Zero Rss

Bessent Convenes G20 Finance Chiefs To Confront China's $1.2 Trillion Trade Surplus

Treasury Secretary Scott Bessent will meet with G20 finance ministers and central bank governors later today in Asheville, North Carolina, to discuss strategies for reviving economic growth, correcting global imbalances, reassessing trade relationships with China, and addressing the sovereign debt mess.

The agenda today will also include plans to deepen Iran's economic isolation, Reuters reported, citing a senior US Treasury official. The discussions signal a continuation of the financial-pressure campaign Bessent unveiled last week (read here).

"The world cannot have a China with a $1.2 trillion trade surplus," Bessent told the outlet on Sunday. "The rest of the world is going to have to examine their terms of trade with China."

Bessent accused Beijing of attempting to "export its way" out of an economic slowdown by flooding overseas markets with cheap Chinese goods that undermine foreign industrial bases. He said G20 members should pressure China to stimulate domestic consumption rather than dump goods in overseas markets.

A Treasury official told Reuters, "And so we're really focusing on this head-on in our G20 discussions to ensure that our economies compete on productivity, innovation, and investment, and not on just sort of policies that push excess production and excess capacity into global markets."

The comments from Bessent and the Treasury official echo similar comments from the administration, which is pressuring Beijing to change its export-heavy economic model because of the damage it inflicts on foreign industrial bases. Europe's auto manufacturing base has found that out the hard way with the flood of BYD EVs. 

US Trade Representative Jamieson Greer told Axios earlier this month, "We did that for 25 years with our best people, and everything got worse," referring to efforts to persuade China to shift toward greater consumption.

The Treasury's warning ahead of today's G20 meeting comes as the Trump administration prepares to impose a 7.5% tariff on Chinese goods over excess manufacturing capacity. The measure would restore Trump's second-term tariffs on China to roughly 20%.

Chinese Foreign Ministry spokesman Guo Jiakun told reporters earlier today that any differences with the US should be resolved through dialogue.

"China-US economic and trade ties are mutually beneficial in nature," Guo said at a regular briefing in Beijing. "China never seeks a trade surplus and opposes unilateral tariff measures in all forms."

Last Monday, Bessent announced "Operation Economic Outcast" against Iran, resulting in sanctions against nearly 60 Iran-linked entities, including many based in China. The objective is to break China's reliance on cheap crude imports from the Gulf region.

Politico recently reported that hawkish lawmakers on Capitol Hill have urged the Trump administration to target large Chinese banks to cut off Iran's economic lifeline.

The Trump administration appears to be recalibrating its pressure campaign against the world's second-largest economy carefully ahead of President Trump's summit with Chinese leader Xi Jinping next month. We suspect the Trump team is negotiating with China before the meeting, with any meaningful escalation in tariffs or sanctions more likely to follow after the meeting. 

Tyler Durden Mon, 08/31/2026 - 07:20

China's Record Ship Swarm Around Taiwan Sends Decoupling Alarm To Wall Street

One of our emerging investment themes (beyond nuclear, AI, and "Powering Up America") is the accelerating US-China decoupling, with a particular focus on companies with robust ex-China supply chains as Beijing increasingly weaponizes exports of strategic materials, including tungsten and germanium.

At the same time, the Trump administration's expanding sanctions campaign against Chinese entities linked to Iran is adding another friction point to an already deteriorating bilateral relationship. Looking toward 2027, one of the biggest geopolitical tail risks could be a Chinese blockade of Taiwan, which would severely disrupt global trade, semiconductor production, and critical supply chains.

The latest report from Taiwan's main English-language daily newspaper, the Taipei Times, shows that China deployed a record 244 coast guard, research, and other government vessels around the island.

The surge in Chinese vessels surrounding Taiwan, in what may be a mock blockade run, exceeded June's total of 55 vessels and averaged nearly 8 ships per day. Another 152 were detected during the first three weeks of August.

About 60% of the ships were Chinese coast guard ships, while research and other government vessels accounted for the rest. The figures exclude the People's Liberation Army Navy warships operating around Taiwan almost daily.

"When we say the situation is becoming increasingly severe, we mean that the number of their government vessels in the waters surrounding Taiwan has increased, and there was a marked increase in July," a senior Coast Guard Administration official told the local outlet.

The outlet said the Chinese vessels were likely involved in "oceanographic sampling and seabed survey operations," which could contribute to China's "anti-submarine warfare databases."

Ryan Martinson, an expert on China's maritime strategy at the US Naval War College, told the outlet that "any kind of data/knowledge is highly useful for Chinese naval forces, which will operate in these waters in the event of a conflict."

In the past couple of months, Martinson said he had observed a "very large increase" in the number of Chinese research ships operating around Taiwan, especially to the east of Taiwan proper.

"This is not a new 'play' in its 'playbook.' Rather, the novel aspect is that the scale of these operations around Taiwan is unprecedented," he said.

Overnight news:

Overnight, 3 out of 3 sorties consisting of PLA aircraft, 8 PLAN vessels, and 5 official ships crossed the median line and entered Taiwan’s northern and eastern ADIZ.

-Taiwan’s Ministry of National Defense pic.twitter.com/MTIYAH2Cob

— Open Source Intel (@Osint613) August 30, 2026

What is becoming evident is that China may not even have to fire a shot to isolate Taiwan. However, we do not expect a future quarantine or blockade before Chinese President Xi Jinping meets with President Trump in Washington on September 24.

After the Trump-Xi summit, however, China hawks on Capitol Hill could get their way, as a new Politico report says lawmakers are pressing the Treasury Department to target Chinese banks over Iran.

"Any country complicit in providing an economic lifeline to Iran's terrorist regime, including China, must be held accountable," said Rep. Darin LaHood (R-Ill.), a member of the House Select Committee on China.

LaHood noted that sanctions on Chinese banks that do business with Iran would send "a clear message to China and every other nation that enabling Tehran's malign actions will come at a cost."

Taken together, the surge in Chinese government vessels around Taiwan appears less like routine maritime activity and more like preparation for a future quarantine or blockade. 

For markets, any move toward a blockade would accelerate US-China decoupling and trigger severe disruptions across semiconductors, shipping, energy, and critical-material supply chains.

Decoupling Theme:

• China's Tungsten Chokehold Turns Almonty Into a Critical-Metal Lifeline
• "BlackDiamonds Are Forever": How To Profit From The China-Driven Germanium Squeeze

We're already mapping out critical material supply chains outside China to help readers be well prepared for what seems to be an incoming crisis. 

Notably, a blockade or quarantine could be imposed at virtually any time of year and is not weather-dependent. However, a full-scale Chinese invasion has two favorable windows:

• Spring: roughly March through May, with April often cited as the best month
• Autumn: roughly late September through November, with October often cited as the best month

Beijing does not need favorable invasion weather to begin isolating Taiwan. The record number of ships around Taiwan may only suggest that much more is to come.

This also comes as President Trump has declared the Strait of Hormuz a "New U.S. Territory," complicating matters for China because about 45% to 50% of the country's crude oil imports normally transit the critical waterway.

The US has also struck the "biggest oil deal in history" by taking a majority stake in Venezuela's oil industry, cutting into yet another source of cheap crude for China.

Taken together, China might feel more pressure than ever to blockade Taiwan, particularly given that the U.S. military is experiencing a "beyond critical" shortage of missile interceptors and other critical weapons. 

Tyler Durden Mon, 08/31/2026 - 06:55

Feds Arrest Foreign National In California On Voter Fraud Charges

Authored by Jack Phillips via The Epoch Times,

Federal officials on Aug. 28 arrested a foreign national living in California who they say illegally registered to vote and made false statements.

Election workers conduct ballot tabulation at the Los Angeles County Ballot Processing Center during California's state primary election in the City of Industry, Calif., on June 2, 2026. Patrick T. Fallon/AFP via Getty Images

Darwin Jonathan Rivera Flores, 30, a Honduran national and lawful permanent resident living in Southern California, is accused by prosecutors of making felony false claims of being an American citizen on voter forms. He faces two charges-making a false claim to U.S. citizenship and fraudulent voter registration.

Rivera, who entered the United States in 2002, was also accused of physically disrupting federal immigration operations during a protest at the federal office earlier this year in Camarillo, California. For that, he was given a misdemeanor citation before pleading guilty and receiving a one-year probation sentence, said the Department of Justice (DOJ) on Aug. 28.

According to the DOJ, Rivera sent a federal agent text messages between April and July, writing to the agent at one point: "Your not the good guy I can't wait until the mid terms you dont have qualified immunity then we can start and indict all you guys one bye one [sic]."

Following an investigation, Rivera allegedly was discovered to have registered to vote and proclaimed that he was a U.S. citizen in his 2025 application. Records that were obtained by the California secretary of state and the County of Los Angeles show that the "United States of America" was listed as his birthplace, according to the DOJ.

"There is no record of Rivera seeking or obtaining U.S. citizenship," said the DOJ in a news release about his arrest, adding that he hasn't voted in an U.S. election.

"Noncitizens who commit fraud so they can vote in American elections do so in violation of federal law and should expect to be prosecuted," said Assistant Attorney General Harmeet K. Dhillon of the DOJ's Civil Rights Division, in a statement. "Let this criminal complaint serve as a reminder that the Justice Department stands ready to enforce the laws Congress enacted to ensure only American citizens vote in federal elections."

First Assistant U.S. Attorney Bill Essayli said in a statement that "today's arrest is the first of many to come" in his district.

"Because states like California allow non-citizens to easily register to vote and receive a ballot by mail, there is no telling how many non-citizens are currently registered," he added in an X post.

Video footage that was included in the U.S. attorney's post showed law enforcement officials surrounding a man who was being handcuffed.

It's not clear if Rivera Flores has legal representation who can speak on his behalf. He was expected to make an initial court appearance in the United States District Court for the Central District of California in Los Angeles on Aug. 28.

It comes weeks after Essayli announced is office is pursuing several election fraud investigations alongside the FBI to carry out a "comprehensive audit of California's voter rolls" amid questions about the state's election systems.

"California's election system has serious structural vulnerabilities," Essayli wrote on X in June. "Universal vote-by-mail with no voter ID requirements creates conditions where fraud can go undetected and unpunished, eroding public confidence."

Tyler Durden Mon, 08/31/2026 - 06:30

Unitree's Blockbuster IPO Short Circuits

Shares of Unitree Robotics have nearly halved since the Chinese company's blockbuster IPO almost two weeks ago, as concerns about a humanoid robotics bubble continue to mount. Not even China's World Humanoid Robot Games or World Robot Conference generated enough enthusiasm among retail or institutional investors to rekindle upward momentum.

The warning signs were first visible from the opening bell in Shanghai. Unitree initially surged 629% when it began trading on Shanghai's Star Market, immediately transforming China's first publicly traded humanoid robot manufacturer into a real-time indicator of the industry.

Unitree's valuation remains detached from even the assumptions of its own underwriting team. Citic Securities analysts valued the company at between 50.6 billion yuan and 55.9 billion yuan six to 12 months after listing. Even after the stock was halved, it is still worth more than four times the top of that range.

Through July, Unitree said it had produced about 18,000 humanoids, while first-quarter revenue increased 68.5% from a year earlier to 423 million yuan. Its current market capitalization is roughly 147 times its annualized first-quarter revenue.

"Given that level of uncertainty, Unitree's high valuation is probably not justified," said Chen Dong, CIO for Asia at Bank J. Safra Sarasin, citing the stock's lofty price-to-earnings ratio and the difficulty of staying ahead in an "infant-level" industry where competition is intensifying.

Zhang Ying, an economist at the Economist Intelligence Unit, said, "Widespread adoption is currently hindered by financial constraints, such as high upfront and maintenance costs, and technical limitations, such as short battery life, which make it difficult for manufacturers to justify the investment."

Unitree founder Wang Xingxing told the World Robot Conference in Beijing shortly after the IPO that mass-market adoption of these robots would be achieved within the next decade. That timeline is broadly in line with the forecasts we have provided readers from multiple institutional desks.

Unitree Strikes Double Gold on Day One🥇🥇🏃
The First World Humanoid Robot Games
Unitree takes first place in all Day-One races
1500m track race — 6:34.40 (Unweighted)
(Unitree H1 humanoid robot — the same model featured in the Spring Festival Gala)
400m track race — 1:28.03… pic.twitter.com/V1BPoNQMMP

— Unitree (@UnitreeRobotics) August 15, 2025

More broadly, the Solactive China Humanoid Robotics Index (a yuan-denominated equity benchmark tracking Chinese companies involved in humanoid robotics, including robot manufacturers, AI systems, motion controls, precision actuators, and industrial automation) shows that the bubble has been deflating since peaking in mid-2025.

The next big test for Unitree and China's robotics industry is whether they can scale commercially before Tesla brings its humanoid robot to market, which JPMorgan analysts expect to occur in the second half of 2027 (read here).

Tyler Durden Mon, 08/31/2026 - 05:45

One Every Minute: These Numbers Are Unsustainable...

