Tag: economy

The Price of Genocide: How US Funding Sustains an Unraveling Israeli Economy

In an important step toward the economic isolation of Israel due to its genocide in Gaza, Norway’s Government Pension Fund Global has decided to divest from yet more Israeli companies.

Norway’s sovereign wealth fund is the world’s largest, with total investments in Israel once estimated at $1.9 billion. The decision to divest was taken gradually but is consistent with the Norwegian government’s growing solidarity with Palestine and rising criticism of Israel.

Taking a leading role along with Spain, Ireland, and Slovenia, Norway has been a vocal European critic of the Israeli genocide and man-made famine in Gaza, actively contributing to the International Court of Justice’s investigation into the genocide, and formally recognizing the state of Palestine in May 2024. This diplomatic and legal stance, coupled with its financial divestment, represents a coherent and escalating effort to hold Israel accountable for the ongoing extermination of Palestinians.

The Israeli economy was already in a state of freefall even before the genocide. The initial collapse was related to the deep political instability in the country, a result of Israeli Prime Minister Benjamin Netanyahu and his extremist government’s attempt to co-opt the judicial system, thus compromising any semblance of “democracy” remaining in that country. This resulted in a significant lowering of investor confidence.

The war and genocide, beginning on October 7, 2023, only accelerated the crisis, pushing an already fragile economy to the brink. According to reports from the Israel Ministry of Finance, foreign direct investments in Israel fell by an estimated 28% in the first half of 2024 compared to the same period in 2023.

Any supposed recovery in foreign investments, however, was deceptive. It was not the outcome of a global rallying to save Israel, but rather a consequence of a torrent of US funds pouring in to help Israel sustain both its economy and the genocide in Gaza, along with its other war fronts.

Israel’s Gross Domestic Product was estimated by the World Bank to be around $540 billion by the end of 2024. The war on Gaza has already taken a considerable bite out of Israel’s entire GDP. Estimates from Israel itself are complex, but all data points to the fact that the Israeli economy is suffering and will continue to suffer in the foreseeable future. Citing reports from the Bank of Israel and the Ministry of Finance, the Israeli business newspaper Calcalist reported in January 2025 that the cost of the Israeli war on Gaza had already reached more than $67.5 billion. That figure represented the costs of the war up to the end of 2024.

Keeping in mind that the ongoing war costs continue to rise exponentially, and with other consequences of the war – including divestments from the Israeli market by Norway and other countries – future projections for the Israeli economy look very grim. The Israeli Central Bureau of Statistics reported that the Israeli economy, already in a constant state of contraction, shrunk by another 3.5% in the period between April and June 2025.

This collapse is projected to continue, even with the unprecedented US financial backing of Tel Aviv. Indeed, without US help, the precarious Israeli economy would be in a much worse state. Though the US has always propped up Israel – with nearly $4 billion in aid annually – the US help for Israel in the last two years was the most generous and critical yet.

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Europe on the Path to a War Economy

In Unterlüß, Lower Saxony, Europe’s largest ammunition factory began production last week. What started clandestinely is now being publicly scaled with full firepower: the European Union is building its own war economy.

In the good old days in Germany, recessions were typically masked by state-funded infrastructure programs. The concept worked as long as the state did not overgrow, overregulate, or force the private sector into a destructive ideological agenda, as is the case with the green transformation. In other words, the economy was always able to clear away the debris left behind by the state.

Southern Europe Could Never Recover

In Southern Europe, where the state’s role has traditionally been high, monetary policy generous, and handling of public funds notoriously lax, this policy left nothing but infrastructure ruins and industrial wastelands. Local economies were never able to productively absorb the artificial credit distributed by Brussels. The fatal consequences of this pseudo-boom still shape the landscape today.

For economic historians, present-day Europe has long been a fascinating case study. Crisis followed crisis, with the public sector intervening each time with increasing volume. The attempt to install the Green Deal, a Keynesian pseudo-economy, must be understood in this context. The new Rheinmetall plant fits into this narrative.

The company invested half a billion euros to provide an annual capacity of up to 350,000 rounds by 2027. 500 new jobs are to be created, celebrated by politicians as a turning point and the beginning of a pan-European defense architecture.

Ceremony and Half-Truths

Rheinmetall CEO Armin Papperger expressed satisfaction: “It was not easy for us to invest half a billion without orders. I am very grateful to you” — the words were directed at Defense Minister Boris Pistorius — “for keeping your handshake agreements. You are a man of word and deed.” A heavy dose of pathos and self-congratulation is evident here — politics and the defense industry are long intertwined.

Of course, this is only half the truth. Beyond the usual behind-the-scenes deals, politics has made it clear that it is ready to mobilize all means to build a German defense industry and provide sector companies with guarantees and subsidies where necessary. Big business, no risk.

