Nostalgia

Somali pirates are back.

It’s Groundhog Day in the Gulf. I use an American reference as it’s an American-made calamity. After weeks of stop-start progress, 14,000 of the estimated 20,000 seafarers who had been stuck in the Strait of Hormuz since Donald Trump began bombing Iran have made their escape. Having heard that good news, you could be forgiven for thinking that things had been on the up, at least as far as shipping is concerned.

……… 

In Hormuz, ships have no protection either. They are easy prey. With the Western navies preoccupied, the Somalis have opportunistically reappeared in the Arabian Sea and western Indian Ocean and now hold hostage four ships and 67 seafarers. The pirates have issued a £3 million demand for the release of MT Honour 25 and released a chilling photo of the crew sitting on the floor of the bridge, with masked pirates and AK-47s as a backdrop.


When Honour 25 was first taken hostage, one of its crew managed to send a voice note to his family in Karachi, Pakistan. His son Muzammil Ahmed Ansari told Al Jazeera what his father, 53-year-old Mehmood, had managed to say. “He said, ‘We are hijacked, reach out to the company, to people, to the government.’ He said there were pirates on the ship, all armed. He panicked, but he said, ‘Don’t worry, ask the government to deal with it.’”

More blowback from Trump's disasterous Iran war. 

He Hates it Because it Works

Paul Krugman (Yeah, I know) has a very interesting look at the Trump administration's hostility toward the Brazilian digital payments system PIX.

It's cheaper, more reliable, and more secure than anything that US payment providers offer, and so the White House is threatening sanctions.

Brazil introduced Pix, a digital payment system, almost 6 years ago. The system — which allows people to make payments on their phones, not very differently from Apple Pay or Google Pay, except that Pix payments are official currency rather than transfers from private companies — has been highly successful. The vast majority of Brazilians use it regularly, and by all accounts Pix — which is free for individuals, and cheap for businesses — is hugely popular.

On Wednesday — as it happens, on the first anniversary of an article I posted praising Pix and suggesting that it may represent the future of money — the Trump administration will try to punish Brazil for this success. It will do so by imposing tariffs on Brazilian exports under Section 301 of the 1974 Trade Act, which permits such tariffs to counter “unfair trade practices.”

………

Trump’s hostility towards Brazil’s Pix system is also an illustration of the same phenomenon we see in his energy policy: this administration is hostile to progress whenever that progress works against the interests and ideology of the oligarchs who have poured money into Trump’s campaigns and his pockets.

Krugman is wrong here when he characterizes this behavior as being unique to the Trump administration though, the Biden USTR was expressing "concerns" about PIX in 2022. (PDF).

This knee jerk support of predatory US financial institutions is something that widely supported by the US Polity, whether conservative or liberal.

 

Speaking of the Ongoing War

Trump has announced that the cease fire has ended and that the United States will resume its blockade on Iran and charge a 20% fee on all ships transiting the Strait of Hormuz.

I'm not sure what the legal justification is for charging such a fee, and in announcing the blockade he is announcing a resumption of war against Iran.  (It's why Kennedy called the blockade of Cuba during the Missile Crisis an, "Embargo.")

The fee that President Trump wants to charge ships going through the Strait of Hormuz would significantly increase the cost of transporting oil and other products through the crucial waterway, shipping operators and logistics experts said.

On Monday, Mr. Trump said the United States would charge a 20 percent fee on all cargo shipped through the strait, as a way to recover the cost of providing military protection to vessels using the waterway.

……… 

Mr. Trump did not explain exactly how the 20 percent fee would be calculated.

But if it were charged on the value of the cargo, it could more than double the cost of shipping oil through the strait.

Scores of ships have gone through the strait with Iran’s permission, taking routes close to the Iranian coast. On Monday, Mr. Trump said he was reinstating a U.S. naval blockade of ships that use Iranian ports.

……… 

In late June, Secretary of State Marco Rubio said: “No country is allowed to charge tolls or fees on an international waterway. That’s existing international law.” 

He forgets the most important internal law, "We don't care, we don't have to, we are the United States of America mother f%$#ers."

I Hate Reruns

So, Trump has declared that the cease fire has ended, and the US is launching strikes on Iran while Iran has responded in kind.  (Also, the US has revoked its waiver of sanctions on Iranian oil, which counts for little giving that the shooting war has started up again.)

