Huge thanks to August’s sponsor, who wishes to remain anonymous. At his request, I’m sharing a link to his brief but fascinating essay about Shakespeare’s The Tempest and the origins of Britain’s enslavement of Africans. He welcomes feedback in the comments section.
“JPMorgan warns a global food crisis could hit next year, and unlike oil, there’s no backup plan for fertilizer…
“There are two prongs to JPMorgan’s predicted food deficits: a fertilizer shortage and a monumental weather event. And the Strait of Hormuz’s closure wasn’t just bad for gasoline prices. The strait also sees about a third of the world’s nitrogen fertilizer — an essential form of fertilizer for around half of the world’s crops.”
“The strongest El Niño on record will hit food prices from Brazil to Indonesia.
“The Pacific is warming faster than at any point in history, and central bankers have started writing it into their forecasts… the European Central Bank’s chief economist Philip Lane told Irish radio that “food inflation is going to be one of the drivers of inflation over next year.””
“Governments’ borrowing costs hit further multi-decade highs as US-Iran peace hopes fade…
“Donald Trump’s threat to bomb Oman if they “get in the way” of negotiations helped to push oil higher on Tuesday, to above $91… Fiscal pressures are also rising as governments ramp up defence spending, which is expected to drive borrowing higher in leading European countries such as Germany and the UK.”
“‘There is no breaking point’: The problem with Trump’s plan to economically strangle Iran.
“Iran’s leaders… see the conflict as existential, giving Tehran reason to absorb the extraordinary economic pain rather than accept terms it believes could imperil the regime — especially as U.S. inflation remains elevated and treasuries sell off.”
“Russia is shipping explosives to Iran to bolster its missile and drone arsenal in U.S. war.
“Russia is shipping drone components, ammunition and TNT to Iran through the Caspian Sea, helping Tehran replenish stockpiles damaged in U.S. and Israeli airstrikes, according to a European government document obtained by NBC News and verified by a Western official.”
“Iran eyes military targets in Europe if Trump escalates war: insiders…
“Two regime insiders told the Financial Times that Iranian forces have assessed striking US assets in south-eastern European countries such as Bulgaria, which last month approved the use of its Bezmer air base for US refuelling aircraft.”
“US chip stocks slide as government borrowing costs hit multiyear highs.
“Chip stocks led a sell-off on Wall Street on Tuesday as long-term borrowing costs across major economies hit multi-decade highs amid rising concerns over mounting public debt and inflation triggered by the Iran war.”
https://www.ft.com/content/61354e68-c4ba-4716-b849-b332608c8c65?syn-25a6b1a6=1
“AI: like a debt machine. Credit (and rates) markets reel from rise and rise of hyperscaler issuance…
“The numbers are just bonkers. Goldman Sachs said in a note earlier this month that US dollar investment-grade issuance had already exceeded $1.5tn so far this year, which put 2026 on track to beat the previous record-breaking blowout from the pandemic era.”
https://www.ft.com/content/b2cbbab2-a51a-48f2-a9da-86d858cd4e86?syn-25a6b1a6=1
“Private credit stress mounts as troubled loans reach highest level since 2017…
“The deterioration comes as private credit managers contend with rising defaults, weaker loan valuations and limited new-deal activity. Fitch Ratings recently reported that private credit defaults reached a record level in July…”
“Donald Trump’s deregulatory drive will cause another financial crisis…
“Under Donald Trump, the Treasury Department has argued that regulation itself can threaten financial stability. That is a dangerous claim to make amid booming equity markets and weakening credit conditions, when financial safeguards matter most.”
“Diesel Margins Top $100 a Barrel to Reach Record High as Supply Crunch Grows.
“The margin for making diesel from crude oil in the US has soared to more than $100 a barrel, setting new all-time highs… a near-perfect storm of factors has coalesced to raise prices once again, threatening a winter of higher heating bills and inflationary shocks.”
“What if America Went Completely Dark? The Blackout That Could Devastate America…
“… a coordinated attack on the U.S. power grid’s aging,, hard-to-replace transformers could trigger a months- or years-long blackout… the nation’s reliance on custom infrastructure and rising energy demand makes the system acutely vulnerable to cascading failures.”
https://www.nytimes.com/2026/08/18/magazine/national-blackout-power-electricity-outage.html
“UK risks running out of gas by 2030s, ministers told.
