Posted Nov 2, 2026 by Martin Armstrong |

Germany and Japan have signed a new agreement to secure critical minerals as both nations begin confronting the consequences of their dependence upon China. German Chancellor Friedrich Merz met Japanese Prime Minister Sanae Takaichi in Tokyo on October 28, where the two governments agreed to diversify their sources of raw materials, develop alternative supply chains, and protect technologies essential to their manufacturing industries. For decades, Western governments encouraged their industries to become dependent upon China for the very materials necessary to sustain their economies. Now they are discovering that an economic dependency can become a strategic vulnerability the moment political relations deteriorate.

The agreement is particularly significant because Germany and Japan are two of the world’s most important industrial economies. Both depend heavily upon manufacturing, automotive production, advanced machinery, electronics, and technologies that require specialized minerals. China dominates the processing of many rare earth elements, which are essential for high-performance magnets used in electric motors, wind turbines, industrial equipment, aircraft, and military systems. It is not enough to possess a mineral deposit somewhere in the world. The material must be extracted, separated, refined, and manufactured into a usable product. China spent decades building that infrastructure while Western politicians became increasingly convinced that they could abandon domestic production and simply import whatever their industries required.

Takaichi stated that Japan and Germany would work to diversify critical mineral supplies and develop alternative sources while protecting sensitive technologies. Merz acknowledged that Japan, Germany, and the European Union must reduce their dependence upon concentrated supply chains. The joint statement expressed grave concern over the use of economic coercion, including arbitrary export restrictions and retaliatory measures. Neither government needed to name China directly. Everyone understands which country possesses the ability to disrupt these industries. Japan still obtains approximately 60% of its rare earth supplies from China despite spending more than a decade attempting to reduce that dependence.

Japan learned this lesson back in 2010 when a territorial dispute with China coincided with disruptions to rare earth shipments. Tokyo responded by investing in alternative suppliers, including Australia’s Lynas, and supporting additional processing capacity outside China. That diversification helped reduce Japan’s exposure, but it did not eliminate the problem. Sixteen years later, Japan remains heavily dependent upon Chinese materials, particularly certain heavy rare earth elements that are difficult to source and process elsewhere. This demonstrates how difficult it is to rebuild an industrial supply chain once production has become concentrated in another country. Governments can sign agreements in a single afternoon. Developing mines, refineries, and manufacturing facilities can take years.

The latest confrontation escalated after Takaichi suggested in November 2025 that Japan could become militarily involved if China attacked Taiwan under circumstances threatening Japanese security. Beijing responded in January 2026 by restricting exports of dual-use products to Japanese military end users. Additional Chinese restrictions targeted Japanese companies and organizations during the year. These measures illustrate how the Taiwan dispute is extending into economic relations. Japan is not merely concerned about the possibility of military confrontation in the Taiwan Strait. Its manufacturers must now consider whether their access to essential industrial materials could be interrupted by a diplomatic disagreement.

Germany faces a similar problem, although its vulnerability has developed through different political decisions. German manufacturers built extensive commercial relationships with China while Berlin became increasingly dependent upon Russian energy. The confrontation with Russia exposed the risks associated with concentrated energy supplies, and German industry has struggled with the consequences of higher costs and economic uncertainty. Now the government is confronting its dependence upon Chinese raw materials. The German automotive industry requires rare earth magnets for electric motors, while machinery manufacturers depend upon specialized metals and components that cannot always be replaced quickly. Germany spent decades building an industrial economy around access to reliable energy and international supply chains. Both assumptions have been severely challenged.

The new German-Japanese agreement includes plans for joint purchasing arrangements, co-financing of mining and processing projects, and cooperation between companies seeking supplies in third countries. Germany’s Economy Ministry specifically identified joint offtake agreements and financing as tools for supporting new raw material projects.

The problem is that Germany and Japan are hardly alone in pursuing these supplies. The United States has been working with allies to develop alternative critical mineral supply chains, including proposals for coordinated pricing arrangements intended to protect producers from Chinese competition. Washington has also expanded cooperation with Japan on rare earths and other strategic materials. Australia, Canada, and numerous African and South American countries are attracting greater attention because of their mineral resources. Yet deposits alone do not guarantee an economically viable supply. Investors must consider infrastructure, political stability, environmental regulations, financing costs, and the time required to bring production online. The competition for reliable supplies is intensifying precisely because so many governments neglected these issues for decades.

China understands the importance of controlling the processing stage. A country may possess substantial lithium, cobalt, or rare earth deposits, but if those materials must be shipped to China for refining, the dependency has not been eliminated. This is why Beijing’s position is so powerful. Its advantage is not simply geological. It has developed an industrial ecosystem capable of processing materials and supplying manufacturers on a scale that competitors cannot immediately replicate. China can use that position commercially, and export controls demonstrate how such capabilities can become instruments of foreign policy. Western governments are now attempting to rebuild industrial capacity that they previously allowed to migrate overseas.

