We’ll begin with SpaceX. Then, we’ll switch gears for a quick look at what’s happening with markets, especially metals and miners. And yes, the two broad themes are connected.

I’ll set the stage by noting that next month, on Sunday, July 20^th, Shark Week kicks off for its 37^th year on Discovery Channel. To which you may be thinking, “Huh?”

Yes, bear with me; read on…

If You’re Not a SpaceX Insider, You’re on the Outside

I mention Shark Week, above, only because we may as well call this week “SpaceX Week.”

This Friday, June 12^th, Space Exploration Tech Group, aka SpaceX (SPCX) will launch its initial public offering (IPO). And it’s a Really Big Thing across the markets. There’s massive interest out there…

But the truth is, SpaceX will only “sort of” go public. The company will release less than 5% of its shares. Which is to say that over 95% of shares will remain locked up with Elon Musk, his management team, employees, and other well-connected insiders.

This limited release of shares is designed to support what’s called a “monetization” event, and in this case it’s a market cap of about $1.8 trillion, or the ballpark equivalent of the GDP of, say, Turkey or South Korea. It sets a new record as the biggest IPO in history.

There’s much to say about SpaceX, and if you’re interested, I discussed this earlier today in the Rude Awakening.

I pointed out that SpaceX is already a massive industrial ecosystem within the space, aerospace and related tech sectors. To use a term of astrophysics, it’s a “gravity well” for talent and money. And no doubt, the company’s IPO will affect markets everywhere, both within the space sector and with much else that’s space-adjacent, and even distant from space.

For example, many index funds have already sold or will soon sell assets to raise significant cash. No doubt, they’ll chase SpaceX shares, bid up the price, and just buy-buy-buy out of a perceived need to own this new shiny thing.

Likewise, many retail investors want a piece of the action and will buy no matter what. And SpaceX insiders know this, so they’ve reserved a portion of the IPO for retail. Right away, this is unusual because big IPOs are usually parceled out to institutions and favored customers, while everyday punters must buy in the secondary market at higher prices.

Sure, we might see a strong rise for SpaceX shares in the early days after the IPO. But when you consider all the glitz, glitter, hype and utter $$-size of the event, whatever happens will not be true “price discovery.” No, it’ll be hot money blowing in like rocket exhaust, and momentum chasing momentum. In other words, SpaceX IPO stock is a high-risk play.

Here at Paradigm Press, several editors have followed SpaceX over the years. They studied the recent prospectus. And it’s fair to say that they urge outsiders to steer clear of the IPO.

In particular, our AI authority James Altucher; our macro maven Jim Rickards; our trading pro Enrique Abeyta are all on the same page with this one: don’t chase SpaceX as it blows the hold-down bolts and lifts off from the IPO launch pad.

Still, whatever our editors say, we understand that many investors are primed to grab SpaceX shares, if for no other reason than to “be there,” if not to trade in and trade out. And okay, some people might even make money; but again, keep in mind the risk.

If nothing else, just understand that big money guys and trading pros have inherent advantages with this IPO, let alone the SpaceX insiders. And if you’re not on the inside, you’re outside.

The New Space Economy

That said, there are other ways to participate in the market boom for the new space economy. Because, yes, costs to access space have fallen dramatically, and more and more “mass” is going into orbit: big satellites of course, but also literally tens of thousands of small satellites that perform a vast range of missions.

There are fortunes to be made in the heavens above. And along these lines, if you don’t want to play in the sandbox with SpaceX, you can buy other publicly traded companies that are its suppliers, or that work on space exploration and telecommunications on their own.

Two companies that come to mind are AST SpaceMobile (ASTS) and Intuitive Machines (LUNR). But note: these names are from independent sources and are not necessarily official recommendations from our publications. As always, if you buy shares in anything, read up first, and then watch the charts, wait for down days in the markets, always use limit orders, and never chase momentum.

And I can think of at least ten other publicly traded companies that offer a close fit to SpaceX, either as competitors, key vendors or other participants related to SpaceX’s core businesses.

Last Week’s Market Swoon

Meanwhile, for all the SpaceX excitement and Big Money in play, last Friday we had a serious down-day in markets (speaking of gravity wells). That is, on Friday, June 5^th pretty much everything dropped.

Big losers included many recent big gainers, for example memory chips and AI. Of course, those sectors have had massive runups this year, courtesy of hyped narratives about what AI can or will do, as well as an ocean of hot money, which tends to be fickle.

The sell-down was rooted in a few basic reasons. We had a robust national “jobs report” that showed stronger-than-expected hiring gains. To some, this indicates that the Federal Reserve might actually raise interest rates under the new Chairman. But really… C’mon, man…

No, the Fed won’t raise rates this summer, not as we move towards mid-term elections. And the federal government is already paying over a trillion dollars per year of interest on the national debt, so raising rates will just drain the Treasury.

Then again, strong job growth may indicate that the Fed won’t lower rates anytime soon, which is not what the broad market wanted to hear. Indeed, investor sentiment this year has leaned into the expectation of rate cuts; hence markets were primed for that kind of easy-money news. But the strong job numbers changed the narrative.

One example of risk-off sentiment out there comes from Bank of America, which now recommends that investors “exercise caution” with U.S. stocks due to an increasing number of “bear market signposts.” According to B-of-A Securities, we’re “approaching a top” and there are “too many red flags.”

So, “take profits,” says B-of-A, because according to the firm’s metrics, “70% of bear-market signals” have recently been triggered, which has marked numerous prior market peaks.

Closer to my own wheelhouse, Friday’s sell-down hit mining plays quite hard. Big names, intermediates and a long list of superb juniors sold down in the realm of rocks, mines, minerals and metals.

Well, between Friday morning and Friday at close of markets, nothing changed with any mining play. It’s all the same people, same assets, same geology and engineering, same exploration and development plans, same kind of production profiles. And developing an exploration play or building a mine is still a long-term effort, while production is forecasted months and years ahead as well. So… It’s a bargain-hunter’s market just now, with all the usual caveats about care and moderation.

More specifically, with $4,300 gold and $65 silver – and solid prices for most of the rest of the periodic table – we’re still looking at what were record highs as recently as February of this year. And many of the recent high levels of share prices for miners were yearly highs as well. For many producers, earnings are strong, if not growing.

But yes, last week blew off the top, and Friday’s charts were bright red on the daily trackers. Now, for the long-term? Miners and metals have done well, with more to come after market sentiment recalibrates. The fact is there’s not enough copper out there. Or aluminum. Or silver, gold, zinc, lead, tin, bismuth, rare earths, and a host of other metals and materials.

Which brings us back to Elon Musk and SpaceX, if not the entire solar system of companies in the new space economy. That is, if the idea is to put “mass” into orbit and make money out of it, everyone will require the usual, familiar metals and alloys, plus other quite exotic materials. And the geological fact is that everything begins as a rock in the ground.

In fact, last week in Philadelphia, at Paradigm’s “76/26 – America 250” event, my colleagues and I discussed metals for both normal economic use and in the new space economy. Between five editors, we laid out 53 names of strong companies across the boards, including many mining names.

As we look ahead, people will still make money from rocks in the earth, as well as from rockets and satellites up in the heavens. Which prompts me to ask… Did you tune into that event last Thursday, June 4^th? If you missed the broadcast, here’s the replay.

And there’s always more to say but that’s all for now. Thank you for subscribing and reading.

The post Fortunes from Heaven and Earth appeared first on Daily Reckoning.

Today, we’ll discuss two hot sectors, gold and military technology. Both are subjects about which people write long books, but I’ll spare you the long book and give you a few short points to consider.

I’m focused on these two topics because this coming Thursday, June 4, at 1:00 pm Eastern Daylight Savings Time, Paradigm Press has a special broadcast for subscribers, live from Philadelphia.

As part of Paradigm’s ongoing America 250 effort, my colleague Jim Rickards (an old Philadelphian) will host an afternoon LIVESTREAMabout what’s going on in the world. His guest list includes yours truly and numerous other of our great editors.

And yes… We WILL offer investment names and stock picks. I can hear the chant of “TICKERS” now!

Be There on Thursday the 4^th

It’s now the beginning of June 2026, with only a month until Independence Day. So, this Thursday, June 4, at 1:00 p.m. EDT, the team from Strategic Intelligence will broadcast a live – and FREE – summit call from Philadelphia, former home of Benjamin Franklin and birthplace of the 1776 American experiment.

As America moves into its 250th year of national existence, we’ll ponder what drives markets at this point in history. Obvious motive forces include the Iran war, the associated global energy shock, persistent inflation, a broad affordability crisis, critical minerals and materials, gold, AI-driven power shortages and the future of the Trump agenda.

The host this Thursday will be Paradigm’s Aaron Gentzler, along with macro-economist and New York Times best-selling author Jim Rickards, plus me, Dan Amoss, Zach Scheidt, Matt Badiali, Adam Sharp and other colleagues. Together, we’ll share our latest research, investment ideas and market outlook.

And don’t worry; this won’t be a dry-as-dust economics talk. Expect fast-moving conversation, lively debate, behind-the-scenes stories and practical insights – aka Tickers! – that you can use immediately.

Throughout the event, we’ll present actionable investment ideas for you to consider. And again, just to be clear, there’s no cost to view the broadcast. We won’t ask for your credit card number! This event is on us… and it’s just us.

That is, the event is built around your Paradigm Team getting together to dissect world and national events, and share thoughts on the markets with our wonderful subscribers. To see the full agenda and reserve your spot, click here to view the special event page.

What’s the Story with Gold?

Now, let’s move along and discuss our favorite monetary metal, gold. Price-wise, gold began this month at $4,514 per ounce, well inside the range where it has traded for the past six weeks or so, between about $4,450 to $4,550. At current levels, the price of gold is down about 12% since February 28, when the kinetic war with Iran kicked off. Here’s the chart:

Price of gold is down about 12% in past three months.

Then again, this recent price of $4,514 is what gold posted back in… check notes… mid-January of this year, which at the time was a pop-the-champagne record level. So, if you have a time horizon of years versus a few months, gold is doing well.

Along these last lines, the current price of gold is up by over 34% from its price last year, in June 2025, about $3,350 per ounce back then. And that one-year price move says more about gold and its long-term relationship to the dollar than it says about three months of wartime, range-bound price-drift.

My point is that the gold price has been steadily rising for four years, and for a variety of reasons. One main factor is U.S. sanctions against Russia, which were prompted by the Ukraine conflict that began in February 2022. Back then, the U.S. froze Russian state assets and many nations looked on with shock, if not horror, and deliberately began to de-dollarize.

Broadly, this move out of dollars is reflected in substantial gold buys by central banks across the world. And central banks don’t buy gold to trade in and out; they’re holding for the long haul in a generational, macroeconomic, strategic-level trend.

Don’t just take my word on this last point. No less than London’s Financial Times, not exactly a gold-bug of a newspaper, says much the same thing in an article published today, June 2:

“Gold has overtaken U.S. government bonds as the world’s top reserve asset following years of relentless buying by central banks and a historic rally that has seen prices nearly double over the past two years.”

Meanwhile, from the standpoint of gold markets in general, U.S. government spending is out of control. Just this year (FY-2026), about 40% of federal outlays will be “funded” (some might say, “fake-funded”) by debt and accounting gimmickry. And so, the national debt – now over $39 trillion – increases while interest payout also climbs. Indeed, right now, annual national debt interest is a larger outlay than the entire defense budget.

Long-term, if not in the medium- and even short-term, the dollar’s purchasing power is steadily declining. It’s not out of line to say that we already see this reflected in rising inflation numbers for energy and food, and the Iran conflict and global oil mess just accelerated an ongoing, long-term process.

Sorry, but things won’t get better anytime soon, and this coming Thursday Jim Rickards, plus, Dan, Zach, Adam, Matt and I will all have more to say about gold and its price trends, as well as solid gold mining plays.