Authored by Steve Watson via Modernity News,

One migrant is now being granted settlement or citizenship in Britain every single minute, according to newly released Home Office figures.

In the three months to June 2026, 140,122 foreign nationals were given indefinite leave to remain or British citizenship - 1.07 people every 60 seconds. Across the full year, nearly 200,000 were handed indefinite leave to remain (ILR), a 16-year record and a 24 per cent jump on the year before. Another 245,520 were granted citizenship. Applications to become British hit an all-time high of 315,224.

This is the so called "Boriswave" arriving at the welfare office. The people waved in when salary and skills thresholds were slashed are now converting temporary visas into a permanent claim on housing, the NHS, benefits and, in time, the state pension.

'The numbers we see now are a huge increase on where they have been in the last few years.'

Research Director at the Centre for Migration Control reacts to Home Office data showing one migrant is being granted settlement or citizenship in Britain every minute. pic.twitter.com/k1PRUEofoH

— GB News (@GBNEWS) August 30, 2026

Robert Bates, research director at the Centre for Migration Control, put it without decoration: the numbers are unsustainable, and the damage will have to be undone.

ILR is not a courtesy stamp. It is the right to remain for life, to access the same welfare entitlements as a citizen, to apply for social housing, and, after a further year, to apply for a passport. Once that status is issued, reversing it is a political fight the Home Office has spent years refusing to have.

Bates told GB News the latest settlement totals are "a huge increase on where they have been in the last few years." In the year to June, he noted, Britain issued around 200,000 grants of settlement - a 243 per cent increase on 2017. Every one of those people, he said, can claim benefits, social housing and NHS care, "and they will all end up being pensioners drawing money from the state."

Full segment:

"Just one in five of those individuals are actually work main applicants," Bates said. "Over half are family members and dependants, and actually one in seven are refugees. So this idea that they're all going to be economic dynamite and aren't going to make use of Britain's welfare state is pie in the sky thinking."

Indian nationals led settlement grants, with Chinese grants quadrupling. The pipeline behind them is larger still. The Home Office's own earned-settlement consultation estimated that between 1.3 million and 2.2 million people will settle in the UK between 2026 and 2030, with a central forecast of 1.6 million and a peak year around 450,000 in 2028.

Health and care visa holders who arrived in the post-2021 surge become eligible in a cluster from 2027. That is not a trickle. It is a second population event, baked in before Shabana Mahmood's promised 10-year wait even takes effect.

Bates's warning was blunt. "If the Labour Government continues to drag its heels on its reforms to indefinite leave to remain, then we could be facing a catastrophe." Even "the Home Office's conservative estimates suggest a £10billion, or up to several hundred billion pounds." "This is something that simply a country's books cannot afford."

While the settlement machine stamps papers, the asylum machine prints invoices.

The asylum system cost the British taxpayer £4.3 billion in 2025/26. Official Home Office spending on asylum stood at £4.36 billion in that year. Centre for Migration Control toted up the last ten years at £25 billion spent accommodating, supporting and processing illegal arrivals and asylum claimants. Bates calculated that as £150 a year from every household, an eightfold rise on the bill a decade ago.

The asylum system cost the British taxpayer £4.3bn in 2025/26.

In the last decade a total of £25bn has been spent on accommodating, supporting and processing illegal migrants/ 'asylum seekers'.

This money should have been spent on British priorities. https://t.co/yXA9tSj3hf

— Centre for Migration Control (@migrationCtrl) August 28, 2026

Labour's answer is a press release about hotels. Hotel numbers have been cut. At the end of June there were 16,021 people in hotels, half the 32,041 of a year earlier and well below the 56,000 peak of 2023. Fewer than 160 hotels remain in use, against around 400 at the height of the Conservative mess. Thirteen more sites were handed back in August, with ministers advertising £51 million in savings from that batch and £224 million from this year's closures.

What they do not advertise is the relocation. 69,038 asylum seekers are now in houses, flats and bedsits - up 4 per cent in a year and double a decade ago. The North West, including Manchester, holds the largest share: 16,349 in dispersed private rentals, almost a quarter of the supported total. Bates wrote that some 73,000 people are now in non-hotel accommodation, up since the election. They are not going into detention. The detention estate has fewer than 2,500 beds. They are going into the street behind yours.

Andy Burnham's instruction to the country was that middle-class areas should "play their part" so the "poorest communities" do not take "the lion's share." In practice that means villages such as Piddington - population 350 - being lined up to host hundreds of unvetted arrivals. Hotels were a visible scandal. Houses in multiple occupation are a quieter one. The bill does not shrink because the sign on the door changes from "Holiday Inn" to "dispersal."

Mahmood's line is that control is being "restored." "A little over two years into office and the asylum backlog is down, the number of asylum seekers in hotels is falling, illegal working arrests are at record levels, and deportations and returns are up markedly," she said. "Small boats numbers are also now falling, but we are not complacent."

The small print tells a different story. 86,000 people claimed asylum in the year to June - down 21 per cent, but still far above the pre-2021 normal. 33,000 came on small boats. Detected illegal arrivals totalled 38,000. Returns of people with no right to be here rose to 41,000, including 6,000 foreign offenders. That sounds like movement until it is set against the stock. More than 210,000 people have crossed the Channel since 2018. Analysis of Home Office figures found 9,694 of those dinghy arrivals had been deported between 2018 and the first half of 2026. Fewer than 10,000 removed in eight years.

Bates's assessment of Labour's record on the only number that matters - removal - was savage. "Less than eight per cent of small boat migrants who have arrived under Labour have actually been removed, and this includes, of course, those who were sent to France before sneaking back into the country." He added, that "Since Labour took power, the Home Office has deported more Poles than it has individuals from the top five small boat nationalities combined."

The backlog at initial decision has been cut to around 40,000, the lowest since 2019. Appeals have exploded the other way. In March 2023 there were roughly 8,000 cases in the First-tier Immigration Tribunal. By March 2026 the figure was well over 87,000. Applications are being "waved through," Bates wrote, while the courts fill up with a second queue. Failed claimants stay. The boats keep coming because the people in northern France can see the same statistics. "Even if their asylum application is eventually rejected, the human rights framework of this country, along with the Refugee Convention, means they will never be removed."

Shadow home secretary Chris Philp accused ministers of shifting the problem, not ending it: "Labour are moving illegal immigrants out of hotels and into flats in your building, and now they are telling them to go and disappear without a trace." The Conservative offer is to leave the ECHR and "deport every illegal immigrant." Reform has gone further and talked about abolishing ILR as a category. Labour's offer is a longer wait, a £10,000 repayment levy for those who later earn, and another round of former barracks.

None of that touches the people already being stamped through at one a minute.

Settlement and the asylum bill are only half the ledger. The other half is what happens after arrival - and that is the file the government is in court to keep shut.

Ministers are spending public money to block the release of conviction data by nationality for England and Wales, the dataset the Centre for Migration Control requested under FOI and the Information Commissioner ordered out. Justice Secretary David Lammy sanctioned an appeal. Families of the dead and the raped asked him to drop it.

Alex Whyte, whose sister Rhiannon was stabbed 23 times with a screwdriver by Sudanese small-boat arrival Deng Chol Majek at the asylum hotel where she worked, told GB News she felt "sick, disgusted and completely let down." Anger, she said, "doesn't even cover what I feel, and it never will." Labour, she added, is "too afraid to admit" what open borders have done. "Open your eyes. You are so aware of what is happening, but you are too afraid to admit it."

The families' letter to the Justice Secretary stated "Imagine if someone you loved had been attacked, abused, or killed by a person who had entered Britain from abroad." Victims and the public "deserve transparency about the people who enter our country and the crimes they subsequently commit." Withholding the data "damages trust" and blocks "meaningful action."

Partial figures already out explain the panic. Foreign nationals accounted for 14.1 per cent of sexual offence convictions in 2025. They made up about 9 per cent of the population and 26.1 per cent of sexual-offence arrests - 3.5 times the British rate. On the railways, CMC's British Transport Police data showed foreigners were 79 per cent of theft arrests in 2025, 40 per cent of drug-offence arrests, 37 per cent of sexual-offence arrests and 36 per cent of violent-crime arrests. Across England and Wales, foreign nationals were arrested 172,889 times in the year to March 2025 - one every 183 seconds.

That is why the Ministry of Justice is in a tribunal instead of a press conference. They know a nationality breakdown, published in full, would not produce a seminar. It would produce a reckoning. They know it would trigger mass unrest. So they fight the Information Commissioner with the same Treasury that cannot find an extra nurse and can find £4.3 billion for a system Bates described as "perma-chaos."

Net migration has come off the 2023 peak of 944,000. The year to December 2025 was estimated at 171,000. Work visas are down. Study visas are down. Labour waves those charts as proof the fever has broken.

Settlement is the delayed charge on the same account. You can slow the inflow and still lock in the stock. You can close a hotel and open a house. You can cut the initial backlog and watch the appeals list triple. You can talk about "earned settlement" while stamping 140,000 grants in a single quarter.

Bates's line on the student route captures the wider fraud. Around three-quarters of a million visas are still being issued, with students the largest slice. "We are seeing an increasing trend now of the student visa route being increasingly used not just actually to come and study at a world-beating university, but as a back door into Britain and a long-term migration route."

He further noted that more than 60 per cent of people arriving on student visas were still here more than three years after their courses ended. "So there is huge, huge pressure that is being piled already on the British welfare state."

That pressure is not an accident of weather in the Channel. It is a policy choice repeated by two governments: admit first, process later, settle always, remove almost never, and treat the public's demand for numbers by nationality as a public-order risk rather than a democratic right.

Mahmood says fairness is being restored. Burnham says nicer postcodes must take their share. The Home Office says the hotels are emptying. The stopwatch says otherwise. One grant a minute. Two hundred thousand settlements in a year. A quarter of a million new citizens. A record citizenship queue.

A forecast of up to 2.2 million more settlers before the decade is out. Four billion and more on asylum this year, twenty-five billion across ten. Nine thousand-odd Channel arrivals removed from more than two hundred thousand who came.

These numbers are unsustainable. The people running the system know it. That is why the crime file stays in the vault, why the hotels become HMOs, and why settlement is being issued faster than the country can absorb, house, police or afford it.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Mon, 08/31/2026 - 05:00

Google Retreats On 'Parasite SEO' Crackdown In Europe To Head Off EU Antitrust Fine

Alphabet's Google said on Friday that it has changed how it enforces its spam rules in Europe, following concerns from EU regulators that the policy could unfairly hurt news publishers and other websites that carry content from commercial partners.

The Google logo outside the company's offices in London on June 24, 2025. Carlos Jasso/Reuters

The dispute centers on Google's policy against "site reputation abuse," a practice often called "parasite SEO." It occurs when a third party publishes content on a well-established website primarily to benefit from that site's strong reputation in Google Search and gain higher rankings than the content might receive on its own.

Google introduced the policy to target arrangements in which outside companies use trusted websites mainly as vehicles for boosting their search visibility.

European regulators, however, raised concerns that Google's enforcement was too broad. They found that the policy was also reducing the search rankings of legitimate publishers simply because their websites contained material produced with, or supplied by, commercial partners.

Google said that from August 30, manual actions taken under the policy will no longer apply to users in the European Economic Area - the 27 EU states plus Iceland, Norway, and Liechtenstein. The policy remains unchanged everywhere else. The policy does not apply to ZeroHedge, as Google explicitly distinguishes editorial syndication from “site reputation abuse.” This is different from "parasite SEO" where an outside company places unrelated content on a trusted domain in order to exploit that site's Google ranking strength. And - since Google search algos still hate us with the white hot passion of 1,000 suns, the 'ranking strength' aspect would be moot anyway. 

Google has now adjusted its approach in Europe in an effort to address those concerns and avoid a potential antitrust penalty. DMA breaches carry fines of up to 10% of global turnover.

The two sides are describing the same climbdown differently. "We welcome the repeal of this policy, which unfairly penalised publishers and other business users of Google Search," Commission spokesman Thomas Regnier said, adding that "thanks to the DMA, Google Search will no longer demote press publications solely for hosting third-party content." Google, for its part, called it an adjustment to "our enforcement approach" - and warned that "an overbroad application of the DMA could prevent us from addressing real threats to the integrity of our search results."

Tyler Durden Mon, 08/31/2026 - 04:15

Pentagon Strikes Iranian Island Target, In First US Military Action In Weeks

Update(1615ET): Things have been quiet for many days and weeks on the military front when it comes to the Iran war, but on Sunday there are some emerging reports of new but limited US strikes. According to the latest late Sunday from Axios:

Senior American official: Earlier today, American forces attacked two Iranian launchers on Larzac Island. Revolutionary Guard forces were observed preparing to launch rockets carrying sea mines toward the Strait of Hormuz.

So despite the White House signaling a move away from military action and toward the economic warfare front, it's also clear that more sporadic tit-for-tat blows could follow. But Trump has lately made clear that military options are still on the table, and strikes will be utilized as needed.