“Great Britain risks running out of gas in the 2030s despite its growing clean energy sources, unless ministers take “unprecedented” action to guard against a future supply shock, according to an official assessment.”
https://www.theguardian.com/business/2026/aug/18/uk-risks-running-out-of-gas-2030s
“Norway wealth fund sounds alarm on AI stock market bubble…
“Nicolai Tangen, CEO of Norway’s Government Pension Fund Global (GPFG), warned last week that, in an extreme market collapse, a massive loss to its $2.4 trillion (€2.07 trillion) portfolio is “not completely improbable.””
https://www.dw.com/en/norway-wealth-fund-ai-stock-market-bubble-china/a-78351371
“Europe risks financial crisis if AI bubble bursts, warns ECB…
“The ECB warned that a sharp fall in stocks was probable. In a blog post, analysts said: “Economic research on past technological revolutions points to a worrisome conclusion: a correction of current stock market valuations is likely.””
“Traders Short French Bonds as Fight Over Budget to Escalate…
““We’ll have a big election, a lot of political instability probably going into 2027,” said Marie-Anne Allier, a fixed-income manager at Carmignac Gestion who has bearish bets on intermediate-term French bonds against those of Germany, Italy and Spain. “You are in a dynamic that is very negative for France.””
“EU-backed electricity link to Cyprus stalls amid regional tensions.
“The nearly €2 billion Great Sea Interconnector subsea cable would connect Cyprus to the EU’s electricity system and end Nicosia’s energy isolation. However, Turkey’s maritime ambitions and financing issues have been stalling the project, which was meant to become operational in 2024.”
“Romania Restarts Coal Plant as Danube Drought Forces Nuclear Shutdown.
“Romania has this week restarted a 300-megawatt coal-fired power plant to partially offset the generation lost by the closure of nuclear electricity output after the low water level on the Danube river forced a shutdown of the country’s only nuclear power plant.”
“Russian president Vladimir Putin has issued a stern warning that Moscow will retaliate if European countries proceed with seizing Russian merchant vessels.
“Speaking during Pacific Fleet drills aboard the missile cruiser Varyag, Putin described the Western moves to detain vessels linked to Russia as a breach of international maritime law. “This is nothing short of piracy and plunder,” Putin said”
“Moscow threat of ‘consequences’ will not alter UK support for Ukraine, says Burnham.
“The use of the drones made by UK companies is part of Ukraine’s “deep strike” campaign… The Russian embassy to the UK said on Monday that Britain had been deliberately escalating the Ukraine conflict and the deeper its involvement, “the higher the price it will pay”.”
“Russia rejects Türkiye’s Black Sea moratorium push under the grain deal model…
“If the reference is to a unilateral scheme modeled on the 2022-2023 arrangement known as the “Black Sea Initiative,” under which Moscow suspended what it described as its response measures to protect Russian port infrastructure and energy facilities, Zakharova said returning to that format would be “ill-advised.””
“Five Grain Ships Struck Near Russian Black Sea Ports.
“At least five grain ships have been attacked near the Russian Black Sea ports of Novorossiysk and Tuapse as Moscow struggles to continue exporting grain amid heightened Ukrainian strikes, according to people familiar with the matter.”
“Tensions in the Black Sea and regional droughts spark rising global wheat prices.
“…wheat prices are on the rise again. Widespread drought has affected crop conditions in the Northern Hemisphere, and increased tensions in the Black Sea are again threatening wheat supplies. As a result, wheat prices have increased almost 25% above their January 2026 levels…”
“Russian attacks are doing severe harm to Ukraine’s economy…
“Russian production of ballistic missiles is rising just as Ukraine’s supply of interceptors has dwindled. Ukraine’s defenders can now shield only a few high-priority targets. In July Russia profited by launching a record 198 ballistic and hypersonic missiles, mostly at the Kyiv region.”
“Russians pull billions from banks, fearing Kremlin will seize deposits for war.
“Russians are pulling billions from the country’s banking system ― a record cash outflow amid intensifying Ukrainian drone attacks and rising fear that the Kremlin could start seizing deposits to finance its war… “Drones are flying. Things are burning down. Nervousness is growing.””
“China’s Economy Weakens on Several Fronts as Property Bust Worsens.
