“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
“Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
“A full-throated defense of economic dynamism.” - The Wall Street Journal
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
AI Summary.S. facilities, targeting 10,000 units annually by 2028 at mid-six-figure euro prices — a fraction of the $4m–$6m cost of comparable Tomahawk missiles. Lower unit cost enables large-scale barrages to saturate hardened targets such as weapons factories and military bases.
Laura PitelFinancial Times
Date Posted:
Covenant, a defense start-up, is opening manufacturing facilities in the US, Germany, and Israel to manufacture its new deep-strike munition at scale, with a production target of 5,000 annually at its US and German sites in 2028.
Can cheaper missiles enable more effective saturation attacks on hardened targets?
Core argument: Covenant’s Anthem missile, priced in the mid-six-figure euro range, costs roughly 10–25x less than a Tomahawk ($4mn–$6mn), enabling saturation-barrage tactics that offset its smaller 250kg warhead through sheer volume.
Covenant aims to produce 1,000 Anthem missiles a year at each of its German and US plants in 2027, and 5,000 a year at each site from 2028. [Anthem] would cost in the “mid six-figure” euros — a fraction of the price of Tomahawks, which are sold to overseas governments for roughly $4mn-$6mn apiece. Covenant declined to state the range of the Anthem but [Covenant's CEO] said the concept was partly a response to a German-British plan to jointly develop “deep precision strike” weapons with a range of more than 2,000km. Anthem will carry a warhead weighing up to 250kg half the 450kg payload of a Tomahawk. But Covenant said the lower cost and ability to be produced at scale would allow militaries to fire large barrages of the missiles to “saturate” targets such as weapons factories or military bases.
Takeaways by Macro Roundup® AI
Covenant’s Anthem missile, priced in the mid-six-figure euro range, costs roughly 10–25x less than a Tomahawk ($4mn–$6mn), enabling saturation-barrage tactics that offset its smaller 250kg warhead through sheer volume.
Covenant targets production of 1,000 Anthem missiles per year at each of its German and U.S. plants by 2027, scaling to 5,000 per site annually by 2028, with €130mn in orders already booked.
Is the Industrial Base on a Wartime Footing? A Progress Report— U.S. defense manufacturing has expanded significantly, with ~10,000 new firms entering the market, $120bn+ in contracts awarded to nontraditional companies, and munitions contract obligations up 330% since 2010. Spending priorities are shifting toward lower-cost weapons, with affordable munitions targeted to rise from 49% to 70% of total procurement by
AI Summary.China has developed hypersonic glide vehicles capable of launching air-to-air weapons at targets up to 5,000 miles away, putting U.S. command-and-control aircraft, Guam, and Hawaii within range.
Gerry DoyleBloomberg
Date Posted:
The Chinese military has developed hypersonic glide vehicles that can launch air-to-air weapons, which would allow them to hit high-value targets from thousands of miles away.
Does China's hypersonic missile threaten U.S. military dominance in the Pacific?
The Chinese military has developed hypersonic glide vehicles that can launch air-to-air weapons, an advancement meant to threaten high-value targets such as command-and-control aircraft thousands of miles away. A hypersonic glide vehicle deployed from a DF-17 missile could travel about 1,500 miles, just short of the distance from China to Guam. The DF-27 missile has a maximum range of about 5,000 miles, putting Hawaii in range.
Is the Industrial Base on a Wartime Footing? A Progress Report— U.S. defense manufacturing has expanded significantly, with ~10,000 new firms entering the market, $120bn+ in contracts awarded to nontraditional companies, and munitions contract obligations up 330% since 2010. Spending priorities are shifting toward lower-cost weapons, with affordable munitions targeted to rise from 49% to 70% of total procurement by
Trump Invokes Cold War-Era Law to Boost Munitions Production— U.S. military stockpiles of long-range and air-defense missiles are being depleted faster than they can be replaced, with full replenishment taking up to six years under current production capacity.
AI Summary.The U.S. Navy is testing an air-to-air missile with a range exceeding 290 miles, surpassing all other known weapons of its type and matching the reported range of Chinese-made missiles recently used to shoot down fighter jets.
Gerry DoyleBloomberg
Date Posted:
The US Navy is testing a new air to air missile that can hit targets at least 290 miles away. A defense analysis suggests the system is likely intended for “fleet air defense, not air to air combat.”
