Zerohedge

Authored by Victor Davis Hanson via American Greatness,

To find an impossible peace between Ukraine and Russia we must understand the recent history of the war and the European and American roles in it. 

So, Americans should revisit some fundamental realities and questions from which to remember before going forward:

Why Did Putin Invade Ukraine in 2022?

Putin did start the war. Trump’s trolling aside, he knows that because he correctly pointed out that Putin invaded his neighbors in three of the last four administrations—but not his own, given Trump’s deterrence.

The most obvious answer why Putin did is that he thought he easily could. But why in 2022—as he had in 2008 and 2014?

Putin has nonending opportunistic desires to recombobulate what he thinks properly is and will always be Russian—whether territories to be formally absorbed or as coerced satellite states. But he moves on them only whenever he thinks the benefits outweigh the costs.

And by February 2022, he certainly felt they did.

The U.S. and NATO had lost all appearances of deterrence vis-à-vis Russia. Joe Biden had been part of the Obama-Biden administration that had naively appeased Putin for some eight years. Remember their 2009 reset by Secretary of State Hillary Clinton that was based on numerous flawed and disastrous assumptions:

1. The prior Bush sanctions against Putin for invading Georgia and grabbing parts of South Ossetia were overly harsh, reflective of his supposed cowboyism evident in Iraq.

2. The Obama mystique, coupled with criticism of the prior Bush administration, would win over Putin. Remember Obama’s 2012 hot mic appeasement in Seoul, when Obama promised Putin “flexibility” (i.e., cancellation of Eastern European defense, if Putin gave Obama “space” for his “last election” (i.e., please don’t invade and embarrass Obama until after he was reelected in 2012).

3. The U.S. thought it could act unilaterally in Libya and Syria, talk of expanding NATO in Europe, and expect a humiliated Russia to keep silent and distant.

4. Once rebuffed by Putin, who took Obama’s measure, an angry and rejected U.S. would cajole, beg, and finally try to force European Union democratic values onto the Putin regime—by sanctions, by aiding Russian dissident groups, and by claiming Putin was America’s archenemy.

The flawed working theory was that an either compliant or defiant Putin could acquiesce and begin liberalizing Russia, in emulation of EU and US democracy.

All these assumptions were manifested by both Obama and Biden in a number of ways:

1. By ignoring Putin’s 2014 absorption of the Donbas and Crimea;

2. By ignoring Putin’s continual cheating on the Intermediate-Range Nuclear Forces Treaty;

3. By contextualizing his hacking and cyber warfare that were targeting U.S. institutions and corporations (“Cut it out!” said Obama to Putin; “Certain critical infrastructure should not be attacked,” piped up Biden);

4. By suspending offensive weapons shipments to Ukraine;

5. By Biden’s announced hesitation to react to Russia’s “minor incursions” in Ukraine;

6. By coupling such appeasement with a near decade of tough talk (Putin as a “killer”) and Putin-bogeyman hysterias like “Russian collusion” and “Russian disinformation.”

7. And finally, and most importantly, by fleeing from Kabul after abandoning to the terrorist Taliban a $1 billion embassy, a $300 million airbase, and billions of dollars in military equipment.

Weakness and appeasement when coupled with loud false charges are a disastrous combination.

What Was the Biden/NATO Strategy to Deter Putin?

The most obvious answer is there was none.

After the failure of Obama covertly promoting the pro-Russian Ukrainian government in 2014 and trying to select replacement candidates that would supposedly cement the transformation of Ukraine into an EU, NATO-member, Westernized garrison state on Russia’s border, there was only an embarrassed acceptance that the Obama-Biden group had played into the hands of the aggressive Russian bear. But it soon proved it had no desire for any ensuing effort to put him back into his cave.

So, what followed with Biden after February 24, 2022, was ad hoc, on-the-fly measures that, as best we could tell, were guided by naivete:

1. Gradually and silently slide Ukraine into NATO;

2. Convince the Europeans to step up and arm Ukraine;

3. Increase weapons shipments and provide economic and intelligence aid to Ukraine to levels sufficient not to lose the war, but not to excess to win it and provoke nuclear Russia;

4. Keep feeding the war endlessly in efforts to bleed out the Russian military, weaken Putin, and perhaps provoke a “democratic revolution” in Russia;

5. Transform Ukraine and Zelensky into modern heroes by:

Overlooking entirely that Zelensky had all but canceled habeas corpus, most opposition parties and media, and postponed scheduled elections. In other words, was our once rock star becoming a “benevolent” wartime autocrat amid the apparent corruption of US and NATO aid?

Keeping mostly silent about the horrendous costs to Ukraine, where a quarter of the population has fled the country, 500,000 have been killed, wounded, missing, or captured, while the economy and infrastructure have been all but destroyed—with no end in sight.