Meanwhile, many miners are spinning cash and growing earnings based on the current price of gold, let alone what can happen as the gold price begins to move up even more. Because frankly, we’re just beginning to glimpse the long-term profitability of well-run gold miners in the current price range for yellow metal.

The MilTech Boom (No Pun)

In other news – well, it’s not “new” news but it is meaningful – military tech is accelerating, soaring, booming, exploding, and overall lighting up the investment horizon. And of course, I’ll address some angles on this at the Thursday event.

Definitely, I’ll discuss America’s shipbuilding problems because there’s serious money going down not just to the coastline constructors, but also to companies all across the country. The two most important Navy builders are General Dynamics (GD) and Huntington Ingalls (HII). And for now, to keep it simple, I’ll just say that when it comes to big vessels with which to fight big wars, there’s nobody else.

That is, do you want submarines? It’s only GD and HII because no other company can even approach being qualified to build such vessels. Indeed, aside from these two names, just one other company in the entire U.S. economy is even qualified to cut into a submarine hull for maintenance, let alone build the beasts.

Submarine under construction. Credit U.S. Naval Institute.

Meanwhile, do you want large warships? Only HII can build aircraft carriers, let alone service them with refueling, and HII even has a lock on decommissioning the ships.

Or consider destroyers, namely the Arleigh Burke-class; again, it’s GD and HII. And yes, sure, the U.S. economy has “boatyards” that construct smaller vessels, such as for offshore oil work. But good luck finding companies with yards capable of anything sizeable, let alone suitable for warfighting.

Or go to a list of other vessels like amphibious assault ships (LPDs) or aviation-oriented assault vessels (LHAs). Again, it’s GD and HII and nobody else on the domestic horizon is even close to competing. And absolutely, there’s nothing simple about a military-scale shipyard.

Ingals shipyard at Pascagoula, Mississippi. Credit HII.

Then again, on Thursday we’ll have a list of investable suppliers for items like engines, electrical and combat system components, and nuclear power systems. On that last point, we’ll likely soon see long-lead buys for President Trump’s proposed “battleships,” which are really more like heavy battle-cruisers despite the official Navy designation (BBGN).

And don’t laugh or kid around about those battleships. I’ve discussed them in other articles and recently, no less than the Chief of Naval Operations (CNO) had very kind words about bringing this new class of vessel into existence.

On the aviation side, the U.S. is in the midst of a massive air power buildout that includes buying more legacy systems like the venerable, and much-improved F-15E, plus F-35s and the F-47 under development, and likely a new Navy aircraft called F/A-XX just now.

Notional image of proposed F-47 aircraft. Credit WarWingsDaily.com.

Plus, the U.S. is developing and fielding an entire menagerie of drones that range from tiny things that can be tossed like a javelin or fired from a mortar tube, to great big birds the size of a Boeing 737.

Meanwhile, along with ships and airplanes come munitions that range from families of underwater weapons like torpedoes and mines, through short-, medium-, long- and very-long-range missiles that do everything from intercept drones to kill orbiting satellites. And some of these weapons cost as much apiece as the ship or aircraft that might fire it.

Then there are all manners of electronics, and plenty of software to run it all and manage the battle. And okay, of course… this already involves phenomenal levels of AI, because how else do you think that the U.S. could have attacked over 800 targets per day in Iran during the March kinetic phase of the war? Hint: most targeting packages were prepared using AI, with final sign-off by a real person, or two or three levels of real people.

And on Thursday, I won’t neglect to mention the exotic metals and related materials that go into many of these MilTech platforms, munitions and electronics. This means rare earths, along with a host of other elements from the periodic table, that range from antimony and helium to tellurium and zirconium.

Periodic table, highlighting rare earths. Credit U.S. Geologic Survey.

In fact, this last aspect of MilTech is among the most critical of all because if you don’t have certain elements with key, specific metallurgical and/or electronic properties? Well, good luck making the overall weapon system work. Again, it gets technical in a hurry, and people write books about these things. But on Thursday I’ll explain and discuss who is doing what out in the investable economy.

And with that, let’s wrap it up. Allow me to bid you well, and thank you for subscribing and reading.

Best wishes… and Be There On Thursday!

The post TWO Red Hot Sectors — PLUS, “TICKERS!” appeared first on Daily Reckoning.

I hope you had a good Memorial Day holiday. Now, it’s just six weeks to Independence Day, aka the 4^th of July. This year, it’s the “America 250” celebration, a quarter millennium since the Declaration of Independence, or also called a Semiquincentennial (yes, that’s a real word).

At Paradigm Press, we have an upcoming America 250 event that I’ll discuss further along. But first: Have you noticed that, while there’s a 250^th anniversary buildup, it doesn’t seem all that strong or widespread?

From what I’ve discerned, the overall level of America 250 sentiment comes across as subdued; and this 250-ennui is definitely a theme on social media. As I’ll detail below, things are not at all like what we had in 1976, during the 200^thanniversary of independence.

What’s going on? Where’s that Spirit of ’76, as in… 1976? It’s missing. Let’s dig in…

Recall the Bicentennial

First, and not to be presumptuous, but were you around in 1976? By definition, you’d now be at least 50 years old. And if you’re younger than 50, maybe you heard about it as you grew up.

The point is… 1976 was a thing! The Bicentennial was Big! There was a multiyear lead-up and a nationwide sense of excitement and anticipation.

For example, corporate America poured hundreds of millions of dollars into a multiyear makeover of the then-decrepit, unsafe Statue of Liberty. And during the actual 4^th of July week many foreign nations (even the Soviet Union) sent “tall ships” to New York Harbor, something that requires plenty of planning:

New York Times front page, July 5, 1976. Credit NYT.

Further north in the Big Apple, Broadway had a smash hit musical entitled… yes… 1776. It ran at the Gershwin, the largest stage-theater in New York. America’s Revolution was set to patriotic song, with sellout crowds all summer.

Playbill for 1776. eBay screen shot.

Bicentennial-focused marketing was ubiquitous. It touched everything from patriotic, totally red-white-&-blue Coca Cola ads to Revolution-themed highway maps – remember paper maps? – from oil companies like Conoco, now ConocoPhillips (COP):

Bicentennial-themed highway map. eBay screen shot.

I could go on, but you get the idea. And the takeaway here is that, for all the problems the U.S. had back then – and yes, they were many; see below – the country seemed upbeat in ’76. But that same level of… let’s call it celebratory enthusiasm… isn’t as apparent today.

Okay, I’ll grant that President Trump is fixing fountains and the Reflecting Pool in Washington, D.C., but even that has been met with partisan and media pushback.

Trump Admin fixed historic Meridian Cascading Fountain. Credit WJLA.com.

The background story is that most Washington fountains were shut off many years ago due to neglect and poor maintenance, while the celebrated Reflecting Pool transformed into a brown swamp of algae and built-up bird poop.

In many ways the broken, dysfunctional fountains characterized the culture of recent decades, in which people in power said, in essence, “You plebes and proles out there cannot have nice things.”

A Different Take on ‘76

When you think about it, that 50-years-ago national sense of Bicentennial good feeling could definitely have gone the other way. Consider that 1976 was one year after the disastrous Saigon-evacuation that ended America’s tragic, costly effort in Vietnam.

Saigon disaster, April 1975, one year pre-Bicentennial. Credit Library of Congress.

If Saigon wasn’t bad enough to wreck the nation’s party mood, the Bicentennial was a mere two years post-Watergate, when President Nixon was forced to resign.

Meanwhile in 1976, America was in the midst of roaring inflation, traceable to the 1960s and President Johnson’s blowout spending on the above-noted Vietnam War, coupled with his pipedream of a so-called “War on Poverty,” another failed conflict for the long-term “loss” column.

U.S. inflation, 1948 to present; note mid-1970s spike. Credit FRED, Fed of St. Louis.

That mid-decade, Bicentennial bout of inflation was also rooted in the energy shocks of 1973-74, when oil prices skyrocketed during a Middle East war, and the U.S. economy endured regional fuel and chemical shortages, and long lines at filling stations. (Sound familiar?)

Meanwhile, in 1976 the country – the entire world – was in the depths of the Cold War, in which the U.S. and Soviet Union had tens of thousands of nuclear weapons pointed at each other. Talk about things going south in a hurry? On any given day, we were 45 minutes from Armageddon.

Still, and as I recall 1976 both personally and from what history has recorded, the country felt pretty good about itself. In general, the U.S. looked like it offered a future.

Now, compare 1976 with today. And yes, hindsight is 20/20, but… little did we innocents back then anticipate what nasty stuff would hit the national fan over the next half-century, 1976 – 2026.

That is: five decades of inflation, financialization, deindustrialization, growth of government and expensive boondoggles, deficits, debt, corruption, globalism, open borders, mass migration, a widespread drug culture, H1B visas, outsourcing, crummy schools K-12, radical universities and grad programs, C0v!d lockdowns, homeowner associations, people everywhere staring like zombies into their smart phones… and you name it because I’m sure I’ve missed a few things.

America in 1976: a Foreign Country

“The past is a foreign country,” wrote L.P. Hartley in his 1953 novel The Go-Between. “They do things differently there.”

They do things differently? They sure as hell did things differently in America of 1976, a very different place to the present and now a “foreign,” long-lost land in many ways.

Among other things, in 1976 most people who worked at and ran America’s businesses, banks, educational and religious institutions, and government entities were U.S.-born citizens. They came of age during the Great Depression, World War II, the Korean and to some extent Vietnam Wars, and their shared life experiences informed their worldviews. They weren’t self-styled “citizens of the world” – i.e., they were not detached, rootless multi-nationalists – such as we see today in many C-suites.

At a deeper, cultural level in America of 1976, the intellectual poison of failed Marxism – think in terms of “Frankfurt School” – was germinating, but had not yet taken deep root. It’s a long tale, but by the mid-1980s the Hard Left was busy colonizing universities, media, religious institutions, NGOs, corporate HR departments, and definitely influencing politics.

In the five decades post-1976, what Marxists called “Critical Theory” transformed into today’s identity politics, DEI mandates, Woke-ism, and cancel culture; that is, an in-your-face means of attacking and controlling the individual in the name of group grievance.

In this sense, we now – 2026 – have a large segment of U.S. population who are not just indifferent to America 250 but are outright hostile to the very existence of the country. The usual critiques are along the lines of so-called “settlers” displacing Natives, and/or enslavement, racism, environmental destruction, exploitation of labor, “micro-aggressions,” etc.

In other words, the broad fabric American culture is now unraveling; it’s heavily influenced by dollarized globalism, plus the mind-bending, legacy toxic-sophistry of Erick Fromm, Herbert Marcuse, Howard Zinn and the like on steroids (look ‘em up; too depressing to discuss here).

Who Lives Here Anymore?

There are all of the foregoing matters (and more), and then there are just plain raw numbers. That is, according to the Census Bureau in 1976 the U.S. population was just shy 216 million. While today, the nation’s population is in the range of 350 million; perhaps 400 million by some counts. And the country’s overall demographics are quite different now-versus-then, to the point where the term “Balkanized” does not overstate the case.

In short, America is now more crowded than in 1976, evident in overburdened infrastructure: jammed roads, crowded airports, loaded rail lines, max’ed out cargo ports, busy hospitals, brimming schools, overloaded city housing, clogged courts and government offices, sprawling suburbs, rapidly-developing rural areas, busy beaches, packed parks and… yes, just about everything. (Really, have you visited a National Park lately?)

One way to view it is that the country’s vast increase in population was not met by sufficient investment in infrastructure. Looking back, we should have built more 10-lane highways in Houston, Dallas, and northern New Jersey, right? More Denver Airports. More big, ugly federal and state office buildings. More San Diego, Phoenix, Austin, Jacksonville or Charlotte sprawl. More beachfront high-rises on coastlines. More Walmart and Costco sites on former farmland.

