I complained yesterday that the BBC, in particular, had reported weekend events and claims about what was happening in the Strait of Hormuz without appropriate caveats being provided.
I was sceptical of the US claims that two ships had been escorted through that Strait by US naval vessels. Tracking data did not support the claim. Iranian sources claimed it was wrong.
What was undoubtedly true was that Iran's missile attacks were happening at the same time as these claimed passages were occurring. The likelihood of US success appeared to be low, and now all my doubts have been confirmed, as it seems that Donald Trump has, as Donald Trump always seems to, chickened out again. The claimed policy of supporting ships to pass through the Strait of Hormuz has now ceased, 24 hours after it began.
As I suspected, Trump has not the slightest idea how to reopen this route and has walked away from the problem, yet again, and the impasse in this war continues, with Iran continuing to exploit its asymmetric advantage with considerable success to effectively secure the defence of its own country, whilst the consequences of Trump's actions continue to create economic mayhem around the world.
So, where are we now?
The reality is that Donald Trump has very clearly got no idea how to get himself out of the mess he is in, but his own capacity for what might fairly be described as bullshit provides him with no available route to solve the impasse that he has created. At the same time, and perhaps unsurprisingly, the Iranians see no strategic advantage in backing down from the position of strength they have developed. We do, as a consequence, face the likelihood that this situation will last for many more months.
Some suggest that conflict intensification is more likely. I continue to think that is unlikely. The fact that the USA is short of weaponry is, in fact, the best explanation for its current refusal to deploy long-range missiles in Germany at present. A spat with the German Chancellor is just an excuse. They do not have the missiles available for this deployment, or for the resumption of hostilities against Iran on any scale. In that case, we have to consider a very different outcome to this war, which is most likely to continue at a low level of aggression but with massive consequences nonetheless for some time to come.
What might that mean? First, as I previously explained, the only prospect of the stalemate being broken will arise if pressure is brought to bear on both the USA and Israel to do just that.
I have previously explained that I think that this might involve the imposition of sanctions on Israel and, as the international situation worsens, possible measures against the USA.
However, European governments with the most power to impose these are at present far too frightened to do so, but as the situation in their domestic economies worsens, I suspect that this mood will change, although nothing will happen before the autumn at the earliest.
This is going to feel like a long, grinding process that might only be broken by sanctions and rejection of Benjamin Netanyahu at the ballot box in Israel, and by the rejection of Trump at the midterm elections, with the prospect of impeachment to follow, in the USA.
In that case, we have to anticipate further development in the economic cost of the war. The development of these costs is going to be fairly rapid and potentially disastrous as we move through a number of stages as the crisis evolves.
We have already seen the first response. Markets have, almost certainly inaccurately, appraised the risks of economic shortages and have increased the price of oil, gas, fertiliser and other raw materials that are going to be in major short supply for some time to come.
The second stage of the response is that these increases in the price of raw materials are going to be reflected through supply chains, and initial impacts are already being seen, most particularly at petrol pumps. Food prices are also being impacted, but not by anything like as much as might happen before this conflict is over.
The third stage of this response is that the world's central banks have begun to notice this crisis and are threatening to respond by raising interest rates, albeit wholly inappropriately. That error will arise because, as I have already suggested, the inflation we are going to get is not the consequence of an overheated economy, but of an absolute shortage of essential products, which will actually reduce demand within the economy as a whole, to which an increase in interest rates is a wholly inappropriate response. That response will happen nonetheless, making this crisis very much worse than it needs to be, with this stage beginning within a month or so.
Fourthly, absolute shortages will begin to develop. These will first happen with petrol, diesel, jet fuel, and other oil-based energy sources. Reports are now appearing that stocks of all such products are declining rapidly. The forecasts of absolute shortages from sometime during June onwards appear to be accurate. This is when the consequences of this war begin to have a very direct impact on our well-being.
Fifthly, supply chains then become disrupted. This will most obviously be the case with regard to food, but this will also become apparent in the supply of a whole range of other raw materials, and as it does, major economic obstruction will develop and absolute shortages will appear, with people being forced to go without essential items unless government intervention happens. This will be happening over the summer, and most certainly by early autumn.
Sixthly, we then begin to see economic failure as a consequence of what is happening. Companies with limited financial reserves will not be able to sustain their operations as they suffer critical shortages in their supply chains and will not, as a result, be able to meet customer demand, potentially generating unsustainable losses in their operations that will force them to impose short-time working in the first instance, or straightforward closure as their funds run out. This will, at the latest, be happening during the autumn.
