Pinpoint Intel, 03.14.26: What the Marines could do in Iran
Plus, Congress's latest failures, stocks on hold and the meme of the week
Strait bullshit. CNN reported on March 13 that Trump and his war planners badly underestimated Iran’s ability to close the Strait of Hormuz in the event of war. The White House fired back, with Trump spokesmodel Karoline Leavitt calling the CNN story “100% fake news” and “garbage.” Which raises the obvious question, okay, geniuses, then what was the plan?
It’s self-evident Trump had no plan to keep the strait open, because two weeks into his war, no oil tankers are transiting the strait, sending oil prices about 40% higher than pre-war levels. No Navy ships are escorting tankers either, because the risk of taking a hit from Iran is too high, even for Navy ships. 1-800-WAR-PLAN could have done a better job.
Here’s how to read the CNN story and others that are emerging about Trump’s crappy war planning. Anonymous sources, probably in the Pentagon and State Dept., are telling reporters that Trump didn’t consult the usual government experts because he only trusts a few chummy aides. The generals reportedly told Trump about the risks to the strait, but he blew it off. Trump thinks experts are meatheads and trusts his own judgment more. Result: Colossal screwup. And the real war planners want people to know it wasn’t their fault.
Here’s a clue about what might come next: US bombers have started hitting military targets on Kharg Island, the shipping facility in the Persian Gulf that’s responsible for almost all of Iran’s exported oil. Regular readers might have seen the primer on Kharg I published on March 9. Central Command says it attacked military targets but left oil infrastructure alone, which is important, because that oil needs to make it to market to get prices back down.
The Pentagon is now sending a Marine expeditionary unit, or MEU (“Mew”) to the Gulf region, which you might call boots in the sand. This is a deadly group of several ships and about 2,200 marines who specialize in amphibious raids, airfield and port seizures, and recovery of offshore energy facilities, according to their own job description. It’s a good guess the Marines are heading to the Persian Gulf to take Kharg Island, or at least threaten to. So Trump finally does have a plan to reopen the strait: Threaten to take control of most of Iran’s oil unless it lets tankers pass.
[More: In Vietnam, it was the body count. In Iran, it’s the bomb count.]
The last major Marine Corps amphibious assault was at Inchon, Korea, in 1950. I’ll bet it’s a lot different now. Wonder if we’ll find out.
Call me when it’s over. Investors have retreated to their own bunkers and are basically waiting for the Middle East hostilities to end. Oil prices dominate everything at the moment, and the essential question is how long will the price-spike last? Nobody knows, but prices in the $100-range or lower suggest traders expect prices to retreat fairly soon. Prices above $110 suggest trouble. If prices rise above $120 and stay there, we have a problem, Houston.
The S&P 500 index sank 3.2% for the week, with the NASDAQ down 2.9%. The S&P is about 5% below its all-time closing high on January 28. Remember Dow 50,000, which President Trump was so gleeful about? It’s now Dow 46,559. Not quite as pithy.
Meme of the week: The Internet spotted some prominent world leaders observing the action in the Middle East, up close. 😄
New old economic worry. Financial news outlets that have to say something every day are warning (again) of stagflation. That’s slowing growth with elevated inflation, kind of like what happened in the mid-1970s, in between two recessions. Two recent data points: 1. GDP growth in the fourth quarter of 2024 got revised down by half, to a timid 0.7%. 2. An alternate measure of inflation shows prices rising by 3.1% year-over-year, much higher than the Federal Reserve wants to see. And both of those numbers reflect the economy before Trump’s Iran war brought higher energy prices and flailing stocks.
[More: Trump squandered his favorite affordability brag]
There have been on-and-off stagflation warnings since prices spiked early in 2022. It doesn’t feel like the right narrative. Everything comes back to the bifurcated “K-shaped” economy, in which wealthy people who own stocks and homes spend freely, while those without established wealth pinch pennies. If there is stagflation, it will apply to the lower-K economy but not the upper-K. At any rate, we need to get through the war to know, assuming Trump can end it someday.
Powell free. A federal judge quashed the Trump Justice Dept.’s subpoenas for Federal Reserve documents relating to a building renovation project that’s over budget. This was Trump’s naked effort to “punish” Chair Jay Powell for keeping interest rates higher than Trump wants. “There is abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will,” the judge wrote. Yep.
