Decision time for Trump?

 CAN TRUMP WAIT UNTIL AFTER THE MIDTERMS?

MAKE PEACE OR GROUND WAR

 

It seems a pivotal moment in the Iran war is going to me made sooner rather than later. With fuel prices now escalating by the day and false narratives no longer being effective, it is clear that doing nothing is not an option, a  critical decision will need to me made possibly in days.

 

The options are a fulfillment of the Memorandum of Understanding,  an air escalation to destroy Iranian infrastructure, that will inevitably lead to a response by Iran that will destroy oil infrastructure in the gulf for many months, if not years.  Or a ground operation to take control of the strait of Hormuz.

 

There are indications that some sort of ground operation is being considered. Recent videos have shown a miles long train in San Diego loaded with over 125 military vehicles and containers. These vehicles appeared to be humvees and trucks and fuel trucks all with trailers and many containers along with generators etc. It looked like a load of auxiliary equipment for possibly a forward base. 

 

It is also being reported that South Korea had agreed to furnish some sort of military force. 

 

The problem with a ground action is where can they assemble a force that will not come under attack.  The bases in the gulf have been made inoperable and most US forces have moved to Jordan and Israel leaving a thousand mile trek across Iraq for a ground force, likely a suicide mission.

 

The other option is Saudi Arabia and one has to wonder if the Saudi action against the Houthis was not a preparation for just that.  It may also be that the Houthis understood the same and is that still a viable option?

 

The gulf countries are talking with Iran and may be considering some sort of understanding leading to an agreement without the US.  

 

An objective calculation leaves a return to the MOU, the problem is with Israel being the road block to any settlement with Iran, short of destruction. Israel may have to decide to make a decision of its own.

 

Trump will need to make a decision soon as doing nothing is going to bring down the world economy, as will the wrong decision. The MOU is the only least bad option left.

 

 

 

 

 

Another Oil shoe drops in Yemen.

 HOUTHIS TAKE OVER ALL OF WESTERN YEMEN

SAUDI PIPELINE TO RED SEA CLOSED 

 

The tit for tat hostilities between the Houthis and Saudi Arabia has now erupted into something else all together. The Houthis have quickly taken over all of the western part of Yemen and with it the western shore of the Red sea, including the  islands in the sea and the Bab El Mandeb Strait. The Houthis were able to interfere with shipping in the strait before, when they were near 100 miles from the strait but now they are in control of this strategic waterway.

 

At the same time the Iraqi militia has damaged the Saudi pipeline to the Red sea and it is now inoperable, cutting off the oil that has been bypassing the strait of Hormuz. It is reported that a major pumping station  has been destroyed that will take it off line for some time.

 

The Houthis were able to rout the Yemen and Saudi defenders of 3 major  bases and capture all the US equipment and supplies. Some fear they may actually target, Aden, the capital of Yemen, and then control the majority of the country.

 

This action essentially cuts off most of the oil being exported form the Persian gulf. This will have a dramatic effect on the cost of oil probably starting today. 

 

While Saudi Arabia has been bombing the Houthis, it has been ineffective and pleas for assistance from the US has not resulted in action.  The US may be reluctant to engage the Houthis as last years 30 day war resulted in a huge loss of drones and munitions without any result. All resources may be needed for future action against Iran.

 

This action is a major step in the ongoing oil and economic war that is underway.  It may now require some kind of immediate action rather than a waiting game until after the November elections.

 

 

 

Democrats, do I hear $6000.

 "VOTING YOUR POCKET BOOK" REACHES NEW LEVEL

DO YOU PREFER NEW BENEFITS OR CASH 

 

Donald Trump has offered $5000 to each adult if the Republicans win in November.  While buying votes has been the mainstay of "Democratic Socialism" for many decades, this is a first. While many may be outraged, I suspect some are considering a deal too good to refuse. For a household that is $10,000, a windfall for everyone, not just a few select groups.

 

While Trump says every adult American will get the check, watch out, it may disqualify those who  are not here legally and maybe only if you vote Republican. Trump has a way of moving the target, so it will require a lot of clarification.

 

I believe the Democrats are talking about 2 or 3 Trillion in new spending, so this is calculated a $1.3 Trillion. Cash in hand is often better than some thing that you may not live long enough to obtain, or if you qualify at all. 

