Eight years later, in August 2007, to be precise, while working as a market commentator for Dutch TV (RTL Z), I published my first book, which warned of the US housing bubble. Just one year later, Lehman (and some others on Wall Street) collapsed, nearly taking the entire financial system down.

What followed were daily invitations to join nationwide TV news shows to discuss the fallout. I decided to quit journalism to profit from the coming gold rush and started two precious metals-related companies. I sold the bullion business in 2011, some three years later, when our annual sales reached 100 million euros. To this day, I continue to run the Gold & Discovery Fund (renamed Commodity Discovery Fund in 2011).

So, I recognize a bubble when I see one. During a presentation for FX traders earlier this week, I showed that NVIDIA was worth more than the top 100 largest listed mining companies combined. It has reached a valuation of over $5 trillion because all hyperscalers need to buy more and more high-powered chips in their race to the top of AI. Especially now at the end of the boom. They all know it's winner-take-all.

However, the bubble might well have just popped. Elon Musk recently warned that over 200 smaller AI (‘neoclouds’) companies probably won’t survive, because they will have funding problems.

The topping pattern is often quite similar. During the mania phase, every new technology is treated as if profits can only keep rising. The wake-up comes when real returns lag. The first cracks often appear in the most levered names, and the multi-year correction that historically follows has repeated with railroads, telegraph and telephone networks, and many previous boom-busts.

The scale of the current build has been extraordinary. Alphabet, Amazon, Meta and Microsoft alone are guiding for roughly $740–830 billion in capital expenditure for calendar 2026, most of it directed at data centers, custom and merchant silicon, networking, power, and related AI capacity.

In the third quarter of 2026, the five main hyperscalers spent approximately $230 billion, up 118% from the same quarter a year earlier. Four-quarter cumulative spending through Q3 already exceeds $690 billion for the core group and is absorbing most operating cash flow. In several cases, free cash flow has turned negative. For the first time in more than a decade, the combined capital spending of the largest players has exceeded the cash their businesses generated.

The revenue side does not yet match.

Goldman Sachs calculated that the major hyperscalers need something on the order of $300 billion in annual AI-related revenue simply to break even on an $800 billion 2026 infrastructure outlay. At the time of that analysis, AI cloud revenue was running only about $70 billion above the pre-AI trend line, leaving an annual gap of roughly $230 billion. Company-disclosed or widely cited AI run-rates remain far smaller: Microsoft’s AI business has been described in the mid-to-high tens of billions annualized, AWS AI above $25 billion, OpenAI in the $24–50 billion range depending on the snapshot. Now, rumors circulate OpenAI might drop prices and start a price war.

It's becoming clear that revenues clearly attributable to generative AI have not scaled to the size of the infrastructure bill. Outside the pure technology sector, enterprise surveys still show most companies stuck in pilot or early-production stages; measurable, broad-based ROI that would justify the current pace of spending remains limited.

So, we might have well entered the classic “topping pattern” phase. For more than two years, markets rewarded larger capex guidance as a signal of confidence and future demand. That reflex has now broken. In October, the Nasdaq 100 faced roughly a $2 trillion market-value wipeout and lost more than 5% from recent highs. This week Alphabet 12% in just one day and erasing hundreds of billions in value after reporting negative free cash flow and still-elevated spending.

Broader technology indices and semiconductor names sold off sharply; pure-play AI infrastructure and “neocloud” companies had already been under pressure for weeks. Investors are no longer treating every incremental dollar of capex as unambiguously positive. Attention has shifted to free-cash-flow pressure, rising debt issuance (the group raised hundreds of billions in 2026), depreciation assumptions, power and construction bottlenecks, and the simple question of how quickly revenue can close the gap.

In a boom, every bit of news is filtered through the rosiest lens, while during a bust almost everything is viewed through dark-colored glasses. Historical parallels are obvious. Railroad construction in the nineteenth century, the telegraph and early telephone networks, and especially the late-1990s fiber-optic and telecom equipment boom all followed the same sequence: transformative technology, massive upfront capital deployed on the assumption that demand would arrive on schedule and at high margins, early winners in the equipment and infrastructure layer, and then recognition that capacity had been built ahead of proven monetization. The AI cycle is now in the late stage of the “build first, monetize later” portion of that arc.

Yes, the largest spenders today have highly profitable core businesses, including search and advertising, cloud, e-commerce, and enterprise software, that can absorb losses longer than pure-play telecom carriers or many of the 1990s internet startups could. Forward price-to-earnings multiples on several of the hyperscalers and on Nvidia remain elevated by historical standards but are not at the 150–200× extremes seen in Cisco and other leaders at the 2000 peak. None of these differences erase the gap between current AI revenue and the capital already committed or still being guided.

The first phase of adjustment is already visible in the most levered and pure-play names. Companies that finance data-center capacity primarily with debt rather than with the cash flow of a diversified, high-margin core business have seen credit spreads widen, and equity valuations compress earlier and more sharply. This is the classic sequence: the most capital-intensive, least diversified participants feel the change in investor tolerance first. Only later does the scrutiny broaden to the largest platforms if revenue growth fails to accelerate or if free-cash-flow pressure persists for several more quarters.

Google might be among the hardest hit. Google’s core business model depends on humans scrolling through search results pages, viewing ads, and clicking links. Pay-per-click and impression-based advertising on those results still generates roughly half of Alphabet’s revenue. AI agents upend this because they do not scroll or browse. Personally, I stopped using Google almost completely. This risk crystallized after Alphabet’s Q3 2026 results this week. Beyond the positive PR number-talk, I found that while Search query volume hit a five-year high, Search & other revenue grew only 12% to $63.4 billion, down from 17% the prior quarter, and advertising overall missed expectations.

Management explicitly cited strong AI Mode query growth and its “lower monetization” as a drag. Capital expenditures hit a record $51.4 billion, while free cash flow turned negative. Shares plunged over 10%, erasing roughly $500 billion in market value, the company’s worst post-earnings reaction since its 2004 IPO.

If the historical pattern holds, the full adjustment in stock prices does not occur in a single month or a single earnings season. It typically unfolds over several years as capacity comes online, depreciation hits income statements, management teams revise growth assumptions, and investors re-rate the expected returns on invested capital.

Yes, some of the infrastructure will ultimately be used and will generate attractive economics (the rail lines are still used, even 150 years after the collapse of the railroad bubble). This week’s market action is best read as the first clear public recognition that the “profits will keep rising indefinitely” narrative has limits. It is consistent with the late stage of a classic infrastructure boom rather than with a stable, self-funding growth trajectory. Historical precedent suggests that once investors collectively shift from rewarding spending to demanding visible returns, the subsequent re-rating will continue.

After this initial shock, markets often recover and even set a final top. If that happens, it will give investors time to offload some positions. The real risk is an implosion of this tech bubble, leading to a broader market-wide correction (or worse).

Grok assisted writing - all prompting and editing by Willem Middelkoop

The reform does not enlarge the orebody, cut a royalty, or shorten a permit. It moves the federal tax shield forward. That is enough to reorder who gains, and in what order.

The system it replaces

Canadian resource taxation has long split spending into pools that move at very different speeds. Canadian exploration expense, the grass-roots and early-exploration bucket, is already deductible at 100 percent and can be renounced to flow-through investors. Canadian development expense—the cost of shafts, declines, stripping, and much of the work required to bring a known resource into commercial production—has ordinarily been deductible at only 30 percent on a declining-balance basis. Depreciable mining assets, including much of the plant and infrastructure in capital-cost allowance classes 41 and 41.2, have been written off over multiple years, often delayed further by available-for-use rules tied to first use or to commercial production.

Temporary accelerations already existed. A reaccelerated development-expense regime and the Productivity Super-Deduction from Budget 2025 improved rates for a limited slice of investment, in some cases toward 45 percent. They were partial and, in important respects, time-limited. The Mega Deduction is designed to widen eligibility and to make the 100 percent rate permanent for new spend.

What the draft actually covers

Two clocks govern eligibility. Depreciable property acquired on or after 15 September 2026 generally qualifies for a full deduction in the year it becomes available for use, unless it is excluded. Exclusions include ordinary buildings in classes 1 and 3, goodwill and similar intangibles, certain vehicles, and a handful of specialised categories. Mining structures in classes 41 and 41.2 are widely expected to fall outside the building exclusion, so mills, process plants, and a large share of site infrastructure should qualify if bought after the cutoff and then brought into use.

Development expense incurred on or after 15 September 2026 would become “immediate Canadian development expense,” deductible in full in the year incurred. Successor amounts and non-arm’s-length purchases of Canadian resource property are carved out. The definition of the expense is not broadened; only the rate changes. Qualifying amounts can still be renounced to flow-through investors, but only under agreements entered into on or after announcement day, and mining development expense generally must be incurred before it can be renounced.

Spending before 15 September 2026 stays on the old rails. A mine built from 2022 through mid-September 2026 does not have that historical capital upgraded. Only money spent after the cutoff enters the new regime.

Who benefits, in order

A deduction saves cash only when someone has taxable income to offset, or when it can be transferred to someone who does. Carry-forwards preserve the nominal amount and discount its present value. On that test:

• Existing producers rank first. They already have Canadian taxable income, so equipment, mill upgrades, sustaining capital, and brownfield development after the cutoff shelter current profits. The shield stays in the company. Agnico Eagle’s Canadian operations and extensions such as Odyssey at Canadian Malartic, Cameco’s uranium mines and mills, Teck’s further Highland Valley work, Lundin Mining, Hudbay, Glencore’s Sudbury complex as Onaping Depth enters production, and future Red Chris capital for Newmont and Imperial Metals all fit. Shareholders gain only through cash flow and valuation.

• Companies building now rank second, and only on capital still ahead of them. Generation Mining’s Marathon copper-palladium project is the cleanest case: early-works construction began in October 2026, so almost all remaining capital falls inside the window. Skeena’s Eskay Creek rebuild is already about three-quarters complete, so only the residual spend qualifies. Foran’s McIlvenna Bay had commissioned its plant by June 2026. Osisko’s Cariboo made its construction decision on 14 September 2026, with first gold targeted for 2029, so it still has most of the build ahead of it. Denison’s Phoenix in-situ uranium project moved to full-scale construction in July 2026. Nouveau Monde Graphite’s Matawinie and BHP’s Jansen potash project, aimed at mid-2027, are split the same way. With little income during construction, the deduction often becomes a loss or a pool used once production starts.

• Developers that have not started major construction rank third as corporations and higher as financing stories. They rarely have income, so the corporate deduction carries forward. The near-term gain is flow-through: development expense renounced under a post-announcement agreement becomes a 100 percent deduction for the investor rather than 30 percent, which can lower the cost of late-stage capital. Ordinary shareholders benefit if dilution falls or if updated studies show a higher after-tax net present value and internal rate of return.

• Flow-through investors rank ahead of ordinary shareholders as direct tax beneficiaries. The subscriber, not the issuer, receives the personal deduction, often stacked with exploration tax credits where those still apply.

• Grass-roots explorers rank last under the rule. Their spending is already fully deductible exploration expense. They gain only if better development economics raise the price of a discovery, or if they later incur qualifying development expense.

Development-stage companies, as examples

These issuers still lack a full construction program. The order reflects how much Canadian capital remains unspent, how close a construction decision appears, and how usable the new development-expense deduction and flow-through channel are. It is not a ranking of geology or of investment merit.

• Canada Nickel, Crawford. Federal approval was issued in July 2026, the first mining project approved under the amended Impact Assessment Act, and the project has been referred to the Major Projects Office. A feasibility study put the two-stage build at about $3.5 billion. Almost all of that capital is still above the cutoff, so both the corporate write-off and 100 percent flow-through renunciation remain available if and when the money is raised and spent.

• Troilus Mining, Troilus. One of the larger undeveloped gold-copper deposits in Quebec, with a construction decision still pending and an $850 million credit-approved debt commitment announced in late September 2026 toward a larger package. Permitting decisions are expected around late 2026 or early 2027. The build itself has not started, so eligible development and plant capital would fall under the new rules.

• NexGen Energy, Rook I. The Arrow uranium project in Saskatchewan remains pre-construction, with pre-production capital previously estimated at around C$2.2 billion. A decision to build after the cutoff would place most shafts, underground development, and the surface plant inside the immediate-expensing window.

• Frontier Lithium, PAK. The integrated Ontario lithium mine-and-chemicals plan is still pre-construction, with a final investment decision discussed for late 2027 or early 2028. Future mine-development costs and plant capital fall within the new window, and late-stage flow-through is a practical financing tool. Near-term spend is smaller than Crawford’s or Rook I’s.

• Northcliff Resources, Sisson. The company filed a feasibility-study update in October 2026 for the New Brunswick tungsten-molybdenum project. The company is still clearing environmental-approval conditions and has pointed to a construction decision in the latter part of 2027, with operations around 2030. Any eventual build qualifies; the path from here to incurred development expense is longer.

• Patriot Battery Metals, Corvette, and similar advanced lithium and critical-mineral explorers crossing into development studies. Where the work is still resource definition, the spending remains exploration expense and the new rule changes little. After 15 September 2026, when projects become pre-production development or a plant order, the 100 percent development-expense rate and the flow-through channel begin to matter.

Projects already in the ground are a different category. Marathon, the unspent portion of Cariboo, residual Eskay Creek and McIlvenna Bay capital, Phoenix, Matawinie, and Jansen are construction stories. Their benefit is the write-off on dollars still to be spent, not a development-stage financing reset.

What the ranking does and does not mean

Producers capture the reform on the next tax return. Builders capture it on the unspent estimate. Developers capture it by selling a richer deduction to outside investors and by improving the after-tax case for a construction decision. Flow-through subscribers capture the personal deduction. Explorers capture it, if at all, when they sell or when they graduate into development.

The limits bind all five groups. The text is a draft and can be narrowed. Available-for-use rules can push a plant deduction into a later year. Provincial mining taxes and royalties are untouched. A faster federal shield does not allow a project to proceed, power it, or finance it. Because the lifetime nominal deduction is unchanged, the reform's value is the interest saved by taking the shield earlier, not the face amount of the capital. For capital incurred in Canada after 15 September 2026, that interest saving is now the variable that separates one project’s after-tax return from another’s.

Grok assisted writing - all prompting and editing by Willem Middelkoop

Alexei Tsydenov, head of the neighboring republic of Buryatia, said she had died “possibly from the plague,” while noting that Buryatia itself had no outbreaks.

On 4 October, Rospotrebnadzor said the diagnosis was pneumonia of unknown etiology, that expanded testing had not recovered microorganisms linked to her professional work, and that a biosafety commission found no accident involving pathogenic organisms at the institute.

Nevertheless, authorities placed roughly 197 people under medical observation. Several Irkutsk hospitals, including a children’s hospital, imposed reported three-week quarantines. The Irkutsk Aluminum Plant in Shelekhov introduced a mask requirement.

A U.S. State Department official said Washington was monitoring reports of a suspected fatal pneumonic-plague case and encouraged rapid information sharing. As of 5 October, no secondary confirmed cases had been announced.

The uncertainty is itself instructive. Pneumonic plague is the lung form of infection with Yersinia pestis. It spreads mainly by respiratory droplets during close contact with a coughing patient. Incubation is typically one to three days. Untreated case fatality is extremely high; streptomycin, gentamicin, doxycycline, and fluoroquinolones remain effective when started early. The organism does not remain infectious for long in outdoor air or on ordinary surfaces. Sustained chains therefore require crowding, delayed recognition, and the absence of antibiotics—the same conditions that produced the large epidemics of the pre-antibiotic era and that still define the outer bound of any hypothetical worldwide event.

The clearest historical demonstration of the pneumonic plague is the Manchurian epidemic of 1910–1911, centered on the Chinese Eastern Railway zone and the adjacent borderlands of northeast China and the Russian Far East. It began among marmot hunters. The Siberian marmot, Marmota sibirica, is a natural reservoir; skinning and close handling allowed transfer that then became person-to-person respiratory spread inside trains, inns, and laborers’ barracks.

Contemporary estimates place deaths near 60,000, with case fatality approaching 100 percent in the absence of effective drugs. The wave peaked in winter and receded by spring 1911 after railway quarantines, isolation of the sick, burning of contaminated dwellings, and restrictions on marmot hunting. Wu Lien-teh, who directed much of the Chinese response, introduced gauze masks for medical staff—one of the earlier systematic uses of face coverings against pneumonic plague. Mortality was highest in unventilated barracks. Settlements that sealed themselves and refused entry recorded far lower attack rates.

A second pneumonic wave in 1920–1921, again tied to marmot epizootics and transport corridors, killed tens of thousands and was arrested by the same measures. Both outbreaks showed that respiratory chains can persist for months under cold, crowded conditions and that they break once symptomatic people are physically separated from the uninfected. Observers at the time also noted that open-air activity and warmer weather coincided with natural decline, while winter confinement accelerated spread.

Madagascar supplies the modern counterpart. Yersinia pestis remains enzootic in rats and fleas of the central highlands. Most human cases are bubonic, acquired from fleas, but a fraction become secondary pneumonic and can seed limited primary pneumonic clusters. The 2017 season produced 2,417 notified cases and 209 deaths, with several hundred pneumonic, including unusual urban transmission in Antananarivo and the port city of Toamasina. School closures, airport screening, contact tracing, prophylactic antibiotics, and rodent control ended the event by late November. No sustained urban pneumonic epidemic has occurred in the antibiotic era where isolation and drugs were available within days.

That record frames the Irkutsk reports. If the death was unrelated to Yersinia pestis, the quarantines are a precaution. If it was a single laboratory- or travel-associated pneumonic case, negative contacts and early antibiotics would be the expected end of the chain, the pattern seen whenever surveillance functions. Only a simultaneous failure of isolation, diagnostics, and drug supply across many regions would convert scattered events into the worldwide scenario sometimes imagined. Under that condition, residual safety would not lie in any country’s nominal preparedness ratings. It would lie in sites that can reproduce, by geography and logistics, the separation that quarantines once enforced by decree.

The highest-probability refuges are therefore places that already have near-zero routine human contact, the physical ability to remain sealed for one to three months, and elementary self-sufficiency in water, calories, and shelter. Uninhabited or extremely low-population oceanic islands without scheduled air or sea links reduce the chance of an infected arrival through distance alone. Stored food, rainwater catchment or small desalination, and fuel become the binding constraints. Polar field camps and winter-over Antarctic stations that can operate under strict no-resupply, no-visitor rules offer a comparable barrier; cold does not sterilize the bacterium inside a host, but the difficulty of reaching the site substitutes for formal quarantine. Deep wilderness with no roads and negligible density, interior Greenland, segments of the Canadian Arctic Archipelago, or the Australian interior many days from the nearest settlement, provides space rather than infrastructure. Any later contact with outsiders reintroduces risk, and medical care is absent.

