GEOFINANCIAL

EARTHQUAKE

Meanwhile, there seems to be no end in sight to the military hostilities. What are the current and future consequences for the global economy?

 

By Sidney Hey

The start of the war against Iran has a very calculated purpose – or does it not? Israel was the aggressor and the US followed suit, believing it would all be over in a couple of days. Donald Trump, far from using his own judgement and listening to those who really know, ended up believing he would secure a lightning victory. This is what the deputy head of the Mossad and Netanyahu himself assured him. As we can see, that did not happen, and beyond the destruction of civilian and military infrastructure and the human casualties being caused (including their own), Donald Trump’s blunder is already inflicting severe damage on the international financial system that could bring it down completely.

On this last point, and as a separate note, there is growing internal tension between the camp of Wall Street financiers and the supporters of technology companies in Silicon Valley –not to benefit US citizens-, let alone the world, but to bring down the current system and replace it with one in which AI and a digital currency (which would supplant the dollar) set the parameters for a new global financial economy.

Meanwhile, reality hits hard. The economist and professor Richard Wolff was blunt on the matter, stating that “this war could lead the country to a fiscal cliff”, and whilst he made it very clear that Trump is not solely responsible for these consequences, he has done much to make matters worse. Although he is not responsible for the enormous public debt, he is contributing to it causing the collapse of the state of the Union’s finances and, with that, the consequences for the economy. Likewise, it is already too late, and all he is trying to do is lick the wounds of his own arrogance. Trump continues to try to cover up his strategic blunder with false announcements in a bid to buy time, but Iran is not buying it and has already shown itself determined to drive his forces out of the entire region. Added to this, his arrogant proposals for a ceasefire are unacceptable (and even less desirable) to Tehran, especially as they are achieving their strategic objectives. Proof of this is the shift in the dynamics of the conflict, in which IRGC forces are gradually going on the offensive using the most sophisticated missiles and other weapons systems that have not yet been deployed.

Trump’s underestimation of Iran and its ability to manage the conflict has served him well enough to have his own words turned against him: “You’re fired”. It is precisely in the US where citizens have the opportunity to dismiss a clearly reckless leader who, in addition to betraying his voter base, has jeopardised not only global peace but also his own country’s political, economic and financial stability by supporting a war to satisfy the personal ambitions of a corrupt and criminal foreign politician like Benjamin Netanyahu.

Now the markets no longer pay attention to what Trump might say in the media, on his “Truth Social” network or through any of his spokespeople; they look to and get their information from independent sources about what is really happening on the ground. Even more so. They are surely paying closer attention to Iranian media than to the reality-shapers of Western media such as CNN, FOX NEWS, AXIOS and all their affiliates across the hemisphere, which merely tailor the facts to suit Washington’s whims and convenience. Even if they were to turn to reasonably credible Israeli media outlets such as HAARETZ, they could find useful pieces of information despite the military censorship imposed by the Tel Aviv regime.

All this brings to light a reality that is very hard for Trump and Netanyahu to swallow, revealing the failure of their expectations.

As of today, whilst the White House attempts to contain the damage caused by its occupant’s own nonsense, the Strait of Hormuz remains closed to the Americans and their allies in the aggression, shattering like glass the grandiose assertions about negotiations, surrenders or even victories uttered by a man accustomed to lying. The announcement that passage and oil transactions would be charged in Chinese currency is already a direct torpedo to the waterline of the US economy and a right-handed cross to Trump’s own jaw. Even more so. Tehran is already allowing passage to ships from nations that stand apart from the aggression and have no trade relations with either the US or Israel.

This reality, which neither Trump nor the media, let alone the intelligence agencies, can hide today, has begun to take effect. Just to mention the extent of the structural damage Tel Aviv has been enduring –and speaking only of urban infrastructure– it would require some 100 million dollars to rebuild, demolish and refurbish a large proportion of the buildings.

As for the economic damage already caused by the disruption to business resulting from the bombings and the serious threat posed by Iranian missiles, this has not yet been quantified, and the Israeli public is no longer buying the explanations offered by Netanyahu and his cabinet.

To the imminent and progressive rise in oil prices must be added the consequences for productive sectors that affect the global economy. One of these is industrial production, which, according to the Secretary-General of the International Chamber of Commerce (ICC), John Denton, “the war could become the worst industrial crisis in living memory”, he said. At the same time, as Fatih Birol, head of the International Energy Agency (IEA), stated, we are also on the brink of the most severe energy crisis since the 1970s, when the oil crisis left US petrol stations dry.

Let us not forget that just a few hours after the first attack on Tehran, the Iranian authorities set themselves the goal of using oil and gas as a deterrent against the aggressors’ criminal plans. If we compare the two positions and assess which is the most credible, we will see that the Iranian stance is the one that is being most effectively implemented, with the aim of pushing the price per barrel to over $200 something that, in the view of analysts and economists, would be a global disaster.

As you can see, ‘the emperor has no clothes’ (in reference to Trump), and although he believes otherwise and his sycophants such as Hegseth, Witkoff and Kushner fawn over him obsequiously, the markets do not share that view and can clearly see that he is left with his arse in the air; so one might well ask: what else is he prepared to sacrifice?