2026-07-10 ATS briefing¶

Primary deficits: a short history¶

The FRED Blog’s piece on primary versus total deficits is a useful technical primer, but its framing obscures the real dynamic at play. The distinction it draws — between the total deficit (including interest payments) and the primary deficit (excluding them) — is presented as a tool for assessing “today’s budgetary choices” versus the “burden of past decisions.” This is misleading.

The primary deficit is not a measure of fiscal discipline. It is a measure of how much the state must borrow before it even services its existing debts. When the primary deficit is large and persistent, it means the state’s current spending on things like war, welfare, and administration already exceeds its tax take. The interest payments on past debt are then piled on top, forcing even more borrowing. The US has run a primary deficit in most years since 2002. This is not a temporary blip; it is the normal state of affairs for a state that must simultaneously fund imperialist military commitments, manage social peace through spending, and avoid taxing capital.

The article’s three historical observations are telling. The WWII spike was a genuine emergency. The 1990s surplus was a brief anomaly, driven by a temporary peace dividend and a stock market bubble that inflated tax revenues. The third point — that low interest rates narrow the gap — is the key. The US state has been able to run large primary deficits for decades because the dollar’s reserve currency status and the Federal Reserve’s ability to buy its own debt have kept interest rates artificially low. This is not a sign of health; it is a sign that the system is being propped up by its own contradictions. The moment this arrangement falters — as it is now — the gap between primary and total deficits widens, and the state’s borrowing costs explode. The “burden of past decisions” is not a technical footnote; it is the central contradiction of a state that has spent beyond its means for a generation and now faces the bill.

Baltic Dry Index Up to 1-Month High¶

Source: Hellenic Shipping News

The Baltic Dry Index has ticked up to a one-month high of 2,910, driven by capesize and panamax segments. The headline is unremarkable — a routine fluctuation in a volatile index — but the context matters.

The index tracks the cost of moving raw materials: iron ore, coal, grain. A rise suggests increased demand for these inputs, which in a normal cycle would signal expanding industrial production. But we are not in a normal cycle. The global economy is awash in overaccumulated capital, with manufacturing capacity sitting idle across China and Europe. What we may be seeing is not genuine demand growth but a speculative scramble — commodity traders front-loading shipments ahead of anticipated supply disruptions or currency volatility.

The Baltic Dry Index is notoriously sensitive to financialised betting. When fictitious capital is sloshing around looking for yield, it inflates freight rates as easily as it inflates tech stocks. A 2% rise in capesize rates to 4,569 points could just as easily reflect hedge fund positioning as real steel demand.

The more telling data point is buried in the same feed: crude tanker newbuilding contracts hitting a record high of 60m deadweight tonnes. Shipowners are betting big on future trade volumes. That is either a rational bet on a recovery that has not yet materialised, or a classic overinvestment trap — building capacity for a world that no longer exists.

For revolutionary politics, the implication is indirect but real. The shipping industry is a canary for global trade. If these rates are inflated by speculation rather than demand, the correction will be sharp. A freight crash would compound the existing crisis in global supply chains, hitting workers in ports, warehouses, and factories first. The system’s tendency toward boom-bust in its most basic infrastructure is not a bug — it is the operating logic.

Dry Bulk Shipping: South American grain demand drives rise in Atlantic Panamax rates¶

Source: Hellenic Shipping News

The Atlantic Panamax market has tightened sharply in Q2 2026, with rates averaging 65% higher year-on-year. The driver is straightforward: South American grain exports to East Asia surged, with shipments from the East Coast to the Far East more than doubling from Q1. This is not a speculative bubble. As one broker notes, the market was "fundamentally driven," not led by forward freight agreements. Real demand for grain—China remains the main buyer—soaked up available tonnage.

What matters here is the geography of accumulation. The Pacific market was strong enough that owners kept their ships in the East, ballasting from Australia rather than returning empty to South America. That created a localised shortage in the Atlantic, pushing up rates for prompt loading. The North Atlantic also held firm, with mineral and coal cargoes adding support. The result is a market where multiple trade lanes are pulling in the same direction, making the basin more resilient than if it relied on a single grain corridor.