I expect to see gas price increases returning shortly. 

 

Some Good News Out of Madrid

Spain has excluded Palantir from public contracts.

What a surprise.  It's in the pocket of the US State Security Apparatus, its founder is a literal vampire, its CEO is increasingly unhinged, and it's f%$#ing evil.

Spain just told Palantir to pack its bags. Or at least, to stop unpacking new ones.

On July 1, the Spanish government issued a directive through SEPI, the state holding company that oversees the country’s publicly owned enterprises, instructing its portfolio companies to avoid entering new contracts with Palantir Technologies. The reason: concerns over classified national security information and what officials see as risks to national sovereignty.

The directive targets firms operating in defense, communications, and infrastructure. We’re talking about heavyweights like Telefónica, defense contractor Indra, and naval shipbuilder Navantia

………

Spain isn’t acting in isolation. France announced similar restrictions on June 10, specifically linked to Palantir’s operations. Germany has been having its own version of this conversation.

The concept driving all of this is “digital sovereignty.” The basic idea is that nations should control their own critical data infrastructure rather than outsourcing it to foreign companies, particularly ones whose other clients include the CIA and the Pentagon.

Toxic assholes should not handle sensitive data.  Musk and DOGE demonstrated this quite clearly.

It's Not About Global Insecurity

The fact that many central banks are repatriating their gold reserves from the UK and US stems from the belief that if their government falls afoul of Washington, DC, they will lose access to their gold stores at a critical point.

Maintaining one's own gold reserves is a PITA compared to allowing the gnomes in The City of London and Wall Street keep them in their vaults, unless you stop believing that they can be relied on.

Global central banks are removing gold from vaults in London and New York as they become more skittish about storing bullion outside their own borders, according to a new survey.

The central banks of India and France are among those that have relocated huge volumes of gold out of the US and UK in the past year to store more domestically — part of a trend of the institutions bringing bullion home and also diversifying the storage location of their reserves.

For years, central banks have been increasing their holdings of gold, which recently surpassed US Treasuries to become the world’s top reserve asset, as many seek alternatives to the US dollar, the world’s de facto reserve currency.

However, increasing geopolitical conflict, sanctions regimes and a decline in trust have put strains on a gold trading system that relies heavily on London — where huge vaults at the Bank of England store more than $700bn of the yellow metal — and on New York, the world’s largest gold futures market.

………

The news comes as Singapore and Hong Kong have been working to offer vaulting services to central banks that are looking to diversify their storage. Singapore’s deputy prime minister on Monday said the city-state would launch an over-the-counter clearing system for gold this year, along with a vaulting service for central banks.

One of the biggest recent repatriation programmes has been in France, which removed 129 tonnes of gold from the New York Federal Reserve between July 2025 and January 2026 and now stores all its gold domestically.

………

Over the past three years, India’s central bank has also repatriated most of the gold it held overseas with the Bank of England and the Bank for International Settlements.

The share of its gold held overseas by the Reserve Bank of India dropped to 22 per cent in March 2026 from 55 per cent in March 2023, according to the central bank’s data. The RBI did not respond to a request for comment.

Let me be clear here, I do not believe that gold reserves are that significant in the modern financial system, but the movement of these assets is an indication of reduction of trust in the US and UK, and that is significant. 

Bringing Jobs Back to America

Or not.

Because of concerns about threats to travelers to the United States by immigration authorities, the Ig Nobel Prize will be moving its awards ceremony to Europe.

Honestly, I understand the need to relocate to a safer place than the United States.

It could have been Europe, it could have been Japan, it could have been Karg Island, or it could have been Chernobyl. They would all be safer for people going through US customs.

The annual Ig Nobels, a satirical award for scientific achievement, are shifting for the first time from the US to Europe due to concerns about attendees getting visas, organizers announced on Monday.

Organized by the Annals of Improbable Research, a digital magazine that highlights research that makes people laugh and then think, the 36th annual ceremony will be held in Zurich. It’s usually held in the US in September, a few weeks before the actual Nobel prizes are announced.

“During the past year, it has become unsafe for our guests to visit the country,” Marc Abrahams, master of ceremonies and editor of the magazine, told the Associated Press in an email interview. “We cannot in good conscience ask the new winners, or the international journalists who cover the event, to travel to the USA this year.”

