"The great Bilderberg secret of 2019 had to do with why, suddenly, the Trump administration has decided that it wants to talk to Iran `with no preconditions.'

"It all has to do with the Strait of Hormuz. Blocking the Strait could cut off oil and gas from Iraq, Kuwait, Bahrain, Qatar and Iran – 20% of the world’s oil. There has been some debate on whether this could occur – whether the US Fifth Fleet, which is stationed nearby, could stop Tehran doing this and if Iran, which has anti-ship missiles on its territory along the northern border of the Persian Gulf, would go that far.

"An American source said a series of studies hit President Trump’s desk and caused panic in Washington. These showed that in the case of the Strait of Hormuz being shut down, whatever the reason, Iran has the power to hammer the world financial system, by causing global trade in derivatives to be blown apart.

"The Bank for International Settlements said last year that the `notional amount outstanding for derivatives contracts' was $542 trillion, although the gross market value was put at just $12.7 trillion. Others suggest it is $1.2 quadrillion or more.

"Tehran has not voiced this `nuclear option' openly. And yet General Qasem Soleimani, head of the Iranian Revolutionary Guards Corps’ Quds Force and a Pentagon bête noire, evoked it in internal Iranian discussions. The information was duly circulated to France, Britain and Germany, the EU-3 members of the Iran nuclear deal (or Joint Comprehensive Plan of Action), also causing a panic.

"Oil derivative specialists know well that if the flow of energy in the Gulf is blocked it could lead to the price of oil reaching $200 a barrel, or much higher over an extended period. Crashing the derivatives market would create an unprecedented global depression. Trump’s former Goldman Sachs Treasury Secretary Steve Mnuchin should know as much.

"And Trump himself seems to have given the game away. He’s now on the record essentially saying that Iran has no strategic value to the US."

— Pepe Escobar, Asia Times, June 5, 2019


Well it may not be a sure thing that you can "take to the bank," but Pepe Escobar may be right.  Is anyone in their right mind prepared to run the risk of a new global economic and financial catastrophe triggered by a war between the United States and Iran?  Undoubtedly, many war games have been played in recent months on just how such a war would proceed.  Recent US public leaks of cyber attacks against Iranian computer systems associated with their radar and air defenses raise the question of US capabilities to strike targets inside Iran.  But IRGC has vast numbers of fast boats capable of swarming US Navy vessels, commercial tankers and other ships transitting the Straits.  The likelihood of a panic on derivatives markets associated with oil price spikes is real.  So Pepe is probably addressing the BIG collateral damage associated with the creeping steps towards a new Gulf War.

In the next few days, President Trump will be in Osaka for the G-20 meeting.  He is set to meet with Russian President Putin and Chinese President Xi Jinping, among other world leaders.  No doubt the prospects of a new Gulf War will be high on the agenda in those private talks.  No doubt the economic consequences will be on the minds of all those leaders.  Talk about a "lose-lose" proposition.


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  1. JJackson says:

    I am confused by Iran’s position which I see as very restrained.
    Based on the premises that any kind of conventional, economic or cyberwar would be lost and that the loby’s hold on the US body politic is such that the current economic, cyberwar and attempts at regieme change are never going to stop. My advice would be try and build a dozen nukes and get them on rockets, invite the Chinese and Russians to inspect one to prove you are for real (I suspect they have all the knowedge required but pl and others probably here probably know far more about their capabilities). Step two anounce the straights are closed until the sanctions are lifted. Nogotiating with the US without teeth is a waste of time.

  2. The Beaver says:

    another article along the same line of thought:
    Our current geopolitical environment requires the careful and considered attention of relevant heads of state. The repeated meetings between Putin and Xi Jinping indicate that Russia and China are actively preparing for any eventuality. The closer we get to economic collapse, the more tensions and chaos increase around the world thanks to the actions of Washington and her close allies.
    Xi Jinping and Putin, who have inherited this chaotic situation, have met at least a dozen times over the last six months, more recently meeting at least three times over two months. The pressing need is to coordinate and prepare for what will inevitably happen, once again trying to limit and contain the damage by a United States that is completely out of control and becoming a danger to all, allies and enemies alike.

    Just have to watch what transpires in Osaka next.

