By Charles Kennedy of OilPrice.com

The Texas General Land Office (GLO) has formally objected to a plan by Pilot Water Solutions LLC to drill three new saltwater disposal wells in the Permian Basin, warning the project could contaminate state-owned crude reserves in North America’s top oil field, according to the Dallas Morning News.

Founded in 1836, the GLO manages 13 million acres of state land and generates billions of dollars for Texas public schools through oil and gas leasing.

It argues the proposed disposal sites in Loving County near the New Mexico border pose “significant risk” to mineral interests under its control. 

Bloomberg reports that ConocoPhillips, one of the Permian’s largest producers, has joined the opposition, noting that in the area near the proposed wells it is producing less than 40% of expected oil volumes while generating nearly twice the forecast water output.

For every barrel of oil pumped in the Permian, as many as five barrels of wastewater are produced, presenting a growing operational and environmental challenge.

Reuters notes that disposal capacity is under mounting strain, with costs climbing and injection-related earthquakes drawing regulatory scrutiny.

The Railroad Commission of Texas will hold a hearing later this month to assess the Pilot Water Solutions proposal.

State officials are weighing contamination risks alongside concerns about induced seismicity linked to high-volume wastewater injection.

Environmental groups and local ranchers have long warned about the hazards of underground wastewater disposal, but record Permian output has made the problem more acute.

The GLO’s opposition is the first real indication we are seeing that water management is no longer just a peripheral environmental issue, but is now a direct threat to oil production economics in the nation’s most prolific basin.

Spot Ether exchange-traded funds (ETFs) recorded their biggest day of net inflows ever on Monday, with flows across all funds totalling $1.01 billion.

The development came as many key indicators had turned bullish and Ether gained 45% in the past 30 days, dramatically outperforming bitcoin.

Inflows into Ether ETFs far exceeded those of their Bitcoin counterparts, which saw a net inflow of $178 million on Monday, according to Farside Investors.

CoinTelegraph’s Tarang Khaitan reports that for the Ether funds, BlackRock’s iShares Ethereum Trust ETF (ETHA) attracted the lion’s share of flows, with a record $640 million going into the fund.

The Fidelity Ethereum Fund (FETH) was the runner-up and also recorded its largest single-day inflow, taking in $277 million.

Net inflows into spot Ether ETFs exceeded $1 billion on Monday.

NovaDius president Nate Geraci said on X that Ether ETFs were previously underestimated as institutional investors did not understand Ethereum.

“Feel like spot eth ETFs were severely underestimated simply [because] tradfi investors didn’t understand eth,” Geraci said.

He added that institutional investors are now resonating with ETH, as it is being touted as the “backbone of future financial markets.”

Bullish indicators for Ethereum

The record inflows come as key indicators have turned bullish for ETH, which has surged 45% in the past 30 days, according to CoinGecko.

Ether held on exchanges hit a nine-year low on Thursday, dropping to 15.28 million ETH, its lowest level since November 2016, according to data from Glassnode.

Investors taking their crypto assets out of exchanges is typically considered a bullish signal, meaning they could be moving them for long-term storage.

In a Monday X post, onchain data platform Token Terminal noted that Ethereum remained the dominant chain for tokenized assets, as the blockchain accounted for about 58% of all tokenized assets across all chains.

The company also said that assets staked on the Ethereum network surpassed the $150 billion milestone for the first time.

Ethereum topped $4400 for the first time since Dec 2021…

Ether ETFs, treasuries keep on stacking

Crypto influencer Anthony Sassano posted that Ether ETFs have bought over 50% of the ETH issued since the Merge in late 2022.

The blockchain has issued over 451,000 ETH since its switch to proof-of-stake, while net inflows into the ETFs on Monday bought up 238,000 ETH, Sassano said.

“In a *single day*, the ETH ETFs bought over 50% all the net issued ETH since The Merge,” he said.

Corporate holders of Ether witnessed their assets under management swell to $13 billion on Monday due to the price increase of ETH.

