- Trump announces extended blockade of Iran…
- “There’s a day of reckoning coming”…
- Psst — Here’s the #1 stock to buy before the huge SpaceX IPO. Get the free ticker here.
Dear reader,
Do not wager upon a looming resolution of the conflict. You should instead wager upon a protracted testing of wills between the United States and Iran.
Reported The Wall Street Journal late last evening:
- President Trump has instructed aides to prepare for an extended blockade of Iran, U.S. officials said, targeting the regime’s coffers in a high-risk bid to compel a nuclear capitulation Tehran has long refused.
- In recent meetings, including a Monday discussion in the Situation Room, Trump opted to continue squeezing Iran’s economy and oil exports by preventing shipping to and from its ports. He assessed that his other options—resume bombing or walk away from the conflict—carried more risk than maintaining the blockade, officials said…
- Since ending the major bombing campaign in an April 7 cease-fire, Trump has repeatedly walked back from escalating the conflict, opening space for diplomacy after earlier threatening to destroy the entirety of Iranian civilization. But he still wants to tighten the grip on the regime until it caves to his key demand: dismantling all of Iran’s nuclear work.
In response to the United States naval cordon, Iran has denied all foreign maritime traffic passage through the Hormuz Strait.
Trump Says Iran Nears “State of Collapse”
Meantime, the president claims the naval blockade is speeding Iran towards a “State of Collapse.”
He added that:
- Iran is collapsing financially! They want the Strait of Hormuz opened immediately — Starving for cash! Losing 500 Million Dollars a day. Military and Police complaining that they are not getting paid. SOS!!!”
Is Iran collapsing financially? I do not know.
The president has been known to… how do I style it… stretch the facts on occasion.
Yet I am confident the naval blockade is producing an Iranian migraine. The choking-off constitutes an economic blow to an already clobbered economy.
Yet a State of Collapse? Here I am not convinced.
My agents inform me that scores and scores of Iranian tankers are presently afloat upon the world’s oceans.
They escaped the Persian Gulf before the United States imposed the naval cordon. And they are presently en route to foreign ports
My agents claim they contain some 160-170 million barrels of Iranian oil. And that the revenues collected therefrom may well keep Iran in funds through August.
History Says Standalone Blockades Don’t Work
Meantime, I recently cited the Center for International Maritime Security’s conclusions about naval blockades through history.
The results do not necessarily encourage. In reminder:
- Throughout history, maritime nations have used naval blockades to wreck the economies of their adversaries and bend them to their will. However, the impact of blockade in history has been overstated.
- Throughout history, blockade has been a part of military success, but it has never been the primary key to victory… blockades have not been successful as standalone campaigns.
Yet it appears the president is choosing blockade as a standalone campaign.
Perhaps he will triumph over history… and a kneeling Iran will settle upon his terms.
Yet it is far from certain at present that Iran will settle upon the president’s terms.
Or, Iran may settle upon his terms on a distant tomorrow — after the global economy has already absorbed a severe roughhousing — and the president has absorbed a political trouncing in November’s elections.
Iran Thinks Time’s on Its Side
Thus Iranian authorities may be prepared to inflict severe economic hardship upon their own nation, so long as they inflict equal economic hardship upon their tormentors.
Ms. Suzanne Maloney is a prominent Iran expert stabled within the Brookings Institution’s foreign policy division. From whom:
- Iran is calculating that its ability to withstand and circumvent the blockade outstrips the U.S. interest in preventing a wider energy crisis and potentially a global recession. A regime that slaughtered its own citizens to silence protests in January is fully prepared to impose economic hardships on them now.
Meantime, United States gasoline prices leapt yesterday to their highest point in four years.
And certain energy experts believe the president’s continual announcements that the conflict would soon end will in fact propel gasoline prices higher. How?
The answer is because oil producers have heeded him. Thus they have not taken steps to increase production.
Why would they if they believed the conflict would soon end and oil flows would return to normalcy?
“There’s a Day of Reckoning Coming”
Comments Mr. Dan Pickering, chief investment officer with the eponymous Pickering Energy Partners:
- There’s a day of reckoning coming. It will be painful because I can tell you that the stock market’s ignoring this.
The bright side-seeing, glass half-full optimists on Wall Street are in fact ignoring this.
The S&P 500 has advanced some 10% this month. Thus the index is grooving for its greatest monthly performance since November 2020.
The wagon-pulling Magnificent Seven stocks — Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta and Tesla — have jumped some 16% this month.
Should the S&P 500 advance another percentage point by month’s end, April would register as the second-greatest month in over 10 years.
Why? I will reveal the answer in tomorrow’s issue. Thus I encourage you, my poor, suffering reader, to return to these pages tomorrow.
I will, however, cite a poetry passage suggestive of present conditions:
“Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall…”
Brian Maher
for Freedom Financial News
