Is the Economy About to Explode?

in its entire history, which triggered its circuit breaker. Circuit Breakers are a thing that stock markets have now where if the stock market collapses, like if it loses points too fast in a certain period of time, all trading will automatically stop for a bit, so it hits its circuit breaker. The Tie index also hits at circuit breaker. And then in the wee hours of sort of Monday morning American time, I start seeing a bunch of people posting that Coachy hit the circuit breaker, and I'm very

confused because that happened on Wednesday, right, like this already happened. No, no, no, no, wrong, wrong, happened again. It's two circuit breakers in like four sessions. So this has turned into an unbelievable crisis. Yeah, so we're gonna get the tariff episode at some point, talking about the Supreme Court tariff rulings and stuff like that that will happen. There's a lot of interesting stuff there. But right now we need to answer the question is

the economy about to collapse? And tendively it has been held off at least for a little bit. Now. This is being recorded early Monday afternoon on March ninth. By the time this goes out on March tenth, who the fuck knows what will have happened. But let's talk about what happened in the run up to all of this, because it's very important. So in the lead up to the open of the American markets, we had a massive spike in oil futures, like one of the largest single

day spikes in oil futures ever. It looks like it's going to be the apocalypse for the markets. And the reason it looks like this is because and this is something that's genuinely astounding. So one fifth of the world's oil moves through the strait of farmos we're going to talk about this in more detail later. And obviously there is now a war, which means that you can't move oil through it, and people suddenly realized that, oh my god,

this is going to raise oil prices. Now. When I was originally writing this episode in the housey in days of Friday of last week, part of this episode was about why oil prices were not spiking because they didn't spike and be upon the start of the war, right. And I was very confused about this because the explanation at the time was that people were like, Oh, I'll be fine. The US Navy can escort oil tankers through the straight ocrewer moves. No, they can't, like the narrowest

part of it's twenty three miles wide. Like what are we doing here?

move oil. Jesus Christ, like this is unbelievable stuff from the people who are in the oil markets, from the oil executives, from the golf monarchies, from all of the people planning this, Why would you think this wouldn't happen?

And we're gonna get into that actually in a little bit, because there is apparently a reason why they thought this was going to happen, which is some combination of just pure lies and a full belief and some of the worst strategic planning I've ever seen in my entire life.

But you know, the ability to close the straight upward news is the reason why even if you are like President Donald Trump, the kind of person who doesn't give a shit if you know your army burns a running and children to death, right, even if you don't care that you fucking bombed a fucking school, you don't fight

this war because it fucks with the money. Now, in anticipation of what looked like it was going to be just a market pounding, Trump gave a phone interview with CBS's senior White House correspondent Weija Jang, who posted this on Twitter. This is her reporting of his statements. This is from Donald Trump quote. I think the war is very complete pretty much. They have no navy, no communication, they've got no Air Force. He added that the US is quote very far ahead of his initial three to

four timeframe. You know, he also said that ships are moving through it now, but he's also quote thinking about taking it over, which what is officially conquering the strait up a moves instead of merely like protecting it with the American fleet assets. This is completely unhinged. And that he also said, quote they've shot everything they have to shoot, and they better not try anything cute or it's going to be the end of that country now. Okay, So the part of this right that went to the markets

is that he thinks the war is over now. The part of it where he says if Iraan fights back in any way, quote, it's going to be the end of that country apparently did not hit the markets. The people running the markets are really really dumb. They think and act like herd animals. This is, I guess slightly an insult to herd animals because herd animals react that way for a reason. These people are human beings. They

have the capacity for logic and reason. They have the same capacity for logic and reason that we do, and they still act like this. But this has calmed the markets down, and it's sent oil prices back down again. We're going to get into why that's kind of nonsense in a little bit, but it's also worth noting in terms of Trump saying the war is nearly over, that every single other quote Trump has said about this war

has been He's in this for the long haul. He's thinking about troops on the ground, he is not going to get bored with it. He doesn't care the gas prices are going up. Someone asked his press secretary about whether he's ruled out the draft, and she said no, he hadn't, which is I mean, like they're not going to do a draft, But like, that's ridiculous, why would