The move comes amid Donald Trump’s sweeping crackdown on immigration, in which he has focused on deporting migrants illegally in the US, as well as holders of student and visitor exchange visas.

………

But four of the 10 winners last year chose not to travel to Boston for the ceremony. In previous years, the ceremony has taken place at Harvard University, Massachusetts Institute of Technology and Boston University.

I think that someone should publish a paper in a peer-reviewed journal about this.  You might even get an Ig Nobel Prize for that.

 

We Are So Screwed

One of the side effects of the increasing commerce in liquefied natural gas is the production of uelium.

When you cool down the gas, the helium remains a gas, and you can collect it and use it for things like MRI machines and silicon chip manufacture.

Among the strikes made by Iran in retaliation for attacks on its South Pars natural gas facilities, Iran struck the major helium production at Ras Laffan in Qatar, which looks to have the effect of taking 30% of world helium supplies offline.

Days after the U.S. and Israel launched airstrikes against Iran, killing Supreme Leader Ali Khamenei, Iran’s Islamic Revolutionary Guard Corps declared the Strait of Hormuz—the narrow waterway through which roughly one fifth of the world’s oil passes—closed. While oil has dominated headlines, a third of the world’s commercial helium comes from Qatar and has also been cut off.

Often associated with party balloons, helium is indispensable to magnetic resonance imaging (MRI) scanners, aerospace and the manufacture of microchips for artificial intelligence. With the strait closed, the disruption of the global helium supply chain could have ripple effects that might last for months and affect the most advanced technologies on Earth.

While there is a decent supply and stockpile out there, it is almost certain that helium providers will shortly announce a "Force majeur," and raise prices on existing contracts immediately.

Thanks, Donnie.

H/t PZ Meyers.

Neither Eric Arthur Blair nor Franz Kafka Would Be Surprised

What can you say about the fact that Halliburton filing an ISDS (Investor–State Dispute Settlement) complaint against Venezuela to revover their damage from US sanctions.

As Anna Russel would say, "I'm not making this up, you know." 

This is functionally identical to murdering one's parent and then asking for mercy as an orphan. 

The ISDS is an administrative secret court that allows for private investors to sue governments for engaging actions that might negatively effect their profits.

In this case Halliburton is suing because the Venezuelan Bolívar was devalued and they had to leave the country because of US sanctions.

On December 11, as the Trump administration was escalating its military campaign against Venezuela by trying to impose a total siege on the country’s oil and gas sector, the US oilfield services company Halliburton quietly filed a suit against Venezuela at the World Bank’s international arbitration court, ICSID.

Long-standing readers are well-versed on investor-state dispute settlements (ISDS), a topic we’ve covered in depth over the past decade or so. As Yves pointed out in a recent post on Russia’s decision to use ISDS to go after the EU’s attempts to permanently confiscate Russian assets, the judgments made in these dispute settlements overwhelmingly benefit investors:

These treaties, designed to override the laws and regulations of states in order to give protected status to investors, make a mockery of national sovereignity. ISDS disputes draw on a small community of arbitrators, many of whom were involved in drafting ISDS treaty provisions, with hearing held in secret and typically not appealable. The rising (and correct) perception that the rules were gutting labor rights and environmental protection was instrumental to stopping their reach being extended further in the US. But it seems no existing ISDS provisions have been unwound.

What makes this case particularly pernicious is that a large part of the losses and foregone profits Halliburton is seeking to claw back stems from Washington’s economic sanctions on Venezuela. What’s more, the case was filed at the World Bank’s International Centre for Settlement of Investment Disputes, to which Venezuela has not even been party since 2012.

To say that this is Orwellian or Kafkaesque would be an understatement.