Another way to look at it is that more-more-more has not necessarily been better-better-better, no matter what anybody built. That is, how much does quality of life improve in an overcrowded country held together by max’ed-out supply chains?

And please… don’t tell me that “America still has lots of empty land” unless you want to move to the middle of Nowhere in the Desert, High Plains, or Appalachia. Indeed, and again per the Census Bureau, over 82% of Americans live in urban areas, and quality of life in almost all areas has measurably deteriorated.

Plus, that 50-year population increase has brought a plethora of social pathologies like increased crime (petty and violent), drug usage, homelessness, and more. (On the positive side, maybe we’ve reached a point where Spencer Pratt will become Mayor of Los Angeles.)

Is There a “Spirit of ’26” Out There?

Okay, enough with the bellyaching, right? The year 1976 was then; and year 2026 is now. We have contrasts, and obviously the country had (then) and still has (now) many problems. So, we must deal with challenges as they are.

Of course, one element of dealing with things the way they are is to identify opportunities. And while we’re at it (and as Confucius noted long ago), it’s important to call things by their correct names.

One angle on current reality is that the 50-year American population explosion has led to massive increases in the use of what we at Paradigm call “hard assets,” things like energy, minerals and materials, water, waste disposal systems, and related elements of modern life. And that part of the economy is investable, so if you play it right you can stay ahead of the game.

Along these lines, as America approaches her 250^th birthday, my colleague Jim Rickards and our editorial team will present a broadcast on Thursday, June 4 at 2:00 p.m. ET — LIVE from Philadelphia… the birthplace of the American experiment.

With Jim leading this livestream event — and with insights from yours truly and the rest of the gang — we’ll break down what’s driving markets in 2026, including…

The Iran war and energy shock, growing stress in private credit, deep-rooted inflation, the affordability crisis, critical minerals, gold, AI-driven power shortages and the future of Trump’s agenda.

I promise that this won’t be a dry economics lecture. Expect lively give-and-take, show-and-tell, fast-moving debate, behind-the-scenes stories and practical insights you can use immediately. Indeed, we’ll share actionable, investable ideas tied to these major trends.

Again, there is no cost to attend. Watch for more details soon. But for now, save the date: Thursday, June 4.

And at this point? Well, let’s wrap-up, get moving, and build our own, better America.

Thank you for subscribing and reading.

The post The Missing Spirit of ‘76 appeared first on Daily Reckoning.

Chinese have a word – Jingju.

• 京 (Jing) means “capital” or “Beijing.”
• 剧 (Ju) means “drama” or “play.”

Translated, the term Jingju refers to a performance called “Peking Opera,” a traditional form of Chinese theater characterized by elaborate costumes and makeup, with loud singing, spectacular acrobatics, and grand gestures.

But it’s all just an act. And frankly, this is exactly how to process President Trump’s visit to China last week.

Presidents Xi and Trump walk past ceremonial honor guard. Credit White House Press Office.

From beginning to end (well, almost to the end; see below) the visit was one spectacle after another, replete with bands, ruffles, flourishes, honor guards and parades; a state visit to match all state visits. Or was it?

Because looking back, it’s apparent that the trip was cordial but cold; flashy but inconclusive; visually impressive, but mostly ineffective.

All in all, Trump’s recent trip to China was three days of Peking Opera; but in fairness, it did have something of a surprise ending… and for that please keep reading!

So, with this in mind let’s look behind the curtain at five things you probably didn’t see or know.

“My Friend Xi.”

“This has been an incredible visit,” said President Trump to China’s Xi Jinping during a visit to the elegant Zhongnanhai Garden, on his final day in Beijing. “I think a lot of good has come of it.”

Then there was this: “He’s a man I respect greatly. Become really a friend,” Trump said of Xi.

And more: “We’ve known each other now eleven years, almost 12 years. That’s a long time, and we’ve settled a lot of different problems that other people wouldn’t have been able to settle, and the relationship is a very strong one.”

Wow. So much bonhomie on display, right?

Presidents Xi and Trump, putting on the “Bro”-act. Credit Xinhua News Agency.

Not so fast, though, because much is missing from that brotherly narrative. Begin with the fact that even President Trump, like all official U.S. government travelers to China, was told not to bring any personal electronic devices with him, in order to protect his data from intercepts and hacks.

Okay, sure… At one point President Xi showed off a grove of old trees in Beijing’s Garden of Heaven. How touching! But of course, America has old trees too.

Presidents Xi and Trump admire old trees. Credit China XYZ Press.

What matters more than old trees, however, is a nation’s people and government. And Americans have lived as free citizens since 1776 (and okay, we can argue over details but not the Really Big Picture). While China is run by a hardline Communist government that blasted its way to power in 1949, and the country’s resurgent Maosim speaks for itself.

Trees or not, the fact is that before heading off to China, the President and every member of his official delegation was briefed and given strict protocols on what not to take along, which was everything and anything electronic.

No cell phones, iPads, laptops, thumb-drives; not even medical monitoring devices that people use for health reasons, if not routine metabolism checks like blood pressure or heartrate.

Nothing. Zero. Zilch. Leave it all at home. Because Chinese intelligence is just THAT good! And U.S. visitors have been badly burned in the past.

But yes, we’re “friends.” And we both have great old trees.

What’s for Lunch?

Meanwhile, at another point Trump and Xi had a nice sit-down for a chat, accompanied by lunch.

Chinese President Xi Jinping gestures during a meeting with President Trump. Credit New York Post.

And wow… it was quite a menu according to press reports:

• minced codfish in seafood soup
• crispy and stir-fried lobster balls
• pan-seared beef fillet stuffed with morel mushrooms
• kung pao chicken and scallops
• braised seasonal greens
• bamboo shoots, mushrooms and beans
• stewed beef in a bun
• steamed pork and shrimp dumplings
• chocolate brownies
• fruits
• ice cream
• coffee and tea

Yum-yum-yum… And Trump ate none of it. Not one bite.

Every morsel of the president’s food, plus water, his famous Diet Coca Colas – and even the ice cubes for the water and colas – was flown into Beijing either in advance on C-17s, or onboard Air Force One. Plus, every meal consumed by Trump in China was prepared in a U.S. mobile kitchen by an American chef, served on U.S.-supplied plates along with U.S. cutlery.

And just outside the dining area, a mobile U.S. hospital awaited any emergency, fully staffed by U.S. Navy and Air Force medical personnel. Just… in… case… something… happened.

All this was because of U.S. security concerns over Trump either being poisoned or otherwise ingesting some bizarre form of Chinese sci-fi nanotechnology embedded in the food. (Hey, that C0v!d bug of a few years back left an impression.)

Meanwhile, as Trump dined at the fancy luncheon with Xi (or did not dine, so to speak), other top U.S. officials and press received impromptu takeout bags from randomly selected McDonald franchises around Beijing.

No pan-seared beef & morels for the staff and press. Just McDs because that’s how worried U.S. intelligence and security services were about the Chinese government’s food.

Spies, Spies Everywhere

On the second day of the visit, President Xi threw an elaborate state dinner to honor Trump, and the spies were everywhere. Of course, it (almost) goes without saying that invited Chinese guests were all there to gather whatever intelligence they could pick up from the American side. That’s their job.

Meanwhile, Chinese serving staff were also in on the caper, such as this woman army officer who trailed White House adviser Stephen Miller:

How much should you tip the server when she’s a spy? Just curious.

According to Chinese commentator Bin Xie, this woman speaks perfect English. “That’s a must.” And undoubtedly, according to Mr. Bin, this woman and her associates at the fancy dinner are all intelligence agents. “Every one of them graduated either from the Beijing University of International Relations (UIR — 北京国际关系学院) or PLA Foreign Language Institute (解放军外国语学院) — both are China’s top spy schools.”

That’s just how it rolls at these big, elaborate state-sponsored feasts. And it’s just another act in the Peking Opera.

Speaking of Rolling…

Speaking of “rolling,” here’s the Presidential Limo, an armored car that tips the scale at over eight tons. It comes with bulletproof glass, an air filtration system, roll-flat tires, defensive armaments (can’t say much on that), and even a supply of fresh blood to match that of the Commander in Chief.

Fancy Presidential steel on wheels. Credit South China Morning Post.

This gleaming mini-tank, along with dozens of other vehicles for Trump’s Beijing motorcades, all arrived in China via a squadron of C-17 transport planes a few days ahead of Air Force One.

The president’s mechanized entourage included specially outfitted personnel carriers for armed security agents, plus redundant medical vans, communication vans, the above-mentioned mobile kitchen, and several trucks filled with supplies of presidential food, water, Diet Coke, ice cubes and much more.

Oh, and the U.S. even brought its own gasoline and diesel fuel for the vehicles. Because security dictates that the president cannot risk driving down the road and the engine conks out, a development which would definitely spoil his night at the opera.

Exit, Stage Right

Finally, we come to the last moments of Trump’s state visit, in which the Peking Opera displayed a dramatic, if not thrilling denouement. Some might even say that it was a shocking way for Trump and the U.S. entourage to exit the stage.

Per White House directive all American officials, delegates, staff and reporters on Air Force One were required – openly and notoriously – to trash ALL Chinese goods or items before boarding the airplane. Indeed, the Secret Service and U.S. Air Force obtained and displayed a dumpster for just that purpose, conspicuously labeled “Airport Waste.”

American officials and Air Force One passengers dump out all Chinese items. Credit New York Post.

Everyone on the U.S. side tossed every Chinese item straight into trash cans next to American airplanes. No exceptions. Nothing permitted. U.S. security protocols were airtight.

Not a single thing from China was permitted onboard the presidential jet. This included credential badges, lapel pins, souvenirs, gifts, and all burner phones that any of the U.S. group used during their stay in the country. It all went to trash, and in an astonishing photo, even President Trump himself was seen tossing Chinese items into a bin.

Nice visit, eh? Trump tosses his Chinese stuff. Credit Times of India.

In its own way this was an ultimate geopolitical power move by the Trump administration; truly a public slap in the face to the Chinese Communist hosts.

Based on (mostly) foreign press accounts – cuz almost all U.S. press carefully curated this very dramatic aspect – the astonished looks on the faces of Chinese officials said everything. That is, China invests enormous cultural and diplomatic thought and credibility on the kinds of gifts it presents to foreign leaders and emissaries. As a rule, every item is deliberately selected and thoroughly screened. And returning, let alone trashing, an item is a countermove that lands like a punch in the nose.

In essence, the Trump administration publicly signaled to China that American officials, and all others associated with the visit, would not take a single thing back from Beijing to U.S. soil. And in this respect, it reflects much about the overall outcome of the state visit.

Thank you, but no thank you. Chinese gifts in trash. Credit Times of India.

Indeed, this gift-dump was far more than a security measure. The optics were like a laser beam burning holes in Chinese drones above the oceans. Chinese officials, who no doubt had spent weeks preparing presentations, watched it all get left behind on the runway. All this, while Trump proceeded to his airplane, boarded, flew away and left it all behind without looking back.

President Trump walks towards Air Force One at Beijing Capital International Airport. Credit White House Press Office.

And as the spectacle and Peking Opera of his state visit faded in the rearview mirror, so to speak, Trump headed home, played golf the next day, and – from what we hear – worked on plans to bomb Iran into powder.

I hope you enjoyed the show… And that’s all for now.

Thank you for subscribing and reading.

The post Trump’s China Trip: Five Things You Didn’t Know appeared first on Daily Reckoning.

LA politics burned down his house. Now, he’s burning LA politics.

“I’m not running to be a politician,” said Spencer Pratt, former television personality and now a candidate for Mayor of Los Angeles.

“I’m running because the current mayor (Karen Bass) let my house burn down.”

