The Economic Collapse

The Pacific Ring of Fire has been extremely active this year, and that should deeply alarm all of us. Approximately 90 percent of all global earthquakes occur along the Pacific Ring of Fire, and we have just gotten another reminder that danger is potentially lurking every single moment of every single day. Those that were killed by the magnitude 7.1 earthquake that just hit Japan were just living their lives like normal when disaster suddenly struck. Unfortunately, the entire west coast of the United States also sits directly along the Pacific Ring of Fire, and scientists openly acknowledge that the clock is ticking. (Read More...)

Unless some sort of a miracle happens, the world is facing a severe energy supply crunch in the months ahead. Since the war with Iran began, we have been able to function normally because we had huge inventory buffers that we could rely on. But now those inventory buffers are nearly gone, the Iranians have been attacking commercial vessels in the Strait of Hormuz, the Houthis are preventing Saudi tankers from getting through the Bab el-Mandeb Strait, and the Ukrainains have been relentlessly attacking Russian refineries. As a result, we are potentially facing a very difficult winter. (Read More...)

We are literally watching a slow-motion apocalyptic event play out right in front of our eyes, but most people in the general population don’t seem too concerned even though we are being warned that this apocalyptic event could cause trillions of dollars in economic losses. Large numbers of fish are being cooked to death, unprecedented wildfires are ripping across the United States and Europe, severe drought is greatly harming agricultural production in many areas, and the northern hemisphere is being slammed by one crazy heatwave after another. Yeah, a lot of people out there may be able to ignore what is going on outside by sitting in their air-conditioned homes, but the truth is that what is happening to us is going to cause a tremendous amount of pain for the whole world for an extended period of time. (Read More...)

Everyone is starting to figure out that there isn’t going to be enough oil. The Iranians have closed the Strait of Hormuz, the Houthis are targeting Saudi oil tankers in the Red Sea, and the Ukrainians are relentlessly attacking Russian energy infrastructure. The reality of what we are facing is finally starting to set in on Wall Street. As I write this article, the price of Brent crude has crossed the $100 threshold, the Dow has dropped more than 500 points, the Nasdaq has dropped more than 600 points, and U.S. Treasury yields have been flying all over the place. For a long time investors tried really hard to ignore what was happening on the other side of the globe, but now things have gotten so bad that they simply cannot do that any longer. (Read More...)

Somehow we have convinced ourselves that AI companies that are bleeding billions upon billions of dollars are great investments because there is a possibility that someday they will eventually become profitable. But the losses just keep getting even bigger every year. Meanwhile, we are spending trillions of dollars to build even more AI infrastructure. There is no way that the AI industry is ever going to generate the sort of revenue that will justify that level of investment. What we are witnessing is a capital misallocation of absolutely epic proportions, and it is inevitable that this entire bubble is going to come crashing down. When that finally happens, it will be unlike anything we have ever seen before. (Read More...)

Unless we witness some sort of a crazy diplomatic miracle, the price of gasoline will soon rise into unprecedented territory. The Iranians have closed the Strait of Hormuz, the Houthis are blocking Saudi tankers from getting through the Bab el-Mandeb Strait, and with a big helping hand from the United States the Ukrainians are relentlessly attacking Russian oil refineries. Meanwhile, the oil inventory buffers that existed before the war with Iran are rapidly being depleted. Nations around the world are doing whatever they can to adjust to this crisis, but time is running out. (Read More...)

I really don’t understand the tremendous apathy that I am witnessing right now. Everyone can see that commercial oil inventories are rapidly being depleted. As I discussed yesterday, the global oil market had about 400 million barrels of excess inventory before the war, and now we have “close to nothing”. But at least we still have the Strategic Petroleum Reserve, right? Yes, that is true, but that is being rapidly depleted as well. In fact, when you add the dwindling commercial oil inventors in the U.S. to the oil that is left in the Strategic Petroleum Reserve, we only have 43 days of supply remaining… (Read More...)

The only way that we were going to avoid a historic oil crisis was if a diplomatic solution could be found to end the war in the Middle East. Obviously that did not happen. The “Memorandum of Understanding” has completely failed and the U.S. and Iran are hitting one another really hard. The Strait of Hormuz is going to be closed for the foreseeable future, and now it appears that the Bab el-Mandeb Strait will soon be closed as well. Global oil inventories have been falling for months, and now we have reached a stage where we are going to experience some really severe pain. (Read More...)