Island jurisdictions that have previously closed all borders within days, among them New Zealand and Iceland, form a second tier for people already resident, provided authorities maintain the closure. Large, sparsely populated countries with internal movement controls outrank dense megacities, yet remain inferior to true physical isolation because essential workers and residual travel continue. Urban centers, major airports, ports, and any settlement dependent on continuous food or medical imports are the least favorable once symptomatic cases appear in number.

Historical pneumonic outbreaks were arrested by case isolation and, later, antibiotics. In a hypothetical collapse of those systems everywhere at once, the absence of other people becomes the dominant remaining variable. A small, pre-supplied group that can enforce a strict no-contact rule for weeks to months of active transmission has a higher chance of escaping infection than any named country or latitude on its own.

The Irkutsk reports, whatever their final laboratory result, illustrate the same narrow margin: one severe pneumonia, nearly two hundred contacts, and a race between observation and uncertainty. For now we can relax a bit ..

Grok assisted writing - all prompting and editing by Willem Middelkoop

Before Washington treated critical minerals as industrial policy, Beijing already treated them as statecraft. China mined about 70 percent of the world’s rare earths and performed roughly 90 percent of the chemical processing that turns ore into magnet metal, alloys, and oxides. It refined the large majority of several other strategic intermediates as well: on the order of 99 percent of gallium, a commanding share of germanium and graphite anode material, and enough midstream capacity in cobalt, nickel, and lithium chemicals to set prices even when the rock itself was dug in Africa, Australia, or Latin America. The United States imported about 80 percent of the rare earths it consumed and was wholly or nearly wholly import-reliant for battery-grade natural graphite, many heavy rare earths, and a long list of defense metals. For roughly 25 critical minerals, U.S. import reliance exceeded 90 percent.

For two decades Chinese firms bought mines, built refineries, financed infrastructure, and accepted thin or negative margins that private Western capital would not. Processing, not geology, became the chokepoint. Ore could be mined in Congo, Chile, or Australia and still have to pass through Chinese separation plants before it became a usable input for an F-35 magnet, an EV motor, a radar chip, or a missile fin. Beijing then demonstrated that the chokepoint was usable. The 2010 rare-earth cutoff aimed at Japan was a warning shot. Licensing regimes and export bans on gallium, germanium, antimony, tungsten, and rare-earth magnets in 2023–2025 followed. The United States discovered that a generation of outsourcing had left the defense and electronics base downstream of a single political authority.

Only after that exposure did the United States assemble grants, loans, equity stakes, tax credits, a strategic stockpile, and bank-led platforms into a single campaign. President Donald Trump framed the reversal in industrial-sovereignty language: “Critical minerals are the raw materials of American strength that power everything from advanced weaponry to automobiles, and we want these essential products to be mined, refined and made right here in the USA.” Secretary of Commerce Howard Lutnick was more explicit: “Critical mineral is more than an economic issue; they’re national security issue. If we want to lead in advanced manufacturing, AI, semiconductors, energy, defense, we can’t depend on our foreign adversaries for the materials that underpin our industries.”

My question now is now how much the United States is spending to try to close the gap. It is how much has actually been reserved, what that money buys, and whether public instruments plus Wall Street vehicles can rebuild a midstream that was allowed to atrophy.

Let’s give it a try. Here is what we could find;

Under the One Big Beautiful Bill Act, the Department of War’s Office of Strategic Capital saw loan and guarantee authority expanded to as much as $200 billion across 31 covered technology categories. Of that, up to $100 billion is authorized for critical minerals and related industries, supported by about $500 million in credit subsidy through 2029. Subsidy. DFC’s maximum contingent liability was separately raised toward $205 billion. These are budget numbers;

Operational metrics are smaller and overlapping:

• Since January 2025: 160 minerals-related deals totaling nearly $40 billion, including letters of interest.

• Six months to February 2026: more than $30 billion in letters of interest, investments, loans, and other support.

• BMO compilation of about 60 financing instances: roughly $18.6 billion in committed and uncommitted support—$15.9 billion loans, $2.1 billion equity, $615 million grants—weighted toward rare earths.

• OSC by August 2026: about $4.9–5 billion in conditional loans and more than $11 billion in mobilized public-plus-private capital in FY2026.

• Project Vault: up to $10 billion EXIM loan plus about $2 billion private capital.

• IRA tax instruments remain in the background: Section 45X (10 percent of production costs for designated minerals, now phasing down after 2030) and Section 48C (about $10 billion allocated across rounds, with a portion for critical-materials processing and recycling).

Energy Secretary Chris Wright captured the administration’s theory of the case: “President Trump is reversing that dependence by securing our critical supply chains, unleashing American industry, and bringing critical materials production and processing back to the United States.”

Gracelin Baskaran, director of the Critical Minerals Security Program at CSIS, has argued that ownership races are decided early: “China is winning the race for critical minerals long before mines enter production.” In testimony she added: “The United States cannot achieve mineral security alone… International partnerships are therefore not optional; they are a fundamental component of U.S. mineral security.” Jack Lifton, co-chair of the Critical Minerals Institute, makes the industrial point: “A mine becomes strategically important only when its output can move through a complete, qualified, and economically sustainable supply chain to reach the end user as a usable product.”

Government initiatives, by instrument

Strategic stockpile

• Project Vault: public-private reserve covering the 60-mineral USGS list, initially emphasizing rare earths; manufacturers commit to offtake.

Export-Import Bank

• $14.8 billion in letters of interest for critical-minerals projects.

• Examples: $455 million rare-earth development and processing in the United States; $400 million lithium in Arkansas; $350 million cobalt and nickel in Australia; $215 million tin in the United Kingdom and Australia; $58 million in loans to Westwater, Global Advanced Metals, and 5E Advanced Materials.

Department of Energy

• $500 million battery-materials processing, manufacturing, and recycling grants (third round, seven projects).

• $162 million for nine industrial-byproduct recovery projects.

• $355 million for byproduct pilots and “Mine of the Future” proving grounds, part of a roughly $1 billion 2025 package.

• Large Loan Programs Office and related commitments: Thacker Pass, Rhyolite Ridge, Glencore recycling, Syrah graphite, EnergySource Minerals, Novonix, Michigan Potash.

• Additional notices for a rare-earth demonstration facility, sensing, and magnets.

Department of War / Office of Strategic Capital

• Conditional loans on the order of $5 billion by August 2026, including Sila, Sunrise Energy Metals, Niron, Energy Fuels, Vulcan Elements, ReElement, and Phoenix Tailings.

• Equity and related stakes: MP Materials, Ambler Metals, Alcoa-Sojitz, Strategic Bauxite, Korea Zinc-related structures.

• Workforce awards of roughly $80 million for mining and metallurgy schools.

Other agencies

• DFC: Brazil rare earths, Orion consortium capital, Ukraine seed funding, other letters of interest.

• Commerce CHIPS: USA Rare Earth letter of intent.

• Bilateral frameworks with Australia, Brazil, DRC, Madagascar, and others.

• Combined mining-school funding of more than $180 million announced in August 2026.

Projects, largest to smallest

Amounts mix loans, equity, grants, and letters of interest. Many are conditional. Private co-investment is noted where known.

• Up to $10 billion plus about $2 billion private: Project Vault stockpile.

• About $7.4 billion project: Korea Zinc / Crucible Metals, Tennessee multi-metal smelter-refinery; government debt and equity plus JPMorgan and private capital.

• $2.9 billion: Perpetua Resources, Idaho antimony and gold; also first JPMorgan Security Initiative equity.

• About $2.26–2.3 billion: Lithium Americas, Thacker Pass lithium.

• Possible about $2.1 billion: Graphite One, Alaska deposit and Ohio anode plant.

• $1.6 billion letter of intent plus $1.5 billion private: USA Rare Earth, Texas Round Top to magnets.

• $1.4 billion: Sila Nanotechnologies, silicon-carbon anodes and battery cells.

• $1.4 billion conditional: EnergySource Minerals, lithium from geothermal brine.

• More than $1 billion in work: Ivanhoe Electric, Santa Cruz copper.

• $1.26 billion conditional: Michigan Potash.

• $996 million: Ioneer, Rhyolite Ridge lithium and boron.

• $755 million conditional: Novonix synthetic graphite.

• $750 million planned: Aclara heavy-rare-earth processing.

• $725 million: Energy Fuels, rare-earth separation and metallization.

• $620 million plus $550 million private: Vulcan Elements, NdFeB magnets.

• $565 million: Serra Verde / Brazil rare earths, DFC package.

• $500 million: Phoenix Tailings midstream facility.

• $500 million grants: seven battery and minerals projects, including Lilac lithium and Jervois cobalt.

• $475 million: Glencore battery recycling.

• $450 million: Elmet, tungsten manufacturing and feedstock.

• $400 million equity, $150 million loan, and $1 billion bank facility: MP Materials, Mountain Pass and 10X magnet plant, with a $110 per kilogram NdPr price floor.

• $400 million: Sunrise Energy Metals, scandium value chain.

• $355 million and $162 million: DOE byproduct recovery and mine-technology pilots.

• $150 million: Niron Magnetics, rare-earth-free magnets.

• $134 million: rare-earth demonstration facility.

• $98 million: Syrah Vidalia graphite.

• About $93 million plus $170 million crowded-in equity: Alcoa-Sojitz gallium.

• About $85 million: Strategic Bauxite.

• $80 million plus $200 million private: ReElement rare-earth separation.

• $58 million: Westwater graphite $25 million; Global Advanced Metals tantalum and niobium $25 million; 5E boron $8 million.

• $35 million: Ambler Metals.

• $4.8 million match: Harena Rare Earths, Madagascar.

The distribution is not a diversified geological portfolio. It is a bet on magnets, battery materials, and a handful of defense metals, with processing weighted more heavily than greenfield pits. OSC Director David Lorch described the Energy Fuels loan in those terms: “OSC’s support to Energy Fuels represents an important step in strengthening the full mine-to-magnet supply chain, specifically at the midstream stage.”

Next to the US government, Wall Street and private-funds have also taken some significant initiatives:

The distinctive feature of the 2025–26 cycle is that large banks have begun to treat minerals as a national-security asset class.

• JPMorgan Security and Resiliency Initiative: $1.5 trillion of intended lending and investment over time, including $10 billion from the bank’s own balance sheet. First disclosed equity: $75 million, about 3 percent of Perpetua Resources. Also a $1 billion bridge commitment with Goldman Sachs for MP Materials’ 10X plant, and financing work on the Korea Zinc Tennessee project. CEO Jamie Dimon said it had become “painfully clear that the United States has allowed itself to become too reliant on unreliable sources of critical minerals.” Doug Petno, co-CEO of JPMorgan’s commercial and investment bank, called the Perpetua stake “precisely the focus of our new initiative.”

• Goldman Sachs: co-underwriter of the $1 billion MP Materials magnet-facility commitment.

• Orion Critical Mineral Consortium: $1.8 billion raised with DFC and Abu Dhabi’s ADQ; earlier $5 billion target; now a pipeline on the order of $20 billion, including discussions of a 40 percent interest in Glencore’s DRC copper-cobalt assets.

• Sprott: listed critical-materials vehicles plus project lending.

• Blackstone: raising at least $8 billion for a private-credit fund aimed at energy security, digital infrastructure, and related lending.

• Project Vault trading layer: Hartree, Traxys, and Mercuria as procurement and working-capital partners.

Public equity is doing something older industrial-policy tools rarely did: it is putting the state on the cap table. That may crowd in capital. It also creates governance questions about warrants, cross-agency shareholding, and the blending of CHIPS, defense, and development-finance ownership across the same issuers.

Analysts who support the direction of travel are less impressed by announcement totals than by duration. Stephanie Gagnon-Rodriguez of the Center for Climate and Energy Solutions argued: “We need to see [these policies] stay in place for a longer period of time rather than hoping to see really quick results from things like grant announcements or executive orders.” Peter Trousdale warned that cancelled grants “erode trust in government institutions considered dependable forms of finance,” and that grants still cover only part of plant costs unless offtake is secure. Baskaran has made the demand-side point in another register: the United States is a small consumer of several minerals it is trying to finance, and winning the minerals race requires building demand, not just supply. Senator Todd Young put the same vulnerability in security language: “Our economy and our military depend on supply chains that we don’t fully control.”

Those cautions matter because mines and refineries have decade-long clocks. Letters of interest are not cash. Loans are repayable. Tax credits are open-ended but scored as revenue losses, not project finance. A financing surge can change project bankability. It cannot, by itself, create qualified magnet metal, solvent-extraction plants, or skilled metallurgists.

Conclusion

As of mid-September 2026, the United States has assembled the most aggressive minerals-finance toolkit in its modern history: OSC authority that can theoretically support tens to hundreds of billions in loans; a $12 billion stockpile; roughly $40 billion in announced deals if letters of interest are counted; a more conservative $18–20 billion of identifiable loans, equity, and grants; multi-billion flagship plants from Tennessee to Nevada; and bank platforms measured in the trillions of intended activity.

Washington woke late to a processing monopoly that had already been built. China built its position with time. The United States is now trying to buy time with balance-sheet instruments. That is a coherent strategy. It is not yet a completed one ..

Grok assisted writing - all prompting and editing by Willem Middelkoop

Ordinary people are already experiencing an affordability crisis. The loss of purchasing power is now noticeable to everyone. This puts huge pressure on governments to subsidize their citizens; however, by doing so, they have to print and borrow more money, which only accelerates these dynamics. Central banks understand they are cornered. Lowering interest rates increases inflation, while rising interest rates make the debt-laden system more unstable. This explains why central banks, just like investors, have started to flee towards gold. They know a debt-based fiat system ultimately fails. Reintroducing gold back into the system is the only way left to avoid a full loss of confidence. That’s why I expect gold to be officially reintroduced into the system one day. However, we first need to see the start of a real crisis, in which many will panic.

So, within the next decade, the system will probably break. Persistent primary deficits, exploding interest burdens, and the end of the free-money era will force a violent reckoning. We can expect cascading defaults or restructurings, banking crises, currency collapses, and in the end a full-scale monetary reset. The social repercussions will be huge. It could well lead to revolutionary forces.

Let me first say, I was wrong, wrong on timing. On the back cover of The Big Rest, I stated: "A system reset seems imminent." The world’s financial system will need to find a new anchor around 2020.’’ Well, it’s 2026 now, and we have only seen the very first cracks coinciding with phase 1, higher interest rates, and a flight towards gold.

During a recent discussion with central bankers within the new OMFIF Gold Hub, I learned that several central banks have just begun buying their first positions in physical gold for their national reserves. That tells me we are still early in this game. This year could well be the fifth year in a row central banks buy up to 1000 tons of gold. That’s one-third of world mine production. They often say, "Don’t listen to what central bankers say; just watch what they do."

It all leads to the inevitable conclusion that this debt cycle stretched far beyond its limits. As Ray Dalio has warned, high debt combined with rising rates creates a self-reinforcing deleveraging that few systems survive intact. Nouriel Roubini has similarly cautioned that the combination of high public debt and tightening financial conditions “raises the specter of a new sovereign debt crisis.” Mohamed El-Erian has observed that markets are already “pricing in fiscal dominance.” The only assets that have historically protected wealth through such resets, gold, silver, and other hard stores of value, will once again separate survivors from the ruined. The clock is running, and the next ten years will deliver the verdict.

The point of no return has already been passed. Sovereign debt has become a ticking time bomb whose fuse is already lit. Since 2008, and especially since the pandemic, governments across the advanced and emerging world have piled leverage onto leverage until the entire structure can no longer bear its own weight.

IMF data for 2026 show global public debt near 95% of GDP and climbing toward 100% by 2029, levels previously seen only after world wars. The United States alone carries more than $40 trillion in government debt, China over $22 trillion, and Japan nearly $9 trillion. Debt-to-GDP ratios in the major economies already exceed 100 percent and, in several cases, 200 percent.

Desmond Lachman of the American Enterprise Institute has stated bluntly that “a crisis is brewing in some of the world’s largest economies.” Ray Dalio has been even more direct: “When debt levels are high, and interest rates rise, the system becomes vulnerable to a self-reinforcing deleveraging.” Larry Summers has warned for years that large and persistent deficits eventually “confront the constraints of market tolerance.”

So, we are living through the opening act of the world's first global sovereign debt crisis. The rise in long-term yields across the United States, Japan, France, and the United Kingdom is the market’s first clear signal that the free-money era is over. Within the next decade, the full force of this reset will arrive. Expect it to be disorderly, contagious, and transformative. The arithmetic of compounding interest on an already unpayable stock of debt leaves no other conclusion.

Every Debt Empire Eventually Falls

History is merciless on this point. Soft-money regimes always end the same way. The classical gold standard constrained excess until war and politics destroyed it. Bretton Woods collapsed in 1971, the moment the United States could no longer pretend the dollar was as good as gold. The pure fiat experiment that followed has now reached its terminal stage after five decades of continuous credit expansion. Look into Appendix I of the Big Reset. A list of over 100 failed fiat currencies over the öast 200 years. There isn't a single example of a fiat currency that has held on for over 100 years.

In this book (translated into 8 languages, including Arabic and Chinese), I note that economists Carmen Reinhart and Kenneth Rogoff have demonstrated that public debt ratios above 90% of GDP are reliably associated with slower growth and a higher probability of crises. In their words, “high debt levels are associated with higher incidences of debt crises.” The Latin American defaults of the 1980s, the Asian financial crisis of 1997–98, and the eurozone near-death experience of 2010–12 all proved that confidence can evaporate overnight and that contagion travels at the speed of modern finance. Bill Gross, the veteran bond investor long known as the “Bond King,” has remarked that “the era of free money is over, and the bill is coming due for highly leveraged sovereigns.” The debt-dynamics equation is unforgiving. When the interest rate exceeds the growth rate and primary balances remain negative, the ratio explodes. That is precisely the position of the major economies today.

Dalio calls this the late stage of the “big debt cycle.” Lacy Hunt has repeatedly emphasized that rising real rates, combined with elevated debt, “tighten financial conditions far more powerfully than in previous cycles.” We are deep inside the first phase, and history shows that these cycles do not end gently.