CENTCOM says that they attacked two Iranian missile launchers on Larak island. This is the first time that they have struck an Iranian target in weeks.

— barry with the NED (@bonzerbarry) August 30, 2026

*  *  *

Propaganda has always been a problem when it comes to the fog of war.  The internet and social media add a new dimension to the confusion as conflicting information is allowed to spread like wildfire using civilians and media outlets as tools for propagation.

The lack of confirmation is exploited, often by both sides, and the truth becomes lost in the mire.  That said, the facts on the ground will eventually see the light regardless of spin.  In the case of the war in Iran, the facts on the ground do not bode well for the Islamic Regime. 

Iranian leaders now openly admit that the US blockade has crippled around 35% of the nation's exports and imports while domestic prices continue to skyrocket by 60% or more.  This, however, is not the most immediate problem for the regime.  

It would appear that initial reports of gasoline shortages across Iran did not convey the true scope of the crisis.  In the past week alone more evidence from within Iran has hit social media, showing mass lines at gas stations and panic among citizens as rationing is introduced. 

Energy officials have acknowledged a gasoline deficit of roughly 15 million liters every day, warning that strategic reserves have reached “dark red” territory.

Iran has ten main operating oil refineries plus the large Persian Gulf Star condensate refinery, which is the country’s biggest gasoline producer, meaning, they do have the capability to produce their own domestic gasoline supply.  So, why the shortages? 

 

Some refined products are shipped into Iran from foreign sources and the US blockade is stifling that supply.  However, there is also the possibility that the blockade has forced Iran to shut down a number of oil wells due to lack of storage.  Depending on the type of well, a shutdown can cause extensive damage and prevent new production for years to come.  It's likely that Iran's crisis is rooted in an oil supply problem as much as a refining problem. 

The Iranians have recently called for a return to the standards set by the MOU agreement with the US, and they have also accused the US of committing "war crimes", arguing that the blockade is causing a humanitarian crisis.

The recent admissions of economic damage, the fuel shortages and the assertions of humanitarian crisis are a sharp tone shift from Iran's posture only a month ago.  Couple this with the 400% surge in ships traversing the Strait of Hormuz and it would seem that Iran is losing the war outright.  If the blockade continues for another few months the financial damage could be irreversible and repairing resource flows could take years.    

It's not enough for the regime to survive if the economy they oversee dies.  

Tyler Durden Mon, 08/31/2026 - 04:15

US Debt Matters, But The Euro Area May Create The Next Crisis

Authored by Daniel Lacalle via dlacalle.com,

The US $40 trillion debt has dominated global headlines. However, although the US fiscal challenges are relevant, we must remember an important lesson. Fiscal policy is not about who wins but who loses first.

According to official 2026 estimates, the present value of U.S. Social Security and Medicare financing gaps is about $95 trillion over 75 years, roughly 5% of the cumulative present value of projected GDP over that period, on top of federal debt held by the public, which is already projected at 101% of annual GDP in 2026.

However, the euro area's hidden fiscal burden is at least as large as its recorded debt. Official European Commission estimates put net accrued public-pension liabilities at around 150% of GDP, after future contributions are considered, while gross pension promises amount to roughly 371% of GDP. Importantly, this excludes much of the future pressure from health and long-term care spending.

What does this all mean? The next debt crisis may not come from the U.S. but from the eurozone.

First, the U.S. dollar remains the world reserve currency and treasuries are the most important asset for central banks globally, even with the recent gold purchases and rebalancing.

Second, the political landscape in most large European Union economies is one of fiscal denial. France's sovereign bond yields are now higher than Italy's. No eurozone government is willing to cut spending or limit future liabilities. Unfinanced committed liabilities (debt already assumed but not issued) exceed 300% of GDP in key euro area nations.

Third, euro area sovereign assets have generated negative real economic returns since 2021, leading to a declining appetite from global investors. U.S. debt is a challenge, but euro area debt is significantly more problematic because the reported debt is only the "excessive deficit protocol" figure, not the total liabilities of public administrations.

Euro-area Maastricht debt captures only consolidated currency and deposits, loans, and debt securities at face value. It is therefore materially smaller than the full balance-sheet liabilities of public administration and narrower still than the euro area's implicit pension and public sector-related commitments.

The key lesson is that investors should be rightly concerned about issued debt, but they should be even more scared of expanding government size added to unfunded liabilities in a region crippled by economic stagnation.

All of this tells us that the recent global bond sell-off is not a temporary issue. Markets are telling governments that no central bank is going to hide their irresponsibility anymore.

Developed economies' governments have pushed all the limits of debt-funded policies and surpassed their fiscal, economic, and inflationary limits.

• Fiscal limit: More spending creates persistent deficits, and tax hikes never solve the issue. Government spending is a burden on taxpayers and the economy.

• Economic limit: More government spending and bloating GDP with debt-fueled public sector outlays only weakens the economy and productive investment, leading to stagnation.

• Inflationary limit: Government spending leads to persistent inflation and markets discount higher-for-longer consumer prices, eroding the economy while the combination of higher taxes and consumer prices demolishes the middle class.

The United States creates headlines because Treasury yields remain the global benchmark for the price of money and collateral, but the euro area may generate the next big sovereign shock because its member states borrow in a currency they do not control and governments refuse to reduce spending, resorting constantly to tax hikes and regulatory burdens that make the economy weaker.

As of 21 August 2026, the U.S. 30-year Treasury yield traded at 5.27% and the 10-year Treasury yield around 4.73% after a week of sharp moves that briefly pushed long-dated yields to their highest levels since 2007. However, if the world saw the U.S. as a risk and other nations as safe havens, German bond yields would be falling, as happened in other periods of risk aversion. That is not the case. Germany's 10-year Bund has soared to 3.26%, the UK 10-year yield is at a record 5.1%, and Japan's 10-year yield is near 2.89%, confirming that the repricing is global rather than U.S.-centric.

This is what matters for investors and governments. Long-term sovereign bonds are no longer the unquestioned safe assets. That is why gold is soaring too.

Long-term bonds are being repriced for inflation risk, fiscal deterioration, high debt supply, and the inability of central banks to disguise fiscal irresponsibility.

When the U.S. 10-year and 30-year yields rise, financing conditions tighten globally through mortgages, corporate credit, bank funding, and emerging-market borrowing costs. In this environment, the market is not moving to euro area debt for protection; it is moving away from it.

The United States retains the world reserve currency and has the deepest and most liquid sovereign bond market in the world. This does not eliminate the debt problem, but it changes its transmission. Furthermore, at least the United States government is keeping federal spending under control, although not cutting it as fast as desired. That is not the case in the euro area, where none of the large economies seem to have any intention to control spending; rather, the opposite. Thus, this adds to the pressure of unfunded liabilities.

The euro is the only global currency that faces re-denomination risk, and the fiscal policy of the euro area has opted for interventionism and government control rather than free markets. The ECB centralizes monetary policy in the euro area, yet governments spend and borrow as if they possess unlimited monetary credibility. Their only fiscal tool is higher taxes. This creates the risk that what begins as a liquidity event quickly becomes a solvency concern, especially when markets doubt whether Brussels, Frankfurt, and national governments will respond with a coherent strategy. We saw it in 2011.

Now, the euro area has added more risks. The "savings and banking union" and central bank digital currency (CBDC) projects do not provide relief for global investors; rather, they raise concerns that the euro area may have opted for interventionism and government control by imposing the use of the currency instead of enhancing its appeal as a global hub for free markets and capital attraction.

The savings and banking union project will not avoid a debt crisis in the euro area. With governments that do not accept spending cuts, the digital currency may only lead to surveillance, control, and, ultimately, higher inflation.

This is why the next crisis may come from Europe, not despite the U.S. debt problem but because the euro area lacks institutional flexibility, discipline, and an open market approach. Thus, if the euro area accelerates its interventionist plans to force investment and promote the use of the currency through repression, the problem may become more significant. If monetary policy cannot be a limit to fiscal irresponsibility and governments refuse to reduce their spending, the currency and the financial system are at risk. Resolving the United States' debt problem requires implementing spending cuts and fostering higher productive growth. Unfortunately, euro area governments are not generating economic growth and are instead increasing government intervention. As such, when confidence in a large member state disappears, the consequences are systemic for the entire monetary union.

The world is seeing the German spending experiment fail in real time, and that is why German bonds are falling as fast as others, instead of strengthening.

Recent data from France and Germany show that the problem extends beyond a small country within the union. The core of the euro area is weakening while the peripheral countries are either disguising stagnation with immigration and political spending (Spain) or are still in post-crisis mode.

France's 10-year yield has soared to levels not seen since 2008. German bonds, once viewed as a safe haven, weakened alongside other euro area issuers. The ECB anti-fragmentation tool disguised imbalances for a while and now has transferred the risk to all sovereign issuers.

France matters because it is the core euro-area economy alongside Germany. French public debt is expected to be about 118% of GDP in 2026 and could rise toward 130% of GDP by 2030. Markets now understand that no new prime minister is going to cut spending. They will repeat the same failed approach of the past three decades: raising taxes and postponing necessary spending cuts.

As markets begin to reprice France as a fiscal weak link rather than a core strength, the euro area's internal problems become impossible to ignore. This European project has made rising government spending and a large public sector the focus of policy, treating the private sector as a cash machine for an ever-expanding bureaucracy.

The real problem is not simply the absolute level of debt. The combination of high borrowing, big government, high taxes, and a lack of real growth capacity leads to rising interest costs, and it is now evident that central banks can no longer disguise this problem.

When U.S. borrowing costs rise, global financial conditions tighten. It is a significant problem that requires spending cuts, government shutdowns, and higher private sector growth. When euro area borrowing costs soar, they show evidence of the unsustainability of a European project based on expanding the size of government at any cost. When governments reject short-term pain, they pass it to citizens.

The solution is not more government, monetization, intervention, or more taxes on productive capital. The answer is credible spending cuts, lower structural deficits, stronger incentives for private investment, and reforms that eliminate regulatory burdens and lift productivity as well as economic growth. If nothing changes, U.S. debt will continue to tighten global financial conditions, but the euro area may still be the place where the next sovereign crisis erupts.

Tyler Durden Mon, 08/31/2026 - 03:30

Canadian Leftists Want To Use Great Lakes Seaway As A Weapon Against The US

If anyone had any doubt that Canada is a predominantly far-left country, one only need look at polls in support of Market Carney's trade war rhetoric against the US.  Over 70% of the Canadian population is currently in support of Carney's decision to dismiss trade negotiations with the Trump Administration. 

Much of the rhetoric online repeats leftist talking points, including the claim that America is now a "fascist" state and cutting a deal with Trump would be the same as "cutting a deal with the Third Reich".      

Keep in mind, Carney was so close to a deal with the US that Trump had paused new tariffs and Carney asked premiers to put American liquor back on provincial shelves.  The was two days before he abruptly backed out and abandoned any future talks.  Why?  Theories abound. 

The most prominent theory being that Carney has been talking with US Democrats and was convinced to avoid cutting a deal with Trump before the midterm elections in November.  Any deal would be seen as a win for Trump that might boost Republicans. 

Other theories cite potential foreign influence from the EU.  Carney was on vacation in Italy just before the negotiations were to finalize and he engaged in a flurry of meetings and calls with European officials just after his trade war decision.  Leftists governments in Europe and communists in China have much to gain by continued tensions between Canada and the US. 

It should be noted that the full text of the deal still has not been released to the Canadian public for review.  Opposition Leader Pierre Poilievre called on the Prime Minister to release details of the failed trade deal with the United States and reconvene parliament. 

“We need to see the deal that we rejected. Canadians have not seen it,” said Poilievre.       

Whatever may have happened to convince Carney to walk away from the best tariff deal that was offered to any country, the aftermath has stirred plenty of Canadian citizens into a hostile frenzy.  One is reminded of Scrappy Doo, yipping and yapping and nipping at the heals of a much larger opponent in the delusion that this will accomplish something. 

In the meantime, 33% of Canada's GDP relies on exports and 78% of those exports rely on US markets.  Furthermore, there are no practical alternatives.  Without a near-term deal with the US, Canada faces severe recession, or worse.  Canadian officials and the public have not yet come to accept this reality.  They have been busy conjuring ways to "hurt" the US, but these tactics are based on an ignorance of the bigger picture. 

For example, Canadian officials recommended shutting off electric supplies to the US eastern seaboard.  However, Canada provides less than 1% of all US electricity.  Meaning, they have no leverage. 

They also called for a shutdown of oil exports to the US, but the US is a net exporter of oil and the largest oil producer in the world.  Going without Canadian oil would cause prices to rise, but it would not do the kind of damage they are hoping for.  Trump's latest landmark deal with Venezuela will mitigate any potential supply disruptions from Canada.    

Plus, 70% of Canadian oil traveling from Alberta to Ontario uses pipelines that cross into US territory (the Enbridge Mainline).  It would be a disaster for them to escalate. 

This brings us to the newest ingenious idea from Canadian leftists, which is to shut down US access to the St. Lawrence Seaway from the Great Lakes to the Atlantic Ocean.  Or, increase tolls to crippling levels at the various Canadian controlled locks. 