What Were and Are America’s Strategic Interests?

We have many interests and, in no particular order, would like to work to see the following occur:

1. Stay out of a theater-wide, European war with a nuclear power.

2. End the horrific killing.

3. Seek a sustainable peace that keeps Putin inside his own borders.

4. Convince Europe to rearm, defend its own interests, and deter Russia.

5. Free up some US military investment in Europe to pivot to Asia and deter China.

6. Disrupt the Russia-China alliance.

What Should Trump Now Do?

1. Talk softer while carrying a bigger stick.

2. Leverage, if possible, a return of Putin to his February 23, 2022, borders.

3. Accept that none of the last three presidents believed Ukraine could militarily regain Donbas and Crimea and neither will be recaptured.

4. Keep Ukraine out of NATO.

5. Help NATO to ensure Ukraine is well-armed and capable of thwarting any Russian violation of the peace—in other words, a hyper-NATO ability without being in NATO.

6. Insist that all NATO countries must meet their 2 percent contributions and over the next three years up it to 5 percent.

7. Allow U.S. interests to do business in Ukraine for a variety of economic and strategic advantages.

For all of Putin’s bluster, he has paid a terrible price for marginal gains. And he would not like to repeat the invasion of an even better-armed Ukraine. Despite his braggadocio, Putin seeks an end to the war.

Russia has lost respect worldwide, especially in its military. And great powers in its neighborhood, like India and China, no longer fear Russian arms. Even without a NATO Ukraine, it is likely that both Ukraine and Europe will be better armed in the years ahead.

China may be more restive and opportunistic vis-à-vis Russia. Bottom line: Putin has lots of reasons to see the war end, especially if he understands that he cannot win it, or at least cannot win it without further political instability at home.

Trump also wants an end to the war and for lots of reasons. He knows that the U.S. is divided or rather, its parties have flipped. Conservatives want to end the war and see our military redirected to deterring China. They believe our presence abroad should not be enlarged, given the massive efforts at home needed to solve the debt, border, and cultural crises. The MAGA, don’t-tread-on-me creed is to avoid wars and entanglements unless belligerents either attack us or attack our close friends to hurt us.

In weird contrast, peacenik liberals quietly want the war to go on. They quite unrealistically believe that greater U.S. and European aid, along with Ukrainian and NATO partnership, will eventually “crack” Russia, lead to Putin’s removal, and the installation of a glorious Western, EU-Russian political and cultural democracy.

Trump must negotiate with, but not necessarily believe, Putin and proceed in Reagan’s trust-but-verify fashion. For the immediate term, he can neither politically afford to expand the war to gain negotiating leverage nor simply, in a Kabul-fashion, pull out and be blamed when Ukraine is overrun or continue the no-end-in-sight current Biden killing-field policy.

So, to avoid all three unpalatable choices, Trump wishes to move quickly and decisively to cut a deal no one will like now—but may be appreciated once the slaughter ends.

As for Ukraine, Trump has enormous leverage over it for two obvious reasons: 1) Zelensky’s resistance to Russia will collapse if U.S. military aid is even modestly cut back; 2) Zelensky is no longer the pop star of 2022 who saved Kyiv in what was naively then thought to be a short, quick victory for Ukraine.

Trump can persuade Zelensky to give up his NATO hopes and his dream of regaining lost pre-2022 territories. Instead, he can tell him to seek to reopen a free society—with or without his leadership—and to rebuild a new, somewhat smaller, more secure, and even better-armed Ukraine.

The model—unfortunately—is not a gloriously defiant and courageous Finland of winter 1939. Instead, it is—realistically—an exhausted, proud, and realistic Finland of March 1940, when it finally accepted the reality of a Russian impending victory, negotiated, surrendered disputed territory, was often criticized but still preserved its autonomy, balanced East and West, finally gained international respect, armed to the teeth, and deterred Russia from entering the Finnish quagmire again.

Trump can make the argument that Russian détente with the U.S. and Europe is in Russia’s interests. The West does not have any territorial ambitions in Russia—unlike Moscow’s current partner of convenience, China, which most surely does. That is Beijing’s attitude toward any territorially large, naturally rich neighbor (like Australia) that is underpopulated. Putin will likely stay in power if the war ends now; he will see real threats to his regime if it continues for another three years.

Trump can let Europe decide whether it wants a beefed-up NATO, under strong U.S. leadership and engagement, in which all the parties invest 2 percent of their GDP in defense now and 5 percent in three years.

Or he can let Europe prefer to keep conning and lollygagging—sorta, kinda arming, sorta, kinda not arming. And thus, Europe will ensure that the U.S. becomes a nominal 2-percent member but forgoes leading an alliance of what Obama once called deadbeat “free riders.” Their choice, not ours.

