Following yesterday’s disappointing existing home sales print, this morning sees new home sales confirm the disappointment with a mere 0.6% MoM rise (well below the 4.3% MoM rebound expected after tumbling 11.6% MoM the month prior)…

Source: Bloomberg

That is the worst YoY decline in new home sales since Oct 2024, leaving the total SAAR at 627k – hovering near post-COVID lockdown lows and well below expectations…

Source: Bloomberg

The Median new home prices plunged in June (near 5 year lows), now well below that of existing homes…

Source: Bloomberg

This week, Atlanta-based PulteGroup relieved investors by posting better-than-expected earnings, despite reporting a slowdown in new home orders.

Sales incentives have grown to 8.7% of its houses’ gross sale price, more than double a “normal” incentive load, executives said on an earnings call.

“I long for the days of more normal incentive loads of kind of 3% to 3.5%,” Chief Executive Officer Ryan Marshall said on the earnings call.

“Hopefully as we get out into kind of future years, that will become possible again.”

Thursday’s government report showed the supply of new homes for sale in June increased to 511,000, still the highest level since 2007.

Source: Bloomberg

And for those hoping for rate-cuts to fix all this, think again…

Source: Bloomberg

Rate cuts have steepened the yield curve and pushed mortgage rates up; but as the chart above shows, the relationship between home sales and actual mortgage rates has decoupled in recent weeks…

So be careful what you wish for.

Tesla shares plunged more than 9% at the cash open on Thursday after CEO Elon Musk lamented the company faced some ‘rough quarters’ ahead on its Q2 earnings call Wednesday evening. 

Here is what Tesla reported for Q2:

• Adjusted EPS 40c vs. 52c y/y, missing estimate 42c (GAAP EPS 33c vs. 42c y/y). According to Bloomberg “investors may be relived it reported adjusted EPS just 2 cents below Wall Street estimates”
• Revenue $22.50 billion, -12% y/y, missing estimates of $22.64 billion
• Gross margin 17.2% vs. 18% y/y, beating estimates of 16.5%
• Automotive Gross Margin Ex-Regulatory Credits 15%
• Free cash Flow $146 million vs $664 million in Q1 and down 89% YoY from $1.34 billion in Q2 2024, and missing estimates of $760 million

The stock was steady until the company’s conference call, where it started to slip about 5% before falling further in this morning’s pre-market, and then cash, session.

During the call, Musk acknowledged the company was entering a “transition period” due to the loss of U.S. electric vehicle tax credits and the gradual rollout of autonomous technology.

“We probably could have a few rough quarters,” he said. “But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I would be surprised if Tesla’s economics are not very compelling.”

Despite pushing long-term ambitions for robotaxis and AI, investors were left frustrated by the lack of detail on Tesla’s core business and product roadmap. Analysts noted that the company offered “remarkably little detail” on key developments, such as its upcoming affordable vehicle or the progress on its humanoid robot, Bloomberg wrote. One observer remarked, “There was a lot of uncomfortable realism mixed in with the futurism.”

“There are some teething pains as you transition from a pre-autonomy to a post-autonomy world,” Musk had noted on the call. 

Truist Securities analyst William Stein said: “The company offered remarkably little detail on some of the most important factors”. That makes “our outlook lean more on imagination than realistic targets.”

Tesla’s problems extend beyond North America. In Europe, Tesla’s vehicle sales fell 33% in the first half of 2025 compared to the same period last year. June sales in the EU alone dropped 40%, and Tesla’s market share in the region declined to 1.6%. While the refreshed Model Y helped slightly in the UK, sales across the EU, Norway, and Switzerland continued to struggle. Musk’s political alignment with far-right parties and past support for Donald Trump have further damaged Tesla’s brand image in the region.

