War, oil shock, debt and inflation: Four horsemen of the fall apocalypse — SkimNews
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- US inflation reports showed core CPI hotter than expected and PPI running above 5%, signaling that the oil shock from the Mideast war has finally started to push prices higher across the economy.
- Oil prices crossed the US$100-per-barrel threshold this week, driven by depletion of buffer stocks (strategic reserves, refinery storage, and dark-fleet ships) and the resumption of Mideast hostilities, including a Houthi victory against Saudi Arabia that could disrupt Red Sea shipments.
- Diesel prices sit at record highs as refineries that postponed maintenance during the conflict are forced to catch up, removing production capacity and driving up farming and transportation costs beyond the gas pump.
- Bond yields are rising in response, with the US 10-year approaching 5% and Canada's nearing 4%, setting the pace for higher interest rates across mortgages, credit cards, and corporate borrowing.
- The US government now spends more on interest payments than on defense, and rebuilding military stockpiles depleted by the war will force hard choices between tax hikes, spending cuts, or more borrowing that would aggravate inflation.
- Iran's economy is buckling under the Trump administration's blockade with a restive public, but the regime shows no sign of imminent collapse and is instead escalating attacks on American forces.
- The Strait of Hormuz remains effectively shut; the author argues a sharper 1970s-style early oil shock would have forced a quicker end to the conflict rather than the slow-boil path that built up more debt, sent stock markets higher, and ran down savings.
Why it matters: Western governments face a painful convergence: with $100 oil, diesel at records, and 10-year yields near 5%, every option to rebuild military stockpiles and service debt — austerity, more borrowing, or letting rates rise — worsens either growth or inflation, all while Iran escalates rather than capitulates under the US blockade.
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