  3. Christian J Chuba says:

    Iran is looking for palatable ways to push back against the U.S. This is a novel approach …
    Iranian Parliament Presents Bill to Collect Toll from Vessels Passing Strait of Hormuz

    “A bill has been provided by the lawmakers which requires the government to receive expenses for providing security to vessels, either military or non-military, in the Strait of Hormuz from them,” Hossein Ali Haji Deligani, a senior legislator, told FNA on Tuesday.

    They later mention Trump’s lament that we spend all of this money protecting other people’s oil, so I don’t know if Iran is serious or just taunting us. Pompeo would scream and call this extortion and it is pushing it but we are quite the extortionists as well.
    We tell India, don’t buy Iranian oil buy our oil or else …, same with the EU and Russian NG vs our Freedom LNG, Turkey and the S400, …
    The only possible way I could see Iran actually doing this would be if they offered premium protection for tankers that used their territorial waters in exchange for a fee vs take your chances if you don’t. Yeah, that is extortion but what would the U.S. do? It’s not like we would covertly damage Saudi or Kuwaiti tankers in Iranian waters, can’t see that. Oh and we would look incompetent if tankers on our side of the of the ‘Arabian Gulf’ kept having minor accidents. That is a very dangerous game.
    I guess desperate times call for desperate measures. We shall see.

  4. blue peacock says:

    IMO, Pepe Escobar trends towards hyperbole. Stress and liquidity issues in derivatives markets are the least of the worries. The Fed, ECB, BoE and BoJ can always open an unlimited repo window for worthless collateral. They’ll be doing that with a high probability in any case since we already see growing stress in the offshore eurodollar market since the middle of last year and that has nothing to do with the Gulf. Just look at the movement in the yield curves in the past year.
    As Col. Lang has noted here in the past, the Straits of Hormuz can’t be blocked forever. At some point in the war, Iran will be overwhelmed. The question is how long does it take the US military to bring sufficient assets to bear to totally destroy all Iranian air defense and gain complete air superiority? What military damage can Iran and its allies inflict before that? Iran must know that its air defenses & offensive missile capability will be overwhelmed eventually, so its strategy must be to inflict maximum damage right at the very beginning. The major Saudi & Gulf oil installations are all within strike distance of Iranian missiles. So are US military bases in Qatar, Oman and Iraq. The straits are narrow and could be heavily mined requiring time to clear. The war will also naturally extend into conflict with Israel & Hezbollah and will require the intervention of the US military to suppress fire. How much heavy bombing capacity does the USAF have?What happens to the Green Zone in Iraq? What happens to Russian assets in Syria who will be in a total war zone with Syria, Lebanon & Israel?
    Clearly, not only will oil prices skyrocket but also tanker insurance until Iran, Hezbollah & Syrian missile strikes are completely suppressed. Then it will take time to clear the straits of mines and debris. And of course the rebuilding of Gulf oil installations. Asia is particularly vulnerable as Russia could be a swing supplier to Europe. But what will Putin demand? The one thing is certain I believe, the US will become a pariah nation as the sentiment on the streets around the world will see the US as the primary instigator of global instability. They see the long arc of US interventions that have consistently created instability and don’t buy easily into our propaganda. I also believe the Vietnam era protests and civil disturbances will be small relative to what we’ll get with the wider ME war as it will provide a focal point for opposition to Trump. This would be a godsend for the NeverTrumpers. And those that supported Trump in the last election on the basis of his criticism of military interventions will abandon him. I agree with Tucker Carlson, it would be the end of the Trump presidency.

  5. Chris says:

    China needs the straight open. Not necessarily the US. Trump is already alluding to other countries protecting their own interests.

  6. Fred says:

    “anounce the straights are closed until the sanctions are lifted.”
    That’s going to do great wonders for the Iranian economy. Of course American extortion – by Trump – is bad! Unlike Iranian extortion like you recommend.

  7. “Is anyone in their right mind prepared to run the risk of a new global economic and financial catastrophe triggered by a war between the United States and Iran?”
    Israel is prepared for others to run that risk for them. Of course you could argue they are out of their minds.