Spencer & Heidi Pratt amidst debris of former home in LA. Courtesy Pratt for Mayor 2026.

Kaboom! Great line.

It’s no wonder that Pratt is soaring in polls. He’s honest, serious, straightforward, sincere, sympathetic, original, energetic and refreshing; plus, he’s funny and totally incisive. Definitely, this guy resonates with voters. Hence, Pratt is raising funds, gaining endorsements, and remaking California politics, if not America’s.

Will Pratt be the next mayor of America’s second-largest city? Can he salvage LA from its trashy level of decline and urban implosion? Just now, it’s hard to say because strange things definitely happen on election days anymore.

Still, it’s “America 250,” and what better way to celebrate the country’s quarter-millennium than to liberate a formerly great city from the seedy, greedy grip of long-term, left-wing, progressive political dysfunction, corruption, incompetence and cronyism.

Meanwhile, the tale of Pratt’s political journey pertains not just to the Golden State, but offers a teachable moment to the entire nation. Let’s dig in…

Reality TV Meets LA Reality

At first blush, 42-year-old Spencer Pratt is an unlikely candidate to run a city, let alone a really big place like Los Angeles.

Still, he begins with solid bones, so to speak. Born and raised in LA, he’s a home-boy USC grad who went into a local industry, namely the entertainment business. There, Pratt played roles that portrayed him as a bad guy; although, of course, in Hollywood that’s also what actors call “work.”

“Yes, I was a bad guy,” Pratt explained in one interview. “That was my job. I worked with show-creators, producers and scriptwriters to be a bad guy. And I made good shows that people wanted to watch, which led to good ratings.”

(Note – Pratt discusses his career in a recently published book entitled The Man You Love to Hate: Confessions from a Reality TV Villain.)

Meanwhile, ratings are the cash register of the entertainment biz. And Pratt’s strong ratings led to more than a few handsome paydays. During one stretch, Pratt’s income was so good that he and his wife Heidi bought a multimillion-dollar home in tony Pacific Palisades. (Well, back then it was tony. Not anymore, as we’ll discuss below; and see here for a related article I wrote last year.)

For Pratt, his home and former life amidst the LA show biz crowd burned down on January 7, 2025, at the beginning of several weeks of massive wildfires that scorched the region.

Pratt’s house went up in flames, along with much else. In fact, those LA fires burned about 90 square miles, destroyed more than 18,000 homes and structures, killed at least 31 people and forced more than 200,000 to evacuate. Insurance estimates placed losses north of $250 billion.

Pacific Palisades post-fire, January 2025. Courtesy ABC News.

During the conflagration, flames jumped from building to building. But in many neighborhoods water mains were empty and fire hydrants didn’t work. Not that it mattered because several of LA’s key reservoirs were empty, drained and never refilled by officious, know-it-all bureaucrats.

Even adjacent to the Pacific Ocean – absolutely, an aqueous firefighting resource – many areas burned to the ground for lack of equipment simply to pump seawater ashore and squirt it from a hose.

LA burned to the waterline; i.e., the Pacific Ocean! Courtesy U.S. Army Corps of Engineers.

On streets across the city, the LA fire department lacked sufficient firefighting trucks. In its fiscal wisdom, the city had retired equipment without replacement; or the fire department lacked funds for normal maintenance after the Bass administration raided the budget to fund so-called “homelessness” programs and other boondoggles.

And while LA burned, Mayor Bass was on a political junket to Africa, in Ghana to be exact, and nowhere to be seen in the early days of flaming disaster.

Burned Again, After the Fires

Immediately after the fires, politicians lined up and promised help. Clear the debris! Rebuild fast! Permits forthcoming! Blah, blah, blah. Yeah, right…

A year later, per Fox News, a mere 12 building permits were issued for reconstruction in Pacific Palisades. And in the past 17 months, just two new houses have been erected amidst the ruins, one of which is a “spec” by a builder who bought land from a seller who just wanted to cash out and get away from the entire mess.

Instead of helping citizens who lost homes rebuild, the Bass administration and her LA city bureaucracy placed roadblock after roadblock: new zoning and land use rules, extensive permits, costly filing fees, architectural reviews, endless checklists. And this is on top of how property owners must battle insurance companies over the amount of fire coverage (long story).

Along the way, several thousand displaced people have simply sold their former real estate to insiders, speculators and developers, more than a few of which are foreign corporations, and some apparently funded from Chinese sources.

Downtown, at City Hall, and up north in the state capital of Sacramento, the prevailing push is to rebuild Pacific Palisades with a large element of so-called “low-income” housing.

In other words, we see here a political land grab from former homeowners. The system ties up burnt-out homeowners in red tape, waits them out, wears them down, and then takes their property to advance the cause of Social Justice and the Nanny-Welfare State. It’s a massive racket between well-connected developers and local, county and state government.

Meanwhile, as things currently stand in California, multi-billions of dollars per year are already dedicated to… ahem… “housing the homeless,” and yet the numbers of people on those LA mean streets never seem to decline. (Long story; scandalously long.)

Campaigning for Competency

Pratt’s frustration with unaccountable, incompetent, uncaring government prompted led him to toss his hat into the political ring. “I saw who was running,” he said, “and it was the same exact people who caused the problems in the first place. So, I stepped up.”

Now, Pratt is staging a fast-growing, populist-style campaign, and in California no less; a state defined – and ossified – by two decades of single-party political dominance, certainly in LA.

“I’m running against incompetency,” Pratt said. “I’m running against complacency. Against the idea that these politicians are entitled to power, and to spend taxpayer money on whatever they want, no matter how bad the result. My campaign platform is common sense.”

Asked about his lack of past political experience, Pratt quickly notes, “The people who run things have all this supposed ‘experience,’ and look where we are.”

He explains that his campaign has been working with a long list of outsiders who will be pleased to step up and play roles in bringing better governance to LA if (when) he wins the election.

Pratt points out that, “California is home to some of the smartest people in the world. Many of them live in or around LA. And none of them seem to be working in the Bass administration.”

Meanwhile, “The LA region is among the wealthiest spots on the face of the earth,” he says. “We ought to be an economic powerhouse, gleaming like Dubai or Singapore. But instead, we have miles of homeless camps. We have drugs everywhere. Feces on the sidewalks. Crime. Bad schools. Broken infrastructure. Boarded up buildings where nobody can start a business.”

In a recent interview with CBS News, Pratt was filmed at his current abode, a trailer parked on the site of his burnt-out home in Pacific Palisades. “My opponent lives in a three-million-dollar home. I live in a trailer, a year after my house burned down. And after my parents’ house burned down. And my friends’ houses. And ten thousand other people’s houses.”

But neither is Pratt a single-issue candidate. For example, in another discussion he explained how LA is unprepared for a mass-casualty event.

“It’s not just last year’s fires,” he said. “Already, much of the underbrush has grown back and the city isn’t clearing fire breaks. And LA is unprepared for even a modest earthquake, and we know what kind of damage that would cause because we’ve seen it before.”

Plus, Pratt has a more than respectable approach to many other basic issues of city governance: how to deal with homeless people, drugs, crime and criminals; how to promote growth and economic development, repair infrastructure, and much more.

Indeed, it’s fair to say that Pratt has as much of a campaign package as anyone else, if not more. But it doesn’t matter if he doesn’t win.

Shock & Awe Social Media

So, what’s Pratt’s pathway to the mayor’s office? Well, here’s where his bad boy, reality TV past comes in handy.

Pratt understands that the way to break through the California media market is with some level of spectacle, but not just gratuitous sound and light. Thus, his ads are creative gems that offer a sharp, honest, reality-based, easily understood political point, delivered with pithy humor.

One of Pratt’s first ads was a homemade effort that required about six hours to devise and has already amassed over 20 million views. Numerous other Pratt ads are similarly impactful: a mix of funny sketches that include devastating political points about how out-of-touch is the current political class. (These ads are easily located with a simple You Tube search.)

Pratt eschews typical political pabulum. He knows that California is a one-party state run via a tight, mostly closed political-media system that maintains the Left in power. In other words, it’s next-to-impossible for an outsider to break through to the public by conventional means; other candidates have tried in the past and spent hundreds of millions of dollars on losing campaigns.

With this in mind, Pratt’s road to success is to mobilize public opinion via social media. His ads must land hard, and then go viral; that is, go over, under, and around the roadblocks of conventional television, radio, print and even established online venues.

Pratt’s anchor-narrative – and it will continue, no doubt – has been the loss of his house to the Palisades Fire: “Karen Bass let my house burn down.” Yes… very emotive.

But now that Pratt has people’s attention, his narrative is expanding. He can’t just be the “burned house” guy. So, he campaigns honestly on issues that quickly relate to other, widespread levels of dissatisfaction: homelessness, crime, drugs, urban decay, etc. That, and massive waste of billions of taxpayer dollars on failed boondoggles. At root, Pratt tears the mask away from standard California zombie-party politicking.

For Pratt, the political idea must be to mobilize and build a voter base via social media. Clearly, he has caught the wave of broad public opinion that’s dissatisfied with progressive, expensive, thoroughly ineffective Left-wing government.

Serendipitously, Pratt’s engaging ads have sparked a cottage industry of creative, independent imitators and spinoffs, many of them constructed from astonishing displays of visual AI. One ad depicts Pratt as Batman fighting crime, and thoroughly mocks the current crop of California political frauds.

So, Spencer Pratt is a blast of fresh air; but can he prevail? Will he be the next mayor? Well, he’s coming on strong right now. And the California primary is June 2^nd. We’ll see, of course, and then we’ll see what happens in the November elections.

But clearly, Pratt is out to change Los Angeles, to recapture governance, kick out the hard Left, and bring some basic honesty and sanity back to the streets.

At an even higher level, LA offers hope to the nation. Because if the City of Angels can come back from the brink of Perdition, it says much about many other American jurisdictions where political dysfunction, corruption, grift, graft and incompetence also run deep.

Spencer Pratt. Bad guy. But you can call him “Mr. Mayor.” Indeed, maybe even America’s Mayor.

That’s all for now. Thank you for subscribing and reading.

The post Spencer Pratt appeared first on Daily Reckoning.

Today, let’s discuss “America 250,” in which the country celebrates a quarter-millennium since the Declaration of Independence. It ought to be big news. Indeed, I recall the 200^th national commemoration in 1976, a huge deal at the time.

But this year? To me at least, the 250^th comes across as lackluster so far, and we’re already into May. Perhaps it’s a sign of the times and coarsening culture. (Ugh… speaking of coarse: did you see any imagery of the Met Gala from last night, in New York? Yuck.)

Meanwhile, time flies, we’re all busy, gasoline is expensive, and maybe this 250-thing isn’t at the top of your list. Still, the fact remains that we have but two months until the July 4^th festivities.

And oh-by-the-way, just so you know: Mark your calendar because Paradigm Press will hold an online “250” event on June 4^th for subscribers to Strategic Intelligence, via broadcast from Philadelphia. Details are coming soon.

Meanwhile, at least some 250-related merchandise is out there. It ranges from kitsch like T-shirts and ball caps to fancy, engraved bottles of whiskey, and even commemorative coins from the U.S. Mint, like this proof-set of Walking Liberties priced well north of $10,000:

Commemorative “250” gold coins. Courtesy U.S. Mint.

But now, let’s dig in… Because what if there had been no American Revolution? No Declaration of Independence? No July 4^th?

Historians call this a “counter-factual” scenario. And I mention it because no less than the King of England raised the matter last week, during a state visit to the U.S.…

“You’d be Speaking French.”

Yes, in honor of America 250, Britain’s King Charles III paid a call. And befitting his office, the man was ceremoniously welcomed, wined, dined and feted… all quite royally.

Fit for a King: Charles III at the White House amidst splendid fanfare. Courtesy AP.