The evidence is overwhelming. The U.S. 10-year Treasury yield has climbed roughly 75 basis points over the past year to approximately 4.7% and is “slowly inching toward 5%, a major psychological threshold for investors,” as Lachman has noted. The 30-year yield has reached levels not seen since 2007. Mortgage rates are up to around 7%, leading to the lowest numbers of housing buyers in decades.

Japanese long-dated government bonds have surged to multi-decade highs following the Bank of Japan’s exit from yield-curve control. French and United Kingdom yields are racing toward decade highs as investors reassess the sustainability of public finances.

Higher rates are now colliding with record debt stocks. Interest payments are already devouring an increasing share of government budgets. The US interest costs on the national debt have surpassed the $1 trillion mark and are now larger than all defense spending. Deficits are feeding on themselves in a classic debt spiral. Dalio has warned that “the more debt there is, the more sensitive the economy becomes to interest-rate increases.”

OECD Secretary-General Mathias Cormann has issued a stark warning specifically on France: “If nothing is done, the public debt could reach 203 percent of GDP by 2050. Strict budgetary discipline is therefore essential to stabilize public debt.” El-Erian has observed that the current environment reflects “the early stages of markets forcing fiscal adjustment that politicians have refused to make.” The market is no longer waiting for governments to act. It has begun the process of forced discipline, and that process will accelerate with increasing violence as refinancing needs mount and investor patience erodes.

The next stage of the crisis will not require a perfect storm. Any one of several plausible shocks will be sufficient: a further sustained spike in long-term yields, a recession that simultaneously blows out deficits and shrinks nominal GDP, political paralysis in Washington, Paris, or Tokyo that signals the absence of any credible consolidation path, a major geopolitical disruption, or the revelation of large banking losses on sovereign bond holdings. Once confidence cracks, the adjustment becomes nonlinear, with failed government bond auctions, surging credit-default-swap spreads, rapid capital flight, and currency freefalls.

The Committee for a Responsible Federal Budget has listed the forms a U.S. fiscal crisis could take: a financial crisis triggered by loss of confidence in the Treasury market, an inflation crisis, an austerity crisis, a currency crisis, or outright default. Dalio is clearer still: central banks will face “the choice between allowing rates to rise and triggering a debt crisis or printing money and risking inflation and currency devaluation.” Roubini has warned that “fiscal dominance and financial repression may be the only politically feasible paths, but both destroy the old monetary order.” Summers has added that “the longer the adjustment is postponed, the more violent the eventual correction becomes.” Either path, market-imposed austerity or aggressive monetization, ends the current monetary regime within the decade.

Where the Break Will Begin?

Five jurisdictions stand out for their size, trajectory, and systemic importance, and any one of them could ignite the broader conflagration, although their vulnerabilities differ markedly. Schroders ranks the United States the most vulnerable G20 country on its composite sovereign-debt risk scorecard. El-Erian has noted that “the fiscal trajectories of the largest economies are on a collision course with market discipline.”

1- The United States is the most important case because Treasury securities occupy a central position in the global financial system. The largest sovereign debt market on earth carries structural deficits of 6–8% of GDP with no serious consolidation plan in sight. A crisis of confidence in Treasuries would constitute global financial Armageddon because these securities still underpin the world’s collateral and reserve system. The United States nevertheless possesses extraordinary advantages. It issues debt in dollars, the world’s dominant reserve and funding currency. U.S. Treasury markets are exceptionally deep. The problem is not imminent inability to pay. The problem is the narrowing margin for fiscal error. If investors begin demanding a substantially higher term premium while deficits remain large, the fiscal cost could rise rapidly. A sustained loss of confidence in Treasuries would also transmit through global collateral and funding markets, making the U.S. fiscal problem a global financial problem. And with the need to refinance almost $10 trillion in U.S. debt over the next 12 months, the margin for error is narrowing.

2- Japan represents the opposite end of the spectrum. Its debt ratio is extraordinarily high, yet it has historically financed that debt at very low yields, supported by domestic savings, institutional demand, and the Bank of Japan’s policies. With debt near 204–230% of GDP, Japan has long been the extreme outlier. The collision between ultra-high leverage and normalizing rates is already visible in the Japanese bond market and will not remain contained. The challenge is what happens now that monetary policy is normalizing and rates are rising sharply. Higher Japanese yields increase the opportunity cost of holding government bonds and gradually increase the government’s interest burden. The Japanese experience therefore provides an important test of whether a highly indebted advanced economy can transition from a near-zero-rate environment without destabilizing its fiscal position. Japan is not proof that high debt automatically causes collapse.

3- France faces a different combination of risks: high public spending, persistent deficits, rising debt, and political difficulty achieving rapid consolidation. A French funding crisis would immediately undermine confidence across the eurozone, because France is a core member. Unlike the United States or Japan, France cannot independently create the currency in which its sovereign debt is denominated. A serious deterioration in French fiscal credibility could therefore have consequences far beyond France itself, affecting euro-area spreads, banks, political stability, and the credibility of the European fiscal framework.

4- Italy remains another structural vulnerability within the eurozone. At approximately 138% debt-to-GDP, combined with structurally low growth and demographic decline, Italy remains a chronic flashpoint. One more sustained widening of spreads would revive the 2011–12 dynamics with even greater destructive force. Yet Italy also demonstrates why debt ratios alone are insufficient to predict crises. The country has repeatedly survived periods of severe market stress without defaulting. A renewed widening of spreads could quickly become destabilizing if it coincided with recession or political paralysis.

5- China presents a different form of debt problem. Rapid accumulation of general government and local government debt, already above 100% of GDP when broader liabilities are included, poses the risk of a sharp slowdown in growth. A hard landing would export recession and commodity demand destruction worldwide. Its central government debt ratio is not directly comparable to those of some advanced economies because significant liabilities are held at the local-government and quasi-government levels. The more important concern is the interaction between debt accumulation, property-market weakness, demographic deterioration, and slowing economic growth. A prolonged Chinese slowdown would not necessarily produce a sovereign default. It could instead generate a different form of global shock: weaker commodity demand, pressure on emerging-market exporters, deflationary trade effects, and intensified competition in global manufacturing. China’s debt problem therefore has the potential to become an international growth problem even without a conventional sovereign crisis.

Modern finance is a dense web of mutual exposures and guarantees. Sovereign mark-to-market losses or actual impairments immediately hit bank balance sheets. Banking stress freezes credit creation. Cross-border capital flees toward whatever still appears safe. Currencies of weaker sovereigns crash. Trade finance seizes up and real economic activity contracts. In the eurozone, the absence of national monetary and exchange-rate flexibility turns local fiscal problems into existential threats to the currency union itself.

Dalio has observed that in highly interconnected systems “problems in one place quickly become problems in other places.” Roubini has described the rising risk of “synchronized sovereign and banking stress across advanced economies.” This time the vulnerable places are the largest economies on the planet. There will be no safe corner inside the traditional financial system once the cascade begins.

The window for the acute phase of the crisis is no longer distant or theoretical. Phase 1 is already visible in the yield charts of 2026. Debt trajectories under current policies, massive refinancing calendars, and the political impossibility of timely consolidation in the major democracies all converge on the period 2030-2035.

Dalio has stated that once rates rise against high leverage, the later stages of the big debt cycle “typically unfold over years rather than decades.” Summers has warned that postponement only increases the violence of the eventual correction. Hunt has noted that the interaction of high debt and rising real rates produces tighter financial conditions than models calibrated on the previous decade would predict.

Every year of delay raises the ultimate cost. The crisis is coming inside the next ten years. The data, the bond market, and the chorus of expert warnings all point to the same narrow window.

When the break arrives, the post-1971 pure-fiat system will not survive in its present form. Expect selective defaults and forced restructurings, aggressive financial repression that traps domestic savings, inflation that silently expropriates creditors, capital controls, and the rapid emergence of multipolar reserve arrangements. Gold, already being accumulated by central banks as the ultimate non-sovereign asset, will reclaim a central monetary role, exactly as it has after every previous major debt-cycle climax.

Dalio has long argued that such resets are “the historical mechanism by which excess debt is ultimately reconciled with the real economy.” Hunt has observed that hard assets tend to “preserve purchasing power when fiat claims are diluted or restructured.” The reset is the forced outcome of a debt structure that has already exceeded the carrying capacity of the real economy and of political systems that refuse to adjust until markets compel them. Within the next decade, the sovereign debt mountain will trigger a systemic crisis of historic proportions, bond-market seizures, widespread banking stress, equity-market collapses, violent currency moves, deep and prolonged recessions, and political upheaval across multiple major economies. Contagion mechanisms ensure that the damage will be global and nearly simultaneous.

In the chaos that follows, gold, silver, and other hard assets will once again perform the function they have served for centuries. Gold cannot be printed by any central bank or defaulted upon by any treasury. Central banks themselves are already accumulating it precisely because they understand its role in a monetary reset.

Silver, carrying both monetary heritage and industrial demand, offers amplified exposure to the same forces. Physical real estate in politically stable jurisdictions, productive commodities, and other tangible stores of value will help preserve real purchasing power while paper claims on over-indebted sovereigns are inflated away, restructured, or repudiated.

The Big Reset is no longer a theoretical construct discussed in books. Those who continue to trust the current debt-based fiat system until the final moment will discover, too late, that the system they relied upon has collapsed under the weight of its own promises. The decade ahead will deliver the reckoning. Especially now that the baby boomers are starting their great demise. Prepare accordingly.

Grog/ChatGPT assisted writing, prompting and editing by Willem Middelkoop

The past week has delivered interlocking confirmations of the transition: the signing of the Mecca Accord on 7 August 2026, a more than 7% weekly surge in gold to levels last seen in mid-June, the joint U.S.-Japan yen intervention, and the sharpening of Israeli-Turkish strategic rivalry. They mark the accelerating end of American hegemony in the Middle East and the progressive dismantling of the financial arrangements that once sustained it.

In the aftermath of the Iran conflict that began on 28 February 2026, Israeli strategic discourse has shifted markedly. With Iranian capacity degraded, attention has turned to Turkey. Former Prime Minister Naftali Bennett has described Turkey as “the new Iran” and a “new strategic threat,” warning that after Iran “we won’t stay idle.” Diaspora Affairs Minister Amichai Chikli has stated that a direct military encounter between the Israeli and Turkish militaries is “not an impossible scenario” and could occur “even tomorrow morning’’. Defense Minister Israel Katz has pointed to regional security, Syria, and historical analogies, while Prime Minister Benjamin Netanyahu has publicly campaigned against the sale of F-35 aircraft to Ankara, arguing that such aircraft in Turkish hands would “destroy the power balance” and that Erdoğan’s government harbors “aggressive aspirations” and is “not a force for peace and security.”

Israeli officials have also linked Turkish plans for military bases in Syria to potential Israeli countermeasures, including the establishment of Israeli bases on Syrian territory. Energy and Infrastructure Minister Eli Cohen has framed the issue in precisely those terms. Former national security adviser Giora Eiland has observed that while Iran once sought to surround Israel with a Shi’ite “ring of fire,” Turkey increasingly appears interested in constructing a Sunni equivalent. The rhetorical escalation has been matched by diplomatic moves, including the formal recognition by the Israeli cabinet of the 1915 Armenian events as genocide, widely interpreted as a rebuke to Ankara. It takes one to know one :-)

Turkish leaders have not remained silent. President Recep Tayyip Erdoğan stated in June that Israeli attacks on Syria and Lebanon had reached a point where they also threaten Turkey, tying Ankara’s security to that of its southern neighbors. Foreign Minister Hakan Fidan has accused the Netanyahu government of using security concerns “as an excuse to occupy more land” and of pursuing expansionism that destabilizes the region. In Turkish security circles, the National Security Council’s “Red Book” is reported to regard Israeli expansion as a principal threat. The Iran war altered Ankara’s calculus: the priority is no longer solely Kurdish or Gülenist issues, but the longer-term trajectory of Israeli military activism across Syria, Lebanon, and the Eastern Mediterranean.

This all shows we are moving from a uni to a multipolar world. Two significant military powers, one a NATO member with growing defense-industrial autonomy, the other a nuclear-armed state with demonstrated willingness to project force, are locked in a largely non-kinetic but intensifying rivalry over influence in Syria, the Eastern Mediterranean, Cyprus, and broader regional architecture.

Erdoğan’s response has been characteristically strategic. Rather than escalate bilaterally or rely solely on NATO channels of uncertain reliability, he has moved to embed Turkey in a new collective-defense framework. On 7 August in Mecca, Erdoğan, Saudi Crown Prince Mohammed bin Salman, and Pakistani Prime Minister Shehbaz Sharif signed the Makkah Joint Defense Agreement. An armed attack against any one of the three is to be regarded as an attack against all. The pact expands cooperation in the defense industry, counterterrorism, and collective deterrence, and is explicitly open to other states seeking regional stability.

This seems like a great Erdoğan chess move. By aligning NATO’s second-largest army, sophisticated unmanned systems, and electronic-warfare capabilities with Saudi financial resources and geographic centrality, and with Pakistan’s nuclear deterrent and military depth, Ankara acquires strategic depth against potential isolation or pressure. The agreement builds on the earlier Saudi-Pakistani bilateral mutual-defense arrangement of 2025 and reflects months of quiet diplomacy. Turkish officials have emphasized that it is defensive, targets no specific country, and reaffirms the right of self-defense under Article 51 of the UN Charter. Turkey expects Egypt to join at a later stage as well.

Mehmet Çelik has described the resulting formation as an “axis of stability” whose complementary strengths- Saudi capital, Turkish industry and manpower, Pakistani nuclear capability- create a credible deterrent. Mohammed Shoaib Raza has noted that the pact blends hard-power aggregation with civilizational framing of Islamic solidarity while carefully avoiding formal exclusivity. Former U.S. ambassador Christopher Hill has called the accord “one of the more important developments of this war,” observing that it carries “no American fingerprints” and signals a regional judgment that Washington is “becoming unreliable.” Erdoğan has simultaneously kept the door open to additional partners and reiterated a preference for dialogue, while ensuring that Turkey is no longer a solitary actor in a volatile theater.

The same agreement significantly strengthens Crown Prince Mohammed bin Salman’s position. Domestically, MBS has already centralized power to an unprecedented degree since 2015–2017, neutralizing rivals, consolidating control over coercive and financial institutions, and cultivating support among younger generations and women through Vision 2030 reforms. Internationally, the Mecca Accord positions Riyadh as the indispensable financial and geographic anchor of a new Sunni security architecture at a moment when U.S. guarantees appear contingent and Iranian proxy attacks have targeted Gulf energy infrastructure.

By binding Turkish military capacity and Pakistani nuclear deterrence to Saudi interests, MBS gains leverage without ceding autonomy. The pact enhances Saudi deterrence against residual Iranian pressure while diversifying security partnerships beyond traditional American dependence. It also elevates Riyadh’s role in any future regional settlement, whether concerning energy corridors, maritime security, or broader order-building. Analysts tracking Saudi strategy note that MBS has long sought to reduce over-reliance on any single external patron while maximizing the kingdom’s centrality. In an increasingly multipolar World, the ability to convene and underwrite collective arrangements confers status. MBS now sits at the intersection of energy markets, Islamic symbolism, and a nascent defense framework that includes a NATO member and a nuclear state. Washington isn’t very happy about these developments.

These geopolitical shifts unfold against a clear monetary signal. Gold has delivered its strongest weekly gain since January, rising more than 7 percent to levels around $4,340 per ounce, possibly ending this year’s correction. UBS projects gold reaching $5,000 in the first half of 2027. Central-bank purchases remain robust; World Gold Council figures show 290 tonnes acquired in the second quarter of 2026, up 62% year-on-year. So, 2026 could well be the fifth year in a row where central banks accumulated around 1000 tonnes of physical gold. China continues to accumulate on dips, treating price softness as an opportunity while Western markets remain heavily paper-oriented. China also told the markets it has moved more gold holdings from London to Hong Kong, in a clear effort to build an Asian gold trading system. During the first of our OMFIF Gold Working Group, attended by almost a dozen central bankers, we learned more and more of them have started to accumulate or repatriate gold.

Simultaneously, the yen has given back nearly half the gains from the late-July joint U.S.-Japan intervention, the first coordinated yen-buying operation since 1998. Former BOJ official Atsushi Takeuchi has argued that U.S. backing removes constraints on Japanese capacity and that the partners will act again if the yen resumes its slide. The U.S. move is probably in response to the risks the BoJ would face if it needed to start selling Treasuries to support its currency. The White House needs all support possible now that it has to sell/roll-over almost 10 trillion of Treasuries in the next 12 months.

These market moves are not coincidental. They reflect the same loss of confidence in the old arrangements that is driving regional realignments. The petrodollar system- oil priced in dollars, surpluses recycled into U.S. assets, American security guarantees in return- is fraying as we have explained in previous posts. China settles growing volumes in yuan. Sanctioned oil already moves off dollar rails. When security guarantees appear unreliable and regional powers construct alternative frameworks, the structural demand for dollars generated by mandatory recycling weakens. Gold’s rebound and the struggle to defend the yen are monetary expressions of that geopolitical shift.

Robert Kagan’s, one of the core U.S. neocons, has acknowledged the passing of the American-dominated liberal order, describing the Iran confrontation as a strategic setback that could neither be repaired nor ignored. Empires rarely fall solely on the battlefield; they dissolve when the financial arrangements that subsidized their primacy lose credibility.

The Big Reset is not a future binary event. In its geopolitical and monetary dimensions, it is already underway. Those who study the historical pattern of monetary regimes and the power relationships that sustain them will navigate the transition with clearer eyes than those who assume the arrangements of the last fifty years will simply persist.

Grok assisted writing; all additional prompting and editing by Willem Middelkoop

Almost six months after the start of the Iran War, we begin to understand the consequences of Operation Epic Fury. A war started ‘to help and on request of Israel’, according to the website of the US State Department.

Still a little drunk after the quick regime change and kidnapping of the president in Venezuela, Trump was clearly played by Netanyahu, who said he ‘had waited 40 years’ to bring regime change to Iran. Trump gambled (‘no President had the guts to do this in 40 years’) and lost more than the US could afford.

For over 40 years, the US avoided losing control over the Straits of Hormuz. Its Fifth Fleet, stationed in Bahrain, ruled over the Gulf and Arabian waters. Now Iran seems to be in full control. Understanding his defeat, Trump signed the Memorandum of (mis)Understanding to ‘avoid an economic catastrophe’, only to restart the War again, because he (or his masters) apparently couldn’t accept the outcome.

