Sanctions Undermining the US Economy Long Term


Posted  Originally on Sep 2, 2026 by Martin Armstrong |  

Sanctions Chains

I have warned, but nobody seems to listen, that war NEVER unfolds when everyone is fat an happy. This stupid decision of imposing sanction under the theory that they will punish the people and cause them to rise up and overthrow their governments fails to ever work Sanction were impose on Cuba in 1960 and are still there.

This stupid theory of imposing sanction assumes that economic pain will logically lead to political change. However, in reality, this often backfires. Instead of turning against their leaders, targeted populations (like in North Korea, Cuba, or Iran) often rally around the flag, viewing the sanctions as an external attack on their sovereignty. The sanctions imposed on Russia I found in a conversation with a Russia I was asked: “Why does the West hate us so much?” These sanctions are not causing the Russian people to rise as they do in theory only.

So, while the theory behind U.S. sanctions is to coerce, deter, and promote values, the outcome is frequently a form of containment, simply making it very expensive and difficult for a rival nation to operate globally, rather than actually forcing a regime change or policy reversal. This leads to creating permanent enemies.

Dollar Beat Up

Sanctions have become a permanent feature of U.S. foreign policy less because they perfectly achieve their goals, and more because they are a powerful, low-risk tool for expressing U.S. power in a multipolar world. However, this is entirely back by the fact that the dollar is the reserve currency and that the US is the largest economy. But imposing sanctions also reduces US economic growth the same as the current Tariff war.

Dethrone Dollar

Removing Russia from the SWIFT System and threats against China if they to not comply with US Neocon demands, has led to China creating s competing CHIPS system and the abuse of using the dollar as a weapon is actually setting the stage for the eventual decline of the dollar system.  These Neocons understand nothing about economics.

China vs US CHPS vs SWIFT

This is why our computer is projecting that China will Become the New Financial Capital of the World displacing the United States. If these stupid Neocon remove everyone from SWIFT who they do not like, guess what, the US becomes isolated and the dollar will no longer be the reserve because these morons have used it as a weapon.

China on the Rise Report - Hard Copy


We published that forecast back in 2018 and targeted 2027 as a critical turning point. We will update this for the 2026 WEC. The Export-Import Bank of China has a loan balance of over 2 trillion RMB dedicated to Belt and Road Initiative (BRI) countries, covering more than 130 nations . China has become the world’s largest bilateral official creditor.

The issuance of “panda bonds” in China’s financial market is a key mechanism for providing credit. Besides Egypt, other issuers include the African Export-Import Bank and the Brazilian company Suzano.

Dollar into Yuan

Shift to RMB lending is unfolding on a global scale and the Neocons are too stupid to look at economics. They were probably bullying kids in the school yard skipping economics altogether. There is a trend where China is encouraging, and in some cases requiring, borrowing countries to take on loans in RMB rather than USD. This helps protect borrowers from some currency risks but also creates new ones if their own currency weakens against the RMB.

China restructured Kenya’s loans which has prompted interest from other nations, including Ethiopia, Mozambique, Zambia, Pakistan, and Indonesia, who are reportedly considering similar restructuring to convert their USD debt to RMB debt.

China restructured Kenya’s loans primarily by converting three major railway loans from U.S. dollars to Chinese yuan, but combined this currency switch with traditional debt relief measures that provided the bulk of the financial benefit. The Restructuring Agreement was laid out:

  1. The restructuring applied to three loans from the China Exim Bank, totaling about $3.5 billion, which financed the construction of Kenya’s Standard Gauge Railway (SGR). The agreement involved:
  2. Currency Conversion: Switching the loans from U.S. dollars to Chinese yuan.
  3. Interest Rate Margin Removal: Waiving the original margins of 3% and 3.6% on two variable-rate loans.
  4. Extended Grace Period and Maturity: Adding new grace periods and extending the repayment terms.

China understands the game and they are leaving behind a bunch of Neocons who always impose sanctions, threaten to remove nations from the SWIFT system, and cannot see past their own nose that the world is moving away from these idiots who have used the dollar as a weapon in an international war that they are losing.

Market Talk – September 1, 2026


Posted  Originally on Sep 1, 2026 by Martin Armstrong |  

Market Talk 2017

ASIA:

The major Asian stock markets had a negative day today:

• NIKKEI 225 decreased 96.59 points or -0.15% to 66,215.34

• Shanghai decreased 6.41 points or -0.16% to 3,979.888

• Hang Seng decreased 237.26 points or -0.93% to 25,329.73

• ASX 200 decreased 9.30 points or -0.10% to 9,066.70

• SENSEX decreased 12.99 points or -0.02% to 76,944.28

• Nifty50 decreased 24.60 points or -0.10% to 24,055.80

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.002 or -0.28% to 0.71467

• NZDUSD decreased 0.00245 or -0.41% to 0.58905

• USDJPY increased 0.499 or 0.31% to 160.238

• USDCNY increased 0.00451 or 0.07% to 6.72242

The above data was collected around 13:51 EST.

Precious Metals:

•  Gold decreased 99.42 USD/t oz. or -2.24% to 4,341.72

•  Silver decreased 1.934 USD/t. oz. or -2.91% to 64.586

The above data was collected around 13:53 EST.

EUROPE/EMEA:

The major Europe stock markets had a negative day today:

•  CAC 40 decreased 32.65 points or -0.39% to 8,301.85

•  FTSE 100 decreased 34.98 points or -0.32% to 10,789.28

•  DAX 30 decreased 288.00 points or -1.10% to 25,970.11

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.00302 or -0.26% to 1.15874

• GBPUSD decreased 0.00373 or -0.28% to 1.35116

• USDCHF increased 0.00392 or 0.48% to 0.81228

The above data was collected around 14:15 EST.