Does extended missile range shift the balance of air superiority?
Core argument: The U.S. Navy’s new air-to-air missile under testing reaches targets beyond 290 miles, surpassing the range of any other known weapon in its class and materially extending fleet air-defense reach.
The US Navy is testing a new air-to-air missile that can hit targets more than 290 miles away, considerably farther than any other known weapon of that type. Such weapons came into sharp focus last year when Pakistan said it used long-range Chinese-made missiles — with a reported range of about 300 kilometers — to down Indian fighter jets. Although missiles with that range can be used to hit high-value aircraft such as command planes or tankers, they might be more valuable for defending ships, said Peter Layton, a former Royal Australian Air Force officer “I think it’s meant to counter Chinese bombers firing long range anti ship cruise missiles,” Layton said. “Fleet air defense, not air-to-air combat.”
Takeaways by Macro Roundup® AI
The U.S. Navy’s new air-to-air missile under testing reaches targets beyond 290 miles, surpassing the range of any other known weapon in its class and materially extending fleet air-defense reach.
Pakistan’s combat use of Chinese-made air-to-air missiles—with a reported range of approximately 300 km—to down Indian fighter jets validates long-range beyond-visual-range engagements as operationally decisive in peer-adjacent conflicts.
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Is the Industrial Base on a Wartime Footing? A Progress Report— U.S. defense manufacturing has expanded significantly, with ~10,000 new firms entering the market, $120bn+ in contracts awarded to nontraditional companies, and munitions contract obligations up 330% since 2010. Spending priorities are shifting toward lower-cost weapons, with affordable munitions targeted to rise from 49% to 70% of total procurement by
Defense Spending: Macroeconomic Consequences and Trade-Offs— Defense spending booms raise real economic output, lift inflation briefly, and widen trade deficits as import demand rises, while boosting both public and private investment and improving long-run productivity through innovation spillovers and private research crowding-in.
AI Summary.U.S. defense procurement commitments of up to seven years are driving major missile production expansions, with interceptor and strike missile output targeted to grow 3–4x by 2030.
Jerry McGinn and A.J. DiltsCenter for Strategic and International Studies
Date Posted:
Lower cost munitions (under $600,000 per unit) will potentially start to arrive at scale over the next 18 to 24 months as production of higher quality exquisite systems ramps up. Capex of major defense contractors has risen 31% y/y as of Q2 as they expand production capacity.
Can the munitions industry scale production fast enough to meet defense demand?
DOD budget documents confirm that low-cost systems will arrive at scale before most exquisite systems, as illustrated in Figure 2. Across framework agreements with Lockheed Martin of up to seven years, the DOD anticipates growing the production capacity of PAC-3 MSE interceptors by 233%, from roughly 600 to 2,000 interceptors per year by 2030; THAAD interceptor output capacity by 317%, from 96 to 400 units annually; and annual Precision Strike Missile production capacity fourfold to roughly 550 missiles. Backed by a DOD procurement commitment of up to seven years, RTX also plans to raise annual production of the Tomahawk missile to more than 1,000, the Advanced Medium-Range Air-to-Air Missile to over 1,900, and the Standard Missile 6 (SM-6) to over 500.
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Is the Industrial Base on a Wartime Footing? A Progress Report— U.S. defense manufacturing has expanded significantly, with ~10,000 new firms entering the market, $120bn+ in contracts awarded to nontraditional companies, and munitions contract obligations up 330% since 2010. Spending priorities are shifting toward lower-cost weapons, with affordable munitions targeted to rise from 49% to 70% of total procurement by
AI Summary.Iran's economy is contracting at its fastest rate in roughly 40 years, with inflation above 50%, food costs doubling year-over-year, and the national currency near worthless.
Javier BlasBloomberg
Date Posted:
Is Database:
Database
Inflation in Iran is running at at least ~69%, its highest annual rate in 70 years. The black market exchange value of a rial hit a record low of ~1.85mm rials to the dollar, relative to 50,000 per dollar five years ago.
Is economic collapse the only path to ending the conflict?
Core argument: Iran’s inflation rate exceeds 50% annually — the highest in nearly 70 years of records — while food and essential goods costs have doubled year over year, severely compressing household purchasing power across the economy.