Since 28 February 2026, when American and Israeli forces struck Iranian military and nuclear infrastructure and killed Supreme Leader Ali Khamenei, the Middle East in general and the Gulf in particular has undergone a fundamental reordering. Iran responded with waves of ballistic missiles, drones and precision strikes against American bases and shared facilities across the Gulf.

Satellite imagery and independent assessments confirm that at least twenty American military sites in Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain, Jordan, Iraq and Oman sustained serious damage. Several bases became virtually uninhabitable; advanced systems, including THAAD batteries, radar installations, refueling tankers, and aircraft hangars, were destroyed or severely compromised. Material losses run into the billions of dollars, accompanied by almost twenty American fatalities and hundreds of wounded.

So, this conflict is not merely another war. In the analytical tradition of The Big Reset, it demonstrates how the physical architecture of American military presence in the region has shifted from deterrent to liability. The security guarantees that Washington extended to the Gulf states for decades now carry elevated risk: host nations attract Iranian fire without receiving commensurate protection.

Saudi Arabia
Prince Sultan Air Base suffered repeated strikes that damaged refueling tankers, communications equipment, and surveillance aircraft, including an expensive E-3 Sentry aircraft. Iranian missiles and drones also hit energy infrastructure. Saudi Arabia had quietly supported pressure on Iran yet warned early of regional spill-over. The kingdom now confronts a strategic shock. Former Saudi intelligence chief Prince Turki al-Faisal stated: This is Netanyahu’s war, and indicated that future Saudi relations with Washington would need to become more selective, warning that automatic alignment with Israeli-driven escalations could no longer define Riyadh’s security posture.

Long-term, Riyadh is accelerating diversification. Vision 2030 acquires a security dimension: intensified cooperation with China on air-defense systems, drone technology and oil settlements outside the dollar, alongside a quiet review of basing access. The American guarantee, once a shield, has become a risk factor that threatens investment and tourism.

United Arab Emirates
Al Dhafra, Al Ruwais and Al Sader bases were struck, including costly THAAD systems. AWS data centers and LNG facilities also sustained damage, undermining the UAE’s carefully cultivated image as a stable AI and commercial hub. Tourism, one of the largest sectors, is hit very hard. Emirati officials have stressed that their territory should not be used to launch attacks on Iran and have called for urgent de-escalation.

Many experts point to the fact that the Gulf states, including the Emirates, could no longer fully rely on Washington as a security partner after the bases invited rather than prevented attacks. This assessment underscores the shift toward more conditional future relations with both the United States and Israel.

Over the longer horizon, the Emirates will deepen bilateral ties with Beijing and New Delhi, review force-majeure clauses in contracts, and explore limits on American operational freedom.

Qatar
Al Udeid Air Base, the largest American complex in the region and forward headquarters of CENTCOM with roughly ten thousand personnel, suffered significant damage, including to early-warning radar. Evacuations and aircraft relocations signaled eroding confidence.

Retired General Frank McKenzie stated: “No one in their right mind would ever put the CENTCOM forward headquarters 100 miles away from Iran, yet that’s where it is.” McKenzie’s critique of the basing pattern in Qatar highlights the structural problem that now forces Doha to reconsider the terms of its long-term relationship with the United States.

In the years ahead, Doha is likely to press Washington for greater concessions or partial repositioning while expanding Chinese investment in infrastructure and energy.

Kuwait
Kuwait absorbed the heaviest blows. Port Shuaiba saw its tactical operations center destroyed and six American service members killed; Ali Al Salem Air Base lost hangars, fuel storage and accommodation; Camp Arifjan and Camp Buehring sustained further damage. The US bases in Kuwait became effectively uninhabitable.

Experts have stated that Iran had rendered “the physical architecture of American hegemony useless” in the span of a month, due to the extensive damage in Kuwait, and imply that future Kuwaiti relations with the United States will involve a reduced and more flexible military footprint, with little appetite for closer political alignment with Israel.

Long-term consequences include strong domestic pressure to harden or reduce the permanent American presence of approximately fourteen thousand troops.

Bahrain
The headquarters of the Fifth Fleet and associated communications equipment were hit, as was Sheikh Isa Air Base. Bahrain, heavily dependent on American protection, has seen its strategic value diminished. Its port is heavily degraded and emptied of US Navy ships since late February, just before the war started.

Retired U.S. Navy Rear Admiral Mark Montgomery observed that American forces are “not relying on them in the same way that we did before the war” and predicted repositioning. Montgomery’s analysis indicates that Bahrain’s future relationship with the United States will feature narrower defensive arrangements rather than expansive basing, while closer alignment with Israel remains politically untenable.

Looking forward, Manama faces pressure to review the naval base arrangement and will likely court greater Chinese economic engagement as a counterweight.

Jordan
Muwaffaq Salti Air Base and related sites were struck, with additional American fatalities recorded in July 2026. Jordan, already economically and politically fragile, is increasingly used as an alternative basing location, thereby attracting further fire.

Dr. Kelly Grieco, an American foreign policy and defense analyst, noted that existing damage has “consumed US and partner air defense stocks at a significant rate,” with “no rapid path to replenishment.” Grieco’s evaluation underscores the heightened vulnerability that now shapes Jordan’s calculations about future American troop presence and limits any deepening of ties with Israel.

Long-term effects include heightened dependence on American aid accompanied by internal pressure to limit troop numbers.

Oman
Oman suffered fewer direct hits yet still saw facilities damaged. The sultanate has preserved its mediation role and relative neutrality. Omani Foreign Minister Badr Albusaidi emphasized dialogue and sovereignty, and underscored the importance of respecting territorial integrity. This position continues to guide Muscat’s approach to future relations with the United States and keeps any entanglement with Israel carefully limited.

Over time, Oman will strengthen independent diplomacy and possible Chinese partnerships, treating limited American presence as a strategic advantage rather than a necessity.

Iraq
Bases and facilities were attacked, while Iran-aligned militias struck hotels in Erbil. The American presence remains deeply controversial.

Ali Vaez, a prominent Iran expert, has highlighted damaged deterrence and antagonized allies as central outcomes of the conflict. This perspective supports the Iraqi view that future relations with the United States will trend toward managed decline and that any formal relationship with Israel remains politically impossible.

Long-term pressure for complete withdrawal will intensify, while Iranian influence through militias continues.

Consequences for American Hegemony

Bases historically positioned to protect allies against the Soviet Union or later threats now lie too close to Iran, often within 200 kilometers. Retired General Frank McKenzie and Retired Rear Admiral Mark Montgomery have both called for repositioning forces farther from Iran. Dr. Kelly Grieco has documented the depletion of air-defense stocks, making it very difficult for the Americans to defend their bases and Israel for a prolonged period.

Chinese Foreign Minister Wang Yi sees these developments as the structural decline of unipolar power. The Pax Americana that underpinned regional order for three decades is severely weakened. Hegemony is shifting from hard-power projection to a costly, vulnerable presence that invites rather than deters challenge. This military erosion parallels the monetary pressures analyzed in The Big Reset: overextension, loss of credibility, and the gradual redistribution of power toward multipolar centers. Add the end of the Petro Dollar System a few years ago, when the Saudis began selling oil to China for yuan instead of dollars, and you understand the significance of all these changes.

Consequences for the Middle East as a Whole

The region is quickly moving from an American-dominated order toward genuine multipolarity. Host countries pay the price for decisions taken in Washington or Jerusalem without possessing a meaningful veto. Economic disruption, oil price spikes, Hormuz interruptions, damage to LNG and critical infrastructure have compounded the security shock.

Politically, the whole space now opens for regional actors and external players such as China and Russia. Temporary alliances, shifting balances and unpredictable conflicts could characterize the coming decade. Bahrain and Kuwait could face existential risks in a larger and broader Middle Eastern conflict. Most experts agree that rebuilding the old framework is impossible now that trust has eroded. The war has dismantled both the physical and psychological foundations of American dominance.

China’s Perspective and Gains Without Firing a Shot

China has observed the conflict with deliberate restraint, repeatedly calling for de-escalation, respect for sovereignty and a return to dialogue, while carefully avoiding any military role. Never disturb your enemy while he is making mistakes seems to be the Chinese mantra. Chinese Foreign Minister Wang Yi has been the principal public voice of this position. Beijing’s strategy prioritizes economic engagement over security leadership, allowing China to expand influence while the United States absorbs military and political costs.

Beijing gains on multiple fronts, again without firing a shot. Energy security is cushioned by discounted Iranian and Russian oil, substantial strategic reserves and rising domestic self-sufficiency. Economically, China expands infrastructure, technology and energy projects with Saudi Arabia, the UAE and others at a moment when American attention and resources are consumed by repair and repositioning. Without risking soldiers or bases, China consolidates its position as the primary economic anchor in a post-American Gulf, precisely the multipolar transition described in The Big Reset.

The Growing Isolation of the United States and Israel and the Dangers for the Jewish State

The damage to American bases and the transformation of security guarantees into liabilities mark the end of the previous order. The United States and Israel find themselves increasingly alone. For Israel, this war and the dangers are existential. The multi-front war has strained social cohesion. Reservist non-attendance has risen sharply, with estimates of a 30 to 50 percent decline in reporting rates and reports of more than 100,000 reservists no longer answering call-ups. Another 100,000 have left the country, leading to a temporary max of 50 persons allowed per outbound flight during the first weeks of the conflict. Ultra-Orthodox draft evasion continues at scale; legislative measures have temporarily shielded large numbers from arrest, effectively legitimizing mass non-enlistment. Conscientious objection among young Israelis is growing, driven by fatigue with cycles of violence.

Simultaneously, the high proportion of dual-passport holders, particularly American and European, facilitates a brain drain of skilled professionals. During prolonged conflict, highly educated citizens leave for safer environments, eroding the demographic and technological foundations of the state. The combination of elevated refusal rates for both conscription and reserve duty with the quiet departure of the most capable citizens weakens the Israel Defense Forces and societal resilience at precisely the moment external isolation deepens.

The 2026 Iran war has upended the Middle East dynamic. The Strait of Hormuz blockade caused the worst energy disruption since the 1970s. A fragile new Gulf equilibrium is emerging: Iran leverages Hormuz control for deterrence and permanent energy-route shifts.

This conflict accelerates a geopolitical Big Reset: US unipolar dominance erodes, energy chokepoints force de-dollarization and alternative trade routes; proxy networks fracture, enabling new regional power balances and challenging Western-led security architectures worldwide.

This is not an isolated episode but a symptom of deeper power realignment. Multipolarity creates opportunities for some (BRICS comes to mind). Only a realistic recalibration of power and interests, rather than the illusion of permanent Western dominance, can offer a path toward stability. The old architecture has collapsed, and the new one will not be rebuilt on the same foundations.

NB: A few hours after this Substack post, one of my followers on X (@Mark4xx) posted this important information on X, confirming my thesis;

(watch the video in the post)

FORMER NATO SUPREME COMMANDER (Wesley Clark): THIS WAR IS NOW EXISTENTIAL FOR US HEGEMONY — NO EXIT ALLOWED

Former NATO Supreme Allied Commander Wesley Clark just laid out the real thinking inside Washington. This is no longer about Iran. It is about whether the United States remains the global hegemon or watches its power collapse in real time. Stopping is not an option. That is the hard line now being drawn.

THE EXISTENTIAL STAKES

• Clark makes it clear: if America pulls back and lets Iran keep control of the Strait of Hormuz, the hit to US global leadership is permanent.

• He warns it would damage American deterrence, weaken influence in Asia, and undermine the security of Europe in one stroke.

• This is the decision point. Failure here is not a temporary setback. It is the end of the post-1945 order.
  
  THE NO-EXIT REALITY

• Clark rejects any idea of simply walking away or signing a weaker deal.

• “Pulling back, that’s no good,” he states without hesitation.

• An MOU worse than the last one would signal American weakness to every rival watching.

• China and Russia are already feeling good about the current trajectory. Clark says they should not be allowed to celebrate further.
  
  THE STRATEGIC TRAP

• There is no easy military solution, yet retreat is worse.

• The near-term fight must stay focused on keeping the Strait open and isolating the theater of operations.

• Any pause only gives Iran time to rebuild, rearm, and dig in deeper.

• Clark insists the longer-term threat of Iranian missiles and nuclear capability cannot be ignored either.
  
  THE BOTTOM LINE
  Wesley Clark is not speaking as a pundit. He is speaking as a former NATO Supreme Commander who understands exactly how the deep state and neoconservative core in Washington now view this conflict.
  This war has become existential for American global power.
  Stopping is no longer on the table.
  
  HT: YouTube Piers Morgan Uncensored

Willem Middelkoop is the author of The Big Reset: The war on gold and the financial endgame (2014)

(Grok assisted writing; all prompting and editing by Willem Middelkoop)

As of mid-2026, Russia has become dangerously dependent on China. Beijing, meanwhile, is playing a much longer and colder game. The question is no longer whether the relationship is strong. The real question is: how far is China prepared to go to keep propping up Putin’s regime, and what happens when that support no longer serves Beijing’s interests?

The great asymmetry nobody wants to talk about

Since the 2022 invasion, China has quietly become Russia’s economic lifeline. It buys Russian oil and other commodities at a discount, supplies the dual-use components that keep Russian factories (and war?) running, and provides the financial plumbing that allows Moscow to dodge Western sanctions. Trade between the two countries has exploded. China now accounts for nearly 40 percent of Russia’s total trade.

But the numbers tell only half the story. Russia represents less than 4 percent of China’s trade. Putin needs Xi far more than Xi needs Putin. During Putin’s May 2026 visit to Beijing, the much-hyped Power of Siberia 2 pipeline, Moscow’s desperate attempt to redirect gas flows to the East, once again failed to materialise. Chinese negotiators reportedly demanded prices close to Russia’s own domestic rates. In other words: take it or leave it. It was one of the first signs of stress in this special relationship.

So, it’s not a partnership of equals. China holds almost all the cards and seems to be using Putin as an aggressive pitbull confronting the West, so China can keep quite for now.

Beijing seems preparing for life after Putin

Smart analysts saw this coming. Joseph Webster of the Atlantic Council noted after the latest summit that Beijing is deliberately “institutionalising ties with Moscow in anticipation of a power transition.”

Why? Because Xi Jinping plays the long game. He knows Putin will not live forever. China has no interest in tying its future to one man or one regime. It wants a stable, resource-rich neighbour that remains dependent on Beijing, whether that neighbour is led by Putin or by whoever comes next, in a classic great-power behaviour. Quietly diversify your options while your junior partner remains useful. Even seasoned observers in the West are increasingly blunt about Putin’s narrowing options. Investigative journalist Seymour Hersh recently laid it out without sugar-coating:

“Russia’s economic deterioration will continue and will worsen as the clock ticks. There is currently no path for recovery. Putin has lost his place as a world power. The Damocles sword is there and it is getting heavier and heavier. The question is ultimately whether he is ultimately a realist or will enter the history books as self destructive fool. At this point no commentator knows the answer.”

Hersh closed his analysis with a stark historical reminder: “Putin knows the ghost in the Kremlin closet: Revolution.”

A European diplomatic scholar put the same reality in different words during a private conversation. The minute Putin “loses the war someone in Russia will replace him, like they did with Khrushchev. Not kill him, but treat him like an exile.” Another Russian expert who has held high national security posts in Washington was equally direct: “Putin is in a no-win situation, a business elite that wants a one way out to cut losses, and a security elite that want to go more hardline.”

These comments reflect a growing consensus that Putin’s position is structurally weakening, caught between economic reality and the hardliners who still dominate the security apparatus.

The clearest signal yet that Chinese support has hard boundaries came in July 2026. As Russian media and officials ramped up nuclear saber-rattling, Beijing delivered a message that Ukrainian President Zelenskyy described as “very clearly and very firmly, even in ultimatum form.” There could be “no thought whatsoever” of using nuclear weapons in Ukraine. China, effectively told Moscow: do not cross this line. The warning was also quietly passed to Western governments, according to some analysts. It showed that Beijing is willing to use its leverage when Russian behaviour risks dragging the world into a direct superpower confrontation.

Even inside Russia, some voices are growing uncomfortable. Pro-Kremlin commentators have publicly complained that Beijing treats Moscow as a junior partner rather than an equal. They are right to be nervous. When one country floods another with cheap manufactured goods while buying its raw materials at favourable prices, the long-term power shift is obvious.

An abrupt, dramatic break is still unlikely. But the direction of travel is clear: China will support Putin’s Russia only for as long as it serves Chinese interests. The moment it doesn’t, whether because of internal Russian instability, economic costs, or strategic calculations, the support will be adjusted quietly, efficiently, and without sentiment.

The bigger picture in the global reset

We are living through one of the great power shifts in modern history. The old Western-dominated financial and geopolitical order is under pressure. Sanctions, de-dollarisation talk, and the weaponisation of trade have accelerated the move toward a more multipolar world. In that context, Russia has become a useful but ultimately disposable asset for China. Cheap energy, a weakened military power that no longer threatens Chinese interests in Central Asia, and a convenient distraction for the United States, these are valuable. The “no limits” partnership always had limits. The only question now is how visible those limits will become in the years ahead, and whether the West is paying attention while China quietly rewrites the rules of the game.

The reset is already underway. The only surprise would be if Beijing continued subsidising a junior partner long after that partner stopped delivering strategic value, or after the Damocles sword hanging over the Kremlin finally falls. History suggests that is not how rising powers operate.

I wouldn’t be surprised to see China take over large parts of Siberia during a future collapse of the Russian power structures.

(Grok assisted writing, all prompting and editing by Willem Middelkoop)

Israeli media across outlets portray the deal overwhelmingly as a setback or outright defeat for Israel. Public polls show the vast majority of Israelis view it negatively, seeing it as a victory for Iran and a long-term loss for Israeli security. A Hebrew University and Agam Institute survey found that approximately 86 percent of Israelis view the MoU negatively, over 90 percent believe Iran has emerged victorious, and 83 percent see it as a long-term loss for Israel’s security. Nearly three-quarters also consider claims that the IDF removed an existential threat to be inaccurate. Another poll showed only 18 percent support for the deal.

Analysts argue it hands Iran renewed legitimacy and financial resources without requiring meaningful concessions on its nuclear ambitions, ballistic missile program, or network of proxies.

The worst consequences highlighted include Iran using the economic windfall to rebuild and strengthen its military capabilities directed against Israel. The nuclear issue receives only vague promises, with no firm mechanisms to prevent Tehran from advancing toward weapons capability. Iran’s support for groups like Hezbollah remains unaddressed, leaving Israel to confront these threats alone going forward.