Indeed, during an address to Congress, the King was cheered and applauded, including several standing ovations. And those stander-uppers included a sizeable number of politicians who are known to attend domestic rallies premised on the idea of “No Kings.” Astonishing, although it definitely demonstrates how American politics are truly bizarre.

King Charles III addresses a Joint Session of Congress. Courtesy AP.

When he spoke before Congress, and then at several other venues, the King delivered remarks with a characteristic British sense of history, humor, and diplomacy. He described the U.K.-U.S. relationship as one of the most consequential alliances in modern history.

At one point during a state dinner, Charles aimed a tongue-in-cheek, yet pointed remark towards President Trump, referencing an earlier comment by the U.S. leader about World War II:

“You recently commented, Mr. President, that if it were not for the United States, European countries would be speaking German. Dare I say that if it wasn’t for us, you’d be speaking French.”

The line drew laughs. And indeed, much humor is fundamentally rooted in truth. But what kind of truth? Because a comment like this actually raises questions. It opens the door to what are called “counter-factual” versions of history. And what does that mean?

What If? What If?

More than a few professional historians don’t hold much use for counter-factual questions, and theirs is a respectable position. That is, many people believe that history is history, so stick to what it was; follow the script in a manner of speaking. Don’t play fiction-games.

Then again, back when I studied at the Naval War College, the instructors – solid thinkers with impressive amounts of academic wax and ribbon to their names – often posed counter-factuals. Indeed, they loved posing contrarian questions to spur discussion, debate and thorough thinking. For example:

• What if, in 1941, the Japanese navy had sent a third wave of aircraft to attack Pearl Harbor, and destroyed the fuel storage area for the Pacific Fleet? Or…
• What if, in 1942, the Japanese navy had prevailed at the Battle of Midway? Or…
• What if, in 1950, General MacArthur’s landing at Inchon, Korea had failed?

I could go on, but you get the idea… What if…? What if…? Pick any event and ask “what if” things had gone differently.

Of course, in our own reality there’s always just plain “what actually happened,” although even that is not necessarily clear in the mists of history, if not the fog of war. And definitely, entire realms of critical, controlling information may be classified, such as what pertained to, say, signals intelligence for 40 or more years post-World War II. (Seriously, how do you discuss World War II absent knowledge of code-breaking?)

Still, the pedantic point is that there’s a “forcing” aspect to counter-factual questions. Sometimes you cannot really know what happened until you examine the matter from the standpoint of what “didn’t” happen, or what “might have” happened. And only then can you see the granularity of events as they occurred. (eg., What if Pickett’s Charge had succeeded at Gettysburg?)

I could go on with this, but let’s get back to King Charles III, and how he raised the question of why the U.S. speaks English versus French.

No Revolution Without a Pre-Revolution

People who study revolutions will tell you that such events don’t happen in a vacuum. For a revolution to occur, there must be something “pre-revolutionary” going on.

In the case of the American Revolution of 1774, 75, 76 – and historians argue about even those dates! – the forcing mechanism was the French & Indian War, 1754-63, aka the “Seven Years’ War” despite the longer indicated time from start to finish. (The peace treaty took two years to hammer out.)

Basically, this war was about who would control the interior of North America, meaning what’s now Canada and lands west of the Appalachian Mountains. Among other things, the war involved Colonists moving westward versus Natives, plus regular British forces fighting French over control of Quebec and the Maritime provinces.

In the end, Britain prevailed over France, and the door was wide open for “British” interests – the coastal colonies – to move westward, all be it there were extensive Spanish claims out towards the Mississippi region and beyond.

But for now, let’s not dwell on the military or even geographic outcomes of the French & Indian War. Because the important point for the American “pre-Revolution” is that Britain wanted the Colonials to pay for the effort which led to new taxes via the Sugar Act (1764), Stamp Act (1765), Townshend Acts (1767), and Tea Act (1773).

Of course, the Colonials generally were not pleased to be taxed to pay for the war, although of course it benefitted them greatly; and this alone sowed many seeds of the Revolution of the mid-1770s.

Meanwhile, at a different level of governance, many within the British governing class looked down at rough-hewn American Colonials, and in fact treated them with disdain and disrespect.

One telling moment that defined transatlantic class difference came in the late 1760s, in London, when a Colonial representative – Benjamin Franklin – was mocked by members of Parliament. Then and there, Franklin realized that he was no longer “British,” despite his birth in a Colonial America, ruled by an English King. And thus did Franklin become, in the words of historian H.W. Brands, “The First American.”

Benjamin Franklin, “The First American” by H.W. Brands (2002). Fabulous book!

And What If Things Were… “Different”?

So again, we return to the counter-factual question behind King Charles III’s comment: what if the original 13 Colonies had followed a different course?

For example, what if the French had prevailed in the French & Indian War? What if, by the 1770s, British colonies were hemmed in to a narrow space between the Appalachians and the sea?

British Empire in North America, 1776. Courtesy Muir Maps.

What if the French controlled the interior of most of North America, with extensive Spanish holdings further West? And note that at the same time, Russia had expanded into what’s now Alaska, and was establishing settlements down the West coast? Already, the eventual geography and map lines begin to alter greatly.

Offer up just a few “what if” premises like that, and the next 250 years would be quite different, right? Or take King Charles’s musings another step, and ask what if there had been no American Revolution, of it the Revolution had been suppressed relatively quickly? That is, what if Britain had remained dominant in the 13 Colonies?

One key fact is that France financed a large portion of the American Revolution (1776 – 81) and went deep into debt to do so. And consider that by the mid-1780s France had fallen into dire financial straits. But in an alternative scenario, with no American Revolution, King Louis XVI would not have called the Estates General, which means that there might not have been a French Revolution in 1789.

No French Revolution means, in due course, no Napoleon; no Napoleonic Wars; no invasion of Egypt; no conquest of the Iberian Peninsula; no Louisiana “Sale” to the U.S.; no 1812 invasion of Russia; no armies marching back and forth across the German territories; no rise or unification of Germany; probably no unification of Italy.

Just on the point of, say, Napoleon’s invasion of Spain, consider that this broke down Spanish imperial governance across Central and South America. And this led to the rise of populists like Simon Bolivar, and revolutions that brought independence to countries that range from Mexico south to Argentina and Chile.

Meanwhile, Britain’s loss of 13 American Colonies led that island nation to expand elsewhere, particularly into India – another prize from the French & Indian War – as well as into the South Seas. Or stated another way, had Britain retained its hold over what became the U.S., there would have been fewer reasons to sail around the globe and colonize Australia and New Zealand.

Indeed, speaking of sailing, if Britain had remained more deeply involved in administering what became the U.S., there would have been less incentive to expand into Africa or Asia. So, imagine China without the Opium Wars of the 1830s-40s; or less meddling in, say, Crimea in the 1850s; or less British interest in the mostly Dutch region of what became South Africa, meaning no Great Trek, or no Boer War.

Closer to home, imagine if mid-1800s Britain had received ample and assured supplies of food from North America. Perhaps there would have been a less harsh British policy towards Ireland; no “Potato Famine,” and the mass-exodus of Irish to North America and across the world (Australia as a destination, again).

And a solidly British-controlled “America” would likely have been less of a welcoming place to other immigrants from Europe, such that large numbers of Eastern and Southern Europeans would never have set foot on North America.

Obviously, if we all “spoke French,” per King Charles III’s quip, it would truly be a different world. Indeed, almost assuredly, we’d not be here and the planet would be populated and run by others.

Wrap-Up

We could go on with these lines of questions, but past a certain level it gets deep into the realm of just raw speculation, no matter how informed it all may be by actual events. So, let’s return to the “real” history, meaning what happened 250 years ago and what followed.

We’ve got this country, the United States of America. Along the way, a lot of great things happened, and more than a few not-so-great things. But we’re here, it’s our time, and we can only make the best of what’s in the here and now.

For all the “what ifs” out there, the big question is… What do we do next? What about energy, industry, the economy, education, culture? How do you want to live? Where do we steer this ship? And who sets the rudder orders?

Well… as it all unfolds, we’re here at Paradigm Press to help you see through the smoke and fog. Our focus is the future, and how to make the best of it. That’s what we do. And that’s all for now.

Thank you for subscribing and reading.

The post America Turns 250… But what if? appeared first on Daily Reckoning.

Do you remember the song, California Dreamin’? If you’re of a certain age, it was a hit in the 1960s by a group called The Mamas & The Papas.

The music and lyrics were what was called “California sound.” It was an ode to the West Coast counterculture of the era. Basically, the song was about someone who moved away from sunny Los Angeles and missed the great vibes of the Golden State.

I mention this item of Americana only because right now, California is in deep trouble. And it’s no dream, I assure you. Indeed, we’re looking straight down the barrel of a California nightmare.

California Nightmare of fuel shortages. Courtesy ChatGPT.

Here’s the bottom line: California has maybe six weeks before disaster strikes. By mid-June life as we know it out there will be in turmoil. No doubt – and I’ll lay it out below – California’s looming problems will cross state lines into Nevada and Arizona as well, to make the usual hot summer out West even hotter. And the effects will ripple east, all across the U.S.

Let’s dig in…

A West Coast “Energy Island”

Sure, California has many problems: budget problems, homelessness, water shortages, migration, crime, deteriorating roads, declining schools… But one problem dwarfs all else. It’s immediate, as in the old saying that “the wolf is at the door.”

Right now, meaning today and as you read this, California is running out of gas. Specifically, the state is burning down its gasoline, diesel fuel, jet fuel and a host of other refined petroleum products. The tanks are going dry. We’re looking at true shortages within a matter of weeks.

California fuel shortages in 1974. Courtesy LA Times.

Why? It’s a self-inflicted wound. That is, over many decades, California has created an energy mess for itself. A long list of magical-thinking, energy-challenged, feel-good politicians and bureaucrats have left their fingerprints at the scene of this crime. But for now, let’s avoid naming names and just focus on the problem.

Begin with a broad look at the U.S. pipeline system that moves oil, gas and refined products. This map below shows just some of the oil and refined product lines that crisscross the U.S.

Major U.S. oil & gas pipelines. Courtesy US Dept. of Energy.

To be clear, it’s difficult to obtain comprehensive maps of U.S. pipelines and related systems because exact details add up to critical national infrastructure. And federal, state and local governments want to keep things like this under wraps, and not make life too easy for potential saboteurs or criminals. It’s totally understandable.

Still, the map above is revealing, certainly with respect to California. Notice how few pipelines go into or out of the state. While in contrast, much of the U.S. Midcontinent and East is well-served by pipelines.

California only has a few lines that enter the state at the north and south. One reason is just plain geography. From down south at the Arizona border, and northward to Oregon, eastern California follows the Sierra Nevada Mountains, and no one has ever tackled that engineering challenge by laying pipe. It’s not worth the trouble or investment.

Up north a few pipelines cross from mountainous regions of Oregon and Nevada, with the same engineering challenges for oil or refined product movement from Midcontinent. It’s tough.

In southern California, a few lines cross from/into Arizona, itself a mountainous and challenging place to build anything; but yes, there’s at least there’s some connectivity at a relatively small scale to Texas.

The point is that California is what’s called an “energy island.” Sure, it’s a big state connected to the North American continent. But it’s isolated from the rest of the U.S. oil, gas and refined product infrastructure.

California, the Former Energy Powerhouse

This last point raises the question of how California prospered so mightily over the past 150 years or so, if it’s not connected into a national-scale energy system of pipelines for oil and refined products.

The answer is that California has long been an energy powerhouse in its own right.

In fact, oil production in California dates to the late 1860s, and the arrival of oil prospectors and drillers from back East, post-Civil War. California’s first big, home-grown oil company was the old Union 76 brand (from 1876, the U.S. Centennial), which is now part of Chevron (CVX).

