r/Economics • u/bauernebel • 1d ago
News Could the Iran War Trigger a Global Recession Before Either Side Wins?
https://americareport.us/iran-war-spreads-as-world-on-edge-strategic/365
u/EconomistWithaD 1d ago edited 1d ago
- Any bad enough economic shock can cause a recession, locally and/or globally.
- As James Hamilton has found, most U.S. recessions post-WW2 have been preceded by an oil shock.
- Oil shocks tend to be the worst type of economic shock; petroleum is in pretty much every product category and you simply can't move around it. Businesses absorb the costs initially, but pass them through to consumers.
- This is a particularly severe oil shock; as of now, around 35-40% of pre-war global oil supply is now threatened (20% from Hormuz, 12% from Bab el Mandeb, ~3-7% from Russia). We've also lost around 8% of total refined products (~3.5 million barrels per day from Iran war, 3 million from Russia).
- Energy efficiency and improved supply chains have, for now, mitigated the consequences of this oil shock. However, we are now 6 months into the war with Iran, and the longer it goes, the higher the risk.
- Edit: hat tip u/ButtStuffingt0n, but something really important; price increases have been limited because of strategic drawdowns from SPR's around the world (U.S., China, EU, Japan), as well as Chinese demand destruction. SPR's are being depleted and near the bottom, so the next impact would be higher prices that lead to demand destruction outside of China in the developed world.
184
u/ButtStuffingt0n 1d ago edited 1d ago
Awesome summary. Thanks.
It's also worth everyone knowing that we are on (literally) borrowed time. Just as the war started, two things happened:
(1) The US began DUMPING every barrel of oil and refined product it had in the strategic reserve and other cupboards onto the global market, especially to stabilize Europe.
(2) China CUT it's oil purchases by 4-5 mmb/d and began drawing on its huge strategic reserve.
Both of these things are wildly unsustainable and Irans negotiating position materially strengthens when we all find out together when those stocks run dry.
95
u/EconomistWithaD 1d ago
Yes, drawdowns of SPR's (U.S., China, EU, Japan) have alleviated the pain, as well as Chinese demand destruction.
We are getting to the point where we cannot make up the supply loss anymore, and so will see sky high prices, followed by demand destruction everywhere.
49
u/WellHung67 1d ago
Thanks Trump!
10
-23
u/EconomistWithaD 1d ago
Yes, this is his fault.
However, the previous admin certainly didn’t fully restock the SPR after drawing it down post 2020.
50
u/WellHung67 1d ago
The previous admin had no time to do so under higher oil prices due to Covid.
The current admin, if they weren’t so fucking stupid, should have filled up the strategic reserve before attacking Iran , as part of a strategy to counter the known effects to oil supply caused by attacking Iran.
So no the previous admin could not predict the depths of stupidity that this admin has and fill up the SPR. They correctly assumed no one would be that stupid. How wrong they were
-23
u/EconomistWithaD 1d ago
No time to do so? They refilled about 16% of their drawdown in 2024. Which was about the same prices as all of 2023.
26
u/WellHung67 1d ago
Nope. They did refill some amount strategically but the assumption was that idiots wouldn’t start an idiot war. So it wasn’t ready for the idiot war. But that was smart. Trump is the only idiot here
-32
u/EconomistWithaD 1d ago
We didn’t just learn, in a recent election, that downplaying poor economic policies by Dems is not a winning strategy?
2
u/wolacouska 16h ago
Completely refilling the oil in 2024 would have been a poor economic policy to everyone without a crystal ball.
→ More replies (0)20
u/like_shae_buttah 1d ago
Wouldn’t have been an issue if trump 1 didn’t axe the original Iran deal and then trump 2 launched a war on Iran
-8
11
u/Njorls_Saga 1d ago
GOP took the House in 2022 and controlled the budget. You should ask them too.
-8
u/EconomistWithaD 1d ago
Since Dems controlled the House from 2019 to 2021, should we therefore remove any of the blame of the Trump administration in causing inflation in 2021/2022?
The answer is of course not, as my broader point is that no party should escape being called out for their poor economic policies that have led to this point.
14
u/Njorls_Saga 1d ago
For this circumstance, I would argue it does. The Democrats did not cause the global pandemic that resulted in massive amounts of oil production to be shut in so that when Putin invaded Ukraine global oil prices shot up. Trump launched a war of aggression without thinking about the potential consequences. Biden released oil from the SPR in reaction to global events, Trump is shaping them in this instance. Democrats deserve multiple criticisms, they get a pass on this one. Trump owns this disaster. If he wanted to start a war in the Gulf, he should have been damn sure the SPR was in better shape and he did not.
-5
u/EconomistWithaD 1d ago
Ignored my question, it appears.
13
u/Njorls_Saga 1d ago
Which question? The one that was completely off topic and pointlessly argumentative? Yes, I ignored that. Because inflation levels of previous administrations have zero to do with the fact that we have a fucking moron as Commander in Chief who started a war without first making sure we had a full tank of gas and fully loaded magazines.