A major concern centers on Lebanon. The ceasefire provisions are seen as pressuring Israel to halt operations and potentially withdraw forces from the south, allowing Hezbollah to survive and reconstitute itself as a persistent threat on the northern border. Israeli security officials had argued that continued economic pressure through the blockade was pushing Iran toward collapse, and the deal is viewed as prematurely relieving that strain.

The agreement also strains Israel’s relationship with its key ally, the United States. Reports indicate the Israeli prime minister was not consulted on the text and faces sharp criticism from Washington, raising fears of reduced American support in future confrontations with Iran. Overall, the MoU is described by experts as empowering Iran at Israel’s expense, reversing potential gains from the military campaign and leaving core security threats unresolved or even intensified.

Israeli analysts have labeled it a strategic catastrophe and diplomatic fiasco of historic proportions, noting that a joint US-Israeli effort aimed at weakening the Iranian regime has instead resulted in Washington granting it legitimacy and resources. One expert stated it is “an Iranian victory over the US and Israel.” Another described the US approach as “a catastrophic capitulation.” A senior Iran researcher called the outcome a strategic “catastrophe,” adding: “We went to topple the regime with US backing and ended with Washington effectively giving legitimacy and strengthening the same regime we wanted to bring down.”

Further commentary in Israeli media frames the overall picture as “wretched” and highlights how the deal confirms Israel’s worst fears. As one detailed analysis put it: “Emerging contours of the MOU are confirming Israel’s worst fears. Other than its acquiescence to restore passage through the Strait of Hormuz, Tehran appears to have conceded nothing tangible in exchange for Trump’s commitment to stand US forces down. Jerusalem has manifold concerns. On Iran’s nuclear program, the ostensible trigger for Operation Epic Fury, the MOU suffices with rhetorical promises, deferring the actual mechanics of blocking Iran from acquiring a nuclear weapons capacity, with no guarantee of agreement on that most critical issue. The MOU apparently offers no treatment of Iran’s ballistic missile arsenal or its patronage of terrorist proxies, leaving Israel to contend with those additional threats as well. Meanwhile, Iran’s theocratic regime stands to pocket renewed legitimacy and a windfall of assets that it will almost certainly invest in upgrading its offensive and defensive capabilities.”

Netanyahu’s political future now faces significant uncertainty amid widespread domestic criticism of the deal.

With only a small minority of Israelis supporting the agreement and opposition leaders accusing him of failure and collapse at a critical moment, his leadership is under pressure. He must navigate whether to abide by the ceasefire terms or risk further escalation in Lebanon, decisions that could either consolidate his base among hardliners or alienate moderates ahead of upcoming elections. The strained dynamic with the US administration adds another layer of vulnerability, potentially isolating him politically if American backing diminishes. While his coalition partners have voiced concerns, the overall narrative in Israeli discourse frames this as a defining test that could determine whether he retains power or faces a leadership challenge.

(Grok assisted writing, prompting and editing by me)

In the tradition of The Big Reset, where the architects of the post-1945 financial order, anchored in dollar dominance and Western institutional control, face an inexorable unraveling through debt spirals, commodity rebellions, and the quiet accumulation of gold by BRICS challengers, the ongoing confrontation in Ukraine emerges as far more than a territorial clash. It is a high-stakes chapter in the broader geopolitical reset: a deliberate Western strategy of calibrated erosion, akin to the monetary manipulations that have propped up fiat systems for decades.

In a “boiled frog” scenario, NATO is using Ukraine to incrementally increase pain and suffering for the Putin regime. Long-range strikes in St Petersburg and even in Moscow are making this situation increasingly dangerous.

The western goal? To exhaust Russia economically and psychologically without triggering the nuclear “fire” that could accelerate the very multipolar order Moscow and its partners seek. Yet, as I have long warned, such engineered delays in power transitions breed dangerous miscalculations. Russia’s elite, led by Vladimir Putin, perceives this not as prudent containment but as existential provocation, pushing a nuclear-armed bear into a corner where restraint may soon give way to rupture.

This analysis dissects the Kremlin’s internal mood, factional divides, and narrative of “cooking on a slow fire,” before outlining three plausible scenarios if Western probing persists. Drawing extensively on voices from Russia’s strategic community, Sergei Karaganov, Fyodor Lukyanov, Ivan Timofeev, Dmitry Trenin, and others, it reveals a regime resilient yet strained, where hardliners gain ground amid blurred red lines.

Factions and Mood in the Kremlin: Siloviki Ascendancy Amid Elite Erosion

Russia’s power architecture remains a personalized system orbiting President Putin, who acts as the supreme arbiter among competing blocs. The main division separates siloviki, hardline security officials from the FSB, the military, and the intelligence apparatus, from pragmatists in economic ministries, the Central Bank, and presidential administration technocrats.

The former, empowered by the “special military operation,” demand uncompromising confrontation: lowered nuclear thresholds, strikes on NATO enablers, and total mobilization. The latter, including Economic Development Minister Maksim Reshetnikov, Central Bank Governor Elvira Nabiullina, and adviser Maksim Oreshkin, emphasize macroeconomic vulnerabilities—persistent inflation, rouble volatility, and the drag of war spending (now exceeding 6% of GDP). A widening rift has emerged, with the FSB enjoying near-total freedom to purge elites via arrests, forced nationalizations (surpassing 4 trillion roubles), and opaque deaths, dismantling the informal pacts that once governed corruption and rents.

This Darwinian struggle has intensified amid tangible strains: Q1 2026 GDP contraction of 0.3%, a 5.9 trillion rouble budget deficit in the first four months, and Ukrainian drone/missile strikes on refineries and infrastructure. Business elites, oligarchs like Suleiman Kerimov and Oleg Deripaska, face coerced “voluntary contributions” and steeper taxes, breeding quiet resentment. Public mood shows Putin’s approval dipping, with 60% favoring negotiations. Yet the “rally-round-the-flag” dynamic persists, fueled by framing the conflict as existential against “the collective West.”

Ultranationalist voices amplify hardline pressure. At the June 2026 St. Petersburg International Economic Forum, Tsargrad Institute figures Konstantin Malofeev and Alexander Dugin outlined optimistic projections: Russian forces occupying Kyiv, Odesa, and Kharkiv by 2036, EU fragmentation, and Russia as a global security guarantor. These “Z-bloggers” and ideologues critique perceived military shortcomings while demanding victory without compromise.

The overall atmosphere is one of “systemic erosion” rather than imminent implosion. Elite cohesion holds through repression and shared threat perception, but fractures surface dramatically, as in May 2026, when loyalist lawyer Ilya Remeslo publicly branded Putin a “war criminal and a thief” before psychiatric confinement. Such episodes, combined with over 352,000 reported Russian fatalities, signal growing irritation even among insiders. Factional infighting is likely to intensify gradually, with siloviki leveraging external pressure to consolidate influence.

Putin and Associates on NATO’s Incrementalism: “Cooking Russia on a Slow Fire”

Kremlin discourse characterizes NATO’s measured support, progressing from Javelins to ATACMS, F-16s, and deep-strike permissions, as classic “salami-slicing” or, in inverted Russian parlance, “cooking on a slow fire.” Incrementalism avoids decisive red-line crossings while steadily degrading Russia’s position, mirroring the “slow boil” analoque. Ivan Timofeev, RIAC Director General, captured this in a formulation echoed across elite circles: “Roughly speaking, they [the West] are trying to cook Russia on a slow fire. Nuclear escalation is a way to jump out of the boiler, abruptly bringing the temperature to the boiling point. The problem is that after jumping out of the boiler, you can get directly into the fire.”

Sergei Karaganov, an influential former adviser and hardliner, has repeatedly warned of the erosion of deterrence. In 2023–2025 interventions, he argued the West “forgot the horrors of war and even stopped fearing nuclear weapons,” necessitating threshold reduction: “The enemy crosses one red line after another… Mirror responses are a purely defensive tactic.” By late 2024, he urged “steps up the ladder of nuclear escalation… Until finally the Europeans run away,” advocating strikes on active NATO participants (“We should also start striking targets in the countries that are most actively participating in NATO’s aggression”) and labeling the alliance a “cancer.”

Dmitry Trenin echoed the call for action over rhetoric: “It’s Time for Russia to Give the West a Nuclear Reminder.” He and his allies contend that a traditional defensive posture fails against a perceived proxy war, demanding “nuclear signaling in action.” Fyodor Lukyanov, editor of Russia in Global Affairs, has nuanced the debate. While cautioning in 2023 that Russia “won’t be able to ‘sober up the West’ with a nuclear bomb,” by April 2026, he acknowledged U.S. actions elsewhere “exacerbated” hardliner currents: diplomacy stands discredited, and “nuclear arms, the red button… might be the only guarantee against such an aggressive policy.” Putin himself has iteratively redefined thresholds, from NATO expansion to long-range strikes or “massed aerospace attacks”, while state media portrays each Western increment (Oreshnik tests notwithstanding) as proof that blurred lines invite further probing.

This narrative sustains unity: external incrementalism justifies internal sacrifices, yet fuels hardliner momentum when incidents such as drone strikes at the presidential site or refinery strikes expose vulnerabilities.

Three Scenarios: Persistent Poking and the Angry Bear’s Response

Continued Western “poking”, deeper strikes, NATO infrastructure aid, or Tomahawk-like systems, risk distinct trajectories, as Russian commentators map them.

Positive Scenario: The Deterrent Awakening (Bear Forces Retreat)
Hardliners envision escalation as restorative. Karaganov posits limited nuclear signaling or conventional strikes on European enablers (Poland, UK, Germany first) could “sober up” the West, compelling withdrawal: “We will have to make nuclear deterrence a convincing argument again by lowering the threshold… The enemy must know that we are ready to deliver a preemptive strike.” Ultranationalists like Malofeev-Dugin project maximalist gains: territorial consolidation, the EU's collapse, and a Russian-led security architecture by 2036. On this optimistic path, blurred red lines finally provoke a decisive Russian “jumping from the boiler,” restoring fear without a full thermonuclear exchange.

Neutral Scenario: The Prolonged Attrition (Enduring Slow Boil)
Pragmatists and moderates anticipate stalemate: economic strain mounts (brain drain, sanctions bite), but repression and resource mobilization sustain the front. Timofeev’s caution, “after jumping out… you can get directly into the fire”, prevails, with incremental Western aid met by asymmetric hybrid responses (sabotage, energy leverage) rather than nuclear leaps. Putin arbitrates, balancing demands with technocratic warnings of collapse. Public fatigue grows (polls already favor talks), yet “rally” effects and territorial gains prevent collapse. As Lukyanov observed on related crises, “each next attempt… will bring us to the same agenda, but in the worst situation for Ukraine.” The boil persists: costly for all, but no rupture, Russia endures as a sanctioned but intact power, waiting for Western cohesion to fray.

Negative Scenario: The Catastrophic Escalation (Spiral into Fire)
Pessimists warn of miscalculation: perceived existential threats (massed strikes, NATO “hubs,” or sovereignty erosion) trigger doctrine-mandated response. Karaganov’s ladder, preemptive limited strikes escalating to waves, could ignite if “the Europeans run away” fails. Trenin’s “nuclear reminder” becomes reality amid elite panic or hardliner dominance. Lukyanov’s “very disturbing scenarios” materialize: unimaginable years ago, now plausible. Economic desperation (2026 exhaustion forecasts) or battlefield reversal accelerates the leap. Worst outcome, with Russia’s survival uncertain amid the risk of mutual destruction.

Russian experts caution that underestimating a cornered nuclear power courts catastrophe. Persistent poking risks transforming the slow boil into explosive rupture, underscoring the imperative for realistic off-ramps before the frog, or the bear, forces a reckoning no one can control.

Grok assisted, all prompting and editing by Willem Middelkoop

His intellectual output, including influential books and essays, positioned him as a key architect of the post-Cold War interventionist consensus that justified operations such as the 2003 invasion of Iraq. Compounding his establishment credentials, Kagan is married to Victoria Nuland, the former senior State Department official who, in a 2013 speech, famously remarked that the United States had “invested more than $5 billion” in Ukraine to get a successful regime change. For decades, the Kagan family embodied the neoconservative faith in American exceptionalism and the moral imperative of sustaining a unipolar world order through strength and resolve.

As the author of The Big Reset: War on Gold and the Financial Endgame, first published in early 2014, I have maintained for over a decade that the American-led monetary and geopolitical order carried within it the seeds of its own structural exhaustion. I expected a methodical erosion of dollar hegemony driven by unsustainable debt, and the parallel rise of gold or commodity-backed alternatives.

What I described then as the inevitable “endgame” of the postwar financial system is now materializing with clinical precision, and it carries particular weight that Robert Kagan, one of its most articulate guardians, has now chronicled its passing in two decisive essays. In the analysis that follows, I dissect Kagan’s arguments, weave in his most telling formulations, and register my own reactions to demonstrate why these texts represent both an intellectual watershed and the overdue confirmation of a reset long in motion.

Kagan’s earlier essay frames the crisis as a conscious choice rather than an inexorable decline. He contends that the United States has not been forced from its hegemonic perch by material weakness or external rivals alone. Instead, the Trump administration’s National Security Strategy “made it official: The American-dominated liberal world order is over.”

This is not, he insists, the result of incapacity, “the United States proved materially incapable of sustaining it”, but of a deliberate decision “that it no longer wishes to play its historically unprecedented role of providing global security.” The American might “that upheld the world order of the past 80 years will now be used instead to destroy it.”

Here, Kagan evokes the grand bargain of 1945: allies surrendered spheres of influence and territorial ambitions in exchange for American protection, fostering decades of relative peace and prosperity even amid Cold War tensions. That bargain, he argues, is now void. The administration’s embrace of tariffs against allies, threats to NATO partners, demands for payment for defense, and a worldview that treats Russia and China as co-participants in a multipolar carve-up of the globe marks a return to nineteenth-century Machtpolitik.

Exactly as expected when mapping the Saudi-BRICS pivot and the quiet dedollarization of oil settlements, this rupture is no policy accident but the predictable consequence of a monetary order that has finally exhausted its capacity to underwrite global commitments. Kagan’s phrasing captures the essence of the mechanism: empires rarely fall on the battlefield alone; they dissolve when the financial arrangements that once subsidized their primacy lose credibility.

The “grand bargain” he mourns was always financed by the dollar’s exorbitant privilege, the unique ability to monetize deficits and underwrite alliances without immediate consequence. When that privilege frays, as I demonstrated it must through accelerated central-bank gold purchases and commodity-based settlement systems, the political appetite for sustaining the bargain evaporates.

Kagan’s own reaction is one of unmistakable lament: “Americans are entering the most dangerous world they have known since World War II, one that will make the Cold War look like child’s play and the post–Cold War world like paradise.” Without the stabilizing architecture of alliances, the United States will confront a more dangerous environment. Allies, long habituated to American security guarantees, will rearm and recalibrate. Europe, stripped of its transatlantic umbrella, faces the resurgence of nationalism; Germany “has no choice but to become normal again,” while Poland and France may pursue nuclear options.

In Asia, Japan and South Korea confront similar imperatives. The result is not a stable balance of power but proliferating flashpoints, as “in a multipolar world, everything is up for grabs.”Commentators sympathetic to realist traditions might applaud this shift as a long-overdue correction to overextension, yet Kagan’s reaction is one of lament.

His prose carries an elegiac tone, underscoring the aberration of the postwar order: “This was truly aberrant behavior and defied all theories of international relations as well as historical precedent.” The essay’s power lies in its insistence that the unraveling is not inevitable but chosen, a form of strategic abdication that leaves the United States “neither materially nor psychologically ready for this future.”

One reaction from within the academy might note the irony: Kagan, once a champion of the “benevolent empire,” now chronicles its self-dismantling. Yet his analysis invites a deeper critique. By attributing the end of hegemony primarily to domestic political will rather than to structural erosion, debt, deindustrialization, or the diffusion of power, he risks underplaying the fact that Trump’s policies merely accelerated trends already latent in American society’s war-weariness and fiscal constraints. Still, his warning resonates: the retreat from global responsibility may purchase short-term sovereignty at the expense of long-term primacy.

In my assessment, this framing understates the monetary driver I have emphasized since 2014: the hidden costs Kagan enumerates, greater military spending, and economic isolation are the direct symptoms of a dollar system that can no longer socialize its deficits across the globe.

If the first essay diagnoses the policy-induced twilight of empire, the second declares its strategic noon has passed into night.

In “Checkmate in Iran,” Kagan examines the U.S. confrontation with Tehran as the crucible in which abstract decline becomes concrete defeat. Writing in the immediate aftermath of military operations that failed to achieve decisive objectives, he asserts that the United States “suffered a total defeat in a conflict, a setback so decisive that the strategic loss could be neither repaired nor ignored.” Unlike Vietnam or Afghanistan, “costly but [which] did not do lasting damage to America’s overall position in the world, because they were far from the main theaters of global competition”, the Iran episode is qualitatively different. “Defeat in the present confrontation with Iran will be of an entirely different character.

It can neither be repaired nor ignored. There will be no return to the status quo ante, no ultimate American triumph that will undo or overcome the harm done.”The centerpiece of this verdict is Iran’s retention of control over the Strait of Hormuz. “With control of the strait, Iran emerges as the key player in the region and one of the key players in the world.” Tehran can now exact tolls, restrict passage, and punish adversaries economically, transforming a theoretical nuclear threshold power into a choke-point hegemon over global energy flows.

Kagan details the cascading effects: Gulf Arab states, once sheltered by American hegemony, “will ineluctably go begging to Tehran”; Israel finds itself isolated; European naval initiatives prove risible. The war itself exposed American vulnerabilities: “Just a few weeks of war with a second-rank power have reduced American weapons stocks to perilously low levels”, while adversaries gain: “The roles of China and Russia, as Iran’s allies, are strengthened; the role of the United States, substantially diminished.”

The global adjustment “to a post-American world is accelerating. America’s once-dominant position in the Gulf is just the first of many casualties.”Kagan’s language is starkly final. “If this isn’t checkmate, it’s close.”

He rejects optimistic narratives of reversal: blockades or renewed strikes risk regional economic catastrophe, and the conflict has already “revealed an America that is unreliable and incapable of finishing what it started.”

The Strait of Hormuz episode confirms the monetary, commodity and energy reordering I highlighted in my books: the petrodollar, long the cornerstone of American financial dominance, fractures precisely because the underlying architecture that financed expeditionary power has reached its terminal limits. Kagan’s comparison to Pearl Harbor’s early reversals drives the point home: earlier setbacks were tactical; this one is structural and, as I have consistently argued, irreversible without a comprehensive monetary reset.

