Strait Numbers
Versus strait rhetoric.
As I noted in my comment on James Joyner’s post, I think that what we are seeing out of Trump is a rhetorical skill that he has had his entire career, which is convincing some number of gullible customers to buy what he is selling. And, I think, to often convince himself.
Trump steaks! Trump vodka! Trump University! Trump sneakers! Trump Bibles! Trump casinos!
It is all hype disconnected from reality.
He does it with his whole “Golden Age” rhetoric that I think most of us treat as annoying background noise. He told TPUSA last night about how respected we are as a country worldwide because of his presidency, yet anyone who can read polling knows that this is not true.
But the Golden Age shtick and the puffery about our global reputation give supporters a safe harbor to dock their feelings. Plus, it is all so amorphous that supporters, at least, can pretend that it is true. I mean, the S&P 500 just hit a record! What are you doomers complaining about? I mean, do you want the Iranians to have a nuke?
This morass of rhetoric brings me to the Strait of Hormuz. I don’t think I am exaggerating when I say that every morning since April 8th, the headline portion of Morning Edition has contained some variation in whether the Strait is open, closed, partially opened, totally shut down by the US, totally shut down by Iran, opened back up, and so forth.
I am a news junkie who writes daily about politics, and I can’t keep track of what the alleged state of the Strait is. Imagine if you are a regular person (a normal, well-adjusted type), how does one even try to make sense of all of this?
Worse, these news reports are mostly generated via social media posts made by Trump, as augmented by various back-channel communications from Iran. There are no formal briefings of any consequence. There are precious few reporters on the ground.
All of this means that one’s likely understanding of the war is being filtered, like everything else, through partisan filters for the bulk of the population.
The problem for Trump is that there are empirical facts that do filter into the population, like the price of gasoline at the pump. Some voters, even Trump voters, do notice those big numbers on the side of the road and on their credit card receipts.
Nonetheless, it is kind of stunning the degree to which a lot of people seem to have decided that all of this war is just background noise, including a lot of investors on Wall Street.
CNBC argues it is because investors have decided that Trump will stand down and that 6-to-12 months from now, all will be back to normal. We shall see.
But I keep coming back to this in my mind:
So, from an empirical point of view, the Strait has been essentially closed and remains essentially closed. And while I do understand that it matters on the margins which ships can transit, the issue really isn’t so much who is closing the thing, but that the transit of ships remains insanely low.
This is not sustainable for the Gulf States or the global economy. Wall Street can pretend like it doesn’t matter for a while, I guess, and Trump can declare victory, even if, objectively, we are worse off than when all of this started. But at some point, this is going to matter unless it resolves cleanly and quickly.
We do remember the way the disruption of global supply chains during COVID affected us all, right?
Right?
Sigh.
See this piece from the Atlantic Council: 15 charts that explain why the Strait of Hormuz shutdown matters for the global economy, which I commend in full. I would note that the immediate effects of all of this, as per the charts in the piece, show that the main immediate impacts are on countries other than the US, often hitting allies hard (jet fuel in Europe, for example). And yes, while shortages will affect other countries more acutely, prices for commodities are set globally, so the pain will come to our shores (as it already is at the pump).
Still, all of that underscores how much of a lie it is that Trump has made the US more respected globally; there is little doubt that we are more reviled than has ever been the case.
Indeed, Gallup published the following earlier this month:
Here’s one chart from the piece worth noting, which reminds me of this story from the AP in open tabs: AP Exclusive: Europe has ‘maybe 6 weeks of jet fuel left,’ energy agency head warns.
Maybe all of this is an illusion spun by the Kafaybe Master, or maybe he TACOs out soon, but at some point, it seems likely that reality is going to fully assert itself.
While Trump is Trump, it’s his environment (the GOP, mainly, even though though it’s a bit broader than that) that allowed his bullshitting to become the problem that it is.
I mean, if we all would have agreed that the emperor has no clothes, we wouldn’t be in this flaming mess.
I’m no insider, so I don’t know if there is some sort of continuous connection, but this infamous Rove(?) quote already has it all:
Going from there to Trump seems… inevitable.
First time a tragedy, second time a farce.
Regarding the market. At one time the stock market was dominated by individual investors managing portfolios either by themselves or with an adviser, in today’s market, those investors would be/are gone. Today, most investment is managed by institutional investors and while they can make money on the dips, they need the markets to rise on a regular basis. If the market keeps falling then those who have invested with the institution will pull their money out and it may never come back. So the investment pros grab at straws, anything that appears optimistic becomes a buy signal.
As I mentioned in the Blockade post, we’re living in a García Márquez moment of magical realism. In the Times(?) this AM, an article talked about the late 60’s documentary The Sorrow and the Pity being a apt description of our current times, that we collectively want the horror to pass and try to keep everything as “normal” as possible hoping that it will.
