Many people who have wide expertise about the energy markets believe that three weeks of having the Strait of Hormuz closed will be the tipping point. This is when the storage capacity of many European and Asian countries starts to reach empty. When that happens, the stock markets start to crash as these countries have to shut down transportation and energy production.
Of course Trump and his lightweight SecDef planned for none of this. Trump told us that he's smarter than the generals, and when the generals told him what Iran is likely to do - block the Strait of Hormuz with drones and mines - Trump ignored them. Now we're in the thick of it and the Confederacy of Dunces in the White House have no clue how fix the mess they've caused.
BTW this: "Although even that may have priced in some chance of future Trump actions in Iran."
Some people were surprised that the price of oil barely budged when Trump announced for a coordinated release of 400 million barrels of oil and refined products from their strategic reserves.
That was because analysts believed he had to do this and it was already baked into the price that was sitting above $90 per barrel. So no drop in oil prices.
Sorry, I'm sure you've explained this, but I'm really surprised that you are using "Department of War," which is not the AP style and not the official name of the department. The AP Style Guide on this is: "We are using the official name in AP copy. If Congress acts to change the name, we would use the new official name."
Trump cannot legally rename a Cabinet department, so this is an example of an authoritarian overreach, an attempt to do something illegal to see if he can get away with it. At best, it is a "nickname" -- the department is still the Department of Defense.
It's similar to the Kennedy Center, which is called "the Kennedy Center" by AP and major news sources (except that it looks like CNN, perhaps in anticipation of its right-wing fate, has started calling it the Trump Kennedy Center) or the Gulf of Mexico (not the Gulf of America).
Well... Given Nate's contextual comments re the Sec of War - who fully merits his self-granted title - I think the non-partisan reader can read Nate's text as something other than approval of the entire affaire and indeed one might read it as something of non-approval...
Arch eggheadery of legalism and quoting style guides you hopefully can contain to Lefty political blogs/substacks where it is the height of cleverness. As like getting bent out of shape over critical views of Califnornian governors.
ETA there is equally quite the argument that the Sec of War and Dep of War self-Id in the hands of the coterie has quite a degree of Truth in Advertising value.
Vaguely annoyed at nit-picking arch overdone Lefty language games, yes.
Nate made a comment using Department of War which in the context of what he's writing about has a degree of truth in advertising rather more relevant than utterly irrelevant language parsing or irrelevant pseudo-legalisms that are better placed chez Bluesky.
It's interesting to me that you don't think your comments are angry, but that CJ's are. I ran all the comments between you two in this subthread (both above and below) through a sentiment analyzer (https://text2data.com/Demo) and got the following scores (scores go from -1 [negative] through 0 [neutral] to 1 [positive]):
F: This document is: negative (-0.66)
C: This document is: negative (-0.59)
F: This document is: negative (-0.59)
C: This document is: positive (+0.69)
F: This document is: negative (-0.55)
C: This document is: negative (-0.59)
F: This document is: neutral (+0.13)
C: This document is: negative (-0.58)
Your mean is -.42, CJ's is -.27. While I question how good this particular sentiment analyzer is, it is neutral with respect to this argument.
I don't think he's explicitly explained it, but I assume it's because it makes more sense to use the common usage rather than the technical name. Wouldn't that be like saying we should refer to Lady Gaga as Stefani Germanotta until she legally changes her name? In either case, it seems pedantic to insist on waiting for the name change to be official.
The "name change" will never be official. There is a bill, but it will never get 60 votes in the Senate. I don't think they could even get all the Republican members in the Senate to support it.
Major nonpartisan publications -- including the Wall Street Journal, which is no leftist rag -- continue to refer to the Department of Defense because that is what exists. The Department of War doesn't exist, and referring to the Department of Defense subtly alerts readers to this truth.
Obviously Nate is aware of all of this and has made an intentional editorial decision to refer to it as the Department of War (rather than using Department of Defense or dodging the issue by referring to it as the "Pentagon" or some other colloquial term). I think it's a legitimate question to ask because I suspect his reasoning is probably more interesting than "I just call things what Donald Trump calls things."
Trump is a useful idiot, easily manipulated by much smarter leaders like Putin, or in this case, Netanyahu. I still think TACO is most likely outcome but there is a lot of uncertainty (otherwise known as risk.)
TACO is certainly what Trump would want all else being equal. The problem is you can’t participate in the killings of the leadership (good, bad, ugly, whatever) of a country and the chicken out. He can chicken out all he wants, but Iran has every incentive to keep the pressure on and develop nuclear weapons as soon as they can. Unlike TACO they view this as existential and will do everything they can to survive.
You’re anthropomorphizing Democrats. “We” didn’t nominate Kamala. Biden did. “We” haven’t even had a primary yet, and you’re blaming “us” for maybe nominating Newsom. You were wrong about Trump.
i mean there was another normal democrat running (dean phillips) and he didnt get the nomination. i voted for him. every democrat could have voted for him.
This made me laugh out loud: "It might actually help Trump in a weird way that his behavior is effectively random in some ways based on the last person he talked to or the last TV segment he watched."
I have less conviction on my stances wrt military intervention ever since we started aiding Ukraine immediately after withdrawing from Afghanistan. Combined with the fact that we invaded Iraq for practically no good reason whatsoever, then basically created the conditions for ISIS to spawn, while simultaneously nation building in Afghanistan for 20 years for it to literally collapse in 1 day. It just seems like the calculus on these decisions is too hard to get right. And any priors I have will basically mean nothing due to unforeseen second and third degree consequences once things get "kinetic". I used to concern myself with these things, but I have since turned into a casual observer. My basic instinct is that bombing Iran was not in our best interests, and now it seems we have kicked the hornets nest yet again.