you say that. It's also worth noting that, so he has a two hundred and fifty year anniversary commission thing that he set up that he's very very excited about. That's like it's America's two hundred and fifty year blah blah blah blah blah. And that commissions like one of their big people was ringing the opening bella shake this morning. So you know, I suspect that there's a lot of sort of motivated reasoning here going on with Trump saying, oh,

that's fine, It's gonna be fine. The war is nearly over. Do do do do do? Okay? So, I quite frankly do not believe the President when he says that the war is nearly over. I mean, I guess maybe there's a scenario where everything we're about to talk about causes a crisis that is large enough to, you know, actually set off Trump pulling out of the war under pressure from his allies in the region, which is to say,

the air of monarchies. I don't know to what extent that's actually going to happen, but let's talk about what the crisis here is. So the US's war against Iran has triggered what could be the start of a full on energy crisis. The energy crisis has been postponed for one day, I guess as of again time of recording, Monday, March ninth. But this could be the start of a fall on energy crisis. And it's not just me saying this. Here is the subtitle of the Wall Street Journal's big

piece on this quote. Traffic through the Strade of four mus has ground to a virtual halt, unleashing the most severe energy crisis since the nineteen seventies. And threatening the global economy. So that's not good. Now. I began this episode talking about a collapse on South Korean and high markets, and I also mention by the way that like when that collapse happened, all the other Asian markets kind of

ate shit. The Chinese markets were sort of more stable for reasons we'll get you in a second, but like Japan, like the nik was down like four percent, like all of the other Asian markets kind of ate shit, right,

Tawinese market. And the reason for that is well, again, as I said above, one fifth of the world's oil supply crude oil is shipped through the trade of farmuz and this is an issue for a country like South Korea, which imports almost all of its oil, you know, and whose economy, like manufacturing economy in particular, is very, very

heavily dependent on oil. This is true of a lot of other countries in that region, and South Korea and Thailand and Taiwan and Japan are not countries like China, which have much of oil stockpiles and have the ability to get oiled through other ways. Now, I want to take a second to actually explain what the strait of Carmus is. So the Strait of Ramus is a straight it's like there's a little bit of water, but it's

close to land. I talked to said earlier. At the narrowest part of it is twenty three miles, so it's very narrow, and it is a passage between the Persian Gulf and effectively the Indian Ocean, right and what you're out into the Indian Ocean, you can get to the rest of the world that is, you know, east of that, which is all of Asia, most of the rest of the world that's not west of view right now, she's

bordering the Persian Gulf. Who are in the area who need to ship their oil out through here include Iran, Iraq, Bahrain Cutter, the UAE in Saudi Arabia. Those are a bunch of oil producing countries. You know. They are now also countries that are embroiled in this war because they are part of the American Alliance. And you can ask the very reasonable question, Okay, so if you're part of the American Alliance, why the fuck would you be like, okay,

with the United States launching this attack on Iran. On a more vulgar level, you can ask the question, how the fuck was this allowed to happen. This is the money, This is the global economy that you are fucking with right now. One of the things that the Wall Street Journal talks about is that officials in the US and Israel told the Gulf States that there wouldn't be retaliation by Iran, right, that Iran wouldn't target oil facilities, they

would just target American military bases. They had a whole thing about how oh were in the war with Israel. They did only target American military basis. They didn't like bomb any oil infrastructure. They were sending mister Bean memes in their group chats about how weak the Iranian retaliation was going to be. So this is not just a situation of pure, you know, motivated reasoning. We were lying

to them, etc. Et cetera. Like the Americans appeared to have actually believed some of this, that Iran's retaliation was going to be weak. I've seen reports that they thought that Aram was out of drones. I don't know why you would think this baffling. Their drones are extremely cheap to produce, like they've used them, but why would you think they didn't have more? And I just want to point out, right, so their point of reference here was

oh Iran showed restraint in the war with Israel. You know, this is a twelve day conflict where Israel and Iran sort of fired missiles at each other and stuff after Israel assassinated a bunch of people for doing nuclear stuff. But okay, let's look at this for a second. My brother in Christ, you killed the fucking Ayatola. This is an existential war for survival of the regime. Of course, they were going to forget your oil facilities. Are you

fucking kidding me? Your goal here was regime change. You literally assassinated their fucking head of state. You literally killed him. What the fuck did you think was going to happen? Oh my god.

