Something Wicked This Way Comes

In France, the voters turned against Macron’s ruling coalition. In Germany, they turned against the centrist Social Democrats and Christian Democrats in favor of more extreme alternatives.

Anatol Lieven: Europe’s center is not holding

The collapse of the government in France and the ruling coalition in Germany spells continued crises

In America, too, voters selected the ‘insurgent’ Donald Trump over the media-approved Kamala Harris.

Something wicked this way comes?

Executive Summary:

All the world’s major nations — China, Japan, the US, France, Britain and Germany — are facing a debt crisis. Too much spending. Not enough revenue. And now, there’s about $330 trillion of debt worldwide… much of which will never be paid.

Responsible governments try to cut back. But they can’t. The primary beneficiaries — the rich — undermine them. And then, the victims — who have come to depend on handouts — abandon them.

The trend — towards more debt, bigger government, and more inflation — continues until a ‘bad thing’happens, effectively cutting off the money.

In France, the voters turned away from the center and moved towards the right and left, each one offering more radical solutions.

In Germany, too, the ‘right-wing’ Alternative for Deutschland and the ‘left-wing’ Sahra Wagenknecht Alliance have greatly weakened the more mainstream parties.

And, of course, Donald Trump’s Republican Party is not at all like the old conservative, centrist Republican Party of Robert Taft and Ronald Reagan. It is now a ‘populist’ party combining elements of dollar-store nationalism with old-fashioned sticky-fingered socialism.

The ‘bad thing’ we think these election results foretell is that post-WWII mainstream models — welfare states in Europe/a welfare-warfare state in the US — are running out of juice.

There was something fraudulent about them from the very beginning. In the welfare states, the promise was that by supporting the ruling elites, the voter would get more out of the system than he could by his own honest, cooperative efforts. This seemed to be true as long as populations were growing and technology and trade increased productivity. Richer, younger generations could afford to support their parents in grand style. Pensions, real estate values, medical coverage — all went up. But it was fake. Government was just redistributing wealth, not creating it.

And then, birth rates declined. And the benefits of the Industrial Revolution — which converted heat energy into useful kinetic energy — reached declining marginal utility (meaning… you get a big bump in productivity with your first tractor… not so much with the 10th).

Young people now struggle to match their parents’ wealth, not to surpass it. And though the internet, Facebook, Google and AI promised more wealth, in terms of useful bill-paying GDP, they delivered little. This left voters with a big gap between what they had come to expect from their governments and what they will actually get. Austerity was not what they had bargained for.

The American warfare state, meanwhile, had its own scams. It pretended that the US was in imminent danger from foreign and domestic enemies… and that it could only protect itself by transferring huge amounts of money to the firepower industry. Rather than a modest ‘defense’ budget, it insisted on ‘full spectrum dominance,’ that would allow it to meddle in whatever conflicts, wherever and whenever it wanted.

In addition to the costs of projecting armed force worldwide, the US too has an extensive welfare state at home to support. As in Europe, at current levels of expenditure, it is unsustainable.

In order to avoid financial catastrophe, the feds need to cut about $2 trillion from the annual budget. That is the goal of the new DOGE headed by Musk and Ramaswamy. But to get there, they need to cut back on both the warfare state and the welfare state — on military muscle as well as civilian fat.

It is certainly possible to do so; Milei shows us that. For the warfare state, it would mean only redirecting military spending towards protecting the homeland rather than romping all over the globe. And for the welfare state, the feds could simply subject beneficiaries to means testing, reducing support for people who don’t really need it.

Theoretically, it wouldn’t be difficult to bring the budget into balance and avoid a fiscal disaster. But can it be done without a ‘bad thing’ –war, depression, hyperinflation, revolution or a natural disaster -happening first? Can it be done before the people become desperate?

We’ll see.

Regards,

Bill Bonner

In France, the voters turned against Macron’s ruling coalition. In Germany, they turned against the centrist Social Democrats and Christian Democrats in favor of more extreme alternatives.

