The Iran Fiasco’s Silver Lining: Trump, Bibi & the Neo-Cons Got Their Clocks Cleaned

If you don’t think the Donald inhabits an alternative universe—just set your mandibles loose to chomp on his most recent missive. According to history’s most gifted practitioner of the Art of the Deal, only one thing really counts with respect to his Paperless Invite for Iran to join yet another round of negotiations: Namely, making good on their pledge to “never, ever” get a nuke, which they never, ever, ever actually had or had even pursued:

Trump: “This agreement is about one thing — that Iran will never have a nuclear weapon. Never ever ever. The rest of it is irrelevant, frankly.”

And just in case anyone missed the point, he further insisted that the real bad stuff that supposedly provoked the US/Israel attack in the first place—-the 420 kilograms of 60% HEUs—and which the Donald had been on the verge sending in ground troops and Caterpillar earth-movers to retrieve, doesn’t matter so much any more, either!

Trump is backing away from getting Iran’s enriched material: “You could make the case, why even bother? It’s not very valuable stuff.”

That’s right. It is plain as day that the Donald is laying the ground work for a final “deal” with Iran that contains nothing more than a notional “No Nukes” pledge, gussied up by some variation of JCPOA Light.

That is, an agreement about—-

• the length in months and years of a moratorium on Iran’s fuel grade (3.67%) enrichment operations in support of its civilian nuclear power plant.
• the scale of these civilian enrichment operations in terms of facilities and numbers and types of permitted centrifuges once they restart.
• the intrusiveness of a renewed IAEA inspection regime.
• the “snap-back” mechanisms designed to keep the mullahs on the straight and narrow of the overall Peace Plan.

Needless to say, the Obama folks will be proven to have done a far better job the first time around during their arduous negotiations of 2013-2015 than whatever cockamamie version emerges from a final deal that the Donald must and will sign in the shadows of the upcoming November Congressional elections.

Still, peace is better than war against a faraway nation that has 1% of America’s GDP and which never wanted “nukes” of the explosive type in the first place; and one that has now also discovered that 1,600 kilometers of rocket- and drone-studded shoreline along the Strait of Hormuz to be far more powerful than an implosion device chock-a-block with U-238, anyway.

But when it comes to Iran’s missiles, proxies, evil regime, enriched stockpiles and economic and military strength in the middle east—all the things that the War was allegedly fought over—not so much.

Of course, you might well ask why the Donald spent upwards of $100 billion to date on this misbegotten project. And that’s at least what it is when you count munitions expended (~$41 billion), damaged bases and military assets (~$12 billion), aid to Israel and sundry O&M costs ($7 billion) and needlessly increased domestic fuel costs (~$40 billion).

Indeed, none of that was necessary—to say nothing of pushing the global economy to the edge of collapse—in order to get a NO NUKES PLEDGE from the mullahs. After all, the chief mullah himself—the assassinated Ayatollah Khamenei Sr— had given that pledge long ago (2004) in the form of something far more powerful and binding than a diplomatic post-card addressed to Washington.

We are referring, of course, to the former Ayatollah’s religiously binding Fatwa proscribing Iran from possessing or even working upon nuclear weapons.

And, don’t smirk. The alleged medievalist regime in Tehran did take the instructions of its Supreme Leader deadly serious. For crying out loud, even the war-loving US intelligence agencies have testified to that truth over and again.

So at the end of the day, the Donald’s still secret “peace plan” appears to be all to the good. This last and most pathetic Regime Change War may finally destroy the UniParty consensus which has generated endless Forever Wars since the end of the Cold War in 1991; and set off a civil war in the Republican party that may finally rid the remnant that emerges from the baleful grasp of the Bibi/neocon Fifth Column.

Stated differently, what the neocons will denounce as the Donald’s “surrender” will underscore better than anything else that the war was a gigantic mistake; and that the bellicose loud-mouth who launched it without even consulting the Congress—let alone getting a constitutionally prescribed declaration of war—got his clock cleaned in the process.

Indeed, that Trump actually “lost” the war was starkly confirmed this morning by the careful work of the folks who make a living tracking tankers on the blue water and the movement of 106 mb/d of liquids through the labyrinthine global petroleum supply chains.

To wit, in January Iran was earning about $90 million per day from its oil exports. That figure reflected a $63 per barrel Brent price minus a $10 per barrel discount for Iranian crude, multipled by sales of about 1.7 million barrels per day.

As it happened, the Donald’s mighty Naval blockade wasn’t all its cracked-up to be by his ex-news-reader Secy of Defense. That’s because there was about 130 million barrels of Iranian petroleum on the blue water in transit to market or in floating storage when Hegseth allegedly brought down the hammer of the US Navy blockade on April 13th.

But that was more than enough to support sales during the month of May of about 850,000 barrels per day from this floating stockpile outside the blockade perimeter—augmented by another 250,000barrels per day of workarounds over land routes.

Moreover, while the resulting sales of 1.1 mb/d during May represented a sharp 35% reduction from the January daily rate, that was only half the equation. During May the Brent marker price averaged $107 per barrel or nearly double the January price. Moreover, due to the extreme global scarcity induced by the Donald’s Demolition Derby in the Gulf, the discount fell to just $1 per barrel on Iranian crude.

Hence the math. At $106 per barrel and 1.1 mb/d, Iran earned an estimated $116 million PER DAYin May or nearly 30% more than the January level!