………

There is currently very little information available on the ISDS case filed by Halliburton. The following is an excerpt of a firewalled article published by the Global Arbitration Review that was translated into Spanish and posted by the Madrid-based legal firm Bullard Falla Excurra on its LinkedIn page (translated back into English by yours truly, emphasis also my own):

On December 11, 2025, Halliburton filed a claim against Venezuela with the International Centre for Settlement of Investment Disputes (ICSID) under the Barbados-Venezuela Bilateral Investment Treaty. The case will be processed under the Additional Facility Rules, given that Venezuela withdrew from the ICSID Convention in 2012. The dispute stems from Halliburton’s gradual withdrawal from the Venezuelan market between 2016 and 2020, after reporting losses of approximately US$199 million. These losses were attributed to the devaluation of the Venezuelan bolívar and the deteriorating economic and political conditions in Venezuela, which affected its ability to meet payments to its clients, including PDVSA, the state-owned oil company. Halliburton also notes that changes in the Venezuelan government’s exchange rate and US sanctions further complicated the viability of its operations in the country. Halliburton, which had operated in Venezuela since 1940, was forced to cease operations in 2020 [by US sanctions], although it maintained local assets and equipment in the country.

It seems to me that filing an action in a court that has no jurisdiction in response to actions that were taken by a party not a party to the action is fraud, and perhaps attempted extortion.

While Venezuela does not have much in the way of foreign reserves, it seems to me that they do have a court system to charge the people involved, including the members sitting on the ISDS panel with fraud and extortion, and then offer rewards in the low 6 figures for their delivery to Caracas.

Yeah, This is Literally the Worst Thing to Do

In response to high pricing (not high cost, high prices) of pharmaceuticals, the Trump administration is writing higher drug prices into international trade deals.

This isn't lowering prices, it's just hurting other people.

The Trump administration’s position on drug prices is that Americans pay too much while other countries don’t pay nearly enough. A new trade deal with the United Kingdom is addressing that imbalance, raising prices the national health system will pay for new medicines in exchange for tariff exemptions on U.K. pharmaceutical exports valued at about $3.5 billion a year.

The deal announced Monday is an update to a broad trade deal the U.S. struck with the U.K. in May. While the countries describe this new deal as an “agreement in principle,” it sets a precedent that could shape pharmaceutical pacts the Trump administration is still pursuing with other countries.

Before the U.K.’s National Health Service (NHS) can use a new medicine, it must first be evaluated by the government’s National Institute for Health and Care Excellence (NICE), which assesses a drug’s cost effectiveness to the health service. NICE’s current cost effectiveness benchmark is a range of £20,000 to £30,000 (about $26,412 to $39,618) per quality adjusted life year. That means a cost-effective drug should lead to the equivalent of one additional year of health and improved quality of life for no greater than £20,000 to £30,000 more than the cost of the current standard of care. Consequently, a drug shown to be safe and therapeutically effective in clinical trials may end up being turned down by NICE because it is not cost effective, though the agency said it applies a higher threshold for medicines developed for ultra-rare conditions.

 This is ineluctably evil.

Headline of the Day

Libertarianism, 13, Dies in Argentina Chainsaw Accident

—The Nerd Reich

Yes, I know, this hed is from a few weeks ago, but it's new to me.

It is, of course, about Argentine President Javier Milei asking, and getting, a bailout from Donald Trump/ 

An Interesting Perspective on China Trade Sanctions

Specifically, Arnaud Bertrand is suggersting that China has been slow walking negotiations until they haD developed alternatives to items that were only available in the United States, particularly helium.

Here's a question I know many are wondering about: why did China wait until now to use rare earths as leverage against the US? Why not in the first Trump administration when the US started the trade hostilities? Or when the Biden administration unleashed the chips export controls 3 years ago?

I just watched a fascinating explanation by a Chinese analyst and, unexpectedly, a big part of the explanation is... helium. 

 I had no idea but as he explains (source here), all the way until 2022 China imported 95% of its helium and most of it was controlled by the US. Of the world's ten largest helium producers, four were American companies, and the remaining six all used American technology. 

Helium isn't just a party balloons gas: it has plenty of industrial applications for things such as quantum computing, rocket technology, MRI machines, as a coolant for chip lithography equipment, etc. 

In a nutshell what he's explaining is that with helium the US had an even stronger card to play if China ever used the rare earths card. 

The Chinese embarked on a crash program to develop helium extraction technologies and to nutralize other US controlled choke-points.

Now that this has been achieved, they can throw choke-points the United States' way. 

Even if you don't admire the player, you have to admire the play. 

So, How Corrupt is the Supreme Court?

We're about to find out, because the U.S. Court of Appeals for the Federal Circuit, I normally refer to them as the "Patent Court", but they cover international trade as well, has ruled that Donald Trump has no authority to implement tariffs.