That's not to say intervention is never a good idea, I just really don't know when or when not and what conditions make it apparent.
That is what makes you a good and decent person. I err on the side of not intervening militarily, mainly because it’s hard to know if it good or not. The vast majority of US interventions post WWII have been costly to the US without clear benefit. Let alone the havoc they have wreaked upon the place we have intervened.
But we should always err on the side of caution, especially with force. There are real innocent people on the other end of our weapons (and not so innocent people too).
Yeah I’m curious what others think (and what to do on an individual level in response, other than rotate to e.g. a high yield savings account) but this has been my thought based on yours and other analysis: Trump seems more motivated to take on Iran and the markets seem to be pricing in TACO. Even if he did TACO, Iran and Israel have a say and damage has already been done that can’t just be solved in an instant (there’s lead time to producing and exporting more oil where the market seems to be acting as if maybe we’ll be back to normal in a week or so)
As I read it, most wars go on for four years or more; the recent ones we've lost went on about 15 years each. Wars can go on very long: two thirty years wars and the Hundred Years War we know of (116 years, actually). Remember how fast the Ukraine War was supposed to be over? And here we still are. So, have to tell you, I don't think it'll be over in six weeks. Or maybe even when the leaves fall, as the Kaiser once said. Though clearing this up before the heating season may be key.
"a 'put' is an option to buy a stock at a specified price that’s typically lower than its current value"
No, a put is an option to sell a stock, and it can be either in-the-money (the exercise price is higher than the current price, so you would exercise if it were about to expire) or out-of-the-money (the exercise price is less than the current price, so you would only exercise if the price fell). The option to buy is a "call" option, which also can be in or out of the money, although in the reverse circumstances.
The original "Greenspan put" was the idea you could buy stocks with limited downside risk, because if the market fell, Greenspan would cut rates to push it back up.
Alan Greenspan--who played a skilled, but not professional, game of poker--understood the game theory nature of the idea, thus his famous reply at a Senate hearing, ""If I seem unduly clear to you, you must have misunderstood what I said." Treasury Secretary Henry Paulson--a bad poker player--displayed the classic confusion of people who don't understand bluffs, "If you have a bazooka in your pocket and people know it, you probably won't have to use it."
I think this account suffers from the ludic fallacy, the treatment of probability like a casino game. Of course, this is how the mathematical field of probability developed, but it considers a specialized type of randomness that only exists when humans create it for games. Over the succeeding centuries different types of randomness emerged from scientific study of nature: random mutation and natural selection in biology, statistical thermodynamics, quantum uncertainty and game theory--each of which use an entirely different concept of probability.
In this case, I think quantum uncertainty is more relevant than casino games. Without liquid financial markets there are many prices for the same thing existing in different places and circumstances. A liquid financial market "collapses" these into a single price enforced by arbitrage. But until that happens, a wide variety of potential prices are in force. This means that a financial path that would be impossible under $65 oil or $200 oil or any other price can occur.
Now there are liquid markets for a few reference types of specific crude oil and refined products at specific times and places. These limit superposition randomness. But those are a small fraction of total oil price uncertainty. Many profitable trading strategies involve betting on paths that require superposition.
The idea of a Trump or Greenspan put is not a game theory concept, but a quantum one. It allows traders to ignore price paths that pass through a region which would cause a wave function collapse. It's a ludic fallacy to assume there is one correct price that is the probability-weighted average of possible prices from some distribution. Rather traders are buying and selling at a price that supports strategies that make money in the superposition of states--and both buyers and sellers can have winning strategies. TACO is a limitation on the range of superposition, not a change to the probability distribution of future prices.
Nate, you are describing a call. A put is the right to sell at a specific price (often slightly below the current price), thereby limiting your losses.
If the goal for the Dems is to nominate the person most likely to win in 2028, I suppose Nate could find a poll that would be compelling evidence for Liz Cheney.
There are a large number of reasons Newsom might be a bad selection, but "underperforming" in California is not meaningful when your basis is comparing off year elections to presidential cycles. Bad methodology leads to garbage conclusions.
why do you think nate silver supports liz cheney? he literally has a whole article on why she’s a bad candidate? nate seems to love random swing state governors more than he likes anyone else
Nate's "underperforming" bad math position is based on the idea that the Dems should nominate someone who has a track record of overperforming among the broader electorate.
If the D's nominated a center right Republican, that would clearly do the trick.
i feel like its a pretty big stretch to assume “democrats should nominate someone who has a history of over performing” secretly means “the only or most important factor is how much each candidate over performed” like i think you me and nate would all agree some pretty scary people have a history of over performing electorally. i also don’t know why you think centrist republicans overperform but not centrist democrats?
It is the only reason Nate mentions in a gratuitous slam at the current Democratic front runner. Hard for me to conclude that it is anything other than "the most important factor" from Nate's view.
If the only goal is to get more non-Democrats voting for the Democratic candidate, then clearly the Democrats should go as far right as possible.
It is like being the final "bidder" in an open single bid system (eg. The Price is Right). If you think the majority of chances is higher than the current bids, you just bid $1 more than the highest.
The problem with the TACO put is that Trump is now aware of it. And being the extreme narcissist that he is, being aware of it makes it more difficult for Trump to succumb to its charms. Trump isn't just the hero of his own story, in Trumpsychomania, he's the hero of everyone's story.