Musk openly criticized the EV policy changes enacted by the Trump administration, calling the new tax law a “disgusting abomination.” The law removed key incentives for EV buyers and eliminated penalties for automakers failing to meet fuel-economy standards, both of which had previously supported Tesla’s bottom line. Musk conceded that “we are in this transition period where we will lose a lot of incentives in the U.S.”

Tesla executives confirmed that production began in June on a more affordable EV resembling the Model Y, but said they would delay its release until after tax credits expire at the end of September. Meanwhile, the company continues to promote its robotaxi initiative. The pilot program in Austin, Texas, launched last month, and Musk claimed Tesla aims to expand the service across the U.S. this year.

“We’ll probably have autonomous ride-hailing in about half the population of the US by the end of the year,” Musk said. “That’s at least our goal, subject to regulatory approvals.”

Still, investors were hoping for more immediate progress. “All eyes are on how Austin is going to play out, and we didn’t hear much,” said Gene Munster of Deepwater Asset Management. Concerns are also growing about Musk’s attention being diverted from the core car business, with critics warning that Tesla is beginning to resemble traditional automakers more than a high-growth tech company.

Musk also used the call to argue for greater control over Tesla, following a Delaware court decision that voided his multibillion-dollar compensation package. “I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” he said.

As we noted yesterday, here is the financial summary for Q2:

And visually:

As has been the case in recent quarters, both revenue and profitability were hit by lower regulatory credit revenue. Tesla still recognized $439 million of automotive regulatory credits in the second quarter, down from $595 million in the first quarter and down from $890 million a year ago. 

While the information was already reported previously, deliveries fell across models, but the hardest hit category was the one that includes the Tesla Cybertruck. Deliveries of Model 3 and Y cars dropped 12% from a year ago, compared to a 52% plunge for other models.

One bright spot is a 17% jump in “Services and Other Revenue” to $3.05 billion. Tesla attributed that, in part, to more revenue from its industry-leading Supercharging network. It said it added more than 2,900 Supercharger stalls on a net basis, an 18% increase from a year ago. 

As an aside, gross profit for the energy generation and storage division reached a record $846 million. 

After rallying to multi-year highs in June, the preliminary July print for S&P Global’s US Manufacturing PMI tumbled to 49.5 – its lowest level of the year.

At the same time, US Services soared to 55.2 – its highest since Dec 2024

Source: Bloomberg

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:

“The flash PMI data indicated that the US economy grew at a sharply increased rate at the start of the third quarter, consistent with the economy expanding at a 2.3% annualized rate. That represents a marked improvement on the 1.3% rate signalled by the survey for the second quarter.

“Whether this growth can be sustained is by no means assured,” says Williamson:

“Growth was worryingly uneven and overly reliant on the services economy as manufacturing business conditions deteriorated for the first time this year, the latter linked to a fading boost from tariff front-running.

“Business confidence about the year ahead has also deteriorated in both manufacturing and services to one of the lowest levels seen over the past two-and-a-half years.

Companies cite ongoing concerns over the impact of government policies, notably in terms of both tariffs and cuts to federal spending.

Inflation pressures have meanwhile intensified.

“Companies most commonly attributed higher costs and selling prices to tariffs, though increased labour costs are also prevalent, in part reflecting labor shortages.

“The rise in selling prices for goods and services in July, which was one of the largest seen over the past three years, suggests that consumer price inflation will rise further above the Federal Reserve’s 2% target in the coming months as these price hikes feed through to households.”

So, strong growth but strong inflation… but in the manufacturing sector it looks like stagflation is growing stronger.

America’s largest power grid has issued a ‘Maximum Generation Alert‘ and ‘Load Management Alert‘ for Thursday, the third this summer, as extreme heat pushes power demand to the brink, with air conditioners running at full blast across its 13-state eastern U.S. service area. 

“The alert is also targeted at transmission/generation owners, who then determine if any maintenance or testing on equipment can be deferred or canceled,” PJM said, adding, “By deferring maintenance, the units stay online and continue to produce energy that is needed.”

