Peace is an illusion

Negotiations took place between the US and Iran in June. These resulted in the announcement of a temporary agreement (Memorandum of Understanding) providing for a 60-day ceasefire and the reopening of the Strait of Hormuz to tankers. Both sides have portrayed this as a step towards genuine peace. But can we really believe that?

The latest statement by US Vice-President J. D. Vance casts doubt on this. In an interview with Michael Knowles, Vance explicitly admitted that this was in fact a tactical pause and not a permanent agreement. He explained that the main objective was to restore global oil reserves, and that what happens next remains an open question. War could break out again, or there could be lasting peace. The latter, however, depends on a “major shift in Iran’s approach”.

Apart from Vance, it is safe to assume that Tehran will not back down from its demands, and therefore an escalation is highly likely. However, there is one factor that could really weaken Iran’s position: oil. Iran is having serious problems selling it. Following the announcement of the MOU and the lifting of some of the sanctions, Tehran has attempted to export oil on a massive scale, but so far without success. According to Stephen Innes, between late June and early July, more than 58 million barrels of Iranian oil were at sea, of which more than 90 per cent had no clear destination, as shown in the chart below.

Fully loaded tankers are anchored near the Strait of Malacca and the Chinese coast. Iranian oil is flowing there in huge quantities (more than 2 million barrels), but Chinese refineries are unwilling to buy it. The reason is the sharp fall in domestic demand in China, which is leaving Chinese refineries with insufficient margins. In any case, Iran only has until the end of August before the period set out in the MOU expires. The longer the problems with oil sales persist, the greater the pressure on Tehran’s public finances, as the anchored tankers merely incur additional costs. This, in turn, could lead to Tehran making major concessions to the US when the time comes for further negotiations.

At the same time, we must not forget Israel, which will do everything in its power to torpedo the peace negotiations. The current agreement should therefore be viewed primarily as a strategic pause before the cards are reshuffled in the Middle East conflict.

Techno-fascism is coming

Palantir is not just a US technology company, but a software developer whose software is used primarily by government agencies, as well as commercial clients. Tracking the enemy, planning and managing the battlefield are Palantir’s core areas of focus. The company has access to vast databases of classified information, not only in the US but in many different countries simultaneously. It is often perceived as a company that profits from surveillance, war and human suffering.

It used to be people like Rockefeller or the titans of the steel industry, the owners of the railway companies, who influenced and shaped politics. Today, it is people like Musk who, through social media and their decisions, shape world events and stand shoulder to shoulder with politicians. These people have become arrogant; they are beginning to presume they know better how the state should function, and even what this new, brave new world should look like in their visions. Musk, for example, failed in his attempt to work hand in hand with Trump to cut public spending (particularly in the civil service), but his self-assurance regarding the direction the country should take remains immense. Palantir goes a step further and has published a manifesto setting out what makes the Silicon Valley movers and shakers tick and how they view the world.

It is a dystopian essay reminiscent of the works of Huxley or Orwell. Here are some key points from it:

The limitations of soft power have been laid bare: moral appeals are no longer enough for free and democratic societies – they need hard power (Hardpower), and in this century, this will be built on software.
The era of nuclear deterrence is coming to an end; the era of AI-based deterrence is beginning.
The introduction of universal national conscription should be considered. Palantir justifies this on the grounds that the risks and costs of war must be borne by society as a whole.
Some cultures bring about civilisational breaks, whilst others remain dysfunctional and regressive.
Germany’s weakening went too far, and Europe is now paying a high price for it. Japan’s theatrical commitment to pacifism, if it continues, would jeopardise the balance of power in Asia.
American politicians are powerless in the face of crime, which is why technology should step in where the state has failed.

So the decision-makers in Silicon Valley want an authoritarian state governed by AI, which is, after all, capable of making erroneous decisions – be it in the case of criminals or an attack on another country. The Belgian philosopher Mark Coeckelbergh writes aptly on this subject: “The danger lies not only in the overt talk of repression and incitement to war, but also in a more subtle transformation: the normalisation of surveillance, the delegation of judgements to opaque systems, and the quiet concentration of power in the hands of the few actors who design and control these infrastructures whilst simultaneously wielding global influence.”