Anatol Lieven: Europe’s center is not holding

The collapse of the government in France and the ruling coalition in Germany spells continued crises

In America, too, voters selected the ‘insurgent’ Donald Trump over the media-approved Kamala Harris.

Something wicked this way comes?

Executive Summary:

All the world’s major nations — China, Japan, the US, France, Britain and Germany — are facing a debt crisis. Too much spending. Not enough revenue. And now, there’s about $330 trillion of debt worldwide… much of which will never be paid.

Responsible governments try to cut back. But they can’t. The primary beneficiaries — the rich — undermine them. And then, the victims — who have come to depend on handouts — abandon them.

The trend — towards more debt, bigger government, and more inflation — continues until a ‘bad thing’happens, effectively cutting off the money.

In France, the voters turned away from the center and moved towards the right and left, each one offering more radical solutions.

In Germany, too, the ‘right-wing’ Alternative for Deutschland and the ‘left-wing’ Sahra Wagenknecht Alliance have greatly weakened the more mainstream parties.

The ‘bad thing’ we think these election results foretell is that post-WWII mainstream models — welfare states in Europe/a welfare-warfare state in the US — are running out of juice.

In addition to the costs of projecting armed force worldwide, the US too has an extensive welfare state at home to support. As in Europe, at current levels of expenditure, it is unsustainable.

We’ll see.

Regards,

Bill Bonner

For 30 years, Japan was the land where interest rates went to die.

The Bank of Japan used yield-curve control to keep long-term rates sedated. Traders joked that shorting Japanese bonds was the “widow-maker trade.”

Not anymore.

On November 20, 2025, everything changed. Quietly, but decisively.

The Bank of Japan finally pulled the plug on decades of easy money. Negative rates were removed. Yield-curve control was abandoned. The policy rate was lifted to a 17-year high.

Suddenly, global markets had to reprice something they had ignored for years.

What happens when the world’s largest creditor nation stops exporting cheap capital and starts pulling it back home?

The answer came fast. Bond yields in Europe and the United States began climbing. The Japanese yen strengthened sharply. Wall Street faltered.

The rate cut narrative is calcifying into gospel: the Fed must cut to save the consumer.

Bankrate reports that 59% of Americans cannot cover a $1,000 emergency without debt or selling something. And yet stocks are roaring, liquidity junkies are celebrating, and the top 10% now account for half of all consumer spending.

Here’s the plot twist: before 2020, consumer confidence faithfully tracked equity markets. After 2020, that relationship broke. As one analyst put it, “The poor don’t hate stocks going up. They just don’t feel it anymore.”

So when the Fed cuts rates in one of the hottest stock markets in history, who exactly benefits? Not the 59%. Not the middle. Certainly not anyone renting and watching shelter inflation devour their paycheck.

Only the late-stage dot-com fever dreams did better in recent memory — back when analysts were valuing companies by the number of mammals breathing inside the office.

For the moment, stocks appear unsinkable, unslappable, and perhaps uninsurable. But this is what generational technology shifts do: they take a kernel of genuine innovation and inflate a decade of growth into a 36-month highlight reel. We’ve seen this movie. It premiered in 1999 and closed with adults crying into their PalmPilots.

And just as the internet continued reshaping the world long after Pets.com curled up and died, AI will keep marching on whether or not today’s multiples survive a stiff breeze. The technology is real. The valuations, however, will eventually need to stop hyperventilating and sit down with a glass of water.

Wheelbarrows are not chickens. A chicken is a biological production unit. A wheelbarrow is a capital good. A wheelbarrow doesn’t produce work. But it CAN be a productivity multiplier.

And that’s how we have to think of all those GPUs the hyperscalers are spending money on. If their thesis is right, trillion in AI and data center spending now, will translate into a massive burst in productivity and new technologies in the next two decades. That is the only justification for the current valuations/multiples at which these stocks trade now.

The American poet William Carlos Williams wrote, “So much depends, upon a red wheelbarrow, glazed with rainwater, beside the white chickens.”

Today the wheelbarrow is Nvidia Green. And so much of the stock market depends on that wheelbarrow being a big enough productivity multiplier to offset $340 trillion in debt.