 

Now, I also suspect that the first offer is never the best offer and if we can get a little competition going here we may be astounded at what we may reap in the end. After all, it is not Trump's money or the Democrat's money.

 

Ok, Democrats how about $5500 to get this game going.

 

 

 

 

 

Beware the economic tipping point.

 ONCE THE RECKONING BEGINS, IT MAY BE BEYOND CONTROL

OIL, INFLATION, BOND YIELDS SPELL TROUBLE

 

Yesterday we saw bond yields rise to 4.86 % on the ten year and 5.31 on the 30 year, this indicates a reluctance of investors to continue to finance the US debt. 

 

Oil prices are again near $100 and gas was $4.59, diesel well over $6. Heating oil will further reduce the ability of some to keep up. The war in the Gulf is expanding and escalating and the reserve supplies near exhaustion.

 

We can expect inflation to soar, no matter the indications released by the government. 

 

The underlying real problem, as in every economic decline, is massive overwhelming debt. Debt in government, particularly in the western world, corporate debt, private equity debt and household debt is at a level far higher than in 2008. The costs and inflation and proposed government spending and deficits will add to this mixture to create a very possible tipping point that once underway may be impossible to stop.

 

Bond yields are increasing because some believe the government cannot manage the debt and also because the gulf countries and others suffering from the oil crisis need to raise money by selling US debt.  One wonders how this can be reversed? The interest on the debt is going to skyrocket and financial shenanigans will not keep it under control.

 

Rising oil prices, especially diesel, will trigger possibly the biggest rise in inflation yet, especially in basic necessities. This will curtail current spending and inevitably lead to a domestic economic slowdown and possibly an inability to service domestic debt. A massive snowball effect that once started cannot be stopped until it is expended.

 

The US has had a policy of reversing every slowdown with massive injections of money into the system, 2008 almost became out of control but debt was never really liquidated. Can they actually find a way to inject massive amounts of cash into the system again, without exasperating every above problem?

 

Only a quick change of direct could possibly forestall this, and end to war and a resolve to control deficits. It looks like neither will happen. I suspect we are about to go for the ride of our lives. 

 

 

 

 

 

1970's decisions, roots of US decline.

 CLEAN AIR ACT AND OPENING WITH CHINA

DEFICITS, WEAKENED DOLLAR, FOREIGN COMPETITION 

 

I earlier related the 1971 decision to unlink the dollar from gold, https://www.blogger.com/blog/post/edit/219171338015504465/7906932903235858989 , this action coupled with the beginning of constant yearly budget deficits was pivotal in the weakening of the US economic system.

 

In 1970 congress passed the "Clean air act", a measure to end air pollution in the United States, while a worthy objective, the measure set objectives to be reached by 1975 that were almost impossible for most companies to comply with.  Rather than a phase in for expansion or new builds it laid a heavy burden on often small and intermediate sized companies that could not be reached. This coupled with the reemergence of foreign competition which were recovering from WW2.  

 

I worked at the Emmaus foundry in 1972 as the company spend large sums attempting to comply, but it seemed to be perusing a moving target as regulation were demanding declines by dates rather than by possible compliance, the company closed in 1985, as did many thousands of foundries in the nation. As the foundries died so did the machine shops that finished these products. Castings soon were purchased oversees and often came in as finished products. Much of these products were outsourced to Canada and Japan.

 

In 1968 Bethlehem steel, that once had 30,000 employees, upgraded it main furnace in Bethlehem to an oxygen furnace, the build was accomplished by many thousand of construction workers.  In 1970 the company was at its peak of production and also spent millions in upgrading other plants. By 1975 foreign competition, legacy costs and continued regulation caused a decline in production and the blast furnace was shut down in 1995. The company was dissolved in 2003. 

 

This scene was played out all across the country. First Japan and then Chinese plants  unburdened by regulations, decimated the ability of the United States to produce the foundation for a strong manufacturing base. All the supplies and related machine shops disappeared at the same time.  The cost of rebuilding such plants is prohibitive and also the knowledge of production has slowly died and is no longer available. 