AMERICAS:

US Markets:

  • DJIA declined by 419.02 points (0.79%) to 52,766.88
  • S&P 500 declined by 54.67 points (0.71%) to 7,631.47
  • NASDAQ declined by 271.12 points (1.03%) to 26,099.774
  • Russell 2000 declined by 36.32 points (1.23%) to 2,920.132

Canada:

  • TSX Composite declined by 444.75 points (1.23%) to 35,825.73
  • TSX 60 declined by 20.95 points (0.98%) to 2,107.77

Brazil:

  • Bovespa advanced by 2,258 points (1.27%) to 179,676.78

ENERGY:

The oil markets had a mixed day today:

•  Crude Oil increased 4.265 USD/BBL or 4.97% to 90.025

•  Brent increased 3.975 USD/BBL or 4.39% to 94.466

•  Natural gas decreased 0.0291 USD/MMBtu or -0.99% to 2.9059

•  Gasoline increased 0.0581 USD/GAL 1.89% to 3.1351

•  Heating oil increased 0.2543 USD/GAL or 5.77% to 4.6649

The above data was collected around 14:18 EST.

•  Top commodity gainers: Heating Oil (5.77%), Crude Oil (4.97%), Brent (4.39%) and Orange Juice (5.58%)

•  Top commodity losers: Palladium (-4.24%), Cocoa (-3.81%), Silver (-2.91%) and Gold (-2.24%)

The above data was collected around 14:25 EST.

BONDS:

Japan 2.9960% (+4.87bp), US 2’s 4.40% (+0.042%), US 10’s 4.7920% (+3.6bps); US 30’s 5.26 (+0.019%), Bunds 3.3693% (+4.55bp), France 4.206% (+2.79bp), Italy 4.2020% (+3.66bp), Turkey 34.480% (+264bp), Greece 4.0190% (+2.64bp), Portugal 3.6940% (+0.14bp); Spain 3.827% (+5.3bp) and UK Gilts 5.2533% (+11.02bp)

The above data was collected around 14:28 EST.

Categories:Market Talk

Marine Le Pen and the Nationalist Trend the Establishment Cannot Stop


Posted  Originally on Sep 2, 2026 by Martin Armstrong |  

The far-right Marine Le Pen accuses the Sánchez Government of "encouraging the massive entry of migrants" into Ceuta and demands France reinforce controls

A new poll out of France should not be viewed as some sudden political awakening. It is confirmation that the nationalist trend we have been watching throughout Europe for years is continuing and becoming stronger. The poll places Marine Le Pen comfortably ahead in the first round of the 2027 presidential election, with roughly 36% support, far beyond any of the establishment candidates currently positioned against her. More importantly, the polling indicates that National Rally is no longer merely collecting an angry protest vote. Le Pen is increasingly competitive with, and in several scenarios ahead of, mainstream candidates in the second round where the French establishment historically united to prevent her from reaching the Élysée Palace.

This is the continuation of a political trend, not the beginning of one. Brexit was part of it. Trump was part of it. Giorgia Meloni’s victory in Italy was part of it. The Freedom Party winning the largest share of the vote in Austria was part of it, as has been the extraordinary expansion of AfD in Germany. Reform UK has disrupted the old Conservative-Labour structure in Britain, while nationalist and sovereignty movements have advanced across the Netherlands, Portugal, Romania, and elsewhere. Different countries have different grievances, but they are all reacting to the same fundamental problem: people are losing confidence in political establishments that transferred too much sovereignty away from the nation-state.

Le Pen fits directly into this trend because her opposition to Brussels has always been central to her political appeal. National Rally no longer advocates withdrawing France from the European Union or abandoning the euro, but Le Pen continues to argue that France must regain sovereignty from EU institutions. That is what terrifies the establishment far more than all the rhetoric about the “far right.” France is one of the pillars holding the European project together, and a French president willing to challenge the authority of unelected bureaucrats in Brussels would pose a threat to European centralization that Hungary or Slovakia simply cannot.

The EU was sold to Europeans as an economic union that would facilitate trade and prevent another European war. It has transformed itself into an enormous political bureaucracy regulating energy, agriculture, automobiles, immigration, environmental policy, trade, and increasingly defense and foreign affairs. The average French citizen cannot vote the European Commission out of office. Yet those bureaucrats can impose regulations that directly affect what car he drives, what his electricity costs, how farmers use their land, and what policies his national government is permitted to implement.

This is precisely why nationalism has continued gaining ground. The establishment insists that people voting for these parties have somehow become extremists, but perhaps they should look in the mirror. Trump did not create nationalism in America, Brexit did not create nationalism in Britain, and Le Pen did not create nationalism in France. These movements expanded because governments increasingly stopped representing the interests of the people who elected them.

France illustrates the trend perfectly. Le Pen received only 17.9% in the first round of the 2012 presidential election. She increased that to 21.3% in 2017 and then 23.2% in 2022. In the presidential runoff, she went from 33.9% against Macron in 2017 to 41.5% in 2022. Now she is polling around 36% before the first ballot is even cast in 2027. You do not need some complicated political theory to understand what is happening. The direction has been underway for more than a decade.