  8. Walrus says:

    Blue Peacock is close. If Iran decides to fight, they don’t have to close the Straits, the insurance industry will do it for them. War risks insurance will not be commercially available at any price. The solution to that is for the U.S. Government to underwrite the necessary insurance not only for the tankers but the crews and associated people. This has been done before.
    But that only covers one aspect of the financial side… The derivatives trade has losers……and winners, and the winners aren’t going to let the losers off the hook, and Uncle Sam can’t fund that transaction. As for mining and clearing, I don’t know for sure but I think I recall that a weeks orgy of mining with high tech stuff could take all of NATOs mine countermeasures resources some years to clear.
    ……And all this is assuming that Russia, China and perhaps others decide not to add their little cup of gasoline to the fire.

  9. O'Shawnessey says:

    Maybe Hormuz is better seen as symbolic of generalized disruption of oil flow due to collective military action. How long can the BIS/FED zombie economy stay on its feet with $200/bbl oil? $300/bbl? My guess is: Not very bloody long.

  10. william chandler says:

    It is the ADELSON Administration . …. Bought and PAID FOR.
    Remember how “rich” Trump was “self funded” and therefore could not be influenced by contributions?”! Well $259 million bought him. Those funds came from Sheldon and Miriam Adelson, Paul Singer and Bernard Marcus, donors who have made no secret of their desire for the United States to destroy the Islamic Republic. Adelson, who alongside his wife Miriam are the biggest donors to Trump and the GOP, contributed $205 million to Republicans in the past two cycles and reportedly sent $35 million Trump’s presidential bid.
    Sheldon Adelson BRIBED Trump and the Republicans …. This does not include the “favorable and unusual” so-called loans granted Kushner and ?Trump? who is notorious for being in financial difficulty and is desperately hiding his taxes. Trump has lots of energy for defending his tax returns but very little for defending Our borders. Trump’s lawyers will appeal and fight this tooth and nail for his Taxes. But when some P.O.S. “judge” treasonously rules against defending this Nation’s borders from Invaders Trump just shruggs and submits. Makes empty threats about where to put the Invaders, and goes back to putting ISRAEL FIRST.
    63,000 American Citizens have been murdered by ILLEGALS since 9/11…. and tRUMP is worried about Iran because Israel TOLD HIM TO. tRUMP is pissing all over Americans ….. so, yes, there IS TRUTH to that dossier.
    Trump has diverted American resources to granting Sheldon Adelson’s every wish for a FOREIGN nation.
    Trump has NOT fulfilled his DUTY and Promises to the American People as he has focused on Israel.
    Trump is attempting to embroil this Nation in a foreign war through blatant LIES.
    FIRST Trump claims scuba divers planted 90lb. Limpet mines 12 feet up the side of a ship while bobbing in the water!
    SECOND Iran shoots down US drone. I am surprised more are not shot down. Usually the US uses them against defenseless enemies, but that is apparently not the case with Iran. What if Russia starts flying drones over OUR coastline?
    America-“I’m not touching you, I’m not touching you, I’m not touching you …. MOMMY! Iran HIT ME!”.
    Why would we be SPYING on open water??? The debris was in Iranian territory ….. it did not WALK there.
    CURE: Trump, Adelson, Kushner, Pompeo, Bolton, need to go on trial for treason.

  11. Cortes says:

    Great historical precedent, so it’s just “Back to the Future”:

  12. JJackson says:

    Fred true but if they just accept having their economy trashed I see no way out for them at least if they do close the straights the problems they cause for the rest of the world may lead to pressure for an equitable resolution as it stands things will just go from bad to worse for their people. Their problem is how to get some teeth with out the US realising what they are doing while they are growing thier gnashers. At least north Korea has the option of a plan B they would be crazy to trade that away. This can not have been missed by all the other countries that are in danger of US inspired regieme change.

  13. Fred says:

    “CURE: Trump, Adelson, Kushner, Pompeo, Bolton, need to go on trial for treason.”
    Nancy O Nancy where is that impeachment vote!
    “defenseless enemies” That sure beats the other kind.