Also, keep in mind that Trump has a history of overreaching which results in snatching defeat from the jaws of victory. It remains to be seen if Trump resists the urge to prove everybody else wrong.
Last week there was a lot of speculation about who pushed who into this "excursion". Lots of quotes from "anonymous" sources "close to the White House" on this question. Trump seems to have provided the answer by saying that he sped up the onset of fireworks. Israel was going to do something closer to June and Trump decided to get in on it and move things forward a few months.
The white supremacist anti-Semites who compromise the leadership of the "America First" faction of MAGA just want to put the responsibility on Israel, like Israel could tell Trump what to do. Still, it's a a rallying point for the pinheads who are largely unmoored from reality.
Trump is a slob, and this Iran "excursion" is just another example of Trump sloppiness, like his handling of Covid, his demolition of the East Wing, the continuing mess that is DOGE, taking over the Kennedy Center, Liberation Day when Penguins got tariffed, etc, etc. Trump had no coherent plan, certainly no coherent messaging, and the proof of that is that The Strait of Hormuz wasn't the first thing they got control of.
And Trump, having spent the past year pissing on our former allies is now demanding their help to get him bailed out, and surprise of surprises, are declining the offer. Tough noogies.
People are welcome to contort themselves any way they choose in pursuit of normalizing any of this. I can't manage to do it.
Trump is a slob, and this Iran "excursion" is just another example of Trump sloppiness, like his handling of Covid, his demolition of the East Wing, the continuing mess that is DOGE, taking over the Kennedy Center, Liberation Day when Penguins got tariffed, etc, etc. Trump had no coherent plan, certainly no coherent messaging, and the proof of that is that The Strait of Hormuz wasn't the first thing they got control of.
Great take. People who favour Trump (or his likes like our AfD here in Germany) seem to like the disruption for sake of itself. I won’t deny that some disruption can break up antiquated systems. But disrupting everything all the time will create severe damages.
Funny as this may sound, there is disruption that is constructively destructive, and disruption that is only destructive.
As a professional artist I frequently employed disruption to push past barriers, but with an objective in mind. Disruption for its own sake doesn’t do anything.
I think you understand the disruption issue better than most here. IMO Trump's big talent is disrupting frozen, bad societal positions and breaking them. Such as Iran getting nukes and getting the people to all shout "Death to America!" Had to stop. Preferably before they take out our seven largest cities.
Other locked-in-place positions he has broken are DEI, the terrible cancel culture at universities, cross-dressers pretending to actually change sex and people being punished if they don't agree with that nonsense, the medical elites getting to feed the whole country into their profit-making maw with useless treatments, many and many others. This is good. It doesn't even matter if he fixes the problem in the right way, whatever that is --- just break it and then people know it CAN be broken and we do not have to live like this. The people can then fix it, more slowly.
There's some value in disruption, and the illogical extremes of the left and the rapaciousness Medical Industrial Complex are certainly part of that. Even embracing corruption and self dealing as the purpose of getting elected, without any pretense to being a servant of the people, as Trump is doing, is useful. It tests people to see just how far they can distort reality in normalizing the goodness of sociopathy as a foundation for leadership.
American medicine is a mess. The mess stems from many things, like huge increases in the cost of malpractice insurance due to crazy rulings like the McDonald's hot coffee ruling, which seems to have kicked off the modern spiral. There's the mixed benefit of malpractice lawyers, the hit or miss process of medical certification, the dubious squared benefit of for profit medical insurance, the rat poison that is private equity investment, and a culture of greed-centric thinking over societal service thinking. A family paying $200,000 out of pocket for two anti venom treatments to save their toddler from a snake bite shouldn't be a thing. But, nor should the poisonous quackery that is the anti vaccine movement, nor medical advice via "influencers" and other unqualified advisors being propagated over TikTok or some other channel of social media crap.
DEI didn't bother me, as it didn't aim to elevate unqualified people because of their race, ethnicity, sexual identity, etc.. It aimed to thwart bigotry from keeping qualified people from well deserved opportunities due to their race, ethnicity, sexual identity, etc. That this was occasionally mishandled isn't a surprise. People don't do anything perfectly. So that one is a minus. Oh, and lest I forget, the statement that there are only two genders is not just ignorant, but totally false in nature. Gender is actually a spectrum in nature.
Both parties, and their ideologies, suck, which is why I'm not a card carrying member of either of them. But, there are individual points where I will agree with one or the other of them.
Cancel culture exists on both the left and the right. The right does more whining and lying about it, while practicing it. No points there.
The only fix Trump is interested in is fixing elections. He's not interested in fixing anything that does not inure to his personal benefit. Understand that, and you understand Trump.
"Trump. . . . is now demanding their help to get him bailed out."
No, no, that's not the strategy. It's to prevent European countries from saying lack of fuel is all Trump's/America's fault. And Britain and France say they are thinking about joining in!! Germany and Japan are not. This is the story of the little red hen and the corn she planted, and if they won't help, they can't complain. Trump is saying, Hey, if you help, it'll be over sooner.
Somewhat qualified aid. France won't commit to military support.
As far as strategy, what little there is of it, why, on the eve of beginning this whole affair, would the Pentagon move its minesweepers to Malaysia from the middle east, while sending its 4 recently decommissioned minesweepers, berthed in the middle east, back to Philadelphia?
I agree it seems unlikely France will do much, as usual, though I think they did send in some sort of ship lately, maybe for the optics. Yes, the whole minesweepers thing seems to be --- complicated; a number of them have recently been mothballed, I read; ouch. I suppose it may be as simple as keeping what we do have out of trouble in Malaysia: it's obvious Iran would go after the minesweepers if they could reach them. It may be that totally conquering Iran first and THEN bringing in the minesweepers to open the Strait may be the plan.