“China’s economic momentum slowed broadly in July, weighed down by muted consumer spending and slumping investment, according to official data released Monday… Property investment fell 19% year over year, highlighting the extreme weakness in China’s property market.”
https://www.wsj.com/economy/chinas-economic-activity-weakened-in-july-0ce9bde7
“Japan’s economy slowed in the second quarter of the year amid moribund consumption and capital spending, according to official figures.
“Gross domestic product (GDP) grew 0.3 percent in the April-June period from the first quarter, data released by Japan’s Cabinet Office on Monday showed.”
https://www.aljazeera.com/economy/2026/8/17/japans-economy-slows-missing-growth-forecasts
“South Korea president calls for military independence in wake of Trump call to cut joint drills.
“South Korea’s president has renewed his push to regain independent control of the military from the US in the event of war and urged faster progress in acquiring nuclear-powered submarines after Donald Trump’s order to cut joint drills.”
“How US Munition Depletion Puts Taiwan at Risk…
“With the loss of approximately 30–40 percent of US ground attack and air and missile defense munitions, and the several years needed to rebuild that arsenal, Washington may not have sufficient resources to mount a strong and durable defense of Taiwan.”
https://nationalinterest.org/feature/how-us-munition-depletion-puts-taiwan-at-risk
“Thailand disputes property seizure claim at Cambodia border…
“Thailand has disputed allegations that its forces seized land and property belonging to a Chinese investor near the Cambodian border, insisting that private ownership claims must be separated from military deployments and resolved through evidence and bilateral mechanisms.”
https://www.nationthailand.com/news/asean/40069979
“How China-India border tensions are rising again over encroachment claims…
“The new revelations pertain to Upper Subansiri, a remote and rugged, mountainous district in the northeastern state of Arunachal Pradesh. The fact-finding report threatens to upend a thaw in ties between India and China, bitter rivals that fought a war in 1962…”
“China’s largest oil shippers abandon Hormuz, Bab al-Mandab as Middle East conflict deepens…
“The decision by COSCO Shipping Energy Transportation and China Merchants Energy Shipping (CMES) marks one of the clearest signals yet that the prolonged conflict surrounding Iran has rendered two of the world’s most vital energy corridors too dangerous for even Beijing’s biggest commercial fleets.”
“The creation of a ‘Muslim Nato’ shows Trump is losing his grip in the Middle East.
“On 7 August, Pakistan, Saudi Arabia and Turkey signed the Mecca Joint Defence agreement, a Nato-style mutual defence pact that states an attack on any one of the group will be considered an attack on all. The timing is significant. All three countries have been the target of Iranian retaliatory attacks…”
“UAE halts all trade and financial dealings with Iran after missile incident.
“The United Arab Emirates accused Iran of firing two ballistic missiles at shipping in the Gulf on Tuesday, marking the first time in months that its defense ministry has warned of a missile threat to its territory. Iran has denied the claim.”
“Israel bombs Syrian airbase, sending warning to Damascus and Ankara…
“”An unnecessary escalation that does not advance regional stability.” That is how the US special envoy for Syria, Tom Barrack, condemned the bombing of an airbase in northwestern Syria, at dawn on Tuesday, August 18, attributing the strike to Israel.”
“Families’ agonising search for answers as thousands still missing in Gaza…
“The Red Cross says it has received more than 5,000 requests to trace missing people who could be buried amid the destruction. The Civil Defence agency in Gaza believes the number of missing people is over 8,000. Bodies are being discovered on a daily basis.”
https://www.bbc.co.uk/news/articles/ce34r0er75go
“Houthis Fighting on All Fronts and Aiming for the Red Sea Coast.
“For several months, the Houthi have been preparing the population of the areas they control in north Yemen for renewed conflict with Saudi Arabia, and signaling their intentions.”
“Unmanned cargo ship destroyed off Yemen.
“Strikes from multiple unknown projectiles leaves vessel a complete constructive loss, according to UKMTO… “Following over 25 cumulative missile impacts and berth fires, Al-Mokha Port remains completely closed to commercial traffic, forcing remaining lower Red Sea commercial logistics to reroute,” said JMIC.”
https://www.seatrade-maritime.com/security/unmanned-cargo-ship-destroyed-off-yemen
“Armed Militants Hijack Cargo Ship Off Somali Coast.