 

At the same time Nixon's historic visit to China in 1972 opened the way for China to be assimilated into the world economy. A massive population, much of it in poverty, Chinese history of innovation and now a market for their goods moved China into the modern world.  Nixon hoped to use this China initiative to wean China away from any cooperation with the Soviet Union. China in fact often followed the policies of an earlier time in the US to grow its manufacturing base, food production and now is the number 1 country in manufacturing, ship building and most innovation. It seems the politicians of the 1970's rested on the vast US economy built in former times assuming it would always be the case, no matter the policies pushed by both parties. Many still do not recognize that the US is no longer the economy it once was but has become a country of financial transactions rather than production, fueled not be wealth creation, but deficit spending and a continuing expansion of the money supply. There is little investment left for massive rebuilding as it is tied up in a $40 trillion debt of past spending.

 

The US cannot be restored by force or intimidation or more financial shenanigans, but only a rebuilding of basic industries and a sound financial policy. Sadly the majority of our leaders have no knowledge of making things, no understanding of wealth creation, only spending and money transfers. Our enemies are not in Russia, China or Iran, but right here at home. 

 

 

 

 

 

Ukraine rejects latest peace plan.

 NO PEACE ANYWHERE ANYTIME SOON

WARS MAY CONTINUE FOR REST OF YEAR

 

The latest peace proposal was rejected by Ukraine. It seems the Russians anticipated that this would be the answer and gave little credence to the plan.

 

The plan was similar to other offers in the past, Ukraine would step back from Donbas, UN peacekeepers would mange the confrontation line. Ukraine would have UN supervised elections and then would agree to a neutral military status with no NATO or other military alliance. That is the basically what has been on the table since Anchorage, but now future Ukraine would be smaller. 

 

We can expect that the EU does not support such a plan. In fact they seem to still be talking about going to war with Russia. The UK, Germany, Norway and Finland have upped their Civil defense ads attempting to prepare their populations for attacks from Russia. This week Finland attempted a civil defense drill by ordering 2000 residents to show up at a mass shelter and it seems 100 actually showed up. it seems the population does not feel as threatened as the politicians. They claim that Russia is at a stalemate in Ukraine. but must prepare for an attempt to invade all of Europe.

 

Finland's ruling class is concerned that since they joined NATO and agreed to US bases in their country, Russia is building bases expected to house 70,000 troops on their border. They are also perplexed that Russia has restricted economic trade and generally ended decades of economic and social interaction. No one seems to understand that military alliances pose a threat to their neighbors.

 

The political landscape of Germany is changing with big loses for the present government, much of it fueled by the present governments talk of war with Russia and major efforts at rearmament. The UK and France are also encouraging Germany to rearms, Dejavu all over again.

 

Iran demonstrated a new anti-ship missile that should be warning concerning escalation.  They have also made it clear that they will step up enforcement of the control of the strait.

 

Cooling temperatures in the gulf may make the possible ground action look more enticing. No sign of peace anywhere, escalation is more likely. 

 

 

 

 

 

 

 

Next step, Ground action?

 INDICATIONS OF GROUND ACTION IN IRAN

HOPING FOR POLITICAL SALVATION? 

 

There are increasing indications that some type of ground action against Iran may be on the horizon. While an all out invasion would require hundreds of thousands of troops and months of logistic support, a targeted or limited attack may be the next escalation option. 

 

There are reports of reserve forces being moved to the middle east and also a redeployment of troops out of Poland to an as yet not disclosed destination. With airborne and marines already in the region and we should expect with a limited time line after already being there for months. It is looking like some type of action may be coming and before the upcoming elections.

 

Netanyahu has been pushing for some type of ground attack for some time and with elections coming in Israel, more war will hope to keep himself in power. 

 

Trump is looking for some type of per-election win and may feel that this is the next roll of the dice to rally support. 

 

Iran may feel that a bait and bleed strategy will keep the population focused and give its military an opportunity to shed US blood. It would not be hard to entice a raid by leaking plans on nuclear implementation or some weak area of opportunity.

 

The recent division in the US military has had to do with proposed ground actions. It seems much of the military opposes this options, as it has for decades. They also opposed the war, but political considerations overrode that advice.  

 

With the political positives possible for all three combatants and time running out on fuel prices for the US, political risks for Netanyahu and a need for Iran's leadership to keep the population engaged, ground action is very possible, very soon.