PJM posted on X that electricity usage is expected to reach 151,485 megawatts by 5 p.m. today (Eastern Time). The good news is that the grid has about 161,643 megawatts of spare capacity available. This spare capacity will act as a buffer to prevent rolling blackouts during peak evening usage. 

Forecast peak #electricity usage for July 24 in #PJM region: 151,485 MW at 5 p.m. (Eastern); total scheduled capacity 161,643 MW (data as of 6 a.m.)

— PJM Interconnection (@pjminterconnect) July 24, 2025

The unfolding story in the Mid-Atlantic and Northeast regions is an alarming one for power grids.

Years of Democratic leadership at every level of government have pushed climate crisis propaganda that forced premature decarbonization of power grids by retiring stable fossil fuel power generation, swapping it for unstable solar and wind. Yet, there wasn’t a perfect one-to-one swap, and this has led to a mix-and-match in base load power capacity versus demand – now colliding with a rapid boom in data center construction across the region, especially the power-hungry CIA data centers in Loudoun County, Virginia. 

One of the biggest failures of grid management by Democrats who control much of the Mid-Atlantic area and Northeast states is that their climate crisis policies have directly resulted in power bill hyperinflation – the highest in the country.

Related:

• “No Spare Capacity”: Watchdog Warns Largest U.S. Grid Is Maxed Out Amid Data Center Buildout

• Brace For Soaring Electricity Bills: Biggest U.S. Power Grid Sets Power Costs At Record High To Feed AI

• Green Agenda Fallout: Democrat-Led Northeast Now Has Highest Electricity Prices In Nation

This time, Democrats can’t scapegoat climate change any longer for their massive failures, as the accountability monster lurks in the shadows. Their failed green push has led to fragile power grids – a genuine national security threat – as well as a power bill crisis already unfolding in Maryland.

Elon Musk’s retro-futuristic Tesla Diner and Supercharger in Los Angeles quietly opened its doors to first responders over the weekend. Musk announced on X that if the concept proves successful, a nationwide rollout is a possibility.

“If our retro-futuristic diner turns out well, which I think it will, @Tesla will establish these in major cities around the world, as well as at Supercharger sites on long-distance routes,” Musk said. 

If our retro-futuristic diner turns out well, which I think it will, @Tesla will establish these in major cities around the world, as well as at Supercharger sites on long distance routes.

An island of good food, good vibes & entertainment, all while Supercharging! https://t.co/zmbv6GfqKf

— Elon Musk (@elonmusk) July 21, 2025

On Saturday, first responders in the Los Angeles area were treated to a preview of the Tesla Diner—complete with 80 EV chargers, a full-service restaurant, and two massive outdoor movie screens.

Thank you First Responders! https://t.co/8ynDGDmFGn pic.twitter.com/M3KLxBBS3F

— Tesla Charging (@TeslaCharging) July 20, 2025

Musk’s choice of a 1950s-style diner design, outfitted with modern technology, can be symbolically interpreted as his move to revive a sense of Americana. This is a symbol of post-World War II optimism, industrial strength, and car culture that defined America’s “golden age.” 

Whether it’s Tesla’s EVs and humanoid robots, SpaceX’s rocket launch program, or Starlink’s space-based internet, Musk’s companies represent the technologies that will define and shape the 2030s. In many ways, Musk is building the blueprint for the kind of company that will dominate the next decade—especially in the U.S. As a reminder, China has several companies of this type, including BYD and Nio. 

It’s therefore fitting that Musk is attempting to revive Americana, as a broader national revival may become increasingly apparent by the 2030s. Just as the 1950s marked the dawn of the space race, the highway system, and consumer technology, the 2030s will likely revolve around the very technologies Musk now controls that are poised to go mainstream.

The diner isn’t just a retro-themed Supercharger hub—it’s cultural signaling. Musk is positioning Tesla not merely as a car, AI, and or humanoid robot company, but as a steward of Americana, tapping into the past to remind Americans of their greatness and the importance of carrying that legacy forward into the next decade. This type of messaging is crucial for young people.