Canada is now considering charging a toll for US ships travelling the Straight Of Ontario. pic.twitter.com/jNjLYVaUsA

— Dean Blundell🇨🇦 (@ItsDeanBlundell) August 28, 2026

There is a problem with this plan, though.  First, Canada already charges tolls at these locks and has done so for decades.  

Every ship entering the Great Lakes goes through the Welland Canal, located fully in Canada. There’s no other option. $26.3 billion of US trade depends on it. Would be a shame if tolls skyrocketed or it was transit-taxed heavily…

Thank you for your attention to this matter. pic.twitter.com/CmAfXiToOR

— Stephano🍁Barberis (@HelloStephano) August 28, 2026

On the other hand, the US also controls at least two locks on the same waterway which Canadian ships use regularly.  The US government waived collection of tolls on the seaway back in 1986.  Meaning Canada is the only country that collects tolls, but this could be easily changed.  If Canada tried to charge higher tolls or block access, the US could to do the same, and the US has the actual military resources to enforce such measures.  

By extension, if Canada tried to initiate a wider resource war against the US, their oil pipelines going through the US could be cut off.  Once again, Canada simply has no economic leverage.  The sooner they accept this, the sooner they can avoid a painful economic decline.     

Tyler Durden Mon, 08/31/2026 - 02:45

No Whites Allowed, Britain's MI5 Tells Applicants

Authored by Steve Watson via Modernity News,

Britain's domestic intelligence service is once again telling White university students they are not wanted.

For the 2027 Summer Intelligence Internship, MI5 has confined applications to people from a "black, Asian, mixed heritage or ethnic minority background" who also come from a "socially or economically disadvantaged background."

White British candidates - including those from the poorest homes - cannot even submit an application. The agency calls this a response to "underrepresentation." Critics call it what it is: racial exclusion.

The rule sits on the official careers page in plain English. Final and penultimate-year students may apply for the 2026/27 academic year only if they tick the approved ethnic boxes.

MI5's own wording is blunt: "We're confining the applications for this internship to those within this demographic due to a current underrepresentation in our workforce."

This is not a fringe outreach day. The placement is billed as a serious introduction to national security work. Interns are promised "unique insight" into operations and "meaningful contributions to real projects," not a seat on the sidelines.

The MI5 stint is expected to run from Monday 28 June to Friday 20 August 2027 across sites in Central and West London. Successful candidates are paid £4,849, with accommodation covered if they cannot reasonably commute. GCHQ is running a parallel scheme on similar racial terms.

MI5 accused of 'flagrant racism' as white candidates told not to bother applying for summer internshiphttps://t.co/wqPUXiNKrn

— GB News (@GBNEWS) August 27, 2026

Applicants must be British nationals, normally resident in the UK for seven of the last ten years, and able to survive the usual vetting. They still face a competitive sift. The racial gate comes first.

The listed groups include Asian or Asian British, Black or Black British, mixed-heritage combinations, "other ethnic minority," and a narrow "White other" category covering Romany Gypsy, Scottish Travellers or Irish Travellers. White British is not on the list.

The socio-economic test is equally specific. At age 14 the main household earner must have been in technical, craft, routine or semi-routine work, or unemployed and seeking work - or the applicant must have been eligible for free school meals. A White student who meets that poverty test is still barred. An ethnic-minority student who meets it is invited in.

What happened to getting a job on merit?

Shadow home secretary Chris Philp called it "flagrant racism from MI5 & GCHQ." He wrote: "White applicants for summer 2027 internships - including from disadvantaged backgrounds - can't apply. The scheme must be scrapped. Applications should be merit-based and colour blind. Working class white boys are among the most disadvantaged - yet are ignored."

Reform UK leader Nigel Farage put the charge in institutional terms. "Yet again, taxpayer funds are being used to fuel a culture of anti-white prejudice across the public sector. It's racism. It's wrong. Only Reform will bring meritocracy back to our institutions. We'll ensure that nobody is discriminated against based on the colour of their skin."

This is not a one-off. The Summer Intelligence Internship has been running across MI5, MI6 and GCHQ since 2023. Every cycle has produced the same argument and the same official shrug. The agencies say the programme exists to "increase diversity within our organisations." Ministers treat the Equality Act 2010 as cover.

In July, Conservative MP Ben Obese-Jecty asked the Cabinet Office why White candidates were ineligible. Dan Jarvis, minister of state for security, answered that the internships are "designed to provide insight" to people "from demographics and backgrounds under-represented within UKIC," and that "this is a lawful measure (as set out in the Equality Act 2010) used to encourage people from under-represented demographics to consider national security careers."

He added that anyone later applying for a proper job would face "fair and open competition, with selection based on merit."

That last line is doing a lot of work. The paid summer placement is itself the pipeline: mentors, projects, a foot in the door, a chance to apply afterwards with the agency already knowing your name. Excluding the country's majority from that pipeline is not a neutral "encouragement." It is a racial filter on the first rung.

The Equality and Human Rights Commission's own guidance on positive action is narrower than the agencies pretend. Employers may encourage under-represented groups to apply. The Commission says that if they do so, "the advert should clearly state the employer is seeking applications from everyone but wishes to encourage applications from people with a particular protected characteristic."

Confining applications - telling one racial group not to bother - is a different creature. "Positive action" was sold as outreach. This is a closed shop.

Claire Coutinho has been making that point for years. When the scheme returned in 2025 she said: "Deciding who can do a summer internship scheme based on the colour of their skin is bad enough. To bar patriotic white Britons who want to serve their country, but allow white Irish people, is utterly mad."

She added: "To make matters worse, the security services will also shut you out if you're a child of a nurse, a cabbie or your dad ran a corner shop, while the child of an £80,000-a-year train driver is eligible. This is state-sponsored discrimination. We should just choose the best people for the job."

In the Commons she asked the obvious question: "What message does it send to our young people when they are told there are some job opportunities they cannot apply to solely based on the colour of their skin?" Equality, she said, "must mean equality of opportunity, not putting some people in society on a pedestal above others."

Jacob Rees-Mogg charged that "MI5 is institutionally, publicly racist against white people." He noted that the policy "discriminates against 92.6% of my constituents in Somerset."

Toby Young of the Free Speech Union gave the thought experiment that every defender of these schemes refuses to answer. "Imagine if it was the other way around, and the intelligence services were saying only white people can apply for our summer internships. There would be absolute uproar."

There would. If the advert had said "no Blacks," the building would be surrounded by cameras before lunch. Because it says, in effect, no ordinary White British applicants, the official class calls it inclusion.

The security services are not improvising. They are copying a model that British policing has already normalised.

West Yorkshire Police, one of the country's largest forces, has run a two-track application system for police constable roles. Black, Asian and minority ethnic candidates have been able to apply year-round. White applicants from British, Irish and Eastern European backgrounds have been told to wait for specific recruitment windows.

An internal whistleblower told The Telegraph that minority applicants were treated as "gold" and White candidates as "bronze." The whistleblower said: "The process restricts progression opportunities for White British candidates, while individuals from other backgrounds are swiftly advanced through recruitment stages."

Ethnic minority candidates, the same source said, were regularly "shortlisted, sifted, assessed and invited to an interview before White candidates can even apply."

The force's own website made the hierarchy official: "We are currently accepting applications for the two police constable entry programmes (uniform and detective) from people from our under-represented groups... If you are not from one of these groups, please keep checking this page for future recruitment opportunities."

West Yorkshire dressed this up as Positive Action under the Equality Act. A spokesman said ethnic minority representation among officers was around 9 percent against a local minority population of 23 percent, and that early applications were merely "held on file" until a window opened for everyone.

The whistleblower's account was that the holding file was a fiction: the favoured group moved while everyone else waited outside.

At Thames Valley Police the ideology went further than the application form. Officers were put through mandatory "equity training" on "white privilege," "micro-aggressions" and the difference between being "non-racist versus anti-racist."

This followed an employment tribunal finding that the force had positively discriminated against White officers by appointing an Asian detective inspector without considering White candidates who had served 19 to 26 years.

Former assistant chief constable Kerrin Wilson, who led an independent review, recorded "strong feelings of frustration." "As white males they felt disadvantaged and ... they had the perception that unfairness was allowed for minority groups but not for majority populations," she wrote.

The review warned that the training "can often be seen as demonising white people and therefore building barriers to the learning." White officers' response was "very strong, at times bordering on aggressive." They felt "they have no support within the force." There was "a tangible feeling of being overlooked."

Minority staff were not grateful either. Some said they would not seek promotion because "even if they did succeed in securing promotions their efforts would not be accepted by some as genuine." Some described the force as a "hostile environment."

Former government adviser and ex-officer Rory Geoghegan said officers "deserve far better from their leaders than to be crudely categorised by skin colour and subjected to reductive, divisive ideologies." The review, he argued, failed to confront "the unthinking acceptance of critical race theory - a deeply political framework that has no place in an impartial police service."

That is the culture now being imported into the agencies that handle terrorism, hostile states and domestic subversion. First the police. Then the Bar. Now MI5.

The legal profession built the same wall and called it progress. A paid internship linked to the Bar Council and the 10,000 Interns Foundation offered London Living Wage work experience while restricting eligibility to specified ethnic minority backgrounds. White applicants were excluded outright.

Sophie Corcoran applied anyway. She is now suing. In her own account of the case she wrote that the central issue is simple: "should organisations operating in Britain be permitted to deny opportunities to people purely because they are white? I believe the answer must be no."

She draws the distinction the agencies keep blurring. Encouraging under-represented people to apply is one thing. "Outright excluding others from opportunities on racial grounds" is another.

She further noted, "The Equality Act was never intended to create a hierarchy of races where some groups are protected from discrimination while others are expected to tolerate it, but this is exactly what these schemes do."

The schemes also flatten every other kind of hardship into a racial cartoon. "A wealthy privately educated applicant from an affluent background can qualify for some race-based schemes, while a working-class white applicant from a struggling town cannot."

White working-class pupils have been the lowest-attaining major ethnic group at GCSE level for more than a decade. Corcoran herself grew up with epilepsy, hearing difficulties and dyslexia and attended a failing state school. None of that counted. "Just because someone is black does not automatically mean he or she is disadvantaged. Equally, just because someone is white does not mean he or she is not disadvantaged."

Rupert Lowe called the Bar scheme "vile, anti-white racism." Corcoran urged "everyone knows that if the races were reversed, such policies would never be considered acceptable. Equality cannot operate on a double standard."

The intelligence agencies' own socio-economic test makes the double standard sharper. They admit class exists. They even try to measure it by the parent's job when the applicant was 14, and by free school meals. Then they add a racial veto.

National Audit Office internships have run on a similar exclusionary logic, limiting places by sex, "black heritage" or lower socio-economic status and shutting middle-class White men out of a taxpayer-funded programme.

Transport for London has run placements reserved for BAME, disabled or disadvantaged candidates. The pattern is no longer a few over-eager HR departments. It is how the British public sector now allocates opportunity.

Intelligence work is not a diversity seminar. It is judgment, languages, technical skill, nerve and loyalty. The agencies' public line is that "a diverse organisation is vital to ensure diverse insights." That sentence has become a mantra. It is used to justify shutting the country's largest ethnic group out of the training ground.

A security service that filters the next generation by race is telling the public something larger than a recruitment statistic. It is saying the majority population is surplus to the pipeline. It is saying competence will be balanced against a demographic target. It is saying the Equality Act now functions as a permission slip for the one form of racial discrimination institutions are eager to practise.

The other way around remains the test. A Home Office page that read "no Blacks" would end careers by nightfall. A police force that labelled White applicants "gold" and everyone else "bronze" would be in special measures. A Bar scheme that barred African and Asian students would be treated as a national scandal. MI5's page does the reverse, year after year, with ministerial cover and a press office that talks about underrepresentation.

Merit is not a right-wing hobby. It is the only honest way to staff an intelligence service. Britain's problem is not that too many White working-class students are bursting through the gates of Thames House. It is that the people who run the gates have decided some citizens are the wrong colour to knock.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Mon, 08/31/2026 - 02:00

The Telephone, Political Entrepreneurship, And Theodore M. Vail

Authored by Joshua Mawhorter via Mises Institute,

Originally, this article was intended to be an exploration as to how-after a period of initial patent monopoly and an all-too-brief episode of freer market competition-cronyism reestablished a telephone monopoly that would last for decades. While such an article is worthwhile and hopefully forthcoming, I was struck by the influence of one man's leadership strategy as president of AT&T/the Bell System and how open he was about limiting competition in his industry, inviting regulation, and seeking a "middle ground" between a pure state-owned monopoly and true free market competition.

That man was Theodore M. Vail. This article largely presents Vail in his own words and seeks to demonstrate how transparent he was about inviting state intervention to move his industry toward monopoly.

