Transcription
Uh, the war has gotten, uh, the US and the world into a terrible bind. We face an economic crisis worldwide. Uh, of course, the way out of this is to stop doing what we were doing, which is attacking Iran, at least to try to go back to the status quo ante. But in terms of any stated goals by the United States, which varied over time in explanation, whether it was regime change or unconditional surrender or an end of, uh, Iran's nuclear program on American terms or an end of Iran's missile systems, nothing remotely has been accomplished or will be accomplished. The United States does not have the power through military force to compel such changes. And the whole war was based on, uh, some failed plan or delusion that a decapitation strike would immediately create a pliant government in Iran. When that failed, basically, uh, the failure of the whole war was exposed. Iran maintains deterrence. Iran can do grave damage to the Gulf region, which produces a substantial share of the world's oil. Uh, and Iran can do grave damage to the neighboring countries and to Israel. The United States, uh, military understands that. I think Trump probably understands this. Well, so he got us into a colossal mess that's going to cost probably, uh, hundreds of billions of dollars one way or another. Um, and, uh, he should get out, but he's a very stubborn person. So, the costs keep racking up rather than being, uh, uh, uh, ended by, uh, simply, uh, ending the terrible mistake that he made.
>> The government says that the war has cost 25, uh, billion. Uh, others, uh, retired military folks have said it's much closer to a hundred billion.
>> Yeah, it's a, it's a preposterous number. Uh, it's a, a lowball number that makes absolutely no sense. Uh, we'll find out, uh, the right numbers over time, but, uh, when, uh, the first, uh, message to Congress came that, uh, there would have to be a $200 billion supplemental and then when the budget for the next fiscal year went in, uh, increasing the defense ask or the military ask, we don't call it defense anymore, we call it the war department, uh, the ask by about another half a trillion dollars. It's clear that the 25 billion is some very strange accounting, but not real.
>> What has been the, uh, consequence of the war to American consumers?
>> Basically, we have a, um, sizable increase of oil and gas prices and, uh, all of the products that are produced by oil and gas. So, a lot of petrochemicals, the fertilizer that farmers depend on, and therefore food prices down the road. Uh, this has been a sizable, not devastating shock. Uh, but it could become devastating if we have a continuation of this grave blunder. Oil prices went from around $70 a barrel, a little bit less at some days, a little bit more, to what is now a little bit over $100 a barrel, about a 50% increase. Uh, but shortages are very real, and the prices will continue to rise significantly if the current situation just continues with a, an Iranian and a US joint blockade, let's put it that way, of the Strait of Hormuz. Very little is coming out from the region. Uh, supplies are shrinking, reserves are shrinking of all of the commodities in question, and, um, prices that will rise further when it looks like there's some kind of agreement. The spot market price falls because speculators expect a reopening of the strait. When there's a failure of, uh, the negotiations, such as they are, then the prices tend to rise fairly relentlessly. Um, so we're in a situation right now of a, a very serious, uh, reduction of world energy supplies that will bite. They will hurt Americans. They will hurt people everywhere. Yes, there will be some offsetting windfalls for Exxon Mobil and Chevron, two big backers of the Trump administration. Uh, and partly what we're seeing is, uh, the normal, uh, Washington policy for sale. This is Trump is, if anything, transactional. So, he caters to the oil and gas industry. He caters to the Israel lobby. He caters to Silicon Valley, which is making a ton of money with the new digital killing machines. Um, and, uh, these are his donor base, and American policy has been sold to them, and the American people have been sold down the river. Uh, they're going to suffer, and they are suffering, and Trump's attitude is, "Suck it up. It's not my problem. I'm a billionaire, and my lobbies love it." So, this is where we stand right now. Uh, the president spoke earlier today about, uh, a temporary reprieve on the gas tax, which is about a dollar a gallon.
Um, the, how cavalier is the government about debt?
>> Debt. Oh, what a quaint topic. We have run up debt now that is the part that's held by the public, not by other governmental units, is above 100% of the gross domestic product. It doesn't mean we're bankrupt, but it does mean that three to four percentage points of our, uh, national income, and roughly now, uh, almost a quarter of our total government revenues are going for interest payments. The interest payments are larger than pretty much all of the discretionary civilian budget now. So, we have increased debt to a level of national income not seen, uh, in peacetime history of the United States. Both parties are culprits. Ultimately, a corrupt political system is the culprit. Starting back in the 1970s, the corporate sector effectively lobbied, and the Supreme Court did it, uh, to deregulate campaign finance, to open the spigots so that our government was put up for sale, and it's bought now, as I said, by Silicon Valley. It's bought by big oil. It's bought by, uh, the Israel lobby. It's bought by a number of, uh, powerful interests because they put in a huge amount of campaign financing. But one thing that the big donors say is, "Don't tax us." So, basically, we haven't had a meaningful budget for decades, and we've been accumulating debt pretty much non-stop, at least for the last quarter century, and it's reaching proportions that are absolutely staggering, and, um, we'll pay for it down the road. But you think Trump thinks about anything more than the next 15 minutes on True Social? I don't see any evidence for that.