  14. Norbert M Salamon says:

    I would expect that the following news of Russia’s statement in Jerusalem is most reverent to Iran/US “war vs peace” issues:

  15. blue peacock says:

    “The derivatives trade has losers……and winners, and the winners aren’t going to let the losers off the hook, and Uncle Sam can’t fund that transaction.”
    The Fed made Goldman Sachs whole on the underwater AIG CDS. Mark-to-market was abandoned. The Fed could accept any collateral no matter how worthless to provide liquidity as the lender of last resort.
    There is a lot of hyperbole on the derivates markets. Most derivatives traders have hedged positions. The primary issue in all financial crises is liquidity. There’s no bid. And most funding takes place in short duration markets. Liquidity in offshore eurodollar markets have been waning for over a year now. Take a look at SHIBOR for example. Significant stress in Chinese banking system. A war with Iran that leads to a ME conflagration will drive a scramble for liquidity and least risk collateral in an already stressed liquidity environment. The inter-bank market could freeze temporarily. T-Bills are at the apex.
    Don’t get me wrong. Central banks are trapped. They have no choice but to keep expanding balance sheets to prevent the gargantuan credit edifice from imploding. Note Draghi’s statements last week. Yes, at some point we’ll hit the psychological tipping point. When is the open question? It could be momentarily or in decades.

  16. Seamus Padraig says:

    I would certainly abandon him. No doubt about that!

  17. Jim Ticehurst says:

    Good Discussion I cant Imagine a Nuclear War anywhere around the Middle East..Far East or Europe..Just desire for the Option..Even Israel has gone Conventional every time…and I would always look at that Option..Logistics and Resources with everyone..over there China has been busy backing up their SecurityWith Control of Resources…Roads..Bridges..Trains..etc They have a backdoor all the way from Pakistan into China.Africa..The Suez…The Americas,,Its all in The Art of the Deal..or Luck..to have any Pawns on the Table..The Asian Dominos are falling..Game play..Bartering..Negotating..All Things Persian..In my Study of Ancient Civizlations..and Culture..Sumerian ..(Funny..Full Circle now) I found that Wine Making began in Armenia..Thank you..Noah..

  18. JamesT says:

    I think Walrus is on the money. As he points out – for every player with a hedged position there is someone providing that hedge and thus exposed to loss.
    The Big Short provides the most accessible explanation of derivatives that I have ever seen:
    So there are oil industry equivalents of CDO’s – that is, derivatives linked to the price of oil. If the price of oil goes up, some people win and others lose. If the price goes really high in a short time those losers will lose big and nobody (not even the US govt) will be big enough to cover their loses. Would the US govt really be willing to pay to bail out German, Japanese, and French banks even if they had enough money to do so? I don’t think so.
    There is a lot of hand waving about derivatives – but I think Pepe’s core thesis actually holds up. Much to my surprise.

  19. LondonBob says:

    True most derivatives are hedged and it all cancels out with your book ideally market neutral, but having worked in the area you did get strange contracts done at strike prices where you would think the price will never hit, presumably the client is hedging something, such as $200 oil. The Investment Bank just takes a fee without any concern they would have to pay out, but if they did have to the notional value would wipe the bank’s capital out. Any price spike would also be difficult to hedge. The real issue would be the loss in confidence of the financial system as you wouldn’t know who was solvent and the economic impact of $200 oil, it would be far worse than 2008.

  20. Harry says:

    Why not forego the nuclear option which is a sin, and head straight for the Straights. The Iranians know that if you want to hurt America you aim for its pocket. Which appears to be what they are doing.
    It doesnt serve them to admit their plan. But they are probably doing their best to discretely harm shipping.

  21. Harry says:

    Force Majeure?
    Losers often whine. It wouldn’t surprise me if there was an attempt to suspend trade to prevent losses being recognized till the US has subdued Iran

  22. Christian J Chuba says:

    Thanks for the historical read, the Danes did have a good run, 1492 – 1857 but I can see how a mandatory 2% cargo tax would lead to wars. If Iran overplays it, it would be them closing of the Strait of Hormuz and would put us on the brink of war they don’t.
    I do see a possibility for them if they do a light version of it. They could apply this only to traffic in their territorial waters and also offer it as on optional service for Gulf States that want their protection in international and their own sovereign waters. I could see Qatar going for it if their fee was reasonable. I could see Iraq and maybe another Gulf state accepting it as well. The U.S. would threaten those states with sanctions but that would strain those relationships.
    If the tanker attacks were false flags it would discourage future attacks because it would make us look incompetent if we can never catch Iran in the act on our side of the fence. It’s a dangerous game but we are breathing down their throats, don’t see how they can avoid danger.

  23. joanna says:

    The Fed made Goldman Sachs whole on the underwater AIG CDS.
    explain. Incidentally the same passage drew my attention.