Read in tandem, Kagan’s two essays form a coherent narrative arc: from deliberate policy choice to irreversible strategic consequence. The first establishes the intellectual and doctrinal foundations of decline, the rejection of the liberal order’s “grand bargain” in favor of spheres of influence and transactionalism. The second supplies the empirical confirmation: a regional conflict that, far from restoring deterrence, cements multipolarity.

Together, they suggest that the end of the American empire is neither myth nor hyperbole but a lived transition. Kagan does not celebrate this; his tone remains that of the reluctant realist, mourning the loss of an order that, for all its hypocrisies, delivered unprecedented peace and prosperity. His reactions to the unfolding events, alarm at European rearmament, dismay at Gulf realignments, foreboding about Taiwan or European flashpoints, betray a conviction that the United States has traded long-term strength for illusory autonomy.

Scholarly reactions to Kagan’s thesis have been predictably polarized. Liberal internationalists echo his lament, decrying the self-inflicted wound to collective security. Realists counter that hegemony was always unsustainable and that multipolarity, however volatile, restores agency to other actors long subordinated. Yet even skeptics must grapple with Kagan’s historical acuity: empires do not collapse overnight, but through cumulative missteps that expose underlying fragilities.

The Iran episode, in his telling, is not an isolated misadventure but the logical outgrowth of a doctrine that prioritizes “homeland security and hemispheric hegemony” over global stewardship. One might extend the commentary further: Kagan’s work implicitly challenges exceptionalist narratives by demonstrating that American power, like all preceding hegemonies, is contingent on will, alliances, and perception. When those erode, the “indispensable nation” becomes merely another great power among rivals.

What renders Kagan’s recent interventions a huge shift, and one that reverberates far beyond the academy, is the radical departure they represent from the very neoconservative worldview he once helped define and defend. Having spent a career warning against the perils of American retrenchment and insisting that only vigorous U.S. hegemony could tame the “jungle” of international anarchy, Kagan now chronicles its deliberate demise with a tone of resigned finality.

This volte-face, from architect of primacy to eulogist of empire, underscores the depth of the crisis: even the most ardent defenders of the liberal order have come to see its foundations as irreparably eroded.

In this light, Kagan’s essays do more than analyze decline; they mark the intellectual capitulation of neoconservatism itself, signaling that the era of American global dominance, once deemed both necessary and eternal, has reached its unanticipated and self-inflicted conclusion.

As I write this from my flight towards Las Vegas, the global bond markets are flashing red once more. The U.S. 30-year Treasury yield has surged to 5.12 percent, its highest level in nearly a year. Eurozone bunds, Japanese government bonds, and UK gilts have followed in a synchronized sell-off. It points to the visible fracture in a debt-laden financial architecture I have warned about for over a decade. With global public debt exceeding $350 trillion and debt-to-GDP ratios circling around 100 percent, the sovereign debt reckoning feels quite imminent. The question is no longer if a crisis will unfold, but how and when policymakers will be forced to confront it.

Just weeks ago, former U.S. Treasury Secretary Hank Paulson delivered a stark warning in a Bloomberg Television interview on April 16. Speaking on Wall Street Week with David Westin, Paulson urged authorities to prepare a contingency plan for a potential collapse in demand for Treasuries. “We need an emergency break-the-glass plan, which is targeted and short-term, on the shelf, so it’s ready to go when we hit the wall,” he said. He added that when the moment arrives, “it will be vicious.” Paulson’s message was blunt: the $39 trillion U.S. national debt is testing the very foundations of the Treasury market. Persistent deficits, heavy issuance, and now war-driven inflation shocks have created the conditions for a “vicious” spiral. His words carry the weight of someone who steered the system through 2008. This time, he sees the risk centered not in private banks but in the government’s own ability to finance itself.

Jamie Dimon, CEO of JPMorgan Chase, has echoed this urgency. In late April at a conference hosted by Norway’s sovereign wealth fund, Dimon warned that rising global government debt could trigger “some kind of bond crisis.” “The way it’s going now, there will be some kind of bond crisis, and then we’ll have to deal with it,” he stated. “I’m not that worried we’ll be able to deal with it. I just think maturity should say you should deal with it, as opposed to let it happen.” Dimon’s candor, often summarized in his trademark style as “we won’t panic, you will”, cuts through the complacency. As I have noted in recent presentations, Dimon has long flagged sovereign debt risks as interest rates rise worldwide. His latest remarks align perfectly with the current spike in yields, driven by hot U.S. CPI data at 3.8 percent and oil breaching $109 per barrel amid Middle East disruptions.

Bond king Jeffrey Gundlach has been equally direct. In early May interviews, the DoubleLine CEO described preparing portfolios for an “Armageddon-type situation”, a massive U.S. Treasury debt restructuring to curb exploding interest expenses. Gundlach argues that the secular decline in long-term interest rates is over, even during a recession, and that America faces two paths: currency debasement or a soft default on obligations. He has positioned his firm at its lowest risk level in 17 years, emphasizing gold and emerging markets while warning that private credit could become the next systemic stress point, much like subprime mortgages before 2008.

Ray Dalio, founder of Bridgewater Associates, frames the moment in historic terms. In recent commentary, Dalio has warned that America’s debt crisis is following well-worn patterns from past empires. “The debts for a country work the same as the debts for an individual or a company, except the government can print money,” he observes. Yet printing brings its own reckoning: “Do you print money or let a debt crisis happen?” Dalio has described the current path as leading to “very, very dark times,” with grandchildren paying off today’s obligations in devalued dollars. He points to the widening gap between spending and revenues, political paralysis in Washington, and the breakdown of the monetary order itself. Any serious fix, he notes, will likely come too late, especially in a midterm election year when painful choices are politically toxic.

These insider voices reinforce what I have argued since the post-2008 era of endless quantitative easing and fiat debasement. Governments worldwide have relied on central bank balance sheets to finance unsustainable spending. As detailed in earlier writings on monetary history, sovereign defaults or restructurings occur with disturbing regularity when debt burdens become untenable. The IMF’s latest reports flag exactly these “elevated risks”: war-driven inflation, rollover vulnerabilities, and the sovereign-bank nexus, where commercial banks hold trillions in government debt that is now losing value as yields climb.

OECD countries face roughly $14 trillion in debt rollovers this year alone. Higher yields mean higher servicing costs, U.S. net interest payments already exceed $1 trillion annually, widening deficits and accelerating the spiral. The current surge is fueled by geopolitical shocks and sticky inflation, forcing traders to price in possible Federal Reserve hikes rather than cuts. Real yields are rising, term premia are expanding, and the era of “free money” for governments is ending.

What makes this uniquely dangerous is the multipolar shift underway. Central banks, led by the People’s Bank of China, have become net buyers of physical gold at a record pace, a clear signal of lost faith in fiat. Price discovery in precious metals is migrating from New York and Chicago to Shanghai, marking what I have called the early stages of a new monetary regime. Silver, with its historic distortions and tightening physical supplies, stands ready for explosive moves amid monetary demand and commodity shortages.

Emerging markets and high-debt developed nations, Japan with 30-year yields near 4 percent for the first time in decades, and parts of Europe facing fiscal fatigue, will feel the pain first. But even the United States, with debt-to-GDP above 125 percent, is not immune. Treasury auctions still absorb supply today thanks to the dollar’s reserve status, yet that privilege is eroding. Once confidence fractures through political brinkmanship, persistent deficits without credible plans, or banking spillovers, the vicious cycle intensifies: higher yields beget higher deficits, which demand more issuance and further elevate yields.

History shows monetary regimes do not endure forever; they reset when trust collapses. The 2008 crisis could well be the dress rehearsal, a banking crisis papered over with trillions in new debt and QE. The sovereign debt crisis will be the main event. In my book The Big Reset, I outlined how such a redesign might preserve U.S. influence while incorporating gold revaluation and a multipolar currency basket. Events are now unfolding faster than anticipated.

Investors must prepare. Diversification into hard assets, “all that the government can’t print”, is essential. My own Commodity Discovery Fund maintains a defensive posture with significant cash alongside precious metals exposure, prioritizing capital preservation amid volatility.

The bond yield surge of mid-May 2026 is not fleeting but symptomatic of deeper fragility. Global debt has reached levels that render traditional tools ineffective and fiscal sustainability illusory. Policymakers, central bankers, and markets ignore these signals at their peril. The sovereign debt crisis is the logical endpoint of decades of mismanagement.

The time for complacency has passed. History demands a reset; markets are now enforcing it. Let us hope leaders act with the foresight that has so far been absent.

Look, I’ve been writing about these kinds of resets for years, the hidden mechanics of power, oil, money, and empires. The Big Reset wasn’t just about gold or the dollar; it was about how control of energy arteries quietly rewrites the rules while the world watches the fireworks. What just happened in the Middle East over the last six weeks is exactly that kind of moment. This was a war the United States and Israel clearly won on paper, yet somehow lost in the only places that actually matter: long-term leverage, energy security, and the quiet architecture of global influence. You can win all the battles, however, lose te war. That’s war what Vietnam was all about. Now today, April 17, the guns have gone quiet under a shaky two-week ceasefire hammered out through Pakistani back-channels. It started on April 8 after forty days of hell by American and Israeli strikes.

The original American Peace plan, the one leaked in pieces back in late March, was bold, almost arrogant in its ambition. Fifteen demands.

Original US Demands on Iran (core conditions)

1. Iran must dismantle its existing nuclear capabilities.

2. Iran must commit never to pursue nuclear weapons (permanent renunciation of any nuclear weapons pathway).

3. No uranium enrichment on Iranian territory.

4. Iran must hand over its stockpile of enriched uranium (reportedly ~450 kg enriched to 60%) to the International Atomic Energy Agency (IAEA) on an agreed timetable.

5. The Natanz, Isfahan, and Fordow nuclear facilities must be dismantled.

6. The IAEA must be granted full access, transparency, and oversight of all Iran’s nuclear facilities.

7. Iran must abandon its “regional proxy paradigm.”

8. Iran must cease funding, directing, and arming its regional proxies (e.g., Hezbollah, Houthis, and other militias).

9. The Strait of Hormuz must remain open and function as a free maritime corridor (no blockades or interference).

10. Iran’s ballistic missile program must be limited in both range and quantity (specific thresholds to be negotiated later).

11. Any future use of missiles would be restricted to self-defense only.

In return, sanctions off, some civilian nuclear help. Iran laughed it off, countered with its own list, and the fighting continued until both sides blinked. The ceasefire that emerged is a messy compromise nobody loves. Iran says the Strait is open again. In practice, tankers are still crawling through at a snail’s pace, paying what amount to tolls, dodging “hazardous zones,” and praying the mines stay quiet. The US Navy is out there sweeping and blockading Iranian ports, but the flow hasn’t normalized yet.

Let’s be brutally honest about what America actually lost here, because the body count and the rubble don’t capture it.

First, the basing problem. For decades the Gulf monarchies were reliable launchpads, UAE, Bahrain, Qatar, Kuwait. During the fighting those same bases took hits from Iranian proxies. Drones, missiles, the works. Now those governments are doing the math in private: why host the world’s biggest target when the next war might not even be about us? The forward operating posture that let Washington project power from the Indian Ocean to the Mediterranean just got a lot more expensive and complicated..

Second, and this is the one that really stings, Iran now owns the Strait of Hormuz in a way it never quite did before. Twenty percent of the planet’s oil trade passes through that narrow choke point. Before February 28 Iran could threaten it. Now it has proved it can manage it, tolls, selective approvals, minefields as leverage. Commercial shipping hasn’t snapped back. A handful of tankers on day one, maybe fifteen by April 10. The rest are rerouting or waiting. Europe is staring at jet-fuel shortages for summer travel. Asia is rationing. Russia and China pocketed discounted barrels and extra revenue while the price surge filled Iranian coffers and Moscow’s war chest.

This is the new reality. The US Navy can sail its carriers and destroyers up and down the Gulf all it wants, but it can’t force twenty million barrels a day through a waterway when the guy on the other side decides the rules. It’s asymmetric warfare at its most elegant: no blue-water fleet required. Ukraine showed Russia what cheap drones can do to expensive ships. Iran just showed the US Navy what a choke point can do to an empire that runs on imported energy stability.

The economic fallout, oil at triple digits for weeks, has already rippled into everything from Asian factories to European household budgets. The very petrodollar flows that have underwritten American primacy for fifty years just got a very public reminder of how fragile they are when someone controls the tap.

Now let’s look at those fifteen American demands with clear eyes. How many actually got delivered?

The nuclear file? The strikes hammered Natanz, Isfahan, and Fordow. Facilities are damaged, timelines pushed back. But the enriched uranium stockpile was never surrendered. Enrichment hasn’t been verifiably stopped. No permanent renunciation. No full IAEA access regime. The program is bruised, not broken. The breakout clock is still ticking, just maybe a few months slower.

The proxy network? Hezbollah took a beating in Lebanon but is still there. The Houthis and Iraqi militias are bloodied yet functional. Funding and direction haven’t dried up. The “abandon the regional paradigm” demand was dead on arrival.

Missiles? Production sites got hit hard, stockpiles thinned. But no formal limits, no verification, no agreement that future launches will be “self-defense only.” Residual capacity remains.

The Strait? That was supposed to be non-negotiable, open, free, no interference. Instead we got a ceasefire promise and a de-facto Iranian toll booth. The US is still running naval operations to keep it clear, which tells you the demand was never met.

What did America get? A temporary halt to the bombing and some vague talk about sanctions relief down the road. That’s it. The fifteen-point plan is effectively in the trash. Negotiations have shifted to Iran’s counter-list. The leverage Washington thought it would have after smashing Iranian infrastructure has turned out to be thinner than expected.

So who really won?

Tactically, the United States and Israel cleaned house. Iran’s navy is gone. Air defenses shredded. Missile factories smoking ruins. Top commanders removed from the board. On any conventional scorecard this is a slaughter. But strategy isn’t scored by rubble. It’s scored by who walks away with more control over the things that matter tomorrow.

Iran walks away bloodied but strategically stronger. It survived the full weight of the American-Israeli military machine, inflicted real pain, and turned its geography into a permanent economic weapon. The Strait is no longer just a vulnerability; it’s a profit center and a veto. Tehran can credibly tell its people it stood up to the Great Satan and forced the table. Its proxies are still in the game. Its nuclear threshold capability, while damaged, survives. And the world just learned that controlling the oil artery matters more than having the best fighter jets when push comes to shove.

America won the battle and lost the war for the future shape of the Gulf. The forward bases feel less secure. The energy chokepoint is now contested in a way that raises the price of everything. Allies are asking harder questions about reliability. And the petrodollar system, already under quiet pressure from BRICS experiments and gold accumulation, has just been given another visible crack. Oil still flows, but the terms of flow have shifted, and Washington no longer dictates them unchallenged.

Which brings us to the strangest part of all: why hasn’t President Trump declared victory?

He’s been vocal about the military success. “We exceeded all objectives,” he’s said. The strikes were “historic.” Yet as of today, April 17, there’s been no Rose Garden speech, no victory lap, no “the war is over” moment. White House insiders quietly killed plans for a big address. The reason is painfully obvious once you stop listening to the talking points.

The ceasefire is fragile. April 22 is the expiration date and nobody trusts it will hold. The Islamabad talks collapsed again this week over the same sticking points, uranium, the Strait, reparations. The naval blockade continues. Proxies are still probing. Declare victory now and you own the narrative if it all blows up next week. Worse, you lock yourself into claiming success on terms that everyone with eyes can see are incomplete. The Strait isn’t free. The nuclear program isn’t dismantled. Iran didn’t fold.

Trump’s instinct has always been to negotiate from strength after the hammer falls. He’s still doing exactly that, keeping the threat of resumed strikes alive, dangling partial sanctions relief, letting the Iranians feel the economic pain a little longer. But the window for turning battlefield dominance into a clean strategic win is closing. The longer this drags, the more Iran’s new leverage becomes the new normal.

In 2026 the map changed. The United States reminded the world it can still smash conventional forces with breathtaking speed. Iran reminded the world that in the age of choke points, geography and audacity can trump firepower.

The real reset isn’t the one in the headlines. It’s the slower, quieter one happening in boardrooms from Riyadh to Beijing: recalculating risk around the Strait, rethinking basing, wondering out loud whether the old energy security bargain still holds. That’s the story that will matter in five years, not the press releases about destroyed centrifuges.

We’re in the pause between rounds. The next few weeks, whether the ceasefire extends, whether a real deal emerges, whether the tankers start flowing freely again, will tell us if America can still convert tactical brilliance into lasting advantage, or whether the 2026 Iran war becomes the moment the empire learned the limits of its reach in a world that has quietly moved on from the old rules.

Keep watching the oil. Keep watching the Strait. The fireworks are over. The real end game is just beginning.

(Grok assisted writing, prompting and editing by Willem Middelkoop)

What we are witnessing in Ukraine, Gaza, Lebanon, Iran, and Venezuela is not a series of isolated regional crises. It is a coordinated great-power contest between the US/NATO/Israel axis and the China/Russia/BRICS/Iran bloc, fought primarily through control of the two most strategic commodity classes of our era: energy (oil) and critical metals/minerals.

At its core, this is a resource war. China dominates the refining and processing of rare earths, gallium, germanium, graphite, antimony, and other inputs vital for semiconductors, electric vehicles, wind turbines, missiles, and defense electronics, controlling over 70% of global rare-earth mining and 90% of processing. It has weaponized this leverage with export controls and licensing requirements, responding tit-for-tat to US tech bans and tariffs.

The US, meanwhile, uses its military reach, sanctions, conflicts, and alliances to deny adversaries cheap oil, the lifeblood of China’s import-dependent economy, where discounted crude from Iran, Venezuela, and Russia has long provided a critical cost advantage. As I posted on X just days ago: “The US is trying to harm China by attacking important oil suppliers Iran and Venezuela.”

Metals versus Oil is a New Great Game. Let us be clear: modern economies and militaries run on physical resources, not just fiat paper. As Alice Gower of Azure Strategy recently observed, “Great-power competition has returned to basics: who controls the physical resources that modern economies and militaries run on. Energy, critical minerals, and industrial capacity are leverage, not just economic assets.”

China’s strategy has been decades in the making. Recall Deng Xiaoping’s famous 1992 remark: “The Middle East has oil and China has rare earths.” Beijing has methodically built dominance in the “new oil” of the 21st century, critical minerals, while securing discounted energy supplies through shadow fleets and partnerships with sanctioned states. As a commodity fund manager, I have witnessed this firsthand.