After the collapse of the green economy, politics is now betting everything on the next pseudo-economy. The aim is to loosen dependence on America while exploiting the media spin that stylized Vladimir Putin’s Russia over years as a potential European invader. Whether this fear campaign will work in the long term remains to be seen.

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National debt to rise to 120% of GDP by 2035, budget watchdog warns

The national debt is projected to rise from 100% of the U.S. Gross Domestic Product (GDP) at present to 120% of GDP by 2035, according to the latest figures from the Committee for a Responsible Federal Budget (CRFB), a nonpartisan fiscal policy think tank, based on baseline budget data from the Congressional Budget Office.

The CRFB released an adjusted August 2025 baseline, which found that annual deficits will “remain above 6% of GDP throughout most of the decade,” which is “more than twice the 3% target advocated by some policymakers.”

The budget watchdog group estimated that bringing the federal deficit down gradually to 3% of GDP would require around $3.5 trillion in savings over five years, including interest, or $7.5 trillion over ten years.

“To hold debt at 100% of GDP, approximately $4 trillion is needed over five years, or $9 trillion over the decade,” read their analysis.

The CRFB found that achieving a deficit equal to 4% of GDP would require about $5 trillion in savings while balancing the full federal budget, including interest, would require about $15.5 trillion in total savings.

The watchdog group noted that economic growth alone cannot solely take the place of major fiscal policy changes to get the fisacl situation in the U.S. under control. The CRFB recommended that the U.S government implement “super PAYGO” as well as trust fund reform and other spending reduction initiatives.

“Under Super PAYGO, every dollar of new spending or tax cuts would be offset by at least two dollars of revenue increases or spending reductions, thus ensuring that new tax cut and mandatory spending legislation also includes deficit reduction,” the CRFB said.

CRFB noted that “faster growth can make these fiscal goals easier.” However, the watchdog group said that “thoughtful pro-growth deficit reduction and reform is likely the best way to put the country on a sustainable fiscal path.”

The CBO recently released a separate estimate which found that the Trump administration’s tariffs will cut the U.S. federal deficit by $4 trillion through 2035. 

The analysis found the tariffs would lead to $3.3 trillion in direct tariff revenue and $700 billion in savings from lower interest payments on borrowing. These projections are revised from CBO’s earlier estimates. In June, the CBO had estimated that tariffs would offset budget shortfalls by $3 trillion.

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Venezuela’s Crypto Adoption Surges Amid Inflation Surge And Currency Collapse

Cryptocurrencies are becoming a core part of the economy in Venezuela as citizens turn to digital assets to shield themselves from a collapsing currency and tighter government controls.

From small family stores to large retail chains, shops across the country now accept crypto through platforms such as Binance and Airtm. Some businesses even use stablecoins to pay employees, while universities have begun offering courses dedicated to digital assets.

“There’s lots of places accepting it now,” shopper Victor Sousa, who paid for phone accessories with USDt, told the Financial Times. “The plan is to one day have my savings in crypto.”

Venezuela ranked 13th globally for crypto adoption, according to the Chainalysis 2024 Crypto Adoption Index report, which noted a 110% increase in usage in the year.

Bolívar’s crash pushes Venezuelans into crypto

The continued slide of the bolívar currency has intensified demand for crypto. Since the government stopped defending the currency in October, it has lost more than 70% of its value. Inflation reached 229% in May, according to the Venezuelan Finance Observatory (OVF).

“Venezuelans started using cryptocurrencies out of necessity,” said economist Aarón Olmos. He noted that they face inflation, low wages, foreign currency shortages and difficulty opening bank accounts.

However, access is not always smooth. With US sanctions on Venezuela’s financial sector, Binance restricts services linked to sanctioned banks and individuals. Connectivity issues also hinder widespread use. Still, experts say the ecosystem is resilient, per the FT report.

The government’s stance on crypto remains inconsistent. Venezuela launched its own digital currency, the petro, in 2018, but the project collapsed last year. The main exchange regulator was shut down in 2023 following corruption allegations tied to oil-linked transactions.

Cointelegraph reached out to Binance for comment, but had not received a response by publication.

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The Modern American Dream?

Popularised after the Second World War, the idea of the American Dream has long centred around the idea that anyone, from any background in the United States, can achieve prosperity and success.

For nearly 75 years, this idea has often been symbolically represented by a middle-class family with two dogs, two kids, an American-made car and a suburban home with a white picket fence. While the “Modern American Dream” continues to include pets and children (increasingly more pets than children) and an automobile (now more evenly split between American pickup trucks, electric vehicles, and various international brands), one piece of this dream is becoming increasingly unattainable for the average American: owning a home.