  24. Harper says:

    Thank you all for thoughtful comments. I believe the collective wisdom of the responses underscores my essential point: An eruption of deeper conflict in the Gulf will have potentially grave collateral consequences. Another major financial disruption at this point would be worse than 2008. At that time, the center of the crisis was the United States. European crisis came on a year or so later and remains unresolved. Between oil flows from the Gulf, still-unresolved US-China trade disputes, Fed and ECB already returning to QE, the scope of the economic consequences of a disruption, even temporary, of global oil and gas flows would be severe. Not the end of the world, not the first step towards nuclear Armageddon, but severe.
    Just means that all concerned parties should thing through a net assessment of the consequences before falling into a step-by-step escalation.

  25. JJackson says:

    That is a hell of a gamble without a trump card to play (no pun intended). If they – or the Houtis – do escalate the danger of passing through the straights to a point where it is causing significant pain and the US decides to stop them militarily they will come off much the worse. The Saudis and some US Gulf bases may not fare well but ultimately you can not win against the American military if they decide to go Desert Storm on you. It is not a gamble I would take unless I did have a weapon of last resort sufficent to make my opponent rethink over running my country.

  26. JamesT says:

    I would recommend Matt Taibbi’s exposition here, but long story short … contrary to their public position, in the run up to the 2008 housing bubble burst, Goldman Sachs predicted what was going to happen. So they bought insurance from AIG that would pay out if the bubble burst – thus hedging the exposure Goldman Sachs had to a market crash. But the financial crisis that ensued was much worse than Goldman Sachs expected, and as a result AIG (which had sold insurance to other banks) went bankrupt and could not pay out on the insurance policy they had sold Goldman Sachs. So the US govt stepped in and gave AIG enough money to pay out its huge insurance policy to Goldman Sachs, and as a result Goldman Sachs was the only US investment bank to survive 2008.

  27. Walrus says:

    JJ, there is a difference between “winning” on the battlefield and winning a war. They’re not the same and the latter is a doubtful proposition in Irans case.

  28. blue peacock says:

    I began my career on an oil trading desk. And I’ve been in the financial trading business all my working life. Currently I work at a macro hedge fund with a focus on analytics and hence my big interest in geopolitics.
    You are correct that not everyone is hedged and even if you are there may be no liquidity when you need to unwind. We’ve seen that time and time again. The bigger issue is the degree of leverage as you point out. LTCM being a prime example. Having said that smart traders take OTM positions when vol is low to speculate on tail risk. Nassim Taleb’s favorite trade. As always in any derivatives trade counter-party risk must be taken into account. If there is a “black swan” – meaning most were dancing until the music stops – then we can see a mad scramble to unwind leverage and acquire “risk-free” collateral which is what always get folks. As we saw with the last credit crisis, which was a black swan in my definition (many people knew the party would end but kept dancing), central banks & financial regulators can intervene. AIG which was caught off-side as they wrote many swaps of massive national value and had counter-parties like Goldman who would have in a MTM environment been wiped out of capital if AIG defaulted. The issue is always liquidity. And these contracts are priced on the basis of moneyness. We saw that the central banks provided a total backstop and allowed liquidity to permeate. Sure there were losses and Michael Lewis & Kyle Bass and others made a lot of money only because liquidity was restored. Other wise they would have been holding just a paper claim. Lehman blew up or more like was allowed to fail by Paulson as the repo & inter-bank market froze. They couldn’t get out of a funding bind.
    The Iran crisis is not like that. It is well telegraphed and anticipated. Sure there will be real dislocations. Volatility will skyrocket. But also note that there are huge strategic reserves globally and there are pipelines that skirt the Gulf. And everyone knows or at least believes it will be temporary. I’m not convinced this will precipitate financial armageddon as Pepe Escobar believes.
    As an aside keep track of the offshore eurodollar market. It seems a “black swan” is taxiing on the runway as liquidity has been waning for over a year and that has nothing to do with the Gulf. The scale of the eurodollar market is significantly larger than the oil and mortgage credit markets. We may be reading about the next Michael Lewis in a few years.

  29. Mark Logan says:

    I believe if Pence was POTUS we would already be at war with Iran. If there is a payoff inherent to Trump’s abjectly self-interested nature this is it.
    IMO it’s unlikely Trump will willingly go on crusade unless he becomes convinced it would either make him rich or popular.

  30. Walrus says:

    Britain literally went bankrupt in October 1916 – spending all her foreign exchange propping up its allies. I don’t believe the current financial system can survive a major war – the price of gold is your best indication.

