Tag: economy

Britain Desperate for Oil

Britain is now discovering you cannot dismantle your industrial and energy base, wage war on domestic production, impose endless climate regulations, and still expect to maintain a functioning economy. Reality eventually arrives no matter how many politicians attempt to legislate against it.

The UK is quietly loosening oil and gas restrictions because the country is becoming desperate. After years of aggressively pushing Net Zero policies, discouraging North Sea investment, raising windfall taxes on producers, and pretending renewable systems alone could carry an advanced industrial economy, Britain is being forced to confront the simple reality that energy shortages destroy economies from the inside out.

The North Sea once represented one of the great strategic advantages for Britain. During the peak years around the late 1990s and early 2000s, the UK was producing nearly 4.5 million barrels of oil equivalent per day. That production has collapsed by more than 70% over the past two decades. At the same time, Britain became increasingly dependent on imported energy while shutting down domestic capacity.

What politicians never understand is that energy is not just another sector of the economy. Energy is the economy. Every industry depends upon it. Food production depends on it. Transportation depends on it. Manufacturing depends on it. Once energy prices rise high enough, inflation spreads through the entire system because energy sits underneath every layer of economic activity.

Britain now faces exactly the trap I warned Europe was heading toward. Deindustrialization combined with rising debt and declining living standards. Manufacturing weakens, capital flees, energy costs rise, and governments respond with more taxation and regulation which only accelerates the collapse further. This becomes a vicious cycle.

The desperation is now becoming obvious. The UK government is reportedly reconsidering restrictions on North Sea drilling and attempting to stabilize investment conditions because energy firms were already beginning to abandon projects entirely. The punitive tax structure imposed on producers created massive uncertainty while investment dried up. Companies simply stopped committing capital because governments kept changing the rules in the middle of the game.

Europe is in a depressionary phase while capital continues moving toward countries with stronger energy and industrial positions. You cannot build an economy entirely on financial services, bureaucracy, migration, and government spending while destroying the productive base underneath society itself.

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US Real Estate Remains Stale

April existing home sales in the U.S. came in at an annualized pace of just 4.02 million units, barely rising 0.2% from March and missing expectations yet again. We are now looking at one of the weakest spring housing seasons in decades, despite population growth and years of underbuilding.

Real estate has always been driven by confidence in the future. People buy homes when they believe their job is secure, taxes will remain manageable, and the economy is stable enough to justify taking on long-term debt. That confidence has been steadily collapsing under inflation, rising insurance costs, property taxes, and geopolitical uncertainty.

Mortgage rates briefly dipped below 6% earlier this year and everyone rushed out claiming the housing market was recovering. Then rates shot back toward 6.4%-6.5% as inflation fears returned and war tensions escalated globally. That immediately froze buyers again. A $500,000 mortgage today carries monthly payments hundreds of dollars higher than buyers were paying only a few years ago. For younger generations already struggling with rent, food, insurance, and student debt, ownership is becoming mathematically impossible in many regions.

The median existing home price still rose to $417,700 in April, marking another record high for the month. This is the real crisis. Sales volumes are stagnating, yet prices remain elevated because inventory is still historically tight. We do not have a healthy market. We have a distorted market where people locked into 2%-3% mortgages refuse to sell because replacing that loan with a 6.5% mortgage would double their financing costs. That traps inventory and prevents natural market clearing.

The National Association of Realtors admitted inventory rose 5.8% to 1.47 million homes, but even that remains well below historical norms. A balanced housing market typically requires roughly a 5-6 month supply. We remain around 4.4 months. That means the market is simultaneously weak and expensive, which is the worst possible combination for society because it destroys mobility and locks younger generations out of ownership entirely.

What is unfolding now mirrors the broader sovereign debt crisis model. Governments kept rates artificially low for years to support endless borrowing and deficit spending. That created massive asset inflation in stocks, bonds, and real estate. Once inflation appeared, central banks had no choice but to raise rates, but they cannot normalize rates without crushing the very debt bubble they created. Housing is now caught directly in that trap.

The regional split is also important. The South and Midwest saw slight sales increases while the West continued weakening. That reflects the capital flow trend we have been monitoring for years. People are fleeing high-tax, high-cost regions in favor of states with lower taxes and cheaper living costs. California, New York, Illinois, and parts of the Northeast continue losing population to states such as Florida and Texas. Real estate is no longer just about location. It has become a referendum on government policy itself.

