll get to in a moment. Sadly (or not) the changes in the political situation between 2015-2025 have scared off most surfers and they’ve migrated to Costa Rica, which has some sweet waves and parts of Guatemala that remain damned near empty. But, I digress.

One late morning, completely disgusted after persistently being thrashed by the waves breaking on the beach at Popoyo—the barrels collapsed so rapidly I was unable to get all but three drops (and no, I was not surfing the A-frame point break Popoyo is famous for, as a beginner I had no death wish I’ve seen too many boards munched on that wave) so I gave up, hopped in the car and began the two hour drive back to Granada.

After 30 minutes drive on a dirt road I turned north on Nicaragua’s stretch of the Pan-American Highway. No fan of Latin music (the radio was off) my mind wandered along the amazing scenery. Volcanoes rose. Small villages disappeared in a sneeze. The olive shades of Lake of Nicaragua were seemingly endless. Isla Ometepe, an island of twin volcanoes, shot up and passed by just as quickly. A few small attempts at agriculture grew to my left and right. All disappeared in blur or blink.

But time passes strange in a foreign land and stranger still on the road. I pulled over next to an anemic sugar cane field, cut a small stalk, sliced it into three pieces and returned to the car. As I shaved the outer layer off and bit into the heart of the cane, two thoughts, as if in quantum superposition, occupied my mind.

“Damn, this is sweet!” Mundane, indeed, but the other was the “a-ha” moment my brain had been silently working out for the last hour.

“Holy shit,” I mouthed silently, “Nicaragua is full of a whole lot of nothing.” Sure, up north in the mountains they grow some mid-grade coffee. Tobacco growth is accelerating also. Why in the current anti-tobacco global climate I don’t know? But it is. Cassava is a major crop, it’s like a potato but tastes like a brown paper bag on a good day. True hunger makes much palatable, I suppose. Plantains and bananas are grown of course. And there are a handful of other root-like plants and squash-like plants that grow there also. The country imports most of its rice, but grows a lot of beans/legumes.

Later I shared this realization with my father who was as surprised as I was by the realization. He agreed. Of course, Dad and I think alike in many ways—father and son, best friends, traveled in 50 plus nations together—so we quickly developed a shorthand for my “whole lot of nothing” observation, calling it ‘low hanging fruit’ syndrome, LHF for short.

LHF came to signify the lack of economic development and general lack of entrepreneurial spirit in Central America. Now, not every nation on the planet is going to be entrepreneurial. Laos is an excellent example—and please this is not a criticism of Laos and Laotians. When I was there they just seemed to have other priorities, like Buddhism. But Nicaraguan’s? The Pinoleros—the preferred demonym of the Nicaraguans and it has not one whit of the pejorative to it—are natural, gifted hustlers, practically pure bred entrepreneurs who are imbued with a naturally prepossessing work ethic and quite a bit of chutzpah. In short: they know when to engage, when to toss out a bit of bullshit. They can sell with the best Wall Street sharks—I’d know—and they know how to make and keep money.

“Why then,” you ask, “is Nicaragua, the largest nation in Central America, making no economic progress and going backwards instead?”

Great question!

There are two reasons for Nicaragua’s penury. First, 90% of Nicaraguans live west of the Pacific slope or in the interior highlands. This population occupies only 38% of Nicaragua’s landmass. The remaining 10% of Nicaraguans live on a narrow strip of the Caribbean Coast or the Corn Islands. Almost two thirds of the country—62%— is uninhabited. Not that I am advocating the rapine of all the pristine tropical forest of the Caribbean lowlands, but far to little of it is being developed and far too many people occupy a very crowded Pacific slope. What is the cause of this underdevelopment? The Pacific slope is littered with LHF and to travel through the Caribbean Lowlands to the coast takes two days on very, very bad roads. Until there is significant infrastructure development that opens the lowlands to development Nicaragua will remain mired in LHF poverty.

Hurdles aside, development politics in Central and South Americ are undergoing a seismic shift. That’s good news for the Pinoleros, money is pouring in. It’s bad news for the USA because the cash is coming from China. As is China’s policy, the money comes with no strings attached, unlike American money with its persistent moral litany of “Do this, don’t do that!”

“Do as we say, not as we do!”

This is not what the Nicaraguans hear from China. The only real demand the Chinese make is on the bigger infrastructure projects. Chinese builders design it, and Chinese build it, hiring few, if any local workers—usually because they don’t have the skills. The Chinese also pay for it, mostly, and don’t lecture. The US can’t compete—not after 150 years of terrible behavior in Latin America. The conclusion, the only conclusion, one can come to in Nicaragua and many other Latin American nations is that the USA is losing influence and power to China. Big time. And fast.

We have a sustained current account deficit with Nicaragua of $1.9 billion. That means we consistently import more from them than we export. China is the reverse. Much of that is due to FDI (foreign direct investment). This investment doesn’t benefit China solely. At present China is building a huge new airport that’s primary goal is to displace the Avianca Hub in San Salvador as the go to airport in Central America. China funded it to the tune of $499 million. It will possess two 4,000 meter runways, long enough and large enough to accommodate Airbus A380 and other wide body jets. The airport is intended to act as a non-stop hub to Europe, Asia and all of South America. Ground has been broken and the expected operational date is sometime in 2028.