  31. Harper says:

    Another factor to consider: 2008 happened and many people were left behind as Wall Street enjoyed $23.7 trillion in bailout money (that is the official figure provided by the Inspector General of TARP). Ignore the political fallout at your own risk. Trump was elected, significantly via the backlash against both parties over the bailout and the endless wars. The political fallout over another bailout will be far worse and very unpredictable. That chaos factor will further spook Wall Street. The volume of outstanding derivatives contracts far exceeds the available backup cash. AIG was a $186 billion bailout to meet the insurance obligations to all the banks and other financial institutions that hedged through the swaps. Also, corporate debt is another major point of vulnerability today–with or without a Middle East oil shock. Vast majority of corporate debt is rated just above junk. Any downgrading means immediate payment call. A lot of points of vulnerability built into the post-2008 skewed system, even without a Black Swan Event.

  32. JJackson says:

    Walrus I don’t think they have any chance of winning a war or any kind of escalating tit-for-tat exchanges they need to negotiate the peaceful removal of sanction but they have no way of doing that at present. The Americans are as likely to reach an acceptable compromise with them as Israel is with the Palestinians, and for the same reason, they can do what they like and say no to any ‘compromise’ that does not give them everything they want while giving nothing in return. They are in danger of still being under economic attack in 50 years, like Cuba, if they do not find a way of making their enemy take the seriously. If anyone can suggest any other way of making Israel or the US negotiate I would be all for it but I have not seen one, yet.

  33. eakens says:

    The best thing iran can do right now is tell the Russians to put some SAM sites manned by Russians on their coast. That would very likely end the prospect of US aggression.

  34. jon stanley says:

    It may very well as Pepe writes, ” Is anyone in their right mind prepared to run the risk of a new global economic and financial catastrophe triggered by a war between the United States and Iran?”…….but perhaps the more relevant question that should be asked is; why, to the extent his is a valid assessment, that is, do we find ourselves, allow ourselves, to be placed in this supposedly catastrophic position? If we are are in such an untenable strategic position, what is the quickest, or, surest, anyway, way out of it? What financial triggery (metaphysics) can create, financial triggery can undo. I am not implying this can be done painlessly, but this position, again, if we are actually in it, cannot be left to stand. Assuming that our society and culture are not batshit crazy. However, if we are batshit crazy, this may be a rather revolutionary period we are about to find ourselves in.

  35. joanna says:

    Ok, got it, thanks, JT.

  36. VietnamVet says:

    Excellent post and comments.
    Donald Trump likes to make deals by getting his marks into negotiations, scaring crap out of them, and settling to his advantage. This is the reason he and his companies have been involved in over 3,500 lawsuits. However, what works with corporations doesn’t work with nations.
    I am not convinced that he knows the difference between a Head of State and a CEO. FedEx said the tariff wars are a Mike Tyson blow to its bottom line. All they can do is spend money and lawyer-up to try to change the policy. On the other hand, the Supreme Leader of Iran is the nation’s ultimate political and religious authority. He can’t be scared. Besides God and fellow Shiites on his side, he has thousands of missiles aimed at Persian Gulf oil facilities and any invasion staging areas. Mobile Scuds have never been effectively countered by air strikes.
    The 20% cut off of oil supplies and $200 a barrel oil will very likely crash the global economy. The troops, supplies and allies are not in position for an invasion. John Bolton screwed up Iraq. He and his fellow travelers will do it again in Iran. Escalation will inevitably lead to a nuclear war if the USA uses them or if China or Russia get drawn into a world war. Donald Trump has to back down. I’m afraid the Iranians are too proud to bend a little like Kim Jong-un in order to survive till Donald Trump and his incompetent crew are gone.

  37. Fred says:

    “2008 happened and many people were left behind as Wall Street enjoyed $23.7 trillion in bailout money ”
    That sure points out the corruption of the American political system. So a war means the economy is screwed with the EU, WallStreet, and China being hurt worst of all? I don’t see how the ‘deplorables’ find that troublesome given that the left is busy with a proposed $1 Trillion college/university system bail out camouflaged as student loan forgiveness, open borders promises (supported by the EU and WallStreet) and as icing on the yellow cake of progressivism “reparations” for the vicitms of America! It seems that if the left wins in 2020 a lot of folks are going to be screwed by peace just as badly as they will be screwed by a war against Iran.