The contradiction is latent rather than explosive. For now, shipping capital is enjoying a rare moment of leverage over charterers. But the underlying dynamic is the same: the system depends on moving ever-larger volumes of grain and minerals across oceans, driven by uneven development between agricultural exporters and industrial consumers. If Chinese demand falters or South American harvests disappoint, the same mechanism that tightened the market will unwind it just as fast. The bullish Q4 outlook is conditional, not structural.

Crude tanker newbuilding contracting hits record high at 60m DWT¶

Source: Hellenic Shipping News

The shipbuilding industry has just posted a record: 60 million deadweight tonnes of crude tanker capacity ordered in a single year, more than double the VLCC orders from 2025. On the surface, this looks like a vote of confidence in the future of oil transport. But the details tell a more contradictory story.

The rush to build is driven by high freight rates and an ageing fleet — 22% of existing tankers are already past their 20-year design life. So this is partly a replacement cycle that should have happened years ago. But the scale suggests something else: a bet that the current geopolitical disruption to shipping routes is permanent. The Strait of Hormuz remains a flashpoint, and owners are ordering now because they assume the normalisation of transit conditions is not coming soon.

What is striking is the almost complete absence of a transition. Only 2% of new orders will use alternative fuels. The industry is doubling down on the existing energy system at the very moment when the contradictions of that system — climate breakdown, geopolitical instability, overcapacity — are intensifying. By 2028, deliveries will flood the market. If demand does not keep pace, or if a diplomatic settlement reopens the Strait, the result will be a classic shipping crisis: too many vessels chasing too few cargoes, rates collapsing, and the weakest owners wiped out.

This is not a story of capitalist planning or foresight. It is a stampede. Each owner acts rationally in isolation, but collectively they are building the conditions for the next crash. The only question is whether the crash comes before or after the ships are delivered.

Trump Is Remaking Latin America¶

Source: Foreign Affairs

Trump's Monroe Doctrine Revival: Short-Term Gains, Long-Term Contradictions¶

Foreign Affairs presents Trump's Latin America policy as a rare success story in an otherwise troubled foreign policy landscape. The article's central claim is straightforward: by resurrecting the Monroe Doctrine with military force — the 48-minute capture of Maduro being the headline act — Trump has secured unprecedented cooperation from regional governments on migration and security.

The material basis is clear enough. Mexico's Sheinbaum, despite her leftist credentials, has delivered cartel extraditions and migrant interdiction that previous administrations could only dream of. The threat of tariffs and military strikes proved more effective than diplomatic niceties. Fentanyl overdose deaths fell 22%. Homicide rates in Mexico dropped 40%.

But the article's real insight lies in what it identifies as the coming contradiction. The author notes that twentieth-century US interventionism bred Castro and Perón. The same dynamic is already visible: China stands ready to absorb any country that tires of Washington's heavy hand. Trump's policy is producing short-term compliance at the cost of long-term alignment.

What this analysis misses is the economic dimension. The US is extracting Venezuelan oil and demanding Mexico restrict Chinese transshipment — both moves that address overaccumulation pressures by securing cheap energy and blocking competitive imports. This is not simply "big stick" diplomacy; it's the US state actively managing the conditions for its own capital accumulation at a moment when inter-imperialist rivalry with China is intensifying.

The question for revolutionary politics: will the inevitable backlash take nationalist or class forms? The article assumes anti-Americanism. But the conditions that produced Sheinbaum's election — inequality, labour precarity, drug war violence — remain unresolved. A left that could articulate those grievances against both US imperialism and the Mexican capitalist class might find fertile ground.

Iran Is Losing Iraq¶

Source: Foreign Affairs

Iran Is Losing Iraq¶

The Foreign Affairs piece by Kamaran Palani describes a significant shift: Iran's influence in Iraq is unravelling, not primarily through external pressure but through internal political realignment. The trigger was the Iran war itself, which forced Baghdad to confront a contradiction it had long managed — the existence of armed militias loyal to Tehran operating within Iraq's borders while formally part of the state.