Nationalism

The establishment has nevertheless repeatedly attempted to contain nationalist parties rather than address why people are voting for them. Germany constructed its political “firewall” against AfD, whereby the traditional parties refuse cooperation regardless of how many Germans vote for it. Austria’s Freedom Party won the largest share of the vote in its 2024 parliamentary election yet initially found itself excluded while establishment parties attempted to construct a government without it. Millions of Europeans are effectively being told that they are free to vote for whomever they like, provided their vote does not actually change who governs.

Romania exposed how dangerous this mentality can become. Călin Georgescu unexpectedly won the first round of the presidential election in 2024 before the Constitutional Court annulled the election amid allegations of campaign irregularities and Russian interference. Georgescu was then barred from participating when the election was rerun. There were legal arguments behind those decisions, but politically the result was extraordinary: the man who won the first election was not permitted to compete in the replacement election. That does not restore confidence in democracy. It destroys it.

Now look at Le Pen. Her conviction in the European Parliament assistants case initially included an immediately prohibition on seeking public office that threatened her participation in 2027. Her legal position subsequently changed through the appeals process, leaving her able to run, but France came remarkably close to having the eligibility of its leading opposition candidate determined by the judiciary rather than the electorate.

Then there is campaign financing. National Rally has repeatedly struggled to obtain loans from French banks despite representing millions of French citizens. Le Pen was forced to seek financing outside France in previous elections, and Jordan Bardella has again complained about the difficulty of securing French bank financing for 2027. Each institution can offer its own explanation, but voters are not blind when they see the same political movement confronting obstacles from the courts, banks, bureaucracy, media, and traditional parties simultaneously.

This is why the latest poll matters. The old strategy is losing its effectiveness. For decades, the French establishment relied upon the Republican Front, whereby parties that despised each other would nevertheless unite in the second round to prevent National Rally from winning. That worked spectacularly in 2002 when Jacques Chirac defeated Jean-Marie Le Pen with more than 82% of the vote. By 2017, Marine Le Pen had increased the family’s runoff vote to nearly 34%. Five years later she reached 41.5%, and now polling suggests the barrier that once made a National Rally presidency virtually impossible is continuing to erode.

The establishment should ask WHY instead of trying to devise another method to stop the candidate. People throughout Europe are rejecting governments that demand endless sacrifices for Brussels while ignoring problems at home. They have watched uncontrolled immigration transform communities, Net Zero policies drive up energy costs, sovereign debt expand, taxes increase, and billions flow into foreign wars while governments insist there is no money for their own citizens. Then the same political class lectures voters that choosing anyone who challenges this arrangement represents a threat to democracy.

That has been the mistake throughout Europe. The establishment treats nationalist politicians as the cause when they are merely the political manifestation of a much broader collapse in confidence. You can investigate a politician, construct a firewall around a party, deny financing, or prevent coalition participation, but none of those measures addresses why voters abandoned the establishment in the first place.

France could become the decisive test because a nationalist victory there would have consequences far beyond French domestic politics. Brussels can isolate smaller states when they resist EU policy, but it cannot treat France as some troublesome peripheral member. If France begins demanding the restoration of national sovereignty, challenging centralized immigration policy, opposing further EU federalization, and refusing to blindly follow Brussels on foreign affairs, the entire political balance of the European Union changes.

Nationalism has already returned as a major political force, and France is demonstrating that the trend is continuing. The establishment can attempt to stop individual politicians, but it cannot indefinitely stop millions of people from demanding the return of sovereignty to the nation-state.

The Treasury Is Now Supporting Its Own Debt Market


Posted  Originally on Sep 1, 2026 by Martin Armstrong |  

Why rising US Treasury bond yields are a big deal | Vox

The US Treasury has doubled the size of its buyback operations for longer-term government securities from $2 billion to at least $4 billion per operation after long-term yields surged to levels not seen in nearly two decades. They will call this “liquidity support” because government always invents a new phrase when the system begins to crack. The reality is that investors were selling long-term government debt, yields were approaching 5.34%, and the Treasury stepped in because the bond market was becoming dangerous for everything from mortgages to equities.

The Treasury market is now approximately $32 trillion, and Washington must continuously sell new securities to repay maturing debt, finance the deficit, and fund a government that has no intention of reducing spending. The Treasury launched these buybacks in May 2024 to repurchase older and less liquid bonds using cash or proceeds from new auctions. In plain English, it is issuing new debt while buying back old debt to keep the market functioning.

A bond market does not require “liquidity support” when buyers are confident in the issuer. Investors willingly purchase the debt, yields remain orderly, and government does not need to rearrange the market to prevent older securities from becoming illiquid. The problem emerges when the supply of debt overwhelms genuine demand and investors begin demanding higher yields to compensate for inflation, political dysfunction, and the risk that they will be repaid with money worth considerably less.

Washington cannot tolerate long-term yields rising freely because the entire economy has been constructed around government debt. Treasury yields provide the benchmark for mortgages, corporate loans, consumer credit, pensions, insurance portfolios, and the valuation of nearly every financial asset. When the 30-year yield rises, mortgage rates climb, real estate weakens, corporate refinancing becomes more expensive, and the federal government must devote even more revenue to interest. Rising rates expose the insolvency that decades of cheap money concealed.

The market’s reaction revealed precisely what investors thought of this intervention. The dollar index fell 0.84%, gold surged more than 4% to $4,508.64, Bitcoin rose more than 6%, and Ether gained over 10%. The Treasury succeeded in pushing long-term yields lower, but capital immediately fled toward alternatives to government currency and debt. That is not a vote of confidence. It is the market recognizing that Washington will defend the bond market at the expense of the currency if forced to choose.

