Posted originally on Feb 20, 2026 by Martin Armstrong |
The latest Eurostat release on business registrations and bankruptcies in Q4 2025 is perhaps one of the most revealing datasets on the real state of the European economy, and it confirms precisely the type of slow deterioration in confidence that I have warned about for years regarding the EU’s policy direction.
On the surface, bureaucrats will point to the 0.5% quarterly increase in business registrations across the EU as a sign of resilience. Yet at the very same time, bankruptcy declarations rose by 2.5% compared to the third quarter of 2025.
Looking deeper into the sector data makes the situation even more concerning. Registrations increased most in information and communication (+6.4%) and industry (+4.9%), while sectors tied directly to consumer demand, such as trade and construction, showed declines. Meanwhile, bankruptcies surged in accommodation and food services (+8.6%), transport (+5.6%), and even information and communication (+7.9%).
When bankruptcies rise across 6 out of 8 sectors, that reflects declining economic confidence and tightening margins across the entire economy. It is far easier to start a business than it is to maintain one. Bureaucrats choose to look at business starts rather than bankruptcies.
The sharp rise in bankruptcies in hospitality and services is particularly telling given Europe’s inflation in energy, labor costs, and regulatory compliance. Small and mid-sized businesses cannot absorb these costs the way multinational corporations can. The result is a slow liquidation cycle beneath the surface of headline GDP numbers. Entrepreneurs are the first to react to declining confidence in future policy stability. When bankruptcies rise faster than new firm formation, capital becomes less confident in long-term profitability.
The sector divergence also reflects the deeper structural transformation underway in Europe. Digital and information sectors are still attracting registrations, while traditional consumer and service sectors face insolvency pressure. That is consistent with an economy being reshaped by regulation, energy policy, and declining industrial competitiveness.
Rising bankruptcies do not immediately show up in political narratives, but they erode the tax base, increase unemployment risk, and force governments into further intervention. That intervention historically leads to more regulation and taxation, which only accelerates the liquidation cycle.
The ECM has long warned that the 2026 period would mark rising volatility driven by declining confidence in government. Rising bankruptcies alongside only marginal business creation are not a healthy expansion phase. It is the early-stage warning that the private sector is under pressure while policymakers continue to insist that the system is stable.
Posted originally onFeb 20, 2026 by Martin Armstrong
The latest data showing the US trade deficit widening sharply to about $70.3 billion should not be interpreted the way mainstream economists always frame it. They immediately jump to the conclusion that a rising trade deficit is a sign of economic weakness, when in reality it often reflects the opposite and represents strong domestic demand. According to the latest Commerce Department figures cited in financial reports, the gap widened as imports surged while exports lagged, driven in part by capital goods and technology demand.
A trade deficit is not occurring in isolation. If the United States imports more than it exports, the excess dollars do not vanish, rather, they return as capital investment into US assets, equities, real estate, and Treasuries. That capital inflow is precisely why the dollar can remain strong even while the trade deficit widens. America has been running trade deficits since the late 20th century, yet it remains the world’s primary capital destination.
Imports rose sharply, particularly in industrial supplies, technology equipment, and capital goods linked to AI infrastructure expansion. America is attracting global capital into productive, growing sectors. Historically, trade deficits expand during periods of investment booms because domestic demand outpaces supply.
Even with aggressive tariff policies, imports continued rising, and the goods trade deficit reached record levels of around $1.24 trillion in 2025. Trade balances are driven more by capital flows and currency strength than by tariff policy alone. Global capital still viewing the United States as the safest destination amid geopolitical uncertainty in Europe and elsewhere. Capital always moves to the strongest legal and financial system, not the one with the best trade balance. This is why nations like Germany or Japan may run surpluses while still seeing capital volatility.
Countries that run chronic trade deficits are only in danger when capital stops flowing in. The key factor is CONFIDENCE. As long as global capital continues to view the United States as the primary safe haven during periods of geopolitical and economic instability, the trade deficit becomes a reflection of strength in capital attraction rather than weakness.
I have warned many times that immigration policy is increasingly being shaped by political ideology rather than long-term social cohesion and economic stability. The report that Canada is considering an express entry pathway for highly trained foreign military personnel raises very serious questions that go far beyond labor shortages or skills-based immigration. When governments begin fast-tracking individuals with military training into civilian society under expedited frameworks, this is no longer just an economic policy — it becomes a national security and social stability issue.