Well, if that's the plan, lord help us, because that plan is no plan. Iran is an immense amount of territory, very close to the land area of Western Europe, so imagine conquering Western Europe and what that would entail.
The mothballed minesweepers could have been returned to service, instead of being sent to the US for scrap. And if the US was afraid of using minesweepers, then why were they asking our former allies to supply them?
The fact is that some kinds of disruptive behaviors, like trashing your allies, isn't productive. Why would any one of them stick their neck out for someone who has proven that he's not trustworthy?
Since Trump, making all these unilateral decisions, is complaining that other countries aren't doing what he demands, it looks like a failure for one lobe of his brain to communicate with the other lobe.
He's not the head of any of these other sovereign states and he seems to have some difficulty understanding that.
Insightful post, Nate. One request: can you stop saying "Department of War"? I don't want to go all resistance lib here, but it's just a pretend name change. Until congress does it, it isn't real. I don't see how playing along is helpful.
Is it awful what Epstein & all of these powerful "allegedly"men did to these young girls? Yes, it's terrible & beyond the pale & I would love to see ALL of them get the Prince Andrew treatment.
However, I question what will really happen from it. It happened 15-25 years ago, all that we really have to rely on are Epstein's notes/records, which are not something that would stand up in a court of law, esp since he's dead. So, what comes of it?
These men get embarrassed? & then say Epstein told them the girls were 18, it was consensual, etc. & it ends up being much ado with little actual consequences.
For Democratic pundits there is value in being able to refer to President Trump as a pedophile. Clearly the chances that Trump faces legal consequences for any of it are nearly zero (After all, we have a recorded call of him attempting to conspire to commit election fraud in Georgia and nothing came from that; we have him hoarding and hiding classified documents and nothing came from that; and so on), but if he's willing to start multiple wars to keep the focus off of the Epstein stuff then it's likely there is *something* there.
It's nearly all Dems who are getting caught with Epstein crimes and getting struck down. Serves them right. They should have left him dead; they didn't have to probe and probe like this.
I think the answer to that question is who can’t afford to blink. The US can (and probably has to blink). Iran views it as existential. Much like the Taliban is in control of Afghanistan today (because of Trump’s deal and Biden’s follow through), it’s hard to imagine the Iranian leadership blinking first.
I honestly don't know how US can blink. Navy escorts will not happen for so many reasons. Nor will it be effective in the first place. So securing the strait will come down to boots on the ground and physically create a buffer zone. That move is going to be a political suicide move for GOP, especially just before the midterm. I see no other way out for the US other than betting on enough high ranking officers death causing a regime collapse
I think you are right: they were betting on killing enough of the regime that it would collapse. But it's not the regime leaders who were wielding the machine guns against the protestor, and shooting methodically into the crowds from rooftops, and herding crowds into kill boxes in allies and killing them all. Many thousands were killed and now people are afraid to take over Iran.
You’re forgetting another party, who is really the primary party on our side - Israel. This is Israel’s war, Trump said “yes,” without thinking - as usual, and for Israel this is existential. This is why we have no exit strategy; we abdicated strategy in this whole endeavor to Israel.
True true, but I'd also point out that for Narcissistic Personality Disorder, i.e. Trump, everyone can go under the bus if it is negatively damaging him. We already saw how Kristi Noem fell after saying Trump signed off on ad campaigns. I'm sure if this war keeps making him look bad, Israel is going under the bus in some sort of forms. I won't call it no exit but it will be ugly whichever way it eventually becomes
Oil is internationally traded, the straits crisis either causes a spike that hits China, India and Europe as well as the US, or no one is hit. If Iran and China strike a deal to let Chinese tankers through then Nigerian and Angolan oil which was sold to China suddenly is sold to the West. America is badly hit by an oil shock but as a net oil exporter it is less hit than others.
Many people who have wide expertise about the energy markets believe that three weeks of having the Strait of Hormuz closed will be the tipping point. This is when the storage capacity of many European and Asian countries starts to reach empty. When that happens, the stock markets start to crash as these countries have to shut down transportation and energy production.
Of course Trump and his lightweight SecDef planned for none of this. Trump told us that he's smarter than the generals, and when the generals told him what Iran is likely to do - block the Strait of Hormuz with drones and mines - Trump ignored them. Now we're in the thick of it and the Confederacy of Dunces in the White House have no clue how fix the mess they've caused.
BTW this: "Although even that may have priced in some chance of future Trump actions in Iran."
Some people were surprised that the price of oil barely budged when Trump announced for a coordinated release of 400 million barrels of oil and refined products from their strategic reserves.
That was because analysts believed he had to do this and it was already baked into the price that was sitting above $90 per barrel. So no drop in oil prices.
The world uses about 100 million barrels per day, and about 20% goes through the Strait of Hormuz, so 20 million per day.
The 400 million barrel strategeric reserve vanishes in less than a month, so it is pretty easy to fold into the models the traders use.
Strategeric, indeed. Shades of George W. [:-)
Sorry, I'm sure you've explained this, but I'm really surprised that you are using "Department of War," which is not the AP style and not the official name of the department. The AP Style Guide on this is: "We are using the official name in AP copy. If Congress acts to change the name, we would use the new official name."
Trump cannot legally rename a Cabinet department, so this is an example of an authoritarian overreach, an attempt to do something illegal to see if he can get away with it. At best, it is a "nickname" -- the department is still the Department of Defense.