These people are stupid. Oh my god. They really truly, they really truly believed that Iran was not going to pick up the weapon that it has always had, that has always been the thing. For what reason why you don't fight this fucking war even if you don't care about Iranian lives, that you're willing to spend American lives? Right? They really thought they wouldn't do it. I just, I just I can't get over this. I just oh my god. Oh I don't know. I don't know.

I wasn't hallucinating. But no, it was January third, twenty twenty six, when we had our last war with a major oil producer where read in some way incapacitated or killed the head of state. By the way, we're still just like holding Maduro hostage.

is good oil. This is one fifth of the world's crude oil supply, right, And also it is now because of cutters from that like liquified natural gas production. This is now also a shutdown of a significant portion of the world's liquified natural which is again extremely important to the economy. And also you know, one of the biggest sort of climate hoaxes in all of this, right, and

I'm saying climate hoaxes here. There's been a whole push to be like, oh, we should transition to natural gas because it's cleaner than oil, and like kind of a little bit in the sense that like dunking your head into a swamp is probably cleaner than dunking your head directly into like a shitful toilet. And also it's only cleaner assuming that no methane escapes through the production process.

But the thing is, methane fucking escapes during the production process of natural gas all the fucking time, and methane is like to get a sense, So we're talking about greenhouse greenhouse gases here, right, and obviously we're familiar with CO two is like the major pollutant that we that we produce. Methane is a greenhouse gas that is so fucked that it is better to light it on fire and have it burn and have it admit that CO two into the air. That is better for the environment

than letting fucking methane into it. It is that fucked of a greenouse gas, right, And you know a lot of this stuff escapes and and this this is the point that I've been, you know, trying to find a thing to put in this episode. Right, one of the big things here is why are we still using oil to this extent? And you know, it has to do with sort of, I mean just just the the the utter cowardice and evil and short sighted profit motive chasing

of the entire world ruling class. It has to do with specific efforts by the oil lobby in order to make sure that politics would happen like this. You know, we can talk about like the role of Pennsylvania and

like fracking as like an electoral thing. We can talk about sort of the kind of Andrea's molm fossil capital thesis about the place that you want to produce things being a place that both has stable energy and also a sort of I don't know, I guess the capitalists would call it disciplined workforce, but like a workforce that's not like organized, and that's not militant, so you can

exploit them. And the places where those things are true, for example, like this century largely has been China, where you know, if you try to do independent union organizing, they will arrest you. Sometimes you will get disappeared. And that also coincides with you know, they have an energy grid, and the energy grid is extremely pollution intensive. It still is, even as you know, trying to sort of renewable energy

push has been happening, is still extremely carbon intensive. So okay, obviously, like we're in this nightmare because a whole bunch of people who really, really, really really desperately want us to burn the entire world alive so they can keep making money. But we're turning to the original thing before I got kissed off about people saying that natural gas is cleaner than oil. It's like, just fucking use literally any other way to generate energy that's not fucking oil or natural

gas or coal or I guess nuclear too. But like I, we have other ways of generating power. We could do this. But because we haven't done this, this massive decrease in oil supply because again nothing's fucking going through the gull. There's like a couple of ships have gone through. This is causing a crisis in the global economy. I'm going to quote the Wall Street Journal. If the Strait is still closed this Friday, output in the region could follow

by more than four million barrels. Kind of analystical Quoting earlier estimates, the decline could reach about nine million by the end of March, representing almost a tenth of global demands. Now it's worth noting here, right that you know, you look at a tenth of global demand and you go, oh, okay, so it's like a ten percent reduction, but it's actually way worse than that, because again, people have this tendency to look at oil as just liquid money that moves