War is now pouring gasoline on this fiscal disaster. Energy prices are rising amid the Iran conflict, shipping through the Strait of Hormuz remains impaired, and governments are expanding military spending while inflation refuses to die. The Federal Reserve cannot easily suppress interest rates when war is increasing the cost of energy, transportation, food, and production. Yet if it permits rates to rise with inflation, the cost of servicing government debt becomes unbearable. This is the trap: inflate and destroy the currency, or defend the currency and expose the insolvency of the state.

Japan is also flashing a warning to the world as its benchmark 10-year yield approaches 3%, the highest in three decades. For years, artificially low Japanese rates encouraged capital to flow abroad and purchase foreign assets, including government bonds. As yields rise in Japan, that capital has less incentive to finance Washington or Europe. Governments are all increasing their borrowing at the same time, but the pool of willing long-term buyers is not unlimited.

The Treasury’s buybacks may calm the market temporarily, but they cannot repair the fiscal structure. Washington is attempting to solve a debt problem by managing the debt more aggressively while continuing to create additional debt. Every intervention merely buys time and increases the eventual cost because politicians interpret temporary stability as permission to continue spending.

This is how the Sovereign Debt Crisis begins. There is no dramatic announcement from the White House admitting that the system has failed. Officials speak of liquidity, market functioning, resilience, and temporary operations while quietly expanding intervention behind the scenes. The Treasury has begun supporting the market for its own obligations because it cannot permit investors to price US government debt without supervision. Once government must protect its debt from the market, the question is no longer whether there is a problem. The question becomes how long they can conceal it.

India Is Rising in Real Time


Posted  Originally on Sep 1, 2026 by Martin Armstrong |  

India sixth-largest economy in world with $3.92 trillion GDP

India has once again demonstrated that its economic rise is not some distant projection for 2030 or 2040. The economy expanded 7.8% during the first quarter of fiscal 2027, exceeding both market expectations and the Reserve Bank of India’s own forecast. This is occurring while Europe struggles with stagnation, Japan confronts its sovereign debt nightmare, Canada is deteriorating, and geopolitical tensions continue disrupting global trade. India is moving in precisely the opposite direction.

I wrote earlier this year that Indians are actually feeling their economy grow in real time. That distinction is extremely important. Governments can manipulate statistics and economists can proclaim prosperity from behind a desk, but people know whether their lives are improving. India is witnessing the expansion of infrastructure, manufacturing, technology, wages, consumer demand, and an emerging middle class simultaneously. The latest GDP report provides even more evidence that this is becoming a structural transformation rather than simply another temporary growth spurt.

The underlying numbers are impressive. Manufacturing expanded 9.2% during the quarter. Financial, real estate, and information technology services grew 12.1%. Gross value added increased 8.2%. Perhaps most importantly, gross fixed capital formation, which measures investment in productive assets such as factories, machinery and infrastructure, surged 11.9% compared with only 5.8% during the same period last year. Bank lending growth has also accelerated to 18.3%, the fastest pace in more than a decade. This is what an economy looks like when capital is actually being deployed rather than merely consumed by government debt.

Make in India' for more 'made in India' | Epthinktank | European Parliament

India is also benefiting from something the West seems determined to destroy: manufacturing. I recently discussed whether India could become the next factory of the world. Manufacturing accounted for only around 16% of the economy when Modi launched Make in India in 2014, but New Delhi has spent more than a decade deliberately attracting production in electronics, automobiles, pharmaceuticals, telecommunications, defense and semiconductors. India is now the world’s second-largest producer of mobile phones, and Apple, Foxconn, Samsung, Tata and others continue expanding production. The Production Linked Incentive programs have attracted more than ₹2.16 lakh crore in investment and reportedly generated over 1.4 million direct and indirect jobs.

India does not need to replace China to succeed. That is the mistake Western analysts continually make. They look at the world as if one country must collapse for another to rise. India can become another enormous center of manufacturing and consumption alongside China. In fact, India’s imports from China have been rising precisely because Indian manufacturers require machinery, components and industrial inputs to expand production. That is how industrial economies develop. You import what you cannot yet efficiently produce, build domestic capacity, acquire technology and gradually move further up the value chain.

Then there are demographics. India has something Europe, Japan and increasingly China simply cannot manufacture: youth. Its median age is around 28. That provides an enormous working-age population entering the labor force, purchasing homes and vehicles, starting families, consuming goods, and creating businesses. Europe is attempting to tax an aging population to service impossible government promises. Japan is approaching the limits of a debt structure accumulated over decades. India still has hundreds of millions of people moving upward into the consumer economy.

That is why I said Indians can see the transformation happening around them. Roads are being built. Airports are expanding. Rail networks are modernizing. Factories are appearing. Digital payments have spread throughout the economy. Global Capability Centres have expanded to more than 2,100 operations employing roughly 2.36 million people, while India’s offshore technology industry generated approximately $98 billion in fiscal 2026. This is not merely GDP appearing on a government spreadsheet. Economic infrastructure is being created around the population.

There are obviously risks. India remains dependent on imports for roughly 85% of its crude oil, leaving the economy exposed to energy shocks and geopolitical instability. The rupee remains vulnerable to global capital flows, and inadequate irrigation means agriculture is still exposed to weak monsoons. India also continues to struggle with bureaucracy, inequality and infrastructure shortcomings. No emerging economy rises in a straight line.

But compare those problems with what is occurring throughout much of the developed world. Europe is spending hundreds of billions preparing for war while industry struggles with energy costs. Governments are drowning in sovereign debt and raising taxes simply to maintain systems they can no longer afford.