The broader danger is what comes next. Real estate historically drives consumer confidence because homes are the largest asset for most households. When housing freezes, consumer spending eventually follows. Construction slows, furniture sales weaken, appliance demand drops, and local tax revenues decline. The ripple effects spread throughout the entire economy.

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We Are 6 Months From Global Food Shortages Because Farmers Are Facing A Quadruple Whammy Crisis

We have never faced anything quite like this. Diesel fuel and fertilizer have become far more expensive as a result of the conflict in the Middle East, and extreme weather is playing havoc with crops all over the planet. Here in the United States, we just experienced the driest first three months of a year in recorded history. No, that isn’t an exaggeration. Now a “Super El Niño” is coming, and that means that drought conditions are going to get even worse in many areas of the world. The “Super El Niño” of 1877-1878 resulted in widespread droughts that killed more than 50 million people, and now we are being warned that the upcoming “Super El Niño” could be even worse. Our farmers have never faced a “perfect storm” of this magnitude, and global food production is going to be way down in the months ahead.

The UN’s Food and Agriculture Organization is publicly warning that a severe global food crisis could strike about 6 months from now if something really dramatic does not happen…

The closure of the Strait of Hormuz could trigger a severe global food price crisis within six to 12 months unless governments act quickly, the Food and Agriculture Organization warned Wednesday.

Decisions now by farmers and governments on fertilizer use, imports, financing and crop choices will determine whether food prices spike later this year or in early 2027, the agency said.

I don’t know what national governments around the world are supposed to do.

They can’t create fertilizer out of thin air.

Thanks to the closure of the Strait of Hormuz by Iran, millions of farmers all over the northern hemisphere didn’t get the fertilizer that they needed for the spring planting season.

UNDP Administrator Alexander De Croo is telling us that as a result “many places in the world will have problems of food shortage” once harvest season arrives…

Food shortages are expected to hit many parts of the world from September or October following a fertilizer production plunge, the U.N. Development Program’s head said on Monday.

“In September, (or) October, many places in the world will have problems of food shortage,” as agricultural production is expected to be much lower following the fertilizer production slump resulting from high oil prices amid Middle East conflicts, UNDP Administrator Alexander De Croo said in an interview in Tokyo.

Even if fertilizer is available, many farmers simply cannot afford it.

In fact, one recent survey discovered that 70 percent of U.S. farmers could not afford to buy all of the fertilizer that they needed for the spring planting season because it has become so expensive.

Meanwhile, diesel has become painfully expensive as well.

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Exit Taxes Won’t Save Failing States

When a state starts floating an exit tax, it is telling you something more important than any campaign slogan: the people running the place know their model is not working. 

They may not say it that way. They will call it fairness, responsibility, or making the wealthy “pay what they owe.” But the meaning is the same. 

If families, entrepreneurs, and investors are leaving, the state can either ask why its policies are pushing them out, or it can try to tax them for escaping. An exit tax chooses punishment over reform. 

I understand why these proposals resonate with some people. If you are watching wealthy residents relocate while governments still face bills for schools, roads, pensions, and other commitments, it is easy to feel like the people with the most mobility are ducking the tab. 

That frustration is real. It deserves a serious answer. But an exit tax is not a serious answer. It is a confession that lawmakers would rather cling to a failing fiscal model than fix the spending, regulation, and tax policies that made people want to leave in the first place. 

That is why the current trend is so revealing.

In California, proposals have centered on taxing billionaire net worth, including wealth that often exists on paper rather than in cash. In New York, the push has extended to a new surcharge on high-value second homes in New York City.

In Washington, lawmakers have already enacted a “millionaires’ tax.” These policies differ in form, but not in spirit. They all send the same message: if government has made your state too expensive, too hostile, or too unpredictable, it may still try to claim part of your future anyway. 

The economics are worse than the politics. Supporters talk as if wealth is a pile of idle cash sitting in a vault, just waiting to be skimmed. It is not. Wealth is usually tied up in businesses, shares, property, and future earnings. 

Taxing net worth or unrealized gains means taxing value that often has not been sold, realized, or converted into cash. That can force asset sales, dilute business ownership, weaken investment, and change behavior long before the tax collector ever gets a check.

 A Hoover Institution analysis of California’s proposal found that once likely migration responses are considered, the measure could leave the state with a negative net present value of about $25 billion. That is the real lesson: politicians score the tax statically, but the economy does not sit still. 

And that is before you get to the broader evidence. The OECD has noted that recurring net wealth taxes have become much less common across advanced economies because they tend to raise less revenue than promised while creating large compliance costs, avoidance incentives, and economic distortions. Countries tried them. Many backed away. 