In sum, Trump can end the war to no one’s satisfaction, or let Europe and Zelensky negotiate and see the war continue endlessly to no one’s satisfaction. 

Given geographical realities, the U.S. can live without a settlement, but eventually, all the other parties cannot.

For all the media screaming and left-wing accusations, Trump’s recent antics have at least accomplished the following: the NATO nations, Ukraine, and Russia are all confused about what Trump is saying, and so now all the more want him to stop the war.

Via The Variant Perception blog,

The relative strength of the US economy makes tariff threats an effective negotiating tool, and “America First” trade and security priorities mean tariffs will remain a feature of Trump’s second term. Allocations to volatility and TIPS should prove the best hedges for headline risk and the stagflationary impulse from implemented tariffs.

As tariff announcements start to dominate headlines, we provide three key points to serve as anchors:

• Weak rest of world (i.e., non-US) growth means less bargaining power for targeted countries

• Demand is the US’s key “export” and the ultimate currency

• Tariffs are here to stay as MAGA 2.0 embraces Reagan + Roosevelt

Weak rest of world (i.e., non-US) growth means less bargaining power for targeted countries

At inauguration, we noted the slim Republican House majority could make tariffs a higher priority (relative to tax cuts) in Trump’s second administration than his first. One key difference between today and 2018 is the global growth backdrop, raising the likelihood of quicker resolutions to tariff threats in order to avoid a significant growth downturn in targeted countries.

On the growth front, the US economy is much stronger relative to the Euro Area and China than at the onset of the first trade war in 2018 (which was preceded by a period of “globally synchronized growth”).

This raises the stakes for non-US countries, whose economies would come under further pressure from a protracted trade war (see shaded area above). It’s possible these growth imbalances encourage targeted countries to settle tariff disputes quickly (as seen today with delayed tariffs on Mexico).

Demand is the US’s key “export” and the ultimate currency

On top of the favorable cyclical backdrop, the US’s role as the chief source of global external demand gives it more bargaining power in trade negotiations.

The US trade deficit has persisted for the past 25 years and represents the US’s role as the “shock absorber” for global excess production. In other words, one can consider consumption demand to be the key export of the US to the rest of the world. So, any like-for-like retaliation will hurt non-US countries more given the US (as the chief buyer) can turn to other sellers more easily than a seller can find a buyer that can replace the US.

Related to this, the US is also a closed economy relative to most other economies. So, any broad-based decline in trade will weigh less on the US economy than other more trade-dependent economies.

Tariffs are here to stay as MAGA 2.0 embraces Reagan + Roosevelt

The asymmetric leverage leaves the Trump administration free to pursue its MAGA/”America First” strategy of restructuring trade and security and make it likely that tariffs will be a regular feature of this administration, not only a negotiating tool.

The use of tariffs to implement the “America First” strategy appears to be a consensus among key members of Trump’s administration, notably Treasury Secretary Scott Bessent (who recently advocated for gradual implementation of US tariffs up to 20%) and chair of the Council of Economic Advisors Stephen Miran (who outlined a similar plan in “A User’s Guide to Restructuring the Global Trading System”).

The trade policy echoes Reagan’s administration, which used measures like “Voluntary Export Controls” to limit imports of foreign goods and incentivize foreign companies to invest in the US. We think Trump will use tariffs consistently to boost investment in the US, given he’s repeatedly stated that the best way to avoid tariffs is to build in the USA.

Meanwhile, the security policy echoes the Roosevelt Corollary, which extended the Monroe Doctrine to allow for more direct US intervention in the broader Americas. The threat of tariffs to force Colombia to accept repatriated citizens, Panama to not renew its key canal deal with China, and Mexico to bolster border security are all evidence of a modern Monroe Doctrine/Roosevelt Corollary in action.

S&P and Treasury yields are the best KPIs, long TIPS + vol the best hedges

While Trump has stated he is not concerned about the market reaction, we still think a meaningful equity market drawdown or economic slowdown are the key constraints to Trump’s use of tariffs. After all, the only major pause in tariff announcements in Trump’s first term was during the S&P 500’s 15% pullback at the end of 2018. Treasury yields breaching 5% on inflation fears could also prove a constraint on Trump’s tariff agenda.

Taken together, we think long exposure to TIPS and volatility will be the best hedges against tariff headline risk and the stagflationary effect of tariffs (once they are implemented).

Via American Greatness,

A new disclosure by the Internal Revenue Service (IRS) to the House Judiciary Committee reveals that, under the Biden administration, the IRS leaked the taxpayer information of more than 405,000 Americans–including President Trump.