Authored by Julia Cartwright via the American Institute for Economic Research,

The recent passage of the Senate’s GENIUS Act and House’s upcoming “Crypto Week” mark a seismic shift in the financial world. The bill, which passed by a 68–30 vote, establishes a federal regulatory framework for stablecoins, including reserve requirements, issuer disclosures, and consumer protections. This legislation lays the groundwork for the US financial system to break free from the monopoly that banks have long had on money, creating room for innovation and competition in financial services. 

Central to this transition is the adoption of stablecoins, cryptocurrencies designed to maintain a stable value by pegging them to a reserve asset. Stablecoins offer a stable medium of exchange and a store of value while enabling smoother digital transactions and wider blockchain adoption. 

But why will Bitcoiners, who have long championed a decentralized, non-sovereign form of money, benefit from stablecoin legislation? After all, stablecoins are issued by private companies and are pegged to a government-issued fiat currency.  

The rise of stablecoins does not diminish the value or importance of Bitcoin or other cryptocurrencies.

In fact, the two complement each other. 

Regulatory clarity in this space allows crypto entrepreneurs to price risk, threatens the monopoly banks have on money, and creates additional demand for dollars.  

To many crypto entrepreneurs, any legislation is better than no legislation. The crypto world is currently suffering from a type of regulatory uncertainty paralysis.

This was a central focus of May’s Bitcoin Conference, the world’s largest Bitcoin meeting, which featured speeches from JD Vance, Michael Saylor, and Donald Trump Jr. Many crypto leaders supported the passage of crypto regulations to set the groundwork for more formal rules of the road in their industry.  

Codifying crypto regulations, to which the Senate’s GENIUS Act and House’s STABLE Act are central, allows entrepreneurs to confidently price risk in the crypto industry. The legislation can always be modified in the future, but having some clear regulatory structure encourages entrepreneurs to confidently make investments in this explosive industry.  

As of now, banks effectively decide who gets access to capital and on what terms through their dominant control of checking accounts, savings accounts, and loans. The rise of stablecoins, however, offers a way out of this centralized system. Stablecoins enable individuals and businesses to bypass traditional banking by facilitating direct, peer-to-peer transactions on decentralized blockchain networks, eliminating banking intermediaries.  

With their price stability pegged to an asset, global accessibility (anyone with an internet connection can access them), and integration with smart contracts on the blockchain, stablecoins provide a cost-effective and efficient alternative to traditional financial systems. 

Adoption of stablecoins diminishes banks’ exclusive ability to control the money supply. As people and businesses use stablecoins, they are no longer contributing to the banks’ bottom line in the form of fees, loans, or deposits. Stablecoins can replace financial instruments like checking accounts, which is the most profitable part of a bank’s balance sheet. By creating a more efficient and transparent way to handle transactions, stablecoins lower the overall costs of financial services, threatening to upend the stranglehold banks have on money.  

As more people adopt stablecoins globally, the demand for US dollars and treasuries will rise. The magnitude of this increase in demand is unknown; however, more demand, on net, lowers bond yields and makes it easier to add to the US debt. If Bitcoiners’ belief that the government has little self-control over fiscal policy holds true, they will benefit from the rise of stablecoins. The more demand there is for US dollars, the more the government will be encouraged to print and borrow to meet that demand. This could lead to inflationary pressures, which would, in turn, increase the value of cryptocurrencies, particularly Bitcoin, as a hedge against inflation. 

The broad acceptance of stablecoins paves the way for more regulatory clarity within the broader crypto space. With clear rules for stablecoin issuance and use, businesses and consumers will have greater confidence in using stablecoins for everyday transactions. For Bitcoiners, regulatory clarity around stablecoin will help ensure that the entire crypto ecosystem has a fair shot at competing with traditional finance. 

The future of crypto is evolving, and stablecoins are an important part of that evolution. 

