Trump's Failed Speech

There is a quote often attributed to Abraham Lincoln, though in all likelihood he did not actually say it, that goes "It is better to remain silent and be thought a fool than to speak and to remove all doubt." I thought of this advice after watching last night's address to the nation by cult leader, convicted felon, and failed President Donald Trump. However, in Trump's case, the quote might be better paraphrased as "It is better to remain silent and be thought to have no idea what you are doing about the war than to speak and remove all doubt." I have been writing for weeks that Trump has no clue how to end the war he launched against Iran. I have repeatedly been astonished by financial market upswings based on nothing more than optimistic-sounding musings by Trump. Any objective appraisal of events would suggest that we are headed for a very difficult time. Apparently, investors were not convinced that Trump was really flailing as much as it appeared. However, in his speech last night, Trump removed all doubt.

I have written this several times now, so forgive the repetition, but I think it is worth saying again. When Trump launched his war against Iran, he did not believe that Iran would close the Strait of Hormuz. Therefore, he did not prepare a plan to reopen the strait. Now, because of the impact of the strait's closure on the world economy, freedom of navigation through the strait has become the most important issue in the war. Shortly after the start of the conflict, I had a conversation with my financial advisor. He told me that from an investor standpoint, it didn't matter how long the war lasted. Instead, the only thing that mattered was how long the Strait of Hormuz would be closed. I think that this represents the market perspective pretty accurately. As such, what was expected from Trump last night was either an indication that the war would end soon, even if it meant leaving the strait under Iran's control, or that Trump would escalate the war and perhaps reopen the strait by force. Trump did neither.

What Trump did was little more than verbalize what he has been posting on Truth Social for the past week. He described Iran as a threat that was on the verge of obtaining nuclear weapons. This is certainly not true. In March of last year, Director of National Intelligence Tulsi Gabbard testified before Congress that "The IC [intelligence community] continues to assess that Iran is not building a nuclear weapon and Supreme Leader Khomeini has not authorized the nuclear weapons program that he suspended in 2003." Just two weeks ago, Gabbard told a Senate committee that "As a result of Operation Midnight Hammer, Iran’s nuclear enrichment program was obliterated. There has been no efforts since then to try to rebuild their enrichment capability." Trump has cycled through a number of different justifications for starting the war and, apparently, has settled on a made-up nuclear weapons threat. This is reminiscent of then National Security Advisor Condoleezza Rice warning about a "mushroom cloud" when she justified the invasion of Iraq due to a non-existent Iraqi nuclear threat. History is repeating itself. Moreover, Trump couldn't help contradicting himself. At one point, he insisted that "We totally obliterated those nuclear sites" and at another point, he said, "They were right at the doorstep" of building a nuclear weapon.

Similarly, Trump wavered between saying that U.S. forces have "beaten and completely decimated Iran" and arguing that there was still a need for more fighting. This is not the sign of someone who has a plan. To the contrary, it was very clear that Trump has no plan. Trump stated that "We are going to hit them extremely hard over the next two to three weeks. We’re going to bring them back to the Stone Ages, where they belong." Why is there a need to do such damage to a country that has already been "completely decimated"? Trump continued saying:

If there is no deal, we are going to hit each and every one of their electric generating plants very hard and probably simultaneously. We have not hit their oil, even though that’s the easiest target of all, because it would not give them even a small chance of survival or rebuilding. But we could hit it and it would be gone. And there’s not a thing they could do about it.

While, technically, Trump may be correct about U.S. targets, Israel has attacked oil storage facilities and a gas field. Iran retaliated against similar targets in neighboring Gulf countries that are allied with the United States. Iran has warned that it would respond to future attacks such as those threatened by Trump by retaliating against the same sort of infrastructure targets. This is a recipe for a humanitarian disaster. More importantly, what kind of deal is Trump proposing? He didn't say anything about the type of deal he envisions. Again, Trump said nothing that suggests that he has a plan.