By way of brief introduction, Vail joined the Bell enterprise in 1878 as general manager, helping build the young telephone industry. After leaving in 1887, he returned in 1907 as president of AT&T, where he pursued his vision of "One Policy, One System, Universal Service" and moved the Bell System toward consolidation and government regulation. He provides a quintessential illustration of political entrepreneurship and cronyism in the telephone industry.

Historian Burton Fulsom's The Myth of the Robber Barons: A New Look at the Rise of Big Business in America makes the critical distinction between "political entrepreneurs" and "market entrepreneurs" (p. 1):

Those who tried to succeed in [business] through federal aid, pools, vote buying, or stock speculation we will classify as political entrepreneurs. Those who tried to succeed in [business] primarily by creating and marketing a superior product at a low cost we will classify as market entrepreneurs. (emphasis added)

Along similar lines, Patrick Newman defines cronyism in the following way, "government intervention that benefits special interests at the expense of the public interest." This distinction is critical because it qualitatively differentiates those who succeed through the production-and-exchange mechanism and those who use the political means and cronyism to gain wealth at the expense of the public.

Theodore N. Vail: The Beginning of the End of Competition (1907-1913)

"Effective, aggressive competition, and regulation and control are inconsistent with each other, and cannot be had at the same time." - Theodore M. Vail, AT&T's 1910 Annual Report

On April 30, 1907, Vail rejoined AT&T as president, "marking the beginning of the end of telephone competition." According to Adam D. Thierer in "Unnatural Monopoly: Critical Moments In the Development of The Bell System Monopoly," "His return to the firm changed its fundamental focus from competition to consolidation."

Rather than market competition, Vail's most important goals as president of AT&T were "the elimination of competitors, the befriending of policymakers and regulators, and the expansion of telephone service to the general public." Vail pushed for "One Policy, One System, Universal Service." Of course, since this could not be achieved on a free market, or even on a hampered market that allowed a good degree of genuine competition, it had to be achieved by further state intervention.

As the above quote from Vail recognized, market competition and "regulation and control are inconsistent with each other, and cannot be had at the same time." Obviously, Vail favored the latter. He went on to state further, "Control or regulation. . .means everything which is the opposite of and inconsistent with effective competition." And, in 1917-after several successful efforts to limit competition through state intervention-Vail declared,

These two [competition and control/regulation] are absolutely inconsistent. If the public is getting the fullest advantage of control and regulation, no competition except destructive competition can exist. . . .

Under proper control and regulation, complete, соextensive competition could not exist.

What follows below are some selected quotes from Vail, in his own words and in context, that express his desire for government intervention and regulation into the telephone industry that would benefit AT&T. The interested reader should note Vail's transparency.

Regarding his goal of a universal telephone system and in the context of some competition, Vail wrote in AT&T's 1910 Annual Report,

It is not believed that this [a universal telephone system] can be accomplished by separately controlled or distinct systems nor that there can be competition in the accepted sense of competition.

It is believed that all this can be accomplished to the reasonable satisfaction of the public with its acquiescence, under such control and regulation as will afford the public much better service at less cost than any competition or government-owned monopoly could permanently afford and at the same time be self-sustaining.

Vail's belief, as stated above, was that there should be neither pure market competition nor full state ownership but the soothing and seductive "middle" solution-regulated capitalism or a "mixed market." Of course, this sounds reasonable to many people because they misunderstand or forget the nature of the state and also misunderstand the relationship between the state and big business. The key insight to understand is that state intervention-usually in the name of the "public good"-often purposely benefits big business at the expense of the consuming public.

Vail also openly expressed his desire for a monopoly under one system. He believed there would be two acceptable methods by which this could be accomplished:

This process of combination will continue until all telephone exchanges and lines will be merged either into one company owning and operating the whole system, or until a number of companies. . .[are] closely associated under the control of one central organization exercising all the functions of centralized general administration. But whatever may be the form of the operating organization, there is bound to be for legal purposes and the holding of franchises, some sort of subordinate state organization which will bring the business and property in each locality under the jurisdiction of the state in which it is situated and operated.

Vail opposed full nationalization, instead preferring cronyism. Over time, Vail's wishes were largely granted by the state as AT&T entrenched a monopoly through politics. In 1910, Vail directly argued that regulated companies should be protected from competition. He wrote,

If there is to be state control and regulation, there should also be state protection-protection to a corporation striving to serve the whole community (some part of whose service must necessarily be unprofitable), from aggressive competition which covers only that part which is profitable.

Governmental control should protect the investor as well as the public. It should ensure to the public good service and fair rates. It should also ensure fair returns to the investor.

A public utility giving good service at fair rates should not be subject to competition at unfair rates.

Keeping track, state control and regulation should provide protection from "aggressive competition," protect from the profit-and-loss test, assure "fair" returns to investors, and ensure that a firm offering its goods for "fair" rates should be protected from those who offer their services at "unfair" rates (i.e., lower prices). Of course, such high-minded rhetoric-"fair," "striving to serve the whole community"-are arbitrary and simply prejudge the conclusion in favor of whatever AT&T, industry insiders, and government regulators decide.

However, Vail reassures us that he is not an enemy of all competition,

It is not that all competition should be suppressed, but that all competition should be regulated and controlled. That competition should be suppressed which arises out of the promotion of unnecessary duplication, which gives no additional facilities or service, which is in no sense either extension or improvement, which without initiative or enterprise tries to take advantage of the initiative and enterprise of others by sharing the profitable without assuming any of the burden of the unprofitable parts or which has only the selfishly speculative object of forcing a consolidation or purchase. (emphasis added)

Thus, instead of allowing entrepreneurs and consumers to freely interact and decide the landscape of the market based on what goods they produce and value, the extent of alternative competitors, market prices, and profit and loss, competition only ought to be allowed within the range that the state and key firms decide.

As opposed to a pure free market and state ownership, Vail argued that regulated capitalism would have all the benefits of both without the disadvantages of either.

When thoroughly understood it will be found that "control" will give more of the benefits and public advantages, which are expected to be obtained by state ownership, than could be obtained through such [private[ ownership, and will obtain them without the public burden of either the public office-holder or public debt or operating deficit. It is conceded that as a rule private management is better, more economical and more efficient than public management, and much more advanced and enterprising.

When through a wise and judicious state control and regulation all the advantages without any of the disadvantages of state ownership are secured, state ownership is doomed.

Apparently, according to Vail, there was nothing to fear, "The proper use of corporate organization or combination under proper regulation or control cannot be objected to."

AT&T, Antitrust Danger, & the Kingsbury Commitment (1912-1913)

At first, to attempt to achieve his vision of a uniform system under AT&T, Vail began acquiring a number of independent competitors until such activity caught the attention of the federal government because of existing antitrust statutes. Michael K. Kellogg, John Thorne, and Peter W. Huber write in Federal Telecommunications Law (1999),

In 1912, fresh on the heels of its victory against Rockefeller, the U.S. Justice Department threatened to take on Vail. There followed a great deal of sound and fury, no doubt reflecting America's traditional populist mistrust of monopoly. In the end, however, government officials would conclude that monopoly in communications was much more tolerable than monopoly in oil.

To avoid antitrust lawsuits, Vail orchestrated the Kingsburg Commitment in 1913 (a year with which readers are doubtless familiar for several other reasons). According to industry historian Gerald W. Brock in his book The Telecommunications Industry: The Dynamics of Market Structure (1981),

Rather than risk legal action that could be adverse to the system, the Bell system entered into negotiation with the attorney general and in December 1913 reached an agreement known as the Kingsbury Commitment.

Correctly assessing the precarious situation of AT&T, Vail tried another-more successful-strategy. The strategy that was reached was essentially an agreement between AT&T and the federal government. AT&T agreed to abandon further acquisitions, sell its Western Union holdings ($30 million), and permit independent telephone companies to interconnect with its system, while the government allowed AT&T to retain its increasingly-dominant position. For Vail, this was a far more favorable alternative to having the government dismantle the Bell System. It constrained AT&T's expansion through acquisition but gave it something far more valuable-the government's acceptance of AT&T's dominant, regulated position in the telephone industry.

Richard Vietor writes in Contrived Competition: Regulation and Deregulation in America (1994, p. 172; also quoted in Thierer),

Vail chose at this time [i.e., around the time of the 1913 Kingsbury Commitment] to put AT&T squarely behind government regulation, as the quid pro quo for avoiding competition. This was the only politically acceptable way for AT&T to monopolize telephony. . . . It seemed a necessary trade-off for the attainment of universal service. (emphasis added)

This was precisely Vail's strategy. Robert W. Garnet-author of The Telephone Enterprise: The Evolution of the Bell's Horizontal Structure-writes (1985, p. 130; also quoted in Thierer),

Regulation played a crucial role in Vail's plans. Astute enough to realize that the kind of system he proposed-universal integrated monopoly-would stand little chance of gaining public approval without some form of public control, he embraced state regulation. In doing so, he broke with the company's long-standing opposition to what [AT&T] management had traditionally regarded as an unwarranted intrusion on its prerogatives. But after years of unfettered competition, during which the firm's financial strengths had been sapped and its efforts to build an integrated system had been dangerously undermined, regulation became a much-preferred alternative. (emphasis added)

Conclusion

All this provides ample evidence of the cronyism and political entrepreneurship within the telephone industry. While speaking of banking in particular, Rothbard provides a simple and profound general insight which every student of economic and political history ought to remember,

Fortunately for the cartelists, a solution to this vexing problem lay at hand. Monopoly could be put over in the name of opposition to monopoly! In that way, using the rhetoric beloved by Americans, the form of the political economy could be maintained, while the content could be totally reversed. (emphasis in original)

This history also serves to confirm the key insight of Gabriel Kolko's The Triumph of Conservatism, that-contrary to the popular historical narrative concerning the Progressive Era-certain key businesses often invited and helped shape regulations in order to achieve a cartel or a monopoly at the expense of the consuming public. Instead of the government and the consuming public teaming up against big business, the government and big business largely teamed against the consuming public. "Competition was unacceptable to many key business and financial interests," writes Kolko, therefore, the power of the federal government had to be sought to establish monopoly. But don't just take Kolko's word for it, take that of Theodore M. Vail in 1917,

We have repeatedly and constantly contended that competition, so far as the public utilities are concerned, is costly, unsatisfactory, undependable. That as an incentive to development or improvement [competition] has passed its period of usefulness, if indeed it ever had any.

We have also contended with equal constancy, that with combination of like utilities under proper control and regulation the service to the public would be better, more progressive, efficient and economical than competitive service given by the separate systems.

Tyler Durden Sun, 08/30/2026 - 22:10

Rise And Fall Of "Climate Crisis" Info War As Dems Urge Politicians To Avoid Global Warming Talk

The "climate crisis" headlines forced down the throats of the American people only began to emerge when socialist Rep. Alexandria Ocasio-Cortez and unhinged leftist Sen. Ed Markey introduced the Green New Deal in early 2019. That was the moment when global-warming headlines spiked and the NGO complex ramped up activist networks through protests and an informational war in the press, tricking the public into supporting climate bills intended to solve a made-up crisis.

Fake News

By March 2019, those climate-crisis headlines had intensified as Democrats desperately tried but failed to pass the Green New Deal.

More Fake News

Then, in 2022, those same headlines spiked again as Sen. Joe Manchin and Senate Majority Leader Chuck Schumer unexpectedly announced the Inflation Reduction Act, reviving much of the climate agenda.

It was all a lie. 

By August 2022, the IRA had passed and President Biden had signed it into law, flooding the Democratic Party's pet projects with $369 billion.

But those headlines subsequently peaked in late 2022. Democrats moved on after securing their massive funding package, and climate was no longer the party's main focus. This suggests that the earlier propaganda push was merely an informational war against taxpayers designed to hustle them.

Climate-crisis headlines remain out of fashion in 2026 as Democrats pivot toward socialism, thirdworldism, protect criminal illegal aliens, and quadruple down on all things woke.

Even AP's new reporting makes the case for the retreat clear: Climate ranks poorly among voters' priorities, suggesting that the public has increasingly rejected the party's climate-grift narrative as bullshit.

The retreat in climate propaganda has become so pronounced that researchers have coined the term "climate hushing." The Democratic-aligned Searchlight Institute has urged candidates this election season to stop emphasizing climate change because it ranks poorly among voters' priorities.

The shift in talking points is playing out in Massachusetts, where Markey, a leading sponsor of the Green New Deal, is placing less emphasis on climate policy as he faces a primary challenge from Rep. Seth Moulton.

All of this demonstrates that the entire climate-crisis propaganda campaign was about pushing legislation through Congress to fund NGOs and climate projects, not actually about the climate.

Tyler Durden Sun, 08/30/2026 - 21:35

US Forces Sink Vessel Providing At-Sea Refueling For Cartel: SOUTHCOM

Authored by Ryan Morgan via The Epoch Times,

U.S. forces, on Aug. 28, sank a vessel in the eastern Pacific that the U.S. Southern Command (SOUTHCOM) said was serving as an at-sea refueling point for drug-trafficking boats.

