Battle Lines: Trump wants a new armada. Can America still build one?
Enter Commander Tom Sharpe, a man who's not only been there and done it, but practically wrote the manual. A retired Royal Navy heavyweight who's commanded four warships and earned an OBE for saving HMS Endurance from a catastrophic flood, Sharpe joins us to tear into what this seismic shift really means.
Are we gearing up for World War Sea? Has the age of battleship brinkmanship returned? Expect sharp analysis, no-nonsense truth bombs, and a few jaw-dropping tales from the frontlines of naval warfare.
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Reuters
36 minutes ago
- Reuters
US fiscal folly could create big, beautiful debt spiral
LONDON, July 3 (Reuters) - The U.S. tax and spending bill passed on July 3 is expected to add more than $3 trillion to the country's deficit over the next decade. If the current debt trajectory continues unabated, it could set off a slow motion debt spiral that could endanger the Federal Reserve's independence. The sobering long-term debt projections of the Congressional Budget Office, opens new tab may actually understate the likely impact on U.S. debt-to-GDP levels of President Donald Trump's "One Big Beautiful Bill". The CBO based its estimate on the assumption that temporary increases in government spending and tax cuts will sunset at a projected date. But this new budget bill, which extended previous tax cuts and other measures, has shown that this sunset often never arrives. Thus, the long-term projections in the U.S. Treasury's annual financial report, opens new tab may be more realistic since they assume the current rate of government spending will continue indefinitely. In the Treasury forecast, the U.S. debt-to-GDP ratio is projected to increase to over 200% in 2050 compared to the CBO's estimate of around 145%. Scarier still, the Treasury forecasts that the U.S. debt-to-GDP ratio will reach 535% by 2100 if current spending plans continue. Proponents of tax cuts argue that they boost GDP growth and thus will slow the rise in debt-to-GDP, but the CBO estimates that the House Bill will only increase real GDP by an average of 0.5%, opens new tab over 10 years or 0.04% per year relative to the CBO's January 2025 projections. The Tax Foundation estimates that the Senate Bill will boost GDP growth by 1.2%, opens new tab in the 'long run'. That hardly makes a difference compared to an expected debt increase totalling almost 10% of GDP. If today's debt dynamics persist, the risk premiums in the U.S. Treasury market will almost certainly climb over the long run. Economists Martin Ademmer and Jamie Rush, opens new tab have analysed the drivers of 10-year Treasury real yields since 1970. They concluded that investors typically demand more risk compensation as the U.S. deficit increases, especially when there is competition from an ample supply of safe assets globally. Thus, Treasury yields rise. Their analysis concludes that these two factors together lifted the natural 10-year real yield for Treasuries by 1.3 percentage points between 2005 and 2023. If the deficit projections for the next decade are realized, this trend should continue. With all this in mind, it was notable that U.S. Treasury Secretary Scott Bessent said last week, opens new tab that he would not boost long-term Treasury bond sales given today's high interest rates. Since the pandemic, the average duration of U.S. government debt has declined significantly as the Treasury has favoured bills over longer-term instruments in an effort to keep interest expenses under control. One reading of Bessent's comments is that the Treasury is concerned about the country's ability to continue servicing its long-term debts if it borrows at today's elevated yields, a message that could push Treasuries' risk premium even higher, making long-term borrowing even less tenable. This reminds me of a similar episode in which a heavily indebted country faced a sudden spike in its already large deficit. As investors lost trust in the country's ability to pay back its debt, long-term yields rose, which in turn forced the government to issue debt at shorter and shorter maturities. This signalled to the market that the government would struggle to pay the existing debt, and this pushed long-term government bond yields even higher. The country's debt entered a doom loop. The country in question: Greece after the 2009 financial crisis. To be clear, I do not expect the U.S. to experience a similar implosion. There are crucial differences between the U.S. and Greece that should prevent this, not least the ability of the U.S. to devalue the dollar and inflate away some of its debt. Greece, as a euro zone member, had no such flexibility. But the new U.S. budget increases the possibility that the U.S. could face a similar debt drama, only in slow motion. If long-term Treasury yields remain higher for longer, the Treasury is apt to continue shortening the duration of its debt. This, in turn, could create a vicious cycle by making government interest expenses more volatile, further imperiling U.S. fiscal health and making longer-term debt even riskier. There appear to be three main off ramps for the U.S. One: politicians could become fiscally prudent and significantly reduce the deficit to a sustainable level. This seems unlikely given both parties' recent track records. Two: the Treasury could impose capital controls to artificially increase demand for Treasuries. As I have written previously, this move would likely spell the end of the dollar as the main global reserve currency. Three: the Fed could create artificial demand for long-term Treasuries by scooping up bonds itself – that is, restarting quantitative easing – to keep yields low. The danger with this form of QE, however, is that it represents fiscal dominance, where the central bank loses control over monetary policy because of imprudent government actions. How such a development would play out is impossible to predict, especially when it involves a global superpower, but it's fair to assume the Fed won't want to find out. (The views expressed here are those of Joachim Klement, an investment strategist at Panmure Liberum, the UK's largest independent investment bank). Enjoying this column? Check out Reuters Open Interest (ROI),, opens new tab your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI, opens new tab can help you keep up. Follow ROI on LinkedIn,, opens new tab and X., opens new tab
The Guardian
an hour ago
- The Guardian
Leaders of Russia and China snub Brics summit in sign group's value may be waning