Rep. Jim Jordan (R-OH), who chairs the House Judiciary Committee, began an inquiry into the leaks last year and with this latest disclosure has found that the scope of the leak was much larger than the Biden administration initially led the public to believe.

The Obama IRS targeted conservatives.

The Biden IRS leaked your data. https://t.co/hOO66tONWX

— Rep. Jim Jordan (@Jim_Jordan) February 25, 2025

The scandal began in late 2019 when an IRS contract worker named Charles (Chaz) Littlejohn, illegally accessed and stole tax returns and return information for President Trump and other wealthy Americans and then leaked that information to news outlets.

Littlejohn pled guilty to the unauthorized disclosure in Oct 2023 and was sentenced to 5 years in prison.

In April 2024, the IRS issued letters of notification to victims whose data had been leaked but the notifications prompted deeper questions into how many people’s data may have actually been disclosed.

One month later, an IRS spokesman stated that “more than 70,000” taxpayers had been affected by the leak.

In Dec 2024, a second round of notifications was issued to individuals and entities that were not part of the initial 70,000 recipients of the first notice.

Rep. Jordan sent the IRS a letter on Jan 30, 2025 requesting more detailed information about the leaks and the IRS’s response letter sent on Feb 14 revised the number of people affected to 405,427 with approximately 89% of those taxpayers being business entities.

The leak of taxpayer data under the Biden administration follows the controversy of the Obama administration being accused of abuse for using the IRS to target conservative individuals and organizations.

Take note that the same coalitions protesting the prospect of DOGE engineers having access to IRS records and other financial data are conspicuously quiet about the actual abuses that took place under presidents Obama and Biden.

Remember when the Washington Post refused to endorse Kamala Harris in the home stretch of the 2024 election and the entire organization went full Handmaid’s Tale? Now multiply that by 100…

For his second act, owner Jeff Bezos announced on Wednesday morning that the Post’s opinion pages will be “writing every day in support and defense of two pillars: personal liberties and free markets,” in addition to the standard fare.

As Bezos explains on X;

There was a time when a newspaper, especially one that was a local monopoly, might have seen it as a service to bring to the reader’s doorstep every morning a broad-based opinion section that sought to cover all views. Today, the internet does that job.

I am of America and for America, and proud to be so. Our country did not get here by being typical. And a big part of America’s success has been freedom in the economic realm and everywhere else. Freedom is ethical — it minimizes coercion — and practical — it drives creativity, invention, and prosperity.

What’s more, WaPo opinion editor David Shipley – formerly of propaganda rag The New Republic as well as Bloomberg’s editorial section, quit the paper rather than present a more balanced view.

Whether or not we can actually Trust Bezos and the CIA’s favorite outlet to follow through – this is a five-alarm fire at the Post. 

I shared this note with the Washington Post team this morning:

I’m writing to let you know about a change coming to our opinion pages.

We are going to be writing every day in support and defense of two pillars: personal liberties and free markets. We’ll cover other topics too…

— Jeff Bezos (@JeffBezos) February 26, 2025

The paper’s chief economics reporter, Jeff Stein, framed it as a “massive encroachment by Bezos” which “makes clear dissenting views will not be published or tolerated here.” (lmao!)

Massive encroachment by Jeff Bezos into The Washington Post’s opinion section today – makes clear dissenting views will not be published or tolerated there

I still have not felt encroachment on my journalism on the news side of coverage, but if Bezos tries interfering with the… pic.twitter.com/7hzWCUDCVV

— Jeff Stein (@JStein_WaPo) February 26, 2025

Everyone at WaPo is gonna walk out today aren’t they? https://t.co/XdJvOSSF0Y

— Blume Industries CEO Balding 大老板 (@BaldingsWorld) February 26, 2025

And the reaction from WaPo journalists has been like sunlight hitting a vampire. https://t.co/UyovKKm3sW

— Stephen L. Miller (@redsteeze) February 26, 2025

And the reaction from WaPo journalists has been like sunlight hitting a vampire. https://t.co/UyovKKm3sW

— Stephen L. Miller (@redsteeze) February 26, 2025

Former WaPo propagandist Jen Rubin (who quit in January to fade into obscurity), joined the swan song.

Musk-Trump destroy WaPo. pic.twitter.com/xBQjEVg4MN

— Bluesky Libs (@BlueskyLibs) February 26, 2025

*  *  *

New ZH Store Deal! Free bottle of Mushroom 10x with each bottle of Peak Focus purchased until 2/28/2025

Try Peak Focus nootropic + Mushroom 10x to boost clarity & focus, while reducing oxidative stress and inflammation.