To me, proposals such as those put forward by Palantir are nothing more than a call to increase the pool of ‘assets’ under the company’s control. The proposal for universal conscription aims to make society as a whole responsible for the war. A society whose children join the army is far more likely to accept astronomical budgets for systems such as Palantir – after all, nobody wants to send their loved ones to the front without the best technical support to minimise their risk. Furthermore, the call for the remilitarisation of countries, the fuelling of hostility towards other societies, and AI-based weapons all serve one purpose: more power and money for the techno-political tandem, and more chaos to enable them to take control of everything. It would be a veritable ‘brave new world’ with a narrative of constant threat, where governments would be reliant on the digital infrastructure that Palantir will provide. How lovely!

Sources:

The Manifesto
An extract from the book on which the Manifesto is based.

Property – a huge problem in the US

The US has been battling the property crisis for years, and it is coming to a head.

According to the report by the US President’s Council of Economic Advisers, there is currently a shortfall of 10 million homes in the US. One of the main causes is the growing disparity between income and expenditure on rent or housing costs. Almost half of the country’s tenants spend more than 30 per cent of their income on housing. More than a quarter of American households who rent spend more than half their income on housing, and recent surveys show that most Americans consider housing costs to be too high.

The difficult situation in the housing market is also reflected in the eviction figures. The number of evictions is rising steadily, leading to an increase in homelessness. A distinctive feature in the US is that the reasons for eviction vary according to tenants’ ethnic background. Whilst only 7% of white tenants fail to pay rent, the corresponding figures for Black and Latin American tenants are 19.5% and 14.5% respectively.

The housing crisis not only poses a growing threat of homelessness but also contributes to the impoverishment of society. When property prices rise (relative to income), people have less money left over for other goods and services. As a result, some citizens will never be able to buy their own home. For this reason, some young people are forced to return to their parents’ home or never leave it at all, preventing them from starting an independent life and raising a family.

The shortage of affordable housing is causing a decline in economic productivity. Employees find it difficult to live in metropolitan areas where demand for skilled workers is rising or where well-paid jobs are being created. High property prices are also having a negative impact on fertility – many couples are postponing the decision to have children.

The report also points out that the climate policy decisions taken by former US President Joe Biden have contributed to higher costs for house building. These relate to energy-efficient building regulations that imposed an obligation to install more efficient air-conditioning systems and water heaters in buildings. The document cites a 2021 analysis by the National Association of Home Builders, which concludes that the installation of environmentally friendly appliances can increase the price of a house by 31 thousand dollars. It can take up to 90 years to recoup the costs associated with purchasing these solutions.

Added to this are the American bureaucracy, which is in a state of disarray, and restrictions on land-use planning that prevent the construction of denser housing. The consequences? The most difficult situation is in California (where 187,000 people are living without a roof over their heads) and in the State of New York (with 158,000 homeless people).

Welcome to America, the land of opportunity.

Paradoxes of today’s economy

[1] The globalisation paradox (the Rodrik trilemma, named after the economist Daniel Rodrik)

It is impossible to maintain hyper-globalisation, democratic politics and national sovereignty at the same time, because:

[a] if we integrate fully into the global market, we must abandon national regulations;

[b] if we wish to retain our national laws, this slows down the global economy, on which our national economy also depends;

[c] the paradox: states are desperately trying to achieve all three objectives at the same time, which leads to political tensions.

[2] The productivity paradox (Solow paradox, named after Robert Solow)

We are experiencing the greatest technological revolution in history (artificial intelligence, automation, digitalisation), yet the statistics show no significant rise in global productivity. Although technology is speeding everything up, per capita economic growth in many industrialised countries is slower than it was during the pre-digital decades of the 20th century.

The latest invention, AI, is not creating jobs in its own sector. Since the launch of ChatGPT, employment in the technology sector has not been rising but falling. The graph below shows two lines since ChatGPT was released.