Historically, successful immigration systems were built around assimilation, economic contribution, and cultural integration. Governments are struggling to build their militaries amid recruitment shortages. Their solution is to import “skilled” fighters as we move closer to global conflict. Military personnel will be included among other high-skilled occupations since the demand far exceeds the available domestic supply.
The larger concern is assimilation and demographic shifts. I have repeatedly stated that social stability depends on shared legal, cultural, and institutional norms. When immigration policy accelerates without equal emphasis on integration, fragmentation follows. Europe has already demonstrated this lesson in multiple countries where rapid demographic policy shifts created long-term social divisions and rising political polarization. Canada is not immune to those same cyclical forces simply because it has historically maintained a more structured immigration system.
There is also the geopolitical layer that cannot be ignored. We are entering a period of rising global volatility into the 2026–2032 window, according to the cyclical models. During such phases, governments increasingly prioritize security, institutional resilience, and strategic labor pools. Policies targeting military-trained migrants may be framed as skills-based immigration, but they also reflect a broader shift toward state planning in response to global uncertainty.
Look at Russia. Putin turned to Kim Jong-un in a desperate plea to recruit more men. Impoverished nations are willing to import anything, including humans. Canada’s announcement alludes to the government’s importance of rapidly building the armed forces. Canada was so focused on forcing their own men and women to take the COVID vaccines a few years back that they pushed away contenders. What could go wrong if a nation opens its borders to trained mercenaries who may have an allegiance to a foreign government? Ancient Rome too relied on non-Roman recruits, but that was merely one aspect of the collapse.
I have explained in my writings on the Fall of Rome and How Empires Die that empires always turn to external manpower when domestic demographics weaken, and the population no longer supports the state financially or militarily. Hiring outsiders, expanding bureaucracy, and increasing control are all late-cycle responses to declining confidence in the system itself.
Posted originally on Feb 20, 2026 by Martin Armstrong |
If we are honest, the current international world order is crumbling and it has demonstrated its inability to effectively resolve crises when financial gain is at stake. The EU is desperate to become relevant again as a world power being overshadowed by Russia, China, and the USA. This is leading to some starting to rethink strategic balances and rapid evolution in geo-economic relations. How wars are going to be fought is also changing before our eyes. Traditional threats are becoming increasingly hybrid in nature, and this is causing tremendous uncertainty among intelligence agencies. The Biden Administration assumed that Ukraine could easily defeat Russia and US would quickly establish bases there. That policy failed. Their sanctioning Russia removing it from SWIFT, was a monumental mistake that has divided the world economy creating BRICS.
The war between Russia and Ukraine has reached a strategic impasse between Western military support and Russia’s strategy of industrial exhaustion. The US won World War II because we had the manufacturing base to turn out weapons including planes and tanks. Today, Russia is able to replenish assets and China’s manufacturing base is in the position that the US was during World War II. China could replenish lost ships, planes, and tanks faster than the USA or Europe for that matter.
The EU and NATO have called the shots and have refused to allow Ukraine to seek peace every time. According to our sources, despite signing the Minsk Agreement that was to allow the Donbas to vote, the West has negotiated that in bad faith and instructed Zelensky not to make any territorial concessions. The nature of the war is rapidly evolving towards nuclear confrontation and the increasing use of autonomous weapon systems. NATO and the EU do not care about Ukraine or its people. This has always been about the conquest of Russia itself. Even assuming the claims that Russia is weak are true and NATO can walz in with no casualties, then it is time to push the button.
Meanwhile, The New York Times writes Vladimir Putin remains confident of his superiority on the front lines. The claims are that he is banking on a protracted war and is prepared to continue fighting for at least another two years to establish complete control over the entire territory of the Donbas region. There is NO WAY Putin can back down. If he did, he would be overthrown in a coup and then you will get a Russian Neocons who will be just as eager to push the button to wipe out NATO.