It's similar to the Kennedy Center, which is called "the Kennedy Center" by AP and major news sources (except that it looks like CNN, perhaps in anticipation of its right-wing fate, has started calling it the Trump Kennedy Center) or the Gulf of Mexico (not the Gulf of America).
AP Style Guide: So the fuck what? Nate writes his substack, he's not an AP stringer.
Nate isn't a MAGA stringer either.
Sure the Trump Department of Defense identifies as a Department of War.
I wonder what the birth certificate says?
Well... Given Nate's contextual comments re the Sec of War - who fully merits his self-granted title - I think the non-partisan reader can read Nate's text as something other than approval of the entire affaire and indeed one might read it as something of non-approval...
Arch eggheadery of legalism and quoting style guides you hopefully can contain to Lefty political blogs/substacks where it is the height of cleverness. As like getting bent out of shape over critical views of Califnornian governors.
ETA there is equally quite the argument that the Sec of War and Dep of War self-Id in the hands of the coterie has quite a degree of Truth in Advertising value.
You seem more bent out of shape than makes sense.
As a finer point, Congressional allocations are for the Dept of Defense.
The Dept of War has no funding, which would make things interesting if actual law mattered.
Bent out of shape? How very odd.
Vaguely annoyed at nit-picking arch overdone Lefty language games, yes.
Nate made a comment using Department of War which in the context of what he's writing about has a degree of truth in advertising rather more relevant than utterly irrelevant language parsing or irrelevant pseudo-legalisms that are better placed chez Bluesky.
Lots of derogatory language for "vaguely annoyed".
Perhaps your volume knob goes up to 11.
It's interesting to me that you don't think your comments are angry, but that CJ's are. I ran all the comments between you two in this subthread (both above and below) through a sentiment analyzer (https://text2data.com/Demo) and got the following scores (scores go from -1 [negative] through 0 [neutral] to 1 [positive]):
F: This document is: negative (-0.66)
C: This document is: negative (-0.59)
F: This document is: negative (-0.59)
C: This document is: positive (+0.69)
F: This document is: negative (-0.55)
C: This document is: negative (-0.59)
F: This document is: neutral (+0.13)
C: This document is: negative (-0.58)
Your mean is -.42, CJ's is -.27. While I question how good this particular sentiment analyzer is, it is neutral with respect to this argument.
I don't think he's explicitly explained it, but I assume it's because it makes more sense to use the common usage rather than the technical name. Wouldn't that be like saying we should refer to Lady Gaga as Stefani Germanotta until she legally changes her name? In either case, it seems pedantic to insist on waiting for the name change to be official.
The "name change" will never be official. There is a bill, but it will never get 60 votes in the Senate. I don't think they could even get all the Republican members in the Senate to support it.
Major nonpartisan publications -- including the Wall Street Journal, which is no leftist rag -- continue to refer to the Department of Defense because that is what exists. The Department of War doesn't exist, and referring to the Department of Defense subtly alerts readers to this truth.
Obviously Nate is aware of all of this and has made an intentional editorial decision to refer to it as the Department of War (rather than using Department of Defense or dodging the issue by referring to it as the "Pentagon" or some other colloquial term). I think it's a legitimate question to ask because I suspect his reasoning is probably more interesting than "I just call things what Donald Trump calls things."
I think Nate is very anti-euphamism, so maybe he like Dept of War
I bet we all go back to Gulf of Mexico post-Trump. I made the mistake last night, and I'm trying not to. It's not very important.
Of course we will "go back". We never left! Trump doesn't have the authority to change the name of the Gulf of Mexico.
Neither did the person who originally named it have the "authority." It's not about some sort of official rules, you know.
You got the definition of put option wrong. It’s an option to sell not buy!
Thank you! That's what I came here to post.
Trump is a useful idiot, easily manipulated by much smarter leaders like Putin, or in this case, Netanyahu. I still think TACO is most likely outcome but there is a lot of uncertainty (otherwise known as risk.)
TACO is certainly what Trump would want all else being equal. The problem is you can’t participate in the killings of the leadership (good, bad, ugly, whatever) of a country and the chicken out. He can chicken out all he wants, but Iran has every incentive to keep the pressure on and develop nuclear weapons as soon as they can. Unlike TACO they view this as existential and will do everything they can to survive.
You’re anthropomorphizing Democrats. “We” didn’t nominate Kamala. Biden did. “We” haven’t even had a primary yet, and you’re blaming “us” for maybe nominating Newsom. You were wrong about Trump.
i mean there was another normal democrat running (dean phillips) and he didnt get the nomination. i voted for him. every democrat could have voted for him.
people have agency.
This made me laugh out loud: "It might actually help Trump in a weird way that his behavior is effectively random in some ways based on the last person he talked to or the last TV segment he watched."
I have less conviction on my stances wrt military intervention ever since we started aiding Ukraine immediately after withdrawing from Afghanistan. Combined with the fact that we invaded Iraq for practically no good reason whatsoever, then basically created the conditions for ISIS to spawn, while simultaneously nation building in Afghanistan for 20 years for it to literally collapse in 1 day. It just seems like the calculus on these decisions is too hard to get right. And any priors I have will basically mean nothing due to unforeseen second and third degree consequences once things get "kinetic". I used to concern myself with these things, but I have since turned into a casual observer. My basic instinct is that bombing Iran was not in our best interests, and now it seems we have kicked the hornets nest yet again.
That's not to say intervention is never a good idea, I just really don't know when or when not and what conditions make it apparent.