Seventhly, at this point, we end up with a banking crisis as both business and mortgage customers of banks find themselves unable to settle their debts, either because of business failure or job loss, creating a financial meltdown in the banking system greater than that seen in 2008.
All of this might happen by Christmas. And I do not see the conflict between the USA and Iran as likely to be resolved by then. The political pressure to find a resolution will not exist until the crisis has reached this seventh stage, in my opinion, and by then the damage will have been done. We will be in recession and heading for depression, and the impact on the overall world economy will be on a scale hard to imagine.
So, what can we do now?
First, talk about this.
Second, put in place contingency plans. As I have already said, take precautionary action with your savings and realise cash if you can.
Third, look at replenishing your store cupboard. If you can afford it, and I know that by no means everybody can, this is a moment to build up stocks of things that have very long use-by dates, and which you might eventually eat anyway.
Fourth, apply pressure on politicians. Ask them how they will react to this developing situation. Making them aware that you know this might happen helps change their mindset.
Fifth, discuss the need for political responses to this situation of the sort that I have discussed, including the adoption of wartime-style economic measures that will be necessary, including considerable increases in taxation on those with wealth and high incomes to lower their consumption so that resources can be allocated to meeting the needs of those who might otherwise go without. Hardship will be very much worse if this does not happen, and soon.
Sixth, support demands for changes in the structure of our economy so that it becomes more caring, resilient and, in the long term, hopeful, when all these qualities are currently missing.
Seventh, pray, if that is your inclination. At the very least, increased focused attention upon the issue of concern will create an environment in which change is possible, and since this is what prayer is, my comment is not entirely flippant.
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Have you noticed any politicians anywhere in the world who have their eyes and ears open to what is happening and are attempting to, at least, get it discussed or get action taken now?
My gut feel is there won’t be many at present.
Craig
They have in Asia, and for a while.
In the West perhaps only Mark Carney. His idea of Europe rebuilding a world order is totally out of his hands. It would require European leaders too wake up. Europe has too many Americophile leaders who still believe that the US will elect another Barack Obama and everything with the US order is fine. Just need to get through this year of Trump and he will be a lame duck president. This is highly fanciful. It ignores completely that Barack Obama was an exceptional president and the rapid social, economic and political changes that is on going.
There are a number of inter-locking interests.
Israel would like to reduce Iran to a failed state (Somalia, Sudan, Iraq, Syria). The USA/tRump acts as Israel’s agent, driven by the posse of pro_Israel “advisors” that surround tRump. The EU is slowly getting over its +/- 70 year love-affair with the USA but, with some exceptions (Ireland, Spain) is still very hesistant to take direct action against Israel for genocide/ethnic cleansing/apartheid state etc etc. The UK remains a quasi-Israeli client state with respect to middle-east policy formation or implementation. And whilst UK serfs are “enjoying” the benefits of inflation due to Israeli actions, their problems are irrelevant to the current UK pro-zionist government. Which leaves an interesting and open question: how did Europe and the UK get to where they are? & why?
One other action, since the cost of fuel is going up and unlikely to stop going up: start getting into the habit of using other forms of transport where possible.
Buses & Trains may be uncomfortable or inconvenient, but the only thing that will induce operators to make them less so is greater passenger numbers.
I’ve started taking the bike to work, 5 miles each way.
I walk wherever I can
I am lucky to live in a small city, but many people drive in to the centre from where I am. I never do, and prefer walking to my bike.
Not so easy in rural Devon. Nearest train station is 9 miles away with no direct bus. Our bus service is poor and the roads are not safe to walk or cycle. Sadly there is no option but to drive although I try to keep this to a minimum and car share to church etc.
Not so easy in rural Devon. Nearest train station is 9 miles away with no direct bus. Our bus service is poor and the roads are not safe to walk or cycle. Sadly there is no option but to drive although I try to keep this to a minimum and car share to church etc.
Tomorrow a few million people, in a low turnout election, will vote for a long-exposed charlatan who backs Trump and backed his war. Despite the colossal failings of every one of that man’s policy positions. Despite his dodgy funding and background.
Human beings have a high tolerance of self harm and abuse, which Britain is determined to put on display once again.
The North of England is likely to turn out heavily (relatively speaking) for Reform, despite the leak by The Financial Times that Farage has told the City that he “won’t rock the boat, he just needs their money.” Reforms’ message is direct to its voters; they don’t see the lies, just the Facebook attack ads and 30 second instagram clips.