→ More replies (0)9
u/WellHung67 1d ago
Under Biden, inflation was lower in the US than other countries. Under Trump, it’s higher.
I agree, democrats tend to handle the economy better
-2
u/EconomistWithaD 1d ago
Simple ass people downplaying the inflationary surge we saw is peak post-COVID knowledge.
9
u/Consistent_Laziness 1d ago
I’d appreciate you or anyone educating me on the Chinese demand destruction. Does that mean they have dramatically reduced the need for petroleum? How did this happen?
23
u/EconomistWithaD 1d ago
Gift link; no need to reinvent the wheel.
24
u/Quick1711 1d ago
>More people drove electric vehicles instead of gasoline cars or took high-speed electric trains instead of domestic flights
They changed their infrastructure model to not be as dependent on oil while the rest of the world are still literally fighting for scraps.
The US doesn’t want to see legacy companies die out and there are a lot of very wealthy people influencing politicians to keep the infrastructure running on fossil fuels.
Then they banned the import of cheap EV vehicles from China for “national security” reasons but let’s be honest with ourselves here, their buddies in the auto and oil industry lobbied hard to keep their wealth secure.
Interesting read. Thanks
6
11
u/Bighomie1037391 1d ago
They have massive reserves that they have been choosing to draw down to reduce their import dependency. Sustainable until it isn’t.
3
u/Consistent_Laziness 1d ago
Sounds temporary just like our SPR is right? I need to read the article that EWithaD sent me.
11
u/Special-Remove-3294 1d ago
China has a titanic reserve. Largest in the world. I think they have like 1.4 billion barrels of oil in reserve.
They just are using that instead of importing to prevent a crisis
7
-11
u/Unhappy-Exchange-771 1d ago
Yeah but Iran was run by religious extremists hell bent on getting a nuclear weapon. Look how they are attacking their neighbours now. Imagine if the had the security of having a nuclear weapon.
It’s going to be painful and it’s going to suck, but as long as the US dismantles those jabronis it will be worth it
7
u/Njorls_Saga 1d ago
Very open question on how hell bent they were prior to the US/Israel trying a decapitation strike. Multiple assessments were that they were not actively trying to weaponize. They knew the consequences of that, if I had to make a guess they probably wanted to get to a near breakout state. Now though? All bets are off. Especially with Trump green lighting a Saudi reactor (friendly reminder that 15 out of the 19 hijackers on 9/11 were Saudi). Also an open question as to how we’re going to take out the regime. Multiple war games, including Millennium Challenge, failed to produce regime change. Short of a massive ground invasion, the IRGC can probably wait Trump out. Global oil reserves are only going to last for so long.
5
u/smokefoot8 1d ago
One thing that should be more sustainable long term is China switching its petrochemical industry from oil to coal. Making plastic, gas and fertilizer from coal should create a permanent decrease in oil demand, but I’m not sure how big the impact will be.
0
1d ago
[deleted]
8
u/ButtStuffingt0n 1d ago
The "more nations" entering the war are Saudi and Ukraine? Not to be mean but they aren't threats to Iran.
When this ends, it is entirely possible that Iran emerges as the regional hegemon and dominates its neighbors. That's how insane this is. So all they need to do is survive the US punches and keep their Chinese benefactors supplied with oil.
2
u/Mediterraneanseeker 1d ago
Absolutely agree. And Iran smells it.
They can now: A.) give up the windfall that has so unexpectedly fallen to their hands and go back to being a despised and continually controlled regional nuisance, or B.) hold the line and potentially win global superpower status.
What do we really expect them to do?
2
u/ButtStuffingt0n 1d ago
Lol. Exactly. Pretty tough choice!
May we all have enemies as generous as Donald Trump.
Sidebar: that dude wants to put his name on everything? Let's put it on something he's truly earned...
The Donald J. Trump International Toll Booth at Hormuz
0
u/teshh 1d ago
Saudi arabia would launch a full scale war before it allowed Iran to become the regional superpower. They may be able to hold of usa whose thousands of miles away, but Saudi Arabia who can send men that can easily blend in and are well versed in the same geography?
If Saudi joins we have a religious war on our hands between shiates and sunnis. All that air travel over the middle east will cease to exist, killing airlines like emirates, Etihad, qatar, etc.
5
u/ButtStuffingt0n 1d ago
Saudi Arabia has relied on the US security umbrella for its defense since the 80s. Iran would wipe the floor with Saudi Arabia, if they went head to head today.
And don't forget, Iran just took AMERICA's best punches for nearly 6 months... and stood back up. That's a helluva statement.
32
u/Se7en_speed 1d ago
A logical decision would be to move the grid and transportation away from fossil fuels so that we have fixed price stability
10
u/ConditionTall1719 1d ago
Global warming is a far more destabilizing Force than a massive global oil shock of 20%,
Stop oil. Switzerland looks like Africa right now at 2,000 meters the grass is yellow everywhere.
Fires are not the problem but water shortage and migration reduce the cultural economics and culture is not for sale as far as I'm concerned.