What makes this noteworthy is the direction of change. The Popular Mobilization Forces, the umbrella coalition of mostly Shiite militias, is splintering. Key groups like Muqtada al-Sadr's Saraya al-Salam and Asaib Ahl al-Haq have announced they will disarm and integrate into the Iraqi state. This is not a defeat imposed by the US or Israel. It is a political calculation by Iraqi actors who see more advantage in aligning with a Baghdad government seeking distance from Tehran than in remaining proxies.

The holdouts — Kataib Hezbollah, Harakat al-Nujaba — are becoming isolated. As Palani notes, they now look less like a national vanguard and more like defenders of a foreign power. That shift in perception matters more than any military balance.

Iran's real strength in Iraq was never just the militias' firepower but their deep embedding in Iraqi society and politics. That second pillar is cracking. The war made it impossible for Iraq to maintain its balancing act between Washington and Tehran. The new government under al-Zaidi, endorsed by Trump, has made reclaiming the state's monopoly on violence a priority — and found willing partners.

The implication is straightforward: Iran is losing what was arguably its most important strategic asset outside its borders. The axis of resistance has been damaged in Gaza and Lebanon, but in Iraq the damage is self-inflicted, driven by Iraqi nationalism reasserting itself against overweening Iranian influence. Whether this opens space for genuine Iraqi sovereignty or merely a shift from one imperial patron to another remains to be seen.

Venezuela’s turn to Israel is about survival, not conviction¶

Source: Al Jazeera

The article describes a straightforward case of political realignment under duress. Delcy Rodriguez, installed after the US ousted Maduro, is trading ideological continuity for survival. The shift toward Israel is not a change of heart but a signal to Washington that Caracas will play by the rules of the new hemispheric order.

What is revealing is the mechanism. Rodriguez is not simply bending to US pressure; she is using the rapprochement with Israel to weaken her domestic rival, Maria Corina Machado, who had cultivated ties with Netanyahu. By courting the same patron, Rodriguez aims to cut Machado off from a key source of international backing. This is a classic manoeuvre in client-state politics: the local strongman uses alignment with the imperial centre to neutralise internal opposition.

The material basis is clear. Venezuela’s economy — oil, mining, electricity — has been opened to US capital as the price of Rodriguez’s tenure. The pivot away from Iran and Hezbollah is the ideological cover for this surrender of sovereignty. The article notes that Rodriguez herself once denounced the US intervention as having “Zionist overtones”; now she welcomes Israeli disaster teams. Contradiction is not a problem for a regime whose only principle is staying in power.

For revolutionary politics, the lesson is grim but familiar. When a movement abandons its social base and becomes a faction fighting for access to imperial patronage, it ceases to be a vehicle for anything but its own survival. The Venezuelan case is a reminder that anti-imperialist rhetoric, without a working-class organisation capable of defending sovereignty, is just a prelude to capitulation.

Tense standoff at an anti-migrant protest in a South African town¶

Source: Al Jazeera

In Alexandra, a township near Johannesburg, locals armed with sticks have been trying to evict suspected undocumented migrants, with police standing by. The scene is a familiar one in South Africa: working-class communities, themselves squeezed by unemployment and crumbling public services, turning their anger on foreign nationals rather than the system that keeps them precarious.

The state’s role here is telling. Police did not stop the harassment; they contained it. The line between official immigration enforcement and mob violence blurs when the state tacitly permits the latter. This is not a breakdown of order but a particular kind of order — one where the state outsources the dirty work of social control to desperate citizens, then steps in only when the violence threatens to become unmanageable.

What drives this is not simply xenophobia, though that is its expression. It is the pressure of a labour market that cannot absorb the people it already has. In South Africa, the formal economy has been shrinking for years, pushing millions into informality and survivalist competition. Migrants become visible targets precisely because they are concentrated in the same precarious spaces — minibus taxis, street vending, domestic work — where locals are also scrapping for a foothold.

The ruling class benefits from this misdirection. Every fight between workers over scraps is a fight not directed at those who own the mine, the factory, the mall. The state manages the violence rather than resolving its cause, because resolving it would mean confronting the accumulation crisis that leaves so many with nothing to sell but their labour — and no buyer in sight.