 

Oil prices in New York steadied this morning after starting the session at its lowest opening price in two months as a souring economic outlook threatened prospects for energy demand and spurred investors to shun riskier assets.

A poor reading of US consumer confidence fanned concerns over the impact of President Donald Trump’s tariffs. Plans for Ukrainian President Volodymyr Zelenskiy to meet with Trump in Washington raised the prospect that Moscow’s crude may again flow freely in the near future.

“Trump actions are hurting consumer and business confidence, which again will weaken actual consumption,” said Bjarne Schieldrop, chief commodities analyst at SEB AB.

Crude has lost almost 5% this month as Trump’s aggressive moves on trade stoked investor anxiety at a time when oil traders were already concerned about lackluster consumption in China. Supply issues have also been at the fore, including the possibility of a restart of significant pipeline flows from Iraq’s semi-autonomous Kurdistan region, with the US pushing for a resumption.

In the US, there was a mixed report from the industry-funded API on commercial inventories. While nationwide stockpiles decreased by 600,000 barrels last week, levels at the key storage hub in Cushing, Oklahoma, were seen rising by a substantial 1.2 million barrels. The government’s numbers will be the deciding factor for the day…

API

• Crude -640k

• Cushing +1.2mm

• Gasoline +537k

• Distillates -1.1mm

DOE

• Crude -2.33mm

• Cushing +1.28mm

• Gasoline +369k

• Distillates +3.91mm

Crude stocks declined for the first time in five weeks but distillates inventories built significantly. Stocks at the all-important Cushing Hib rose for the 3rd week in a row to their highest since mid-November…

Source: Bloomberg

The Trump administration added no crude the SPR for the second straight week, leaving the total crude stock draw the largest since Dec 20th…

Source: Bloomberg

US Crude production was marginally higher at record highs…

Source: Bloomberg

WTI was steady around $69 before and after the official data print…

Source: Bloomberg

The uncertainties over tariffs have eclipsed the lift from fresh sanctions against Iranian flows, as well as expectations that OPEC+ will once again defer a plan to progressively raise output, currently slated to start in April.

“Tariffs and counter-tariffs have the potential to weigh on the oil-intensive part of the economy, which creates uncertainty over demand,” Morgan Stanley analysts including Martijn Rats said in a note. 

“We expect OPEC to extend its current quota beyond April, likely keeping production broadly stable.”

Authored by Paul Joseph Watson via Modernity.news,

Members of the far-left Die Linke party proudly chanted an Antifa slogan before they entered the Bundestag parliament in Berlin after the German elections.

At one point, Die Linke (The Left) looked like they wouldn’t even make it into parliament by failing to achieve 5 per cent of the vote, but a late rally driven by fearmongering over the Afd helped them to garner 8.8 per cent thanks to a last minute surge.

Left leaders Jan van Aken and Ines Schwerdtner and former chancellor candidate Heidi Reichinnek gathered for a photo-op with other MPs to chant, “alerta, alerta, antifascista!” outside the Bundestag.

Unabhängig von der Parole „Alerta, alerta antifascista“ erzeugt diese Aufführung Unwohlsein beim Zusehen. Wenn Parolen und Kollektivismus sich in der Politik breitmachen, weichen Individualität, Vielfalt und Menschlichkeit. Das atmet den Geist der SED.pic.twitter.com/BZtXlFdpG9

— Künstliche Intelligenz (@1234Fit) February 26, 2025

“The phrase — “attention, attention, anti-fascists” — originated in 1920s Italy among leftist opponents of the Mussolini regime before being picked up in the Weimar Republic by the German leftist-extremist Antifascist Action group, the predecessor of the modern Antifa movement. The phrase is often heard at Antifa rallies worldwide to this day,” reports Breitbart.

In other words, literal Communists who support a movement that has been defined as a domestic extremist organization by some countries now have a foothold in German politics.

Die Linke was the most popular party among voters between the ages of 18 and 24 at 25 per cent, while the young female vote was crucial to them entering parliament.

34 per cent of women who voted in that age bracket cast their ballot for Die Linke, with their nearest challengers being the Afd on just 14 per cent in that demographic.

🚨🇩🇪Amongst young men the AfD is the No.1 party and amongst young women it’s No.2

It’s nice to know that some young people see through the leftist propaganda on college campuses. pic.twitter.com/1ZiKwG8d1Q

— Basil the Great (@Basil_TGMD) February 24, 2025

This is particularly striking given the plague of sexual harassment that women have suffered in German cities thanks to mass migration, something that Die Linke vehemently supports.

Meanwhile, CDU election winner Friedrich Merz, who has ruled out a government coalition with the Afd despite the right-wing party coming in second, is already caving on his manifesto promises as a result of him relying on the left-establishment SPD to form a coalition.