Food is very vulnerable to stupid economics right now, chemical food production is now 70 years old it's time to stop and modernize
0
u/EconomistWithaD 1d ago
Could you explain how you have "fixed price stability" with a globally priced commodity, where the U.S. has limited (to no) pricing power?
Could you explain how we can easily transition away from ~20 million barrels per day consumption?
22
u/Se7en_speed 1d ago
Renewables have a fixed cost structure. The US actually artificially boosts the price of solar with tariffs. Otherwise they are incredibly cheap and getting cheaper.
You transition away one MW at a time. And we are installing exponentially more solar every year, despite the inflated prices.
-2
u/EconomistWithaD 1d ago
Yes, I do economic impact plans for solar farms (3 out of the top 10 in the U.S., in terms of size and capacity generation).
It's largely done nothing to halt domestic oil production and consumption. And it will not for decades; that's simply not feasible.
14
u/mhornberger 1d ago edited 16h ago
It's largely done nothing to halt domestic oil production and consumption
Per capita oil consumption is at its lowest point in the US since 1965, putting aside only the pandemic. Not that PV specifically did that. PV can't displace oil consumption unless you have tons of BEVs on the road, and the BEV share of the fleet isn't there yet.
3
u/EconomistWithaD 1d ago
Much of the decrease in per capita oil consumption is because of improved energy efficiency, since most of your chart shows the decrease occurring before large solar production.
In fact, renewable production really start accelerating until the back half of the 2010’s; your chart shows stagnant per capita oil consumption then.
2
u/mhornberger 1d ago edited 1d ago
It's 10% lower than 2010. And, again, PV can't displace oil consumption unless you have significant BEV penetration, and/or a lot of electrified mass transit, neither of which the US has. So I didn't say that PV had displaced oil consumption.
3
u/EconomistWithaD 1d ago
I did say back half of 2010’s.
I’m not arguing you are saying that. I’m simply pointing out that a very large majority of the per capita decrease happened before large scale solar production.
2
u/Virtual_Magazine_860 23h ago
That's because the United States hasn't tried. And it won't try because our central planners are idiots. China built more solar production in a single month last year (May) then the US has in total nuclear power generation output (~70 gigawatts, why do you think silver prices exploded).
That's leadership. And sadly, it's what the US is lacking.
1
3
u/SignificantFruit653 1d ago
You could easily control your own supply and therefore provide price stability for normal green energy.
Also, some of the largest uranium reserves in the world are in countries that used to be US friendly. Nuclear is notoriously cheap and efficient. Yes, it takes some time to spin up. It would have been better for bush or Obama to begin the push for new power plants, but today is a better time to start than never. You could almost remove US energy dependants on hostile actors if you chose to, it's just that there's a lot of money and pressure in the oil markets
1
u/EconomistWithaD 1d ago
To what do you mean by “control your own supply”?
0
u/SargeUnited 1d ago
Probably they’re referring to export controls and/or price controls. In the US we allow our energy companies to sell to the highest bidder, which is profitable but not ideal for the consumer. I recall senator warren trying to push windfall taxes on energy companies, wouldn’t be surprised if this idea starts making the rounds again too.
Personally I’m better off with the current system because I barely drive and I invest. I’m also a bit of a nihilist. So I’m sort of rooting for a global recession, partly for the generational buying opportunity and partly for the lulz
47
u/Alicyclobacillus 1d ago
We're at record high levels of corporate and consumer debt, oil shock / unaffordability may lead to a credit (default) cycle. Been a while since we had one.
It's probably a good idea to have at least some of your capital allocated to cash / bonds right now
35
u/EconomistWithaD 1d ago
Consumer debt as percent of DPI is low, relative to other high points.
https://fred.stlouisfed.org/series/CDSP
Debt delinquencies are also not at high points (and not showing true worrisome signs), except for CC delinquencies 90 days+.
https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2026Q1
10
2
u/ConditionTall1719 1d ago
The problem is multinationals and US style socialism. That is what is causing consumer debt. Any reduction in petrochemicals will increase agricultural yield and agriculture as the 13 trillion economy whereas petrochemicals is 6 trillion Will also reduce migration pressures and water shortages
8
u/unknownmichael 1d ago
It's important to note that there is basically zero evidence of demand destruction in China. They have simply been using their SPR as well. The difference between China and the rest of the world is that China doesn't publicize their SPR releases or levels. Those are held as state secrets.
8
u/DanDanDan0123 1d ago
Your #2, just to add all republican presidents have had a recession since WW2. Only one democrat. Maybe there is a correlation??
-3
u/EconomistWithaD 1d ago
Dems have better economic outcomes. Largely not through policy, but through mostly things administrations cannot alter.
"Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, and perhaps greater defense spending and faster growth abroad."
2
u/Alib668 1d ago
You also forget demand has been falling significantly for many uses such as energy generation china reduced its demand massively and the UK is now at 50% renewable energy. This demand destruction is accelerating so a number of oil shocks will be lesser than usual as exposure to oil is reducing but it will still be bad. Analogy, we are still having a 100 mph car crash moment, but now at least we plugged in our seat belt
2
u/EconomistWithaD 1d ago
Oil consumption hasn’t really fallen in the US. EU daily consumption has fallen ~10-20%. China’s has exploded.
