Inside Trump's plan to remake the world — as Americans foot the bill

Source: Alternet.org · Bias: Left

Summary

I think we have to accept the truth. We are going to pay, and we are going to continue to pay, for the president’s war of choice against Iran. Such are the consequences of politics. Maybe Americans will take their democracy seriously next time.If Donald Trump walks away from this war, things won’t go back to normal. Over the weekend, the AP confirmed reporting from elsewhere that Iran has established a tribute system through the Strait of Hormuz. It is charging as much as $2 million for safe passage of each oil tanker, payable in Chinese currency (yuan). That “toll,” as it’s being called, will be passed on to consumers.But if Donald Trump escalates the war, things will also not go back to normal. Reports suggest that he’s thinking about invading Kharg Island, Iran’s main oil depot. The idea may be to take it and use it to negotiate terms of a ceasefire, but no one really knows. In any case, escalation will not restore the flow of oil through the strait. All Iran has to do is sink a few tankers, as former Secretary of Defense James Mattis said, with “anti-ship cruise missiles that could be fired off the back of a pickup truck that can go 100.” Sink a few tankers that are worth about $100 million each and scare off anyone who’s willing to insure them. That means oil slows to a trickle, prices keep going up and we all look on in despair as our incomes are drained away. (Bloomberg reported over the weekend that the price of gas might be the least of our concerns as we may not be able to find any gas to pay more for.)Walking away from the war would also do nothing to stop Israel from continuing to invade Iran’s allies or from attacking Iran. It would do nothing to stop Iran from attacking neighboring US-allied Gulf states in retaliation for Israel’s continued assault. As long as there’s conflict, insurers won’t insure, and if insurers won’t insure, expect to see oil climb to $200 a barrel, according to Bloomberg, which puts the average price of gas at around $8.To recap, if Trump walks away, we pay. If he escalates, we pay. We pay for the toll or we pay for the scarcity. (Or we can’t find any gas to pay more for.) Again, Americans could have taken their democracy seriously when deciding whether to elect a convicted felon who already screwed up the first time he was president. But we as a people did not do that. The consequence is that we pay.Meanwhile, the president we elected keeps lying about the end of the war in the hopes that traders will believe him and keep down the price of oil. He has done this repeatedly, and the question has been: how long are investors going to trust the gap between what Trump is saying about the war and what’s actually happening? To find the answer to that and more, I got in touch with Patrick Watson, a senior economic analyst for Mauldin Economics. I have turned to him often whenever I need answers on the state of the economy. I asked Patrick if Trump’s war is reorganizing the world. He said yes – if the war does not come to an end soon. That “requires re-opening the strait, which means Iran has to be either defeated or convinced to stop threatening ships,” he said.What happens if this war doesn't end and the oil shipments do not return to normal? Five-dollars-a-gallon gas permanently? “Permanently” is a strong word. Oil and oil-derived fuel prices will stay elevated until either the supply interruption eases or demand drops enough to restore balance. Those are both slow processes, but they will happen.The problem is that the longer this war drags on, the longer it will take to repair the infrastructure that’s damaged or destroyed. The oil industry was already reluctant to invest in new drilling because it can see renewable energy growing so fast. With the rest of the world producing oil at close to full capacity, it could be a long time before we get much help on the supply side. Demand is harder to assess. Recessions typically reduce fuel demand as people travel less, companies ship less stuff around and so on. To the extent this war reduces global economic growth, we could see supply and demand come back into balance over a year or two. But that would be doing it the hard way.Donald Trump is lying to ease market fears. That’s very clear. But for how long will investors choose to believe the president? I talk to Republican business owners and investors all the time. Off the record, many will say they don’t especially like Trump, nor do they believe everything he says, but they still choose him over any Democrat. The economic term for this is “ordinal preference.” You can call it “choose your poison.” They think Trump, for all his problems, is less poisonous than the alternative. So they keep supporting him even when they don’t believe him.Of course, the problem with this is there’s no bottom. No matter what Trump does, the response is “the Democrats would do worse.” That means they can’t abandon him. They may grumble but that’s as far as it goes.