The legal reasoning is fairly straightforward, if one looks at the black letter of the Constitution, only Congress can levy taxes, which includes tariffs, and in all cases where the Congress has given the President the authority to act on their behalf, they have explicitly listed them in the language of the bill.

The International Emergency Economic Powers Act (IEEPA) has no mention of tariffs at all.

The injunction has been stayed until October to allow for an appeal to the Supreme Court.

The real question here is whether or not the Supreme Court will ignore the Constitution in order to more deeply fellate Donald Trump.

I expect a 5-4 or 6-3 decision in his favor. 

He's F%$#ing Broken the F%$#ing Post Office!

Most of the postal services in Europe have stopped shipping parcels to the United States, as have Japan, Australia, and Taiwan.

In addition, shipping giant DHL has suspended shipping parcels as well.

In most cases this only applies to their lower cost shipping services from commercial entities, typically items from private people listed as gifts are still being shipped.

The customs process has become too much of a headache.

You have to f%$#-up hard to kill postal service without resorting to armed conflict.

About Those Tariffs

The Producer Price Index rose by 0.9% in July.

That annualizes out to about an 11% inflation rate, though it should be noted that this is only 1 month of data.

I'm more pro tariff than a lot of people, I believe that friction in international commerce and international finance is a good thing because it provides stability and prevents destructive capital flows. (I take the term "Destructive Capital Flows," from Keynes.) 

That being said, tariffs drive up costs.  That's as close to a fact as you can find in economics.

The question is, or should be, whether the additional costs create any societal benefit, and if so, is the benefit worth the cost.

Wholesale prices rose far more than expected in July, providing a potential sign that inflation is still a threat to the U.S. economy, a Bureau of Labor Statistics report Thursday showed.

The producer price index, which measures final demand goods and services prices, jumped 0.9% on the month, compared with the Dow Jones estimate for a 0.2% gain. It was the biggest monthly increase since June 2022.

Excluding food and energy prices, core PPI rose 0.9% against the forecast for 0.3%. Excluding food, energy and trade services, the index was up 0.6%, the biggest gain since March 2022.

To quote Bette Davis, "Fasten your seat-belts; it's going to be a bumpy night." 

An Ignored Truth

In the discussions of tariffs and international trade, something that is frequently ignored is that the trade regime of the 80s, 90s, and particularly the 2000s did actually result in large numbers oi job losses.

When one looks at things like the GATT, later the WTO, and to an even greater extant WIPO, it becomes clear that the so-called "Free Trade" deals of that era were neither about freedom nor trade.

Instead, they were orgies of self-dealing and political lobbying, with the interests of labor ignored for the benefit for the interests of international finance. 

It's all about one countries negotiating deals that benefit their particular brand or rent-seekers. 

The goal was to create greater inequality through labor arbitrage.

There are claims that it was all due to productivity increases, but this growth was pitiful compared to earlier times.

I had a couple of people ask me what I thought of this NYT piece on trade and manufacturing from last week. The piece makes some valid points, but it continues to push the elites’ big lie, that trade was not the major factor in the collapse of manufacturing employment in the 00s.

It makes this point explicitly:

Take manufacturing. Of the six million factory jobs erased during the 2000s, Chinese imports accounted for about one-sixth of the losses, or a million jobs. But the other five million were killed off by other forces. 

The other forces are supposed to be productivity growth and the shift from goods consumption to service consumption. There is a big problem with these alternative explanations. We had productivity growth forever. We also have been seeing people shift from goods consumption to service for a long time. It did not just begin in the 00s, or end there. But the job loss in manufacturing did.

As can be seen, there are cyclical ups and downs throughout the whole period, but the only time we saw widespread job loss outside of a recession was in the 00s. It seems a bit fantastical to think that productivity growth and a shift to service consumption cost us 40 percent of manufacturing jobs in this decade when the trade deficit exploded, but not in the decades before or in the last fifteen years, when employment in the sector has been on a modest upward trend.

You can read the rest. 

The reason that our economy, and our society, feel so out of whack is because the haves have increasingly crafted a system which is designed to allow them to loot the have nots.

A lot of this is the outgrowth of the DMCA, signed into law in the 1990s, not the safe harbor provisions, but the anti-circumvention provisions, which created an orgy of rent seeking and speculation that drove out building and investment.

Trump is a symptom of this, not the disease. 