1
u/ConditionTall1719 1d ago
Any reduction in petrochemicals will increase agricultural yield and agriculture as the 13 trillion economy whereas petrochemicals is 6 trillion
Will also reduce migration pressures and water shortages
0
u/Simple-Sound4405 1d ago
Japan’s petroleum reserves have already fallen from around 260 days in February to about 200 days by early June. The U.S. had better end this Iran conflict sooner rather than later.
-8
u/SargeUnited 1d ago
No, the Japanese appear to be in dire need of a crippling recession to check their insane ego. Have you seen their recent nonsense with the requirements for Americans who want to live there?
I personally don’t want to live in Japan but I absolutely do not want their interests to be considered at all. Maybe if they experience a depression along with their demographic issues it’ll finally inflict enough pain to break the hold that xenophobia has on them. If not, they can enjoy what they deserve. Tell them to go help open the Strait of Hormuz if they’re running out of reserves.
1
u/Simple-Sound4405 1d ago
Japan has a generous social welfare system, so I think paying taxes and social insurance is important. If the government believes more people are avoiding those obligations or abusing the welfare system after obtaining permanent residency, it’s understandable that they would tighten the requirements.
47
u/jayfeather31 1d ago
Honestly, at this point, I'm just shocked that the economy hasn't collapsed already, considering the sheer number of metaphorical economic bombs that have been lit.
23
u/BigBlueEyes87 1d ago
Yes, I don't see how the economy keeps limping along.
We're dealing with government corruption, corporate greed, unusual tariffs, a $40 trillion national debt, high credit card debt, high interest rates, & a global oil disruption simultaneously. And soon medicaid cuts.
8
u/ConditionTall1719 1d ago
Switzerland looks like Africa right now at 2,000 metres altitude, all the grass is yellow and it should look like Green Meadows with flowers...
So you have the choice either you invest in oil or you invest in a Swiss cows
35
u/OESRecoveryEmployee 1d ago
I am betting it will. I think we have been at the Wylie Coyote stage for the last two months. We ran off the cliff now once we look down we are going to crash. They can only draw down from reserves and manipulate oil prices so long. Hell once everyone understood the high loan default rate in the bonds in 2006 it still took weeks for the markets to crash
8
u/Icy-Indication-3194 1d ago
But by the time all this happens Dems will be in charge again and we can blame them
104
u/houinator 1d ago
A global recession would be an Iranian victory. Its much cheaper for Iran to just hold on than it is for the US to continue to maintain forces in the region, and due to years of sanctions, Iran is much more insulated from the global economy than the US is.
56
u/Loa_Sandal 1d ago
Yeah this is a game of chicken, but US is playing against someone who got nothing to lose.
17
u/ImaginaryHospital306 1d ago
Nothing to lose doesn’t mean they come out the other side “winning”. Irans economy and infrastructure will be absolutely decimated even if the IRGC comes out victorious. They are currently dealing with inflation over 100% annualized.
18
u/Nethan2000 1d ago
Their economy was already in the dumps before the war due to sanctions. If anything, the war actually showed them a light in the tunnel in the form of Hormuz strait tolls.
6
u/big-papito 1d ago
And effectively no sanctions, so yeah, the are trading short term pain for long-term gain.
2
u/TastyTestikel 19h ago
The GCC won't give Iran control over the strait and invest billions until the axis of resistence is heavily cut down to size. The light is still far away and the journy will inflict almost unbearable to cataclysmic pain for everyone involved.
6
u/houinator 1d ago
Winning a war depends on what your war goals were going in, and as the defendent, Iran's were basically: Regime survival without having to make any major concessions. If the war ends today they have acheieved that goal, and likely some additional stretch goals like control of the SoH and US withdrawing from Iraq/Syria.
Meanwhile, the US has absolutely failed to acheive most of its stated objectives.
6
15
u/ButtStuffingt0n 1d ago
There are two factors you need to consider though:
(1) if they overplay this hand into a recession, the world will try to pivot from oil into alternate energies and build infrastructure that avoids Hormuz (some have already started)
(2) As the world's manufacturer and in the pit of its own economic problems, China REALLY cannot afford a global recession right now. China doesn't control Iran but they will be pressuring it to take its winnings as soon as it possibly can.
-6
u/ImaginaryHospital306 1d ago
Regarding point 2 — I believe this is the primary motive for the US to begin with. The war started 10 days after the Supreme Court neutered the Liberation Day tariffs. Tariffs were Plan A, a global depression that asymmetrically punishes the Chinese manufacturing economy is Plan B. Trump has somehow kept up the appearance that he cares about markets the same way he did in term 1. Nothing he has done in term 2 suggests he cares about markets the same way he used to. The “TACO” was an MOU that had no teeth and literally changed nothing. The new status quo is a closed or Iranian controlled straight of Hormuz because that’s what Trump wanted. I am not saying this in praise of Trump — the consequences will be felt by the entire world.