Trump is not getting what he wants from the Fed. It has cut rates gradually since 2024, and stopped cutting for the time being. Trump wants much lower rates, to stimulate growth. His nominee to replace Powell in May, Kevin Warsh, might push a little bit harder for rate cuts, but Trump’s own policies are making it difficult, and maybe impossible. His tariffs stoke inflation, and the Iran war is now pushing costs even higher. Trump should look in the mirror when he rails about the Fed.
Congress’s cant-do list. You might see reports from the Washington press corps about Congressional efforts to cut the cost of housing, regulate crypto and put new limits on mail-in voting. There is a lot of legislative activity, but the media also devotes a lot of airtime to stuff that’s not going to pass.
“There is a massive backlog of ideas and legislation lawmakers on both sides of the political aisle would like to spend time on this spring,” Henrietta Treyz of Veda Partners explained in a March 13 analysis. “But it’s strikingly clear that progress on practically all legislation is stalled out and any expectation of forward progress is not supported by reality.”
Here’s a brief rundown of what Congress won’t do any time soon:
The SAVE Act: This is the voting “reform” law Trump desperately wants to pass. It would require new forms of ID to vote and do other things that would probably restrict voting. The House has passed it but the Senate almost certainly won’t. (You can read more about the SAVE Act here.)
The ROAD To Housing Act. This would ban some institutional investors from buying residential homes--a dubious way to make housing cheaper--and do other things powerful lobbying groups will fight. Support in Congress is tepid and this too shall not pass. (But learn more here, if you want.)
Crypto reform. There’s a CLARITY Act and a PARITY Act, and neither will pass.
What Congress will pass: New funding to cover the cost of Trump’s Iran war, including billions of dollars for missiles, bombs and other munitions. That bill could run $100 billion to $200 billion and will include other goodies, such as billions in aid for farmers hurt by Trump’s destructive trade wars.
[More: What oil prices tell you about the Iran war]
Dept. of Homeland Inanity. The Dept. of Homeland Security still isn’t funded, and Trump now says he won’t even sign a bill to fund the agency unless the SAVE voting law passes. Since SAVE is unlikely to pass, DHS is now running on fumes. Its former head, the incompetent Kristi Noem, is out, but Trump’s new nominee, Sen. Markwayne Mullin, hasn’t been confirmed. DHS includes TSA airport agents, who are working but not getting paid and starting to register their disgust by not showing up. That’s causing snarls at some airports. Oh, DHS is also responsible for HOMELAND SECURITY and you’d think they might have some important work to do when the country is at war with the world’s leading sponsor of terrorism.
The funding dispute arose in the first place because Democrats in Congress are insisting that DHS and its immigration agents following standard policing rules, such as not hiding their faces under masks, like a bunch of brownshirts. Yes, the Democrats are playing politics. But the Trumpers are in charge and it’s their job to run the country. Their disdain for the right of taxpaying citizens to live in a functional country is appalling. 😡
Whether for food, roads or war, ALL nations must have rational plans to attain revenues needed to pay what they spend.
If the U.S. wishes to fight a war it must have plans to pay for that and for all debt it incurs for whatever purpose. Moreover, by the mandates of double-entry accounting, it is ONLY the application of “net income” by which debt can be extinguished without insolvency.
The U.S., by its political morass has been living a decades-old illusion that tax cuts work magically to increase income. Investors, by the recent behavior of long-term U.S. debt costs (and private sector credit spreads), now clearly indicate they have begun to protect themselves against the possibility the U.S. will not support repayment of its debt.
We “can” regain that trust, but NOT by any course that current US leadership has yet offered (since 2016).
We will know if and when that happens by observation of both long-term Treasury debt rates and by daily changes in the credit spreads offered to various private sector U.S. borrowers.
Recently, there is no good news on either front. We are “surviving” on accumulated good will, but that is fading with each passing day that this war continues.
Money is invested based on trust and we are eroding it.
Just you wait and see what happens when the DHS is out of business and, this World Soccer Exercise starts in June.Best time in the World to start a terrorist plot.The save act is just another way for Trump to try and take the vote away from natural born citizens.The man cares nothing about people unless they can stroke Trumps rump.Just say "Democracy" is a joke for Trump.