Posted originally on Feb 19, 2026 by Martin Armstrong |
Macron just said “Free speech is pure bullshit if nobody knows how you are guided to this so-called free speech, especially when it is guided from one hate speech to another.” He expect the EU to clash with Trump because they are in dire straights and when a country is in the death spiral, they will become increasingly authoritarian. The two worst offenders are France and Spain. Macron has been covertly telling French institutions to sell dollars and bring the money home pushing the euro higher which then reduced their trade surplus.
Last April 2025, in response to Trump’s sweeping tariffs, Macron called for European companies to suspend planned investment in the United States, stating “Investments to come or investments announced in recent weeks should be suspended until things are clarified with the United States”
Macron has been pushing “targeting digital services and financing mechanisms of the US economy.” We are seeing that in trying to come up with a European credit card and banning both Visa and Mastercard.
At Davos 2026, Macron noted that European savings are “overinvested in bonds and sometimes in equities – but outside Europe,” suggesting he wants Europeans to invest more domestically. They call Macron the Petite Napoleon. Despite his approval rating at 11%, probably lower than any world leader in history, he is carrying on the dream of Napoleon and Charles De Gaulle who destroy the gold standard because of his hated of the United States. He withdrew France from NATO which is why they have independent nukes. De Gaulle ordered all US troops and NATO instalation out of France which prompted the US to ask if that included the dead America buried there to defend France.
At the Munich Security Conference in February 2026, Macron said Europe must redesign its security architecture independently and confirmed Paris is holding strategic nuclear talks with allies, referring to a more “holistic” approach to nuclear deterrence among European allies.
In an address to the nation in March 2025, Macron announced plans to negotiate with the allies the possibility of placing European countries under the protection of France’s nuclear deterrence forces. Germany, Poland, Lithuania, and Denmark have expressed readiness to discuss the issue. This is why they call him the Petit Napoleon. He is once again trying to make France the dominant power of Europe and it has been him, according to sources, who pushes to invade Russia to gain the assets to rise above the United States as a rival.
German Chancellor Friedrich Merz said Germany does NOT want to develop its own nuclear weapons, but is interested in incorporating French and British atomic bombs in a deterrence arrangement reminiscent of NATO’s U.S.-based nuclear umbrella.
Wolfgang Ischinger at the Munich Security Conference noted that France has air-based nuclear-capable cruise missiles that can be deployed from Rafale aircraft, and “perhaps in the future, such systems could be stationed not only in France, as has been the case so far, but also in Poland or Germany, on a rotating or even permanent basis. Yes, one could even consider replicating the US model of nuclear sharing, whereby these weapons could be launched from suitable partner aircrafts.”
Macron’s proposal are definitely an offer to build an independent nuclear deterrent within the EU framework. Any arrangement whereby Paris would transfer sovereignty over the use of its own nuclear bombs to an EU institution or another state is a no-go in terms of domestic politics. Macron wants to replace the US and retain control of all nukes, not hand them over to the EU.
So yes—Macron has offered extended nuclear protection to Europe, and discussions about potentially stationing French nuclear-capable systems in Germany (similar to NATO’s nuclear sharing arrangement) are part of the conversation, though final decision-making would remain with France.
Behind the curtain, it has been Macron who is trying to replace the USA and lead all of Europe as the modern version of Napoleon. NATO Secretary-General Mark Rutte has emphasized that European nations cannot defend themselves against Russia without the support of the United States, suggesting that they would need to significantly increase their defense spending in the absence of U.S. assistance. He warned that losing U.S. support would undermine Europe’s security and freedom. Rutte said bluntly during an appearance at the European Parliament: “If anyone thinks here again that the European Union, or Europe as a whole, can defend itself without the U.S., keep on dreaming,”
This is why reliable sources see through Macron seeking to seize power and take Europe into a third World War in hopes to leading Europe and fulfilling the dream of Napoleon and Charles De Gaulle. It was De Gaulle who was redeeming dollars for gold believing that if france had the larges gold reserves that the franc would replace the dollar.
Charles De Gaulle was an extreme nationalist far worse than they acuse Trump today. He objected in February 1965 to what he called the “Exorbitant Privilege” of the US dollar’s dominant role and began converting France’s dollar reserves into gold, which put pressure on Bretton Woods. In 1967, I was there in Montreal with my Family at the World’s Fair. My father had met De Gaulle bing with Patton who liberated France. My father was a colonel with Patton and told me how De Gaulle demanded that he lead the victory parade ahead of the Americans as he liberated France. In Montreal, he encouraged Quebec to separate from Canada because they were the English. He was still anti-American and British all because they defeated Napoleon. He refused to allow Britain to join the European Community. Britain joined ONLY after De Gaulle died. Macron seems to be suffering from De Gaulle syndrome.