The meme stock craze of 2021 appears to be making a roaring comeback this week. 

On Tuesday, shares of Kohl’s soared as much as 90%, while premarket trading on Wednesday saw heavily shorted names, such as GoPro, jump 50% or more.

It all began with Monday’s massive gamma squeeze in Opendoor Technologies, which triggered a record surge in call option activity. 

Check out the full list of heavily shorted stocks.

While another round of meme stock mania unfolds and Bitcoin hovers near record highs at $120,000, the focus here isn’t heavily shorted stocks or crypto.

If you recall, during the Covid mania in markets, luxury watch prices exploded as crypto bros and Robinhood traders bought Rolexes. 

The latest data from the Bloomberg Subdial Watch Index, which tracks prices for the 50 most-traded watches by value on the secondary market, shows that used Rolex prices have recently hit their highest level in two years, following a multi-year slump due to elevated interest rates. 

Earlier this month, UBS analysts led by Zuzanna Pusz told clients that a meaningful recovery in the global luxury market might not occur until 2027.

The question remains if the latest rise in luxury used watch prices will sustain.

Looking ahead, US interest rate swaps are pricing in the beginning innings of a cutting cycle in October. 

Authored by Cyrill Widdershoven via OilPrice.com,

• EU launches its 18th sanctions package, lowering Russia’s oil price cap to around $47.60/barrel and targeting the energy sector more aggressively.

• Loopholes remain widespread, with Greek-owned tankers helping transport Russian oil, and non-OECD nations like China and India continuing to import above the cap.

• Without stronger enforcement, including naval oversight and EU unity, sanctions risk being symbolic rather than impactful.

The ongoing push by EU countries to target Russia’s primary revenue source—oil and gas exports—has received a significant boost. With its 18th sanctions package, the EU has agreed not only to hit Moscow’s energy sector harder but also to impose a significantly lower price cap on Russia’s oil exports.

The package faced internal resistance, particularly from Slovakia, which had been blocking the deal over the past week. Slovakia’s current government holds a more pro-Russian stance and is concerned about the EU’s goal to phase out Russian gas imports in the coming years. EU Foreign Affairs Commissioner Kaja Kallas called it “one of the strongest sanctions packages against Russia to date,” stressing that each measure weakens Moscow’s war-making capacity.

France played a leading role in pushing for this round of sanctions. French Foreign Minister Jean-Noël Barrot said, “Together with the United States we will force [Russian President] Vladimir Putin into a ceasefire.”

Slovakia ultimately agreed to the deal after assurances that it would receive economic support should gas prices spike as a result of cutting off Russian imports by the end of 2027.

At the core of the new package is a 15% reduction in the oil price cap for third-party countries, set around $47.60 per barrel based on current benchmarks. While not a silver bullet, this aims to intensify economic pressure on Moscow. The G7’s original 2022 cap of $60 has proven largely ineffective, as non-OECD countries continue importing Russian crude—enabling Russia to maintain export flows and expand its “dark fleet” of uninsured, aged vessels.

The EU also sanctioned 100 more dark fleet tankers and is ramping up inspections in the Baltic Sea. A Russian refinery in India and two Chinese banks were added to the sanctions list. Yet Russia continues to exploit legal loopholes—often with the help of EU members themselves.

Consultancy Windward reports that Greek-owned tankers shipped 7.8 million of the 22.2 million tons of Russian oil moved recently. Despite the price cap, most Russian crude ends up in China and India—far above the permitted price.

Unless Brussels enforces these measures fully and holds member states like Greece, Cyprus, Slovakia, and Hungary accountable, sanctions will remain porous. Military enforcement, naval patrols, and a hard line against Russian hydrocarbon exports via EU waters are the only paths to real impact. Athens must step up, following the example of the Baltic and Scandinavian nations.

