“Dual heat domes” in both Europe and North America were likely to “become more common as we continue to heat the planet”, said Michael Mann, professor at the Department of Earth and Environmental Science at the University of Pennsylvania. Research by Mann and colleagues, published in the journal Proceedings of the National Academy of Sciences, found that the amplification of waves in the jet stream — the fast-moving band of air encircling the planet — had led to a dramatic increase in atmospheric events, driving heatwaves, wildfires and floods.
The GOP debates about where to find savings to offset this massive fiscal cost is revealing a very interesting set of developments in American political history. Cutting federally funded and federally subsidized healthcare—once one of the most unifying ideas within the Republican party—has now become meaningfully contentious. It’s really novel that the Republican Party nationally can no longer frame Medicaid cuts as red meat. They are contrite about it, and they are trying to hide it. Nevertheless, they’re doing it. Where the House arrived involves cutting the following over ten years: $560 billion from IRA clean energy credits, $860 billion from shrinking Medicaid, another $300 billion from SNAP, and another $100 billion and change from curtailing subsidies for the Affordable Care Act. The upshot, as the CBO estimated, is upwards of 12 million people losing their health insurance (plus another 4 million from the GOP’s refusal to extend additional ACA subsidies); and about 3 million people expected to lose food stamps eligibility. Medicaid cuts are the biggest source of savings, and repealing clean energy tax credits is in second place.
The US dollar has suffered its worst first half of the year since 1973, as Donald Trump’s trade and economic policies prompt global investors to rethink their exposure to the world’s dominant currency. The dollar index, which measures the currency’s strength against a basket of six others including the pound, euro and yen, has slumped more than 10 per cent so far in 2025, the worst start to the year since the end of the gold-backed Bretton Woods system.
Big Energy set to benefit as new industry clobbers old
Washington and Brussels are offering billions of dollars of taxpayer funds for smelting, processing and mining projects for metals such as copper and aluminium, in order to break China’s stranglehold on the industry. The US has also imposed punitive tariffs on imports in a bid to protect domestic industry. But senior executives told the Financial Times that more support was needed to make western smelting and processing profitable, while Silicon Valley companies were pushing up the cost of power in the US. “The most important factor deciding where you actually build a smelter is a long-term competitive power price,” which accounts for about a third of an aluminium smelter’s costs, said Trond Olaf Christophersen, chief financial officer of major aluminium producer Norsk Hydro. He said that in the US, smelters were vying for electricity contracts with technology groups, which were willing to pay much higher sums in order to develop the data centres that underpin the artificial intelligence revolution.
One mining industry veteran characterised the dynamic as “not [US aluminium company] Alcoa versus China, but Alcoa versus Google”.
Evergrande in the Medium durée
The “real estate” boom in China that came to an abrupt halt in 2020/2021 was not simply a bubble within a well-established market, say in London, or Florida. China did not even have anything like private ownership of real estate until the late 1990s. Then in a space of a single generation it engaged in the largest construction boom in history, so much so that almost 90 percent of Chinese homes have been built in the last thirty years. In the same 25 years, roughly 500 million Chinese, that is the entire population of Europe, moved from the countryside to the city. This was no ordinary real estate boom. It was a world historic process of resettlement. China’s “real estate boom” was a major causal driver of nothing less than the anthropocene, humanity’s fundamentally altered relation with the planetary economic system. The quantity of steel and concrete that were poured and bashed into the ground in China changed the physical shape of the planet.
Furthermore, consider how China’s “real estate boom” came to an end? Did it overheat like other speculative markets before it, resulting in the spontaneous collapse of a major developer and a run on associated banks, like in Europe and the US in 2007/2008? No. China’s commercially driven urbanization push was brought to an end by the deliberate decision of the Chinese leadership. The most plausible hypothesis is that it took this decision amidst the hubris of the summer of 2020, when it believed that it had “won” the global competition over containing COVID. In this respect too, the Chinese real estate crisis is historically exceptional. As the Economist writes: on the eve of the crash in 2020, property, broadly defined, contributed about 25% of GDP. Today it accounts for 15% or less. “The depressive impact of falling prices on ordinary folk is hard to overstate. In 2021, 80% of household wealth was tied up in real estate; that figure has fallen to around 70%.”