freely around the world. But that reduction in supply is not evenly distributed across the world. Right there are countries who have extraordinary needs of it who get their oil from the Middle East. This is the places like for example, Korea from Thailand, b and mar We're gonna get to you in a little bit, are places who are relying on this oil. And you know, for South Korea, it's

like seventy percent of their oil comes from this region. Right, So that ten percent of global demand is not spread eatingly across the world is intensified into acute crises and very very specific economies. And this is a compounding crisis because, as the Wall Street Journal points out, like it's not just that the Strait is closed for the first time, ever, Right,

this rait has never been closed. Like there was a point where the US was like escorting things through a dream the arad of rock War, but like, it's never just been closed before. It's not just that, like you know, oil and natural gas and fertilizer isn't coming out of there either, which is a real fucking problem that we'll talk about in a second. This is not just an immediate crisis of we can't move the oil that we have out there is a secondary crisis, which is that

where the fuck do you put the oil? Right? If you get one thing out of listening to me talk about oil, it's that again, it's not just liquid money, it's a material substance. And the actual substance of oil and what it is and how it's produced has really wide reaching political effects, right, because when you take ausself out of the ground, the system is designed so that

it is moved extremely quickly. Now, there are countries like a rock that you could in theory still produce oil, right, but there aren't enough containers to store it, so they have to shop production down. Now you could be like, okay, well, but why don't they just ship it out through the Mediterranean and the answers that the pipelines and the shipping equipment there just don't have the throughput. Oil distribution is very very flexible, and this is what makes disrupting it

harder than something like coal used to be. But it is designed to a point to be sort of nodal and flexible and able to sort of deal with supply reduction crises. Right, It's not designed to deal with this, which is a full on energy crisis level, like, oh by god, we can't get oil out through this radio removes. This is a scale of issue that can't simply be solved by just moving the supply around and distributing it differently.

That this is not a solution to this, and so these are having these interlocking effects right because also again these things are designed to be going constantly, and it's not just a thing where you can just turn it off and turn it back on again. It doesn't work like that. These are actual, very very complicated, had to go processes. If you turn these things off, this is again very important. If you turn these wells off, some

of them will never turn back on again. So we're talking about permanent damage to the supply, right, even if tomorrow, Right, like the war is suddenly over and everything quote unquote goes back to normal. We're talking about still like permanent damage to the supply. And this is where again you can be like, well, okay, like why don't we just transition from oil? And again you can also ask like why should we give a shit about this? There's a few reasons when I say this is a compounding crisis.

The Water Journal talked about this a little bit, but in every article you read about this, you will see people making the argument that, oh, it's fine, Like the US is more insulated than it was from oil prices in the seventies when it just like caused a major

global crisis. And that's kind of true to a certain extent, right, the US is an oil producer, but also again, oil is not just something that's used for cars, right, and our domestic economy doesn't just rely on oil, Like you can't just you know, you can you make plastics out of oil, right, but even that, you don't just make

things whole sale out of oil. Like everything you consume has other things in it, and it relies on products like, for example, a luminum and you know, things like copper and everything from basic commodities to sort of like refined goods that rely on there being oil. Right, Like again we're talking about South Korea's economy. South Korea produces. There's a whole bunch of microtrip production stuff that goes on there.

You know, there's like Samsung, right, major foam manufacturer, So there's all of this very very high tech stuff too. On the sort of on the bottom end we're talking about like you can't refine the luminum anymore, know right, not that you can't like like places are shutting down their cassidy to do it because they can't get oil

or they can't afford this oil. To the extent that we're seeing something called forcemith Zura and being deployed by a whole bunch of companies across the world in different sectors and forced majoram is. This is this legal concept you can apply that it's like an act of god, where for example, like I don't know, if there's like a once in a century earthquake and it like obliterates your factory, you're not legally liable to pay stuff out to people because it's an act of God, like you,

you can't be legally held liable for it. And people are doing this for their aluminum production to say like, yeah, sorry, we can't meet our contracts, we can't meet our quotas that you bought from us, Like not our fault, nothing we can do about it. It's happening with oil producers. Because it's also worth noting that it's not just that the strait is closed. Iran is also hitting oil facilities.

