Naked Capitalism: “Iran is winning”

In reply to a comment by Dave Hansell, a systems engineer by trade, on my previous post I wrote:

… despite our shared moans about Naked Capitalism’s leading light, Yves Smith, her daily reports on the Iran war have been indispensable. As a systems man, you’ll appreciate the way she opens today’s report:

Ansar Allah’s closure of Bab el Mandeb, Trump’s escalation as Iran targets critical petrostate energy and economic infrastructure, reports of fracture in Saudi Arabia and Israel, and slow bleeding out of the global economy all point to growing pressures on connected economic, military, and political fronts … too many are making linear forecasts as if things will go on as they are but pressures in any of these systems or across them can and likely will generate sudden, large dislocations.

After 1929 Crash and Depression, and creation of rules and supports to prevent repetition, it was assumed the West would not suffer the near or actual banking collapses that hit the global south (where IMF “reforms” solve short term crises in ways paid for by the masses). They might have slower moving “crises” like savings and loans, with institutions put down and the costs, in terms of recessions and distribution of loss, distributed broadly if not fairly.

But the near-failure of 2008 was due to the authorities’ short-term patch ups over three preceding acute phases, with no one in officialdom asking what would happen if Lehman went under.

Then we merely had one crisis, in derivatives that turbo-charged real economy subprime mortgages. Now on the financial front alone we have multiple potential train wrecks: an AI stock/bond bubble, overlapping stresses in private debt, and cryptocurrencies. And unlike 2008, when massive Chinese stimulus blunted the meltdown, China’s debt overhang is extreme, its champion EV industry flagging.

What happens to all those financial flash points as Hormuz and now (unless Saudi Arabia unexpectedly backs down) Bab el Mandab closures create severe price shocks and shortages in critical supplies like diesel? 

(abridged)

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A word of caution before coming  to yesterday’s Naked Capitalism post. As one prone to this sin myself, I’m wary of anti-imperialists too quick to read empire’s imminent collapse in its every setback. For two clarion antidotes, neither of which make the mirror opposite error of viewing the empire of blood and chaos as invincible and infallible, see my references to Brian Berletic and Nel Bonilla of June 19 in the first and so far, though it pains me to say it, only  post of my intended series; US control of global energy?

Economist “Yves Smith” (her pen name a playful nod to the father of modern economics) is the founder and lead writer at Naked Capitalism. None can fairly accuse her of being a Pollyanna. In contrast to the bullish over-simplifications of a Pepe Escobar, she has consistently – indeed, at times methinks with irritating glee – poured cold water on those who overstate the speed of BRICS ascendance, and understate the dollar’s resilience as global reserve currency. ¹

Nevertheless her fact packed daily reports on the criminal US-Israeli war on Iran are up beat in their anti imperialism. They are also, as per my reply to Dave Hansell above, indispensable to those who rightly deem corporate media systemically incapable of truthful coverage on this as on all matters which go to the heart of the most powerful interests on the planet.

Iran Rumored to Be Readying Big Attacks as Trump Vows More Escalation and Rubio Disses Talks; Brent Rises to $94 a Barrel as Hormuz Transits Fall, Ships Turn Away from Bab el-Mandeb; Hegseth Fried in Iran Hearings

Even though we have yet to hit the five month point of the Iran war, the mode of media reporting, such as Grounghog-Day-type tropes like “tit for tat” strikes, underplay the seriousness of the current escalation as well as the damage inflicted on the US.

Yesterday, we discussed how otherwise formidable analysts and commentators either stick to their silo or are not sufficiently expert in/attentive to the other realms of the conflict …

(Yves refers here to the post from which my opening extract is taken.)

… That leads them to underestimate the propensity for pressure and shocks in one area not merely to produce dislocations there but to propagate into other focal points. For instance, the UK lost in the Suez crisis of 1956 not because its invasion failed but because a sterling crisis was spinning out of control. That necessitated an IMF intervention, where the need for US backing for an action of the required scale gave the US the leverage to demand the immediate withdrawal of British and French forces.

We will stick our neck out further today. As we read the evidence, the US is losing the war with Iran militarily and at a pretty fast pace. Many observers still seem unable to process that Iran can flat out beat the US in West Asia. Some may be anchored in the early-in-war perspective, that all Iran needed to do to “win” was to play the insurgency game: hold out long enough so that even if the objective costs to the defender were higher than of the imperial power, the attacker could in the end not accept the costs in blood and treasure to win decisively, which would take a mass invasion and occupation.

But some credible experts have depicted Iran’s war aims as much higher than that. They rejected mere survival as a goal; that would expose them to periodic “mowing the lawn” actions by the US and Israel intended to keep Iran weak, not just militarily but also on an economic and social/political basis. Iran’s objective has been to inflict such a decisive defeat on the US and Israel that they will not hazard attacking Iran in any meaningful manner for a very long time. The Iran media strategy, of repeatedly framing US actions and statements so as to humiliate the Trump Administration, is contrary to reaching a negotiated settlement but completely consistent with achieving a punitive victory.

Just look at the big picture elements of where the conflict is now …

Continue reading on the Naked Capitalism site …

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1. For more on the dollar as global reserve, see my July 19 post, America – the invisible empire.