The white line represents employment in the education and healthcare sectors. The blue line represents employment in the information and technology sectors. Since November 2022, employment in the US IT sector has fallen by 11 per cent: the sector has lost 332,000 jobs and shrunk to 2.78 million employees. At the same time, the education and healthcare sector grew by 13 per cent, adding 3.16 million jobs. Employment in the technology sector is now below pre-pandemic levels. The sector that develops tools for work automation is itself losing jobs at the fastest rate. This decline is, in part, due to simple cost optimisation. Technology companies began cutting jobs following the pandemic-driven boom. However, the scale and duration of this trend suggest that AI is indeed replacing staff in those areas where the technology is being implemented most rapidly. For the rest of the economy and those who have been made redundant, this is a warning sign of what might happen in the future.

[3] The Green Paradox (described by the German economist Hans Werner)

To combat climate change, governments around the world are announcing stricter environmental regulations for the future. The paradox is that these announcements often have the opposite effect:

[a] Owners of fossil fuels (oil, coal) fear that their resources will soon be worthless.

[b] They increase production in the short term in order to sell off their stocks quickly, which causes CO₂ emissions to rise temporarily.

This paradox is best illustrated by the United Arab Emirates’ recent withdrawal from OPEC. The UAE has sufficient capacity to produce more oil and wants to offload it as quickly as possible, without being constrained by OPEC limits, in order to facilitate its transition to a service and tourism-based economy.

[4] We in the West are supposedly living in the best of times in history, but… where is all the money?

This chart shows Bloomberg data comparing the share of corporate profits in the US economy (left) with the share of wages in the US economy. This is one of those charts that tells us more about the economy than most macroeconomic reports and analyses.

The line on the left reaches a level in the first quarter of 2026 that is unprecedented since 1950. On the right, the share of wages in national income falls to its lowest level in history.

For most of the US’s post-war history, both figures moved in opposite directions, albeit within certain limits. What happens in 2026 is that both sides simultaneously reach extremes. Companies have never had such a large slice of the pie. Employees have never had so little – at least not since these statistics began.

There are several mechanisms behind this. Firstly, automation reduces labour costs. Secondly, market concentration in many sectors enables companies to maintain high margins, and the AI boom generates the greatest profits for companies that employ relatively few people in relation to their valuation.

This is not merely a question of social justice. A consumption-driven economy faces a problem whereby consumers or workers are left with ever-decreasing incomes to spend.

About South Africa, but not about long-haul travel

This is what life is like in what is supposedly Africa’s richest country. The figures speak for themselves:

The economy in perpetual stagnation. According to the OECD, GDP growth has averaged just 0.7 per cent over the last ten years.
Official unemployment stands at 4%!!! This is particularly true for young people (aged 15–34), 58% of whom are affected. They remain outside the labour market. This high unemployment rate contributes to crime. STATS SA reports that 64 murders per day were committed in the first quarter of 2025.
A large proportion of 10-year-olds cannot read with understanding; the same applies to more than 4 million adults. Although three-quarters of the population have access to the internet, most are unable to use it for more complex tasks.
Public debt is not only a financial challenge but also a social one, and is set to exceed 78 per cent of GDP by the end of 2025. The high cost of servicing this debt is limiting the government’s ability to fund social spending and public investment.
The energy shortage is another problem that is hampering economic activity and undermining the quality of life in the country. According to the OECD, power cuts reduced economic growth by 1.5% in 2023, when 289 days of outages were reported, compared with ‘only’ 69 days in 2024. The energy crisis is closely linked to the inefficiency of distribution management by the operator Eskom, which is effectively a monopoly in the field of energy supply in South Africa, where coal still accounts for almost 80 per cent of the mix. Eskom is constantly having to contend with criminals who vandalise distribution stations and steal transformers

Visit Kruger National Park, see Cape Town and Table Mountain, and be back in Europe in no time!