“A security incident has been reported off the coast of Somalia, where a group of eight armed militants successfully boarded and seized control of a cargo vessel. The development was confirmed on Monday by the United Kingdom Maritime Trade Operations (UKMTO)…”
https://english.globalarabnetwork.com/2026/08/18/armed-militants-hijack-cargo-ship-off-somali-coast/
“Somali army repels troops loyal to ousted leader and Islamist insurgents.
“Somali national forces repelled an assault by troops loyal to an ousted regional leader and Islamist insurgents on Monday over control of the key city of Baidoa. The assault involved “vehicles laden with explosives” according to the government, which said its troops killed nearly 30 militants in their response.”
https://www.france24.com/en/somali-army-repels-troups-loyal-to-ousted-leader-and-islamist-insurgents
“Fresh conflict in Ethiopia’s Tigray could bring collapse of its battered healthcare system.
“Fears of fresh conflict in Ethiopia’s northern Tigray region are growing as the health system struggles to recover from a devastating civil war that ravaged the region, and as attacks on hospitals and clinics continue.”
“Lavrov accuses Ukraine of ‘state terrorism’ over alleged role of military personnel in Sahel attacks.
“Russian Foreign Minister Sergey Lavrov on Monday accused Ukraine of “state terrorism,” alleging that Ukrainian military personnel were involved in attacks carried out by illegal armed groups against countries in the Sahel.”
“US refineries taking in half of Venezuela’s oil output, official says…
“Speaking at an industry event in Houston on Tuesday, Under Secretary of Energy Kyle Haustveit said more than 500,000 barrels per day (bpd) are now moving from Venezuela to the US out of national output of roughly 1.25 million bpd.”
“Red dots flash warning for Panama Canal shipping.
“The Panama Canal is starting to ration capacity and draft before an expected El Niño-driven drought bites, with forecasts for Gatun Lake providing an ominous warning for shipping heading into the final months of the year.”
https://splash247.com/red-dots-flash-warning-for-panama-canal-shipping/
“The US has sanctioned the president of the international criminal court (ICC) and a prosecutor tasked with investigating crimes committed by Israel during its war on Gaza.
“The new sanctions designations were unveiled by Marco Rubio, the US secretary of state, who called the Hague-based ICC a “corrupt and fatally politicized supranational court that has maliciously abused its authority and exceeded its mandate”…”
https://www.theguardian.com/us-news/2026/aug/18/us-icc-sanctions
“The United Nations is no longer “fit for purpose” and is at risk of collapse, one of the body’s most senior officials has said…
““Fundamental reform is needed on the governance, peacekeeping and political side,” Mr Schmale said. “If we had the opportunity to redesign this, I would certainly think it’s wrong to give a selected few any veto or permanency rights.””
“Nukes all around? A fraying U.S. nuclear umbrella is pushing allies to weigh defense options, raising risk of a proliferation cascade.
“For decades, allies worldwide rested in the comfort of the U.S. nuclear umbrella, confident they didn’t need their own weapons of mass destruction. That belief is rapidly evaporating.”
https://www.cnbc.com/2026/08/19/nuclear-proliferation-defense-risk-trump-umbrella-.html
I rely on donations and tips from my readers to keep the site running. Every little bit helps. Can you chip in even a dollar? Buy me a coffee or become a Patreon supporter. A huge thank you to those who do subscribe or donate.
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
The Drone Virus
You could almost speak of a ‘drone virus’ spreading through the traditional military-industrial complex. Not because drones are making tanks, aircraft, missiles and warships obsolete, but because they are undermining the economic and organizational logic behind those weapons.
The traditional model revolves around relatively small numbers of extremely sophisticated and expensive systems. Development can take ten or twenty years, production is concentrated among a handful of major companies, and technological superiority is expected to justify the high price.
The drone introduces a different world: cheap, numerous, expendable and, above all, extremely quick to adapt. In Ukraine, designs, software, electronic countermeasures and tactics can change within months. An innovation appears on the battlefield, the opponent develops a response, and shortly afterwards another modified generation emerges.
The ‘virus’ then forces the rest of the military system to adapt. Tanks acquire cages and electronic protection, airfields need shelters, logistics hubs are dispersed and refineries disappear behind protective nets. Meanwhile, air defense faces an economic problem when a relatively cheap drone has to be shot down with a missile costing many times more.