That is what makes you a good and decent person. I err on the side of not intervening militarily, mainly because it’s hard to know if it good or not. The vast majority of US interventions post WWII have been costly to the US without clear benefit. Let alone the havoc they have wreaked upon the place we have intervened.
But we should always err on the side of caution, especially with force. There are real innocent people on the other end of our weapons (and not so innocent people too).
Yeah I’m curious what others think (and what to do on an individual level in response, other than rotate to e.g. a high yield savings account) but this has been my thought based on yours and other analysis: Trump seems more motivated to take on Iran and the markets seem to be pricing in TACO. Even if he did TACO, Iran and Israel have a say and damage has already been done that can’t just be solved in an instant (there’s lead time to producing and exporting more oil where the market seems to be acting as if maybe we’ll be back to normal in a week or so)
And the Iranian mines aren't going to eliminate themselves.
A somewhat relevant old article :
https://www.propublica.org/article/iran-has-hundreds-of-naval-mines-us-navy-minesweepers-find-old-dishwashers-car-parts
As I read it, most wars go on for four years or more; the recent ones we've lost went on about 15 years each. Wars can go on very long: two thirty years wars and the Hundred Years War we know of (116 years, actually). Remember how fast the Ukraine War was supposed to be over? And here we still are. So, have to tell you, I don't think it'll be over in six weeks. Or maybe even when the leaves fall, as the Kaiser once said. Though clearing this up before the heating season may be key.
"a 'put' is an option to buy a stock at a specified price that’s typically lower than its current value"
No, a put is an option to sell a stock, and it can be either in-the-money (the exercise price is higher than the current price, so you would exercise if it were about to expire) or out-of-the-money (the exercise price is less than the current price, so you would only exercise if the price fell). The option to buy is a "call" option, which also can be in or out of the money, although in the reverse circumstances.
The original "Greenspan put" was the idea you could buy stocks with limited downside risk, because if the market fell, Greenspan would cut rates to push it back up.
Alan Greenspan--who played a skilled, but not professional, game of poker--understood the game theory nature of the idea, thus his famous reply at a Senate hearing, ""If I seem unduly clear to you, you must have misunderstood what I said." Treasury Secretary Henry Paulson--a bad poker player--displayed the classic confusion of people who don't understand bluffs, "If you have a bazooka in your pocket and people know it, you probably won't have to use it."
I think this account suffers from the ludic fallacy, the treatment of probability like a casino game. Of course, this is how the mathematical field of probability developed, but it considers a specialized type of randomness that only exists when humans create it for games. Over the succeeding centuries different types of randomness emerged from scientific study of nature: random mutation and natural selection in biology, statistical thermodynamics, quantum uncertainty and game theory--each of which use an entirely different concept of probability.
In this case, I think quantum uncertainty is more relevant than casino games. Without liquid financial markets there are many prices for the same thing existing in different places and circumstances. A liquid financial market "collapses" these into a single price enforced by arbitrage. But until that happens, a wide variety of potential prices are in force. This means that a financial path that would be impossible under $65 oil or $200 oil or any other price can occur.
Now there are liquid markets for a few reference types of specific crude oil and refined products at specific times and places. These limit superposition randomness. But those are a small fraction of total oil price uncertainty. Many profitable trading strategies involve betting on paths that require superposition.
The idea of a Trump or Greenspan put is not a game theory concept, but a quantum one. It allows traders to ignore price paths that pass through a region which would cause a wave function collapse. It's a ludic fallacy to assume there is one correct price that is the probability-weighted average of possible prices from some distribution. Rather traders are buying and selling at a price that supports strategies that make money in the superposition of states--and both buyers and sellers can have winning strategies. TACO is a limitation on the range of superposition, not a change to the probability distribution of future prices.
Nate, you are describing a call. A put is the right to sell at a specific price (often slightly below the current price), thereby limiting your losses.
Enough with the content free Newsom bashing.
If the goal for the Dems is to nominate the person most likely to win in 2028, I suppose Nate could find a poll that would be compelling evidence for Liz Cheney.
There are a large number of reasons Newsom might be a bad selection, but "underperforming" in California is not meaningful when your basis is comparing off year elections to presidential cycles. Bad methodology leads to garbage conclusions.
why do you think nate silver supports liz cheney? he literally has a whole article on why she’s a bad candidate? nate seems to love random swing state governors more than he likes anyone else
You missed the point.
Nate's "underperforming" bad math position is based on the idea that the Dems should nominate someone who has a track record of overperforming among the broader electorate.
If the D's nominated a center right Republican, that would clearly do the trick.
The metric is fundamentally broken.
i feel like its a pretty big stretch to assume “democrats should nominate someone who has a history of over performing” secretly means “the only or most important factor is how much each candidate over performed” like i think you me and nate would all agree some pretty scary people have a history of over performing electorally. i also don’t know why you think centrist republicans overperform but not centrist democrats?
It is the only reason Nate mentions in a gratuitous slam at the current Democratic front runner. Hard for me to conclude that it is anything other than "the most important factor" from Nate's view.
If the only goal is to get more non-Democrats voting for the Democratic candidate, then clearly the Democrats should go as far right as possible.
It is like being the final "bidder" in an open single bid system (eg. The Price is Right). If you think the majority of chances is higher than the current bids, you just bid $1 more than the highest.
The problem with the TACO put is that Trump is now aware of it. And being the extreme narcissist that he is, being aware of it makes it more difficult for Trump to succumb to its charms. Trump isn't just the hero of his own story, in Trumpsychomania, he's the hero of everyone's story.
Also, keep in mind that Trump has a history of overreaching which results in snatching defeat from the jaws of victory. It remains to be seen if Trump resists the urge to prove everybody else wrong.