Despite the SPD being the clear losers on the night, falling to their worst election result since World War 2, they are likely to stay in government.

Merz has signaled he wants a new government to be formed within weeks not months, suggesting he is willing to cede significant policy control to the SPD, particularly when it comes to border control.

After vowing to rapidly increase deportations and impose strict border restrictions during the campaign, Merz immediately backtracked after winning the election.

“None of us wants to close the borders,” Merz said in a blatant effort to appease the SPD.

Essentially, Germany is right back to where it started, and it remains to be seen whether there will be much of the country left to save when the AfD has the opportunity to challenge the establishment again in the next election.

*  *  *

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After rising for two straight months, US New Home Sales were expected to decline 2.6% MoM in January data released today… and drop they did. New Home Sales puked 10.5% MoM in January (from a hugely upwardly revised December print of +8.1% from +3.6%)…

Source: Bloomberg

That dragged sales down 1.1% YoY…

Source: Bloomberg

Some have argued that winter weather impacted sales… to which we retort – aren’t there winter storms every year around this time of year? Maybe the analysts were stuck in rainbows and unicorn land?

The median price of new homes surged to $446k from $415k…

Source: Bloomberg

Finally, some might argue that the recent drop back towards 7.00% in mortgage rates may encourage sales in February…

Source: Bloomberg

…we won’t be holding our breath (especially for new homes in DC).

By Michael Every of Rabobank

Everything right now remains in flux, and there are more shocks for those who thought they could see what 2025 would bring, even based on assumptions from a few weeks ago.

In geopolitics, Ukraine agreed the US minerals/economic security deal after its most onerous terms were dropped. President Trump, when asked what they get for that, replied: “$350bn, lots of military equipment, and the right to fight on.” Is that the abandonment of the country? “Dictator” President Zelenskyy arrives in the White House to sign on Friday. True, some claim Ukraine doesn’t have these resources, and others that the real issue is where not-so-rare earths are processed, which is filthy; but that hasn’t stopped the EU offering Ukraine the same deal – how that can run alongside the US one remains to be seen.

European Commission President Von der Leyen wants Ukraine, with territorial integrity, in the EU as soon as 2030: the EU’s grand strategy just got far grander, and its grand macro strategy far more expensive, and requiring far larger EU structural changes and hard choices.

Turkey will militarily support Ukraine and Europe, and “rejuvenate” the EU’s economy and “demography”, if it gets EU entry, in President Erdogan’s own proposed grand macro strategy. That’s an interesting offer pointing to another radically different European future, if one the current right-wing trend in its politics seems incompatible with.

The UK is to boost defence spending if not by anywhere near as much or as fast as the government portrays, still to a far lower total than Trump wants (3% of GDP by the next Parliament), and by cutting foreign aid budgets. Spinning this, PM Starmer claimed defence spending helps the world’s poor because they are ‘hit hardest’ by war, but this is a ‘guns-not-others’-butter’-or-rich-aid-workers’ bread-and-butter choice. Yet it won’t spread that far vs. what the UK might needed ahead in some gloomy scenarios.

Germany is still serious about rearming, apparently, and next-Chancellor Merz also seems keen on returning to deeper mercantilism, which will raise global tensions just as much as any rearmed Germany. (See here for our post-election take: we remain sceptikal on German fiscal promises.)

Elon Musk agreed with a call for the US to urgently rebuild its navy, requiring a vast increase in its defence industrial base. That’s as: there is a Gulf of Tonkin incident, where Vietnam found oil, involving China; China says it has the right to sail warships through the Tasman Sea whenever it wants; the Cook Islands deal with Beijing could lead to a PLA-N presence on Australia and New Zealand’s doorstep, a Harbin-ger (given where it was signed) that the Kiwis may join AUKUS and spend on defence, even if for now their government is still doing a good impression of European ones before the last US presidential election; and a Chinese civilian ship is caught deliberately cutting a communications cable in Taiwan’s western waters.

Iran is preparing for Israeli strikes on its nuclear sites, says one source. The US prefers a deal, but its roll-back from Europe may lead to Tehran feeling emboldened, and the White House is seen as leaving the choice to Israel of if/when it needs to act militarily. Oil markets may be able to work their way round sanctions, but bombs – not so much. Yet for now markets aren’t worried and oil is lower.

In geoeconomics, the US may introduce a Gold Card visa where $5m and a promise to invest means residency, as many other countries already have: “Give me your retired, your rich, your coddled masses yearning to breathe free markets.” Expect serious population flows out of some parts of the world if so – if their populations are allowed to leave.

President Trump has “freed” US trees so less Canadian lumber is needed – but what of the wood mills? Reportedly, if subsequently denied, US economic advisor Peter Navarro has pushed for Canada to be removed from the Five Eyes Western intelligence network to try to pressure it to accede to Trump demands on tariffs, etc.

