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

Oh?

My goodness. Never seen anything quite like this just now on French news @le20hfrancetele

A quarter of a million people forced to leave their homes. Firemen exhausted in the unequal fight. Huge area around Bordeaux engulfed in flames

Please give it a watch
My Eng subtitles pic.twitter.com/HujNlMzUrl

— Alex Taylor (@AlexTaylorNews) July 26, 2026

Almost everything is on track.

Covid?
The financial crisis?
This war? China officially leading the US in tech and industry?
Global warming coming on faster than expected?
Massive wildfires every summer?
Trump being President?
The Ukraine war?
That little genocide in Palestine?
The US being unable to build enough weapons?
The complete breakdown of international law and (more seriously) the WTO trade order?
A revolution in war making technology which has allowed middle powers to fight great powers?
Multiple payment systems challenging dollar privilege.
Serious collapses in animal and insect populations, so much so that bug splat doesn’t exist in much of the world any more and that I rarely see songbirds.
Constant, inexorable rises in food prices, even before the war.

Notice that food per capita line. Remember all the screaming about fertility rates and look at the births line (though I think the collapse is more severe than modeled.) Industrial output is still increasing, as the chart suggests, but China’s about to go over a demographic ledge and I expect it will peak within ten years of the chart’s prediction. Resources are very definitely being depleted, though less fast than predicted. Still, it’s happening. Just read in detail about oil production.

Collapse happens slowly, then all at once. The post-USSR order has collapsed. It’s gone. The trade order has collapsed. Military supremacy is gone. Every summer we get wildfires and smoke in major cities, which did not happen before about 2019. This is a textbook example of climate change re-ordering the environment. What will grow up afterwards will be a different mix of plants and animals.

Things are happening. Big things. If you want the official “big collapse” well, it’s not here yet for the first world, but the death by a thousand self-inflicted wounds continues. As much as I admire what China has done, and as impressed as I am by solar and so on, they are still an industrial society based on planned obsolescence and over-production and are about to hit a demographic cliff (good in the long run, but it will cause issues.) The only escape from much of the resource trap would be large scale off world mining. Musk isn’t going to manage it. The Chinese are taking a shot, we’ll see. That wouldn’t, by itself, fix ecological collapse, however and won’t supply all necessary resources. It’s also unlikely to come on line in time, if at all.

You’re living thru an epochal period, similar to the WWI thru WWII period: everything is changing, but this time including serious environmental issues. There’s also all the social issues related to AI, phones, the collapse of reading and reasoning ability in some societies, mass surveillance and the rise of authoritarianism, even as civil liberties are contracting in almost every country in the world.

The post-war and post-cold war orders are dying or dead. The negative consequences of the industrial revolution are hitting home after we got the goodies for a couple centuries.

Things are happening. More things will happen over the next couple decades. If you can’t see that, you’re blind.

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Week-end Wrap – Political Economy – July 26, 2026

By Tony Wikrent

On July 26, 2026

12 Comments

Week-end Wrap – Political Economy – July 26, 2026

by Tony Wikrent

Prosecutor Investigating U.S. Boat Strikes and Claims of Torture Was Murdered in Ecuador

Camila Lourdes Galarza, July 23, 2026 [Drop Site]

QUITO, Ecuador—Alexandra Bravo, the prosecutor assigned to investigate U.S. strikes on three Ecuadorian boats and the 36 survivors’ subsequent accounts of torture and kidnapping, was shot dead in the coastal city of Manta last month. According to police, on June 14 a hitman aboard a black motorcycle opened fire on Bravo as she and her sister were leaving a café at about 11 a.m. Bravo’s sister, who jumped to protect her, was also killed in the attack.

Are Foreign Intelligence Agencies and Criminals Killing Donald Trump’s Enemies to Earn His Favor. The Quiet Dismantling of America’s Defenses Against Foreign Assassination on U.S. Soil.

Christopher Armitage, July 25, 2026 [The Existentialist Republic]

War on Voting

Don’t Let ICE Freeze Voting

Guest article by Jay Inslee, former governor of Washington State [MeidasTouch Network, Feb 03, 2026]

… Ask yourself this – why would Trump NOT surround polling places with camo-clad, face-masked, helmet-wearing, semi-automatic long gun carrying ICE and Border Patrol agents on election day, in every Democratic-leaning precinct in any targeted district? What would restrain him? His well-developed sense of propriety? His internal moral code? The spineless Republicans in the House and Senate that would have to threaten him with impeachment if he did this? Good luck finding those Profiles in Courage.

This would be devastating. He would not target all the precincts, just those with heavy Democratic performance. Given the fact that the Trump administration shoots protesters and then lies about them, the abject fear these troops would put in the minds of thousands of people who just want to vote cannot be measured, but is surely significant, particularly given the close margins in the House….

THE PLOT AGAINST THE MIDTERMS

Seymour Hersh [via Naked Capitalism 07-24-2026]

Open Thread

By Ian Welsh

On July 25, 2026

26 Comments

Use to discuss topics unrelated to recent posts.

Oilpocalypse Incoming

By Ian Welsh

On July 25, 2026

28 Comments

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.

Nothing Can Be Done When People Believe Lies

By Ian Welsh

On July 23, 2026

34 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.

BLS Alters How It Counts Core PCE Inflation – Guess What Changed?

By Sean Paul Kelley

On July 23, 2026

5 Comments

~by Sean Paul Kelley

From the Seoul Economic Daily:

The overhaul is expected to partly resolve an unusual gap between PCE and the more widely known Consumer Price Index (CPI). The annual core CPI rate in June was 2.6%, while core PCE was estimated at 3.3%. Typically CPI runs slightly above PCE, but recently the two reversed because of software and investment advisory figures. Both items are expected to show smaller increases after the overhaul.

Why the change? Well, “chipflation” was bleeding into software.

The SED continues:

For the software price measurement being revised, the BEA uses the BLS computing cost index. But that figure includes items such as USB flash drives. Their prices have surged amid a spike in demand for artificial intelligence (AI). The result was a distortion in which rising hardware prices were reflected in the software index.

For some reason game consoles are included in the software measurement. As I argued on July 14, these numbers are fraudulent. And this story is pretty solid evidence of that reality.

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.