EMERGENCY ALERT🔥 TRUMP, IRAN & THE U.S. DOLLAR COLLAPSE For The 2020 - financialanalysis

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Friday, January 3, 2020

EMERGENCY ALERT🔥 TRUMP, IRAN & THE U.S. DOLLAR COLLAPSE For The 2020


When I wrote that the coup against President Trump had morphed into a Civil War, I wasn’t kidding. The sham impeachment created the perfect environment for the Democrats and Republicans to get something definitive from him by playing the House and the Senate off each other.
With the Senate Neocon Occupied Territory the escalation of belligerence since Speaker Nancy Pelosi pushed through the impeachment vote has been serious.
First, there was the rider to the NDAA which upped the sanctions on everyone willing to work on Nordstream 2. Then Lindsey Graham pushed the frankly insane DASKA bill through the Senate Foreign Relations Committee.
Pelosi forced her impeachment vote through the House on partisan lines. Then, clearly overstepping her authority, she refused to send the Articles to the Senate hoping to add a more serious charge, like Obstruction of Justice or Treason for laundering Russian money through Deutsche Bank.
It is under these circumstances we should view the events in Iraq over the last week, especially the killing of IRGC Quds Forces Commander Qassem Solemaini.
Because I’ve warned from the beginning of this impeachment, Trump was just 17 votes in the Senate away from conviction. And failure on his part to respond to an attack on our troops now or our soil, the embassy in Baghdad, would have been enough to turn that many against him and install Mike Pence.
At the end of the day we are held captive by a minority of power-mad Trotskyites without any capacity for forgiveness or humility. They believe in societal order through the whip and the sword.
Truly Maoist in their thinking, the only political power that exists comes from the barrel of a gun. This is why there has been zero opportunities for diplomacy with Iran.
Iran is to be destroyed. If not today, tomorrow. If not then then the day after. It will not end.
And any potential diplomacy was sabotaged at every turn. Peace can only happen through subjugation. Demands placed on Iran after Trump’s disastrous decision to exit the JCPOA were nothing short of regime change, arch neocon Secretary of State Mike Pompeo saw to that.
A man like Solemaini would never submit to this. And yet, fighting a war against the Empire is always reduced to terrorism to sell it to the public.
Like it or not Trump executed the man most responsible for the systemic destruction of ISIS and neutering of Al-Qaeda in Syria and Iraq. He’s also a man, over the years, who has fought the U.S. to a standstill across the Middle East.
Those were his pertinent crimes.
The results of these fights were to empower Israel’s enemies in Lebanon, Syria and Iraq. Russia and China supported this in their own interests. Turkey came to realize it was being used.
There was no way around that. It was a direct consequence of winning the battle to preserve Syria from becoming a failed state.
And that is a goal any rational person should wish for.
This is the most dangerous escalation of Trump’s administration. Nothing he’s done to this point compares with killing Solemaini and taking immediate credit for it.
Nothing he’s done is more tone deaf or disproportionate to whatever crimes were the proximate cause. And nothing he could have done would be more galvanizing of resistance to U.S. occupation of Iraq and Syria.
Trump, to his credit, held back the neocons at critical junctures over the past couple of years. After the Russian ELINT plane was shot down, Putin negotiated a truce which would have seen Iranian forces in Syria pulled back from the Golan Heights as a start to changing the dynamic there.
Benjamin Netanyahu said no all Iranians out of Syria. The war between Israel and the Shia forces backed by Iran continued. The path to peace could have begun then if Trump had the moral courage to force that outcome.
But the neocons at home had him under suspicion of treason. His National Security staff wouldn’t allow that to happen. If he hadn’t pulled out of the JCPOA and left room to negotiate we wouldn’t be here today.
But he did. And we are downstream of this bad decision. It’s been one escalation after another and a series of increasingly dangerous confrontations. This doesn’t end with Iran going meekly to bed, folks.
They aren’t disobedient children but they aren’t animals either.
Killing Solemaini was presaged months ago with the U.S. designating the Quds Force a terrorist organization, which gives the U.S. unilateral legal cover to summary execution of anyone affiliated with them, especially if they are not on home soil.
But, at the same time, Trump assassinated (note the difference) members of the Iraqi Popular Mobilization Forces in the raid as well, since these are considered members of the Iraqi military and the attack occurred on Iraqi soil.
So, in simplistic and, I believe, legal terms Trump committed an Act of War against Iraq. Iran obviously considers killing Solemaini, legal definitions aside, such as well.
This is an act Trump cannot walk back. He can’t ask Iran to come to the negotiating table now or ever. It’s an act of overt war. Whether it leads directly to forces facing off in high level combat is debatable. It will certainly continue escalating from here.
Israel has been itching for the U.S. to attack and destroy Iran’s nuclear R&D facilities. The only way to achieve that was to get Trump to pull out of the JCPOA, forcing Iran back into enrichment and then using that as the casus belli.
Welcome to 2020.
And the sad truth is that it means more killing, more murder and more of everything bad. There is no Just War rationalization for this. While no one rational wants to see Iran with nuclear weapons the end result of the policy led us to that potential outcome.
No rational person should want anyone with nuclear weapons and yet Netanyahu sits on hundreds of warheads.
Beating people into submission doesn’t work. The neocons told Trump to smack Iran in the mouth, that’s the only lesson these animals understand.
By the way, they say that about everyone.
Solemaini may have been responsible for hundreds of American deaths, but Iran and the U.S. have been at war for forty years. At some point that has to be processed honestly.