And Chevron is the former Standard Oil Company of California, spun out from John D. Rockefeller’s Standard Oil Trust in the early 1900s. Indeed, this West Coast part of the Standard Oil family was so important that President Theodore Roosevelt’s trust-busters allowed it to operate independently, to serve the fast-growing California economy.

There’s plenty more history and geology regarding California oil, which I’ll skip except to say that the state has long been a prolific oil producer. The place has petroleum-bearing rocks, plus oilfields, well systems, pipeline gathering complexes, and of course associated refineries.

Indeed, until the early 2000s California produced most of its own oil, supplemented by output from Alaska and an occasional tanker from abroad. But not anymore, as you can see from this graph of oil supply published by the California Energy Commission.

Oil supply to California refineries. Courtesy California Energy Commission.

As this image shows, California has steadily used less and less self-produced oil, with less oil available from Alaska. And the difference has been imported oil, much of it from the Middle East; that is, for many years tankers from the Persian Gulf have been making an almost 90-day voyage across the Indian and Pacific Oceans to unload oil at California terminals.

But since February 28, 2026, and the start of the Iran conflict, no tankers have left the Gulf bound for California. And the few tankers that remain on the high seas – those late February sailings – will soon dock, unload, and then there’s nothing else coming in. Very soon, the view from California’s oil unloading terminals will be just big, blue, empty Pacific Ocean.

So, are you beginning to sense why California is about to experience an energy nightmare?

Lack of Refineries and Fuel

Then again, California’s energy problems are not really due to the Iran conflict. Many issues are purely internal. Just consider how, over the past quarter century, California has taxed, litigated and regulated primary oil exploration and production down to bare bones, despite significant hydrocarbon potential in the state.

This makes for another long story, but in essence California has many still-prospective areas for oil, both traditional production and fracking, let alone offshore. But state politics and environmentalism have shut it in. The state’s problem is politics and culture, not geology.

And then there’s the California refinery story, another key element of the state’s looming energy disaster. That is, in the 1980s California hosted 42 oil refineries and produced almost all of the liquid fuels and related products that the state consumed. The above-noted energy island was self-sufficient.

Today, however, California hosts a mere 7 refineries, with two of them devoted to recycling garbage (i.e., materials like used cooking oil) into so-called “biodiesel.” And for many reasons, those biodiesel plants are unprofitable, only kept alive by state subsidies and tax credits.

As for the dozens of closed refineries, the story is a typical California tale: environmental regs, taxes, litigation, punitive business climate, etc. Indeed, in recent years Chevron, Conoco Phillips (COP), and Valero (VLO) have closed and written off major refinery investments in California; it’s impossible for them to do business.

In fact, California state policy is blatantly anti-oil: to go total “net-zero” by the mid-2030s, which means that regulators want to close down all remaining refineries, and somehow California will run on batteries, and so-called “renewable” power and charging. It’s Green New Scam lunacy, some might say; but that’s what you have out there.

Meanwhile, the current refinery and fuel segment of California’s GDP is about 8%. To which, again, some might wonder how the other 92% will get along without gasoline, diesel, jet fuel, etc. But policymakers and regulators live in their own world, where such doubts are forbidden.

Of the five remaining oil refineries in California, the total output is about 40-50% of total fuel usage in the state, depending on whether it’s gasoline, diesel, or jet fuel. And that’s not enough to run things, so the difference is made up of imports via tankers.

For example, about 40% of California’s jet fuel comes from South Korea; 20% of gasoline recently arrived from Indian refineries; and a new source of gasoline and diesel, of as-yet-unknown percentage, is from… yes… Russia.

But not so fast, Grasshoppers… Because India and South Korea refine fuels from petroleum that also sailed (past tense) out of the Gulf on tankers, and obviously these nations have their own issues now. Hence, neither of these nations are currently exporting fuel to California, nor will they do so anytime soon. And Russian sourcing is problematic, also for obvious reasons.

High Prices, Shortages, Rationing

California has long been burdened with relatively high fuel prices, certainly versus the price back East. And right now, prices out there are going through the roof. For example, gasoline in SoCal is in the range of $6 per gallon and more; while diesel fuel in California is up around $8 per gallon, with some stations up at $10.

Much of the California fuel price is legacy regulation. That is, high prices trace back to massive environmental regs, especially from an entity called the California Air Resources Board (CARB). The idea is “clean air,” right? Although CARB jurisdiction doesn’t extend to, say, polluting refineries in India or South Korea, let alone to oil-burning tankers that traverse entire oceans.

Then again, CARB or no-CARB, California’s problem right now is insufficient state oil production or refinery capacity, and fast-dwindling imports via tankers.

So, what happens over the next month? Well… Stand by for the Nightmare.

We’ll see an unfolding energy disaster as California fuel stocks drain down, with not enough replacement fuel from state refineries, let alone imports from distant sources.

And note that California refineries and tank farms supply Nevada and much of Arizona, which means that these two states are about to get walloped by fuel price increases and shortages as well.

Here’s a summary of California’s energy predicament:

• Not enough in-state oil production.
• Loss of oil imports from the Middle East.
• Not enough refinery capacity.
• Loss of refined products from South Korea, India and other pre-Iran sources.
• Looming shortages of gasoline, diesel, jet fuel and related refined products.
• High and higher fuel prices are a given; the next issue will be physical availability.
• Military will get first call for fuel; that’s just the way it works.
• Look for fuel shortages and non-availability; even gas lines and rationing.
• Diesel shortages will affect agriculture and trucking, key parts of the California economy.
• Agricultural and trucking problems may lead to food distribution issues.
• Other trucking problems will affect cargo from California import terminals like Los Angeles and Long Beach.
• Freight rail and commercial air travel will also be affected, with likely serious ripple effects across the entire U.S. economy.

Wrap-Up

California is beyond an energy mess. We’re not California Dreamin’ here; no, it’s a real Nightmare.

On the “plus” side, last week the Trump administration applied the Defense Production Act (DPA) to domestic oil and gas development. This means that the federal government can begin to make energy policy from a national security perspective. In essence, the Departments of War and Energy can exercise wartime-level control over oil production, refining, imports and distribution.

DPA is not “nationalization” of oil or refining, etc. But it is an effective way to put California’s disastrous regulators on the bench – especially CARB – so that they can do no further harm to the overall energy situation. And harm they have done…

Where does it go from here? Well, California’s Energy Nightmare will become a dynamic situation. Fuel shortages, gas lines, high prices, and ripple effects across America. So, prepare as best you can. It’ll be a long, hot summer…

And we’ll have more for you as it all unfolds. But that’s all for now.

Thank you for subscribing and reading.

The post California Nightmare: A Looming Energy Disaster appeared first on Daily Reckoning.

“If it fits in a container, I want it.”

So said Admiral Daryl Caudle, Chief of Naval Operations (CNO) this week in front of a large gathering of military personnel and contractors at the Sea-Air-Space Conference (SAS) in National Harbor, Maryland. And hold that thought…

CNO Admiral Daryl Caudle at Sea-Air-Space Conference. BWK photo.

“I want it Sailor-centric,” he added. “I want your product ready to fight, and with a long sustainment tail.” And the CNO wants it soon, if not “now.” Hold that thought, too…

Because as far as the Navy is concerned, “Industry is no longer just a supplier. Industry is part of the nation’s force of arms.”

Okay, let’s look at where this is going…

America’s Military “Tribe”

Frankly, it’s refreshing to hear someone at the top – the CNO – say things like that. Because for a long time, my sense of how things work was that many people in charge of the U.S. military maintained an unhealthy distance, if not disregard, for the people and institutions that design and build the gear. No, not everybody, everywhere, all the time; but enough that the “us versus them” attitude was unhealthy and got in the way of actual deliverables that actually work.

Meanwhile, the foundational truth of military power is that it’s the first derivative of a nation’s energy and industrial power. That is, if a nation lacks energy and industry – and the kinds of smart people who bring forth energy and industry – it will never be much of a powerful state.

For example, Israel is a military power, after a fashion. But really, much of Israel’s “power” is based on U.S. equipment with a different paint job. And we can say the same thing about Saudi Arabia, Kuwait, UAE and more: they use oil money to buy U.S. and Euroland equipment, but there’s no way they could ever roll out their own high-performance ships, aircraft or munitions.

Whereas Russia has long been an energy and industrial power, complemented by large numbers of smart people, and has a military-industrial complex to show for it. More recently, see China.

But I don’t want to digress, so let’s return to the U.S. and the CNO’s comments.

First, and looking back since the days of President Eisenhower, people have commonly referred to America’s defense system as a “military-industrial complex” (MIC). And there’s a certain truth to that, although it’s not quite accurate because it leaves out the role of Congress in steering procurement decisions for raw political reasons. That is, U.S. defense is more of a military-industrial-Congressional complex, aka “MICC.”

But this week at SAS, the CNO put a different spin on the MIC/MICC. He began his talk by welcoming the serving military and military contractors as “an ecosystem of military capabilities in one room. A gathering of a tribe,” which is quite an interesting way to frame things.

Indeed, when one walks around the exhibit halls of SAS – sponsored annually by the U.S. Navy League, a private organization – the scale and scope of that military-industrial ecosystem is vast; indeed, it rivals the complexity of the most exotic tropical rainforest in variety and depth.

And calling it all a “tribe” has a certain semantic accuracy. That is, the defense-supplier community is composed of numerous companies and people – even families and clans – who recently, or over generations, have a shared business culture that involves building things for the U.S. military.

Of course, SAS highlights large, legacy – and irreplaceable – shipbuilders like Huntington Ingalls (HII) and General Dynamics (GD), whose heritage goes back into the 19^th century. And then there are significant producers of aircraft and flying munitions like Raytheon-RTX (RTX), and Lockheed (LMT), again with long industrial and business heritages behind them.

Meanwhile, RTX also builds aircraft engines under the century-old Pratt & Whitney name, while just down the aisle is GE Aerospace (GE), not to be confused with power systems maker GE Vernova (GEV), both of which trace corporate roots to Thomas Edison and the 1890s.

Then there are other large system builders like 110-year-old Boeing (BA), along with Northrop Grumman (NOC), a combination of two aviation names that each reach back a century.

But it’s not just the big names on display. SAS features hundreds of other companies up and down the supply chain that make everything from drones and satellites, to wire bundles and connectors; or paints and finishes; or ropes, chains and anchors, and much more. These companies hail from literally across the country, from Hawaii, Alaska, California eastward to the banks of the Potomac River, just south of Washington.

And when you delve into the what and how? That is, what are the products and how are they made? It’s an astonishing, mind-bending journey through many decades of science, engineering and technology. Because the military specification (MilSpec) for defense goods is there for a reason, namely, to be suitable for high end combat, and only after a history of testing and field use.

Sure, 150 years ago ships signaled each other by hoisting colored flags. But today? Military-grade communications are out at the far edge of everything. Math and software, plus electrical and electronic engineering, plus power systems and computing that reflect a century-long synthesis of world-class science and applications.

You name it, and it’s a complex piece of military kit anymore. Gray paint for the hull? No, you won’t find it on the shelves at Home Depot. Glass for the bridge windows on a warship? Not what you’ll find down at the local collision repair joint. Pipes and valves? Hey, there’s very little similarity to what’s in the bins of the plumbing supply place at the edge of town.

Of course, there’s always the rejoinder about how military procurement is bespoke and expensive, and why can’t the defense people use commercial products?

Well, sure, many commercial products work well… most of the time. They function flawlessly when the temperature is controlled, and it’s not raining or freezing, and there’s no shock or vibration, and no smoke or occlusion. Commercial products can be perfectly suitable, as long as the ship isn’t rocking and nobody is shooting at you.

Then again, we don’t want to give Sailors and Marines equipment that works “most of the time,” under normal, unchallenging conditions. Because at some point, those people and their equipment might be tasked to go fight a war, and we don’t want to lengthen the odds by using iffy stuff.