Israel is also hitting oil facilities in Iran. They hit one in Tehrun, like a massive one in Tehran that's releasing all of these fucking toxic chemicals into the error, and that has set off a massive ecological crisis because all of these people are Enormous numbers of people in Iran are going to die because of this, not just because of the bombings, but because it turns out when you fucking blow up an oil facility releases a bunch of extremely toxic chemicals into the air that caused fucking

cancer and stuff like that. And so what you're dealing with, right, is this crisis in which all of these different aspects of the economy that rely on oil are impacted. Right, it's basic commodities, it's highly advanced like parts of like some MAAC conductor manufacturing. It's you know, all of these things that rely on oil are suddenly constrained, and suddenly the supply chains are fragmenting. You know, the US gets things from all over the world, but the crisis right

now has mostly been hitting East Asia. Right. I talked about Korea, we talked about high Land. The thing is right, crises in East Asia do not stay in East Asia. Like the Asian mark collapse, heralded a whole bunch of other debt crises. This is the Asian market class in the nineties, right, Herald's a bunch of debt crises in places like Mexico. Heralds the collapse of the US economy

and drain the dot com bubble. It causes, as say it with me, long time listeners of the show, is what causes the reverse Plaza Accords try to bail out the entire world economy, which is where the US like nuked its own manufacturing economy. By reversing Reagan's attempt to force all of the rest of the countries in the world to increase the value of their currencies relative to the dollars of the US, he compete in manufacturing better. You know, so it affects all these places, you know,

and that that effect will boomerang back here. But as as is always true with American imperialism, the people suffering from this the most are not Americans. It's people in a run, right, It's people who are getting fucking blown up. It's people who are breathing in toxic chemicals as people whose lives have been destroyed and ruined by American imperialism. And beyond Ron, it's Pakistan, it's India, it's Bangladesh, it's Taiwan, it's Thailand, it's the Philippines, South Korea, it's Mia and

mar Like it's Indonesia. I mean, it's Western's and Indonesia. But you know, we're talking about potential crop failures from

lack of fertilizer, right, we're talking about economic ruin. We're talking about the destabilization of the world economy, or we're talking about people dying for fucking cancer when we're talking about the global economic effects of this, That's what we're really dealing with here, regardless of what happens on the American stock markets, is a whole bunch of people who never had anything to do with this fucking suffering and dying because of the fucking greed and pride and vanity

and hatred of the American ruling class. Now I'm going to close on a slightly lighter note, which is people who follow the economy very closely will be talking about how post B the Korean Index had a massive bubble and that's why it collapsed, and that's why it had like two circuit breakers, and that's why it's going down so much. That's kind of true, right, But that bubble is an AI bubble. Now it is a larger and more concentrated version of the American AI bubble. But you know,

the American economy is an AI bubble. And the thing about AI is that it's propped up by gas prices. Right. AI is enormously enormously fuel intensive. That's just it. It wastes a staggering, un hinged amount of energy, right, And it can only really function as long as those oil prices are very cheap and as long as natural gas prices are cheap. And it's also worth noting that, you know, these AI things are also doing a physical infrastructure, because

these people are just like absolute clowns. They've been buying into the Golf monarchy's attempts to attract a tech sector there, so they've been hit. And Iran has been taking advantage of this by hitting an Amazon data centers in the Golf States. So that's another way where this can potentially just sort of toss a nuke into the global economy. Is that like the price of running all of these

AI things suddenly starts to increase. And the kind of worst case scenario scenario for this, right, the one that we've been looking at in terms of what could happen to the world economy is what's been being discussed more and more, which is a version of the Crisis of the seventies, which is an economic crisis of increasing inflation and also increasing unemployment that completely reshaped the entire global economy.

It's why we have neoliberalism, you know. It's a complete collapse with the social democratic system that had come before it. It changes the entire global world order. Right, the US goes off the gold standard, like things change that had never changed before. And we're going to talk about that

more on the tariff episode. But that to a large then, to the ruling class is what is at stake here, right, It's whether it is worth destroying the global economy in order for Trump to kill what people are or on this has been It could Happen Here.