Last week there was a lot of speculation about who pushed who into this "excursion". Lots of quotes from "anonymous" sources "close to the White House" on this question. Trump seems to have provided the answer by saying that he sped up the onset of fireworks. Israel was going to do something closer to June and Trump decided to get in on it and move things forward a few months.
The white supremacist anti-Semites who compromise the leadership of the "America First" faction of MAGA just want to put the responsibility on Israel, like Israel could tell Trump what to do. Still, it's a a rallying point for the pinheads who are largely unmoored from reality.
Trump is a slob, and this Iran "excursion" is just another example of Trump sloppiness, like his handling of Covid, his demolition of the East Wing, the continuing mess that is DOGE, taking over the Kennedy Center, Liberation Day when Penguins got tariffed, etc, etc. Trump had no coherent plan, certainly no coherent messaging, and the proof of that is that The Strait of Hormuz wasn't the first thing they got control of.
And Trump, having spent the past year pissing on our former allies is now demanding their help to get him bailed out, and surprise of surprises, are declining the offer. Tough noogies.
People are welcome to contort themselves any way they choose in pursuit of normalizing any of this. I can't manage to do it.
Trump is a slob, and this Iran "excursion" is just another example of Trump sloppiness, like his handling of Covid, his demolition of the East Wing, the continuing mess that is DOGE, taking over the Kennedy Center, Liberation Day when Penguins got tariffed, etc, etc. Trump had no coherent plan, certainly no coherent messaging, and the proof of that is that The Strait of Hormuz wasn't the first thing they got control of.
Great take. People who favour Trump (or his likes like our AfD here in Germany) seem to like the disruption for sake of itself. I won’t deny that some disruption can break up antiquated systems. But disrupting everything all the time will create severe damages.
Funny as this may sound, there is disruption that is constructively destructive, and disruption that is only destructive.
As a professional artist I frequently employed disruption to push past barriers, but with an objective in mind. Disruption for its own sake doesn’t do anything.
I think you understand the disruption issue better than most here. IMO Trump's big talent is disrupting frozen, bad societal positions and breaking them. Such as Iran getting nukes and getting the people to all shout "Death to America!" Had to stop. Preferably before they take out our seven largest cities.
Other locked-in-place positions he has broken are DEI, the terrible cancel culture at universities, cross-dressers pretending to actually change sex and people being punished if they don't agree with that nonsense, the medical elites getting to feed the whole country into their profit-making maw with useless treatments, many and many others. This is good. It doesn't even matter if he fixes the problem in the right way, whatever that is --- just break it and then people know it CAN be broken and we do not have to live like this. The people can then fix it, more slowly.
There's some value in disruption, and the illogical extremes of the left and the rapaciousness Medical Industrial Complex are certainly part of that. Even embracing corruption and self dealing as the purpose of getting elected, without any pretense to being a servant of the people, as Trump is doing, is useful. It tests people to see just how far they can distort reality in normalizing the goodness of sociopathy as a foundation for leadership.
American medicine is a mess. The mess stems from many things, like huge increases in the cost of malpractice insurance due to crazy rulings like the McDonald's hot coffee ruling, which seems to have kicked off the modern spiral. There's the mixed benefit of malpractice lawyers, the hit or miss process of medical certification, the dubious squared benefit of for profit medical insurance, the rat poison that is private equity investment, and a culture of greed-centric thinking over societal service thinking. A family paying $200,000 out of pocket for two anti venom treatments to save their toddler from a snake bite shouldn't be a thing. But, nor should the poisonous quackery that is the anti vaccine movement, nor medical advice via "influencers" and other unqualified advisors being propagated over TikTok or some other channel of social media crap.
DEI didn't bother me, as it didn't aim to elevate unqualified people because of their race, ethnicity, sexual identity, etc.. It aimed to thwart bigotry from keeping qualified people from well deserved opportunities due to their race, ethnicity, sexual identity, etc. That this was occasionally mishandled isn't a surprise. People don't do anything perfectly. So that one is a minus. Oh, and lest I forget, the statement that there are only two genders is not just ignorant, but totally false in nature. Gender is actually a spectrum in nature.
Both parties, and their ideologies, suck, which is why I'm not a card carrying member of either of them. But, there are individual points where I will agree with one or the other of them.
Cancel culture exists on both the left and the right. The right does more whining and lying about it, while practicing it. No points there.
The only fix Trump is interested in is fixing elections. He's not interested in fixing anything that does not inure to his personal benefit. Understand that, and you understand Trump.
Here's some reading for you:
https://www.amazon.com/Much-More-Dangerous-Donald-Trump/dp/B0FB479JJW/ref=sr_1_2?crid=ZKLJA94RRR3M&dib=eyJ2IjoiMSJ9._HXKIJh6Wu_9RZgXSZv-v76_6e6xVKGbWkKE2t4OZWHavn4g0tc3bciskDLU_W-G1Nq6URaaZOuWW0MGMtLEnoC74Md11_O2Ex63u6StnJRfD_YE5Kpy-qA0clvFvPKakXqMx3eldPyhPVAXCxYMVL8zyW-9zMLgK4f50gQNAdPhjNGcjy05aiAFtF6k5TJLGQVdzuWZjnJEzvQCgnTpvMcMGNEsfBs3gza7UwxmkXA._qgiF2eDbGMjNN-b1uCU7N1cLlVlbZgfOY7HH5u9onA&dib_tag=se&keywords=the+dangerous+case+of+donald+trump+book&qid=1773960532&sprefix=The+Dangerous+Case+Of+Donald+Trump%2Caps%2C257&sr=8-2
"Trump. . . . is now demanding their help to get him bailed out."
