Cuba’s national electrical grid suffered yet another total collapse on July 6, leaving nearly the entire island without electricity. According to the report, the outage began after a failure at the Diezmero substation near Havana triggered a chain reaction that shut down power generation across the country. This marks the fourth nationwide grid collapse in less than a year, underscoring just how fragile Cuba’s electrical infrastructure has become. Authorities estimate nearly 10 million people were affected as engineers once again struggle to restart an electrical system that has become increasingly unstable.
Many immediately blame socialism alone, but the reality is more complicated. Cuba has endured decades of economic isolation, sanctions, fuel shortages, and chronic underinvestment. None of that excuses Havana’s policies, yet pretending that American policy has played no role ignores history. Washington has maintained one of the longest embargo regimes in modern history while successive administrations tightened restrictions on fuel shipments and financial transactions. The result has been an economy unable to obtain the capital, spare parts, and financing necessary to modernize infrastructure that was already decades old.
Cuba’s electrical grid has become one of the clearest examples of what happens when infrastructure is sacrificed to politics. Most of the country’s thermoelectric plants were built during the Soviet era and continue operating well beyond their intended lifespan. Mechanical failures have become routine rather than exceptional. The country imports much of its fuel, and when shipments from allies such as Venezuela declined because of their own economic collapse, the entire system became even more vulnerable. You cannot maintain a twentieth-century electrical grid indefinitely without investment. Eventually transformers fail, transmission lines deteriorate, and power stations simply reach the end of their useful lives.
Infrastructure does not suddenly collapse overnight. It deteriorates after years of deferred maintenance, declining investment, and governments that continually choose short-term politics over long-term planning. Whether the system is socialist or capitalist makes little difference if there is no capital available to maintain the foundation upon which the economy depends.
The sovereign debt crisis I have discussed for years ultimately produces exactly these types of failures. Governments borrow to fund current consumption while neglecting productive investment. The public notices little at first because the lights still work. Then one day they do not. Cuba simply reached that point sooner than many others because it lacked access to both capital and reliable energy supplies. Every nation that neglects its infrastructure while diverting resources elsewhere eventually discovers that economic decline begins long before the markets recognize it. The blackout is not the crisis. It is merely the symptom of decades of economic decay.
Canada has officially selected Germany’s ThyssenKrupp Marine Systems (TKMS) as the preferred builder for a new fleet of 12 submarines. The program is expected to cost roughly C$60 billion, making it one of the largest military procurements in Canadian history. Prime Minister Mark Carney is making the announcement just before the NATO summit, where member states are once again pledging even higher military spending. This is not simply about replacing aging submarines. It is another step in the global rearmament that I have warned was inevitable once governments abandoned diplomacy in favor of perpetual confrontation.
Canada’s existing Victoria-class submarines are reaching the end of their operational lives, but what stands out is who won the contract. Germany’s Type 212CD submarine was chosen over South Korea’s competing bid. The 212CD was jointly developed with Norway and is specifically designed for NATO operations, utilizing advanced air-independent propulsion, non-magnetic steel to reduce detection, and enhanced capabilities for operations in northern waters. Germany has openly stated that this contract would draw Canada closer to Europe strategically, not merely commercially. That should tell everyone this was as much a geopolitical decision as it was a military one.
Europe is rapidly transforming itself into a military union. Germany, once constrained after the Second World War, is now becoming one of Europe’s dominant military manufacturers. I have written repeatedly that history always comes full circle. Nations never remain demilitarized forever. The politicians always justify rearmament by claiming they are preserving peace, but throughout history every major military buildup has eventually found its justification in conflict. The War Cycle has been pointing directly toward this period, and every month governments continue pouring hundreds of billions into defense while their sovereign debt problems continue to spiral out of control.
Canada recently reached the NATO alliance’s 2% of GDP spending goal ahead of schedule, while NATO members have now committed themselves to raising total defense and security spending toward 5% of GDP by 2035. The question nobody asks is where this money will come from. Canada already faces slowing economic growth, record household debt, an affordability crisis, and expanding fiscal deficits. Governments never solve debt crises by borrowing even more money, yet that is precisely the path every Western nation has chosen.