The Chinese are also going to help build out the road network to the Caribbean Coast. This will create many new opportunities. Ortega, for all his faults, brought about some serious land reform at the beginning of his rule, so the Caribbean lowlands are now open to just about anyone who has the gumption to settle them.

The decline in American power is as palpable now as it was during the COVID epidemic. The moment COVID was politicized I could literally sense our decline, it was so obvious. Now, under Trump II, the decline is accelerating. Even in our own backyard.

The jury is still out on whether it is rapidly relative decline or real decline. I think it is the latter, only time will tell. Just not enough time for my taste.

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Palestine’s Last Hope

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On October 23, 2025

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We’re about 3 weeks into our annual fundraiser. Our goal is $12,500 (same as last year). So far we’ve raised $9,010 from 79 people out of a readership of about 10,000. 

If you read this blog, you’re usually ahead of everyone else. You know, years in advance, much of what’s going to happen. The intelligence from this blog is better than what people pay $10,000/year for. Without donations and subscriptions, this blog isn’t viable. If you want to keep it, and you can afford to, please give. If you’re considering a large donation, consider making it matching. (ianatfdl-at-gmail-dot-com).

It is now over 20 years ago that I first wrote that Israel would either become a single, secular state, or it would ethnically cleanse or genocide the Palestinian. There were no other solution sets: the land is not actually large enough, nor does it have enough water to divide it into two states and in any case, it was obvious Israelis would never go for that.

Even at the time I figured genocide and ethnic cleansing was more likely, there’s a point where the depravity of a people becomes so pronounced (as it was for colonial North Americans) that no other solution is likely, given the means.

I don’t know how many of you have read bin Laden’s writings. (I don’t endorse him, but he was a smart man.) His fundamental point was that America must be defeated before various local evils, because America was propping them all up.

As retired IDF general Yitzak Brick said:

“All of our missiles, the ammunition, the precision-guided bombs, all the airplanes and bombs, it’s all from the U.S. The minute they turn off the tap, you can’t keep fighting. You have no capability. … Everyone understands that we can’t fight this war without the United States. Period.”

The only way the Palestinians don’t get genocided and ethnically cleansed out of Palestine (the ceasefire/peace will be temporary, and has been violated multiple times by Israel even as they ramp up attacks on the West Bank), is if Israel can’t. And the only way Israel can’t is its economy collapses and takes the country with it, possibly with its neighbours opportunistically jumping in.

Fortunately Trump, with his escalating trade war, is working on it.

First we have the rare-earth export controls from China. Most weapons need rare earths, the West is ten to twenty years from being able to produce enough (always bet the under on China, and over on the West), and China’s controls include any use of rare-earths for weapons. If Trump doesn’t make peace with China, on their terms, the weapon flow to Israel will slow to a trickle. (It will be even worse for Ukraine.)

But there’s far more that China could do. A cursory search shows that it controls the majority of production of the following:

  • Graphite. US is 100 import dependent. China controls 90% of the processing. Used in batteries, EVs, lubricants and steelmaking.
  • Gallium. China does 98% of this. and the US is 100% import reliant. A lot seems to come in from 3rd parties, but China could shut that down. Used for semiconductors, LEDs, solar panels and radar.
  • Solar panels and wafers are about 80% China manufactured. 95% for polysilicon wafers.
  • Lithium ion battery cells and packs. China has about 80% of the manufacturing, and these things go in everything, including almost all consumer electronics.
  • Refined graphite anodes. China produces 90% and you need them for Lithium-ionC batteries.
  • Consumer drones. (Important for agriculture and the parts often used for military drones.) China controls about 80% of production. More, I’d guess.
  • About 80% of generic drugs are produced in China.
  • Legacy semiconductors (28nm+). As Europe is finding out, since China will no longer let Nexperia import them, and auto assembly is having to shut down as a result, China controls a lot of the manufacture of these items. Taiwan, etc… have moved on, but these are used in consumer electronics and autos in vast quantities and mostly supplied by China.
  • High Capacity transformers and inverters. (Can’t transmit electricity without them, and China has at least 70% of the manufacturing, probably more.)

Imagine if China put export controls on all of this?

The US economy would collapse. Nothing of significance can be manufactured in the US or Europe without Chinese components. It’s that simple. China would take a big hit, but they can tank it if they have to.

And, almost overnight, Israel would be without its suppliers. Plus, of course, they are reliant on US subsidies, and America wouldn’t be able to afford them. Europe wouldn’t be able to make up the difference, even assuming they didn’t get hit hard too.

Now I don’t necessarily expect this, it’s not a prediction, but it’s the only route I see left for any sort of relief for Palestinians.  And if it does happen, I doubt Israel would survive.

It’s also worth running thru to understand just how precarious a position the West has put itself in with regard to China. More on that later.

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