Spirit is running low

The fuel shortage is becoming increasingly serious. Lufthansa has already cancelled 20,000 flights. Air France has increased prices for economy class tickets by 50 euros per return journey, and the Dutch airline KLM has suspended more than 160 flights. At the same time, the International Energy Agency has announced that Europe will only have enough aircraft fuel reserves to last six weeks. However, the problem is already affecting industries across the globe. All major airlines are currently making massive cuts, particularly Turkish Airlines, which has cancelled nearly 20 routes. There are already companies that simply haven’t been able to cope with the situation. One such company is the US carrier Spirit Airlines, which filed for bankruptcy a few days ago. Although the name of this carrier may mean little to many readers, it is worth looking at the figures. Last year, the company operated more than 300,000 flights, carried 30 million passengers and held a 3.5% market share among US airlines. It is therefore not a small airline, but a national giant with more than 17,000 employees.

If we break down the cost of a typical passenger flight into its main categories, we can see that airlines are heavily dependent on the price of aviation fuel. On average, this accounts for 30% of the total cost.

And that is why Europe finds itself in a particularly difficult situation. This is because up to 70% of the crude oil that is subsequently processed into Jet A-1 aviation fuel comes from the Gulf region. This primarily includes Kuwait and Saudi Arabia, as well as the United Arab Emirates and Qatar. This makes the situation very dangerous, as any further blockade of the Strait of Hormuz will exacerbate these problems on a daily basis. Furthermore, it should be remembered that the availability of aviation fuel affects not only passenger traffic but also freight transport, which in practice is the first to feel the impact of disruptions. This is because, unlike passenger transport, where part of the costs can be passed on to customers gradually, any change in fuel prices for cargo is almost immediately reflected in the freight rates for every kilogram of cargo.

So here’s a handy tip: if you’re planning to fly on holiday, book a package with a price guarantee, as travel agencies such as TUI or DERTOUR are entitled to charge us a so-called fuel surcharge. These are additional costs, in accordance with the rules, which they can impose on the customer 20 days before departure if travel costs rise significantly.

The paradoxes of green energy

Energy is a commodity traded on the markets. This happens every day, at every moment. If the price of electricity falls, the electricity producer stops feeding his electricity into the grid. However, producers usually have no choice, as wind turbines keep turning and solar panels operate automatically. Energy storage systems are expensive and currently have barely enough capacity to store surplus electricity for hours or days when demand is high.

The more photovoltaic cells feed into the grid, the more frequently this problem arises: too much energy is generated precisely when everyone is producing the most. On sunny days, particularly at midday, there is more electricity than the system can consume. The more the sun shines, the more electricity flows into the grid at the same time – and the more frequently the price drops to zero or below. In extreme cases, the energy producer has to pay extra just to get someone to take the electricity off their hands. The following chart shows how the percentage of hours with negative electricity prices is rising in Europe and individual regions – and in which countries the biggest increases were recorded in 2025.

A negative electricity price is not a gift to the recipient. It is a signal that the system has been ‘overwhelmed’ by the surplus. Photovoltaic operators therefore sell electricity at a lower price relative to the average market value, which is not reflected in the final price paid by the end consumer. Why? Because there are too few energy storage operators willing to buy the electricity for free or at a premium and sell it at peak prices in the evening. Whilst the number of electricity storage facilities is rising steadily, the electricity grid is not being expanded to keep pace with the rapid growth of solar, wind and storage. As a result, on sunny days, photovoltaic plants and wind farms are being shut down more frequently because it is not possible to absorb the electricity. According to reports, 8.5% of onshore wind production was curtailed in the United Kingdom in 2024. In Germany, wind curtailment (onshore and offshore) has been above 5% since 2022, and solar curtailment rose to 2% in 2024. In China, this rose to 4.1% for wind and 3.2% for solar energy in 2024; preliminary figures for 2025 suggest over 5% for both, according to the IEA.

A modern 100-megawatt storage facility requires around 0.5 to 1 hectare of land. How much farmland would be needed for the massive offshore projects involving terawatt-scale wind farms currently being built in the Baltic Sea (for example, in Poland)? How much lithium and other metals – mined in the developing world in ways that are far from environmentally friendly – are required for these large battery energy storage systems (BESS)? Is that sustainable? Really?

I don’t think so. But it is politically correct, because it creates the illusion that we are becoming less dependent on fossil (read: Russian, Putin-controlled) raw materials.