And here we are now, with American troops deployed and fighting a war in the Middle East, using equipment and munitions from all the usual names… and after two months it’s fair to say that the gear works well. So, where do we go from here?

We Already Fought the Last War

Another common criticism of the military is that it prepares to “fight the last war.” And there’s plenty of history behind this comment, such as how the beginnings of many past wars – waged by the U.S. and many other nations – were replete with costly errors by generals and admirals (and their political bosses) who clearly ignored advances in both technologies, and the very science behind assembling and employing military power.

Or think of it as failures of imagination, too. And that critique may pertain to some organizations and nations… but it doesn’t hold much water if you walk around the SAS Conference this year. Because based on what’s on display in the exhibit halls, and the fascinating breakout talks by senior officers and industry reps, it’s beyond evident that people currently running the show understand that “we already fought the last war,” (I heard this from a very senior submarine admiral), and the present and future are all about reinventing everything.

This last point brings us back to the CNO and his desire to fit warfighting kit into containers. He stated that the Navy cannot afford to focus just on “platforms,” meaning big gray ships, aircraft, etc. Yes, of course, the Sea Service requires places from which to do its work, and in fact the Navy looks forward to building larger ships in years to come.

One memorable line from the CNO was, “There is confusion about the new battleship,” referring to the large vessel that President Trump proposed last fall. “So, let me make this clear… the battleship is about payload volume! You have to bring the mass.”

In other words, Trump’s battleship is not just some crackpot idea based on nostalgia for the good old days of Iowa-class ships forming a battle line. No, the new idea of warfighting is to generate what the CNO calls “combat mass.” That is, a wide variety or ordnance or electromagnetic energy that can move downrange to wreck the opponent.

“Both the present future are about speed of sensing, decision-making, and adaptation,” said the CNO. “Adapt faster than the adversary can respond,” he pointed out.

From industry, the Navy wants to see systems that “integrate, scale, and can be deployed fast.” And this gets back to how it might be packaged, meaning literally in containers like this very portable missile system called “Advanced Reactive Strike Missile” (ARES), developed by Northrop Grumman.

Model of Northrop Grumman ARES system. BWK photo.

As the photo shows, it’s four missiles in cannister launchers, all designed to fit into a 20-foot container. And here’s a photo of the full-size missile (a mockup, of course).

ARES Missile by Northrop Grumman. BWK photo.

And where will these containers go? Quite literally, almost anywhere. You can put them on the deck of a large ship, medium size, or even a small vessel not much different than a service boat that hauls cargo out to, say, an offshore oil rig. Here’s one example, a model of modular capability from Leidos Holdings (LDOS):

Model small ship to carry containerized ordnance. BWK photo.

And I should add that I’m showing photos of models because at a show like this, it’s impossible to bring real ships and airplanes, etc. into the exhibit hall. But the models represent either what’s already out there, our could be out there on certain timelines.

Here’s another example, a Burke-class destroyer, tied up to something that resembles a deepwater drilling rig platform, except without the drilling derrick topside.

Model of offshore naval service platform. BWK photo.

What’s going on? It’s a notional idea from the venerable naval architecture firm of Gibbs & Cox — subsidiary of above-mentioned Leidos Holdings (LDOS) – which has been designing Navy ships since the mid -1930s.

The idea is to take what are (for now) relatively low-cost and available drilling rig hulls, strip them down and rebuild as naval assets. For what? Well, use your imagination: Floating fuel storage. Munitions reload. Submarine and destroyer tenders. Stable helicopter bases for oceanic domain control. Or many other ideas, but the point is to create naval and maritime assets in the short- to medium-term, using what’s already out there.

Or as a retired admiral said, who now works for Oceaneering International (OII), “There’s a deep locker of technology in industry, already invented and deployed. It works, and it’s in production. And the challenge is to adapt it for military use and stitch it all together.”

Wrap-Up

I’ll end here and just say that military procurement is changing fast, as are the requirements for what gets delivered. And there’s a new sense of cooperation between members of the “tribe.” There’s more understanding of the idea that military power is directly downstream from industry and energy. And not a moment too soon, some might say.

All in all, this is how nations win wars, and along the way it’s very investable. So, that’s all for now.

Thank you for subscribing and reading.

The post The Military “Tribe” Wants Containerized Warfare appeared first on Daily Reckoning.

“We’re ahead of schedule and landing early,” said the pilot. My wife and I were on a flight from Tokyo, and the aircraft was descending towards SeaTac Airport, south of Seattle.

“There’s something else,” said the voice from the cockpit. “We have two airliners from China behind us. So, when we reach the jetway, please deplane quickly. Get yourselves to customs, or you’ll wind up in a big backlog of passengers.”

Forewarned, we made haste to International Arrivals and joined a fast-growing line. Then, from another hallway, a crowd of passengers emerged, fresh off those other two airliners from the Middle Kingdom, and this new mass of inbound humanity included a group of about 40 very pregnant Chinese women headed towards the non-citizen passport line.

To be perfectly clear: it was beyond obvious that these ladies were pregnant, although I should add that my keen powers of observation were enhanced by a sharp elbow to my ribs, as my spouse said, “What’s with those pregnant gals? They look like they’re at seven months.”

Hey everybody! Your US passport is an airline flight away. Image via ChatGPT.

Definitely, women notice these things. And then, it was our turn with U.S. Immigration and Customs, but hold that thought…

“The Same Constitution”

You may already suspect where this is going; namely, to discuss what’s euphemistically called “birthright citizenship,” although another term for the phenomenon is “passport tourism.”

That is, current U.S. law interprets the 14^th Amendment to the U.S. Constitution as conferring citizenship on any person born in the U.S. or territories, aside from limited exceptions such as children of foreign diplomats. Otherwise, it doesn’t matter who is born to whom, or under what circumstances. When a baby pops anywhere inside U.S. territory, the outcome is a brand-new U.S. citizen.

At least, that’s the conventional legal wisdom, now under review by the U.S. Supreme Court in a case called Trump vs. Barbara (S.Ct. Docket 25-365), which was argued two weeks ago on April 1, with no less than President Trump in personal attendance.

People write scholarly books and law-review articles on the 14^th Amendment and birthright citizenship. Plus, there’s a large cadre of legal pundits on the topic, who jealously mark this territory like dogs at fire hydrants. And of course, within a few months we’ll have a Supreme Court decision on the matter. Case closed? Well, we’ll see…

Meanwhile, at this point in life I’m just a humble, taxpaying Navy veteran and geologist, not a bigshot Constitutional lawyer. Still, though, I’m intrigued at this quirky feature of American law, the principle that almost anybody can walk in (or fly; see above), deliver a live birth, and presto we have a new citizen, eligible for every sort of private right and public entitlement. So, I listened to the Supreme Court oral arguments.

Frankly, one line of discussion perplexed me. In fact, it troubled me deeply; namely, an exchange between Chief Justice John Roberts – full disclosure; he’s an old Harvard classmate – and U.S. Solicitor General John Sauer.

Undergraduate John Roberts, circa 1973. Courtesy Harvard Crimson.

In opening remarks, Sauer referred to “birth tourism” and stated that “uncounted thousands of foreigners from potentially hostile nations have flocked to give birth in the United States in recent decades, creating a whole generation of American citizens abroad with no meaningful ties to the United States.”

Well, yeah… Sauer’s point rang true to me; see my anecdote above about the pregnant Chinese ladies at SeaTac. Obviously, these women were coming to the U.S. to deliver babies. And one need not be Sherlock Holmes to understand that this was not a one-off thing, because it happens across the country many times, every day. Look around. In essence, there’s an entire travel-birth-citizenship industry at work here.

Then in a follow-up question, Roberts asked Sauer: “Do you have any information about how common that is, or how significant a problem it is?”

Sauer responded that “media reports” estimate over one million people have come from China alone to give birth in the U.S. And he mentioned a Congressional report about “Russian elites” who travel to Miami to have babies, via “birth tourism companies.”

Sauer added that, “Based on Chinese media reports, there are 500 birth tourism companies in the People’s Republic of China whose business is to bring people here to give birth and return to that nation.”

Roberts replied with a rhetorical question: “Having said all that, you do agree that that has no impact on the legal analysis before us?” In other words, Roberts essentially called Sauer’s point irrelevant to the case.

Sauer replied that, “We’re in a new world now, as Justice [Samuel] Alito pointed out, to where eight billion people are one plane ride away from having a child who’s a U.S. citizen.”

And Roberts answered, “Well, it’s a new world. It’s the same Constitution.”

Huh? Hey, wait a minute. That’s a pretty glib, uncurious wave-off of an important fact-set. Indeed, it’s gratuitous, especially coming from the Chief Justice of the United States.

Suicide by Constitution

In other words, it’s not as if the Supreme Court has not interpreted and reinterpreted that so-called “same Constitution” mightily over the centuries to accommodate all manner of human advancements.

And that’s before we get to the relatively modern idea of a “living Constitution,” under which the Court has allowed the federal government to do pretty much anything that the political powers desire. Indeed, the past 90 years of Supreme Court jurisprudence speaks for itself.

The idea of the “same Constitution” should not mean that the nation’s foundational document is some sort of unchangeable fossil record of the world of 1787, from the time when the document was composed.

For example, does the First Amendment, which protects freedom of speech and press, only apply to communication technology of 1787? The question practically answers itself. American free speech is wide open, and per countless Supreme Court cases over many decades, federal, state and local governments restrict it at their legal peril.

Or does the Second Amendment only pertain to muskets of late-1780s vintage? Does it mean that you can own only a flintlock rifle, and even then, only if you are in a “well-regulated Militia?” No, of course not, and the Supreme Court has evolved its views on firearms laws to change with the times.

How about the part of the Constitution that empowers Congress to “raise an Army” and “maintain a Navy.” Does that mean the country cannot have an Air Force? Because obviously, there were no airplanes in 1787 flying over the Philadelphia Constitutional Convention. And again, it may come across as silly to argue the point, except that somehow the so-called “same Constitution” is now a barrier to progress if we follow the Roberts logic to where it seems to be headed.

Last, and not to overwhelm you, there’s Wickard vs Filburn, a 1942 case that empowered the federal government to regulate the smallest details of daily American life – in this case, farming – under the guise of “regulating interstate commerce.” Indeed, the small family farm in America traced its roots literally to Jamestown in 1620. And for over 300 years, farming was a taproot of American freedom. Yet after Wickard, the simple act of planting seeds in the ground fell under the jurisdiction of the U.S. Department of Agriculture.

Which brings up a line that popped into my head when Roberts rebuked Sauer, namely that “the Constitution is not a suicide pact.”

The exact historical record is unclear, but President Abraham Lincoln supposedly coined this phrase in response to charges that he was a tyrant for suspending the Writ of Habeas Corpus during the Civil War. Today, we have the luxury of second-guessing the man, but in his day, he had battles to fight, and keeping certain people off the streets served a purpose.

President Lincoln. Courtesy Library of Congress.

More recently, the “suicide pact” phrase was used by Justice Robert Jackson in his dissent in a 1949 case, Terminiello vs. Chicago, a free speech case then before the Supreme Court. And the phrase saw more daylight in 1963 in Kennedy vs. Mendoza-Martinez, in an opinion grounded in due process rights, authored by Justice Arthur Goldberg.

And now, here we are, dealing with new developments in a rapidly changing world, namely birth tourism. Fly in, have a baby, make a so-called “citizen,” and… then go home.

My anecdote above, about the pregnant ladies at SeaTac, is from 2015, or more than a decade ago. But it still resonates. Both the New York Times and New York Post have recently run stories about Chinese women traveling to the mainland U.S. or territories (eg., Mariana Islands) to have babies. They fly in, hang out, deliver a baby, and in due course obtain U.S. citizenship for the child, plus a social security number and passport.