>> What has been the, um, what have been the economic consequences of the war in Israel?
>> Well, one thing is that Israel's economy is basically now a war economy. And Israel, even according to Netanyahu, is the new Sparta, meaning a state that is just organized for killing. It's a, a ruthless state. Its business is killing. Its business is spying. Its business is assassinations. It's
>> Did we lose you, Professor Saxs?
>> I'm here, but I don't see what happened. Oh, you, you can keep talking, and perhaps your lips will catch up.
>> Okay. I'm sorry. So, Israel is a military garrison state, and it is making, uh, money by selling its, uh, spy systems, selling its Mossad services, uh, selling its assassination machine. It's really amazing. I don't think we've gotten to the depths of how far Israel has fallen from, uh, normal, uh, moral and ethical behavior, but now the entire economy is basically oriented towards war. So, on the one side, the point is that the stock market of Israel is booming. This is incredible. And Israeli military companies make money and give Israel influence in many parts of the world precisely because lots of governments want to buy into assassination services or spying or surveillance activities and so on. It's a, it's grotesque in my view, what has happened. Of course, for the rest of the economy, hundreds of thousands, if not millions of people have left. Uh, the tourist sector is destroyed. The normal economy is destroyed. But Israel is not aiming to be a normal country. It's aiming to be a war machine right now.
>> Professor Saxs with us.
>> Back.
>> Yes, you're back. Right. The last thing we heard you say, uh, was that there are aspects of the Israeli economy that are booming because it has become, uh, a marketplace for, uh, war-related both licit and illicit, like assassinations, uh, services. But how about to Israeli consumers and Israeli commercial life, taking into account the devastation caused by, uh, Iran's retaliation?
>> I'm sure that the dislocations to anything resembling normal life are profound. Uh, basically, hundreds of thousands of people have left. Uh, many will never come back. Uh, many Israelis are disgusted by the state of affairs. In addition to being, uh, taken over by the war industry, it's been taken over by the most extreme religious zealots who act as if they want to really provoke the end times. Um, and so the, the normal daily life is utterly disrupted. Uh, keeping all these reservists in the military, invading one country after another. Uh, Israel's at war all over the Middle East. It's about 8 million Israeli Jews fighting across Lebanon, Gaza, the West Bank, uh, Syria, Iran, Yemen. Of course, the United States funds a great deal of this. So that keeps also the Israeli budget propped up. We should just slam the door and say, "This is the end of this," and Israel should get on with the peace and rebuilding its society as a normal society. Uh, I don't know the precise, uh, numbers and dislocations that have been involved, only the general point that the war machine revs, but the rest of the economy suffers.
How has, uh, the war affected Iran's economy?
Uh, destruction of infrastructure, tolls on the Gulf of Hormuz.
>> Well, uh, first, we should say a, a general point, which is that every economy in the world, uh, is hurt by this rise of energy prices and an energy scare. Oh my.
>> Okay, you're
>> back.
>> Good. I am hurt by the, the, uh, the rise of energy prices and energy scarcity. It's just like chopping off a limb to the world system by taking down a significant part of the actual flow of energy resources. So, in this sense, the world as a whole simply has less, and that is an unavoidable loss everywhere. Of course, there are some few places that have some windfalls, mainly oil and gas companies, that doesn't trickle down to average people. Uh, but it does, uh, fill, uh, the coffers of a, a few major, uh, oil producers around the world, but generally, this is a hard negative, uh, hit to the world. Now, on top of that are the military costs, which we talked about, and then the damage from the war itself, the massive destruction, uh, of, uh, civilian life, of buildings, of downtown Tehran, of physical infrastructure. Um, so these are tens or hundreds of billions of dollars of losses just over a few weeks. Of course, our leaders treat this all as one big game. Uh, they even Trump said when there was another round of fire that this is a slap. This is a game for these people there. These are psychologically deranged people who think that the killing and the destruction is just par for the course. And when certain parts of your financial backers, certain groups are enjoying the windfall, you don't even notice that yourself. And since the windfall is, as I said, highly concentrated in Silicon Valley backers of Trump and in the oil and gas industry, which backs him, he probably feels this is, this is going great.
>> How about China? How has the war affected the Chinese economy? Professor Saxs.