Americans, in the bowels of Christ, I beseech thee, stop conflating the stock market with the economy.
I am not a historian, a political scientist, economist or anything like that, I consider myself a retired lunch bucket Democrat. So here’s my question in all seriousness as a non-expert. At what point does the rest of the developed world get together and tell us and Israel to go to hell and make a deal with Iran that doesn’t take us into consideration?
@Kingdaddy:
It’s not the economy. It’s a casino. And given Fatso’s history w casinos…
The following is an AI generated response…
The US leadership (dis)approval chart is rather revealing.
Notice the lowest points coincide with the 2008 crisis, the first Taco term, and the second Taco term. Funny how that works out.
Now, while the Biden era shows improvement, the current dip starts in 2024. That coincides with the war in Gaza.
@Kingdaddy:
I agree. But I am sincerely surprised that the markets seem to be ignoring what looks like a looming disaster on the horizon.
Welp, ships fired on, at least one is burning, so I don’t want to go too far out on a limb here, but I don’t think the strait is open.
@Steven L. Taylor:
The market can turn on a dime. They are salivating at the profits they’ll make off the “looming disaster.” No doubt the Trump family will too.
@Mr. Prosser: They can’t. As with so many things, Trump is relying on the past 80 years of American exceptionalism to project his delusional incompetence on the world. No one else has a navy that can project power in the ways the US Navy can.
I’m keeeping an eye on bothe the commidit markets and the Srtaits transit data.
And it’s trather remarkable how disconnected the two are.
Because most commodities markets are actually futures markets, these days.
Unless you look at some more “connected to physical” subsets.
Such as “dated Brent” ie Brent crude physically available for delivery on real timelines.
Which is now generally around $120/bbl.
Futures markets still seem to be betting on the “TACO trade”.
This could change quite rapidly.
Right now, I’d not like to be shorting oil come Monday.
@Kingdaddy:
Sod the stock markets.
Watch the commodity prices
(And bonds, but they can be skewed by “flight to safety”)
@Sleeping Dog:
Another factor is “flight to safety”: the US is still a major haven for global money in “interesting times”.
And given the iffyness of bonds, shares are likely to get a sizable chunk of incoming funds after beneficial returns.
Which will work till it doesn’t.
The immense suffering Trump’s little excursion is inflicting on the rest of the world, especially poorer countries and their inhabitants, has basically been ignored by most of the US media. In the Philippines, for example, where most people survive from day to day, Filipinos rely on buses, jeepneys and motor bikes with sidecars to get around. Society effectively ground to a halt a month ago. Most vehicle owners can’t get fuel and if they can, they can’t afford to buy it. Widespread hunger and social unrest are virtually inevitable.
Bessent’s smug, supercilious response was a typical demonstration of the contempt this regime has for Americans’ intelligence. “I wonder what the hit to global GDP would be if a nuclear weapon hit London,” he told the BBC, as if that was the unavoidable consequence of refraining from attacking Iran.
I bet that in all his god-bothering about wreaking vengeance with fire and the sword, Hegseth has never paused to pray for the billions of people he’s hurting.
@Mr. Prosser:
@Kevin:
The US allies problem is ongoing (if likely declining) reliance on US backup re Russia and China.
But there are already indicators: Turkey, India, Pakistan, Phillipines, and (possibly) France seem to have approved deals by shipping operators with Iran for passage.
And China, obvs, but China is in a different category.
As things stand, there is no Power or combination of Powers that can hope to match the US Navy in “blue water” capability.
What would be a US mistake is to suppose that this is some sort of ineluctable law of nature.
Which leads me on to
@drj:
Rove:
This sort of attitude, which is common currency among MAGA these days, overlooks how much US predominance since 1945 and since 1990 has been predicated on being a rather benign hegemon (if not always), which generally (also not always) accomodated its allies interests.
“Honey works better than vinegar” as the saying goes.
Trying to be a tyrant can provoke a “sod you” reaction from other states that, in combination, are fully capable of at least matching, and possibly outmatching, the US in military capability. Given sufficient incentive.
@Ken_L:
The impact on both energy costs and fertiliser and thus food prices is going to be horrible for a lot of poorer countries in Asia and Africa.
Bessent is such a smug f@ckwit; perhaps the most punchable fool in the administration, which is saying something, given Hegseth.
Iran would cease to exist, a reality the Iranian leadership are doubtless aware of.
Which is why the UK has not been making policy on that basis.
See also France.
This whole Trump/MAGA “you should be grateful to us” schtick is really starting to grind everyones nuts.
Trump wants to do stupid things?
Well, that we can’t help.
But Trump wants gratitude for it, or allies to rock up at Hormuz and fight Iran where the US fears to tread?
F@ck off, Bessent.
What time yesterday afternoon does he think we were born?