A recent NBER study on Scandinavian wealth taxation found that higher top wealth-tax rates reduced the number of wealthy taxpayers and that many of those taxpayers were business owners whose departure reduced investment, employment, and value-added. 

That is the part too often ignored in political talking points. When a state drives out a founder, investor, or employer, it is not just losing one tax return. It is losing future jobs, future capital formation, and future opportunity for everybody else too. 

Defenders of exit taxes still fall back on one argument that sounds morally satisfying: these taxpayers benefited from state infrastructure, legal protections, and markets while they lived there, so the state deserves one final cut.

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Electric Bills Could Be 2026 Election Shocker

If all politics is local, as former House Speaker Tip O’Neill said in tying politicians’ fortunes to constituents’ pocketbooks, then a voter’s electricity bill is about as local as an issue can get, landing on kitchen tables every month.

With electricity costs spiking for many of the nation’s 133 million households, this local issue could determine whether Republicans retain control of Congress or Democrats seize one or both chambers in November’s midterm elections.

According to the U.S. Energy Information Administration, average residential electricity rates increased nationwide nearly 13 percent from April 2020 to April 2025. Since President Donald Trump returned to office in January 2025, they’ve increased 6 percent.

Electricity prices are expected to increase, on average nationwide, by another 6 percent in 2026, the administration projects, and as much as 40 percent by 2030, warns economic development finance firm ICF.

The reason is simple: supply and demand. The North American Electric Reliability Corp. projected in its 2026 long-term reliability assessment report that electricity demand will increase in the coming decade by 70 percent more than what was estimated in 2024. Many analyses find that overall demand will increase 25 percent by 2030.

The surge is driven by the development of power-hungry data centers, artificial intelligence computing, advanced manufacturing, and “the electrification of everything,” with the average home featuring up to 21 digital devices – all eating electricity all the time.

The solution is also simple: The nation’s 2,896 utility companies must increase the electricity their power plants produce with the most abundant, least expensive energy sources. Meanwhile, the nation’s seven major grid operators must add up to 7,500 miles a year to their 240,000-mile network of high-voltage transmission lines while also upgrading up to 100,000 miles of those live wires, through 2035.

But determining what solutions work best and what long-term investments to make is a complex $1 trillion challenge mired in partisan politics and buried in century-old federal, state, and local regulations.

Not only are utilities and regional transmission operators amping up from a standing start after nearly two decades of inertia, but many are scrambling to keep pace with swelling demand while also building out generation and transmission capacities to meet projected need.

The cost of these capital improvements is showing up in customers’ electricity bills, leading to heightened scrutiny of investment decisions and generation choices, as well as spurring debate about how individual communities want to develop, all while meeting a Trump administration mandate to expand rapidly to win the “AI arms race” with China.

The focus and investment is long overdue, said Robert Bryce, a film producer and author of a widely read Substack on the grid and seven books on energy policies, including, “A Question of Power: Electricity and the Wealth of Nations.”

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More Evidence Skilled Labor Is Rising in Value

For years, they told an entire generation that the future belonged to people sitting behind computer screens, pushing paper around in climate-controlled offices, while anyone working with their hands was somehow a failure. Schools pushed college degrees endlessly while trade schools were neglected and industrial jobs were treated as relics of the past. Parents were convinced their kids needed massive student debt just to survive while corporations shipped factories overseas and politicians cheered the destruction of domestic industry as “progress.” Now reality is crashing directly into that fantasy.

The irony is unbelievable. The very AI revolution that many thought would eliminate blue-collar labor is actually creating one of the biggest labor shortages in modern history. Artificial intelligence requires physical infrastructure everywhere. These systems do not magically float in the clouds. They need giant data centers, electrical grids, transformers, cooling systems, steel, copper, pipelines, construction crews, semiconductor plants, and endless maintenance. Somebody actually has to build all of it.

CNBC finally admitted this week what many people are beginning to see with their own eyes. White-collar hiring is slowing while skilled trade hiring is exploding. The office jobs everyone chased for decades are suddenly becoming unstable while electricians, welders, HVAC technicians, elevator mechanics, and industrial workers cannot be hired fast enough.

Utilities are expected to spend roughly $1.1 trillion modernizing America’s electrical grid over the next several years because AI systems are consuming extraordinary amounts of power. Reuters reported the United States may need more than half a million additional workers tied directly to energy infrastructure and transmission projects by 2030. At the same time, nearly half the current skilled labor force is approaching retirement age.

