Traversing the Coming Darkness

And Lighting the Way Forward

I’ve been tracking and synthesizing many geopolitical perspectives and I wanted to share my current assessment of where things appear to be headed.

While the prognosis in the short to medium term is dire, I close with more positive reflections on how to be a way shower for a renewal on the other side.

The core tension that is exceptionally difficult to resolve is between an existential threat for Iran and an existential threat for the American empire, which requires the petrodollar to sustain itself financially.

That is why things are very likely to continue to escalate over the Strait of Hormuz.

At this point, Iran doesn’t trust the United States to fulfill any agreements. The last MOU appears to be seen by them, rightly, as a stalling and refueling tactic rather than something real. What the Iranian regime needs for survival is leverage and that is the Strait of Hormuz. They are very unlikely to trust future agreements on paper, given what they have experienced.

If Iran retains control of the Strait of Hormuz, it unlocks hundreds of billions of dollars per year of revenue and a pathway to regional hegemony. Over five to ten years, it becomes the fourth center of power in the world (after the U.S., China, and Europe), and presides over the massive resources that go through the chokepoint of Hormuz. It can be a real global power with its own oil reserves and dominance in the Middle East. Other countries in the Gulf would then need to create a security arrangement with it rather than the U.S., shuffling the balance of regional power. The United States would be forced to leave the region militarily and Iran effectively becomes the central Middle East power broker.

By contrast, if Iran capitulates to the United States, it loses power, money, and sovereignty. The leaders of the regime face death, imprisonment or exile. So this is truly an existential war for them. It has prepared for this scenario for 47 years. It has drones that are distributed in mountainous terrain in an area at least the size of California. Its country is a fortress geographically that is the size of much of Western Europe. It doesn’t need to directly defeat the American military. All it needs to do in this war is survive and be a credible threat to shipping in Hormuz, which means the underwriters of the world will stop insuring passage. An oil tanker is something like a $300 million dollar asset. If a $25K drone can take out a tanker of $300 million passing too close to its shore, then effectively traffic stops. With their allies the Houthis joining the fight and threatening the Red Sea chokepoint at Bab El-Mandeb, even more of the world’s flow of oil will be compromised. They have tens of thousands of drones and the capacity to cheaply make more.

Addressing the risks posed by all of these drones is not feasible without a massive ground invasion, which would be incredibly expensive in human lives. It appears our defensive missiles are running too low to contemplate it. Iran is 3.5 times the size of Iraq and better defended. The Iraq war ultimately cost trillions We thus don’t have the troops, financing or hardware to pull off a mass invasion of Iran.

If United States essentially accepts the loss and leaves the region, it will radically undermine the petrodollar, which is at the foundation of American economic power. Without the need to buy and recirculate dollars to participate in oil commerce, the market for U.S. debt will decline, the cost for servicing our $38 trillion debt will soar, and basically the United States will head towards insolvency. It will be seen globally as the worst defeat of America’s military in history, further reducing our coercive power. Basically, an empire needs money to fund enforcement and without the Middle East control of oil, the American global empire, as it has been constructed, is over. We’ll need to radically slash expenses, cut our military budget to a fraction, release many to most of our 750 military bases around the world, and pull back our influence globally. The time of American military power projected and sustained by petrodollar wealth will be over. We’ll have to consolidate in some very important ways, which I’ve written about is actually good for America in the long haul but appears short-term as a massive loss of wealth and power.

Thus, surrendering control of Hormuz is existential for the American empire, which includes the large number of oligarchs and companies who feed at the trough of America’s economic and military machine. Accepting a loss at this level also runs counter to Trump’s psychology of aggression and winning. Politically, accepting the loss also means accepting the loss of base that would represent, which is likely existential for Trump. He knows that if Republicans lose badly in the midterms, he will face investigations and probably a third impeachment, which could be successful.

Further complicating matters is Israel, which pulled the U.S. into the war, and is sitting mostly on the sidelines now but refusing to surrender the Lebanese territory they have taken. They appear to have used the cover of the Iran War for a land grab in alignment with their Greater Israel vision. Iran is making Israel’s exit from Lebanon a contingency to end hostilities. The pressure is thus mounting in the United States to defund Israel, separate from the long alliance, and get Isaeli money out of U.S. elections. Getting Israel to give up Lebanon may not be easy to deliver. So internal tensions in that alliance are worsening and likely to boil over as the Iran War drags on.

The United States is increasingly isolated on the global stage, estranged from many of our previous allies. As the collective economic hardship mounts, there will be increasing anti-American sentiment in countries that rightly see we started a war impulsively that is harming their economy and jeopardizing their security in substantial ways. As domestic pain increases, the political forces that are pushing for actions ranging from defunding the U.S. by dumping our bonds, forcing closure of our military bases, and removing money from our stock market will increase. A concerted effort globally to curb U.S. aggression through economic means will grow.

The collision of all these forces is not easy to resolve. The only real pathway to peace and avoiding a global economic crash due to the radical reduction in oil and other resources, is for America to accept the loss and walk away, which leaves an emboldened Iran and the eventual loss of the petrodollar. And it’s not clear if Israel can be forced to abide by the terms required of it. It seemed, with the first MOU, that the United States was on the verge of doing this, which I think will eventually be inevitable, but once the scale of the loss became clear and the outrage built, Trump backed away (or it was part of the plan from the beginning to only appear to give the Iranian regime what it wants).