A new survey published in the JAMA Network by researchers at Emory University and the Centers for Disease Control and Prevention has found that an increasing number of pregnant women and new mothers are delaying, or even outright refusing, government-recommended vaccines that hospitals and pediatricians push on newborns and young kids. The findings come just ahead of Health and Human Services Secretary Robert F. Kennedy Jr.’s much-anticipated announcement on what the federal agency believes to be the root cause of the autism spike in children ahead of the fall school season. 

Titled “Vaccination Intentions During Pregnancy and Among Parents of Young Children,” researchers found that 33% of parents with children under age 5 intend to delay or refuse some or all government-recommended vaccines. In contrast, only 4% of first-time pregnant women reported plans to delay or refuse all recommended vaccines.

Researchers noted that first-time pregnant women are increasingly distrustful of newborn vaccinations. About half of these women are unsure whether they will commit to the entire vaccine schedule promoted by the government, which includes dozens of shots, compared to only 4% of parents of young children who reported being uncertain about the same schedule. 

Wonder why parents are increasingly concerned…  

“Given the high decisional uncertainty during pregnancy about vaccinating children after birth, there may be value in intervening during pregnancy to proactively support families with childhood vaccination decisions,” the researchers stated. 

Only 40% of parents report that they intend for their child to receive all the government-recommended vaccines, while 20% plan to delay some vaccines. Over 30% of parents with young children intend to refuse some or all vaccines for their children. 

“Only 37% of young and expecting parents now plan to fully vaccinate their children — a seismic shift.  Why? Because when parents ask real questions about the vaccine schedule to their pediatricians, they’re met with silence or deflection,” Children’s Health Defense wrote on X. Notably, RFK Jr. served as chair of CHD’s board from 2015 to 2023. 

CHD noted, “No answers. No informed consent. Just blind trust demanded. Parents aren’t buying it anymore.” 

🚨 Only 37% of young and expecting parents now plan to fully vaccinate their children — a seismic shift. Why? Because when parents ask real questions about the vaccine schedule to their pediatricians, they’re met with silence or deflection.

No answers. No informed consent.… pic.twitter.com/TXcxNPVbXz

— Children’s Health Defense (@ChildrensHD) July 23, 2025

For parents with newborns and young children, CHD offers ten questions to ask your doctor or pediatrician… 

Hmm.

Government recommended vaccine schedule in Denmark and the US for children birth to 18:

Denmark: 31 doses, 17 injections, 10 diseases
US: 90 doses, 68 injections, 17 diseases

Autism rate: Denmark 1 in 68 children US 1 in 31.

Danish children do not get hep B, hep A, varicella,… pic.twitter.com/tKVYDjxoSL

— Autism Action Network (@AutismActionNet) July 23, 2025

Countdown begins to RFK Jr.’s big reveal in September of what HHS believes could be the root cause of the autism spike in children. 

By Thomas Kolbe

Political centralism doesn’t come free of charge. On the path toward the United States of Europe, Brussels is entangling itself in a web of overreach, control mania, and interventionism. The invoice for this arrogance is being handed down to the outposts of Eurocracy.

Celebration in Berlin. German Chancellor Friedrich Merz proudly presented what he called a comeback for Germany’s depression-plagued economy this Monday. Under the deeply original (read: painfully clichéd) slogan “Made for Germany”, 60 of the country’s top corporations showcased their already planned investments as a kind of aggregated act of economic liberation. “Germany is back,” Merz posted on X – grandiose, juvenile, and more cringe-inducing than inspiring.

Germany is bleeding out

The reality of the German economy paints a different picture. The labor market has already tipped into decline, with more than 100,000 industrial jobs set to be eliminated this year. A record wave of bankruptcies and a dramatic capital flight round out the portrait of an economic policy in freefall.

How far Merz’s corporate pep rally strays from the economic facts is made clear by the country’s net direct investment figures: In 2024, Germany saw €64.5 billion in net capital leave the country. In 2023, it was €67.3 billion; in 2022, a staggering €112.2 billion.