Eventually, the drone virus reaches the military balance sheet. You can win every individual engagement technically while simultaneously losing the economic war of attrition.
That also makes Taiwan interesting. Analyses of a possible war with China often focus on declining US stocks of expensive missiles and ammunition. That matters, but it is only one side of the equation. Taiwan has also been watching developments in Ukraine and is explicitly investing in asymmetric defense, drones, mobile systems and decentralized command structures.
China possesses enormous conventional military power. But in an invasion, that power would have to cross a relatively narrow maritime logistics corridor and then be continuously supplied across it.
Taiwan does not need to destroy the entire Chinese force. It only needs to be able to keep enough vulnerable links under constant threat at relatively low cost.
That is the real significance of the drone virus: it does not replace the traditional military apparatus, but continually changes the price that apparatus has to pay in order to function and survive.
Zip, your final para says it all really.
It’s amazing the speed with which conventional military wisdom has been upended. In the first year or two of the Ukraine vs Russia war, British experts were assisting the Ukrainians. Now that expertise is all but redundant and it is the Ukrainians offering their expertise around the world.
Encourage everyone to read the article above:
China’s largest oil shippers abandon Hormuz, Bab al-Mandab as Middle East conflict deepens
Heating oil in USA is very close to an all time record. And we are going into the busy season, mainenance season and the switch back from summer blends. There are a lot of fixed income retirees that are not going to be able to afford this
Duke, I fear we are facing a cold and expensive winter here in Europe, too.
https://oilprice.com/Energy/Natural-Gas/Europes-Gas-Storage-Crunch-Deepens-Ahead-of-Heating-Season.html
“Iran’s leaders… see the conflict as existential, giving Tehran reason to absorb the extraordinary economic pain rather than accept terms it believes could imperil the regime — especially as U.S. inflation remains elevated and treasuries sell off.”
Like the Ukraine war it is existential for both sides but to people who think the US will keep pumping out 14 mbpd forever it does look like a stupid blunder.
https://youtu.be/dmNVX2etkhk?si=zvPwoWAFkkUr4suP
Jupiviv, I kept waiting for Freddie Mercury and David Bowie’s vocals to come in but the singing is all Pantera. It’s definitely a better use of the iconic bass riff than “Ice, Ice, Baby,” though. 😂
Regarding JPMorgan’s predicted food crisis next year:
1. Will the MSMedia constantly broadcast this news to saturate citizen awareness?
2. Will citizens become alarmed enough to start gardening every where possible?
3. Will companies ramp up making hoes, small seeders, Mason jars, scythes, small grain mills, etc?
4. Will people use leaf blowers to push leaves into the street? Or actually rake them up to compost as fertilizer.
OR will everyone ignore the problem until food riots from empty grocery stores are everywhere?
Place your bets!
Bob Shaw Are Humans Smarter than Yeast?
Assuming no catastrophic financial crisis (which is not a remotely safe assumption), developed nations may escape with just food price hikes and some gaps on the shelves next year, Bob.
Food riots have to be a strong possibility in parts of MENA and countries like Kenya and Bangladesh.
Once a regime starts killing its citizens to stay in power, all conflicts, internal and external, become existential. Iran and Russia aren’t the only countries that will die rather than change their leadership, especially if that leadership is supported by a “corrupt and fatally politicized supranational court that has maliciously abused its authority and exceeded its mandate”…”
johnrember.com/blog/their-wounds-are-our-fates
John, I’ve made that a clickable hyperlink for you. It is a great read. All of this info was new to me:
Netanyahu’s older brother was killed in combat in 1976 while leading a raid at the Entebbe Airport in Uganda.
Xi’s half-sister hanged herself at the military academy where she had been confined because she and Xi’s father had been declared an enemy of the state during China’s cultural revolution. Xi himself spent seven years of forced labor during his adolescence and early adulthood.
Putin was raised alone, but two older brothers had died before he was born, one as an infant and one at the age of two, of starvation and diphtheria during the Siege of Leningrad in 1942.
Trump’s older brother died at the age of 42 of an alcohol-induced heart attack, after failing as an airline pilot and husband and being attacked by his father and Donald for quitting the family business. This was a family that practiced capital punishment.
Good read! Good job, John Rember.