Trump also flagged possible US national security tariffs on copper, seeing prices for that key industrial metal leap.

US consumer confidence slid again as inflation expeditions jumped from 5.2% to 6% on sticky inflation, the recent jump in staples like eggs and the expected impact of tariffs.

However, US bond yields are sliding on DOGE-induced recession fears and weak data. Do also recall the Treasury are now looking at the 10-year part of the curve rather than Fed Funds.

Fed speakers overnight backed remaining “moderately restrictive” on rates; and that it would be appropriate, in the medium term, to purchase more shorter-term securities than longer-term so its portfolio can more quickly mirror the composition of Treasury issuance. The Fed buying T-bills just because the Treasury is issuing vastly more? And that’s even before we get to the Financial Times noting, “If Trump wanted to take control [of the Fed], its constitutional protections are far from secure.”

The House of Representatives passed a Republican budget blueprint 217 – 215 with $4.5 trillion in tax cuts and $2 trillion in spending reductions, with more, not less, for the Pentagon and border security, and raising the debt ceiling by $4 trillion. The non-partisan Committee for a Responsible Federal Budget estimates federal deficits would average 6.8% of GDP vs. 5.8% under current law, would add $2.8 trillion to cumulative US deficits by 2034, $3.4 trillion including interest, and US debt-to-GDP would rise from 117% to 124%. Now talks begin with the Senate for the bill’s next stage.

Crypto is plunging, perhaps due to a recent hack, or the latest celebrity pump and dump in Argentina,… or the emerging realisation that Trump pro-crypto legislation could exclude foreign issued/created stablecoins from accessing the US Treasury market: he wasn’t joking when he said he wanted crypto “Made in America”. Whether this blows up the national security dollar-gateway-to-crypto-assets > stablecoins-levitate-so-more-T-bill-buying > fund-the-Pentagon-Fartcraft-to-Warcraft dynamic or forces the old crypto to pivot to new, remains to be seen.

Bloomberg says, “German Bond Appeal Hits Record Low With More Borrowing Expected” on concerns a €200bn defence fund might really happen at the second time of promising – a zweitenwende. And, of course, that would just be the initial €200bn.

The US dollar is drifting lower with its yields, while a Europe involved in an existential crisis is seeing a positive sentiment shift on key stocks and EUR.

Geopolitical tensions in the Pacific aren’t really new. The call to rebuild the US Navy is no surprise, but the US Ukraine flip-flop might be to some. And how many in markets were positioned for lower US yields and a lower dollar as inflation expectations rise and tariffs are set to follow? Or seriously higher European defence spending? Or the EU being offered multiple, radically different futures in the same week? Or a slower pace of US debt increases ahead than in the recent past despite huge tax cuts? Or oil drifting lower even before we “Drill, baby, drill” and despite Middle East tensions? Or crypto collapsing after the election of a pro-crypto president?

I can assure you, there is more to come as economic statecraft pushes out economic policy.

Romania’s conservative populist presidential election front-runner Călin Georgescu has been arrested in a shock move by the state, which has left his supporters bewildered and outrage, as they mobilize to protest what appars brazen ongoing political persecution.

The detention and ‘questioning’ by police and the prosecutor’s office is reportedly in relation to last November’s canceled vote that he won, after unsubstantiated and vague claims of ‘Russian interference’ were claimed. Western media has commonly sought to portray him as a ‘far-right, pro-Russian’ candidate.

“Călin Georgescu was going to file his new candidacy for the Presidency. About 30 minutes ago, the system stopped him in traffic and he was pulled over for questioning at the Prosecutor General’s Office! Where is democracy, where are the partners who must defend democracy?,” a post on Georgescu’s Facebook account indicated.

Back in December Romania’s Constitutional Court had ruled “to annul the entire electoral process for the election of the President of Romania… to ensure the correctness and legality of the electoral process” – as the controversial and completely unprecedented ruling stated.

The ‘problem’ was that 62-year old Georgescu, the widely dubbed ‘far-right’ contender, came out on top in a first round of voting in a ‘shock’ outcome which left political opponents scrambling and claiming Russian intelligence was behind the massive and sudden rise in his popularity.

After winning the first round on November 24th, he was scheduled to face reformist Elena Lasconi of the liberal Save Romania Union (USR) in the second round. Crucially, Georgescu’s huge underdog victory also happened with zero campaign spending, according to his declaration. This was another ‘problem’ and conundrum for authorities and his political enemies.