>> China is an oil importer, but a very smart and effective country. Uh, it is the most, uh, technologically innovative country in the world right now, ahead of the United States, because it's put its head down to get to work, to build the best electric vehicles, to build the lowest cost renewable energy systems, to build the best humanoid robots, to build the lowest cost 5G digital systems, and so forth. So, China is doing well economically. Its exports continue to grow. Its technological advances continue to be very rapid. Scientists from around the world are, uh, picking up stakes and moving to China because there's a lot of build-out of, uh, Chinese research and development. The universities are booming. They're hiring scientists from around the world. And in this context, the oil shock is felt, but it's certainly no crisis for China. China built up a lot of oil reserves. Uh, some amount of oil continues to come through, even from Iran and the Gulf. Of course, uh, a lot comes through from Russia, uh, and from other Central Asian economies. And interestingly, China is by far, by far the largest investor in wind and solar and hydropower in the world. China is installing, uh, as much solar power capacity every year as all of the rest of the world combined. So, China's going green, digital, uh, building out a new energy system at remarkable speed. It's becoming an all-electric economy. While the United States is doubling down on, uh, the 20th-century technology of internal combustion engine vehicles, China will produce most of the world's electric vehicles in the coming years. And within China, a majority of new car sales now, if I'm not mistaken, are electric vehicles. And the proportions continue to soar. All of this means that yes, China will feel the squeeze from the reduced oil flows, but there's no desperation. And what this will do is accelerate China's energy transformation to nuclear, wind, solar, mega-hydro, uh, very smart grids, uh, electrification of transport rather than, uh, petrol. Uh, actually, shipbuilding also is shifting to green fuels rather than normal fossil fuel-based, uh, shipping. So, China's using this as actually a spur to what is already the world's fastest energy transformation underway.
What leverage, if any, does President Trump have with China when he visits on Friday?
>> None that I can see. None. Nothing. I, I don't see any of it. He tried last year a trade war. It lasted about 24 hours. China matched the US tariffs and it raised the stakes with restrictions on rare earth magnet exports. The United States backed down. Of course, then later on, the Supreme Court said that Trump doesn't have the authority to put on those tariffs in the first place, and everybody knows that, even if it's forgotten in Trump's own mind, when he threatens new tariffs every day. And last week, uh, another court struck down the follow-up, uh, tariff, uh, that Trump set when the first one was struck down by the Supreme Court. Now the second one's going to be struck down as well, very predictably. In other words, Trump is a con, a con man. He's using powers he doesn't have. He's a bit delusional, going to wars on premises that are absolutely false. The United States does not produce anything that I can see that China desperately needs. It used to be thought that the, the high-end chips were, you know, a kind of decisive make or break for China, but China itself is telling its companies, "Buy Huawei. You don't have to buy Nvidia." I, I understand that Nvidia will be represented on this trip to encourage the Chinese reopen the markets for purchases of Nvidia chips. There is no choke point. Uh, there is no threat point. Uh, actually, it would be nice if, uh, just for once in his life, uh, Trump actually sat down with his counterpart and discussed areas of cooperation rather than thinking that he has to hit someone in the nose first before he talks to them. But right now, he has nothing to hit with. Uh, he has no cards, as he likes to say.
>> Last question. Uh, how has the war in Iran, uh, affected Russia?
>> Well, Russia has basically, uh, enjoyed that windfall of, uh, oil profits because oil prices have risen, uh, significantly. Russia is exporting a lot of oil, especially to Asia. And so for Russia, this has been probably the, the one major economy that this is, net net, a significant economic positive, uh, effect. Having said that, it's really true, uh, that Russia does not want this war and doesn't want this instability. Russia's not looking for windfall profits. Actually, Russia has been playing an extremely responsible role, talking both to Iran and to the Gulf countries, and trying to also tell President Trump, "Look, you made a mistake. You didn't get what you want. You can't get what you want. Don't even think about going farther, because you'll blow up the world economy, and actually, nobody's going to like that very much." So, what Russia has been doing behind the scenes is a very responsible role, not an opportunistic one. It's trying to end the war. It's telling the United States, "Stop what you're doing because it doesn't work. It was wrong to begin with. Iran is an ally of ours. They're not going down the drain, and you can't defeat them, uh, without devastating costs to the world." And at the same time, Russia goes out of its way every day to emphasize that it wants good relations with the, the Arab countries as well. And, um, on the whole, it's playing a very stabilizing role in trying to find the way to peace. The main thing that is needed very straightforwardly is for Donald Trump to stop. He doesn't have to acknowledge the mistake. It's not in his character. He just needs to leave. He can call it the greatest victory in the history of the world, as far as we're all concerned. Just stop. Stop the blockade. Open up the straits. Go home. And this would be the best thing for America and the best thing for the