Ethereum observers urge caution

The recent price rally has seen an uptick in short-term traders booking profits, suggesting short-term traders may be expecting ETH to pull back

Ethereum co-founder Vitalik Buterin warned on Thursday that the recent trend of corporations buying ETH for their treasuries could turn into a dangerous “overleveraged game.”

Update (1020ET): President Trump rage-posted about the lack of inflation amid all the tariff-fearmongering…

“Trillions of Dollars are being taken in on Tariffs, which has been incredible for our Country, its Stock Market, its General Wealth, and just about everything else.

It has been proven, that even at this late stage, Tariffs have not caused Inflation, or any other problems for Country, other than massive amounts of CASH pouring into our Treasury’s coffers.

Also, it has been shown that, for the most part, Consumers aren’t even paying these Tariffs, it is mostly Companies and Governments, many of them Foreign, picking up the tabs. “

Then took direct aim at Goldman Sachs:

“But David Solomon and Goldman Sachs refuse to give credit where credit is due.

They made a bad prediction a long time ago on both the Market repercussion and the Tariffs themselves, and they were wrong, just like they are wrong about so much else.

I think that David should go out and get himself a new Economist or, maybe, he ought to just focus on being a DJ, and not bother running a major Financial Institution.”

Ouch!

Meanwhile, just between us girls, Goldman has been somewhat more in the ‘one-time, marginal’ incremental impact of tariffs (as opposed to the UMich terror tantrum), with one of their latest notes highlighting the ““Sharp Declines” In Import Prices As Foreigners Absorb Trump’s Tariffs,” even though Jan Hatzius did claim that US firms are eating up to two-thirds of the increased tariff costs most recently (even though that was not evident in the earnings data this season).

well would you look at that: three days later Powell has to discuss this chart https://t.co/6AfkRRSjJp pic.twitter.com/SOGjff2Fsl

— zerohedge (@zerohedge) June 25, 2025

*  *  *

With a new boss looming at The BLS, one wonders what the ‘old boss’ has in hand for today’s CPI data (with consensus seeing both headline and core YoY price changes ticking higher) after June’s consumer prices came in cooler than expected, disappointing the Trump Tariff Tantrum crowd. Will this time be different… Will the dreaded tariff-flation show up this time?

Headline CPI rose 0.2% MoM in July (as expected) and +2.7% YoY (cooler than the 2.8% expected) and in line with the June print…

Source: Bloomberg

Headline CPI rose 0.2%, after rising 0.3% in June. CPI Core rose 0.3% in July, following a 0.2% increase in June.

• Indexes that increased over the month include medical care, airline fares, recreation, household furnishings and operations, and used cars and trucks.

• The indexes for lodging away from home and communication were among the few major indexes that decreased in July.

Core CPI rose 0.3% MoM (as expected) but YoY rose 3.1% (hotter than the 3.0% expected) – the highest since February…

Source: Bloomberg

Under the hood, Fuel Oil and Transportation costs rose the most but Gasoline and Food at Home costs fell MoM…

Core CPI MoM Details:

• The shelter index increased 0.2 percent over the month.

  • The index for owners’ equivalent rent rose 0.3 percent in July as did the index for rent.

  • Conversely, the lodging away from home index fell 1.0 percent in July.

• The medical care index increased 0.7 percent over the month, following a 0.5-percent increase in June.

  • The index for dental services increased 2.6 percent in July and the index for hospital and related services increased 0.4 percent.

  • The physicians’ services index rose 0.2 percent over the month, while the prescription drugs index fell 0.2 percent.

• The index for airline fares increased 4.0 percent over the month, after declining 0.1 percent in June.

• The recreation index increased 0.4 percent over the month, as did the household furnishings and operations index.

• The index for used cars and trucks rose 0.5 percent in July and the index for personal care rose 0.4 percent.

• The new vehicles index was unchanged over the month while the communication index fell 0.3 percent.

