A SYSTEM STARTING TO COLLAPSE
by Mark A. Shryock
The El Niño is forecast to be the strongest ever on record, with the United States model showing 7.4 degrees Fahrenheit and the European model at 8 degrees Fahrenheit higher than normal. The El Niño is not quite at peak yet. The El Niño has until December before peaking. Without going into all the science of the El Niño, the El Niño will most certainly affect food production across the globe, supply chain disruptions, fertilizer shortages, and economic outcomes.
The fertilizer shortage is not just about the El Niño. Around one third of all globally traded fertilizers pass through the Strait of Hormuz. Military escalation in the region has disrupted shipping flows through the Strait of Hormuz. Urea prices shot from around 400 dollars per metric ton to over 850 dollars per metric ton in April 2026. Export restrictions have affected up to 15 percent of world fertilizer exports. There are no strategic reserves for fertilizer.
Less fertilizer means less food, and the projections are already showing it. The World Food Programme forecasts 274 million people in 45 countries will be acutely food insecure by the end of 2027. The 274 million figure represents 49 million more people than today. Latin America and the Caribbean alone could see food insecurity surge to more than 16 million people. East and Southern Africa could see more than 18 million people face deteriorating food security. Asia and the Pacific could see an additional 8.2 million people facing acute food insecurity.
The United States just spent roughly 10 billion dollars alongside Japan to prop up the Japanese yen, and now just a few days later the gains that were made from that intervention have been completely wiped out. Japan holds 1.116 trillion dollars in United States Treasury bonds as of June 2026. Japan is the largest foreign creditor to the United States. Japan’s debt-to-GDP ratio stands at 198.6 percent. Japan is not just a creditor holding United States bonds. Japan is a highly leveraged economy that just had to intervene in its own currency market. If the Japanese economy cracks, Japan does not just dump United States Treasury bonds. Japan also stops being a buyer of new United States debt.
The United States national debt surpassed 39 trillion dollars in March 2026 and now stands at 39.83 trillion dollars as of August 2026. Interest payments on the United States national debt will hit 1 trillion dollars in fiscal year 2026 and are projected to hit 2.1 trillion dollars by 2036. Interest on the United States national debt is now the second largest spending category in the federal budget, behind only Social Security. The 1 trillion dollars in interest costs exceeds spending on national defense, Medicaid, veterans benefits, and transportation combined.
If Japan dumps United States Treasury bonds or stops buying new United States debt, the United States would be forced to pay even higher interest on a debt the United States is already struggling to service. Buyers would still exist for the United States Treasury bonds, but at higher interest rates. TD Economics estimates the Japan sell-off dynamic could add 20 to 50 basis points to the 10-year United States yield.
The dollar’s position is being challenged on another front at the same time. BRICS Pay is launching in 2026 to facilitate direct cross-border transactions in member countries’ local currencies, bypassing SWIFT and the United States dollar. Alongside it, BRICS is developing a digital reserve asset called Unit, backed 40 percent by gold. Over 110 countries worldwide have already participated in de-dollarization arrangements.
Equally as concerning is an AI bubble floating out there that really has tremendous potential to collapse. The International Monetary Fund has cited the AI bubble as a significant risk to financial stability. Sam Altman himself has argued we are in an AI bubble. AI-linked firms have gained 27 trillion dollars in value over three years, equal to 36 percent of the entire United States stock market. NVIDIA, Broadcom, and others trade at price-to-sales ratios above 30. Warren Buffett is sitting on a record 325 billion dollars in cash and has been selling Apple and Bank of America for several quarters.
There are also markers on Wall Street pointing to tremendous stress, because Wall Street is built on gains we have heard about over and over, and that foundation now looks like it could collapse. Wall Street strategists expect the S&P 500 to gain only about 6 percent in 2026, compared with an 80 percent rally since early 2023. The stock market is heavily concentrated in AI. Without the AI gains, the underlying stock market is flat to down.