This is what the capital flow cycle is all about. Capital migrates toward opportunity. It seeks productivity, expanding markets, favorable demographics and confidence. It does not remain permanently loyal to New York, London, Frankfurt, Tokyo or any other financial center simply because politicians assume it will.

India’s 7.8% growth rate is therefore more important than one quarterly GDP number. Manufacturing at 9.2%, investment approaching 12%, financial and technology services above 12%, and lending expanding at the fastest rate in more than a decade are telling us something much larger. The economic center of gravity is shifting.

Iceland Has Chosen Sovereignty Over Brussels


Posted  Originally on Sep 1, 2026 by Martin Armstrong |  

Voters in Iceland have rejected resuming talks on joining the European  Union. The final result was relatively close, with nearly 53 percent voting  "no", while just over 47 percent voted in favor., ...

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Congratulations to the people of Iceland. They were given the opportunity to voluntarily surrender more of their sovereignty to Brussels, and 52.8% said NO. Only 47.2% supported reopening negotiations to join the European Union, despite the government pushing the issue and despite polls only days earlier suggesting the pro-EU side could prevail. Turnout reached an extraordinary 82.5%, the highest turnout in an Icelandic referendum since the vote establishing the republic. This was not voter apathy. Icelanders showed up and made their position known.

The referendum was technically only about reopening accession negotiations, not immediately joining the EU. Had the “Yes” side prevailed, negotiations would have begun and any final agreement would have required another referendum. But Icelanders understood where this road leads. Once sovereignty is transferred to Brussels, getting it back becomes extraordinarily difficult.

The geographic divide was also revealing. Reykjavík supported reopening negotiations, with the Yes vote reaching roughly 55% to 58% in the capital’s constituencies. Outside the capital, resistance strengthened dramatically, approaching 60% throughout rural Iceland. That should surprise nobody. The people whose livelihoods depend directly upon the country’s land, resources, and fishing waters understand what surrendering authority to Brussels could mean far better than bureaucrats sitting behind desks.

Fishing was one of the central issues in this referendum for good reason. Iceland built its modern prosperity around control of its surrounding waters. Fisheries account for roughly 15% of the economy and around 40% of export revenues. Why would Iceland voluntarily hand influence over that strategic national resource to an organization representing 27 countries with entirely different political and economic interests?

This is the same European Union that has centralized power year after year while pretending that every transfer of sovereignty is merely cooperation. Monetary policy went to the European Central Bank. Trade policy went to Brussels. Regulations increasingly come from Brussels. Agricultural policy is shaped in Brussels. Energy policy is increasingly dictated at the European level, and now the EU is attempting to centralize defense, borrowing, taxation, and foreign policy.

Iceland already receives many of the economic benefits Europeans are told require EU membership. Through the European Economic Area, Iceland participates in the EU single market alongside Norway and Liechtenstein. It also participates in the Schengen free-travel area. Iceland can trade and travel throughout much of Europe without surrendering full political sovereignty to the European Union.

That is precisely why the argument for membership becomes so weak. Why surrender control over fisheries, trade negotiations, and eventually monetary policy when Iceland already enjoys extensive access to European markets?

The EU desperately wants nations to believe there is no alternative. You either join Brussels or you are supposedly isolated from civilization. Britain disproved that argument with Brexit despite everything the political establishment has done to undermine it. Switzerland has never joined. Norway rejected membership twice. Iceland has now rejected even reopening negotiations.

This vote also arrives while the European project is confronting a growing financial problem. Germany, Denmark, the Netherlands, Austria, Finland, and Sweden are already demanding hundreds of billions of euros in cuts to the European Commission’s proposed 2028-2034 budget. Brussels wants a budget approaching €2 trillion while governments throughout Europe are struggling with debt, weak growth, aging populations, military spending, and increasingly angry taxpayers. Germany alone has reportedly sought reductions of around €400 billion.

Europe is moving toward greater centralization precisely as confidence in government deteriorates. Brussels wants more common borrowing, more military integration, more control over national budgets, more regulation, and ultimately more political authority. The people are increasingly being told that every crisis requires transferring another piece of national sovereignty upward to unelected institutions.

The Icelanders have wisely looked at what is happening and refused. There is nothing anti-European about refusing to join the European Union. Europe existed for thousands of years before Brussels created this political structure. Iceland can trade with Germany, France, Italy, Britain, America, China, and anyone else willing to do business without asking Ursula von der Leyen for permission.

Iceland has only around 400,000 people, yet those people control one of the most strategically important positions in the North Atlantic, enormous fishing grounds, renewable energy resources, and access to an increasingly important Arctic region. Small countries should be particularly cautious about surrendering political authority because their voice becomes progressively diluted inside larger political structures.

An extraordinary 82.5% turned out to vote, and a majority decided their nation should remain Iceland rather than move another step toward becoming merely another member of an increasingly centralized European political machine. At a time when governments everywhere are attempting to convince people that sovereignty is outdated and bureaucratic centralization is inevitable, Iceland has demonstrated that people still understand the value of governing themselves. They should be applauded for having the courage to say NO.

The $29 Trillion Debt Rollover Nightmare


Posted  Originally on Aug 31, 2026 by Martin Armstrong |  

No photo description available.

Governments and corporations are expected to borrow a record $29 trillion from global bond markets in 2026, according to the OECD. That is $4 trillion more than in 2024 and twice the amount borrowed only ten years ago. The financial press will present this as evidence that debt markets remain deep and resilient, but 78% of the borrowing by OECD governments will not finance new roads, productive industry, or economic expansion. It will be used merely to refinance debt that already exists.