I love to avoid driving to work. As far as buses are concerned, it is two buses and a half-hour walk. Train is bus to Lichfield, half mile walk to station, train to Stafford, mile walk to work. Cost currently £11 return, takes roughly 2 hours. Drive takes 35 mins. I have a very good bike, however the 16 miles to work is across Cannock Chase, following a former IronMan triathlon route and is non-stop hills till just outside Stafford. Last time I did it, it took 80 minutes. I am now 74.
Having mostly lived in rural villages where we were dependent on the car we have just moved to a market town with a station five minutes walk away. A visit to hospital appointments in the city now means a fifteen minute train trip followed by a ten minute bus ride. No worries about parking or being late. A stress free experience. We even went to the seaside for the day recently because there is a direct train. It’s giving us a new lease of life.
I am pretty much in that situation
It’s good
The construction industry has already pretty much accepted that it is in recession, with a predicted 2.5% drop in output by the end of the year.
Recession fears deepen as building faces sharp decline | Construction Enquirer News
I think they are being optimistic with just 2.5%
Me too
Please note:
1. There is a very high probability that the US November midterm elections will return the House of Representatives to a strong Democratic Party majority.
2. The House of Representatives has the power of the purse – the budget. The Democratic caucus will not fund this war.
3. The House Democrats are keen as sharp swords to impeach the president. Amid the chaos, additional possible impeachments are Chief Justice John Roberts, Justice Clarence Thomas, Secretary of Defense Pete Hegseth.
4. The probability is 50-50 right now that the US Senate will go to the Democratic Party. The impeachment process begins in the House and then goes to trial in the Senate.
5. If we can diminish the Congressional purchasing power of BigMoney and BigOil, and if we can elect a majority of Democrats in the House of Representatives, then we might be able to shorten the length of the global recession. But I could not make any forecasts about “before Christmas.”
As an American, I can only say how enraged I am and how deeply I apologize to everyone else. I have watched every thing for which my cohort and I have worked for decades destroyed. I think it is the citizens of earth who must cooperate now.
Thank you
Good luck
We all need this to succeed
I think China has been shuffling its MahJong tiles and thinking hard about Straits of Hormuz.
When the right wind blows (East) it may declare several Kongs and then execute a quick MahJong.
Trump hasn’t got a clue how to play, and even if he has got the tiles, he hasn’t got a clue how to play them.
(My MahJong set inherited from dad who bought it when posted to RAF Steamer Point, British Protectorate of Aden, 1961-63, just before the Russians replaced us as white colonisers).
Martha Elizabeth Ture, do you think Trump may find or create a crisis that would allow him to postpone or abandon the mid-term elections?
He certainly won’t go quietly and I am sure the Zionists will help him hang on!!
Then what?
Roseanne, short answer is No but.
This has been gamed out several times, and law school deans have written about it. Basically, to attempt to postpone or cancel an election in the US, a president would be instigating civil war. Under the Constitution, elections are conducted by states, not the federal government. If the president declared some sort of national emergency, the states would say So what? You’re not in charge of elections. Both the states and the president would then file litigation with the Supreme Court; in the meanwhile, the states would carry on with elections, the president would order the National Guard, but the National Guard is part time reserve infantry homed in the states. Meanwhile, the world media would be reporting on the president’s war on the states. It would be headlined as US Civil War Erupts. No president is that effing stupid, not even this one.
Thank you
Thank you Martha. That’s good to know!
I can’t help but think that the fifth step is woefully incomplete. Essentially, the unremarked aspect is the need to account for how the political system ignores any demand for positive change that doesn’t have a consistent vocabulary. There is of course some existing vocabulary that is useful.
Once the elections are past occupying all attention, the existing vocabulary is ‘wargaming’ and ‘NEP-F’ (National Emergency Plan for Fuels). A great many people should be asking politicians to ensure that DESNZ has been coordinating with DfT, DHSC, Defra and the MoD (and maybe also UPIA but the public has never heard of them) in wargaming NEP-F. Have the processes been tested in any way or have the relevant civil service staff never heard of them? Is NEP-F fit for purpose?
Noted
It will end up being a ‘Covid’ scramble where they find their ability to create money for some rushed, and probably badly thought out, operation to manage matters.
Heaven forbid.
I was able to decipher most of the alphabet soup but what is UPIA?
The general public is treating all this much more seriously than the politicians seem to be, to judge from a conversation at my dentist’s yestrday.
[…] Cross-posted from Richard Murphy’s blog […]