Recent Items

Trump’s Imminent War(s) and Economic Damage as His Legitimacy Crumbles

Posted on by

This is Naked Capitalism fundraising week. 661 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in the financial realm. Please join us and participate via our donation page, which shows how to give via check, credit card, debit card, PayPal, Clover, or Wise. Read about why we’re doing this fundraiser, what we’ve accomplished in the last year, and our current goal, supporting our expanded daily Links

Since Trump 1.0 suffered sustained frontal attacks on his legitimacy via Russiagate, he has operated his second term with a laser-like focus on making sure that he has his hands firmly on every lever of power he can grab, from having toadies in top Administration position to crippling funding cuts to what he sees as competing power centers, above all universities and the science and medical establishment (recall that Trump regards dealing with climate change as another limit on his freedom of operation) to open jackbootery with ICE raids by masked agents, threats to “flood” peaceful cities like Portland with what he intends to look like occupying forces in the form of National Guard deployments.

As we’ll describe soon, Trump looks to be on the verge of launching wars against one or both of Venezuela and Iran. But he looks to have overplayed his hand with the US military with calling generals and flag officers to Quantico to give them not just a bizarre set of anti-DEI and anti-fat directives, but also to have Secretary of War Pete Hegseth and then Trump himself say that they expected the military to operate against US citizens on US soil, harping on the “enemy within”. Recall that the armed services defied Trump in his first term, when he issued lawful orders to pull out Afghanistan that were simply ignored. Admittedly these directives came at the very end of his time in office.

It is also worth keeping in mind that the armed services have served as checks on trigger-happy civilian leaders. In the Biden Administration, Lloyd Austin repeatedly and often successfully opposed Biden and Secretary of State Blinken’s Ukraine escalation plans, one suspects by pointing oyt the limits of US weaponry and Russia’s retaliatory options. But as Larry Johnson pointed out in a talk with Daniel Davis, the last actual resignation of a general over illegal orders, to his knowledge, was under Bush the Senior, as in decades ago. Hegeseth’s and Trump’s addresses received a very stony faced reception, and YouTuber accounts second-hand from those in the room suggest a combination of gobsmackedness at the pathetic display and horror at the demand to operate domestically against Trump-designated demons. The measured Daniel Davis, in a talk with Colonel Macgregor, pointed out it was obvious that Trump’s definition of “radical left” threats could easily include all of Team Dem.

As these events are happening, Trump is implementing another method for quashing domestic dissent via his new national security directive, NSPM-7, which as Ken Klippenstein describes, looks to have as a major objective stripping not-for-profits that don’t toe the Trump line of their not-for-profit status. And the plan seems to be to target only only ones allegedly engaged in the wildly expanded definition of terrorism (as in challenging the Administration’s version of American values) but also ones that receive funding from purported baddies. Expect the grantees of Soros’ Open Society foundation to be at the top of this new enemies’ list.

In parallel, the evidence of harm from Trump’s economic malpractice is mounting. Payroll processor ADP reported a 32,000 fall in private sector jobs for September, compared to the expected weak gain of 51,000. ADP also revised its August figures to negative 3,000 from an initial report of 57,000 jobs added. Perhaps there was an offset via a rise in state and municipal employment, but with DOGE deploying its chainsaw, one would expect a fall in Federal jobs too. Thanks to the shutdown, BLS reports are expected to be delayed. But will anyone believe them after Trump fired the BLS head for earlier large revisions?

On the inflation front, Trump has kept TACO-ing with tariffs, and has “delayed” putting 100% tariffs on patented and branded prescriptions. But he is still set to impose 25% tariffs on furniture and kitchen cabinets and a 10% ones on timber and lumber on October 14. This sort policy whipsaw leads to stockpiling when possible and makes planning close to impossible, which will deter investment and expansion plans.

More less than cheery sightings:

The problem is that Trump may have gotten far enough with his authoritarianism that no one can stop these freight trains, particularly his rush to war. One possible blindsiding event might be a market meltdown. Trump does not even begin to have a team that could cope adequately, and being at war with the Fed does not help. An AI-bubble-implosion stock market crash would be highly attention-getting and would likely induce a big pullback of spending at the very top which has helped prop up the economy. So the result would be a dot-bomb reply, of a recession and the Fed trying hard to pump some activity back into the economy via a protracted period of negative real interest rates. As we explained long-form in ECONNED, that set the stage for the structured credit bubble which fed both frenzied subprime mortgage lending and too many who should have known better buying CDOs composed heavily of the riskiest subprime bond exposures.