This is the Ponzi structure underlying modern government finance. Politicians speak as though debt is repaid, but governments almost never repay the principal. When a bond matures, they issue another bond to obtain the money needed to redeem the first one. They then borrow still more to finance the current deficit and increasingly borrow to pay interest on the debt accumulated by previous administrations. The entire system functions only while investors remain willing to roll the obligations forward.

The $29 trillion figure is annual borrowing, not the total amount of outstanding debt. Sovereign and corporate bond markets combined have already reached approximately $109 trillion. The system must therefore absorb an enormous wave of new securities every year merely to prevent old promises from defaulting. This is why the refinancing cycle matters far more than the political debate over whether a technical default will occur. A government can continue paying every bondholder on time while still entering a debt crisis if refinancing costs rise beyond what its tax base can sustain.

Politicians became addicted to short-term debt because it was cheaper than locking in long-term interest rates. The OECD reports that 30-year yields have risen significantly across most countries since 2022, leading governments and companies to issue more short-maturity debt. This lowers the interest bill temporarily but forces borrowers to return to the market more frequently. They are trading today’s discomfort for tomorrow’s crisis because nobody in government wants to admit the actual cost of decades of fiscal mismanagement.

A nation that finances itself for thirty years is protected from immediate changes in interest rates on that debt. A nation that continually borrows at short maturities must refinance again and again at whatever rate the market demands. When confidence falls, the cost resets quickly across the debt structure. A one-percentage-point increase may appear insignificant to some bureaucrat, but applied to trillions in recurring issuance, it consumes hundreds of billions that must be extracted through higher taxes, reduced services, inflation, or still more borrowing.

Central banks are also reducing their government-bond holdings after years of manipulating rates through quantitative easing. This leaves hedge funds, households, and foreign investors to absorb a growing supply of debt. These buyers are more sensitive to price and are not obligated to rescue politicians from their own stupidity. If the yield does not compensate them for inflation and political risk, they will demand a higher return or move their money elsewhere. Government calls this market instability because it cannot stand the idea that its debt should be priced honestly.

The competition for capital is becoming vicious. Governments need money for welfare states, pensions, military expansion, energy subsidies, industrial policy, and the interest on existing debt. Corporations must refinance their own obligations while funding new investment, and the artificial-intelligence race is adding another enormous borrower to the market. Nine major technology companies are expected to issue approximately $1.2 trillion in bonds between 2026 and 2030 as they pursue a combined $4.1 trillion in capital spending. Every dollar absorbed by government debt is capital that cannot finance productive private investment without pushing rates higher.

War will make this rollover crisis far worse. Governments are expanding defense budgets while rebuilding supply chains, stockpiling strategic resources, subsidizing domestic manufacturing, and attempting to reduce dependence on geopolitical rivals. These expenditures are being added to budgets that were already insolvent before the War Cycle turned higher. They are preparing for a global conflict with borrowed money while the cost of that money is rising.

This is why the Sovereign Debt Crisis will not resemble the 1930s or some dramatic bankruptcy proceeding. Governments that borrow in their own currencies can create the money necessary to make nominal payments, but they cannot create purchasing power. They will repay creditors in depreciated currency, force financial institutions to hold public debt, suppress interest rates below inflation, impose capital controls, and search for new ways to trap private savings inside the system. Default will come through the destruction of the currency and the confiscation of wealth rather than a polite announcement that the Treasury has missed a payment.

The movement toward CBDCs and tokenized bonds must be understood within this context. Governments facing a record refinancing burden will want a financial system capable of identifying capital, controlling its movement, and directing it toward approved assets. They will say digital money improves efficiency and tokenized debt provides instant settlement. What they will never advertise is that the same infrastructure can prevent capital from escaping when investors no longer wish to finance the state voluntarily.

The OECD recommends that governments ensure the “long-term sustainability” of their debt, as if politicians who created this disaster will suddenly discover restraint. They will not cut spending until the bond market forces the issue because every expenditure has a constituency and every reform threatens someone’s election. They will raise taxes, manipulate markets, change accounting rules, and blame speculators long before admitting that government itself has become the greatest threat to financial stability.

The world must absorb $29 trillion in borrowing during 2026 while war expands, rates rise, central banks retreat from bond markets, and private industry competes for the same capital. The system remains functional only because confidence has not yet completely broken. Once investors question whether rolling government debt forward is worth the risk, the refinancing machine will seize. Governments do not have $29 trillion sitting in a vault to repay these obligations. They have only the ability to borrow again, tax the public, or destroy the value of money.

Mexico Is Growing Because It Still Produces Something


Posted  Originally on Aug 31, 2026 by Martin Armstrong |  

MadeinMexico

Mexico’s economy expanded 1.4% in the second quarter, nearly three times the OECD average of 0.5%. That placed it sixth among the economies in the report and marked its strongest quarterly expansion since early 2022. Yet listen to the political discussion in Washington and you would think nothing exists south of the border except cartels and migrants. There are factories, engineers, suppliers, and entire communities whose livelihoods depend on producing goods for the North American market. Politicians can dismiss Mexico all they want, but corporations making investment decisions have to look at costs, transportation, labor, and access to customers.

Mexico is benefiting from manufacturing moving closer to the United States, with opportunities spreading into the businesses supporting that production. The economy contracted a revised 0.3% in the first quarter before rebounding, and output in the second quarter was 2.1% above a year earlier. Nobody should pretend that this means Mexico has entered some uninterrupted boom. Nor should we attribute the entire rebound to manufacturing when the report identifies primary activities as the fastest-growing sector, expanding 2.4%. The broader point is that a country’s productive potential does not vanish because one quarterly number disappoints. Investment takes time to become capacity, and capacity takes time to become income.