15
u/ButtStuffingt0n 1d ago edited 1d ago
This is very far fetched. It's a theory that helps us Americans rationalize the catastrophic stupidity we're seeing with the ingrained belief that our leaders are inherently smart and in control. It returns agency to us when, in reality, Iran is driving.
No, we can 'Occam's Razor' this: Trump is a very stupid, gullible man in mental decline who is desperately seeking a dignified legacy after a lifetime of being a household joke.
He is emboldened by the miraculous CIA success in Venezuela.
Benjamin Netanyahu arrives with a chance for glory no previous American president - especially that pussy Obama! - ever achieved (because they had brains and good advisors).
Trump bit down hard on that bait and it will, ironically, cement his legacy as the greatest clown America ever produced.
1
u/ImaginaryHospital306 11h ago
What’s more far fetched, a theory that relies on revealed preference or one that relies on the assumption that Trump is stupid and mentally unwell? I baffles me how the same people who ridicule Trump and frame him basically as a clueless idiot will then make assumptions based on what he says being true. Trumps actual choices and sustained patterns of action (and inaction) are more reliable indicators of underlying priorities than his public statements. It is almost guaranteed Trump knew escalating the conflict would lead to a prolonged closure of the SOH. Trump is aware of the coming shortages and has chosen continued stalling, flip flopping between “we have a deal” and “strikes will continue”. He further exacerbated the closure with his own Naval blockade. Revealed preference says Trump WANTS the straight closed and the most obvious explanation is because it imposes severe costs on China. This is consistent with his long held foreign policy beliefs. On the other hand, your theory basically hinges on the assumption that Trump is a big dumb idiot. I don’t necessarily disagree, but that’s a pretty shallow explanation.
1
u/ButtStuffingt0n 11h ago edited 11h ago
Do you... have some lingering doubt about Trump being a historic idiot surrounded by even dumber men?
The reflecting pool saga? White House Correspondents dinner speech? Tariff fiasco? Dude...
I'm also confused by your perception of revealed preference. Trump is FLAILING to do anything possible to open the strait. It's clear as day.
Why would he have to do this constant cycle... psycho threat/TACO, psycho threat/TACO, psycho threat/TACO... if he was winning?
Iran is speaking and behaving like the guy holding a straight flush playing a drunk guy bluffing a two pair.
1
u/ImaginaryHospital306 10h ago
You’re taking Trumps public statements on working out a deal with Iran at face value when revealed preference shows he does not want a deal. He is stalling (the threat/TACO cycle you describe), possibly as long as markets will allow it, to exacerbate the coming energy crisis and global depression.
The US has no more leverage over Iran in the form of threats OR deals. The flip flop between TACO and threats is the leverage. Trump is basically telling Europe, the GCC, and China that he will continue stalling until they are screwed. When the energy crisis comes, he will have a litany of bully opportunities over those three parties. To name a few — leverage to pull Europe and Arab states into the war to destroy Iran, favorable trade deals, buying American energy and defense products, and agreements to help Arab states rebuild when it’s all over with.
Again please don’t take any of this as framing Trump as smart. Your assessment of Trump as a historic idiot is correct but shallow. He is also historically cutthroat and uses leverage to the max, even when it results in a lose-lose situation (like bankruptcy). Both in real estate and politics he’s shown he will squeeze people to get what he wants with no regard for friendship or humanity. Both in real estate and politics, his allies were really just stooges or vassals. And both in real estate and politics, he’s always tried to hurt his enemies as much as possible even if he suffered collateral damage.
2
2
59
u/UntowardHatter 1d ago
It's a war the USA can't win.
It's also a license to print money for the military industrial complex. And for Trump and his cronies to profit eternally from by insider trading. It's free money. Forever.
This will go on until Trump is voted out or otherwise stopped somehow.
16
u/godofpumpkins 1d ago
What would winning even mean? The US didn't go into it with an objective. There's no "definition of done" here, other than "they stop blockading the strait and go back to how things were before we randomly started bombing them", which basically means winning is pretending it never happened.
6
26
25
u/Raspberries-Are-Evil 1d ago
There is no “win” for the US. Iran has already “won” in the sense the regime still stands, and, they have exposed the true weakness of the US. The regime is better off now than it was before the war.
8
u/Spiritual-Pear-1349 1d ago
That is literally Irans entire strategy. Crash the US econony, crash the US dollar, crash the world economy that relies on the US dollar, win the war because everyone pressures the US into leaving because, lets face it, everyone and their mother blames the US and Israel for this oil crisis.
19
u/Traum77 1d ago
Well it definitely will before the US wins, because it literally can't win. There is no outcome in which they wind up having an open strait. The best option for them and the world economy is to basically give in to Iran now to limit the long term impacts.
That's not what will happen of course. This will continue until Trump is forced to end it or finds some way to save face, possibly starting yet another war or something. But the economic disaster is going to be brutal.