A vessel suspected of providing at-sea refueling for drug traffickers burns after being targeted by U.S. forces on Aug. 28, 2026. U.S. Southern Command

SOUTHCOM, which oversees military operations in and around Central and South America, said U.S. forces worked in coordination with the government of Ecuador to track down the vessel.

"Intelligence confirmed the vessel, previously identified and targeted under Department of the Treasury sanctions, was operating in support of the Los Choneros violent narco-terrorist organization," SOUTHCOM said in a press statement.

Los Choneros is one of more than a dozen Latin American transnational criminal enterprises that the U.S. government has designated as a foreign terrorist organization since the start of President Donald Trump's second term.

According to SOUTHCOM, U.S. Marines and sailors launched from the amphibious transport dock ship USS San Antonio to board and search the vessel, and did so without incident.

"Individuals removed from the vessel were safely escorted to Ecuador. Once cleared, U.S. forces sank the vessel," SOUTHCOM said.

SOUTHCOM has since published footage purporting to show U.S. forces boarding the suspect vessel, as well as footage of the boat being destroyed in a fiery blast.

"Today's operation is a stark example of the Americas Counter Cartel Coalition's power to dismantle the sophisticated, clandestine narco-terrorist tactics and capabilities that have enabled the trafficking of dangerous drugs destined for American communities," SOUTHCOM commander Gen. Francis L. Donovan said of the operation.

The Americas Counter Cartel Coalition, formed in March of this year, is a military partnership between the United States and other Western Hemisphere nations to disrupt cartel operations.

The U.S. military had been taking a more forceful approach to disrupt cartel operations even before recruiting regional partners through the Americas Counter Cartel Coalition.

On Sept. 2, 2025, U.S. forces bombed a boat in the Caribbean Sea, which officials said was transporting narcotics, killing 11. It was the first in an ongoing series of strikes on drug boats.

U.S. forces have struck dozens more vessels in the Caribbean and eastern Pacific in the past year. Most recently, SOUTHCOM claimed responsibility for a strike in the Caribbean on Aug. 25 that killed four people it identified as members of a drug-trafficking network.

The campaign of lethal strikes on boats has met with scrutiny and criticism.

Sen. Tim Kaine (D-Va.), in an Aug. 3 letter to the president, said: "A careful review of the available evidence suggests that the United States has killed individuals who are not involved in narcotrafficking."

A December report by Human Rights Watch described the campaign of boat strikes as a series of "extrajudicial killings."

The family members of two Trinidadian nationals who have been missing since October filed a wrongful death lawsuit against the United States in January. The plaintiffs claimed that the two missing men had been working as migrant laborers in neighboring Venezuela, and had arranged a boat ride home to Trinidad and Tobago, but were likely killed in an Oct. 14 strike by U.S. forces.

The U.S. government has not publicly identified any of the individuals they believe to have killed in these boat strikes.

Tyler Durden Sun, 08/30/2026 - 21:00

These Are The World's Safest (And Least Safe) Cities

Doha ranks as the safest major city in the world in 2026, while Caracas sits at the opposite end of the ranking.

This graphic, via Visual Capitalist's Dorothy Neufeld, compares the world’s safest and least safe major cities using Numbeo’s 2026 Safety Index. Scores are based on five years of user submissions covering perceptions of crime, personal safety, property crime, and violent crime. They do not measure official crime rates or exposure to geopolitical conflict.

The Cities With the Highest Perceived Safety

Here are the 10 highest-scoring major cities with populations of two million or more.

Rank Most Safe Cities Country Overall Score (0-100) 1 🇶🇦 Doha Qatar 84.6 2 🇦🇪 Dubai UAE 83.8 3 🇹🇼 Taipei Taiwan 83.4 4 🇭🇰 Hong Kong SAR China 78.2 5 🇸🇬 Singapore Singapore 77.7 6 🇯🇵 Tokyo Japan 75.9 7 🇨🇳 Shenzhen China 75.5 8 🇸🇦 Riyadh Saudi Arabia 75.4 9 🇸🇦 Jeddah Saudi Arabia 75.1 10 🇰🇷 Seoul South Korea 74.6

Four of the top 10 cities are in the Middle East, including two in Saudi Arabia: Riyadh and Jeddah.

Gallup’s latest Global Safety Report reinforces the pattern. Singapore had the world’s highest share of adults who said they felt safe walking alone at night, at 98%, followed by Saudi Arabia at 93% and the UAE at 90%.

Asia dominates the rest of the top 10. Outside the Middle East, every city represented is in East or Southeast Asia, while European cities are notably absent despite routinely leading global livability rankings.

The Cities With the Lowest Perceived Safety

At the opposite end of the index, the 10 lowest-scoring cities are concentrated in just two regions.

Rank Least Safe Cities Country Overall Score (0-100) 1 🇻🇪 Caracas Venezuela 18.5 2 🇿🇦 Johannesburg South Africa 19.2 3 🇿🇦 Durban South Africa 19.5 4 🇧🇷 Salvador Brazil 23.5 5 🇧🇷 Fortaleza Brazil 24.1 6 🇧🇷 Rio de Janeiro Brazil 24.6 7 🇧🇷 Recife Brazil 25.0 8 🇪🇨 Guayaquil Ecuador 25.3 9 🇿🇦 Cape Town South Africa 26.4 10 🇨🇴 Cali Colombia 29.1

The bottom of the ranking is heavily concentrated by country. Brazil accounts for four of the 10 cities, while South Africa accounts for three, including Johannesburg and Durban. South Africa also has one of the world’s highest homicide rates.

Gallup data show a similar geographic pattern. Of the 10 countries where people felt least safe walking alone at night, nine were in sub-Saharan Africa or Latin America. South Africa ranked lowest globally, with just 33% of adults saying they felt safe walking alone at night.

Guayaquil’s low ranking also comes amid a sharp rise in violence. Guayas province, where the city is located, recorded 4,106 homicides in 2025, the most of any province in Ecuador and up 26.5% from 2024.

To learn more about this topic, check out this graphic on America’s most dangerous cities.

Tyler Durden Sun, 08/30/2026 - 20:25

Central Asia Resists US Pressure To Choose Sides In AI Race

Authored by Eurasianet via OilPrice,

• Kazakhstan is continuing to expand AI cooperation with China even after joining the US-led Pax Silica initiative.
• Uzbekistan says it wants access to both cutting-edge American technology and lower-cost Chinese AI models rather than choosing between them.
• Their positions illustrate the difficulty Washington faces in persuading Central Asian governments to take sides in the intensifying US-China technology rivalry.

Kazakhstan and Uzbekistan are tossing figurative darts at a US trial balloon connected to the intensifying race between the United States and China for leadership in AI development.

Reuters reported on August 14 that the US State Department had drafted a note stating that any nation interested in widening access to advanced American know-how and technology in the AI sector under a program known as Pax Silica must refrain from participating in a rival Chinese initiative known as the World Artificial Intelligence Cooperation Organization (WAICO).

Kazakhstan is a member of both Pax Silica and WAICO, while Uzbekistan is a signatory to the Chinese initiative while expressing keen interest in expanding cooperation with the United States in AI development. More broadly, the United States has taken steps over the past 18 months to expand economic ties with all five Central Asian states.

Actions and statements by Kazakh and Uzbek officials since news of the draft State Department note began circulating indicate that both states are disinclined to adhere to what amounts to an American demand.

Kazakh officials have not publicly commented on the issue of the country's participation in both Pax Silica and WAICO, but recent developments suggest Astana is intent on maintaining close contacts with China in the AI sphere.

On August 18, experts from the countries' respective academies of sciences agreed to jointly develop a science-focused AI platform to analyze "scientific literature and large data sets, identifying patterns, formulating and testing hypotheses, modeling complex processes, planning experiments, and predicting results," according to a Kazakh government statement. The Kazakhstan and China are also working on an AI initiative called DeepBas, which aims to develop "specialized models" enabling the more efficient management of water resources.

Exchange programs are likewise proceeding. Kazakh engineers from the national space company recently participated in a training program in China on using AI to analyze satellite data to improve natural disaster early warning capabilities. In addition, at a recent symposium in Almaty, Chinese and Kazakh researchers discussed AI applications in medicine and agriculture, as well as joint research and training for young AI specialists.

Uzbekistan has perhaps been more direct in addressing the brewing AI issue. Speaking at a technology forum in Tashkent on August 24, Bobur Khodjaev, an aide to President Shavkat Mirziyoyev, issued what could be considered a veiled plea for the US to abandon an "us-or-them" stance on AI development. He also stated that Uzbek officials would continue to opt for the best available AI solutions, regardless of national origin. He acknowledged that American tech may be superior but also stressed that China offered more affordable options.

"As a developing country, we want to have access to all available technologies," Gazeta.uz quoted Khodjaev as saying. "Specifically referring to the US and China, obviously American tech companies offer cutting-edge AI chips and AI models. China, in turn, offers open-source models that are significantly cheaper than American ones. And we would like to have access to both."

"We are open to collaboration with all partners and interested parties and strive to implement artificial intelligence technologies not only in finance but in all areas of our economy," Khodjaev added.

Tyler Durden Sun, 08/30/2026 - 19:50

Russia Hits Kiev Ammo Dump Next To Homes; Ukraine Admits 90% Of Retail Food Logistics Wrecked

A Russian drone struck a Ukrainian Defense Forces ammunition storage site in the village of Myla Friday evening, just west of Kiev. The resulting fire and hours of secondary detonations killed at least 37 people, injured dozens more, damaged around 50 residential buildings and a care home for the elderly and disabled, and forced the evacuation of hundreds. Among the dead was the local community head who had gone to help.

Here are some close-up shots from yesterday's explosion at an ammunition depot in the village of Myla, in the Kyiv region. The local population is understandably unhappy. pic.twitter.com/TWJudPFh6j

— Z.O.V Military (@WarHunter2222) August 29, 2026 Smoke rising after a Russian air attack on Kyiv on August 29, 2026.
Serhii Okunev/AFP/Getty Images

In response, Ukrainian President Volodymyr Zelensky said the placement of a weapons depot next to civilians was "terrible negligence." The first impact, he said, hit a depot storing shells, mines, other munitions, and drones that "definitely shouldn't have been there" - while prosecutors in Kiev opened a criminal investigation into the legality of storing explosives next to civilian housing. This is the second such incident in two months. A July strike on a depot in nearby Vyshneve produced similar secondary blasts, deaths, and later detentions of state defense-company executives.  

Footage showing the moment of the secondary detonation at an ammunition depot in Kyiv Oblast following a Russian Geran-4 jet-drone strike. pic.twitter.com/xH7IFTrnk3

— AMK Mapping 🇳🇿 (@AMK_Mapping_) August 28, 2026 Residents pass by the site of a Russian drone strike as smoke rises, amid Russia's attack on Ukraine, in Kyiv region, Ukraine, August 29, 2026. REUTERS/Alina Smutko

Devastating aftermath in the Bucha district following a Russian strike on an enterprise in the Kyiv region.

The attack triggered secondary explosions, killing at least 27 people and destroying local infrastructure and homes.

Photos: Kostiantyn Liberov and Vlada Liberova pic.twitter.com/RO2QhMbocl

— KyivPost (@KyivPost) August 29, 2026

Russia's Defense Ministry said the Myla site held components and launch boosters for long-range drones. It also claimed strikes on Flamingo cruise-missile related facilities in the Kiev region and on the ports of Mykolaiv and Izmail. Social-media claims that Patriots were stored there remain unconfirmed by official Ukrainian statements.

Some unlucky fella got caught at the epicenter of the explosion at the ammunition depot in the Kiev region and filmed everything. You can hear the ammo going off. The Ukrainian military has consistently used civilians as human shields, but it looks like Putin has run out of… pic.twitter.com/HQmiphLNu4

— Gabriel (@GabeZZOZZ) August 29, 2026

Friday night's blast came amid a multi-day Russian campaign of jet-powered drones and missiles that has produced near-continuous air-raid alerts over Kiev and hit warehouses belonging to supermarket chains, postal operators, retailers, and logistics firms. Ukraine Agriculture Minister Taras Vysotskyi told reporters that, "roughly speaking," about 90% of the food-logistics infrastructure used by major retail chains (large distribution centers serving networks such as Fora, Silpo, NOVUS, and Varus) has been destroyed. That said, Vysotskyi insists this won't result in famine - as chains are switching to more expensive direct-from-producer "on wheels" deliveries. Yet, stores in Kiev are reporting empty shelves for produce, dairy, and staples.

Via CNN

The last operating Epicentr hypermarket in Zaporizhzhia was also hit Friday morning, hours before the Myla blast. 

Both sides have been systematically striking each other's logistics and dual-use commercial infrastructure. Ukraine has targeted Russian refineries, energy sites, and online-retailer warehouses. Russia has answered by going after the warehouses that keep Ukrainian shops stocked. Kiev's air defenses remain constrained by a well-documented shortage of Patriot interceptors - the only system that reliably stops ballistic missiles. Jet-powered drones have added another layer of pressure.