And that was even as Mr. Body-builder at the DOD was regaling the Donald with the wonders of the Naval blockade.

Moreover, for want of doubt the estimated Iranian haul of oil loot during May was $3.6 billion on the month and $43 billion at an annual rate—a figure which happens to exceed 15% of Iran’s pre-war GDP.

So, no, the mullahs didn’t cry UNCLE!

THE DONALD DID. And there is no doubt as to why.

The coming storm of renewed inflation is already baked into the cake and will surge again toward 5-6% or higher in the run-up to the November elections for reasons we amplify below. Still, the Donald is belatedly doing god’s work—that is, making peace—because he apparently finally realized that if the Dems run the tables in November, he’ll be getting a last ride to Mar-a-Logo on the Dick Nixon Memorial Helicopter before next Easter.

In fact, the chart below tells you all you need to know. Most voters do not parse the prices on their grocery bills as between the part that existed on January 19, 2025 and what they paid last week for coffee, hamburger or eggs—and the same with respect to fuel, utilities, rent, health insurance and other daily necessities.

Prices for all of these have been surging since the Donald’s inflationary train-wreck during the pandemic. That was when the lockdowns and supply chain disruptions shrank available supply. At the same time, $4 trillion worth of stimmies and free stuff signed by the Donald—along with an eruption of Trump-supported money-printing at the Fed—turbo charged demand, thereby causing inflation rates to erupt toward 9% and 40-year highs.

That’s the affordability issue, represented in a nutshell by the chart below. The Donald was elected in 2024 because voters desperately hoped that he would not only slow the rate of increase, but would actually roll back the whopping cost-of-living gains that they had already suffered during the previous four years. After all, 108% more for coffee, 64% more for hamburger meat and 52% more to fill the gas tank does make an impression on almost everyone.

Alas, when Bibi convinced the stupid mark in the Oval Office—which he had been hunting for over decades—-that the mullahs would roll-over on their backs after the first wave of bombs and missiles, it was all over except the shouting. Any chance to even slow-down this tidal wave of every day cost increases was ended, and the way was paved for a new inflationary surge that is already barreling down the supply chain pike.

Indeed, the Donald is so fundamentally innumerate and impulsive that even now he doesn’t understand that his surrender to the mullahs is already too late. There is so much inflation in the pipeline that even a return to the pre-war status quo ante is not going to slow-down the reported inflation indices in the months just ahead.

For instance, during May the producer price index rose at an incredible 41% annualized rate (blue line) and had been surging higher since the beginning of the year. As a result, the slower moving Y/Y index (dotted red line) is just catching up, rising by a double digit 13.1 % versus prior year during May.

Needless to say, these wholesale level cost increases are now busy filtering their way through the nooks and crannies of America $30 trillion economy in the form of rising energy, materials and labor cost inputs, thereby working their way into end products and the CPI indices to be reported from July through October.

In fact, we have the same story with the consumer price index—just with a few months of lag time. As shown below, the inflationary momentum already in the headline rate will be lifted further on a Y/Y basis right through election time, even if oil prices “drop like a stone” as the Donald apparently expects.

Thus, the Y/Y headline CPI was rising at just 2.37% a year ago, but this May had already rebounded to 4.2% on a Y/Y basis. Of course, it’s the inexorable math of index construction that is already built in. The monthly annualized rate had posted at 5.5% in May and had averaged +6.7% during the four months since February when the war shocks began to hit the US economy.

As we move forward in the months ahead, the low 2.35% average annualized gain of last June to August will drop out, and the higher rates already built into the PPI pipeline will replace them. In turn, that means the headline CPI increase on a Y/Y basis has nowhere to go except up from 4.2% during the balance of summer and early fall.

Meanwhile, rising inflation will not be the only cloud on the horizon as the November bi-elections approach. It should be evident by now that the massive stock market bubble is fixing to have one of its epic decennial crashes.

As of this morning, Space X is now trading at a market cap of $3.0 trillion. That happens to represent 160 times its LTM sales of $18.7 billion, and an infinite ratio to its -$14 billion of free cash flow.

But Space X, of course, is only the canary in the red hot infernal-like coal mine down on Wall Street. As shown below, when you take an average of all the different ways to value stocks—including forward and trailing PEs, EBITDA/Enterprise ratios and aggregate market cap to GDP—we are now at, yes, the 100th percentile of historic performance going back to the 1890s.

To use the Donald’s favorite phrase, the stock market bubble is at nose-bleed level that you have never, ever seen before!

Needless to say, every time the stock market has worked itself into a speculative bubble even approaching this absurd magnitude, it has crashed. And crashed hard.

So come next December, the Donald will be in the countdown to GOODBYE (and good riddance). Inflation will have flared, the stock market will have crashed, the Peace Deal well have given way to renewed Israeli-instigated warfare in the Persian Gulf, and the GOP will have suffered a 1974 scale landslide defeat in November.

You don’t have to be a student of American history to understand what would happen next.

Needless to say, none of this will be good for the unhinged megalomaniacal blowhard now ensconced in the Oval Office. But, ironically, it may well be good for America.

Surely Washington’s ignominious defeat in Iran will put the disciples of Empire on the run. And, hopefully, it may purge the GOP of both the MAGA Hat maniacs and the neocon Bibi First warmongers, too.

https://davidstockman.substack.com/p/the-iran-fiascos-silver-lining-trump-3aa