Posted originally on Feb 19, 2026 by Martin Armstrong
Switzerland is now preparing to vote on a proposal to cap its population at 10 million by 2050, and the entire debate is being framed in the press as merely an immigration issue. That is far too simplistic. What this really reflects is a rising global tension between economic reality, demographic trends, and political narratives about sustainability and population management.
Under the initiative, once the population approaches 9.5 million, the government would be required to tighten immigration, residency, and asylum policies, and potentially even renegotiate agreements with the EU on free movement if the cap is exceeded. Switzerland already has about 9.1 million residents, with a large share foreign-born, largely from EU countries.
Supporters argue the cap would protect resources, housing, and social systems, while critics warn it could trigger labor shortages and harm economic growth in a country heavily dependent on foreign workers.
I have written many times that the concept of “population control” is not always presented directly. It is often framed as sustainability, climate targets, migration limits, or resource protection. The terminology changes, but the underlying policy direction becomes increasingly centralized and authoritative. Politicians believe they must begin managing how many people can live, move, and work within a system. That is a very dangerous trend because it expands government authority over the most fundamental aspect of society: demographics.
Switzerland has seen a surge of migrants from Islamic nations, which has led to cultural clashes. The “No to 10 Million Switzerland” initiative acknowledges the downfalls of mass migration as the Swiss People’s Party (SVP) openly wants to close the border and is considered “far-right” for its beliefs. Reframing population control as an issue for the environment and resources would allow the left to jump on board without being demonized for recognizing that certain cultures cannot assimilate to European life.
Globalist figures like Bill Gates have openly spoken about population growth in the context of sustainability and resource allocation. I have repeatedly warned that population control is rarely presented bluntly; it is framed as climate policy, public health, sustainability, or infrastructure capacity. The danger is not in any single proposal, but in the normalization of the idea that governments and unelected institutions should “manage” population levels as an economic variable.
Switzerland is particularly important because it is not an EU member yet is deeply integrated into the European economic system. If a population cap forces restrictions on immigration or free-movement agreements, it will not just be a domestic policy shift. It would signal fragmentation in the European labor and capital framework.
The Swiss are in favor of the proposal. The LeeWas research institute conducted a poll in November 2025: 48% are in favor, 41% are against, and 11% are undecided. Yet we know the wishes of the people are never truly acknowledged. The bureaucrats must believe that the measures would benefit them directly.
Nations begin to look inward during times of instability. Tighter immigration control, capital control discussions, increased surveillance of movement and finances—these are all par for the course. Once governments normalize the idea that population levels must be administratively managed for sustainability, it opens the door to broader regulatory control over society.
Posted originally on Feb 19, 2026 by Martin Armstrong |
Zillow is now openly acknowledging a shift in the US housing market that most analysts are still refusing to properly interpret. They are framing it as a “trend change” in homebuyer preferences toward smaller, adaptable, and more functional homes rather than large status properties, but this is not a lifestyle trend. It is an economic consequence of declining affordability and a structural shift in purchasing power.
During the peak years of cheap money, the housing market was driven by excess liquidity. Low interest rates inflated asset prices and encouraged buyers to stretch into larger homes, oversized layouts, and high-maintenance properties that projected wealth. Now that mortgage rates remain around 6% instead of the artificially suppressed levels of the pandemic era, the entire psychology of the housing market is changing.
Zillow notes that monthly mortgage payments are already about 8.4% lower than a year ago as rates eased slightly, yet affordability remains constrained. What they are describing as buyers prioritizing “adaptable” and “functional” homes is, in reality, the market adjusting to the end of an artificially inflated cycle. When carrying costs rise from insurance, taxes, maintenance, and utilities, then buyers tend to see big homes as big liabilities.