When it came to the critical issue of the Strait of Hormuz, Trump said nothing that was reassuring. Rather, he stated that, "the countries of the world that do receive oil through the Hormuz Strait must take care of that passage. They must cherish it. They must grab it and cherish it." He further argued, as he has previously done on Truth Social, that other countries should "build up some delayed courage" and "Go to the strait and just take it, protect it, and use it for yourselves." Trump went on to claim that:

And in any event, when this conflict is over, the strait will open naturally. It'll just open up naturally. They're going to want to be able to sell oil because that's all they have to try and rebuild. It will resume the flowing and the gas prices will rapidly come back down.

Trump is clearly ignorant of the international petroleum market. Iran already allows its own oil through the strait. In fact, because of the high oil prices that have resulted from the war, Iran is making more money than it was before the war from its oil. Trump's suggestion that the strait will "open up naturally" because Iran will want to use it makes no sense. Iran already uses it.

Moreover, even if the strait were to completely open today, prices would not rapidly fall. There is an "air gap" in the oil supply, meaning that oil that left the Gulf before the war has either arrived or will soon arrive at its destination. There will be weeks or months before tankers currently trapped in the Gulf could deliver their oil. During that period, supply will continue to be constrained and prices will remain high. This is to say nothing about the facilities that have been damaged and won't be able to immediately return to full service.

Trump also suggested that countries that are unable to obtain oil from the Persian Gulf should "buy oil from the United States of America. We have plenty. We have so much." Other countries can buy oil from the U.S. and, indeed, do so already, but more demand simply raises prices for U.S. consumers. Overnight, Brent Crude Oil increased roughly 5% in price. West Texas Intermediate, on the other hand, increased over 10% and now costs more per barrel than Brent. This price increase will almost immediately be reflected at gas pumps throughout the United States.

What is clear is that Trump has no idea what to do about the Strait of Hormuz. What's worse is that oil is not the only essential commodity that is currently bottled up in the Persian Gulf. There is natural gas, fertilizer, and helium that is trapped as well. Trump has driven the world's economy to the edge of disaster and seems to have no understanding of what he has done or any idea what to do about it.

While I have been writing this post, Trump "truthed" a video of a large bridge in Iran being destroyed. He accompanied the video with text saying:

The biggest bridge in Iran comes tumbling down, never to be used again — Much more to follow! IT IS TIME FOR IRAN TO MAKE A DEAL BEFORE IT IS TOO LATE, AND THERE IS NOTHING LEFT OF WHAT STILL COULD BECOME A GREAT COUNTRY! President DONALD J. TRUMP

Apparently, this is the strategy that Trump plans to pursue. He will bomb civilian infrastructure in the hope that it will convince the Iranian regime to make a deal with him. There is no evidence that this will be successful. Within a few hours, we will likely see Iran's response, which will probably result in the destruction of civilian infrastructure in one of the Gulf Arab countries. Moreover, attacks like this primarily hurt civilians. The masses of Iranians who once had hope that the United States might free them from the Islamic regime will likely turn on America.

In addition to alienating the Iranian public, Trump is likely upsetting his Arab allies. The Financial Times had an article today describing the reaction of several Arab emissaries to an earlier threat by Trump to attack Iran's power plants:

When Trump first threatened to “obliterate” Iranian power plants if the regime did not reopen the strait last month, Arab ambassadors to the US gasped when they saw the news broadcast across their phone screens as they attended a black-tie gala in Washington.

By the end of the night, several Arab states had reached out to the White House and the US defence department, imploring the administration not to carry out Trump’s threat. “Because at that level — the US attacking [Iran’s energy infrastructure] — none of us will be able to handle the volume [of Iranian missiles] coming back,” a senior Gulf official said.

These ambassadors are unlikely to be any happier about attacks on bridges. As usual, Trump is only making things worse. It is not clear what Trump hoped to accomplish with his speech last night. As he read the speech, he slurred his words, wheezed and sniffed, and generally looked tired and out of energy. If anyone was looking for anything positive from Trump last night, it was unlikely that they found it.