Annual changes:

• The shelter index increased 3.7 percent over the last year. Other indexes with notable increases over the last year include medical care (+3.5 percent), household furnishings and operations (+3.4 percent), motor vehicle insurance (+5.3 percent), and recreation (+2.4 percent).

Goods inflation is accelerating (some will argue ‘tariffs’, some will argue fuel) while Services inflation has stabilized…

Source: Bloomberg

The latest inflation report continues to show no negative impact from tariffs. Core goods prices were up 0.2% in July. They are up just 1.1% over the past 12 months and are actually up a lesser 0.8% since President Trump began phasing in tariffs.

— Joseph Lavorgna (@Lavorgnanomics) August 12, 2025

There is one problem in the data… SuperCore CPI (Services ex-Shelter) rose 0.55% MoM (hottest since January) and up 3.59% YoY (hottest since February)…

Source: Bloomberg

The jump in Transportation costs and Medical Care Services stood out for SuperCore (neither seem like they are affected in any way by tariffs)…

3m and 6m annualized CPI is also refusing to bow to the terror predicted by Trump tariff haters…

So, not exactly the screaming spike in prices that Democrats interviewed by UMich have hallucinated about?

Tiffany Wilding, Pimco economist, tells Bloomberg TV that tariff-related pressures are contained within certain areas of the report:

“It’s very concentrated within goods, it’s happening slowly, and outside of that, inflationary pressures look very manageable. So I think for a Federal Reserve, that is a very good sign.” 

Art Hogan, B. Riley Wealth chief market strategist, weighs in:

“Core goods are the real driver of the move up in the index, while being somewhat offset by energy and shelter cost. The report will likely not change the path forward for the Fed, as we expect to see rate cuts at the next three meetings.” 

Rate-cut expectations rose after the CPI print with September now trading at 95%…

But there is a silver lining…

The new BLS commissioner will not be fired today

— zerohedge (@zerohedge) August 12, 2025

So, Airfares, Dental Care, Auto Insurance, Medical Care, and Rent were among the biggest drivers of upside in CPI… NONE of which have ANYTHING to do with tariffs (even if you squint)

And tariff-related items such as New Cars, Apparel, and Toys barely budged.

And cue the “just wait until next month” arguments!!…

Liesman: “I don’t want to rain on the market’s parade here”

Kernen: “You do”

— zerohedge (@zerohedge) August 12, 2025

The yield curve is steepening, with 10-year yields spiking from the CPI aftermath (where focus has turned to the red hot Supercore inflation print) and hitting session highs after Trump took to Truth Social to slam Jerome Powell again, just two weeks after the two of them appeared to have patched things up.

Powell upgraded from numbskull

*TRUMP SAYS POWELL IS A ‘VERY GOOD MAN’: POOL https://t.co/Q91jQozFS3

— zerohedge (@zerohedge) July 25, 2025

After several days without any direct attack on Powell, Trump resumed the onslaught and said he’s considering allowing a lawsuit against the Fed chair related to the building work at the central bank’s buildings.

As Bloomberg notes, the jump in yields might serve as a reminder of what we have learnt over and over again in Latin America – when the executive tries to press for lower rates, borrowing costs tend to go up rather than down.

Trump aside, the rates market took a relief straight after the US CPI release as tariffs pass-through to goods prices looked light. However, the 32bp m/m core CPI in July was still the hottest since January while the Supercore CPI print was especially jarring.

One problem: supercore surging pic.twitter.com/7xZPblqGiZ

— zerohedge (@zerohedge) August 12, 2025

Also, UBS notes that the July PCE number is likely to be a hot one as medical care services printed 79bp m/m. PCE places 20% weights on medical care while CPI only puts 6% weights. Ultimately, the Fed targets PCE not CPI.

Shares of Sinclair, one of the largest U.S. broadcast station owners, jumped the most in over a year in premarket trading after the company announced a “strategic review of its broadcast business” aimed at “optimizing value creation across its portfolio.” 