Clearly, per those above-noted Supreme Court discussions, this is a new world. It’s not the olden days of the 1860s, when the 14^th Amendment was drafted in the wake of the Civil War. And obviously, coming to America no longer involves a long sea voyage on a sailing ship. Just buy an airline ticket, and voila!

Meanwhile, it’s one thing when foreign visitors come to America to see the sights, do tourist things, and then go home with, say, a T-shirt, coffee mug, or maybe some refrigerator magnets.

But now, there’s also a vast subset of the tourism industry that brings late-term pregnant women to America, to have babies and return home with a child and U.S. passport; or perhaps call it a “refrigerator magnet passport.”

To be fair, these almost-mom arrivals are not sneaking into America. They’re not “illegal,” not in the way the term is commonly used. Nor are they coming here to go to take a job away from an American worker. Although their little anchor baby now dilutes your own citizenship, in the big scheme of life.

Indeed, the pregnant ladies walk through the U.S. entry system, usually with a B-1 visitor’s visa, and get a stamp on their own passports for a six-month stay. And they go home with a nice, new, bundle-of-joy American citizen, to raise in, say, China under Communism.

A Crazy Way to Run a Country

To me, at least, this is all very odd: granting citizenship based on an airline ticket and six-month tourist visa. Is this really what the 14^th Amendment authors meant when they were working to clean up the societal mess after the Civil War?

Plus, we have the raw, blood-sport politics of the entire matter, the idea that President Trump wants to end this passport tourism business, which is enough for many people simply to dismiss the idea out of hand. Cuz… Trump, yes?

Then again, all systems have flaws, and the world is filled with people who want to take advantage. But the more curious thing – scandalous, actually – is that this matter has grown to such size that it’s actually a demographic and political issue, now sitting on the bench of the Supreme Court.

It’s in front of the Black Robes, with all of the subtle, but critical, in-group virtue signaling that they must perform to impress their Washington, D.C. career managers. And face it, there’s a certain, leftward-drifting agenda in America, with Washington as Ground Zero. And the Supreme Court is part of it.

At the end of the day, each justice has his/her own future personal and career goals, if not their income and ego. Are they there to serve the nation? Or have they gone native inside the Washington Swamp?

In general, the question is how “birthright citizenship” serves the national good? More specifically, how does “passport tourism” advance the national agenda?

Well, we’ll find out in a couple of months. And that’s all for now.

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I hope you had a good Easter weekend. It’s back to business now, and oil and refined fuel prices are up-up-up. There’s much to discuss because we want to stay ahead of the game.

First, though, it’s worth noting that out of eight billion people on our world, a mere four (4) spent the past few days headed to the Moon. Nice work, if you can get it.

North Africa, Europe, Eurasia and Persian Gulf (green box), plus Moon. Courtesy NASA.

I mention the Moonshot because, as you can see, we have an awesome photo of Earth and Moon together. To me at least, this image helps frame some of the issues.

Moonshots While the World Keeps Spinning

In the center of that photo above is the brown Sahara of North Africa, with the Red Sea and Arabian Plate just to the east. To the north is the Mediterranean Sea, and then Europe framed by lights that shine against a dark background. And of course, Eurasia is further east and northeast. Plus, there’s that (editorially added) green box around the Persian Gulf; aka “Arabian Gulf,” depending on who you talk to.

In the big view of things – looking down from 250,000 miles away – while we all went about our life on earth this past weekend, and even for the four souls out in space, the world kept spinning.

Certainly, the Iran war continued, complete with white-knuckle excitement over the rescue of American personnel from behind the lines (another discussion for another time). While closer to home I noticed that the price of diesel fuel rose by about 60-cents at the end of last week.

Both of these things – Iran and diesel – are connected, and that’s today’s theme. In other words, the war has driven up oil prices, which means that diesel and refined fuels are getting expensive, and absolutely it means we’ll have inflation ahead. “Dieselflation,” so to speak.

So, let’s dig into what’s going on…

Well-Traveled Barrels of Oil

There’s a lot of oil in the world; it’s all over the place. But much of that oil is in the Middle East, as you can see from this graph that ranks various nations and their estimated oil reserves (in billions of barrels).

Estimated oil reserves by nation (and Alberta). Courtesy @RazorOil.

Obviously, we see familiar Middle East names here: Saudi Arabia, Iran, Iraq, Kuwait and Abu Dhabi. All export oil, and the graph doesn’t include Qatar which is a major natural gas player.

Whether oil, liquefied natural gas (LNG) or refined products, hydrocarbons travel by tankers that require about 30 to 60 (and for some routes, even 90) days to get from the Gulf to destinations that range across the globe; that is, to Europe, Africa, South Asia, East Asia and the U.S.

Notional – very cursory – chart of global tanker routes.

Along those last lines, and contrary to myth, the U.S. actually does (well, it “did”) import oil from the Middle East. In fact, last year about 8% of U.S. imports came from the Gulf region, just shy of half a million barrels per day. Here’s a breakdown:

U.S. oil imports, especially from Gulf nations., Courtesy Dept. of Energy/EIA.

Note that much of the imported oil from the Middle East is “medium sour,” which means it contains elevated sulfur, because many American refineries are geared to process that blend. And hold that thought as we get into other details about America’s imported oil barrels.

America’s Many Imported Barrels

First, as you look at that graph above of where America’s oil comes from, you can see that most imported U.S. oil – about four million barrels per day – comes come from a distant land known as Canada, namely the province of Alberta (see Alberta oil reserves in graph above).

Now, here’s a map that shows one of America’s most important pipeline systems, namely the Enbridge Mainline out of Alberta, which moves about three million barrels per day of Canadian crude down into the U.S. Midwest. (And the overall system would be larger if President Biden had not – stupidly! – cancelled the Keystone XL line, back in 2021.)

Enbridge Mainline, moves Alberta crude oil to U.S. Courtesy @RazorOil.

Those three million Enbridge barrels per day are unmatched by any other pipeline in North America, even the Alaska Pipeline. In this sense, Canada is a critical part of making America “great,” if not an energy superpower: America’s Midwest and even Gulf coast refineries heavily rely on Canadian oil.

It’s worth pointing out that Alberta and its oil exports far outclass, say, Venezuela’s oil and that nations’ output of under one million barrels per day. If nothing else, Venezuela’s heavy, tarry, gunky oil must first be moved to the Caribbean coast and then loaded onto tankers for another sea voyage to Houston. So, on this point of logistics alone, Canadian oil is a blessing compared with other oil imports, even from relatively nearby venues like Venezuela.

Also, from that EIA graph above, note that not quite half of U.S. Middle East oil imports have been going to Gulf coast refineries, and not quite half to the West Coast, namely SoCal.

Those Gulf coast imports were mostly Saudi oil, headed to a Saudi-owned refinery near Houston. But the California oil imports? Again, much was Saudi but not all. And this highlights a serious problem in the U.S. West, namely the lack of local or even regional oil supply for California and its six remaining refineries (yes, only six left standing; it used to be over 40), as we see here:

Oil supply to California refineries. Courtesy California Energy Commission.

Okay… What’s wrong with this picture? Well, until the early 2000s California produced most of its own oil, supplemented by output from Alaska. But not anymore. And that’s what’s wrong!

Over the past quarter century, California has taxed, litigated and regulated primary oil exploration and production down to bare bones, despite significant hydrocarbon potential in the state (long story). And the same goes for California refineries, many of which have closed over the past quarter century.

In other words, California has grown in population (well… until the past couple of years, as people left due to toxic politics). And as anyone who has recently been there can tell you – just ask me! – there are way more cars, trucks, trains, airplanes and everything else out there and burning fuel, despite the state’s so-called “green” efforts.

But as noted, California has way fewer refineries that are processing less and less oil supply from local or regional sources. And as you may know, California fuel prices are the highest in the nation; over $8 per gallon for diesel, I just saw in a news article.

The takeaway here is that much of the U.S. is (sort of) okay when it comes to physical supply of barrels. That is, most mid-continent and Gulf coast U.S. refineries have access to domestic, offshore and Canadian imported oil.

But out West is a very different story for California, and by extension for Nevada and Arizona, which obtain most of their refined products from California refineries or other imports.

West Coast Will Soon Have BIG Problems

So far, we’ve covered a lot of ground in terms of oil and where it comes from, and how it gets refined.

One big takeaway is that California has an oil and refinery problem. Most oil that flows through California refineries is imported. And now, global events have disrupted that trade. But also, and because California has so few refineries, the state also imports significant amounts of refined products. From where? Oh, man…

Until recently, much of California’s diesel fuel was imported from South Korea (yes, seriously). That is, oil would go from, say, Saudi to Korea, get refined, and then move across the Pacific Ocean to California. But considering the Iran war, that’s all coming to a halt.

Another source of refined products for California is the U.S. Gulf coast, although it’s a circuitous route via Bahamas (due to the Jones Act – long story) and then a transit through the Panama Canal.

Recent refined product shipment from Houston to Bahamas to California. Courtesy Bloomberg News.

Look at it this way: California is a geographically isolated market. What makes it worse is that much of the refined products in Arizona and Nevada also originate from California. So, looking ahead, the West coast and adjacent states can expect much higher prices for gasoline and diesel fuel.

Of course, right now everybody pays more for fuel; I mentioned earlier that we had a 30-cent per gallon increase for diesel just last week, here in Pennsylvania. Clearly, diesel fuel prices are rising nationwide, but those fuel prices are way higher in California, and it’s all about to get worse.

Go back to those above-mentioned 90-day tanker runs for crude oil from the Middle East. Well, all those oil tankers that didn’t sail in early March, because of the war and blockage of Persian Gulf, are now NOT arriving at unloading piers across the world, from Pakistan to New Zealand to… yes… not to the unloading piers of California.

And without crude oil, refineries across the world lack feedstock to run through the cracking towers. Thus, in 15, 30, 45 days or so – end of April, early May – refined products will run short across many parts of the world, and likely in the U.S. West.

Already, Asia is slowing down:

• The Philippines has declared a national emergency, with fuel reserves under 5 days.
• Pakistan has declared a four-day work week; situation is desperate.
• Bangladesh has imposed curfews to stop fuel-burning activities past 6:00 pm.
• Thailand has shut down much of its fishing fleet for lack of diesel fuel.
• Even China has lines at filling stations, and has banned fuel exports, including to Australia and New Zealand which are at the far end of every sort of oil and refined product supply chain.

Is this doom and gloom? Yes; sorry. But the fact is that energy will drive inflation, or as noted above, “dieselflation.”

And there’s a lesson here for nations everywhere: don’t have dumb, kneejerk, bumper sticker energy policy; drill your own freaking oil, build your own freaking refineries, and always be nice to Alberta.

Meanwhile, looking ahead, “What’s the real price of oil going to be?” people ask…

Well, there are paper barrels that trade on the exchanges. And then there’s real crude, like what’s currently not moving in large volumes out of the Persian Gulf. Which means that across the globe – see that nice photo topside – oil refineries that want crude must pay up for petroleum.

Brent-contract barrels (one key international standard) are going for as much as $160, per data I saw the other day. And I’ve heard tales of tankers on Asian routes making three and four course changes to different destinations, as refineries bid for barrels. It’s wild out there.

Meanwhile, if you are in the U.S., be glad! At least we have barrels and fuel here. Compare with Australia, with just two refineries and not nearly enough domestic oil to keep the planes, trains and autos running. And definitely be glad you’re not in New Zealand, with zero refineries, and which must import every drop of refined fuel and lubricant.

And for investing? Keep it simple: oil companies with minimal exposure to the Middle East, like Petrobras (PBR), and U.S. domestics. Plus, oil services like Schlumberger/SLB (SLB), Halliburton (HAL), or the OIH fund. (Of course, these are not official reccos; we don’t have a Reckoning portfolio.)

That’s all for now. Thank you for subscribing and reading.

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