As it was happening, my standard line was that if Beijing managed to pull off the adjustment without a full-scale meltdown as in the West in 2008, it would be one of the most spectacular instances of macroprudential management in world history, perhaps the most spectacular. In the summer of 2025 the evidence seems to suggest that something like stabilization has been achieved. In the most prime markets, notably Shanghai, there are signs of real recovery. The fact that the situation is no longer deteriorating and that stories of financial panic, like those around developer Evergrande, have receded make one look forward to a future turning point.
On May 31st China’s industry ministry told Xinhua, the state-run news agency, that “there are no winners in the price war, let alone a future.” The ministry vowed to curb cut-throat competition, which it said harmed investment in r&d, and could cause safety problems. On June 1st People’s Daily, the Communist Party mouthpiece, argued that low-priced, low-quality products could harm the reputation of “made-in-China” goods. The backlash comes as leaders crack down on unproductive, self-harming competition between firms and local governments that has created overcapacity and lowered profits. Their moves are part of a broader effort to rebalance the economy. “Recent developments suggest the old supply-driven model remains intact,” Robin Xing, Morgan Stanley’s chief China economist, wrote in a note.
Consolidation will take time and will be painful. byd is well positioned, given its scale and vertical integration. The firm controls everything from mining rights of minerals it needs to build its own batteries to cargo ships for transporting its cars to foreign markets. In November it sparked fears of even fiercer competition when it pressed suppliers to cut prices by 10%. Suppliers may now be squeezed further. That could mean layoffs and less money for car workers to spend, at a time when the government is playing up the need to boost weak domestic demand to help absorb the shock of the trade war with America.
An increasingly tough market at home will fuel Chinese car exports. Reuters reports that byd plans to sell over half of its cars overseas, especially in Latin America and Europe, by 2030. That would be a big jump. China accounted for about 90% of the firm’s 4.3m car sales last year. But the higher prices that evs command abroad could offset the ever-smaller margins in China. And it is making inroads in spite of stronger trade headwinds. In April, despite the eu’s increased tariffs on Chinese evs, byd sold more of them in Europe than Tesla, an American rival, for the first time, according to Jato Dynamics. Though the price war is at its worst in China, its ramifications will be felt worldwide. Cheaper evs would be a silver lining, but that will be little comfort for governments already anxious about China exporting overcapacity to their markets. More trade tensions are inevitable.
The allocation of Japan’s trillion-dollar stash of household assets, roughly half of which have been nonchalantly parked in cash and bank deposits for decades, is simultaneously moving under the pressures of a huge behavioural and environmental shift: rising prices, particularly of food, are forcing a quest for returns that few bothered to consider a few years ago. The great unsticking, therefore, pulls at two corners of the plaster: assets once held firmly in place by inertia and the absence of urgent pressure to move are being suddenly unmoored by the reality of both actuarial and kitchen tables.
The UAE cares less about low oil prices than Saudi Arabia. An economist at an Emirati bank says that the country needs them at just $50 a barrel to balance its books, whereas its bigger neighbour, which is spending lavishly on real-estate projects, requires them at $90 a barrel. In the five years to 2027 the UAE is slated to invest $62bn in new production, bringing its capacity to 5m b/d, up from 3.6m b/d in 2021; Adnoc, which pumps most of the territory’s oil, says that capacity has already almost hit the target for two years’ time. The uae’s quota has not kept up with this growth. Last year it negotiated a 300,000 b/d increase, to be phased in over 18 months. On May 28th OPEC+ scheduled a more comprehensive revision of quotas—originally due this year—for 2027. The Emiratis are unlikely to accept their straitjacket. One analyst with contacts in both governments says it is only a matter of time before Saudi Arabia and the UAE openly clash. A descent into disorder, fuelled by conflict between OPEC’s largest and third-largest exporters, could then make the cartel unworkable.
The war appears, for the time being at least, to have boosted some domestic support for Iran’s ballistic missile programme, the government’s crackdown on alleged Israeli collaborators and even enthusiasm for acquiring a nuclear bomb — something the Islamic republic says it is not pursuing.
Israel has sustained an estimated $12 billion in direct losses from its 12-day war with Iran, according to Israeli media and official economic reports released Wednesday. To finance the war’s costs, Israel is expected to raise its national budget deficit to around six percent — well above the Finance Ministry’s previous 4.9 percent cap.
The estimated costs include military expenditures, missile damage, reconstruction efforts, and compensation to civilians and businesses. Analysts project the total could rise to $20 billion once indirect damages and civilian compensation are fully calculated
And who is to pay for all this?
A source in the Finance Ministry told Yedioth Ahronoth that “Israel may seek additional financial support from the United States, either through direct aid or loan guarantees,” to meet its urgent defense and recovery needs.