Washington’s mistake is assuming that forcing companies to reconsider China automatically means all that production will return to the United States. A manufacturer must calculate whether it can operate profitably. Moving closer to American customers while retaining a competitive cost structure can make Mexico attractive. Tariffs may change that calculation, but they do not abolish it. Businesses will adjust their operations to survive whatever rules governments impose.

There is also a difference between attracting productive investment and attempting to manufacture prosperity through public spending. A factory must eventually sell something customers want at a price they will pay. Government can borrow to finance an unsuccessful program and then borrow again to conceal the failure. The private business does not possess that luxury indefinitely. Its survival depends on meeting demand, controlling costs, and investing where it expects a return. That discipline is precisely what disappears when politicians convince themselves they can direct the economy better than the people risking their own money.

Mexico can still squander the opportunity. Security, water, electricity, transportation, and predictable rules matter to anyone considering a long-term investment. A cheap workforce is of little use if production is repeatedly interrupted or goods cannot reach the customer. Mexico’s government cannot simply congratulate itself over a favorable growth ranking and assume investment will continue regardless of its decisions. Geography provides an advantage, but government can make even an advantageous location too difficult to operate in.

Mexico’s recovery deserves attention because it brings the discussion back to something governments routinely forget: people need the opportunity to earn a better living. They need employers competing for their skills and customers willing to purchase what they produce. A quarterly GDP ranking will not provide that by itself, but sustained productive investment can. Mexico has an opportunity to turn its position beside the American market into lasting prosperity. The greatest service its politicians can provide is to stop assuming that the wealth created by everyone else exists primarily for government to spend.

Categories:Mexico

$40 Trillion in Debt and the Interest Bill Keeps Growing


Posted  Originally on Aug 31, 2026 by Martin Armstrong |  

The U.S. national debt crossed the $40 trillion threshold for the first  time, according to Treasury Department data released Wednesday., Total  public debt outstanding reached $40T+ as of the close of ...

The United States has crossed $40 trillion in gross federal debt, and Washington will treat it as another unfortunate milestone before returning to the business of spending money it does not have. The more immediate problem is what it costs to carry that debt. Treasury’s figures show approximately $1.17 trillion in gross interest expense through July, just ten months into fiscal year 2026. That works out to roughly $117 billion a month, or $3.85 billion every single day over that period. These are interest costs, not repayments that reduce the principal. Washington incurs this expense while the debt itself continues climbing.

There are two different interest figures, and they should not be confused. Treasury’s gross interest expense includes interest credited to government accounts holding Treasury securities. The federal budget’s net interest measure excludes those internal payments and includes other offsets. The Congressional Budget Office’s February outlook placed net interest at approximately 3.3% of GDP in 2026, implying more than $1 trillion for the full fiscal year. Even on that narrower measure, Washington is devoting roughly one dollar in five of projected federal revenue to interest. The distinction matters for accounting, but neither number describes a government bringing its finances under control.

The issue was never simply that government had borrowed a large sum. It was that borrowing had become a permanent arrangement, with interest added to budgets already running deficits. Politicians take credit for the original spending, while the cost of financing it survives long after they leave office. Their successors inherit the bill and issue more debt rather than confront the promises that created it.

Consider what refinancing actually means. When a Treasury security matures, its holder must be repaid. If Washington finances that redemption by selling another security, the creditor has changed, but the government has not eliminated the obligation. It has renewed it at whatever rate the market will accept. Borrowing to refinance principal is separate from the interest bill, yet both require continued access to willing buyers. This is why a government can make every payment on time while its underlying financial position deteriorates.

The mathematics of higher rates becomes brutal at this scale. Every additional percentage point on $1 trillion of debt means another $10 billion in annual interest once that debt carries the higher rate. Apply that to successive waves of refinancing and the expense builds year after year. The entire $40 trillion does not reset overnight, and it would be misleading to suggest otherwise. Existing fixed-rate securities retain their coupons until maturity. That delay, however, can conceal the developing burden and give politicians another excuse to postpone action.

There is no magic number at which a country automatically collapses. Confidence, borrowing costs, economic growth, and the ability to raise revenue all matter. The danger is that higher interest expenses require more borrowing, while concerns about that borrowing encourage investors to demand still higher yields. A deteriorating fiscal position can then begin reinforcing itself.

CBO projects net interest costs reaching $2.1 trillion in 2036, or 4.6% of GDP. That is a projection under its stated assumptions, not a guaranteed outcome, but it demonstrates that the problem does not disappear even in an orderly baseline. Washington is not merely struggling with a temporary expense left over from an emergency. It is carrying an interest burden expected to grow while elected officials continue making commitments against future revenue.

War makes this arithmetic harder. Military operations require resources today, while the interest on borrowing to finance them can remain for decades. If conflict also raises energy costs or disrupts production, it can complicate the Federal Reserve’s inflation problem. Higher rates may be necessary to restrain inflation, but they also increase the cost of new federal borrowing. Demanding that the Fed cut rates does not repair that conflict, especially when long-term investors remain free to demand compensation for inflation and fiscal risk.

Republicans cannot explain this away by blaming Democratic spending while defending every unfunded commitment of their own. Democrats cannot promise an expanding government without confronting the cost of financing it. Both parties have constituencies they refuse to disappoint and obligations they prefer to leave to the next administration. The interest bill does not recognize party affiliation, and the bond market does not have to accept a campaign promise as repayment.