Germany is bleeding. And the real scandal is this: the country’s political leadership and, for practical purposes, let’s call them its “economic elite,” refuse to speak about the true causes of this collapse.

A summit truly “Made for Germany” would call for an exit from the suicidal green policy agenda. It would advocate a drastic reduction in bureaucracy and regulatory coercion, a return to affordable Russian gas, and the revival of nuclear power – the pillars of any serious industrial policy.

Contrast this PR stunt with the hard numbers, and it becomes obvious why the event faded into oblivion – uninspired, flat, and quickly archived as another placebo moment of postmodern politics.

The Brussels Bill

Merz, for his part, was likely already preoccupied with another headache. While he toasted in Berlin, half of Europe was reacting to the ballooning budget proposal by his party colleague, EU Commission President Ursula von der Leyen. She had just introduced her draft for the EU’s Multiannual Financial Framework (MFF) for 2028 to 2034: a whopping €1.82 trillion. (link)

No one can accuse Brussels of lacking ambition. €100 billion is earmarked to keep the proxy war in Ukraine afloat, while another €650 billion is slated for the EU’s green subsidy machine – a lifeline for its artificial eco-economy. The proposed budget would increase by €750 billion, or nearly 50%.

Unlike China’s five-year plans, the EU dreams in seven-year cycles. A true central planner’s paradise.

If enacted, this mega-budget would trigger a massive increase in member-state contributions – with Germany, as usual, stuck with the lion’s share. Based on its economic size, Germany would be expected to contribute around 25% of the total, or approximately €450 billion.

For comparison: Germany currently pays around €30 billion annually into the EU budget and receives €14 billion in return – a net loss of €16 billion per year. Under the new framework, Berlin’s net contribution could rise to as much as €50 billion per year – more than triple today’s level.

The Spiral of Debt Accelerates

Cynics might argue that Germany could absorb the extra debt without much fuss. After all, Berlin is planning to borrow €90 billion next year anyway – what’s another €26 billion? Relative to GDP, it’s just a 0.6% bump in spending. A small price to pay for stabilizing Europe’s central authority. In the lingo of German politics: a Democracy Tax.

And since no one in Brussels or Berlin seems to care about the Maastricht debt rules anymore, the path is clear for another round of debt-financed Euro-socialism.

Merz, together with von der Leyen and French President Emmanuel Macron, is united in the belief that consolidating power within Brussels is the only way to keep Europe geopolitically relevant.

Merz is increasingly revealing himself as a committed central planner. With him, there will be no market-based reset – no return to constitutional economics.

The End of the Veto Right

The German government’s current budget plan shows that Berlin is on board. The crisis will be “managed” through massive borrowing and state-directed investment of fictitious capital.

To resolve Brussels’ budget dilemma, we can expect a two-pronged solution: new EU taxes and increased national contributions.

I’ll go ahead and predict what’s coming: in the next few months, we will see a coordinated push to eliminate the veto rights of individual EU member states in budget negotiations.

Let Viktor Orbán stomp his feet in Budapest all he wants – the advance of European-style socialism won’t be stopped by ox or donkey. One imagines CDU members quietly humming The Internationale under their breath.

Once that veto hurdle is cleared, national debts could be pooled under the umbrella of the EU Commission, monetized via the European Central Bank, and camouflaged by a digital Euro – all in an effort to halt the economic hemorrhaging of the Eurozone.

The Ukraine conflict serves as the ideal justification for this massive wave of public credit creation.

Delusion vs. Dissent

Such are the fantasies of the Eurocrats. Thankfully, reality tends to defy ideology.

As a conservative backlash slowly stirs across Europe, it is highly unlikely that Brussels will face the next fiscal crisis without resistance.

That resistance will either restrain the EU’s fiscal adventurism – or trigger the collapse of this increasingly fragile house of cards.

* * * 

About the author: Thomas Kolbe is a German graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.