But more and more unexpected defaults and delinquencies of significant creditors would choke lending and if enough banks took losses, might even induce a crisis. However, unlike the subprime crisis, where the bad action was concentrated in one big sector and one could see the body blows to banks via instruments like asset-backed commercial paper, second mortgages, and CDOs, here more types of loans are coming under strain, and they also involve a lot of non-bank lenders, most prominently credit funds.

But at a certain point, if enough loans look wobbly, the greater opaqueness means no one will know where bad debt sits. That will lead creditors to yank deposits, refuse to roll commercial paper and short-term loans rather than risk loss of access to their funds, even if arguably for a short time.

To return first to the reaction from the top military officers at Quantico to the Hegseth-Trump shtick conjoined with an ugly demand. Judge Napolitano and former Lieutenant Colonel Karen Kwiatkowski discussed how dead the reaction in the room was:

Starting at 6:15:

Kwiatkowski: What I hoped that Hegseth would say, but what I truly expected was that it would be a big nothing. It would be a nothing burger…. And Hegseth, I think, delivered on that. He didn’t have much to say. But Trump actually, he actually moved the ball way far to an own goal. I mean, that that was an own goal. Frankly, everything Trump said was uh hurting us, violating our standards. I’m sure that those generals and admirals that were sitting there, while I don’t agree with most of them, and I really consider them to be a parasitical class on this country, but even them, I think, were shocked at at the kind of lack of knowledge that Trump exhibited. And he spoke forever…

[9:30] Well, clearly uh they noticed they had pauses where they expected applause to happen or punchlines and that kind of thing and they didn’t get that. They didn’t get that applause… a lot of those guys based on uh that they’re currently active duty, they they came of age in uh the Bush 43 wars, you know, in the Middle East. And we know the lessons of those wars, you know, you don’t lie about your intel. You don’t make up stuff. You don’t try to nation build…

[11:10] Weare fomenting wars and ruining our own ability to uh maintain the bare essentials. And and the generals and admirals know this. They know this far better…..bringing all these people back on short notice and you would think you would be coming back for something really important and andit not only wasn’t important, it was it was insane.

Larry Wilkerson, on Dialogue Works, was more pointed. Starting at 1:55:

Wilkerson: It was absolutely bizarre. Um I can’t describe it any other way and as bizarre but welcome in my military professional mind was the stoic response of his audience. I mean, they were truly imbued with what I would say is a an ethic that is pure in the United States military, probably more so than any other military in the world. I don’t say that loosely… And they came in with the idea of we’re just going to sit here. We’re not going to have any facial expressions of note. We’re not going to clap in any particular way. We’re not going to acknowledge anything that’s being said as we’re pro or we’re con and we’re just going to sit here. It really was a spectacular performance in a subdued sort of way by 300 or so of these generals and admirals and it was probably the only performance they could make other than getting up in mass and walking out in resignation. And I had that argument with the general just a few minutes ago before we came on and right after I finished the Judge [Napolitano] because he had sent me an email reprimanding them for not getting up and walking out. And I said back to him, general officer, I said back to him, what would happen to the real security of the United States if they were to do that? because you’d be talking about abandoning all of the key positions in the US military in front of all our enemies on television and you you that would be unconscionable to do that. There would be there’s too much right now. We’re looking at a potential war. I think it’s coming. It’s coming like a freight train with Iran that has the potential to go nuclear.

Other YouTube commentators, such as Colonel Douglas Macgregor, Larry Wilkerson, and Matthew Ho, argued it was disgraceful that there were no walkouts. But notice Wilkerson’s tacit assumption, that the disgust was so widespread that departures would or could have represented nearly all the attendees.

And the same way financial time runs faster than political time, so too here military time runs faster than political time. Even a mass decampment, which would represent mass resignation (Hegseth said that anyone who didn’t want to be part of the new whiter and thinner armed services should leave, as in quit) which would flip out the press and Congress, does not seem likely to impede the war operations Trump has set in motion. If nothing else, Israel is primed to act and the US would have to execute its part of the plan. Large scale resignations at the top would run the risk of only the most Trump loyal and Zionist crazed being at the helm.