No, no, that's not the strategy. It's to prevent European countries from saying lack of fuel is all Trump's/America's fault. And Britain and France say they are thinking about joining in!! Germany and Japan are not. This is the story of the little red hen and the corn she planted, and if they won't help, they can't complain. Trump is saying, Hey, if you help, it'll be over sooner.
Somewhat qualified aid. France won't commit to military support.
As far as strategy, what little there is of it, why, on the eve of beginning this whole affair, would the Pentagon move its minesweepers to Malaysia from the middle east, while sending its 4 recently decommissioned minesweepers, berthed in the middle east, back to Philadelphia?
I agree it seems unlikely France will do much, as usual, though I think they did send in some sort of ship lately, maybe for the optics. Yes, the whole minesweepers thing seems to be --- complicated; a number of them have recently been mothballed, I read; ouch. I suppose it may be as simple as keeping what we do have out of trouble in Malaysia: it's obvious Iran would go after the minesweepers if they could reach them. It may be that totally conquering Iran first and THEN bringing in the minesweepers to open the Strait may be the plan.
Well, if that's the plan, lord help us, because that plan is no plan. Iran is an immense amount of territory, very close to the land area of Western Europe, so imagine conquering Western Europe and what that would entail.
The mothballed minesweepers could have been returned to service, instead of being sent to the US for scrap. And if the US was afraid of using minesweepers, then why were they asking our former allies to supply them?
The fact is that some kinds of disruptive behaviors, like trashing your allies, isn't productive. Why would any one of them stick their neck out for someone who has proven that he's not trustworthy?
Since Trump, making all these unilateral decisions, is complaining that other countries aren't doing what he demands, it looks like a failure for one lobe of his brain to communicate with the other lobe.
He's not the head of any of these other sovereign states and he seems to have some difficulty understanding that.
Insightful post, Nate. One request: can you stop saying "Department of War"? I don't want to go all resistance lib here, but it's just a pretend name change. Until congress does it, it isn't real. I don't see how playing along is helpful.
This is no defensive war, however. Calling it the "Department of Defense" is rather hypocritical, isn't it?
Isn’t a put an option to buy?
No. It's an option to sell (if you choose to) at a specific price up to a specific date.
err.... What???: "I couldn’t disagree more with media critics who say that the media has focused too much on Iran and not enough on Epstein!"
More on Epstein and less on Hormuz????????
My sense is Epstein has been too focused on.
Is it awful what Epstein & all of these powerful "allegedly"men did to these young girls? Yes, it's terrible & beyond the pale & I would love to see ALL of them get the Prince Andrew treatment.
However, I question what will really happen from it. It happened 15-25 years ago, all that we really have to rely on are Epstein's notes/records, which are not something that would stand up in a court of law, esp since he's dead. So, what comes of it?
These men get embarrassed? & then say Epstein told them the girls were 18, it was consensual, etc. & it ends up being much ado with little actual consequences.
For Democratic pundits there is value in being able to refer to President Trump as a pedophile. Clearly the chances that Trump faces legal consequences for any of it are nearly zero (After all, we have a recorded call of him attempting to conspire to commit election fraud in Georgia and nothing came from that; we have him hoarding and hiding classified documents and nothing came from that; and so on), but if he's willing to start multiple wars to keep the focus off of the Epstein stuff then it's likely there is *something* there.
It's nearly all Dems who are getting caught with Epstein crimes and getting struck down. Serves them right. They should have left him dead; they didn't have to probe and probe like this.
They were betting a quick collapse and regime change in Iran, much like Germans did in 1941. The question now is: who is going to blink first?
I think the answer to that question is who can’t afford to blink. The US can (and probably has to blink). Iran views it as existential. Much like the Taliban is in control of Afghanistan today (because of Trump’s deal and Biden’s follow through), it’s hard to imagine the Iranian leadership blinking first.
I honestly don't know how US can blink. Navy escorts will not happen for so many reasons. Nor will it be effective in the first place. So securing the strait will come down to boots on the ground and physically create a buffer zone. That move is going to be a political suicide move for GOP, especially just before the midterm. I see no other way out for the US other than betting on enough high ranking officers death causing a regime collapse
I think you are right: they were betting on killing enough of the regime that it would collapse. But it's not the regime leaders who were wielding the machine guns against the protestor, and shooting methodically into the crowds from rooftops, and herding crowds into kill boxes in allies and killing them all. Many thousands were killed and now people are afraid to take over Iran.
Anyway, now it's about the oil and gas.
You’re forgetting another party, who is really the primary party on our side - Israel. This is Israel’s war, Trump said “yes,” without thinking - as usual, and for Israel this is existential. This is why we have no exit strategy; we abdicated strategy in this whole endeavor to Israel.
True true, but I'd also point out that for Narcissistic Personality Disorder, i.e. Trump, everyone can go under the bus if it is negatively damaging him. We already saw how Kristi Noem fell after saying Trump signed off on ad campaigns. I'm sure if this war keeps making him look bad, Israel is going under the bus in some sort of forms. I won't call it no exit but it will be ugly whichever way it eventually becomes
Oil is internationally traded, the straits crisis either causes a spike that hits China, India and Europe as well as the US, or no one is hit. If Iran and China strike a deal to let Chinese tankers through then Nigerian and Angolan oil which was sold to China suddenly is sold to the West. America is badly hit by an oil shock but as a net oil exporter it is less hit than others.