 

And the Spanish Armada Gets Boned Again

According to reports from El Pais, (translation here) the Spanish government is ending its plans to buy the F-35 from the United States.

Instead, it will buy some European fighter aircraft instead, most likely the Eurofighter Typhoon or the in-development Future Combat Air System.

This is a problem for Spain's aircraft carrier, the Juan Carlos, since it is a STOVL carrier, with a ramp in the front and no arresting gear, and as it stands now, it will not be able to maintain its AV-8B Harriers much longer.

In order to accommodate something like the Rafale-M, they would need to add an arrester gear and angled flight deck, which is a significant rebuild.

The purchase of F-35 Lightning II aircraft, the fifth-generation American stealth fighter, for the Spanish Armed Forces has been definitively shelved, according to a report published by the Spanish newspaper El País, citing government sources.

Preliminary contacts that had already begun have been suspended indefinitely. Although the government approved a 10.471 billion Euro plan last April and has committed to spending 2% of its gross domestic product (GDP) on security and defense, the decision to invest 85% of these funds in Europe is considered incompatible with acquiring an American aircraft.

………

Spain’s defense ministry never moved beyond a non-binding RFI (Request For Information) for the Lightning II. The 2023 budget even penciled in 6.25 billion Euro for “replacement aircraft for the AV-8B and C-15M, phase 2” (in other words, the Navy’s Harriers and the Air Force’s remaining F-18 Hornets). Looks like those plans are now scrapped.

That leaves the Armada (Navy) in a corner. The AV-8Bs are expected to be retired by 2030, and extending their service is no longer realistic: the aircraft are aging, and with both the USMC and Italian Navy phasing theirs out (and replacing them with the F-35B), Spain would be left as the only operator, facing a vanishing spares market. The only viable STOVL replacement is the F-35B. Passing on it would mean the Juan Carlos I loses its fixed-wing fast jet capability and reverts to helicopters only.

Spanish Armada has a problem.

Maybe they could license the Yak 141 from Russia.

Interesting Tech

A South African has initiated a program to make rhinoceros horns radioactive in an attempt to thwart poachers.

This is extremely low levels or radiation, but it's enough that it can be detected in a shipping container using already in place equipment designed to prevent nuclear weapon proliferation. 

A South African university has launched an anti-poaching campaign to inject the horns of rhinoceroses with radioactive isotopes that it says are harmless for the animals but can be detected by customs agents.

Under the collaborative project involving the University of the Witwatersrand, nuclear energy officials and conservationists, five rhinos were injected in what the university hopes will be the start of a mass injection of the declining rhino population, which they are calling the Rhisotope Project.

Last year, about 20 rhinos at a sanctuary were injected with isotopes in trials that paved the way for Thursday’s launch. The radioactive isotopes even at low levels can be recognised by radiation detectors at airports and borders, leading to the arrest of poachers and traffickers.

Researchers at Witwatersrand’s Radiation and Health Physics Unit said tests conducted in the pilot study confirmed that the radioactive material was not harmful to the rhinos.

 Kewl.

It's Thursday ¯\_(ツ)_/¯

So, both the initial unemployment claims and the continuing unemployment claims numbers were flat this week.

The former is at an OK level, and the latter is at a very much not OK leve.l 

Meanwhile, the Fed's Open Market Committee kept interest rates unchanged, as predicted, unleashing a storm of whining from Donald Trump, and rose at a robust 3% annual rate in the 2nd quarter, but this number, much like the contraction seen in the 1st quarter fall in GDP are likely more a response to the incoherence of Trump's tariff policy than anything else.

I have no clue what this all means. 

Gee, You Think?

Gee, who could have known that among the wretched hive of scum and villainy that is the trump administration, at least one of them would be making a profit on inside information about Commander TACO's flip flops.

Of course they are: 

………

Front-running is a trading term. It means using fore-knowledge of an impending trade or price move to engage in a personal or proprietary securities transaction in advance of that trade or move. If you know in advance that a price will move sharply, either up or down, front-running means trading in advance of that move, then getting out after the move is complete.

You can make a lot of money if you know what the market will do. Using advance, non-public knowledge of a market-moving transaction or announcement is usually illegal (unless you’re a member of Congress; I mean that literally). 

With that in mind, note this:

Nothing to see here.  Move along.