The broadcaster, based in Hunt Valley, Maryland –  just north of the Baltimore metro area – owns 178 stations across 81 U.S. markets. The company announced it will evaluate “all value-enhancing opportunities, including acquisitions, strategic partnerships, and business combinations, with potential partners in the broadcast and the broader media and technology ecosystem.” 

“Scale wins in today’s broadcast industry, and we intend to lead that consolidation,” CEO Chris Ripley wrote in a statement, adding, “Our Broadcast business’s industry-leading performance positions us as the partner of choice for value creation. Simultaneously, we expect separating Ventures will crystallize significant value that the market has overlooked within our current structure, giving us even more flexibility to drive our broadcast strategy forward.”

Sinclair is also considering spinning off its other ventures, which include the Tennis Channel and a digital advertising agency. The unit holds cash, private equity stakes in various businesses, and real estate valued at $726 million.

Shares jumped 24.5% in premarket trading, and if gains hold into the cash session, it would mark one of the largest daily increases since Nov. 2, 2023, when shares rose 34%. 

Year to date, the stock has stumbled, down 22% as of Monday’s close.

The review follows solid financial performance, including year-over-year ad revenue growth, though no transaction is guaranteed.

Meanwhile, consumer behavior via UBS data points to continued shifts from traditional cable and satellite TV to streaming. This trend has been well underway for 15 years. 

“Streaming surpasses traditional TV in May,” analyst John Hodulik told clients last month. 

CEO Ripley understands the fate of traditional TV ahead of the 2030s … 

Authored by Naveen Athrappully via The Epoch Times,

The average 30-year fixed-rate mortgage fell to 6.63 percent for the week ending Aug. 7, the lowest level since April, according to new data from Freddie Mac.

“The decline in rates increases prospective homebuyers’ purchasing power and our research shows that buyers can save thousands by getting quotes from a few different lenders,” Sam Khater, Freddie Mac’s chief economist, said in an Aug. 7 statement.

In an Aug. 7 commentary, Lisa Sturtevant, chief economist at real estate data company Bright MLS, said that while mortgage rates dropped for the third straight week, it isn’t clear whether the trend will continue.

Rates could fall if the economy seems to be on a decline, or may remain high if inflation risks are elevated, she added.

Sturtevant said buyers were also holding back from purchasing homes due to factors such as general uncertainty. Meanwhile, sellers are holding back as they don’t think they’ll get their desired price in the current market, said the chief economist.

“There will be a lot of data coming out in the weeks ahead that could help us get a better handle on where mortgage rates will trend as we head into fall. But it’s very likely that a lot of the data will send conflicting signals,” Sturtevant said.

“The best thing a prospective home buyer can do is to be sure they have their financial ducks in a row and work with a trustworthy and knowledgeable real estate professional so they can be prepared to act if and when rates drop further.”

A cooldown in home price growth and supplies outstripping demand are also contributing toward favorable conditions for buyers, real estate brokerage Redfin said in an Aug. 7 statement.

A person with a monthly housing budget of $3,000 can now afford a higher-priced home due to the lower mortgage rates.

Many sellers are willing to renegotiate prices, with some accepting bids under the asking price or providing freebies to close the deal, according to the brokerage.

“Serious homebuyers should consider taking this window of opportunity to act fast and lock in a mortgage rate,” said Chen Zhao, Redfin’s head of economics research.

“Last week’s soft jobs report ups the chances of the Fed cutting interest rates in September. The market’s anticipation of that cut has already pushed mortgage rates down, and there’s no guarantee they’ll fall further. There’s a chance mortgage rates could fluctuate when more economic data is released in the coming weeks.”

Fed Rates, Affordability

In its recent July meeting, the Federal Reserve kept its benchmark interest rate unchanged for the fifth straight time in a range of 4.25-4.5 percent.

The Fed rate is a major influence on mortgage rates. The longer the Fed keeps its benchmark rates higher, the more difficult it typically would be for mortgage rates to come down.

Federal Reserve Bank Chairman Jerome Powell told reporters that the agency has adopted a wait-and-see approach.

“Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen,” he said.

