The Coming Financial Meltdown
Last November, I wrote to paid subscribers, and then to all subscribers [ see links below] about what I see as a global economic/financial meltdown the second half of this year. Then Trump decided to go to war with Iran.
The column below was published to just paid subscribers two weeks ago. I now want to share it with all subscribers as all should anticipate what is ahead.
Last fall I wrote, first to paid subscribers, about my forecast for a rough ride in the second half of 2026. Then I reiterated my forecast to all subscribers early this year.Then, since Trump’s war with Iran, I have written columns about how the war will deepen last year’s forecast for the second half of 2026. This is a column that updates all these prior columns, only due to the passage of time as the ‘second half of 2026’ is soon to begin.
Everything in the above linked columns I still stand on as a forecast. There have been new developments in the global/political/economic/financial landscapes that underscore my forecast about the latter part of 2026. Of course, I do not know the date and timing of this major downturn/collapse except to see it starting in late summer-early fall, say August-September.
Again, in addition to all the listed points in the above linked columns from last year and early this year, here are some new concerns or updates on older ones.
-Air Travel
-Price of Gas and Oil
-Inflation
-Investment Bubbles
-Hunger
Air Travel
-Airlines are cancelling vast numbers of flights during the summer due to the elevated price of jet fuel. Generally, people fly for two reasons, personal or business. In both cases there is an expectation that these flyers will spend money at their destinations. Personal or tourist travelers expect to spend money on their vacations and business travelers fly to sell, do deals, attend conferences and network. Both categories of travelers spend money on the airline tickets and costs on the ground [hotels, rental cars, restaurants, gift or shopping for clients and family]. Another way of saying this simply is that air travel is a major part of the global economy. It is part of the connective tissue of it. The airlines and travel industry will suffer first, followed by all the ancillary markets. People do not travel without spending money. So this dynamic – fewer passengers on fewer flights – will have a cascading effect on the global economy through time.
- The Department of Transportation has requested flight limitations out of certain major U.S. airports that might be overcrowded. This is due to the understaffing of air traffic controllers. Clearly, all the near misses reported almost daily provide clear evidence to these needed restrictions. This will affect the U.S. economy only but will be relevant to the above paragraph.
-Price of Gas and Oil
-President Trump and his administration seem to be stuck in the Iran War. They have lied and misrepresented the status of the “ceasefire” that wasn’t. As I wrote earlier this year, Iran is going to play the long game. They have no reason not to do so. Translation: the Strait of Hormuz will be closed or only partially open for the rest of the year. I still think that oil – after this bogus “peace plan” or “ceasefire” is shown to be a flight of fancy - might well reach $150 barrel in 2026. This means that gasoline in the U.S. will largely stay above a national average of $4 for most of the rest of the year. By the November mid-terms, the overall price of gas at the pump might well be higher than today.
-It has been pointed out that the high price of fossil fuels will trigger inflation in all kinds of products due to the need for the global transportation industry to support supply chains. Food inflation will continue to exist well into 2027 [see below under Hunger] for two reasons. First just the sheer cost of transport with increased oil and gas prices will affect prices. Second, the Strait of Hormuz is a critical passageway for fertilizer, resulting in a dramatic increase in prices for it. Prices that many farmers could not pay this spring, so the fall harvest season will be filled with stories of reduced agricultural yield for most northern hemisphere farmers. Which will result in higher prices for most categories of food.
Plastic is a petroleum byproduct and as such will increase in cost. Just think of how the modern world is consuming – and throwing away – plastic. Everything using plastic will cost more.
Inflation
Of course the underlying reason for this is the price of fossil fuel energy. When 20 million barrels a day of petroleum stops, it creates scarcity. Scarcity creates inflation, particularly on necessities. However, inflation brings consequences other than higher prices. Inflation going up – and it is right now, on both a month over month and year over year comparison- creates upward interest rates, as the U.S. Fed will raise rates to fight inflation. This moves interest rates up, which means that mortgages will increase in cost. This in turn affects the residential real estate market, making it much less viable than a few years ago when rates were much lower.