Americans supporting this refuse to comprehend that we’re as much to blame as Iran is for the violence. We’re not the good guys and they aren’t the bad guys. Everyone sucks here. For every Iranian that shouts “Death to America” there are Americans who sing “Bomb, Bomb, Bomb Bomb, Bomb Iran.”
Trump was elected to end this belligerence but he’s incapable of separating strength from weakness. A mafiosi-type who uses violence indiscriminately, Trump is a weak man. This was indiscriminate in that Trump believes the political calculus is in his favor, so he can get away with it. He shores up his support in the Senate just long enough to beat the impeachment and can sail to re-election.
But, who he is was written on the bombs he threw at the Al Shairat airbase and the MOAB he dropped in Afghanistan in April 2017 to prove a point to Putin and Xi he wasn’t a wimp.
But he is a wimp. And a coward. And neither man was impressed by this. He hasn’t won a single negotiation of note in three years. Killing Solemaini was the result of having no capacity for diplomacy.
China’s won the trade war. Russia gets their pipelines. Syria will be returned to Syrians and Iraq will reject U.S. presence there. Venezuela won’t fall and North Korea has nukes. Nothing has changed and yet everything has.
A strong man admits his mistakes and makes concessions to those he’s harmed. He doesn’t hide behind how unfair it is the political machine is arrayed against him.
And, now, he’s a failed president no different than Obama who he despises.
The only thing more pathetic than Trump right now is the gaggle of jackals running against him. Weep for the future.
In one line: Iran will respond; the how and when is uncertain but full-scale war is unlikely.
It's hard to overstate the geopolitical importance of Friday's assassination of Qassim Soleimani, architect of Iran's external military activity for more than 20 years and perhaps the most powerful man in the country after the Supreme Leader.  For deep background on Maj. Gen. Soleimani and his importance in Iran's military activity across the Middle East, both direct and via numerous proxies, see this piece from the New Yorker: https://www.newyorker.com/magazine/2013/09/30/the-shadow-commander
Iran right now is reeling from the assassination, but the leadership is dominated by hardliners and the question is how, not whether, they will respond.  For markets, the key issue is the impact of the Iranian response on oil prices.
Our base case here is that a full-blown war between the U.S. and Iran is unlikely, though we appreciate the old adage that nothing brings a country together more effectively than an external threat, and Iran's government right now is extremely unpopular.  Sanctions imposed by the U.S. have crushed the economy and driven up inflation, triggering protests last month in which several hundred protesters were killed by army and police.  It is reasonable to think, then, that the leadership will seek to use the assassination to divert attention from the grim economy.  But Iran's leaders probably aren't suicidal; we doubt they will take action that will trigger air strikes on Tehran.  The infrastructure of the oil sector, though, is a likely target in the event of tit-for-tat escalation.
Iran's military reach via proxies across the Middle East gives the leadership plenty of options, including retaliatory assassination attempts, kidnappings, bombings of U.S. government facilities, and attacks on shipping and other privately-owned U.S. entities.  Iran might also seek to draw Israel into a conflict via Hezbollah in Lebanon.  We can't rule out some sort of grand-scale attack, but an array of smaller-scale activity is our core bet.  The risk that something bigger will trigger a real war, however, likely will put a premium on oil prices for the next few months, at least.
Higher oil prices represent a tax on oil consumers and a windfall for producers.  World oil consumption is about 100M barrels per day, so each five dollars on the prices is equivalent to an annualized tax of about $183B per year, or 0.1% of global GDP.  The U.S., however, is both a huge oil producer and a consumer.  Domestic production runs at almost 13M bpd, with consumption at 21Mbpd.  That would seem to suggest that the net effect of higher prices on the U.S. would be to depress economic growth, but recent experience points in the opposite direction, because oil sector capex, in the era of shale, is acutely sensitive to prices, even in the short term.  When oil prices collapsed between spring 2014 and early 2016, the ensuing plunge in capital spending in the oil sector outweighed the boost to consumers' real income from cheaper gasoline and heating oil, and overall economic growth slowed markedly.  This story played out in reverse when oil prices rebounded in the three years through spring 2018, and economic growth picked up even as consumers’ real incomes were hit.
Oil production has risen by about 40% since late 2014, so the net boost to U.S. economic growth of a sustained jump in oil prices probably has increased.  The Fed has acknowledged publicly that higher oil prices no longer reduce economic growth, but conventional wisdom in markets and the media has yet to catch up.  If events in the Middle East drive oil prices up substantially, markets probably will become nervous about growth and will push the Fed to respond with lower interest rates.
Policymakers are unlikely to oblige, in our view, given their understanding of the impact of higher oil prices, the  tightness of the labor market and the coming increase in core inflation from tariff pass-through and a run of adverse base effects.  The likely further weakening of the dollar, as capital heads to safer havens and the Fed continues its bill-buying program, will add to the case against easing domestic policy. 
The wild card is whether turmoil in the Middle East triggers a sustained sell-off in equities, depressing business and consumer confidence to the point where labor market and inflation concerns become secondary.  We'd be surprised—the plunge in S&P futures is just the initial knee-jerk response—but if Iran takes more drastic action than we are expecting, it will become a real risk.  In that case, the Fed might have no choice but to ease, especially if credit markets seize-up too.  In the meantime, expect defensive stocks to outperform, with downward pressure on Treasury yields and gains for safe-haven currencies, until Iran's response becomes clear.  To repeat: Iran will respond.

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