At the policy meeting, Fed Board of Governors member Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman dissented on keeping rates stable and advocated for rate cuts.

Bowman echoed the sentiment recently after Bureau of Labor Statistics data showed that July added a smaller-than-expected 73,000 new jobs. The unemployment rate rose to 4.2 percent, and the agency revised previous data to show job gains had slowed significantly over the past three months.

During an Aug. 9 speech at the Kansas Bankers Association, Bowman said that there may be a “significant softening in labor demand.”

“My Summary of Economic Projections includes three cuts for this year, which has been consistent with my forecast since last December, and the latest labor market data reinforce my view,” she added.

The Fed has three more policy meetings this year. If the central bank were to cut the benchmark rates in any significant manner, mortgage rates could drop further.

According to an Aug. 6 Redfin statement, the income needed to afford a median-priced home has decreased in 11 of the 50 most populous American metro areas, with the company attributing the better affordability to a decline in home prices.

Oakland, California, saw the largest dip, with required income falling 4.6 percent year-over-year. This was followed by West Palm Beach, Florida; Jacksonville, Florida; San Diego, California; and Tampa, Florida.

“We’ve been in a buyer’s market for the past eight months. If your home isn’t in 10/10 condition and priced at or below market value, it’s going to linger on the market,” said Katie Shook, a Redfin Premier real estate agent in Phoenix.

Elon Musk threatened Apple with “immediate legal action” over what he claims is the Big Tech firm, led by Tim Cook, giving preferential treatment to OpenAI in its App Store popularity rankings. 

“Apple is behaving in a manner that makes it impossible for any AI company besides OpenAI to reach #1 in the App Store, which is an unequivocal antitrust violation,” Musk wrote on X, adding, “xAI will take immediate legal action.” 

Apple is behaving in a manner that makes it impossible for any AI company besides OpenAI to reach #1 in the App Store, which is an unequivocal antitrust violation.

xAI will take immediate legal action.

— Elon Musk (@elonmusk) August 12, 2025

“Why do you refuse to put either X or Grok in your ‘Must Have’ section when X is the #1 news app in the world and Grok is #5 among all apps? Are you playing politics?” Musk wrote in a separate post.

Hey @Apple App Store, why do you refuse to put either 𝕏 or Grok in your “Must Have” section when 𝕏 is the #1 news app in the world and Grok is #5 among all apps?

Are you playing politics? What gives? Inquiring minds want to know. https://t.co/3wenLZGtwG

— Elon Musk (@elonmusk) August 11, 2025

Anti-trust behavior by Apple! https://t.co/MwEuWwkQPW

— Elon Musk (@elonmusk) August 12, 2025

Currently, xAI’s Grok artificial intelligence bot sits No. 6 in the App Store, with OpenAI’s ChatGPT holding the No. 1 spot. Sensor Tower data shows ChatGPT ranks at the top on the Google Play Store. 

The remarks come amid Apple’s AI partnership with OpenAI and Musk’s long-standing feud with CEO Sam Altman, dating back to their split as OpenAI co-founders.

In April, U.S. District Judge Yvonne Gonzalez Rogers in Oakland found that Apple violated a court order mandating competition in its App Store, and referred the company to federal prosecutors for a criminal probe. The antitrust lawsuit was first filed by Epic Games.

And the feud continues…

it was getting boring out there https://t.co/0OYcC69YTP

— zerohedge (@zerohedge) August 12, 2025

. . .  

Authored by Philip Leith via DailySceptic.org,

I was recently travelling in the UK and, after a lot of sightseeing on foot, decided to order a taxi to go back to my hotel.

I searched the internet for a local taxi firm and found one with relative ease. I called the number and went through an automated process which worked well. I managed to book a taxi quickly. The computer-generated voice told me that my taxi was on its way. I was sent a link so that I could monitor the progress of my taxi. The message also said that I would know the taxi driver’s name and the type of vehicle and registration number that was on its way.