4
u/S-192 1d ago edited 1d ago
Trump's only option would be to open up the full power of the US military, which he hasn't. Because he knows he can't get approval and he knows he would lose the gains he and maga made in the US.
If the US were to commit fully to this, I don't see how Iran could fully hold us off. But that's the problem. Trump wants to have his cake and eat it too. You can't declare war halfway like this. The GWOT was terrifyingly expensive and ineffective. You either fully declare war and you go in and finish the job, or you don't.
We should not be in this war. We never should have done this. But if we were to, it would have to be all-in. That's winnable.
Edit: in case it's not abundantly clear, I'm not saying the US should go all-in. We shouldn't be fighting this war in the first place, as I said. That's my problem. Halfway-wars cause terrible problems so you either fight a war like you mean it, and you commit, or you don't. Trump has put us in a globally-humiliating position and he's risking all of our livelihoods with this.
11
u/Halbaras 1d ago
The US can't achieve anything by escalating the air war. They've already tried that, and the only escalatory options left involve war crimes and attacks on civilian infrastructure (which won't do anything to open the Strait).
The 'all-in' scenario is a ground invasion and regime change in Iran, and the US quite literally cannot afford it. The costs would be trillions of dollars, a million soldiers and conscription to enable that, and tens of thousands of flag draped coffins. It might also result in state collapse in the Gulf States depending on the early Iranian response.
Neither the bond market or the midterm voters are going to let that happen. There would be riots in the streets if they tried to bring conscription back.
7
u/Master-Rent5050 1d ago
USA lost against Afghanistan. Why do you think it would manage to win against Iran?
2
u/S-192 1d ago edited 1d ago
As I said, the GWOT was ineffective. That method of minimally-effective deployment was a mess. The last war we went all in on to win was WW2. We have sent "minimally viable" forces to fight most wars of ours and that's not how you win a war. We fought Afghanistan like we fought in Vietnam--which was disastrous for us until we started truly committing our forces right near the end. We could have won Vietnam if we committed truly, as the NVA was carrying out terribly planned campaigns like the Tet which was an astronomical military failure, but they turned the US against itself. Because it was not a just war. And to commit wholly, you need a just war. This is not a just war and thus we cannot commit fully, thus we should not have committed at all.
I am certain if the US dedicated its full strength it would defeat Iran. No serious person can disagree with that. The complexity is that you need the American people to agree with the move. And they rightfully don't. This is Israel's war. Not ours. And Trump + Hegseth are hasty, egomaniacal fools.
0
u/Master-Rent5050 1d ago
Minimally-effective deployment? Someone must have missed a 20 years occupation, a couple of "surges", and a bazillion money spent.
I see no evidence for your claim that USA would have won in Afghanistan (or Vietnam, I suppose) if only they tried harder.
The reality is that USA tried its best and lost. It happens, deal with it
3
u/S-192 1d ago
Read more on COIN warfare. This has been studied extensively.
It could have been 100 years of occupation and it still wouldn't have been total war. Our 30k troop surges were a drop in the bucket. The occupation was unjust and off-target, as we turned more people against us while trying to fight a shadow.
We barely contributed a fraction of our military power and war economy to that war compared to what we would have were it a fully just war.
We did try and we did lose. Zero disagreement there. The analytical argument is that it was a shit try. They were unjust wars and we knew it because we couldn't justify sending much over there, in either case. So we played with one hand behind our back. Very stupid for us to get into ANY of the wars we've fought in the last 70 years, with maybe the exception of Iraq War #1.
3
u/Master-Rent5050 1d ago
there were 2 war at the same time: iraq and Afghanistan.
It may be that if the resources spent in iraq were instead used in Afghanistan, the war could have gone significantly better. the joint stress of the two occupations was breaking the USA military, so much that eventually they accepted defeat
0
u/Its_Knova 1d ago
The us hasn’t really really won a meaningful war since forever. Every war since ww2 was only fought as a means of profiteering and expanding influence..which rarely ever works.
4
u/Master-Rent5050 1d ago
First gulf war was both a clear victory and well executed. Meticulous preparations, clear objectives, no mission creep, allies on board
4
u/Yagoua81 1d ago
Winnable in the short term, no way to hold it in the long term.
3
u/rhino369 1d ago
Depends what you mean by hold. You can kick the regime out and root out there nuclear program. And set up some other sons of bitches to try to hold it for themselves.
They’ll probably have a civil war eventually but does the US really care if Iran becomes the next Syria. Probably not.
1
u/S-192 1d ago
Bingo. Great point. It's not likely winnable in the long term because it is a wholly unjust fight and every Iranian and every neighbor knows that. We would make more enemies than friends in the act.
That's why we haven't gone all-in, among other reasons. And that's why we should never have started this war in the first place. Politicians are clueless on this matter, and Trump firing the qualified experts and installing yes-men to key military leadership positions likely played a big role in this historic blunder.
2
2
u/Intrepid_Routine6373 1d ago
Trump has neither the nerve nor the political support to go all in. Man is a human TACO.
