By SRH
Instead of the $2 billion per round increase last week, US Treasury Secretary Bessent proposed utilizing $1 trillion from the Treasury General Account to assist Special Military Operation Twist bond buybacks, delivering a strategic bombshell. That sounds like “Whatever It Takes,” a song that Stan Druckenmiller, his old boss, despises.
For added isolation and pressure on Iran, he launched “Operation Economic Outcast” in addition to US sanctions and an oil boycott. A nuclear weapon of financial warfare, the potential expulsion of Iranian supporters from the US currency system is one of the secondary consequences that will be imposed. In response to a question about his delay in enforcing them, Bessent stated, “Why would I want to blow up the global financial system?” Though he will first focus on getting important allies out of Iran, he will eventually realize that some of them control rare earths, global supply chains, and nuclear weapons. The stakes are high, unless you’re playing a bluff.
Following Israeli Prime Minister Netanyahu’s claims that Iran had murdered one of his sons, Tehran vowed to assassinate Barron Trump and launched attacks on ships passing Hormu in response to sanctions.z; in the Red Sea, the Houthis attacked a Saudi tanker; neither Egypt nor Turkey reacted; the Saudis attempted to implement a state-backed shipping insurance plan similar to the US one, but their plan was unsuccessful; China dispatched PLA jets to drill alongside Egypt’s; China boasted about its energy security by reporting a 700% increase in the economic value of coal after converting it to liquids; and a US defense startup is manufacturing thousands of drone interceptors in the UAE.
Ukraine is facing a new €23 million defense budget gap, similar to the one that hit Russia’s Afipsky oil refinery and another e-commerce giant. However, the United States has not offered Kyiv any assistance in this matter. It is possible that Russian forces will target Ukrainian defense component factories in the United Kingdom.
Before Xi’s state visit, Trump may use a 7.5% “overcapacity” tariff as leverage in negotiations with China. Imposing a 50% increase on Canadian autos and trucks on January 1st, in reaction to Prime Minister Carney’s “elbows up,” is a bold move. Unlike tariff opponents, Ottawa has the option to match such tariffs, withdraw, or reduce taxes, allowing cheap imports to supplant local production. Cutting down oil exports to the US is “not viable,” according to Alberta Premier Smith, who is facing a secession referendum in October. Since a trade war between the United States and Canada would impact their military cooperation, Carney announced that he will initiate talks with the European Union to strengthen economic and defense ties.
From a geostrategic perspective, but, not politically. Although Canada is unable to join the European Union, it may give up some of its autonomy by joining a customs union. In light of Europe’s aspirations to decarbonize, would the continent purchase fossil fuels, agricultural products, trucks, planes, or cars made in Canada? In spite of their ability to purchase them, they desire vital minerals. Canada would send goods to a bloc far away along waterways that neither it nor the EU could possibly defend due to their defense budget shortfall in comparison to their enormous demands. The United States is their sole supplier of defense and artificial intelligence. Both sides pretend the United States isn’t benign, but if they move forward strategically without it, they end up acting as if it is. This inconsistency in reasoning either proves the plan isn’t solid or necessitates a more drastic change toward riskier economic statecraft.
With Yerevan’s announcement of a referendum on EU membership, the group may move eastward and Russia-EU relations may rise, creating what some are calling a “blue bloc” from Canada to Armenia. Additional remarks of rejoining were made by UK PM Burnham without a mandate.
According to Politico, the Saxony-Anhalt state election on September 6 will be won by the Kremlin-friendly AfD party in Germany. Will Saxony and the AfD be more politically stable in the long run if we ignore, defund, and outlaw them? Le Pen, a nationalist, and Melenchon, a socialist who wants to dismantle norms and debt, could face off in the French presidential election in early 2027. Where do structural difficulties lie in terms of appropriate FTAs or interest rates?
According to Draghi’s new Rhine Group think tank, “The stakes are existential” for the European Union. Compared to when it was initially published, the report highlights the fact that Europe is confronting more significant difficulties. Defense, healthcare, pensions, education, climate investments, and assistance for those who have lost their jobs are among the vital services that could be jeopardized if the continent’s economy remains stagnant. Not certain, but if we do nothing soon, we will fall. Will this report be effective in preventing “slow agony” in the absence of rapid, significant reform within the EU?
Fortune magazine proposes that Venezuela switch to US dollars, and the US(!) opens up Venezuela’s telecom industry to foreign companies while keeping Chinese ones out.
Vast consequences may result from a decision by the US Supreme Court. A Trump executive order has been approved to closely monitor mail-in voting and mandate stricter control over voter lists and envelopes, according to the New York Times, which comes at a time when the president has subtly taken control of the postal service. Those Republicans who bet on the midterm results based on market or geostrategic factors and hope that the enchanted mystery tour of mail-in votes will follow suit might be taken aback, according to their logic.
In the largest mass action in immigration history, the Trump administration is threatening to cancel the visas of up to 200,000 foreign nationals and has proposed a $103,000 cost for H-1B visas, effectively excluding all but the wealthiest applicants. The policy appears to be long-term focused.
To sum up, economic exclusion is common. There may be major dustups, and it’s uncertain who will be in and out and with whom when everything settles down.
According to the latest meeting minutes, the RBA kept rates on hold due to deteriorating inflation and the labor market. That forecast, like that of other central banks, did not account for the aforementioned background. Alright, then, how does one incorporate it? How can it possibly be excluded, honestly? Warsh might make a statement about avoiding the topic on Friday.