[Iran's] economy is on track to suffer the biggest annual contraction since the nadir of the Iran-Iraq War in the mid-1980s. Inflation is running well above 50%, the highest annual rate since records start nearly 70 years ago. Worse, the cost of food and other necessities has already doubled from a year ago. Its currency, the rial, is worthless. In the black market, the exchange rate has collapsed to a record low of about 1.85 million rials to the dollar; five years ago, roughly 50,000 rials were enough to buy a greenback.
Takeaways by Macro Roundup® AI
Iran’s inflation rate exceeds 50% annually — the highest in nearly 70 years of records — while food and essential goods costs have doubled year over year, severely compressing household purchasing power across the economy.
Iran’s GDP is on track for its steepest annual contraction since the mid-1980s Iran-Iraq War nadir, a deterioration that surpasses every recessionary episode across four intervening decades.
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Soaring Diesel Prices Rip Across The US Economy— Diesel prices have reached $5.47 per gallon, near an all-time high, as global supply disruptions push the cost of refining diesel above crude oil to record levels.
For the Oil Market, the Strait of Hormuz Isn’t Closed— At least 5m barrels of oil per day continue to transit the Strait of Hormuz, with the true volume likely higher as growing oil spills from tanker attacks indicate ongoing vessel traffic despite efforts to close the waterway.
AI Summary.U.S. stockpiles of advanced air defense and long-range strike missiles are critically depleted, with over 50% of the most capable Patriot interceptors and ~40% of high-altitude defense missiles already expended. Remaining options carry significant operational trade-offs, as the most effective munitions are in short supply.
Magdalena Del ValleBloomberg
Date Posted:
A Bloomberg analysis finds the US likely consumed > half of its most advanced Patriot variant, ~40% of THAAD stocks and “likely exhausted” its magazine of new Precision Strike Missiles, a key long-range standoff missile in the Iran War.
Are US military stockpiles depleting faster than production can replace them?
[A Bloomberg analysis] found the US has likely fired more than half of its most advanced Patriot variant — the PAC-3 MSE — and about 40% of its Terminal High Altitude Area Defense interceptors. The Pentagon also burned through various types of long distance, so-called stand-off strike missiles with numbers of Precision Strike Missiles “likely exhausted,” as commanders tried to keep US troops out of harm’s way. “The US isn’t out of missiles, but it is running low on the right ones. And the choices that remain all come at a cost” [wrote Bloomberg Economics defense lead Becca Wasser and Courtney McBride].
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Renewed Iran War Would Test Diminished Interceptor Inventories— U.S. ballistic missile interceptor stockpiles have fallen to under 1,000 Patriot and ~250 THAAD units, creating near-term readiness gaps for future high-intensity conflict. No comparable alternatives exist, as naval interceptors are typically out of range, leaving coalition forces exposed to greater risk from ballistic missile threats.
Is the Industrial Base on a Wartime Footing? A Progress Report— U.S. defense manufacturing has expanded significantly, with ~10,000 new firms entering the market, $120bn+ in contracts awarded to nontraditional companies, and munitions contract obligations up 330% since 2010. Spending priorities are shifting toward lower-cost weapons, with affordable munitions targeted to rise from 49% to 70% of total procurement by
AI Summary.The Pentagon is committing over $120bn across multiyear defense contracts for missiles and submarines to stabilize supply chains and incentivize contractors to build new manufacturing capacity in exchange for guaranteed long-term orders.
Drew FitzGerald and Marcus WeisgerberWall Street Journal
Date Posted:
The Pentagon earmarked ~$136B for Patriot missile production as well as 14 new submarines over 7 years. Congress must still provide annual funding for the deals.
Does guaranteed military spending create sustainable manufacturing capacity?
Core argument: The Pentagon committed $135.6 billion across two contracts—a $59 billion Patriot missile deal with Lockheed Martin and a $76.6 billion submarine contract covering nine Virginia-class and five Columbia-class vessels—shifting procurement from annual buys to seven-year multiyear agreements.