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Causes of Uncontrollable US Public Spending and Debt

Annual US public spending has been in deficit for decades. As a result, total US debt continues to increase year after year with no end in sight. The end may not be in sight but the debt cannot continue to grow forever. We just don’t know when markets will shed the dollar, although the process may already be underway. In this brief essay, I will not point out all the disastrous consequences except that they are disastrous and will happen. Rather, I will point out how we got to this sorry state of affairs when it appears that other nations, such as China and Russia, have done a much better job of controlling public spending.

Gold Standard Takes the Blame

The main, and most obvious, reason that American spending has been in chronic deficit is that it abandoned the gold standard and appears to have no intention of reinstating it. Such is not the case with China and Russia. True, neither country is on the gold standard now, but both have been quietly accumulating gold for many years. Nor has either announced their respective total gold holdings or when and under what circumstances either would be prompted to tie their currencies to gold. Nevertheless, it is clear that both nations have a greater respect for gold than the US and appear to be preparing for its return at least for settling international trade accounts.

For millennia gold, and occasionally silver, were considered to be true money. Nations did go off the gold standard in time of war, but most quickly returned to a gold standard after the end of exceptionally high military spending. All nations, except the US, went off the gold standard in World War I, but eventually returned. The British returned to a gold standard in the 1920’s, but the monetary authorities made a glaring mistake. The British had increased the money supply by approximately double during the war, which made it almost impossible to return at the pre-war pound-to-gold ratio, but they did it anyway. This caused a severe recession in Great Britain as it required a drop in prices of 50 percent.

Labor contracts could not be honored and strikes ensued. Gold flowed out of the country, which Fed Chairman Benjamin Strong tried to ameliorate by inflating the dollar surreptitiously. This was but one factor that caused the US stock market crash and led to a sharp recession. Instead of ceasing monetary intervention and allowing business and prices to adjust, as was the policy of President Harding after WWI, first Hoover and then Roosevelt tried to cartelize the economy via price controls. The Great Depression followed. The gold standard took the blame for this debacle instead of Hoover/Roosevelt. In fact, it is a very common myth that Roosevelt’s New Deal saved America. Such is economic ignorance perpetuated.

Corrupting the People through Welfare

Secondly, in a gradual process, government became responsible for the people’s welfare, displacing the family and local friendly societies. The first large program was Social Security, truly the camel’s nose under the tent. Roosevelt sold the program to the citizens and to Congress using different rationales. To the public he claimed that the program was no different than a private annuity. The government took the people’s forced contributions, deposited them into earmarked accounts, and then distributed them plus interest to taxpayers upon reaching a certain age. Of course, the US Constitution enumerates no power to Congress to run a forced annuity program. So Congress and Roosevelt sold the program as merely a spending program, one of many. Social Security was never intended to replace the individual as primarily responsible for his own retirement income. It was sold as a supplement. Yet today 22 million Americans retire with no income stream except Social Security. This represents almost 40 percent of retirees. Obviously, the concept of moral hazard is unknown to government.

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China Off-Balance-Sheet Debt Exceeds GDP of Most Nations

For decades, there have been claims that China had the fastest-growing economy, and that it would eventually overtake the U.S. as the world’s largest economy. However, the fastest-growing economies are always developing economies because mature economies do not have as much room to grow.

In other words, a country with a per-capita GDP of $80 per month, as China had in the year 2000, has far more room for rapid expansion than a country like the United States, where the figure now stands at around $7,000 per month.

There is also the concept of low-hanging fruit. When a country has no highways or rail infrastructure, building highways and railways causes GDP to skyrocket. But once all major cities are connected, building additional highways and rail lines has only a marginal impact on economic growth.

A case in point is China’s famous high-speed rail system. Once highways and conventional railways already existed in China, converting to high-speed rail represented a massive economic investment and a large accumulation of debt, while the resulting increase in GDP was relatively minimal. For one thing, high-speed rail cannot be used to carry freight.

While China is still building high-speed rail lines, linking small communities with other small communities, the world is moving toward a remote-work model, making the movement of people a smaller contributor to GDP. Moving freight, however, remains critically important. Despite having a population less than one-quarter the size of China’s, the United States operates approximately 220,000 kilometers of total rail, about 33 percent more than China’s 162,000 kilometers, the vast majority of which is dedicated to freight.

Along with this development boom in China came debt. Because of the centrally planned economy, the central government was able to order local governments to invest and develop by creating debt. That debt was financed largely through real-estate sales, as the Chinese government controls actual land ownership rather than simple lease arrangements, which is what individual “homeowners” in China actually possess.