“Homes featured dramatic two-story foyers, arched doorways, decorative columns and complex rooflines designed to project prosperity from the street,” Zillow wrote. “Listings highlighted formal living rooms and formal dining rooms, spaces reserved for special occasions rather than everyday use. Home theaters were status upgrades: the bigger the screen, the better,” Zillow continued. “Oversize primary suites, Jacuzzi tubs and walk-in closets were must-haves, while energy efficiency and climate resilience were rarely mentioned.”
This fits perfectly with historical real estate cycles I have discussed in my reports and in Real Estate Outlook. Real estate does not crash immediately after a bubble; it transitions into a stagnation phase where prices stabilize, inventory rises, and buyer behavior shifts toward practicality.
Zillow also expects only modest home value growth in 2026 ,roughly in the low single digits, while mortgage costs still consume a large share of household income. When buyers begin prioritizing resilience, efficiency, and flexibility over luxury, it signals uncertainty about the future.
We must also understand the demographic and economic layer beneath this shift. Millennials and younger buyers are entering the market with significantly higher debt loads, higher insurance costs, and elevated living expenses. Starter homes are less practical. Entering the housing market in general is a stretch for many young potential buyers.
At the same time, older homeowners are locked into low mortgage rates and are reluctant to sell. This creates a supply distortion that keeps prices firm even as demand weakens. That is more of a classic stagnation model rather than a 2008-style collapse.
Zillow’s narrative that homes will become more “intuitive, personal, and adaptable” over the next 20 years is essentially a polite way of saying the era of excess housing consumption is ending. Consumers are concerned that larger purchases will lead to “house poor” finances.
Posted originally on Feb 19, 2026 by Martin Armstrong |
New York City Mayor Zohran Mamdani announces he is “forced to raid the rainy day fund, retiree benefit trust reserve, and to increase property taxes” in order to keep the city on “firm financial footing”
Here we go again. A city runs expansive social programs, expands spending, promises benefits, and then suddenly discovers a “budget crisis” that requires raiding reserves, tapping rainy day funds, drawing from retiree trusts, and raising property taxes to maintain so-called fiscal stability. New York City’s latest proposal openly admits it may withdraw nearly $1 billion from its rainy day fund, hundreds of millions from retiree health benefit trusts, and consider a roughly 9.5% property tax increase to close a multibillion-dollar deficit. This is not an emergency measure. This is the predictable outcome of policy trends I have repeatedly warned about, particularly in cities dominated by progressive and socialistic fiscal models.
I have written before about how politicians like Gavin Newsom and other liberal Democrats have also tapped rainy day funds during periods of economic stress while simultaneously expanding long-term obligations. The pattern is always the same: spend during the boom, blame external factors during the slowdown, and then drain reserves to avoid immediate political consequences. Rainy day funds are supposed to be buffers for recessions or crises, not routine financing tools to sustain structurally imbalanced budgets. Once governments normalize using reserves during periods of growth or mild deficits, they remove the very cushion needed when a true economic downturn arrives.
The mayor’s own budget framework acknowledges a significant fiscal gap and presents two paths: higher taxes on wealth and corporations or shifting the burden through property taxes and reserve withdrawals. You cannot continuously expand spending commitments while assuming tax revenues will keep pace indefinitely. That is not how economic cycles work. Capital is highly mobile, and as taxation rises, the tax base erodes.
Socialistic policy prioritizes redistribution and government expansion under the assumption that taxation can permanently fund rising obligations. In reality, economic confidence is the key driver of revenue. If policies discourage investment, business expansion, and high-income residency, the very tax base required to fund social programs begins to contract. Then governments are forced into the exact scenario we are seeing higher property taxes, reserve depletion, and political pressure for more state aid. Property taxes rise, services expand, costs escalate, and reserves shrink until a cyclical downturn exposes the imbalance.
Socialistic policies promoted by many progressive and socialist-leaning Democrats rest on the assumption that government can endlessly expand, redistribute, and intervene without consequence, as if economic cycles no longer apply. In the end, it is not markets that fail these systems, but the policy belief that government control can permanently override the business cycle.
Posted originally on Feb 18, 2026 by Martin Armstrong |
What you are looking at with Canada completing the roughly $9.4 billion Darlington nuclear refurbishment early and under budget is something that completely contradicts the prevailing political narrative about energy policy in the West. The final 878-MW unit is now preparing to return to commercial operation, marking the end of a decade-long rebuild of the four-reactor complex, finished four months ahead of schedule and about $110 million under budget.