  38. Peter Williams says:

    The USN has four MCM vessels in Bahrain and four in Japan. Probably several helo sweepers in Bahrain. A cleared minefield is only ever considered to be cleared to 99%.
    Iran has moored, ground and possibly torpedo mines. Mines can be laid by almost any small vessel, and air and submarine laid.
    Almost thirty years ago, as part of my MCM/MW course we were given the theoretical task of mining and de-mining the Strait of Hormuz. Mining the Strait was easy and was completed in under a week. De-mining resulted in the loss of all sweepers due to attacks from onshore. We had to resort to converted fishing vessels and lost a great many of them. The Strait was closed for six months.
    Iran can close the Strait!

  39. Jim Ticehurst says:

    The World has now experienced A couple of Decades Record Breaking Global Disasters of Every Type..Floods..Droughts..Tornados.and more.. ..The United States has not been Pro Active to this by either Party..Manpower..Training..Equipment..Resources..or a Combination of Military and civilian Corps of Engineers.Presidnt Bush should have used those Millions of FEMA Dollars to Creat a Manpower aand Development Training Program Like John Kennedys…..So…a Few More Catastrophic Disasters..Less Resources…Crops..Foods..Water..Fuels..supplies etc..and The Result..A One World Government..Bilderberg style..The Control everything..and Abolish Currency.bitcoins and on the Way…Just keep the Mushrooms in the Dark until that Happens..Its not our Culture as much as Media Manipulation..Keep everyone Doped up…and Dummied Down…

  40. blue peacock says:

    Very well said. Indeed, we don’t need another ME quagmire especially after the experience with Iraq, Libya & Syria. We’ve been in Afghanistan for 18 years and after a trillion dollars of expenditure 45% of the country is effectively under Taliban control. Why are both political parties borrowing for this?
    Yes, systemic financial fragility is growing. There is more leverage globally today than at the peak in 2008. And as you point out the corporate debt markets are especially vulnerable to a funding problem considering how much they have grown in the last decade and how much the credit quality has deteriorated. Many corporate balance sheets are worse now than then. Of course a lot of debt has been added to enable stock buybacks. Unlike the Fed, the ECB did buy European junk bonds and kept zombie companies alive. Draghi has already thrown in the towel and Powell is following closely behind. Rate cuts are imminent. It is not if but how much. One good from the credit crisis is that US banks recapitalized but that did not happen in Europe and then there is the unprecedented growth & scale of Chinese banking & shadow banking assets where a serious accident could occur. IMO, many are mistaking the reduction in Chinese USD reserves as reflecting policy to fight the US. The alternative hypothesis is that there is a growing USD shortage in China and reserves are being used to alleviate that. SHIBOR is indicating stress there already. Swap spreads have gone negative across major parts of the curve. I don’t believe we are going to see a replay of 2008. The vulnerabilities that are showing stress right now are in offshore eurodollar markets. That could lead to problems down the line for corporate debt markets if funding tightens. .
    As I’ve noted earlier expect central bank balance sheets to expand substantially in the next few years. The question always is when is the psychological tipping point which will manifest in a currency crisis? Rudy Dornbusch’s work on how expansive monetary policies can lead to currency crisis is worth exploring .

  41. Fred says:

    “FedEx said….” They’ve been buying political influence for years here and abroad. They were instrumental in globalization efforts because it was good for them, not necessarily the Republic. They sure didn’t bitch when manufacturing jobs left America by the millions thanks to NAFTA and other global trade agreements.
    “John Bolton screwed up Iraq.”
    L. Paul Bremer thanks you for making him blameless in the overturning of the social order in Iraq. Iraqi’s of course have nothing to do with how Iraq is governed.

  42. Eugene Owens says:

    Peter W. –
    I recall reading recently that the USN is going to rid itself of those spruce/fiberglass hulled MCM vessels. Supposedly to replace them with the Littoral Combat Ships or perhaps MCM modules on vessels of opportunity like the Brits are striving for. I just hope they have some new magic tech to counteract magnetic fused mines.
    But what scares some are remotely activated mines, which would be perfect for inshore in the Gulf and in the Strait. They would allow Iranian vessels to move at will through their own minefields, yet be threats for foreign ships. The Chinese and Russian Navies have them. Does Iran?

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