When I clicked on the link I was forwarded to this:

I can’t understand why anyone would consider a link to show you the progress of a taxi that you have ordered to be age-inappropriate content.

I can only assume that it is to do with the recent Online Safety Act, although coincidentally I had recently changed mobile providers, so it might purely have been that the mobile provider that I’d switched to had a different standard as to what was considered adult content.

I doubt this on the basis that the company I moved to, Talkmobile, is a wholly owned subsidiary of the company I had used previously, Vodafone, and, as you can see, the block was from Vodafone.

Whoever has decided that this link contains age-restricted content hasn’t necessarily thought this through.

Consider the scenario where a 17 year-old girl can’t get hold of her parents and it’s too far away or she does not want to walk home, so she orders a taxi through a reputable taxi service.

A link is sent to her so she can see the progress of the taxi that she has ordered.

Of course, she can’t open it because it’s considered age-inappropriate and, being only 17, she’s not in a position to prove that she’s over 18 and thus get the link to the taxi.

Thankfully it’s rare, but we do know that there are predators out there who will look for people who are vulnerable, and it’s not difficult to spot someone who’s waiting for somebody to pick them up or waiting for a taxi, because every time a car approaches the person will look up from whatever they’re doing to see if it’s the car that’s picking them up.

All it would take would be for a predator to be around at that time, pull the window down and say, “Did you call for a taxi?” and, of course, because she’s just ordered one, she believes this is her taxi, so she gets in, perhaps never to be seen again — all because some moron has decided that a link to follow the progress of a taxi is something you’re not allowed to see if you’re under the age of 18.

How many other innocuous things have been blocked because of this Online Safety Act, and by doing so, are children really any safer?

There’s some interesting and vital data which was released last week, just ahead of this coming Friday’s historic Trump-Putin summit in Alaska, which will focuse on finding a solution to ending the Russia-Ukraine war, though the US leader has just tempered expectations by calling it a “feel-out meeting”.

Gallup released a poll last Thursday which demonstrates a dramatic shift in Ukrainian public opinion, with 69% of the population now favoring a negotiated settlement to end the grinding war as soon as possible.

General war weariness has long been a feature of the conflict, which has been raging for over 540 days at this point, and has taken at least tens of thousands or possibly hundreds of thousands of lives. Many Ukrainians fled abroad during the first year, and huge amounts of people are still internally displaced in the war-ravaged country.

The fresh Gallup poll found that just 24% support continuing the fight until achieving a military victory, which is a stark reversal from views held at the start of the war more than three years ago.

And yet this undefined goal of ‘pushing on until victory’ seems to remain the Zelensky government’s policy. The Ukrainian leader has shown no signs whatsoever of being willing to make significant compromise to find a lasting truce, including on territorial concessions.

There was a similar Gallup survey of the Ukrianian population closer to the beginnign war, in 2022. At that early point Gallup found that 72% of Ukrainians wanted to keep fighting, while just 22% supported peace talks.

But since then Russia’s strategy has become clear – to use its overwhelming manpower and artillery and missile supply to steadily grind down Ukraine’s dwindling manpower and resolve.

It has become a war of attrition, and Russia has shown itself steady and prepared for such a long conflict. And this is probably why the same survey found that Ukrainians’ hopes for swift admission into either the EU or NATO are fading.

The more evident it becomes that Russia is ‘winning’ the war – the less that the West’s political establishment wants to risk, also amid fears of potential run-up to direct confrontation between NATO and Moscow.

At the same time Ukrainians’ outlook on Washington has turned more negative:

In reviewing the findings, Gallup offers the following conclusion…

“Support for the war effort has declined steadily across all segments of the Ukrainian population, regardless of region or demographic group.”

It continued, “This shift comes as diplomatic efforts gain new traction. Ukrainian President Volodymyr Zelenskyy has signaled readiness for direct talks with Russian President Vladimir Putin…”. However, the reality remains is that neigher side has yet budged from their respective ‘maximalist’ conditions for truce.