In order to keep this debt from detracting from the appearance of investment and economic performance, large portions of the debt were kept off the balance sheet.

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Japanese Are Feeling the Economy Collapse in Real-Time

Japan spent decades trying to convince the world that endless debt, money printing, and zero interest rates could continue indefinitely without consequences. Now ordinary Japanese citizens are beginning to feel the pressure directly as inflation rises, wages fail to keep pace, and living standards steadily deteriorate underneath the surface.

For the first time in generations, Japanese households are experiencing sustained cost-of-living stress while confidence in economic stability weakens sharply. Recent polling showed more than 80% of Japanese households now believe prices are rising faster than their incomes, while consumer confidence remains near recessionary levels despite years of government stimulus and intervention. Food inflation, utility costs, transportation expenses, and housing-related costs have all risen materially as the yen weakened dramatically against the dollar over recent years.

The psychological impact inside Japan is enormous because the country spent decades living through deflationary conditions where prices remained relatively stable. Japanese consumers became accustomed to stagnant prices and low borrowing costs. Once inflation finally arrived, the shock to household budgets was immediate.

Rice prices alone surged more than 20% year-over-year at one stage while basic food staples, imported goods, fuel, and electricity all moved sharply higher. Japan imports enormous quantities of energy and raw materials, which means yen weakness translates directly into higher consumer prices across much of the economy.

This is exactly what I warned would eventually happen once central banks lose control of sovereign debt cycles.

Japan now carries government debt exceeding 260% of GDP, the highest among major industrial economies. For years the Bank of Japan artificially suppressed interest rates and monetized government debt through massive bond purchases. The BOJ effectively became trapped because allowing rates to normalize aggressively would destabilize the government’s own financing structure.

Now Japan faces the consequences of that trap.

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Exploiting Veterans To Advance An Unaffordable Housing Agenda

One of the side effects of our misguided monetary policy in recent decades is the spike in home ‘values’.  Housing is one of the most common inflation hedges this side of gold.  It gives investors a relatively safe place to park their resources, and put them to work. 

But it’s not just big institutional investors who act as landlords.  Almost 9 in 10 such homes are owned by those who can count their entire portfolio on one hand. 

So while federal lawmakers bemoan the ‘affordability’ crisis that they arguably created, state and local lawmakers are left to deal with it.  Too often though, they make things worse.

Last week the San Antonio City Council banned landlords who own five or more rental homes from declining to rent to veterans for the express reason that they use a federal housing voucher as partial payment. 

This is another example of government showing insufficient understanding, much less respect for, the supply side of the economic equation.  This tendency has even penetrated our cultural lexicon.

When my financial literacy class discussed “unearned” income recently, returns from rentals was included with investments in stocks, bonds and the like.  I felt the need to clarify the term. 

Speaking from experience, landlords are ‘on’ 24/7, dealing the tenant concerns, neighborhood/HoA issues, etc.  Plus, when tenants move out, the clock starts ticking. 

The condition of the property must be assessed, cleanup is needed, and repairs might be necessary.  Then there’s marketing, sifting through prospective new tenants, and signing an agreement.

If I got that knocked-out in 4-6 weeks, I was content.  Considering I had a full-time job, was raising four daughters, and teaching at night, I considered that timeframe a win.  That is not “unearned.” 

Insert government meddling, and you introduce a new, unique headache into the process. 

When I started renting, my realtor brought up the possibility of accepting section 8 vouchers.  “It’s a steady income,” he said.  I declined, but not because I’m uncharitable.  Once when a tenant’s husband left, I lowered her rent for the remainder of the lease.

I declined section 8 because I didn’t want to deal with potential bureaucratic hassle, like the inspection headaches laid out by a local landlord.  Sidewalk problems that are the “city’s responsibility.”  Repairs to floors devoid of any actual problems.

I just wanted to convert the house I used to live in into a rental that could eventually help pay for my daughters’ college.  Landlords like the author on the other hand, are trying to help others in the community of lesser means, people who could use a hand-up. 

Aren’t citizens like her the same ones whose virtues are extolled by politicians, aiding citizens that those pols claim to care for?  This issue presents one of the clearest contrasts between the private sector and the public sector.

On the one hand, you have people serving a market demand, in this case with altruistic intentions, and with their own resources. 

On the other hand, you have politicians who promise ‘affordable’ housing on the campaign trail, put citizens on the hook for a staggering amount of debt that their property taxes finance, and then kneecap those who are already doing the work. 

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