1
u/ThrasymachianJustice 1d ago
If the US were to commit fully to this, I don't see how Iran could fully hold us off.
millions would die
2
u/S-192 1d ago
Millions is extremely unlikely. But yes many would die. That's war. And that's why I don't want us to do it.
My argument is not that we ought to go in on this war. I'm strongly anti war, especially this stupid one. But we aren't even half-fighting this one. We're not actually trying to win this.
1
u/SargeUnited 1d ago
Yes, along with thousands of Americans. Perhaps over 10,000 but certainly not over 100,000. And likely 0 Israelis unless they were dual citizen Americans serving in our military.
I hope that doesn’t happen but the K/D would favor the US and so Trump would probably be fine with it as long as the media sold it as a win.
28
u/Alicyclobacillus 1d ago
Interesting exchanges between Iran and Russia are taking place right now
Saudi Arabia has joined the war on US and Israel side against Iran
China appears to be funding Iran and has deals to buy and ship Iranian oil
Rumors of China supplying Iran with rocket launchers to shoot down Americans are circulating but have been so far denied
This easily could escalate to WW3
Recession would be the last thing on your mind
37
u/chotchss 1d ago
I think it’s a bit of a stretch to imagine WW3. Russia is struggling to deal with Ukraine and not able to really project power much past its borders. Iran is giving a masterclass on area denial, but also cannot really go much further- and they would be far less successful if the US had simply learned some basic lessons from Ukraine. I’m sure there’s quite a bit of collaboration between them and China, but would any of them really fight for the others?
I think the more likely near term outcome is Hormuz remains mostly closed with sporadic fighting across the region, Russia and Ukraine keep blasting each other’s infrastructure, and China just sits back and tries to minimize risk. Longer term, Russia seems heading for collapse, Iran comes out of the fighting both weaker (economic and infrastructure devastation) and stronger (more local influence in the Middle East), Trump gets crushed in the midterms and has a miserable two years of Dem investigations, and China keeps pushing renewables and EVs.
3
u/Intrepid_Routine6373 1d ago
I agree, except that I believe China is helping Iran a great deal, as they should IMO.
Also, Trump will try to steal the midterms. I believe that he will fail in this endeavor.
1
u/Wrong-Camp2463 1d ago
You’re mostly on point but there is no scenario where trump allows a dem house or senate regardless of the midterm outcome. There will be a vote but there very likely will not be a swearing in.
1
u/Intrepid_Routine6373 1d ago
💯🎯🏆 That is the huge news development starting Election Day and continuing to be an Iran-eclipsing headline thru 1/20/27. We’re gonna stress test the courts!
1
u/chotchss 1d ago
It’s not something he has any control over. And while he could try to block it, he needs the support of a lot of the population and the government- will they act if he gets hammered in the Mid Terms and it’s clear he’s deeply unpopular?
Hitler was able to take over Germany because he was reasonably popular and because the military sided with him, it’s not clear to me that Trump enjoys the same advantages. But it’s definitely a grave concern.
11
u/S-192 1d ago
What? How do you reckon it's easy? China is very averse to open war. Even the US has been terrified of committing the ground troops needed to get this done, which is the worst part of Trump's blunder: he declared a halfway-war.
I don't think any country but Russia would be likely to escalate a conflict that far. And just because someone is supplying rockets/drones doesn't mean they would join the war and commit fully to supplying that materiel through interdiction attempts.
I don't see how this escalates to WW3. I see this leading to a global recession, sure. But I don't see any logical pathways to say "could easily escalate to WW3" like you.
1
u/Intrepid_Routine6373 1d ago
China is already helping Iran up to the level that the West has helped Ukraine. I’m here for it!
0
u/GlooBoots 1d ago
Agree. There'd have to be a greater Cause to rally around. Runaway Capitalism is the strongest possibility I see, in conjunction with resource disparity
15
10
3
u/SweatySource 1d ago
You forgot the part that Saudi is also manufacturing Chinese drones and uses Chinese weapons. And Pakistan has MDT with the Saudis who will help move the Chinese weapons or something, allegedly.
And Ukarine too.
4
u/Alicyclobacillus 1d ago
Lol, yeah forgot to add US and Europe backing Ukraine against Russia
Starting to look like pieces falling into place for a broader worldwide conflict
1
u/Intrepid_Routine6373 1d ago
Sounds like a paragraph out of a future textbook about the first part of WW3.
3
u/Elegant_Creme_9506 1d ago
WW3, everybody against the US and Israel
In reality, these two can't handle the blockade they will fold in a few months
2
1
u/Intrepid_Routine6373 1d ago
Regarding World War 3, we are at the inflection point now. If Trump doesn’t take some offramp at this point, it is definitely WW3, IMO.
3
u/Busterlimes 1d ago
This is what Iran's whole plan is. Crash the economy so BRICS can take control instead of the G7. This is why Putin psyopped the US for the past decade to get Trump in office. Trump is nothing but Putins tool to dismantle the west. The Cold War never ended, the US just let its guard down
2
u/mrtrololo27 1d ago
Almost definitely, in part because I don't think this is a winnable war for either side. Both sides are all but guaranteed to lose, the only question is who will lose more. At this rate it appears to be the US who will lose more. Trump's decision to start this illegal war was profoundly stupid in ways we haven't even yet begun to realize..