A Patriot contract with missile maker Lockheed Martin is now valued at nearly $59 billion, a significant expansion of an order announced in April. General Dynamics Electric Boat and HII Newport News Shipbuilding received a $76.6 billion deal for nine Virginia-class and five Columbia-class nuclear submarines that will be delivered by 2038. Lockheed has another megadeal for missiles on order with the U.S. government—a preliminary $35 billion multiyear contract for Thaad interceptors, a larger munition also capable of thwarting ballistic missiles. Both contracts, which span seven years, reflect the Pentagon’s changing approach to buying missiles. The military has proposed a series of multiyear agreements instead of annual purchases to guarantee a smoother supply of weaponry over time. The effort is designed to motivate contractors to invest in new factories and supply-chain agreements in exchange for a reliable signal of future orders. Congress must still provide annual funding for the deals.
Takeaways by Macro Roundup® AI
The Pentagon committed $135.6 billion across two contracts—a $59 billion Patriot missile deal with Lockheed Martin and a $76.6 billion submarine contract covering nine Virginia-class and five Columbia-class vessels—shifting procurement from annual buys to seven-year multiyear agreements.
The Pentagon’s multiyear contracting strategy, led by Deputy Defense Secretary Steve Feinberg, trades guaranteed future order volume for contractor investment in new manufacturing capacity and supply-chain infrastructure.
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Renewed Iran War Would Test Diminished Interceptor Inventories— U.S. ballistic missile interceptor stockpiles have fallen to under 1,000 Patriot and ~250 THAAD units, creating near-term readiness gaps for future high-intensity conflict. No comparable alternatives exist, as naval interceptors are typically out of range, leaving coalition forces exposed to greater risk from ballistic missile threats.
Is the Industrial Base on a Wartime Footing? A Progress Report— U.S. defense manufacturing has expanded significantly, with ~10,000 new firms entering the market, $120bn+ in contracts awarded to nontraditional companies, and munitions contract obligations up 330% since 2010. Spending priorities are shifting toward lower-cost weapons, with affordable munitions targeted to rise from 49% to 70% of total procurement by
AI Summary.China's satellite manufacturing capacity has grown from 500 units per year to an estimated 4,100–5,000 units per year, with two domestic operators each planning constellations of 10,000+ satellites to rival existing commercial low Earth orbit broadband networks.
Demetri Sevastopulo and Eva XiaoFinancial Times
Date Posted:
A commercial space sector is emerging in China with commercial satellites now making up almost half of China’s launches. Two firms are each planning on deploying constellations to compete with SpaceX’s Starlink.
Can China's satellite expansion outpace US commercial space dominance?
Core argument: China's satellite manufacturing capacity has scaled 8–10x in three years to 4,100–5,000 units annually, transforming the country from a marginal producer into a direct industrial rival to SpaceX's Starlink supply chain.
Two companies — Guowang and Thousand Sails — are each planning to deploy more than 10,000 satellites in space, putting them in direct competition with SpaceX’s Starlink constellation. This comes as China is pushing to build low Earth orbit broadband networks with dual civilian and military applications. The country is also creating huge automated “gigafactories” to build satellites and has an estimated capacity for the production of 4,100–5,000 satellites a year, compared to an annual rate of 500 three years ago.
Takeaways by Macro Roundup® AI
China's satellite manufacturing capacity has scaled 8–10x in three years to 4,100–5,000 units annually, transforming the country from a marginal producer into a direct industrial rival to SpaceX's Starlink supply chain.
Guowang and Thousand Sails each plan constellations exceeding 10,000 satellites, positioning China to contest low Earth orbit broadband dominance with systems carrying explicit dual civilian-military utility.
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The Hunt For A New Earth— The lunar economy is projected to generate $94bn–$127bn in cumulative revenue by 2050, driven by activities including mining and tourism.
Rocket Shortage Leaves Europe Defenseless in Space Wars— Europe's lack of heavy-lift rocket capacity — capped at ~10 launches per year and ~22,000 kg per flight — leaves it unable to match rivals spending $200bn+ to militarize space with hundreds of satellites and orbital weapons.
Elon Musk’s Starship Heavy Could Revolutionize Warfare— Space-based weapons systems positioned in low Earth orbit could enable simultaneous precision strikes on thousands of targets anywhere on Earth within minutes, without aircraft, personnel, or missile launchers. This approach removes traditional military constraints such as establishing air superiority and relying on large inventories of expensive guided missiles.