The weeks-old dream of an American-made smartphone is over
The phone network launched by the Trump Organization has changed its website to say that the $499 smartphone will be “brought to life right here in the USA” and “designed with American values in mind”, after last week pledging the product would be manufactured in the US.
Those with knowledge of the video call said Wolfe Herd turned critical when staff responded with a series of thumbs-down emojis. “I see a lot of freaking-out emojis, y’all need to calm down,” she said. “This is being taken out of context. I like London and I think everyone is overreacting to this, candidly . . . Everyone’s going to have to be adults in dealing with this.” She also suggested all staff take the rest of the week off following the call.
Bumble chief executive Whitney Wolfe Herd has criticised staff after announcing the company would eliminate more than 160 roles in London, warning drastic cost-cutting measures were needed as “dating apps are feeling like a thing of the past”.
Labour’s hope is that the forward march of AI will save the day by creating unprecedented ‘productivity gains’, with only minimal support from the state. At the encouragement of the Tony Blair Institute and the venture-capitalist-cum-government-AI-adviser Matt Clifford, the Treasury has announced an AI Opportunities Action Plan – a strategy to encourage its rollout across multiple sectors – which it hopes will generate £400bn in new growth over the next half-decade. Last year’s Autumn Budget was part of this techno-productivist agenda, with increases in national insurance contributions and the minimum wage intended to incentivise unproductive firms to invest more in technology and spend less on low-wage workers. The testing ground for the project appears to be the civil service itself, where Labour is aiming to make £45bn of AI efficiency savings per year. Of course, automating large sections of the state in a short period of time will be painful and chaotic, and there is no guarantee that the hoped-for productivity gains will come to pass. Yet a government that has closed off every other plausible route to growth is naturally tempted to embrace such reckless schemes. Since the 1980s, the Treasury has encouraged successive governments to embrace an agenda of deregulation and ‘efficiency’, while politicians have simply waited for some deus ex machina – free-market competition in the 1980s, globalization in the 1990s, artificial intelligence today – to turn things around. The new Spending Review marks the extension of this logic. Its ultimate message is that to live within our means we must live in a state of stagnation.
postwar liberalism, including its version of a left, hinged on making capitalism’s fundamental class contradictions, if not capitalism itself, disappear into an ether of ideological mystifications. These included such formulations as industrial pluralism, interest-group politics, race relations, consumer society, affluent society, industrial then post-industrial society, an amorphous and incoherent middle class, homeowner populism, and the American Way. These and other such mystifications became the baseline common sense for thinking and talking about, and acting within, American politics among scholars, political actors and commentators, and the population at large. Despite the standard posture of High Church liberal propagandists inclined to declaim ex cathedra on such airy matters, that common sense did not emerge organically from an essentialized American national character. Rather, it was the product of class struggle, a combination of three-quarters of a century of matter-of-fact proclamation as incontestable truth in predominant venues of conventionalist bloviation29—the academy, corporate newsfotainment industry, popular culture—which project one or another narrative of American exceptionalism, and aggressive ideological warfare that included active suppression of alternative perspectives via red-baiting and other forms of scapegoating, censorship, and coercion for two decades after World War II and perhaps again in this moment of emboldened authoritarianism.
The historian of science Whitney Barlow Robles quotes Scott in her wonderful book, Curious Species, where she explains how coral unsettled certainties. Fed by sunlight like grass, plants with their tentacles laid down layers of limestone. The power of polyps turned ideas of agency on their head, a molecular sightless mass acting as architect. Robles imagines it would be like “suddenly learning that butterflies, not people, planted all the trees in Central Park.”
It was a similar wonder at the endless events of the natural world that led classical liberals to draw connections between the order of nature and the order created by human exchange in the profane world of political economy. Philip Mirowski reminds us that natural metaphors serve double duty: they are “reassuring and graphically concrete images of order, situating humanity squarely at home in ‘its’ universe” while they also tame the disorder of nature, making “an unintelligible alien world comprehensible.”
Nature offered what Deirdre McCloskey calls the ”metaphors economists live by.” Because so much of our politics relies on an explicit and implicit understanding of economics, this means we live by those metaphors too. The intellectual movement of neoliberalism arrived at its ideas of the good society by thinking with and through nature. As the post-Cold War consensus around neoliberal globalization crumbles and the boundaries of individual freedom narrow, new metaphors might help us understand the successor ideology.