So, the US countered by disrupting energy flows, choking China from cheap oil out of Venezuela or the Gulf, to face industrial slowdowns that crimp its military modernization.

This dynamic explains the interlocking conflicts we see today. Ukraine remains the grinding eastern front. Beyond the human tragedy, this war secures Russian control over grain, fertilizers, and Black Sea export routes while redirecting discounted oil and gas eastward to China and India. Western sanctions have failed to cripple Moscow; instead, they have forged deeper Russia-China energy ties. The US and NATO pour resources into Ukraine partly to weaken this axis and maintain leverage over global commodity pricing. By dragging the conflict as long as possible, they hope to weaken Russia. Putin already turned his country into a war economy; the West is no longer far behind.

The Middle East theater, Gaza, Lebanon, and now direct strikes on Iran, represent the oil chokepoint battle. This escalated into US-backed strikes on Iran starting late February, targeting nuclear sites, missile facilities, and energy infrastructure. The closing of the Straits of Hormuz threatens to sink the world economy into a deep recession.

James Kynge of Chatham House captured the China angle perfectly: “The US attack this month on Iran, coupled with that on Venezuela in January, registers as a blow to China’s diplomatic and economic statecraft.” Beijing’s partnerships with Tehran and Caracas, spanning oil, infrastructure, and diplomacy, are under direct assault. Iran supplies China with heavily discounted crude; disruptions force Beijing toward costlier alternatives, eroding its competitive edge.

Velina Tchakarova, geopolitical strategist, calls this “the beginning of managed confrontation between the US & China… the core of the new Cold War,” where proxy wars multiply to avoid direct superpower clash. Venezuela completes the encirclement. US forces intervened early this year, removing Maduro and installing an interim government.

Washington is now reshaping the world’s largest proven oil reserves for “legal” export channels, directly cutting China’s access to cheap Venezuelan barrels. As one analysis noted, this aligns with US priorities to control critical mineral supply chains while eliminating rival footholds near its borders. China’s strategy of courting US adversaries is backfiring, exposing vulnerabilities in its energy security. Commodities are the glue binding these theaters. China’s export curbs on rare earths and related minerals squeeze Western supply chains for tech and defense.

Russia benefits as the pivot supplier. The result is hybrid warfare: proxies, sanctions, and resource denial. Global oil prices remain volatile; critical mineral shortages loom, with lead times of up to a decade for new Western supply.

For me, this is all part of the 90-Year Cycle: History does not repeat exactly, but it rhymes with remarkable consistency. Over the past five centuries, the world has experienced a fundamental shift in monetary and geopolitical leadership roughly every 80 to 100 years. In the 16th century, the Portuguese Empire dominated global trade and bullion flows after the great discoveries, establishing the first worldwide maritime commercial system. By the 17th century, the Dutch Republic took over. Amsterdam became the undisputed financial capital of the world, the Dutch East India Company pioneered modern corporate finance, and the guilder functioned as the leading international currency. The 18th and 19th centuries marked the British century. After the creation of the Bank of England and victory in the Napoleonic Wars, the British pound sterling became the world’s reserve currency, backed by the gold standard and protected by the most powerful navy on earth.

Then came the transition to American dominance. The two world wars exhausted the old European powers. In July 1944, delegates from 44 nations gathered in Bretton Woods, New Hampshire, to design the postwar order. The resulting system placed the US dollar at its center, convertible into gold, with the United States as the new global hegemon.

We are now, in April 2026, precisely 82 years into this Bretton Woods-derived dollar era. Statistically, we have entered the classic window in which such systems historically reach their limits. Rising debt, internal political division, military overextension, loss of manufacturing competitiveness, and the determined rise of China and the BRICS nations all indicate that the current cycle is maturing and approaching its end. However, these systemic changes bring chaos and even wars.

This long-view perspective helps us understand why the present commodity and resource conflicts are not random crises, but the visible symptoms of a much larger transition underway. This war on commodities is turbocharging the financial endgame. The dollar system, already strained by unsustainable debt (US external debt on a parabolic rise), is cracking under geopolitical pressure.

Central banks, led by China, Russia, and emerging markets, have been accumulating gold at a record pace as a neutral, non-dollar asset amid eroding trust in Western financial weapons. As I have long argued, the US waged a secret war on gold since the 1960s to preserve dollar dominance; that war is now being lost. COMEX gold open interest has hit historic lows, with price discovery shifting decisively to the Shanghai Gold Exchange, another sign of Eastern ascendancy. So, the US is now losing control over the prices for gold and silver, the anti-dollar metals. Silver, in particular, faces structural shortages from industrial demand clashing with decades of underinvestment in mining.

Compounding these international tensions is the looming domestic political risk in the United States. With midterm elections scheduled for November 2026, President Trump’s Republican Party faces the real possibility of losing control of the House, the Senate, or both. A substantial Republican defeat would quickly turn the second Trump term into a lame-duck presidency plagued by gridlock and domestic political warfare. Sustaining prolonged military engagements abroad, whether through sanctions on Russia and Iran, operations in the Middle East, or stabilization in Venezuela, would face fierce congressional resistance, funding battles, and possibly impeachment theatrics.

From a monetary and commodity perspective, such political paralysis would be highly significant. A weakened presidency facing a hostile Congress often leads to fiscal gridlock mixed with populist spending, further inflating America’s already unsustainable debt levels. This would accelerate the very processes I have long warned about: declining confidence in U.S. governance, faster dedollarization by central banks, and stronger demand for gold and other hard assets as the world hedges against American political dysfunction. BRICS nations are already accelerating de-dollarization: trade in local currencies, commodity-backed settlement experiments, and gold reserves as the new anchor.

Let me end with three plausible scenarios: From Stalemate to Catastrophe

1. Prolonged Proxy Attrition (Baseline, Most Likely 1–4 Years): Conflicts simmer without decisive breakthroughs. Russia consolidates Ukrainian gains; Middle East fighting remains proxy-contained with periodic Hormuz jitters; Venezuela stabilizes under US oversight but with guerrilla resistance. China maintains metal leverage while pivoting oil sourcing through Russia and strategic reserves. Commodity prices stay elevated and volatile, but manageable. Diplomatic pauses (temporary sanction relief, trade talks) occur, yet underlying rivalry intensifies tech decoupling and arms races. The Big Reset unfolds gradually: more dedollarization, steady gold revaluation, and a multipolar monetary order by 2028–2030. Economic pain is distributed, but no systemic collapse.

2. Negotiated De-escalation and Partial Realignment (Optimistic Off-Ramp 6–24 Months): Exhaustion on all sides forces talks. A Trump-style deal-making approach yields ceasefires: Ukrainian territorial compromises for security guarantees; a new Iran nuclear framework with sanctions relief tied to Hormuz stability and proxy restraint; normalized Venezuelan oil under monitored, diversified exports. China eases select metal curbs for trade concessions and access to allied supply chains. New Western mining investments accelerate, diversifying critical minerals. Russia and China retain influence but accept limits to avoid deeper economic isolation. Commodities stabilize via hybrid supply chains.

3. Escalation to a World War III scenario (Low-Probability, High-Impact Catastrophe – Trigger Window 12-18 Months): Miscalculation spirals one theater. Full Iranian closure of Hormuz triggers direct US-China naval clashes over oil routes; Russia launches a major Ukraine offensive with overt Chinese material support; and Beijing moves on Taiwan. Nuclear signaling from Russia and Iran raises thresholds. Commodities become total weapons: blanket Chinese metal embargoes paralyze Western industry; global oil shocks trigger recessions, food crises, and alliance fractures. Containment odds improve only with extraordinary diplomacy; history shows great-power resource wars rarely stay limited. Domestic US gridlock from a lame-duck scenario could ironically raise escalation risks through perceived weakness.

We stand at the precipice of the largest geopolitical and monetary shift since World War II. The conflicts we see are symptoms of a deeper transition: from fiat dollar dominance to a commodity-anchored, multipolar reality, predicted by Zoltan Poszar some years ago.

Now, with the West fracturing into a US-Israel Mad-Men bloc and a more reasonable European bloc, The Big Reset is no longer a theory; it is well underway.

(Grok assisted writing, all prompting and editing by Willem Middelkoop)

As the author of The Big Reset, and my earlier books on energy (In Dutch only: De Permanente Oliecrisis in 2008 and The Tesla Revolution: Why Big Oil is Losing the Energy War in 2017) I have spent nearly two decades warning that the global financial system is built on a foundation of cheap, abundant energy that has always been more fragile than policymakers and markets care to admit. Having reported firsthand from the region as a photojournalist for the Dutch weekly Panorama during the First Gulf War in 1990-91, where we even chartered an Iranian fishing boat to sail from Dubai towards Kuwait as the conflict raged, and later reporting from Tel Aviv and hearing twelve Scud missiles exploded nearby, over a few days, I have seen up close how quickly energy infrastructure and geopolitical tensions in the Gulf can spiral into chaos.

Debt-fueled growth, fiat currencies untethered from hard assets, and an over-reliance on just-in-time supply chains all presuppose uninterrupted flows of hydrocarbons from the world’s most politically volatile region. The ‘Energy War of 2026’, now grinding into its fourth week, has demolished that assumption. What started as a targeted military exchange between the US-Israel alliance and Iran has metastasized into a systematic assault on the Persian Gulf’s energy heart. The unintended consequences are already cascading through every corner of the global economy, a stark reminder that carbon-based fuels remain the non-negotiable lifeblood of industrial civilization.

This report dissects the damage with precision, beginning where the fires still burn: the Gulf’s energy infrastructure. I name every major facility and project hit, explaining their pre-war role and the precise nature of the destruction. I then examine repair timelines under the most optimistic assumptions, map the immediate economic fallout, identify the ten countries suffering most severely, and forecast shortages across oil, natural gas, refined products, and petrochemical derivatives. Finally, I outline three plausible scenarios: good, neutral, and bad, each projecting how the war’s duration will shape the depth and longevity of global energy pain, before turning to the escalating risks of financial-market contagion that now loom larger than at the onset of the Covid crash in early 2020. The numbers are sobering. The implications for inflation, currency stability, debt sustainability, and the coming reset are profound. In an era when central banks have exhausted their tools and politicians cling to green-transition rhetoric, this conflict forces us to confront an uncomfortable truth: energy scarcity is not a future risk but a present reality reshaping power balances, wealth distribution, and the very architecture of the financial system I have long predicted would eventually crack.

The Physical Toll: Naming the Wreckage in the Gulf

The Persian Gulf is not simply a geographic feature; it is the strategic jugular of the global energy system. Every day before the war, roughly twenty-one million barrels of crude oil and an equivalent volume of liquefied natural gas in energy terms flowed through the Strait of Hormuz, representing about twenty percent of the world’s total petroleum liquids and a comparable share of seaborne LNG. For over 50 years, we have been warned it could be closed during a major conflict. Now it happened. The infrastructure feeding that flow, refineries, export terminals, gas-processing plants, storage tanks, pipelines, and offshore platforms, represents trillions of dollars in sunk capital and decades of engineering expertise. In just weeks, precision strikes, retaliatory barrages, and the chaos of war have turned part of this network into a smoking ruin.

Over forty major assets across nine countries now show severe or catastrophic damage. What follows is not an exhaustive list but a focused accounting of the most consequential targets, each described in the context of its pre-war importance and the specific harm inflicted. Begin with Iran itself, the original target and now a major casualty of its own strategy of asymmetric retaliation;

• - South Pars gas field, the world’s largest natural-gas reservoir shared with Qatar, has been central to Iran’s energy independence and export ambitions. Located offshore in the Gulf, it supplies nearly seventy percent of Iran’s domestic gas needs and feeds the massive Asaluyeh onshore complex. On 18 March, Israeli strikes damaged four gas-treatment plants at Asaluyeh, destroying critical dehydration and sweetening units essential for removing hydrogen sulfide and water from raw gas. Fires raged for days, forcing emergency flaring that wasted millions of cubic meters and released massive plumes of carbon dioxide and pollutants. Further inland, a gas-pressure regulation station in Isfahan province was hit, disrupting flows to power plants and petrochemical facilities.

• - Kharg Island, Iran’s primary oil-export terminal on the Gulf, handled up to 1.6 million barrels per day of crude and condensates before the war. Multiple missile strikes cratered storage tanks, severed loading jetties, and ignited fires that consumed an estimated 300,000 barrels of product. Although US statements initially claimed military targets were prioritized, satellite imagery revealed widespread collateral damage to crude-storage infrastructure and associated pipelines. The Bushehr nuclear plant, while not directly targeted, sits uncomfortably close to damaged gas infrastructure that supplies its cooling systems, raising fears of secondary power disruptions even if the reactor itself remains intact. Collectively, Iran’s losses represent not just lost export revenue but a collapse in domestic energy supply that has already triggered nationwide blackouts and forced the diversion of scarce military resources to protect remaining assets.

• Qatar, until recently the world’s third-largest LNG exporter and a supposed neutral player, absorbed what may prove the single most spectacular blow to global gas markets.

• - The Ras Laffan Industrial City, sprawling across the northern coast, was home to the planet’s largest concentration of LNG export trains—fourteen operational units capable of shipping seventy-seven million tonnes per year. Iranian missiles struck on 18-19 March, igniting fires across at least six trains;

• - The Pearl GTL plant, a joint venture with Shell and the largest gas-to-liquids facility on earth, suffered direct hits to its synthesis reactors and hydrocrackers. This complex converts natural gas into ultra-clean diesel, kerosene, and lubricants using Fischer-Tropsch technology that is extraordinarily difficult to replicate or repair quickly. QatarEnergy declared force majeure on all contracts within hours, confirming that seventeen percent of its nameplate LNG capacity is now offline. The planned North Field expansion—six additional trains scheduled for completion by 2027—has been suspended indefinitely. Repair crews cannot even begin full assessments until fires are fully extinguished and unexploded ordnance is cleared. The economic symbolism is devastating: Qatar’s entire national development model rested on the reliability of these assets. Their partial destruction removes roughly twenty percent of global seaborne LNG supply at a stroke, a shock larger than the 2022 Russian curtailments to Europe.

• Saudi Arabia, the world’s swing producer and de facto OPEC leader, has seen its carefully cultivated image of resilience shattered;

• - Ras Tanura, the kingdom’s flagship refining and export complex on the Gulf coast, processes 550,000 barrels per day and serves as the primary loading terminal for Arab Light crude. Early drone strikes damaged distillation units, tank farms, and control rooms; the facility was shut for days before a partial restart at reduced rates.

• - The SAMREF refinery, a joint venture with ExxonMobil at Yanbu on the Red Sea, suffered direct missile impacts that destroyed a catalytic cracker and associated storage.

• - The Shaybah oil field in the Empty Quarter, producing one million barrels per day of extra-light crude from carbonate reservoirs, was repeatedly targeted; wellheads were damaged, gathering lines severed, and associated gas-processing plants forced offline.

• - Yanbu’s export port suspended loadings for more than a week, and the Jubail petrochemical complex—home to world-scale ethylene crackers and fertilizer plants—reported collateral damage from debris and power-grid failures.

• - Saudi Aramco’s master gas system, which collects associated gas from multiple fields to feed domestic power and industry, is operating at sixty percent capacity. These strikes expose the vulnerability of even the most modern infrastructure to low-cost drones and missiles; the kingdom’s sovereign wealth funds may cushion the fiscal blow, but physical repair cannot be bought with petrodollars alone.

• The United Arab Emirates has lost critical nodes in its diversified export portfolio;

• - The Ruwais refinery complex in Abu Dhabi, one of the largest in the world at 837,000 barrels per day, was shut after a drone-induced fire gutted its hydrotreating units.

• - Habshan, the central gas-processing hub that sweetens and fractionates associated gas from the Bab and Bu Hasa fields, was struck by debris; three of its four trains remain offline.

• - The Fujairah oil terminal and port on the Gulf of Oman, designed as a bypass for Hormuz risks, endured repeated closures due to missile threats and shipping insurance spikes. Jebel Ali, the region’s largest container port and logistics hub, suspended operations for days, snarling supply chains for spare parts and chemicals needed elsewhere in the Gulf.

• - Das Island LNG plant, which exports associated gas from offshore fields, is running at minimal capacity because outbound tankers cannot safely navigate the Strait. The Shah gas field, a sour-gas development critical for domestic supply, was hit directly, forcing emergency imports from neighbors already struggling with their own losses.

• Kuwait’s losses are proportionally devastating;

• - The Mina Al-Ahmadi and Mina Abdullah refineries, together processing more than 700,000 barrels per day, were struck early; fires destroyed atmospheric distillation columns and catalytic reformers. Roughly half the country’s oil output remains offline.

• - Bahrain’s Bapco Energies refinery at Sitra, with 400,000 barrels per day capacity, declared force majeure after precision strikes on its visbreaker and storage tanks.

• - Oman closed its Sohar, Mina Al Fahal, and Salalah export terminals temporarily after threats and minor damage to loading arms.

• - Iraq saw the Lanaz refinery near Erbil and the Majnoon oil field in the south targeted; production from Iraq’s southern fields, already hampered by aging infrastructure, has fallen by thirty percent. Pipelines crossing the region—particularly the Iraq-Turkey line and intra-Gulf feeders—have been severed in multiple places, creating bottlenecks that compound terminal damage.

The Strait of Hormuz itself, the narrow chokepoint through which almost all this infrastructure funnels product, is effectively closed. Mines, anti-ship missiles, and Iranian Revolutionary Guard speedboats have turned the waterway into a no-go zone. Insurance premiums for tankers have risen twentyfold; shipping firms refuse to transit without naval escorts that no coalition has yet provided at scale.

This is not a temporary inconvenience but a strategic strangulation that has halted the physical movement of oil and gas even from undamaged facilities. Secondary effects compound the primary destruction: ruptured storage tanks have spilled millions of barrels into Gulf waters, creating environmental disasters that will hinder future operations; power plants supplying the complexes have been forced into emergency shutdowns.

The total picture is one of almost systemic collapse. These facilities were not built for wartime resilience; they were engineered for peacetime efficiency. Their destruction severs not only current production but future investment. Global markets have never faced simultaneous damage across so many interdependent nodes in such a concentrated geography.

Repair Timelines in a Positive Scenario

Even in the most optimistic scenario, an immediate ceasefire, no further strikes, unlimited access to capital, and international cooperation, the repair timeline stretches into years, not months. Modern energy infrastructure is not modular Lego; it consists of precision-engineered components forged from exotic alloys, controlled by proprietary software, and assembled by cadres of highly specialized technicians who cannot be conjured overnight.