But then again, the passivity may run deeper than Wilkerson can admit to himself:

In the meantime, in a paler version of the runup to the Iraq War, and similar to right before the 12 day war with Iran, the US is moving military assets to the Middle East, particularly refueling jets. In a talk with Daniel Davis at Deep Dive, Douglas Macgregor said he was hearing that the US was also deploying old Tomahawks and very heavy bombs. He speculated the latter might not be intended for Iran but to complete the flattening of Gaza while all eyes were on Iran.

Later in Larry Wilkerson interview that we reposted above, Wilkerson said he was hearing that forces were being called up to move on Venezuela. Are these reports/orders meant to serve as an attempt at a diversion regarding the timing of a strike on Iran? Is the US really so deranged to think it can fight two wars in two different hemispheres at the same time? Those World War II days are long past, and the Allied win was in a big way due to the costly efforts of Russia and China.

Conventional wisdom had held that the attack on Iran was coming soon, likely before year end, presumably due to concerns that more time would enable Iran to get more equipment from Russia and become better at using it. I’m not sure if this applies to Iran, but the IDF avoided attacks on Lebanon in January and February because the mountains were misty enough to impede air operations.

But the movement of equipment suggests action is more imminent; I believe it was Douglas Macgregor who suggested the timing was days or weeks.

Even if the US intends these deployments to be a show of force, Netanyahu has agency.

Hegseth, in a moment military professionals derided as the posturing of a junior staff officer, taunted US opponents, most of whom actually have no interest in being enemies:

It looks more likely that the US will be the party to find out. But sadly, a world of innocent bystanders will be along for the ride.

Print Friendly, PDF & Email

Subscribe to Post Comments
12 comments

  1. Pensions Guy

    Yes, it looks like war with Iran is imminent. Between the movement of refueling planes and rushing interceptor missiles to Israel, with Iran simultaneously beefing up, the stars are aligning for a conflict. Wilkerson yesterday stated that if he were advising Iran, he would tell them to strike Israel first with full force, retaining some missiles, and then announcing that it did not want to go to war with the U.S. If they wait until they are attacked, the odds are that U.S. assets will be part of the attacking force.
    With respect to Yves’ comments on the stock market, it seems to me that the odds are still good that the Supreme Court rules against the Administration in the tariff cases, triggering massive claims against the Treasury to repay the illegally collected tariffs, plus interest. That will be a real windfall for corporate America, and we can all seriously doubt that the money will find its way back to consumers. That should keep the stock market propped up for a while. Trump can then impose some tariffs under other statutory authority, but there will be limits on the amounts and the time involved, unless Congress finds its way to approve them.
    Overall, it’s just a fine mess.

    Reply ↓
    1. Yves Smith Post author

      I have spoken to a top tax lawyer (as in at the level of writing tax guidance for lawyers internationally, has also advised governments). Even if Trump loses in the Supreme Court, the tariffs paid will not be refunded. Those wanting refunds would have to sue. It would take years and they would probably lose. Only the ones who were plaintiffs in the case before the Supreme Court would be entitled to refunds. (Bessent made some remarks that this expert deems to have been Making Shit Up, but perhaps his intent was to try to scare the Supremes into ruling for the Administration).

      And Trump’s team has other authorities under which they can impose tariffs and are working to get those launched. Those authorities are narrower but are not nuthin’

      Reply ↓
  2. ambrit

    One of the talking heads recently also mentioned that Iran was making noises that, if the war breaks out anew, that they would also target American regional assets. America has a lot of bases and troop concentrations in the Middle East that are not considered to be adequately defended against arial attack.
    The wild card here is Israeli atomic weapons. The Ultras in Tel Aviv are just crazy enough to use nuclear warheads against their “enemies” if the looming war goes against them. Then the Third Party nuclear assets might come into play. Particularly, Pakistan recently declared solidarity with the Kingdom of Saudi Arabia and said that they would use their nuclear weapons against anyone attacking Riyadh.
    See: https://www.aljazeera.com/news/2025/9/17/saudi-arabia-signs-mutual-defence-pact-with-nuclear-armed-pakistan
    For what it is worth, I believe that those in the corridors of power in Washington do not understand just how bad their standing is in the World today. This upcoming war could be the catalyst for the complete collapse of the American Hegemony.
    Stay safe. Find that potassium iodide folks! Who knows how far the radioactive fallout will spread. Just look at the radioactive fallout patterns after the meltdown of the Chernobyl nuclear power station back in 1986.
    See (click on the map function): https://ratical.org/radiation/Chernobyl/IRSN14dayPlume.html
    Armageddon is supposed to start out in Israel after all.