There is also an important distinction between lithium and rare earth elements. Lithium is essential for many rechargeable batteries, while rare earth elements are particularly important in permanent magnets and other specialized technologies. They are not interchangeable commodities, and each has its own production and processing challenges. Governments frequently group them together under the heading of critical minerals, but securing a lithium supply does not resolve a shortage of dysprosium or terbium.

The German-Japanese partnership also extends beyond minerals. The two governments announced cooperation in artificial intelligence, cybersecurity, advanced technologies, and defense. Germany is even examining possible participation in Japan’s next-generation combat aircraft program, although no specific commitment has been announced. Japan is already working with Britain and Italy on a future fighter aircraft, while Germany’s separate European program with France and Spain has faced industrial disagreements. These developments demonstrate how economic and military considerations are becoming increasingly interconnected. A secure supply of critical minerals is necessary not only for consumer products but also for aircraft, missiles, radar systems, and other defense technologies.

We are entering a period when the availability of essential commodities will increasingly influence economic policy, investment decisions, and international relations. Germany and Japan are attempting to protect their industries from disruptions they can no longer afford to ignore. Whether they succeed will depend upon their willingness to support actual production rather than simply announce ambitious agreements. China spent decades building its position while other governments assumed that international trade would always remain open. Now those governments are discovering that dependence carries a price, and the bill is coming due at precisely the moment geopolitical tensions are escalating.

Categories:World Trade

Posted Nov 2, 2026 by Martin Armstrong |

I recently wrote about Finnish President Alexander Stubb and Norwegian Prime Minister Jonas Gahr Støre doing something that much of Europe’s political establishment has spent years avoiding. They picked up the telephone and spoke directly with Vladimir Putin. The October 27 conversation lasted approximately 90 minutes and addressed the war in Ukraine, European security, and the possibility of renewed negotiations. Now the Kremlin has publicly declared that Putin is prepared to speak with German Chancellor Friedrich Merz and French President Emmanuel Macron as well. Kremlin spokesman Dmitry Peskov stated, “Of course, he is open to dialogue with everyone.” When asked whether Putin would speak with Ukrainian President Volodymyr Zelensky, however, Peskov replied, “No one has called yet.”

What has happened to diplomacy? Since when did refusing to speak with an adversary become a demonstration of political strength? The entire purpose of diplomacy is to communicate with governments whose interests conflict with your own. You do not need negotiations when everyone agrees.

Stubb and Støre have demonstrated that direct communication does not require abandoning Ukraine. Both governments remain committed supporters of Kyiv. Their telephone conversation was coordinated with Ukrainian officials, and they spoke with Zelensky afterward. Stubb explained that Finland and Norway share borders and security interests with Russia, making the outcome of the war directly relevant to their own countries. He stated, “Ending the war requires direct discussions.” This should be obvious to anyone who understands international relations. The Nordic leaders did not recognize Russia’s territorial claims, withdraw their support for Ukraine, or promise to lift sanctions. They opened a channel of communication because they recognized that refusing to speak accomplishes nothing.

The reaction from other European leaders was revealing. Danish Prime Minister Mette Frederiksen warned against individual diplomatic initiatives, arguing that Europe should maintain a united position. Swedish Prime Minister Ulf Kristersson expressed skepticism about the value of the conversation, while Polish Prime Minister Donald Tusk urged caution. They fear Putin could cause further division between EU members. Why? Could they perhaps realize that billions in aid, an energy crisis, and thousands dead are not in their national best interest?

Now the Kremlin is attempting to portray itself as the party willing to communicate. Peskov has stated that Putin would answer calls from Macron and Merz, while presidential aide Yury Ushakov said the Russian president would remain available to the Finnish and Norwegian leaders. The Finnish and Norwegian initiative is significant because it demonstrates that European leaders can communicate directly with Moscow. Elected leaders should be able to speak on behalf of their constituents rather than cower in silence awaiting approval from the unelected bureaucrats in Brussels.

Throughout history, governments have maintained diplomatic channels with adversaries even during periods of extreme hostility. Negotiations between nuclear powers were essential during the Cold War precisely because the consequences of misunderstanding were so severe. Today, Russia and NATO possess enormous military capabilities, and the possibility of miscalculation remains a serious concern. Direct communication is one means of reducing that danger. It does not require trusting Putin, accepting Russian claims, or abandoning Ukraine.

The question is no longer whether European leaders can telephone Moscow. Finland and Norway have already demonstrated that they can. The question is whether those conversations can develop into a serious diplomatic process capable of addressing the interests and security of all parties involved. The Kremlin says Putin will answer the phone.