These massive defense programs become long-term liabilities that taxpayers finance for decades. Every new military commitment pushes sovereign debt even higher while politicians simultaneously claim there is no money for healthcare, pensions, or essential domestic infrastructure.
This is why I have consistently said the sovereign debt crisis and the War Cycle are converging. Governments throughout the West cannot meet their existing obligations, yet they continue to expand military budgets at a pace not seen since the Cold War. Germany is rebuilding its defense industry. Canada is rearming. Europe is preparing for prolonged confrontation with Russia. Asia is expanding its naval forces. These are not isolated events. They are all part of the same global trend. Once governments begin reorganizing their economies around military production, history shows they rarely reverse course peacefully. That is why the years immediately ahead remain among the most dangerous we have faced in generations.
The United States has crossed a milestone that Washington has spent decades pretending would never arrive. Federal debt held by the public has now exceeded 100% of GDP for the first time since the aftermath of the Second World War. According to the latest government data, debt held by the public reached approximately $31.27 trillion while the nation’s annual economic output totaled roughly $31.22 trillion, pushing the debt-to-GDP ratio to 100.2%. The Congressional Budget Office now projects debt held by the public will average 101% of GDP this year and continue climbing to 120% by 2036 if current law remains unchanged.
The media continues to compare today’s numbers with the end of World War II, but that comparison completely misses the point. After 1945, the United States emerged as the world’s dominant industrial power. Soldiers came home, factories shifted from producing tanks to automobiles, the population expanded rapidly, and economic growth far outpaced government borrowing. Debt declined because the nation was producing wealth. Today we are doing precisely the opposite. Washington continues borrowing during periods of economic expansion, not because the country faces an existential war, but because politicians refuse to tell voters that promises have become mathematically impossible to keep.
The numbers expose just how unsustainable the fiscal position has become. The Congressional Budget Office estimates the federal deficit will total roughly $1.9 trillion this fiscal year, equal to 5.8% of GDP. By 2036, annual deficits are projected to exceed $3.1 trillion, or 6.7% of GDP. Federal spending will consume 23.3% of GDP this year, while revenues amount to only 17.5%. Washington is spending approximately $1.33 for every dollar it collects. That gap is no longer the result of recession or emergency stimulus. It has become the permanent operating model of government.
The real crisis is not simply the debt itself. It is the cost of carrying that debt. Net interest payments exceeded $1 trillion for the first time last year, consuming roughly 14% of all federal spending. Interest on the debt now exceeds what Washington spends on national defense. Every increase in long-term interest rates compounds the problem because trillions of dollars in Treasury securities must continually be refinanced at higher yields. Governments cannot borrow indefinitely without eventually becoming captive to their creditors.
This is exactly why I have repeatedly explained that the sovereign debt crisis, not inflation, will define this decade. Every government has embraced the Keynesian fantasy that deficits do not matter as long as borrowing remains possible. They assume they can simply issue another bond and postpone the consequences for another administration. That strategy works only until confidence begins to disappear. Sovereign debt crises are never caused by running out of money. They begin when lenders question whether governments possess either the ability or the political will to restore fiscal discipline.
Our computer has never suggested that the sovereign debt crisis would begin with a sudden default. It unfolds gradually through rising interest costs, capital migration, declining confidence, and governments searching for new ways to finance themselves. That inevitably leads to higher taxes, inflationary policies, capital controls, and expanding regulation of private wealth. Politicians will never admit they overspent. They will instead insist that the problem is wealthy citizens who have not contributed enough, corporations that have not paid their “fair share,” or investors who moved capital abroad. Governments always blame the people before accepting responsibility for their own fiscal recklessness.
Crossing 100% of GDP is not merely another statistic. It marks the point where the United States officially joins the group of heavily indebted nations that believed perpetual borrowing could replace sound fiscal policy. Unlike 1946, there is no peace dividend waiting on the horizon, no manufacturing boom capable of overwhelming the debt, and no political appetite to reduce spending. Every election promises more benefits, more subsidies, and more borrowing. That is why this cycle will end as every sovereign debt cycle throughout history has ended, with a crisis of confidence rather than a shortage of promises.
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