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Inside Trump's plan to remake the world — as Americans foot the bill
Alternet.org

Inside Trump's plan to remake the world — as Americans foot the bill

Left

I think we have to accept the truth. We are going to pay, and we are going to continue to pay, for the president’s war of choice against Iran. Such are the consequences of politics. Maybe Americans will take their democracy seriously next time.If Donald Trump walks away from this war, things won’t go back to normal. Over the weekend, the AP confirmed reporting from elsewhere that Iran has established a tribute system through the Strait of Hormuz. It is charging as much as $2 million for safe passage of each oil tanker, payable in Chinese currency (yuan). That “toll,” as it’s being called, will be passed on to consumers.But if Donald Trump escalates the war, things will also not go back to normal. Reports suggest that he’s thinking about invading Kharg Island, Iran’s main oil depot. The idea may be to take it and use it to negotiate terms of a ceasefire, but no one really knows. In any case, escalation will not restore the flow of oil through the strait. All Iran has to do is sink a few tankers, as former Secretary of Defense James Mattis said, with “anti-ship cruise missiles that could be fired off the back of a pickup truck that can go 100.” Sink a few tankers that are worth about $100 million each and scare off anyone who’s willing to insure them. That means oil slows to a trickle, prices keep going up and we all look on in despair as our incomes are drained away. (Bloomberg reported over the weekend that the price of gas might be the least of our concerns as we may not be able to find any gas to pay more for.)Walking away from the war would also do nothing to stop Israel from continuing to invade Iran’s allies or from attacking Iran. It would do nothing to stop Iran from attacking neighboring US-allied Gulf states in retaliation for Israel’s continued assault. As long as there’s conflict, insurers won’t insure, and if insurers won’t insure, expect to see oil climb to $200 a barrel, according to Bloomberg, which puts the average price of gas at around $8.To recap, if Trump walks away, we pay. If he escalates, we pay. We pay for the toll or we pay for the scarcity. (Or we can’t find any gas to pay more for.) Again, Americans could have taken their democracy seriously when deciding whether to elect a convicted felon who already screwed up the first time he was president. But we as a people did not do that. The consequence is that we pay.Meanwhile, the president we elected keeps lying about the end of the war in the hopes that traders will believe him and keep down the price of oil. He has done this repeatedly, and the question has been: how long are investors going to trust the gap between what Trump is saying about the war and what’s actually happening? To find the answer to that and more, I got in touch with Patrick Watson, a senior economic analyst for Mauldin Economics. I have turned to him often whenever I need answers on the state of the economy. I asked Patrick if Trump’s war is reorganizing the world. He said yes – if the war does not come to an end soon. That “requires re-opening the strait, which means Iran has to be either defeated or convinced to stop threatening ships,” he said.What happens if this war doesn't end and the oil shipments do not return to normal? Five-dollars-a-gallon gas permanently? “Permanently” is a strong word. Oil and oil-derived fuel prices will stay elevated until either the supply interruption eases or demand drops enough to restore balance. Those are both slow processes, but they will happen.The problem is that the longer this war drags on, the longer it will take to repair the infrastructure that’s damaged or destroyed. The oil industry was already reluctant to invest in new drilling because it can see renewable energy growing so fast. With the rest of the world producing oil at close to full capacity, it could be a long time before we get much help on the supply side. Demand is harder to assess. Recessions typically reduce fuel demand as people travel less, companies ship less stuff around and so on. To the extent this war reduces global economic growth, we could see supply and demand come back into balance over a year or two. But that would be doing it the hard way.Donald Trump is lying to ease market fears. That’s very clear. But for how long will investors choose to believe the president? I talk to Republican business owners and investors all the time. Off the record, many will say they don’t especially like Trump, nor do they believe everything he says, but they still choose him over any Democrat. The economic term for this is “ordinal preference.” You can call it “choose your poison.” They think Trump, for all his problems, is less poisonous than the alternative. So they keep supporting him even when they don’t believe him.Of course, the problem with this is there’s no bottom. No matter what Trump does, the response is “the Democrats would do worse.” That means they can’t abandon him. They may grumble but that’s as far as it goes.

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