In addition, increasing interest rates often cause the equity markets to go down as the risk/reward ratio will change. This is relevant to the next category
Investment Bubbles
The equity markets in June seem to be frothy. They seem to be driven by both emotion and the belief that the Trump administration is telling the truth about the Iran War [more on that lower down in this column]. Market frothiness often comes at equity market peaks, and that is the way I am looking at them now. I think there seem to be a lot of possible bubbles our there, any one of which could trigger market collapse. One is the three big IPOs; SpaceX, Anthropic and Open AI. So much investment money is being placed on all related AI companies that market signs are flashing as they did in 2008 with the Great Recession, and the Dotcom bubble of 2000. The immediate threat is the lower cost, open-source models of the Chinese AI start-ups. Close to same results with prices that are 80% lower than U.S. companies. Maybe, maybe not. I am not a stock picker or a market prognosticator. Rather, I am a macro-thinker who sees big problems with many investment categories right now.
Which leads me to crypto. It seems like the global crypto market is falling through key lower price supports. [Bitcoin currently is slightly less than $60 after having a long stay in the upper 70s, with the direction downward]. In and of itself, the prices of all crypto seems to be drifting downward, so that in and of itself might be a bubble. However, Bitcoin may have been used to secure loans in other financial markets and with its declining value, loans might need to have more collateral or they will go into default [remember 2008?]
Hunger
In and of itself, hunger is not a trigger for economic downturn, but the images of it will contribute to concern as to why. As referenced above, the inflation ahead with food will certainly make all foodstuffs go up in price. This inflation will be felt in the developed countries of the world. In Europe and North America, there will be many stories in the media about the growing need for foodbanks distributing free food. In a perceived scarcity marketplace for food, these developed countries will consume a disproportionate percentage of the harvested food in the fourth quarter of 2026 globally. This of course leaves less available for the poorer countries, which will lead to media stories and images of starving children.
What will shock the global economy is the reality – in spots around the world -that even in the developed countries of the world there are people having to go hungry. The Far East economies – India, Bangladesh, the Philippines, Indonesia, and even Japan - are already in national crisis mode; stockpiling fossil fuels, mandating workers work from home, conserving energy usage. All of this is a result of some 80% of all oil that comes through the Strait of Hormuz goes to East Asia. This is all based on the closure of the Strait, where, up to 2/28/26 it was open and through it daily some 20 million barrels are transported [the 20% of global consumption that we hear endlessly from media outlets]. So, basically the Strait is still closed. The scorecard to watch for is how many barrels of oil pass through the Strait of Hormuz when it is ‘partially open’. Anything less than 20 million barrels a day will continue to build up a backlog that will adversely affect some countries more than others.
As reference above, there is the real issue of what is happening with Trump’s War with Iran. The White House says something. Iran responds that the message from the White House is totally false. What is going on? No media outlet has the whole story. I wrote about this in my column in March
I Never Expected to be in this Situation as an American
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MAR 24
That I would not be able to determine who is speaking the truth: the American president or the evil, despotic, autocratic theocracy of Iran. Trump is a pathological liar and since 1979 I have not trusted anything that Iran might say. What is the truth?
That, as an American I have been wondering who to believe; the evil regime in Iran or the pathological liar occupying the White House. According to CNN, as of early June, President Trump has said that a deal to end the war with Iran would be finalized in “two to three days” or “a matter of days” since he ordered the attack on Iran on 2/28/26, more than 40 times. So he clearly does not have a clue as to how to end the war and yet people [Wall Street in particular] believe his lies. I am not sure why. Perhaps that Americans have been taught to not believe what Iran says.
In any case, credibility is at stake. If the U.S. Federal Government is lying about the single greatest economic threat to humanity, then it cannot be trusted to speak the truth when the downturn happens in a few months.
I apologize if this column is depressing to read.
I think that this economic/financial downturn will be global and might last well into 2027.
I think that all subscribers should do whatever you think wise when facing economic uncertainty. I have no investment advice. I just am clear that at the macro level there will be a downturn. [I am not using the words recession or depression as they have distinct definitions]. I just see inevitable risks everywhere.
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