Supply/demand imbalances of housing stock in the US, exacerbated by an ageing population clinging to homes that they either own outright or with extremely low mortgage rates, combined with a large pullback from developers following the 2008 financial crisis, continue to ripple through the economy and the fixed income universe in unexpected and meaningful ways.

Where are we today?

Activity in the US housing market has ground to a halt, as older homeowners who have locked in low interest rates, or have paid off their homes altogether, are choosing to hold tight to significant amounts of housing inventory. Originations of mortgages in the US (which include new financing and refinancing) could hit two-decade lows, with the majority of transactions among the highest income (highest credit score) borrowers.

The median age of both first-time and repeat homebuyers continues to rise, as the combination of an undersupply of homes (both new and existing) and higher mortgage rates continues to keep younger buyers on the sidelines, with wages unable to keep up with parabolic increases in homeownership costs.

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The Smear Campaign Against Trump’s Bureau of Labor Statistics Nominee E.J. Antoni

President Trump’s nomination of economist E.J. Antoni to lead the Bureau of Labor Statistics has triggered those infected with Trump Derangement Syndrome. That’s too bad, because Antoni has some exceptional ideas to modernize economic data collection and reporting. 

Regardless of this latest TDS outbreak, it is time for the Bureau to modernize data collection and use available technology to get markets the most accurate and comprehensive information possible.

I’m no economist. I changed majors from economics to English before my junior year. But I can still hear my late father every month complaining about two things – the inflation report and the jobs report. My dad lived in the markets. CNBC burned like a log fire in our house. And those damn inflation and job reports were always flawed to my dad.

Inflation reports underreported some things and overreported others. The jobs report also has flaws. The current methodology at the Bureau is already flawed. Antoni knows exactly why and could make them better.  

The reports, for example, downplay inflation by underemphasizing things we all consume. 

The jobs report is also often a snow job. Goldman Sachs estimates that upcoming revisions to the Bureau’s 2024 jobs data may show a drop of up to one million jobs.

Antoni notes that the Bureau fails to differentiate between full-time and part-time jobs.  

This methodological failure has masked labor market weakness. After COVID, many Americans began piecing together multiple gigs. America met JD Vance’s grandmother, Mamaw, in “Hillbilly Elegy.” She worked multiple part-time jobs to get by.  

Yet the status quo at the Bureau of Labor Statistics is to count the part-time jobs as full-time jobs.

Changing this flawed methodology, as Antoni suggests, seems sound. 

Antoni has been pushing for refinements to the system from his perch at the Heritage Foundation, where he is the chief economist.

Did I say Heritage Foundation? Indeed, and thus we arrive at another triggering event for the hatred of Antoni. He comes from the premier conservative think tank, not the halls of Harvard. 

To sink Antoni’s nomination, his foes have turned to a ninety-year-old ship. 

Full disclosure. When I was a child, I built plastic model airplanes. My models included the ME-109, the iconic fighter in the Luftwaffe, as well as the RAF Spitfire. These two planes dueled over the skies of southern England to decide the fate of Western civilization. I even built models of the stubby, ridiculous-looking ME-163 Komet. You could buy the plastic model kits at the mall toy store for about $5. I don’t remember if they included the authentic swastika decals or if I threw them out. Even more damaging for my career, I displayed the models on my bookcase!

What does this have to do with Antoni, a naval history enthusiast? 

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Why The IEA Reinstated Its “Business As Usual” Scenario

  • The IEA has reversed course by reintroducing the “Current Policies Scenario” in its flagship World Energy Outlook, marking a significant policy shift.
  • The debate highlights the inherent subjectivity of data in energy modeling and the political stakes tied to forecasting fossil fuel demand.
  • U.S. political leaders and fossil fuel advocates pressured the IEA, arguing that its previous modeling discouraged oil and gas investment and threatened energy security.

A great debate is unfolding about the subjectivity of data in producing the energy outlooks that guide public policy and private spending, shaping the future of the global energy sector. The International Energy Agency has been caught in the crossfire of a partisan debate in which environmental and energy industry leaders vehemently disagree about what constitutes accuracy, truth, and good science in data, and particularly in the agency’s flagship World Energy Outlook report. And this year, the fossil fuels industry is getting its way.

It’s easy to forget that data is not objective, nor is it purely subjective. This false dichotomy, according to data expert Melanie Feinberg, “distorts the empirical realities of data collection, the challenging work of forcing unruly phenomena to speak in clean, distinct, ideally quantitative phrases.” Instead, good science is about recognizing the responsibility of being an active decision-maker to produce methods and outputs that most accurately represent complex realities. 