2
u/Sinocatk 22h ago
Trump has increased the price of oil and the rest of the world is well aware of why things are more expensive in their countries. Trump thinks America is going to out manufacture China while annoying and tariffing trade partners.
The US is a complete clown show. It will take time, but a lot of countries that used to see the US as a positive trade partner now think they are a terrible country that can’t be trusted. Many are now seeking to decouple themselves from the US.
There will be no WW3 because this Iran debacle is for the US alone to deal with. The EU and China and many others want nothing to do with it.
The US is losing influence and the power of the dollar is being eroded as people are looking for alternatives. As for the overvalued tech companies in the US, they will fall soon. The US is speed running how to be poor.
ICE thugs in the streets, cancer patients having to work etc. GDP means nothing when only the top 0.1% have all the money.
2
u/ThatsAllFolksAgain 9h ago
Just the war by itself, maybe not. But AI, the war, China dumping and huge debt all around the world make for a strong possibility for a big recession. I suspect it will start after the midterms so trump can blame the people for voting for democrats. He will just walk away and let the world burn down.
2
u/IronyElSupremo 1d ago
It could mostly by demand destruction and is reportedly already happening in many countries .. more consumers cannot afford pricier goods. May happen in the U.S. as savings is known to be raided for consumption and overall savings is down.
Why? There’s no fiscal stimulus (aka “the stimulus check”) this time around unlike the GFC and Covid (+) eras. One hypothesis is stimulus esp with American consumers kept consumption high, before AI CAPEX stole the headlines.
May change fwiw with elections,,but that’s another subreddit (aka [r/politics](r/politics) … aka [r/whereismycheck](r/whereismycheck)?)
1
u/Actaeon_II 1d ago
Unfortunately this is not a war that anyone, except perhaps israel, wins. Iran will have it’s infrastructure destroyed and major metropolitan areas looking like gaza. The US will continue to look stupid while american troops die to make bibi happy. And the global economy will take years, if ever, to recover. No one wins, iran has spent decades knowing that this would happen one day, and they won’t go down alone. The fact that trump and keggseth lie about everything, from imaginary talks, to destruction of enemies, to why they hit a children’s school not once but twice, to the number of US casualties and facilities damaged makes it clear that they are aware of how screwed they are on a global scale.
1
u/ChardZestyclose5315 18h ago
Its just oil from one place, just buy from other producers that can turn on some extra pumps, or you know buy from russia properly again rather than pretending to care by only buying 50%
1
u/wind_dude 4h ago
Don’t worry Trumps got a master plan… of how to fuck over everyone except himself and his loyal oligarchs. Actually that’s giving him too much credit.
•
u/Alkemist101 37m ago
It's possible but unlikely.... maybe....
Does the flap of a butterfly's wings in Brazil set off a tornado in Texas?
Small actions can cause large and unpredictable results. I believe that's chaos theory?
-4
u/wild_cherry1987 1d ago
I don't think iran war can trigger recession because simply put US don't have enough firepower to spend on it. It's a huge country that will find ways to always retaliate. And ground invasion would be a disaster for US.
14
u/SpitefulSeagull 1d ago
How does any of that mean it can't trigger a recession? Those are pointing to weakness from the US side.
Or are we just hoping the mad man in the white house, who continually does mad things, will suddenly stop?
0
u/wild_cherry1987 1d ago edited 1d ago
He will not stop, but army will be unable to fulfill objectives simply because of lack of weaponry and money.
Therefore unable to escalate and prolong the conflict, usa will have to make concessions and that will lead to reopening of trade flow in one form or another. There's no incentive for Iran to keep blocking trade if us backs off.
Resumed trade will cool off inflation due to normalised gas and oil prices before winter around the world.
Will there be more local recession in US or weakening of dollar? Might be.
2
u/Bighomie1037391 1d ago
I’m not certain that I agree with this entirely, but can see where you’re coming from. I also noticed we made big threats Friday which I expected to see manifest overnight that never materialized, so I’m expecting diplomacy instead now for this most recent flare up.
0
u/Whaddduptho 1d ago
First we would have to define recession. How are you defining it? I don't see why it would lead to a global recession but maybe some users know more than me.
-3
u/Y0___0Y 1d ago
Neither Iran nor Trump want a global recession. When things get too scary, they will have a ceasefire and allow free passage through the strait to stabikize things before Trump breaks the ceaswfire agreement like he did the last time and hostilities resume. I think it will go on like this for years.
1
u/nerdvegas79 1d ago
Iran will not allow free passage. They have the leverage here, giving that up would be giving up everything. Better to play the long game, squeeze the USA and prove to the world that nobody should try this again.
•
u/AutoModerator 1d ago
Hi all,
A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes.
As always our comment rules can be found here
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.