Zelensky's government has framed its own long-range strikes as a way to force Russia to negotiate. The immediate result is visible in the suburbs of Kiev: another poorly sited ammo dump cooking off next to civilians, a retail logistics network that Ukraine's own minister says is 90% gone, and winter approaching. The investigation into who decided to store explosives next to homes will tell one part of the story. The empty shelves and the sirens will tell the rest.

Tyler Durden Sun, 08/30/2026 - 19:25

Federal Court Rules Sexual AI Images Of Children Are Legal To Possess

Perhaps sometimes it's best for judges to ignore technical loopholes and rigid legal precedent for the sake of doing the right thing?  Maybe, in extreme cases where absolute evil is involved, our system could dismiss the "rights of artists" and enforce restrictions based on the potential long term damage to society as a whole? 

Yes, the constitutional conundrums are plenty, but can't we also simply use common sense? Because if we can't, these kinds of artistic "expressions" are going to inspire independent vigilantism and it will be the fault of the courts when this inevitably happens. 

A federal appeals court says a Supreme Court precedent set in 2002 forces it to protect the in-home possession of AI-generated child sexual abuse material.  The court warned that rapidly advancing technology has complicated legal lines drawn nearly 25 years ago. 

The Seventh Circuit said it was bound by the Supreme Court decision that rejected restrictions on sexually explicit depictions of fictional children when no actual child was involved in their creation. But two judges warned that modern AI can now generate images virtually indistinguishable from material depicting the abuse of real children. 

In other words, artistic depictions of child abuse are legal to possess in private because no real children were harmed in their creation.  The use of AI exploits this loophole for the creation of hyper-realistic images very similar to real pornographic content.   

"Indeed, in Free Speech Coalition, the Supreme Court addressed the scope of First Amendment protections for virtual CSAM, but that was nearly twenty-five years ago, and the image-generation technology available today was likely unimaginable back then," Judge John Lee wrote. "Given the relentless advancement in artificial intelligence models, we have some concerns about the lines these cases draw, but we are not free to redraw them ourselves." 

If we give these judges the benefit of the doubt and accept their explanation that the Supreme Court ruling prevents them from taking action, we are still left with the moral question.  There are constitutional purists out there who might argue that "artwork" is protected speech under the 1st Amendment.  There are others (progressives) who will argue that a private individual owning such images hurts no one and they should be left alone to bask in their AI generated pedophilia.

This brings us to the deeper question:  Should known pedophiles be allowed to roam free within society because they haven't abused a child "yet"?  Or, should these people be locked up the moment they are identified for the sake of protecting communities from "potential" harm? 

It's generally not constitutionally legal to arrest someone for something they might do, but obviously, the legalized possession of AI child abuse images cannot be allowed to stand.  Even if the materials could be labeled "art" that does not harm real children, they act as a useful identifier for some of the worst monsters within any given community.  That is to say, these images should be used as an excuse to round up such people. 

It doesn't matter if they have not yet harmed a child; given the opportunity, they likely will.  The Supreme Court should change their precedent for this reason alone. 

The Seventh Circuit affirmed a lower court’s dismissal of one of four charges against Steven Anderegg, who investigators said had hundreds of AI-generated sexually explicit images depicting children on devices seized from his Wisconsin home. 

Anderegg was charged with producing and distributing the AI-generated material, transferring it to a minor under 16, and possessing it. A federal district court dismissed only the possession charge on First Amendment grounds, leaving the other three charges intact. 

For now, the distribution of these images is still illegal.  Generating the images, while still considered illegal, is difficult to prove, which is why the possession issue is so important.  Any AI images that use pictures of real children as a reference are also illegal.   AI is testing legal lines that many people thought impossible only a decade ago and limitations need to be addressed before extensive damage is done.  

Tyler Durden Sun, 08/30/2026 - 19:15

What Do "Capitalism" And "Socialism" Really Mean?

Authored by Vincent Cook via Mises Institute,

The old debate between socialism and capitalism is back. It wasn't that long ago when socialist economics had been repudiated even by former Soviet insiders, businesses like Wendy's and Miller ran clever television advertisements poking fun at the once-mighty but by then grossly dysfunctional Soviet Union, and the remaining leftist political parties in Western countries pivoted to focusing on promoting welfare statism while admitting that government controls over the means of production is a losing proposition. Back in the day, even people lacking the keen theoretical insights of a Ludwig von Mises could plainly see that actual attempts to realize socialism, however well-intentioned they were originally, only delivered totalitarian tyranny and mass impoverishment.

Since then, schools haven't been so keen on teaching younger generations that a system based on individual liberty constrained only by peacefully-acquired private ownership rights is what delivers the goods and what enables competent adults to function as morally- and intellectually-autonomous individuals. Neither do they teach that politically-generated handouts, subsidies, privileges, and immunities, nor governmental fiat money creation or unrealistic governmental promises of future economic security are at the root of many of the worsening problems afflicting the productive classes in our society today. Instead, young people have been indoctrinated with a belief that "capitalist" private profit-seeking and the cultural and religious traditions spontaneously propagated in an individualistic culture are to blame for all of society's ills and injustices. They are taught that only by instituting "socialism" to overthrow capitalism and forcibly re-engineer America's culture to "woke" specifications can such problems be solved.

Many contemporary defenders of socialism deny that they have anything like the Soviet Union in mind when they use the "socialist" label (though there is a Marxist Unity Group within the Democratic Socialists of America that is overtly pro-Bolshevik), while they are quick to pin the "capitalist" label on an admittedly dysfunctional status quo that strongly deviates from individualist libertarian principles in numerous respects. Such rhetoric is driven in no small measure by clashing definitions of what "socialism" and "capitalism" are supposed to mean, since of course neither side wants to take blame for either the failed Soviet example or for the failing status quo. So how are we to understand this definitional conflict, and how can we resolve it? In what sense is the extreme Soviet version of socialism relevant, if at all?

Back when the socialist movement got started, the original premise was that private ownership of the means of production was intrinsically evil because only the owners of the means of production (the wicked "capitalist" class), not society at large, allegedly benefited from the existence of private ownership. Private property was smeared as being profoundly unjust. Earning a positive return on investments was erroneously portrayed as being a parasitic extraction of value from producers, not as enhancing productivity in any way.

"Socialism" in this early context broadly referred to any system for organizing production that prevents such private earnings on investments, instead reallocating them to the benefit of "society" according to whatever distributive outcome was considered just. As long as most of the public remains blissfully ignorant about how both private thrift and profit-seeking/loss-avoidance and private investment of the resulting savings actually increases the physical quantity of outputs produced, it is possible to conceive of all sorts of crazy schemes to replace "capitalist" profits with some sort of "socialist" alternative. Socialism, in other words, was originally defined in a negative way as the antithesis of private ownership of production, which rendered it hopelessly vague.

Likewise, narrowly focusing on private ownership of the means of production without regards to other important requirements for a productive profit-and-loss driven economic system-like ownership being based on peaceful acquisition, ownership rights being defined in terms of the owner's exclusive control over the use and disposition of his body and the owned things, and everybody being at liberty to do anything that doesn't violate other people's ownership rights)-leads to an overly-broad definition of "capitalism" as well. It conflates the genuinely productive laissez-faire variant of private ownership with the genuinely exploitative interventionist variants where the state rewards specially-favored private interests with subsidies, with privileges that enhance earnings by restricting the liberty of others, and with immunities that enhance earnings with exemptions from liabilities for violations of ownership rights.

Such fuzzy ambiguities give socialists an escape clause when confronted with evidence of how badly real-world socialist experiments work-"But that wasn't real socialism!" It also permits a conflation of interventionism with laissez-faire that incoherently indicts private ownership with evidence of exploitative outcomes arising from what are actually serious deviations from libertarian/classical liberal principles. With such a foggy conceptualization of the nature of capitalism and socialism, the underlying issue of the absolute economic necessity of private thrift coupled to profit-and-loss-motivated entrepreneurial investing in the context of competitively-generated market prices for capital goods and for factor inputs is never confronted.

The way to dispel this fog is to realize that an eclectic mix of government controls and of private profit-seeking (as is frequently encountered in concrete historical situations) is neither fully capitalist nor fully socialist. Appeals to the evidence of concrete historical examples are never fully persuasive because one can always invoke alternative causal factors to rationalize why things worked out as well or as badly as they did in a particular situation instead of treating the historical example as a decisive test of a given system. As Mises explained in his methodological work Theory and History, causal explanations of historical events always have to be preceded by a correct understanding of economic theory; data from complex, uncontrolled social situations does not permit rigorous logical inductions of causal generalizations like the controlled laboratory experiments of the natural sciences do.

This implies that the real battleground for a debate over different economic systems are rival theoretical understandings of how purposeful human action works, not the data of how different historical examples performed. Mises brings theory to the forefront by reserving the label "capitalism" to a system based on laissez-faire principles of liberty constrained only by peacefully-acquired private ownership rights, the label "socialism" for coercively-centralized control over the means of production (whether formal ownership itself is centralized or not, which gives rise to two distinct varieties of socialism), and the label "interventionism" for systems with selective government interference with certain aspects of production while leaving all other aspects of production to be self-directed, incentivized by private profit-seeking and loss-avoidance.

The crucial point to note here is that Mises avoids the customary ambiguities by narrowing the meaning of each concept to a particular idealized type of economic system where the properties of each system have been specified sufficiently so that a theoretical analysis of the consequences of each system can be deduced rigorously. Also, it is helpful other conceptual possibilities as needed to provide an exhaustive catalog of possible systems. Unlike the vague terminology that originally informed the capitalist/socialist debate, Mises's definitions are fit for the task of debating the merits of different systems.

While having a more highly-specified, robust set of concepts at one's disposal doesn't necessarily conclusively settle debates over how to interpret a particular concrete historical instance, such concepts do enable deductions concerning what consequences would follow from various changes to the current system, all other things being equal. It also obliges champions of more limited interventions, entitlement benefits, etc. to drop the pretense that because their vision of "socialism" doesn't involve full Soviet-style central planning, their "socialism" somehow doesn't suffer from yet other problems that arise in connection with interventionism, welfarism, etc. All things being equal, the consequences of each isolated type of intervention can be qualitatively predicted using Misesian economic theory too.

What really ought to be the focus of debate today is America's deindustrialization and the associated decline of America's productive classes while the ruling class and its assorted minions and clients have been flourishing. Simply blaming all billionaires (and the newly-minted trillionaire) and traditional American culture for all of America's ills (as progressives like to do) or blaming foreigners and "woke" culture (as MAGA conservatives like to do) does not add up to a coherent logical explanation of how economic exploitation actually works in our society or why it suddenly started becoming a problem a little over half a century ago.

Only a logic of purposeful action, which is self-evidently and universally true for all human beings under all social circumstances, can help us clearly understand how America went wrong and what we must do to reindustrialize America while ending the systemic exploitation of the productive by the unproductive. It is Mises's definition of capitalism, not the interventionist status quo often confused with capitalism, that conceptualizes what is lacking in America today and how America needs to be reformed to make possible liberty and prosperity for all.

Tyler Durden Sun, 08/30/2026 - 18:40

Pentagon Grabs 35% Equity Stake In Venezuelan Oil As Trump Vows To "Fill Up" The SPR

Venezuelan President Delcy Rodriguez on Saturday evening unveiled further details of the grand US oil deal that was announced by President Trump on Friday, detailing that her country will receive about $19 per barrel of oil produced under the long-term energy deal.

Rodriguez, who was Maduro's #2 as VP before the former president's overthrow by invading US forces less than a year ago, hailed the "historic" agreement as an avenue for boosting crude output while bringing economic benefits. "The agreement is based on a very simple premise," she said. "Each party contributes what it does best. Venezuela contributes oil, its industry and the experience of its workers accumulated over more than 100 years. The United States contributes the capital and technology needed to recover and develop those assets."

Trump on Sunday: a "Gift from Venezuela to the People of the United States."

Rodríguez additionally said that in return, "Venezuela receives production, jobs, investment in infrastructure, increased revenue for the government and productive linkages for domestic industry." On top of this she assessed the deal would eventually grant Venezuela some $209 billion in taxes.

Her comments attempted to preempt discontent over the US deal from sectors of her own citizenry. Ironically, she's obviously playing the role of a pliant Washington figurehead, and there's local concern that the deal simply siphons off national resources and puts it into Uncle Sam's pocket, which is a long-running experience of a number of Latin American populations especially related to CIA action there in the context of the 20th century Cold War.

President Rodriguez stated that she wants to "make something absolutely clear"... she insisted that "Venezuela retains ownership and sovereignty over its resources, while utilizing capital, technology and operational capacity to leverage the recovery of a strategic industry that has been severely hit by sanctions."

In parallel to some of the details that Rodriguez filled in, The Wall Street Journal over the weekend has its own lengthy report on some of the deal's ins and outs. Below are a few highlights of that WSJ report...

*  *  *

The Pentagon will take a 35% passive stake in a private company holding Venezuelan oil rights:

Although it was negotiated by senior officials in both governments, the structure would make the U.S. an investor in a private company rather than a direct counterparty to the Venezuelan government. 