The $40 trillion figure should therefore be understood through the income required to sustain it. America possesses enormous productive capacity, but that is not permission for Washington to claim an ever-larger portion of future revenue before the public receives any new service. More than a trillion dollars in annual net interest is already a substantial claim on that income. The question is how much further government intends to mortgage the future before admitting that borrowing has become its substitute for governing.

Has Netanyahu Undermined the US?


Posted  Originally on Aug 31, 2026 by Martin Armstrong |  

Netanyahu_Says_No_Iran_Deal_Possible_Told_Trump_Savages_Can_t_Be_Trusted

Netanyahu, I believe, is a sick individual. In 2024, in his Knesset speech, Netanyahu said: “I’ve been warning about Iran for 30 years.”  It was reported on March 3rd, during a visit to a site struck by an Iranian missile, Netanyahu stated: “We read in this week’s Torah portion, ‘Remember what Amalek did to you.’ We remember—and we act.”

In 1 Samuel 15:2-3, God gives King Saul a specific, direct order to carry out this command. The prophet Samuel relays the message: “This is what the LORD Almighty says: ‘I will punish the Amalekites for what they did to Israel when they waylaid them as they came up from Egypt. Now go, attack the Amalekites and totally destroy all that belongs to them. Do not spare them; put to death men and women, children and infants, cattle and sheep, camels and donkeys. ‘”

The harshness of the command in 1 Samuel has disturbed Jewish scholars for centuries, leading to various interpretations that move beyond a literal call for genocide. If Netanyahu believes that genocide is the command of God, that is NOT in the self-interest of the United States. He knows you cannot accomplish regime change from the air. This is the very first time when we are in a partnership with another country who is really calling the shots here where the interests of Netanyahu are by no means the same national interest of the United States.

This Iran War is Netanyahu’s war, not America’s. He is consumed with hatred and he will NEVER stop because he sees only total annihalation of Persia. This has been an ancient feud that goes back thousands of years. We should NOT be involved because Netanyahu will NEVER accept peace so this war will NEVER see a resolution while it is draining the resources of the USA leaving the country vulnerable on a grand scale. The US can be defeated conventionally because of Netanyahu.

Let me make this very clear. The US has bombed the hell out of Iran to the point that the stockpile of conventional weapons has been seriously depleted. I warned from the outset, if I was on the other side of the table, I woud use this war to drain the US as we have used Ukraine to weaken Russia. There is no way to win this war. Iran cannot be bombed into oblivion. Sources familiar with internal data state that the US has fired a vast number of its most advanced long-range missiles. Reports suggest that almost ALL of the Army Tactical Missile Systems (ATACMS) and the newer PrSM have been used during the campaign. These are costly, land-based missiles valued at well over $1 million each.

It would take boots on the ground to secure the Strait of Hormuz meaning you ust occupy 50 miles indland on each side of the Strait permanently. Anyone who is NOT biased can see Netanyahu has dragged us into his endless war trying to fulfill 1 Samuel 15:2-3.

Crassus Molten Gold

The Persians captured Marcus Crassus, a member of the Triumvirate with Caesar and Pompey, at the Battle of Carrhae in 53 BC. As the legend goes, he was famous as the wealthiest man of Rome, so the Persians poured molten gold down his throat to kill him. The symbolic message was “you thirsted for gold, now drink it.” Then in 260AD, they were the first to capture a Roman Emperor Valerian I in 260AD.

Labienus._Gold_Aureus_40BC

Even during the civil war that followed the assassination of Julius Caesar, Cassius sent Quintus Labienus to join with the Parthians during the civil war asking for their help against Octavian and Mark Antony. They did not arrive in time. Yet, this coin issued by Labienus showed a Persian horse on the reverse.

Roman Empire vs Parthian Empire

The Romans were NEVER able to conquer the Persians. They have always been a proud and formidable enemy. Sorry, but I warned that I did not see a change in the government until 2027. The risk here is that they have shifted the real power from the Ayatollah to the Islamic Revolutionary Guard Corps (IRGC), which is an elite military and security force in Iran, established after the 1979 revolution. It was created by Ayatollah Khomeini to protect the new Islamic system from both internal and external threats, serving as a powerful ideological counterweight to Iran’s regular army.

Today, the IRGC is much more than just a military branch. It has evolved into one of the most powerful institutions in Iran, often described as a “state within a state” due to its immense influence over the country’s military, political, and economic spheres. To be part of that they must be the hardline believers. This is far more difficult to negotiate with than an Ayatollah assuming he is even alive. Of course, Netanyahu smiles and claims the Ayatollah is dead as if that is some victory.

Lucius Verus AR Parthia Victory

Lucius Verus invaded Persia, claimed a victory after sacking two cities. As the Roman army withdrew from the East, it brought back more than just victory. The soldiers carried a lethal disease, which became known as the Antonine Plague. The plague had a catastrophic impact on the Roman Empire. It raged from 165 to 180AD and is estimated to have killed 5 million people, with mortality rates in the army and cities reaching as high as 15% in some areas. In Rome itself, the plague was so severe that it is reported to have caused up to 2,000 deaths per day at its peak. It Even Killed an Emperor: In 169 AD, Lucius Verus himself died from the plague, becoming one of its most high-profile victims.

For Iran to win, they merely have to survive.

But the US is now Vulnerable for the stockpile of conventional missiles has been seriously depleted for a war that cannot be won.