By Jean Dalbard, Bloomberg Markets Live reporter and strategist

France continues to fall short on fiscal consolidation. Recent data from Insee suggest that the heavy reliance on direct transfers by certain social groups, particularly pensioners, combined with their growing electoral heft, may be a key constraint. These factors make it harder for the government to undertake significant fiscal adjustments without running the risk of political instability.

Based on these findings and given the proximity to local (1Q26) and presidential elections (2Q27), we continue to think there is a good chance the recently announced consolidation package of roughly €44 billion will target public services, rather than direct transfers. We can’t dismiss the chance of it being substantially watered down.

Social Groups Reliance on Public Transfers

Forces Hindering Fiscal Consolidation

France has historically struggled to reduce its fiscal deficit. One key reason: spending cuts tend to affect the groups with the most electoral influence. This was illustrated in late 2024, when then-Prime Minister Michel Barnier proposed delaying the price indexation of pensions in the 2025 budget. The aim was to save up to €4 billion, but his government was ultimately brought down by a censure motion which was backed by a majority of parties claiming to defend pensioners.

In a 1989 working paper, the authors (Alesina and Drazen) noted that social groups can indeed strategically postpone much-needed fiscal consolidation. These groups delay measures in the hope that the associated costs will eventually be borne by another group. In such settings, fiscal adjustments rely on less-vocal social groups, or are triggered by a crisis or an external shock, such as a loss of investor confidence.

A Much-Needed Fiscal Adjustment

Deteriorating fiscal arithmetics and a sluggish growth outlook has made deficit reduction in France increasingly urgent. The primary balance required to stabilize the debt-to-GDP ratio between 2026 and 2030 is estimated at –0.7%. But France’s track-record is weak: the average primary balance from 2002 to 2019 reached -1.9%, and is projected to reach –2.3% on average over 2026-2030.

Meanwhile, the population remains deeply divided about how to reduce spending, despite becoming increasingly aware of the country’s risky fiscal outlook. Public debt has emerged as a top-five concern in opinion polls.

Large Consolidation Needed to Stabilize Debt

Mapping Affected Groups

To understand why spending-led fiscal consolidations are so hard to deliver, we use a recent dataset provided by the Insee to estimate the potential cost of austerity for different social groups. This dataset offers information on household total income, before and after direct and indirect public transfers.

Direct transfers include all monetary transfers such as pensions, unemployment benefits, and subsidies. Indirect transfers capture the imputed value of public services received, including healthcare, education, or housing assistance.
Based on this data, we construct two exposure metrics: (1) direct exposure, defined as the ratio of direct transfers to total income; (2) indirect exposure, defined analogously for indirect transfers. The higher a group’s exposure, the more costly spending cuts would be for them.

We visualize these relationships using a bubble chart (see first chart), where the position of each social group reflects its exposure, and the size of each bubble corresponds to its share in the total population. These social groups are not mutually exclusive. The chart highlights which groups are more dependent on public redistribution and are therefore more likely to resist or delay a fiscal adjustment.

Vulnerable to External Shock

Under this framework, pensioners emerge as the social group that would bear the highest direct cost from any reduction in direct transfers, which account for nearly 60% of their total income. They are followed by individuals with lower secondary diplomas, for whom direct transfers, and notably unemployment benefits, represent close to 40% of their income.

Both groups also exhibit high levels of indirect exposure, with indirect transfers representing around 40% of their initial income (before redistribution). Across the population, however, the level of indirect exposure is lower and more evenly distributed.

These findings confirm that fiscal consolidation through cuts to public services may encounter less political opposition, as there’s a smaller share of the population has high indirect exposure. On the other hand, targeting direct transfers (such as pensions) is likely to face strong resistance, given that boomers are among most affected and now account for more than 50% of the electorate.

All this hinders the government’s ability to prevent fiscal slippage and leaves the country susceptible to external shocks, such as a loss of investor confidence. Still, there is a high risk that Prime Minister Francois Bayrou’s consolidation measures will be undercut by political concessions during the autumn parliamentary debates.