Europe should examine what diplomacy can actually achieve rather than treating the act of speaking as a political controversy. The war has already inflicted enormous damage, and its continuation carries substantial risks for Ukraine, Russia, and the wider European economy. Finland and Norway have reopened a channel that much of Europe allowed to deteriorate. Whether that channel produces meaningful progress remains uncertain, but the principle should never have been controversial. Diplomacy exists to prevent disagreements between governments from being settled exclusively on the battlefield.

Categories:War

Posted Nov 2, 2026 by Martin Armstrong |

With Democratic control of House, the party that still worships at the grave of Karl Marx and FDR, will gain majorities on committees that can propose legislation and hold hearings. Beside drooling over the thought of impeaching Trump a third time just for shits and giggles, the more serious is their  is their passion to taget the rich. They are contemplating a National Billionaire’s Tax and Elizabeth Warren want’s her Wealth Tax on simply ownership disregarding income altogether. These two issue will surface eventually but the thirst for the bright lights and the praise of the hopeless mainstream media will target artificial intelligence and how some of these 20-somethings run around and says AI will kill all humanity as if this is Terminator-7.

I have consistently argued that sovereign debt is a Ponzi scheme that functions perfectly well until the buyer of last resort disappears – that’s you. The United States carries roughly $40 trillion in debt, but the global sovereign debt complex is closer to $400 trillion. The arithmetic is alarming, but arithmetic alone has never toppled a bond market. What topples it is the realization that the debt cannot be rolled over at a price anyone will accept.

I am NOT the only one to have found that it was President Johnson’s Great Society that was the primacy force that broke the back of Bretton Woods. I knew John Exter, a board member of the Fed, who was the first to see the handwriting on the wall. Hohn in 1968 warned that the Gold Standard would collapse. They ignore John as well, but that came in 1971.

Economic historians and official histories consistently identify the combination of Vietnam spending and Great Society programs as the root cause of the inflation that destroyed the dollar-gold convertibility by 1971. The Federal Reserve History notes that U.S. inflation rose from less than 2% in early 1965 to 6% by the end of 1969, making fixed exchange rates unsustainable. The French economic education site Citéco lists both “expensive wars, particularly in Vietnam” and “Johnson’s Great Society Programs” as the factors that increased U.S. budget deficits and undermined the system. Just like Europe, politicians are NEVER wrong – only the people. They will NOT alter their philosophy despite that this collapsed both Russia and China. They simply refuse to accept their philosophy is just wrong.

Our computer has shown that the economy will now enter a recession into 2028. The Democrats only need to talk about wealth taxes, rising social security with Elizabeth warn saying the rich don’t pay their fair shar proving it’s just a tax and not some security fund for your future, and then the Billionaire Tax they want to impose nationally after lying to their billionaire backers in a bait & switch game.

The fools who actually think that voting for the Democrats will solve all the problems is hilarious. They blame trump for 80 years of fiscal mismanagement. Their solution, as always, will be to punish the productive class. The computer shows that nether party is ever willing to reform because they look to elections every 2 years, not the long-term. The problem is that long-term is becoming closer every year. We can see that the computer has targeted 2032 the same as the ECM, which is not included in this Array. The Democrats have to win to show the average person that neither side matters because nobody cares about the long-term – just the next election. The light at the end of the tunnel is approaching when we get to correct the flaws of this system. No war without a public referendum. Term limits – 1 time in and out to end the perpetual lobbying, and no cushy private sector job to influence your buddies on the Hill. The day is coming – we get to fix the future and leave behind a worthwhile system.

Posted Nov 1, 2026 by Martin Armstrong |

A protest took place in Zurich on Saturday night, which escalated into violence and clashes with police. The incident began around 10:30 PM on October 31st, 2026 in the Langstrasse area and later spread to Helvetiaplatz, continuing until approximately 1:30 AM the following day.

Several hundred people gathered in response to a call under the slogan “We’ve had enough – in Switzerland too,” with some participants wearing Halloween masks. The demonstrators set fire to barricades constructed from trash bins, bicycles, and other objects, and torched a car. They also attacked police with fireworks, bottles, and stones, and damaged shop windows and bus stop facilities. Additionally, a police patrol responding to a medical emergency was attacked, delaying assistance to an injured teenager.

Zurich police deployed water cannons, tear gas, and rubber bullets to disperse the crowd. Police reported that the situation was brought under control by approximately 1:30 AM. The situation in Zurich has calmed down and there are no indications of ongoing riots or protests.  Yet this is what I have warned about. This is how the 1848 Revolutions began in Sicily as swept through Europe even toppling the French Government. These things are always a CONTAGION and the rising discontinue will escalate as we head into 2028 as the economy turns down and fuels costs rise.

This will spread eventually to USA.

Posted Nov 1, 2026 by Martin Armstrong |

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