A massive nuclear infrastructure project in a Western country was delivered ahead of schedule and under budget. That alone tells you this was treated as a strategic national priority rather than a political talking point.
The refurbishment extends the plant’s operational life by decades and secures over 3,500 megawatts of reliable baseload electricity into at least the mid-2050s. This is the key difference between energy policy driven by engineering reality versus ideological policy driven by climate politics and bureaucratic regulation. Nuclear provides stability. Wind and solar provide volatility unless backed by baseload power.
From a cyclical perspective, this fits directly into what I have written in my reports on energy, sovereign debt, and industrial competitiveness. Nations that secure long-term, reliable energy sources maintain industrial strength. Nations that deliberately dismantle baseload energy in favor of politically fashionable policies inevitably face rising costs, deindustrialization, and declining confidence.
Canada’s approach here is pragmatic. The project began back in 2016 as a long-term refurbishment of all four CANDU reactors, replacing major components and effectively giving the facility another generation of operational life. This is not simply maintenance — it is strategic infrastructure renewal.
Compare this to Europe. The EU has been shutting nuclear plants, imposing Net Zero mandates, and then wondering why industrial production is collapsing and energy costs remain structurally elevated. Energy policy is not separate from economic performance. It is the foundation of it. Germany is the perfect case study of how abandoning nuclear in favor of ideology undermines industrial competitiveness.
What is even more significant is the timing. This project comes as global electricity demand is rising due to electrification, AI infrastructure, and reindustrialization trends. Governments are beginning to realize that intermittent energy cannot sustain modern economies or military readiness. Baseload power is not optional in a geopolitical cycle turning toward fragmentation and potential conflict.
The fact that this refurbishment is being called one of the world’s largest nuclear life-extension projects also signals something deeper: nuclear is returning as a strategic asset. Historically, during periods of geopolitical tension and rising sovereign risk, governments shift toward energy security. That is exactly what the model has been projecting into this 2026–2032 window of rising volatility.
Posted originally on Feb 18, 2026 by Martin Armstrong |
According to the February 2026 Euro indicators data, euro area GDP expanded by just 0.3% in the fourth quarter, matching the previous quoter and underscoring a persistent low-growth environment across the bloc.
Year-over-year growth is hovering around roughly 1.3%, which is hardly a recovery when you consider the massive fiscal expansion, energy disruptions, and regulatory overreach imposed across the EU in recent years. This is exactly the type of sluggish cyclical performance that aligns with a declining confidence model in government policy rather than a normal business cycle expansion.
At the same time, inflation has fallen to 1.7% in January 2026, down from 2.0% in December, with energy prices still contracting and services remaining the primary source of price pressure. On the surface, bureaucrats in Brussels and the ECB will celebrate this as a victory over inflation. But this is where mainstream economics consistently gets it wrong. Disinflation alongside stagnant growth is not true strength.
Services inflation remains elevated while energy prices are negative year-over-year. That reflects structural distortions created by EU energy policy, sanctions, and the forced transition toward Net Zero, which I have repeatedly warned would crush industrial competitiveness across Germany, France, and the broader eurozone. You cannot deindustrialize an economy and then pretend weak inflation is a sign of stability.
Growth is being driven disproportionately by a handful of economies, such as Spain, while core economies like Germany and France remain structurally weak and politically unstable. A monetary union with a one-size-fits-all policy always produces divergence. Strong regions survive; weaker ones stagnate under a centralized monetary policy they cannot control.
From a capital flow perspective, this data reinforces the broader trend we are tracking into the 2026 ECM window. Capital chases stability. When growth is stuck at 0.3% quarterly and inflation is falling below target, global capital begins to question long-term stability. That is precisely how slow capital flight begins.
The ECB is now trapped. With inflation falling below target and growth barely positive, they cannot justify aggressive tightening, yet easing risks further currency instability and capital outflows. This is the classic sovereign debt-cycle dilemma I outlined in Manipulating the World Economy. Central banks do not control the economy; rather, they react to it, and usually too late.
What we are witnessing is not a recovery. The ECM has long projected rising volatility into 2026, and Europe’s data is lining up perfectly with that model.
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