The Hormuz disruption is not the only chokepoint under strain. Houthi attacks resumed in the Red Sea on February 28, 2026, blocking the Suez Canal route at the same time. For a period in 2026, both of the Middle East’s major maritime corridors were blocked simultaneously. The only alternative for most cargo is the Cape of Good Hope route around Africa, which adds 3,500 to 4,000 nautical miles and 10 to 14 days to voyage times. Transpacific container rates are already running 40 percent above pre-crisis levels because of the disruptions.
Oil prices surged sharply as a result. Brent crude hit $118.35 per barrel on March 31, 2026, and at one point physical oil prices surged to $140 per barrel. Prices have remained volatile in the $80 to $100 range since. QatarEnergy declared force majeure on LNG shipments in early March 2026 after attacks on its Ras Laffan facilities, removing a large share of global LNG supply from the market at a stroke.
The Panama Canal is under its own strain. The Panama Canal Authority reduced the maximum authorized draught for vessels beginning July 1, 2026, citing concerns over potential El Niño drought conditions, cutting the draught from 50 feet to 49.5 feet for Neo-panamax vessels. During the last El Niño drought in 2023 and 2024, the canal had to slash daily transits from 36 ships to 24. The canal is already running near maximum capacity, with traffic up 16 percent from tanker demand rerouted away from the Middle East.
The El Niño, the fertilizer shortage, the debt crisis, the AI bubble, Wall Street stress, and the shipping and oil crisis are not separate. The El Niño hits at the exact moment fertilizer is scarce because of the Iran conflict, at the exact moment the United States is borrowing 8 billion dollars per day, at the exact moment the dollar is being challenged, at the exact moment Wall Street is propped up by a single sector, at the exact moment the Red Sea, the Strait of Hormuz, and the Panama Canal are all under strain at once. The compounding crisis is the system. The system matters.
The call to stock your pantry is not new. Fear is not the goal. Stocking your pantry would be really really smart.
Copyright © Mark A. Shryock. May be shared with attribution.
SOURCES
El Niño sea surface temperature forecasts from the National Oceanic and Atmospheric Administration and the European Centre for Medium-Range Weather Forecasts, August 2026.
Japan yen market intervention from the United States Department of the Treasury and the Bank of Japan, July 2026.
Japan Treasury holdings from the United States Treasury Department TIC data, June 2026.
Japan debt-to-GDP from CEIC Data, June 2026.
United States national debt and interest payments from the Congressional Budget Office, the Committee for a Responsible Federal Budget, the Peter G. Peterson Foundation, and the Joint Economic Committee, 2026.
Strait of Hormuz fertilizer disruption from the World Trade Organization Data Lab, the United Nations Conference on Trade and Development, and the University of Illinois FarmDoc Daily, 2026.
World Food Programme hunger projections from the World Food Programme and Anadolu Agency, August 2026.
BRICS Pay and de-dollarization from the BRICS Information Portal, January 2026.
AI bubble and Wall Street data from the International Monetary Fund, The Atlantic, and market strategist reports, 2026.
Shipping and Strait of Hormuz disruption data from Carra Globe and the Indian Institute of Logistics, 2026.
Oil price data from The New York Times and market data, 2026.
Panama Canal draught reduction from the Panama Canal Authority and gCaptain, June and July 2026.
Supply chain cost data from Slimstock and Trade Treasury Payments, 2026.
QatarEnergy force majeure from Carra Globe and maritime reports, March 2026.
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Didn't know where to post this for you. I thought it was pretty neat!
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What makes this particularly disturbing is not any single crisis, but the disappearance of slack between them. Complex systems rarely collapse because one component fails; they collapse when every mechanism designed to absorb failure is already under pressure elsewhere. Food, energy, shipping, debt, currency and speculative capital are not parallel vulnerabilities but interdependent ones, each capable of amplifying the next. The system has mistaken efficiency for resilience…. and may now discover the difference under conditions in which there is no margin left for error.