Consider the LNG trains at Ras Laffan. Each train incorporates massive cryogenic heat exchangers, turbo-expanders, and liquefaction units that operate at minus 162 degrees Celsius. Replacement parts for damaged compressors and cold boxes require foundries in Japan, Germany, or the United States that already operate at capacity. QatarEnergy’s internal assessment projects three to five years for full restoration of the seventeen percent lost capacity; the Pearl GTL plant, with its intricate Fischer-Tropsch reactors, could take longer because the catalyst beds and high-pressure vessels must be custom-fabricated and certified under international safety standards. Global supply chains for these items were already strained before the war by post-pandemic backlogs and sanctions on Russian and Chinese suppliers.

Saudi and UAE refineries, while less complex than LNG facilities, still face eighteen-to-twenty-four-month timelines for major repairs according to independent engineering assessments. Distillation columns warped by fire must be replaced; catalyst beds contaminated by debris must be regenerated or discarded; and electronic control systems damaged by power surges require complete rewiring. Historical parallels are instructive but sobering. After the 1991 Gulf War, Kuwait’s oil infrastructure, far simpler than today’s digitalized plants, took nearly two years to regain pre-war output despite massive international assistance.

The 2019 Abqaiq drone attack on Saudi facilities, which affected only a fraction of capacity and caused no structural fires, required four months of intensive work. This conflict’s damage is broader, deeper, and compounded by ongoing supply-chain chaos: steel prices have tripled, skilled welders and process engineers are in short supply worldwide, and insurance markets will demand exorbitant premiums before work even begins.

Pipelines and storage tanks present their own nightmares. A single ruptured forty-eight-inch crude line can take months to isolate, drain, and replace, especially when sections run through contested waters or minefields. Environmental cleanup of oil spills in the shallow Gulf waters will delay dredging and reconstruction. In a positive scenario, simpler oil-production facilities might see partial restarts within three to six months, but gas-processing plants would achieve only fifty percent recovery within eighteen months. Full pre-war export capacity through the Strait of Hormuz and damaged LNG infrastructure would not return until 2029 or 2031 at the earliest. Every month of delay compounds opportunity costs measured in hundreds of billions of dollars. Sovereign wealth funds from the Gulf may finance the work, but the physical and human constraints cannot be wished away. The war has exposed the illusion that energy infrastructure is infinitely resilient; repair timelines now dictate the pace of global economic recovery.

Current Economic Fallout

The economic consequences are already visible in every price ticker and policy announcement. Crude-oil benchmarks have surged past $110 per barrel in spot trading, with forward curves in backwardation signaling acute near-term scarcity. European natural-gas prices at the TTF hub jumped forty-five percent in a single week, the largest one-day move since the 2022 energy crisis. Refined products have followed: gasoline and diesel contracts in Singapore and Rotterdam have risen thirty to fifty percent, while jet-fuel cracks have widened dramatically. This all translates directly into higher costs for transportation, manufacturing, agriculture, and heating.

Stock markets have reacted with a predictable correction, a real panic, like happened during the Covid-crash, but it still didn’t materialise. Global equities lost more than ten trillion dollars in market capitalization within the first ten trading days. Energy stocks have soared while airlines, chemicals, and consumer discretionary names have collapsed.

Inflation expectations, as measured by five-year break-evens, have climbed sharply in every major economy. Central banks face an impossible trilemma: hike rates to fight energy-driven inflation and risk recession, or ease and accept entrenched price rises. Emerging markets with large current-account deficits are already seeing capital flight and currency depreciations that echo the 1997 Asian crisis, but on a larger scale.

The true cost extends far beyond headline commodity prices. Petrochemical feedstocks, naphtha, ethane, and propane are tightening rapidly, threatening the production of plastics, fertilizers, synthetic fibers, and pharmaceuticals. Global supply chains for semiconductors, automobiles, and construction materials are rerouting around higher freight rates caused by longer voyages around Africa or through the Cape of Good Hope. Food prices, already elevated, will climb further as fertilizer shortages bite into the 2026-27 planting season. In developing nations, fuel rationing has already triggered protests and political instability; in developed economies, four-day workweeks and school closures are becoming normalized responses to power shortages.

The financial system itself is already under strain. Sovereign-debt yields in import-dependent nations have spiked as investors price in slower growth and higher deficits. The dollar’s safe-haven status is under pressure because the United States, though relatively insulated, still imports refined products and faces political backlash over gasoline prices. The war has accelerated de-dollarization trends: bilateral trade deals in yuan, rupees, and riyals are being discussed openly. In short, the energy shock is not merely an inflationary event; it is a structural stress test for the post-1971 fiat regime I have long argued was unsustainable without cheap energy. The Petro Dollar Deal, in effect since 1974, and the anchor holding the current dollar system is under serious attack. Now, the Gulf States will reconsider their alliance with the US and Israel.

Top 10 Most Negatively Affected Countries

The countries suffering most are those with the highest dependence on Gulf imports, the least domestic production, and the weakest fiscal buffers. Here is the ranking, with detailed consequences for each.

1- Japan imports ninety-five percent of its oil and a substantial share of LNG from the Gulf. Strategic reserves are being drawn at record rates, but industrial giants like Toyota and Sony have already announced production cuts. A weakening yen is compounding imported inflation.

2- South Korea, similarly dependent, faces factory slowdowns across its export-oriented chaebols. Shipbuilding and petrochemical plants have declared force majeure; the government is preparing worst-case scenarios that include mandatory energy-saving measures and potential GDP contraction of four percent this year.

3- India relies on the Gulf for ninety percent of its crude and sixty percent of its LPG. Four-day workweeks for government offices, school closures, and fuel rationing have been implemented nationwide. Diesel shortages threaten the agricultural sector during harvest season; inflation is approaching double digits, and the rupee is under heavy pressure.

4- Pakistan has seen acute LNG and oil shortages. Textile exports, the country’s lifeline, have plummeted; food riots have broken out in Karachi and Lahore. The IMF program is in jeopardy as fiscal deficits balloon.

5- The Philippines declared a national energy emergency within days of the Hormuz closure. Fuel prices at pumps have doubled; protests in Manila have turned violent. Manufacturing and tourism, both energy-intensive, are contracting sharply.

6- Bangladesh faces threats to its garment sector from power cuts and higher transport costs. Rolling blackouts have closed universities and forced millions into darkness; rice prices are surging, and the taka has depreciated by twenty percent against the dollar.

7- Thailand has imposed office-temperature mandates at twenty-seven degrees Celsius, car-pooling requirements, and television campaigns urging air-conditioner reductions. Tourism recovery has stalled as jet-fuel costs deter long-haul visitors.

8- China, despite its size and domestic coal, remains a massive net importer. Fuel-price caps and strategic-reserve releases have bought time, but domestic inflation risks are rising, and factories in Guangdong and Zhejiang are operating below capacity. The property sector, already fragile, faces higher construction costs.

9- Vietnam and Myanmar have introduced odd-even vehicle rationing and factory slowdowns. Textile and electronics assembly lines have reduced shifts; export earnings are falling while import bills soar.

10- The European Union, especially Germany, Italy, and the United Kingdom, is grappling with the loss of Qatari LNG at a time when Russian pipeline gas remains curtailed. Storage levels are dangerously low; coal and nuclear restarts are being debated urgently. Industrial giants like BASF and Volkswagen have warned of permanent plant closures if shortages persist into winter.

Gulf producers themselves are internally strained, but their sovereign wealth funds provide buffers unavailable to pure importers. The global south bears the highest human cost.

Australia, though not appearing in the strict volume-based ranking above, stands out as a particularly vulnerable developed economy in this crisis. Despite being one of the world’s largest LNG and coal exporters from its own fields in Queensland and Western Australia, the country imports 80-90 percent of its refined petroleum products, gasoline, diesel, and jet fuel. Domestic refining capacity is now minimal after successive closures, leaving Australia heavily reliant on imports routed through already-strained Asian hubs such as Singapore and South Korea.

Strategic fuel reserves cover only 30-38 days of consumption, well below the International Energy Agency’s 90-day standard, and the government has already begun emergency drawdowns. Local shortages have appeared within days of the Hormuz closure: service stations in Sydney, Melbourne, and Perth have reported dry pumps, panic buying, and temporary rationing. Airlines have cut domestic routes, and logistics firms are warning of delivery delays. For a nation whose economy depends on long-haul transport and mining, these carbon-product shortages are not abstract; they are immediate and painful, underscoring how even resource-rich nations can be crippled when global refined-product chains snap.

Predicted Shortages in Carbon-Related Energy Products

Shortages will manifest across multiple categories. Crude oil supply has lost an estimated eleven million barrels per day initially, which is almost 10% of the world’s daily production. Gasoline and diesel could probably be rationed in Asia and parts of Europe by the second quarter of 2026; jet fuel scarcity might ground flights and raise freight costs dramatically. Bunker fuel for shipping will push global trade costs higher, accelerating inflation in imported goods. Even in Australia, refined-product shortfalls are already biting.

LNG and pipeline natural gas face a structural deficit of roughly twenty percent of seaborne supply. Europe and Asia will compete fiercely for the remaining cargoes from the United States and Australia; poorer nations will be priced out entirely. Winter 2026-27 could see widespread blackouts in gas-dependent power grids.

Petrochemicals and derivatives, ethylene, propylene, aromatics, and ammonia, are already tightening. Plastics production for packaging and consumer goods will contract; fertilizer output, heavily dependent on natural gas, will fall, threatening food security in 2027. Secondary by-products such as helium for medical imaging and electronics, and sulfur for fertilizers and batteries, will also face constraints.

Overall, expect ten to twenty percent global energy-price inflation to persist into 2027 even under optimistic repair scenarios. These shortages could be the new baseline until physical infrastructure is rebuilt.

Three scenarios on energy shortages

The duration and intensity of the Iran Energy War will ultimately dictate the severity, duration, and geographic spread of shortages in crude oil, refined petroleum products, LNG, natural gas, and downstream carbon-based materials such as petrochemicals and fertilizers.

The Good Scenario: War Over Soon

A ceasefire is achieved within four to six weeks, perhaps brokered by China and mediated through back-channel diplomacy. The Strait of Hormuz reopens quickly under international naval guarantees. Partial repairs begin immediately with emergency funding from Gulf sovereign wealth funds and international institutions. Oil supply could recover sixty to seventy percent within six months, although full restoration of damaged LNG capacity in Qatar will still take three to five years. Energy shortages would peak during the northern-hemisphere summer of 2026 but ease noticeably by early 2027. Rationing of gasoline, diesel, and jet fuel would be temporary. LNG and natural gas shortages would moderate as alternative supplies from the US and Australia fill part of the gap. Global recession remains mild, with GDP drag of one to two percent.

The Neutral Scenario: Conflict Drags On

Sporadic fighting and tit-for-tat strikes continue through the remainder of 2026 and possibly into 2027. Insurance markets continue to price in high risk, slowing repairs significantly. Oil output stabilizes at thirty to forty percent below pre-war levels for twelve to eighteen months, while the LNG shortfall persists for four years or longer. Energy shortages become semi-permanent features across Asia and Europe, with ongoing fuel rationing, frequent power cuts, and suppressed industrial activity. Petrochemical and fertilizer shortages drive food prices higher throughout 2027 and beyond. Inflation is entrenched at six to eight percent across major economies as energy costs remain elevated.

Bad Scenario: War Takes Years

Prolonged attrition warfare stretches well into 2028 and beyond. Repeated strikes and infrastructure degradation turn partial recoveries into repeated setbacks. Global oil supply settles into a structural loss of fifteen to twenty percent, while LNG markets face a multi-year deficit until new projects in the United States, Australia, and elsewhere can ramp up (earliest 2028–2030). Energy shortages evolve into chronic scarcity: rolling blackouts, permanent industrial contraction, severe diesel and gasoline shortages, and acute food crises become commonplace in import-dependent regions. Global GDP could contract three to five percent annually for multiple years. In this worst-case path, energy shortages act as the ultimate trigger for the full-scale Reset.

The Mounting Financial Risks: Corrections, Contagion, and Comparisons to the Covid Crash

What elevates this crisis beyond a mere energy shock is the accelerating risk of a full-blown financial-market correction and a developing crisis rooted in private debt and equity markets. The energy-price surge has already triggered margin calls across leveraged commodity traders, hedge funds, and corporate balance sheets heavily exposed to floating-rate debt. As borrowing costs spike and cash flows from energy-intensive industries evaporate, defaults are rising sharply in shipping, aviation, petrochemical manufacturing, and commercial real estate. Equity markets, still carrying sky-high valuations from the post-2022 AI bubble, face a brutal de-rating as earnings forecasts are slashed. The combination is combustible: falling asset prices erode collateral values, forcing banks to tighten lending and triggering forced sales that amplify the downturn.

Contagion risks are multiplying. European banks, already burdened by legacy energy exposures from the 2022 Russia shock, hold large portfolios of Gulf-related project finance that now look impaired. Asian sovereign wealth funds and pension schemes, heavy investors in both equities and Gulf infrastructure bonds, are seeing simultaneous losses. Derivatives markets, particularly those tied to oil futures and currency swaps, are experiencing unprecedented volatility, with clearing houses demanding ever-higher margins that drain liquidity from the system. A single major default in the private-debt space could cascade through credit-default swaps, echoing the 2008 Lehman moment but with far less central-bank ammunition left to deploy.

The uncertainty feels eerily familiar to the early days of the Covid crash in March 2020, yet it is arguably more dangerous. The downside risks for stock markets are real. Back then, markets faced a sudden but temporary demand shock; governments and central banks responded with unprecedented fiscal and monetary bazookas that papered over the cracks. Today, the shock is a permanent supply-side rupture with no quick fiscal fix available. Supply chains are physically severed. Central banks are already fighting entrenched inflation and cannot credibly promise unlimited QE without risking a currency crisis.

The psychological dimension is worse: in 2020, investors believed the damage was containable once vaccines arrived; today, there is no vaccine for destroyed refineries or a closed Strait of Hormuz. Volatility indices are climbing faster than in the Covid onset, credit spreads are widening across high-yield sectors, and safe-haven flows into gold and Treasuries are being tempered by fears of sovereign-debt sustainability. If the neutral or bad scenarios materialize, we could see at least a 30-40 percent further correction in global equities, a wave of corporate bankruptcies, and a liquidity crunch that forces emergency interventions reminiscent of 2008, but this time against the backdrop of sovereign balance sheets already stretched to breaking point.

Accelerating The Big Reset: Energy Scarcity as the Ultimate Catalyst

This energy war does not merely hasten the financial reckoning I outlined in The Big Reset; it makes it unavoidable and accelerates its timetable by years. For decades, the post-1971 fiat system has survived on two hidden subsidies: endless cheap energy and the willingness of foreign central banks to hold dollar-denominated debt. With oil and gas structurally more expensive and physical shortages baked into the global system for the foreseeable future, governments worldwide will face exploding fiscal deficits as they subsidize fuel, bail out industries, and support unemployed workers. Central banks will have no choice but to monetize these deficits on a scale that dwarfs anything seen during the Covid response. The result will be a rapid erosion of fiat purchasing power—precisely the kind of controlled (or uncontrolled) inflation that forces a monetary reset.

After the Global Boom, we might now experience a Global Bust, leading to much more money printing ahead.

Gold, commodities, and tangible assets like real estate might become the only reliable stores of value. Private debt markets, already cracking under higher interest rates and lower cash flows, will see cascading defaults that overwhelm even the most creative central-bank interventions. Governments will be forced to restructure sovereign debts, impose capital controls, or introduce new forms of digital money backed by energy or hard assets. The war has turned what was once a theoretical warning into an unfolding reality: energy scarcity is the master variable that ends the era of easy money.

The Geopolitical Shift to a Multi-Polar World

This new Energy War marks the decisive acceleration toward a genuinely multi-polar world order. For over eighty years, the United States has derived its global primacy from its role as guarantor of Middle East energy flows, the dollar’s status as the petrodollar, and its unchallenged naval dominance over the Strait of Hormuz. That architecture is now in jeopardy. The US-led strikes have failed to deliver a quick victory and have instead exposed the limits of American power projection in an era of cheap drones and asymmetric warfare. Gulf monarchies that once looked to Washington for protection are now quietly hedging their bets, opening new lines of credit with Beijing and Moscow. The petrodollar system, already fraying, is fracturing further as oil is increasingly settled in yuan, rupees, and even gold-backed instruments. Global trade routes are being rerouted away from vulnerable chokepoints, accelerating the fragmentation of supply chains into regional blocs. The war has not strengthened American leverage; it has shattered it, proving that military superiority cannot overcome the physics of concentrated energy infrastructure.

America’s Strategic Retreat and China’s Bloodless Victory

Perhaps the most striking unintended consequence is the silent ascent of China. Beijing has not fired a single shot or lost a single soldier, yet it emerges as the clear strategic winner. China’s massive strategic petroleum reserves, long-term contracts with Russian and Iranian suppliers, and control over critical mineral processing give it a buffer that the West can only envy. While the United States and Europe grapple with rationing and inflation, China is quietly negotiating discounted long-term energy deals across the Global South and expanding its Belt and Road Initiative into energy-scarce regions. Delivery of oil products can make or break relations now.

The renminbi’s role in energy trade is expanding rapidly; BRICS nations are accelerating de-dollarization experiments that once seemed marginal. In a multi-polar world, influence flows to the nation best positioned to secure and allocate scarce resources. China has achieved this without direct involvement or even firing a shot, demonstrating that economic realism and patience can outperform military adventurism. The United States, by contrast, finds itself overextended, its Middle East leverage evaporated, and its financial system exposed as never before. Imperial overstretched has never been so clear.

In every scenario, the unintended lesson is identical: the world’s dependence on a handful of Gulf facilities was never sustainable. The Iran Energy War has not merely disrupted supply; it has exposed the hubris of assuming infinite growth on finite, concentrated carbon resources.

As I warned across my books, energy is the master variable. Markets, governments, and citizens ignore it at their peril. The repair bills will be paid not only in higher prices and lost output but ultimately in reordered global power structures, a full-spectrum monetary reset, and a multi-polar order in which America’s unipolar moment ends not with a bang but with the quiet, relentless rise of China.

The age of easy energy and easy money is almost over. What comes next might test every assumption of the post-war economic order.

(Grok assisted writing, prompting and editing by Willem Middelkoop)