Human-led decisions and difficult choices are being made at every step of developing a report like the International Energy Agency (IEA)’s annual World Energy Outlook – from how to collect and clean the data to how to analyze and report on it.

One of those critical choices is how the agency chooses to construct its projected scenarios for the clean energy transition and the phaseout of fossil fuels. 

The choice that has recently come under scrutiny is whether to include a “Current Policies Scenario” along with the typical scenarios that the agency uses to make its forecasts.

The IEA based its “business as usual” outlooks on current policies until 2019, when the agency decided to switch to a “Stated Policies Scenario,” which it believed to be more accurate.

The difference is that the Stated Policies Scenario assumes certain future policy actions, such as the extension and renewal of policies with end dates.

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Business Flees California due to Overregulation

California has been repelling capital through overregulation. The energy sector high-tailed out of the state in recent years under Governor Gavin Newsom’s net-zero policies. Now, even retailers feel forced to evacuate as California becomes increasingly anti-business.

Bed Bath & Beyond announced that it must close all retail stores within the state of California. “This decision isn’t about politics—it’s about reality,” company head Marcus Lemonis said in a social media post. “California has created one of the most overregulated, expensive, and risky environments for businesses in America. It’s a system that makes it harder to employ people, harder to keep doors open, and harder to deliver value to customers.”

Newsom’s office commented that Bed Bath & Beyond was already a dead business, failing to take any responsibility. To begin, California’s minimum wage continues to rise year after year at a pace unsustainable for businesses. Automation is replacing the human workforce, and some studies have shown that minimum wage workers in California are simply receiving fewer working hours as employers aim to cut costs.

Newsom believes he can continue spending and rescue the state from the debt through taxation. Fleeing businesses can’t pay taxes, and California forces both businesses and residents to pay some of the highest taxes in the nation. All corporations operating in the state must pay a flat corporate income tax rate of 8.84% on net income. Banks and financial institutions pay a bit more at 10.84%. There is an annual franchise tax of $800 for businesses as well. But wait—corporations are still beholden to the 21% federal corporate income tax, which means businesses are paying roughly 29.84% on corporate income taxes alone.

Payroll taxes in California are higher than the national average, largely due to social programs like State Disability Insurance (SDI) and the Employment Training Tax (ETT), which must be paid in addition to Unemployment Insurance (UI). There is a personal income tax withholding of up to 14.63% that employers must withhold from employees as well.

The state was forced to overturn its policy regarding shoplifting and burglary after criminals used the minimum $950 amount for petty theft to avoid felony charges. Countless businesses shuttered their brick-and-mortar locations as a direct result of light-on-crime policies.

Capital flees excessive regulation and it’s almost a no-brainer for corporations to move beyond state lines where operating costs are drastically lower.

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These Are The US Cities Where Groceries Are The Most Expensive

Grocery bills vary dramatically across the U.S., and some cities are feeling the pinch more than others.

Adding to the strain are record meat prices, driving up up food price inflation 3% compared to June of last year. Meanwhile, vegetable prices are spiking as farmers struggle with labor shortages amid rising deportations.

This visualization, via Visual Capitalist’s Dorothy Neufeld, ranks the top 20 American cities with the highest cost of groceries, based on data from Numbeo.

Honolulu, Hawaii ranks far above all other U.S. cities with a groceries index of 120.2. That’s over 20% more than in New York City, the benchmark.

As an island state, Hawaii faces higher import and transportation costs, driving up the price of food staples. The state’s geographic isolation continues to make everyday goods, including groceries, particularly expensive.

Meanwhile, California and Washington state are well-represented in the top 20. San Francisco (100.1), San Jose (89.8), Sacramento (81.8), and Los Angeles (81.7) all make the list, as does Seattle (95.3) and Spokane (76.5).

These cities are known for higher costs of living in general, and groceries are no exception. Limited space for agriculture and strong demand from dense populations contribute to elevated food prices.

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How Managers Are Using AI To Hire And Fire People

The role of artificial intelligence (AI) in the workplace is evolving rapidly, and some are warning that using AI to make executive decisions without careful consideration could backfire.

AI is being used more and more in recruitment, hiring, and performance evaluations that could lead to a promotion or termination.

Researchers, legal experts, legislators, and groups such as Human Rights Watch have expressed concern over the potential that AI algorithms are a gateway to ethical quagmires, including marginalization and discrimination in the workplace.

This warning bell isn’t new, but with more managers using AI to assist with important staff decisions, the risk of reducing employees to numbers and graphs also grows.

A Resume Builder survey released in June found that among a group of 1,342 managers in the United States, 78 percent use AI tools to determine raises, 77 percent use it for promotions, 66 percent use it for layoffs, and 64 percent use it for terminations.

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