    Reply ↓
    1. Yves Smith Post author

      I think I heard the same vid and it was Larry Wilkerson..

      The problem is Iran really does not want to kill Americans. That becomes a bloody flag. Wilkerson did say we’d removed a lot of our personnel. We’s also fly the planes out. Airstrips can be repaired quickly. But if radars were destroyed as opposed to damaged, I think that would be a different matter.

      Iran’s best play IMHO is closing the Strait of Hormuz. That takes just a few lousy little boats with explosives on them, although it can be done more elaborately. Would piss off the Gulf States but what have they done for Iran?

      Reply ↓
      1. ambrit

        I wonder if there are alternate routes to supply oil from Iran and the Persian Gulf to China? That would be the main impediment to closing the Straits of Hormuz. Has China been stockpiling oil recently? For that matter, doesn’t Japan get most of its oil from the Persian Gulf region?
        There are so many moving pieces to this puzzle that it is a real time lesson in World governance.
        Stay safe in the tropics.

        Reply ↓
  3. albrt

    I haven’t seen this mentioned anywhere, but October 1 was a military payday.

    Unless somebody came up with a workaround that hasn’t been announced, all the folks being deployed to the vicinity of Iran and Venezuela (and all those generals in the meeting) have already missed a paycheck.

    Reply ↓
    1. raspberry jam

      I was wondering about this – how realistic is a war if the troops aren’t getting paid? Are there exceptions/carve outs so they can still deploy all these forces during a government shut down? Ordinarily I’d add if there was even legal basis for any of this but that horse has long been out of the stable, so…

      Reply ↓
  4. raspberry jam

    Ever since the Doha strike I’ve wondered if it was a test run for Israel to do long range air fired ballistic missile strikes on Tehran (they claim this is how they bypassed Saudi and Qatari air defenses when firing from the Red Sea).

    From the link:

    Israeli jet fighters, eight F-15s and four F-35s, flew to the Red Sea, on the opposite side of the Arabian Peninsula from Qatar. From there, some of the planes fired the air-launched ballistic missiles into space over Saudi Arabia at Doha, several U.S. officials said.

    Maybe they think they can do a decapitation strike on Iranian leadership at the outset?

    ETA: More technical details on the strike in this link:https://www.twz.com/air/new-info-on-how-u-s-military-was-caught-off-guard-by-israeli-strike-on-qatar

    Reply ↓
  5. ciroc

    When Trump started ordering the killing of Venezuelan fishermen, I thought some high-ranking officers would refuse the orders or resign in protest. However, I haven’t heard of anything like that happening yet. This makes me wonder if American generals have any sense of ethics.

    Reply ↓
  6. hamstak

    I mused (if one may call it that) that one purpose of the Quantico spectacle might be to use video cameras to record the general staff and run the frames through AI to evaluate individual mood, facial expressions, posture, reactions, etc. in a “friend-or-foe” detection exercise. Were that the case, given what was described about the meeting above, it was a pointless exercise.

    If I were to guess timing for an attack on Iran (and perhaps Venezuela as well), I might say after US stock market close on some Friday. If precedent serves (the recent 12-day war), resolution will then occur prior to the market opening on the Monday of some following week.

    Reply ↓
  7. ISL

    It could be posturing, but moving air fuelers to where a pre-emptive attack by Iran could cripple these critically needed assets by Israel – no tankers, Israel cannot reach Iran, so there is a non-zero risk for posturing.

    It’s not as if posturing will create the negotiating space for Iran to surrender unconditionally (the US demand) after the US used the white flag of truce for negotiations for a sneak attack.

    So, posturing only has a downside with no upside.

    Reply ↓

Leave a Reply

Your email address will not be published. Required fields are marked *