Russia and China are not sending their leaders to a Brics summit starting in Brazil on Sunday in what may be a sign that the group's recent expansion has reduced its ideological value to the two founding members. China's 72-year-old leader, Xi Jinping, has attended Brics summits for the past 12 years. No official reason has been given for sending the premier, Li Qiang, other than scheduling conflicts. Russia's president, Vladimir Putin, is facing an international criminal court arrest warrant and may have decided not to travel to Rio to avoid embarrassing the summit hosts, who are signatories to the ICC statute. Mongolia has been in an acrimonious legal dispute with the ICC after it did not act on the warrant when Putin visited last year. Putin abandoned his plans to attend the 2023 Brics summit in South Africa after the president, Cyril Ramaphosa, was unable to offer any guarantees regarding Putin's arrest or otherwise under the warrant. Putin is accused by the ICC of being instrumental in abducting and deporting tens of thousands of Ukrainian children. Brics, often described as the developing world's alternative to the G7 group of nations, has undergone a recent rapid expansion, but in the process has diluted its coherence as a body offering an ideological alternative to the western capitalism represented by the G7. Its founding members were Brazil, Russia, India, China and South Africa, but the group last year expanded to include Indonesia, Iran, Egypt, Ethiopia, Saudi Arabia and the United Arab Emirates, countries in various stages of economic development and with varying levels of antagonism towards the west. The additions skewed the body towards autocracies, leaving Brazil, South Africa and India uneasy. Brazil has said the Brics grouping is just one sign of an emerging new world order. Speaking recently at the Overseas Development Institute, the former Brazilian foreign minister and current ambassador to London, Antonio Patriota, said Donald Trump's 'America first' foreign policy would move the world order away from the US as a superpower and towards a multipolar world with power spread more evenly. 'The US, through its policies, including on tariffs and sovereignty, is accelerating the transition to multipolarity in different ways,' Patriota said. He added that new alliances were likely to develop that would challenge the current distribution of power. 'It's difficult to argue today that Europe converges with the US policy on trade or on security or on sustaining democracy, for example. So where there used to be one unique western pole, now perhaps there are two.' Brazil, an emerging diplomatic powerhouse in the global south, may benefit from Russia and China's leaders being absent this weekend, since it wants to use the summit to champion a theme of inclusive global governance reform. It would not want the focus to be solely on criticism of western double standards in the Middle East and Ukraine. The hosts have a set of concrete proposals: the green energy transition, cooperation on vaccines and expanding most-favoured nation status to all countries in the World Trade Organization. Patriota denied that new multipolarity – a world in which many different cooperative alliances are formed – was inherently unstable, arguing it was unilateralism that had been the more disruptive force. 'There is strong support for preserving multilateralism, but that does not mean that we need to preserve it as it stands,' he said. 'Brazil is arguing we shouldn't wait for another world war, or for something of that nature, or scale, to start reforming. Unless there is a strong movement towards reform now, we run the risk of reaching a tipping point.' But Dr Christopher Sabatini, a senior fellow for Latin America at Chatham House, has argued Brazil will struggle to impose an agenda on the Brics. 'Brics was an unwieldy group before it opened its membership – even if the stated goals of the emerging-economy alliance were initially laudable and long-overdue,' he wrote recently. 'While UN security council expansion was once a stated goal, China was always likely to block India's accession to the body. Brazil's commitments to reduce carbon emissions were also likely to collide with Saudi Arabia, Russia and the UAE's oil- and gas-based economic interests (though Brazil has doubled down on oil production and exports despite its public rhetoric over climate change).' India is also opposing the idea of a Brics currency as an alternative to the dollar. Nevertheless, Xi's decision to stay away is puzzling, given the US's retreat from its global leadership role has provided a golden opportunity for China to pick up the mantle. Dr Samir Puri, the director of the centre for global governance at Chatham House, questioned whether a transition to a new multilateralism was happening. 'It seems that the ending of one international order does not necessarily beget the sudden arrival of another,' he said. 'The vacuums created by the US's sudden retreat from multilateralism and global governance will not be automatically filled by others.'
The Independent
an hour ago
- The Independent
The Dalai Lama says he hopes to live more than 130 years ahead of 90th birthday
Tibetan spiritual leader the Dalai Lama said that he hopes to live until he is over 130 years old, days after he laid out a succession plan by saying he plans to reincarnate after his death. The Dalai Lama, who is celebrating his 90th birthday on Sunday, made these comments during a ceremony organized by his followers to offer prayers for his long life. 'I have been able to serve the Buddha dharma and the beings of Tibet so far quite well, and I hope to live over 130 years,' the Dalai Lama told thousands of followers who had gathered Saturday in India's northern town of Dharamshala. Dharamshala has been the Dalai Lama's home in exile since 1959 after he fled Tibet in the wake of a failed uprising against Chinese rule. Since then, he has sustained Tibet's aspirations for greater autonomy under Chinese Communist Party rule and mobilized Tibetans inside and outside China. On Wednesday, the Dalai Lama said that he intends to reincarnate, paving the way after his death for a successor to take on a mantle stretching back 500 years. Tibetan Buddhists believe the Dalai Lama can choose the body into which he is reincarnated. That announcement ended years of speculation that started when he indicated that he might be the last person to hold the role. The Nobel Peace Prize-winning spiritual head of Tibetan Buddhism also said that the next Dalai Lama should be found and recognized as per past Buddhist traditions, while stressing that his office will lead the search. China views the Dalai Lama as a separatist and has insisted that only Beijing has the authority to approve his successor. Meanwhile, the exiled Tibetan community of more than 20,000 people in Dharamshala is gearing up to celebrate the Dalai Lama's birthday on Sunday. His followers have put up giant posters and billboards across town, as tens of thousands of people are expected to attend the event, including Buddhist leaders of various sects and followers from across the world. Barbara Weibel, a U.S. citizen who has been following Buddhism for more than 30 years, said she 'had to be here for this.' "I want this long life ceremony to keep him alive as long as possible,' she said.