The U.S. plans to take a 35% passive stake in Betancourt’s North American Blue Energy Partners and would secure preferential rights to purchase 20% of its production at cost, according to people involved in negotiating the agreement. 

Venezuelan businessman Alejandro Betancourt is being offered development of some seventeen oil fields:

It would give Washington a direct financial stake in a private company that would be granted centurylong rights to some of the world’s largest proven oil reserves—and tie the U.S. more closely to the unelected government that is granting those rights.

The private company, led by controversial Venezuelan businessman Alejandro Betancourt, would have the opportunity to develop 17 oil fields said to contain 65 billion barrels of oil, or one-fifth of the country’s reserves. The Pentagon, in a striking expansion of its remit, would help finance the oil venture and reap the rewards of its future output.

Pentagon's strategic capital office was brought in late in the process to create a financing mechanism:

The Pentagon’s Office of Strategic Capital plans to structure the investment through penny warrants that would yield the U.S. an equity ownership in the business without a significant capital investment, the people said. The Pentagon office has limited statutory authority to strike deals designed to support U.S. national-security interests, typically through loans and guarantees. 

Betancourt has served as a broker in Venezuela’s energy deals and has close ties to Rodríguez. He faced criminal investigations of alleged money laundering in Spain and Switzerland, though no formal charges have emerged. His NABEP has become the second-largest private oil producer in Venezuela, after Chevron, over the past two years.

Future governments in Caracas could potentially challenge the agreement (though Washington is unlikely to ever cease asserting its direct influence):

For American oil companies pursuing potential investments in Venezuela, the idea of competing with a U.S.-backed private company with a stake in huge swaths of the country’s oil fields is daunting, people close to the companies said. U.S. officials said the state-backed company would be the second-largest corporate holder of proven reserves after Saudi Aramco.

The deal is also raising alarms within the industry about whether a new Venezuelan government could mount a successful legal challenge, and whether it might undercut new entrants’ confidence in making investments, the people said.

...The substance of the agreement appears to be in direct conflict with Venezuela’s 1999 constitution, which states that the country’s oil reserves belong to the Bolivarian Republic of Venezuela and can’t be sold. Critics say Venezuela’s current government, populated by unelected officials kept in power by the Trump administration, has no legal authority to sell the country’s oil rights.

Via AP: The Amuay oil refinery - Venezuela's largest petroleum processing facility.

There remain an additional array of problems facing translating the deal into additional supply at a moment America's Strategic Petroleum Reserve hits decades lows.

Though sitting atop the world's biggest proven oil reserves, Venezuela has long been known for its derelict and largely defunct infrastructure for getting crude out of the ground and refining. There's also the question of security, which has been a source of discussion between the US admin and American oil companies being courted. The oil majors must be convinced that they can operate in enough safety to be successful, not just for the coming months, but for years down the line. And yet, they will now be forced to essentially 'compete' with the US government, ironically enough.

There are also lingering transparency and accountability questions concerning the Venezuelan oil exports that Washington already took over since Maduro's ouster.

Tyler Durden Sun, 08/30/2026 - 18:05

Opportunity Lost? Gained? Squandered?

Submitted by Peter Tchir of Academy Securities

Another week with so many competing narratives driving markets. The information flow was coming so fast and furious that it is difficult to believe that Economic D-Day kicked off the week (it already seems longer than that).

Today, we will take a quick romp through how things seem to be playing out.

Opportunities Lost?

As anyone reading recent T-Reports knows, I was hopeful Warsh would take the stage on Friday and try to “shake things up.” Try to drive home some new (and in my view, much needed) paradigms. We got to discuss this ahead of Warsh’s speech on Friday morning on Bloomberg TV.

Warsh does deserve some credit for using the word “hike” three times at the start of his speech (but all in reference to the activity involving walking outdoors, rather than anything to do with rates). Not sure it was wise, as it likely set the algos off on the 2-year note, but I do applaud the effort to mislead the algos and speed readers.

In the end, bonds bear flattened. Stocks fell a little bit, but the bear flattening was the big takeaway from what I found was quite a boring speech, that really didn’t provide any new information.

The 30-year bond rallied initially and tried to hold on to those gains, but finished the day with higher yields. Part of that afternoon selling on longer-dated Treasuries could well be hedging (yield locks) for some IG new issues on Monday. As we wrote about in Yields Behaving Normally, both Bessent and Warsh need to pay far more attention to the massive supply of long-duration bonds (primarily from corporates in the “compute” space) and bonds in general (including increased global sovereign/quasi-sovereigns).

Had he gone down the path I would have liked to see, Friday might have even been messier than it was, but at least we’d have something interesting to discuss. Instead, I expect by the middle of next week, we will be back to lamenting the lack of specificity on the reaction function.

As the chair of the Fed, he has plenty of opportunities to speak, and people will listen, but the set-up for something more exciting than we got was almost perfect on Friday. An Opportunity Lost, in my view, but one that will be re-addressed as nothing is going to stop the data from coming in and the Fed from having to make decisions.

Opportunities Gained?

Every major news source is reporting increased oil flows out of the Middle East. Between alternative routes and increased passage through the Strait, pressure on the crude market is being relieved.

The blockade remains incredibly successful, preventing trade with Iran via the Strait. 

CENTCOM’s Commander, Admiral Brad Cooper, announced the Strait has been cleared of mines. Another very positive development on reducing the leverage Iran has.

The U.S. is also increasing staffing at embassies in the Gulf States, which is another step towards our view that neither the U.S. nor the Gulf Region has any interest in re-escalating “kinetic” warfare (the “cool” way to say shooting and blowing things up).

If we see renewed escalation, it seems likely to be initiated by Iran, and they don’t seem to have the will, or ability to do much at the moment (they have allegedly disabled some ships trying to transit, but no large-scale attacks on infrastructure in the region – which is the main fear). 

While we haven’t seen diesel or gasoline drop materially, the more oil that can make its way to refineries, the better.

Bessent’s announcement of Economic Outcast on Monday was a bit disappointing. Well, disappointing from launching concrete, obvious effects, that would really pressure the regime to give up (really needs to be tough on China to do that). But that also soothed markets which have less to worry about if we aren’t ramping up the rhetoric with China. A bit of a catch-22.

Basically, Bessent saying that we’ve put everyone on warning/high alert (and they have some time to change their behavior before we come down with the hammer) seems logical. It will take longer that way, but if the threat of the “hammer” works, then it will have accomplished the mission.

On the other hand, what happened to “Sanctioning a Major Financial Institution” on Friday? Maybe it is taking longer to get the legal side of things right, before implementing the sanctions? Maybe the “guilty party” has come to the table to negotiate a deal favorable to the U.S.? Those would be good outcomes and are plausible. But why make such a “direct statement” and not live up to it? On that topic, why didn’t this press conference happen the prior week, which seemed to be the initial target for launching the Economic Armageddon?

As a whole, the direction of travel on the issue of oil and energy products in the Middle East is heading in the right direction (less clear on nuclear deals and change of regime behavior).

Stories are hitting the tape this weekend about a major deal between the U.S. and Venezuela. We continue to see success in working with Venezuela since Maduro has been captured. Having said that, it is difficult to tell from the details provided so far, what the real impact is with this potential “deal.” If it is as good as the Truth Social posts say it is, that could be very good (primarily in the medium to longer term). But as we discussed last week, in the section Done Means Done, we have seen social media pronouncements, or soundbites (even soundbites from the Oval Office), that don’t always materialize the way they were initially touted.

Would be a great win, and I do think Venezuela can be a hub for processing, refining, and smelting materials that the U.S. needs.

Opportunities Squandered?

Since the trade negotiations fell apart (wow, that was only last Friday, that seems even longer ago), there has been a lot of discussion about who caused the deal to break down. Some argue that Carney views it as politically in his interests to not do a deal, even if he could have had a “good” deal. Others discuss last-minute demands on the U.S. side, which seems to fit in with the “art of the deal.” Where this all winds up, who knows.

We are going to lump this into the Opportunities Squandered section, though maybe not in the way you think this is going.

Let’s start with Canada. Let’s start a decade or so ago.

On Friday on Bloomberg TV (during the second segment), I say something that will probably get me in trouble, but once in a while you need to take that risk to get a soundbite across.

I argue that Canada cannot have BOTH a Green Economy and a Real Economy right now. I am not saying that over time you cannot achieve both a robust economy and one that is sustainable for your own nation and the world. I am saying that even if the ultimate end goal skews heavily towards sustainable and green, the priorities in the near term may have to be adjusted. You might never get to the “green” economy if you don’t survive long enough. We argued that the “energy companies of the future are the energy companies of today” during peak “Hopium.” By Hopium, I meant that the vision drove everything and ignored certain realities, that were really needed to turn that vision into reality. I’m not sure I’ve dug myself out of any hole I’ve dug myself into with this attempt at explaining my view, so I’ll just move on.

LNG exports. The U.S. has built a robust business around LNG. Not only is it bringing in revenue for America, and creating jobs, in America and abroad, but you could argue it is helping importers diversify away from LNG imports from less trustworthy, or reliable counterparties.

While there are a myriad of reasons why the U.S. can do better than Canada, and has done better, there is truth to the concept that Canada regulated themselves out of business. Or, more precisely, in this case, regulated themselves out of creating a new business.

This to me, is just another example of why ProSec needs to go global (and is going global).

• If you have the resources, why not extract them?
• Once you’ve extracted the resources, why not refine them?

As we’ve seen with the Strait, the bottlenecks occur primarily around the refined versions of oil. Yes, oil in itself is troublesome, but it is the refined products that are even more important.

Whether Canada listens to this wake-up call (and there are signs that they have been doing it — heck, we even have a tiny blip in the export line from Canada) is yet to be determined. As we’ve highlighted recently, Australia is planning on their first refinery in 60 years!

ProSec is going global. It is in every nation’s interest to ensure that their supply chains for things that are imperative to their existence are as stable, safe, reliable, and resilient as possible.

Having said that, we will discuss two other subjects in this section, even though I’m not sure they are squandered.

• Trade with Canada.
  • At least some of what the U.S. needs for reshoring and, possibly more importantly, the compute build, does or could come from Canada. Aluminum. Data centers need it. Canada has it. There is very little evidence of domestic production that can come on-line quickly, hence, the cost of compute build will go higher. If I’m Canada, I’m trying to harness all the things at my disposal that go into compute and will try to maximize that revenue source (whether in the U.S. or elsewhere). Not sure Canada will do that, but I’m not sure why the U.S. is doing anything making it more difficult or expensive for the compute build, when they are facing enough cost, energy, and NIMBY hurdles.
  • Farming. Potash. The U.S. imports it at scale. It is an important cost to farmers. Canada has it. The U.S. may have it, but it isn’t readily available. I’ve lost track of what the U.S. is doing on some ag things. Importing ground beef from somewhere (presumably Argentina). Changing how the processing is done. Food costs are a key issue for many voters, so not sure what the nation gets more benefit from – tariffs or coordinated effort?
• The China Summit.
  • While it is simplistic, my “working view” is that:
    • China is aiming to catch up on compute, faster than the U.S. can catch up on processing, refining, and smelting.
      • We are purposely avoiding the term – rare earths and critical minerals, because that tends to make people think about the rare earths and critical minerals themselves, rather than what is more important, which is processing, refining, and smelting. Not just rare earths and critical minerals, but even some basic commodities and metals.
  • If we think back to the “cards” on the table when the trade teams were negotiating in Geneva, to now, who has improved their hand?
    • I am not sure. Our compute is growing, but China seems to keep popping up as well. The admin is doing some great work on the processing, refining, and smelting side, but we started so far behind China that we need to continue to operate at lightning speed!

It will be interesting to see if I’m correct and ProSec truly moves global, or if countries will remain content to let others do the heavy lifting, even if it risks their economic future.

Bottom Line

I continue to like owning “compute” bonds on a yield basis (no rate hedge).

The Treasury bear steepener likely has more room to run, but we did have downward revisions to the prior year’s worth of jobs data. Not as draconian as last year, but another hint that the job market might be something the Fed needs to keep an eye on (especially as I don’t see how hiking helps war-related inflation or compute-build inflation). Will want to be adding to the front end. I remain indifferent on the long end, but suspect the global supply of debt will outweigh what Bessent has announced so far, and ultimately, the Fed will need to implement some form of Operation Twist to really shift the pricing of the long end.

If oil keeps coming down, it will help rates and equities. I remain concerned how much (in either direction) equities are being driven by the semis where the number of leveraged ETFs astounds me (creating mechanical buying and selling, amplifying every move).

I do think even with oil prices coming down, energy companies, globally, should remain a key overweight in portfolios (XLE is up 42% YTD) and global demands to harness and deliver energy are only increasing!

I don’t think I “squandered” the summer, but have to admit it went by a lot faster with a lot more work and angst than I would have hoped for! Enjoy this last week of summer and hope you have great plans for Labor Day weekend! (which is a holiday both in Canada and the U.S. though it is spelt differently).

Tyler Durden Sun, 08/30/2026 - 17:30