But the supposed ‘smoking gun’ was related to mere social media posts on platforms like TikTok. The ruling came after President Klaus Iohannis declassified intelligence that alleged Russia ran a far-reaching campaign comprising thousands of social media accounts to promote Georgescu across platforms like TikTok and Telegram.

Footage of his arrest on a Romanian street:

🚨🇷🇴 EXCLUSIVE: MORE FOOTAGE OF CALIN GEORGESCU GETTING ARRESTED

He won a Presidential election, so they cancel the election and now arrest him.

‘Democracy’ in action in EU and NATO member: Romania

See below tweets in the chain for the full story of what I woke up to this… https://t.co/0ZEBuyq9fj pic.twitter.com/WklqgPWkje

— Mario Nawfal (@MarioNawfal) February 26, 2025

Currently, Romanian news outlets are reporting that police are searching the homes and offices Georgescu’s close associates, reportedly in connection with the funding of his election campaign last year.

According to the latest from Politico: 

Prosecutors suspect 27 people of acting against Romania’s constitutional order, public incitement, initiation of a fascist organization and false statements regarding the sources of financing an election campaign, but they didn’t name Georgescu or his aides in their statement.

However, shortly after news of the raids broke Wednesday morning, Georgescu claimed that the searches were aimed to block his new presidential candidacy.

A machine translation from the Romanian of Georgescu’s post reads in part as follows: “The communist-Bolshevik system continues its odious abuses! Today, at 6 am, they descended again on families in dozens of locations, waking children from their sleep.”

“They are looking to invent evidence to justify the theft of the elections and to do anything to block my new candidacy for the presidency,” the post emphasized. “They have been searching for three months without success.”

🚨 BREAKING: Romanian presidential front-runner Calin Georgescu has been arrested, his team says.

He won the first round—before it was canceled over alleged “Russian influence.” It later turned out the interference had actually come from the pro-EU liberal party PNL. pic.twitter.com/AncH3yP3Yj

— Brian McDonald (@27khv) February 26, 2025

The arrest has happened ahead of the new election date of May 4th – which had been set by authorities for the new rerun vote. It’s as yet unclear if Georgescu will be able to participate in the ‘do-over’ election – and the legal intervention does appear an effort to damage and block his campaign from moving forward. If no single candidate wins over 50% of the ballet, a runoff would be scheduled for May 18.

In early January, as people took to the streets in support of Georgescu, the blocked frontrunner wrote in a social media post: “You petty politicians, with your ungrateful and immature games, you won’t even know what hit you in this global storm.” He compared Romanian leaders and judges with former French president Nicolas Sarkozy, who is on trial on corruption charges. “You are so small that you aren’t even able to understand anything. Nothing you do will make a difference anymore. The inevitable, is inevitable.” 

Power and electrical equipment companies moved higher in early trading after The Information reported Tuesday evening that Meta Platforms is in discussions to build a new artificial intelligence data center campus that “would dwarf anything the company has done to date” and be the largest project of its kind, with costs potentially exceeding $200 billion. 

A person familiar with the plans said Meta has been speaking with developers about potentially opening the data center campus in states including Louisiana, Wyoming, or Texas, adding senior executives have already toured potential sites. 

On Meta’s latest earnings call, META CEO Mark Zuckerberg said the social media company plans to invest “hundreds of billions of dollars” in AI infrastructure “over the long term,” without elaborating. 

TikTok Owner ByteDance Plans $12 Billion AI Chip Investing Spree; Trump Unveils “Stargate” Project https://t.co/ngpiMlDhWA

— zerohedge (@zerohedge) January 22, 2025

Like Amazon, Microsoft, and Google, Meta has aggressively increased capital expenditures to expand AI data centers, raising its capex to between $60 billion and $65 billion, nearly 70% higher than last year. The company has not provided details on whether the new project will begin this year.

“Meta’s proposed new data center campus, which hasn’t previously been reported, would be several times larger than a new AI data center in Louisiana that CEO Mark Zuckerberg discussed last month, which he implied would be about four miles long,” The Information noted. 

The people said that Elon Musk’s xAI data center in Memphis, Tenn, considered one of the world’s largest AI supercomputers, prompted Zuckerberg and Meta executives to expedite data center expansion plans. 

Since the launch of MSFT-backed OpenAI’s ChatGPT in 2022, AI Capex in data center spending has erupted, but a report earlier this week from TD Cowen suggested MSFT began canceling data center orders. However, it “strongly refuted” the Cowen report. US tech firms are also wrestling with ‘DeepSeek’ fears, essentially more efficient AI models that require less data center processing, which brings us to this…

The whole “Capex to the Sky” narrative for AI data centers among Mag7 companies is in jeopardy. However, big tech firms like Meta continue to push back against this bearish narrative by raising their capex projections…

… keeping the bubble alive.