The Iranian regime knows all of this and is not even bothering to return to the negotiating table at this point. They build power by delaying longer while Trump gets increasingly desperate.

The most plausible path to de-escalating the war I’ve seen came from Professor Robert Pape, whose analyses are sophisticated and historically grounded. He predicts that Trump is likely to do a ground invasion somewhere that is lower risk, such as along the coast near Pakistan, to create the appearance of a victory before the midterms to rally his base. Pape, who is an expert on use of force, thinks this could generate a high risk of a suicide bomber attack that leads to some rallying around the flag. That, in turn, would accelerate America’s march towards authoritarianism. Given the constraints at play, his best case scenario would be a large Democratic win in November, which means Congress can turn off the money spigot for the war by January. But that’s a long way off when the world is missing in the range of 20% of its oil supply and other essential commodities.

So where does that leave the world? Oil reserves are dwindling and nearing the bottom of what can be sustained. Basically the U.S. Strategic Petroleum Reserve plus China’s voluntary reductions of five million barrels per day reduced the real economic pain to this point but we’ll run out of runway for reserve drawdown in August or soon thereafter, after which prices will spike to create demand destruction (which triggers a global recession or worse). Oil futures are still pricing in a resolution to the war, which seems like wishful thinking. The stock market is still buoyed by the highest percentage of debt financing in history. All sorts of signals are pointing to the potential for a stock market bubble, with the increasing power of open source Chinese models directly threatening the valuation of American tech, which are inflated off AI.

Other countries are far more vulnerable to sustained blockage of Hormuz and potentially now in the Red Sea with the Houthis joining in. Australia, India, Europe all face more pressing fuel shortages that will turn into full blown crises soon. This is worsened by the extensive damage to Russian oil refineries as well. Basically, we’re headed for a massive global shortfall in oil and many derivative products plus a wide scale food shortage, particularly in the developing world due to 30% less fertilizer this year and a pending huge El Niño which will disrupt crop production. Unless something radically changes, the cost of living globally is going to ramp up, fuel rationing is going to become widespread, and in certain markets, this is going to lead to real food shortages. Developing countries are likely to face debt crises and insolvency, which can then create financial contagion in economic markets.

There are a shrinking number of possibilities for an off ramp but they seem mostly in the control of the IRGC right now as they feel their leverage increases by waiting until the price of oil increases. Markets are still acting as if this situation will be resolved but once it becomes clear that we are hitting tank bottoms with no end is in sight or there are boots on the ground, prices for oil will increase dramatically. It takes months for oil to get from source to pumps, so any resolution will have delayed effects on relieving pressures. Basically, once we hit the real fuel shortage crisis, it will be at least 2-3 months before it’s possible to resolve simply due to the time required for production, shipping, refining, and delivery.

Where does that leave us and what actions are valuable?

If you’re in the United States, it’s vital to be active in the mid-terms (from voter reg to campaign contributions to social media). They need to be a blowout for the Democrats to overcome election manipulation that Trump will clearly be attempting. The Republican Party needs to break with Trump and while some of that may happen in advance of the midterms, a large loss will probably be required for that to happen at scale. In the meantime, it’s important to advocate with your representatives to exert constitutional oversight over the war and stop the funding. It’s better for Trump to have an off ramp in which he can blame Congress than to go further into the dark hole..

On the personal level, it’s important to think through your strategy to get through an economic winter. Buy what you need now to weather supply chain disruptions. Plan to reduce your fuel consumption as prices spike (flights, long car trips, commutes). Have backup food supplies for any interruptions in supply chains (depending on the area, diesel can become a real problem). Keep your money in the safest assets you can and assume the casino era of the stock market will be ending soon. Deepen relationships with neighbors and create more local cooperation.

On the plus side, I see this time ahead as a great time for building yourself. I’m personally aiming to get in the best shape of my adult life, increase personal disciplines from meditation to writing and do a lot of transformational inner work. I’m planning on it being a more frugal, disciplined year with more time at home in which I emerge stronger, clear, and wiser. I think all of us can do the same. The more grounded each of us is, the more we can be a safe harbor and support for others who may be less prepared.

The economic winter will eventually pass and spring will come with new opportunities. Humanity will need way showers for the rebuild. We’ll have unprecedented collective motivation to end the oil era and transition to a renewable economy, which is key to address global warming, which has been spiraling out of control. If Iran remains in control of 20% of global oil, the rest of the world will figure out quickly how to not need that oil, which puts on a faster track out of the oil era. We’ll have clear, recent examples of the idiocy, cruelty, and wastefulness of war to build momentum towards global peace as an operating system. We’ll have been forced to build more local resilience to offset global supply chains. America will have dissolved myths, exposed corruption, faced its shadow, and been forced onto a humbler path. We’ll have momentum to expose the forces engaged in manipulation of democracy. And much more.

In short, we won’t want to waste this crisis for the positive evolution of humankind.

To empower a positive shift in the wake of the destructive forces now unleashed, we will need millions of people to embrace their role as way showers. Taking the time to increase your skills to lead the way into the era to come is imperative. Simply hunkering down won’t lead to a brighter new dawn. Seeing the geopolitics now with clear eyes, working for the exposure of truth, the preservation of democracy, and the cessation of war is important.

And it’s ultimately the possibility for a healthy, vibrant, illuminated life of peace, contribution and meaning that will pull humanity forward.

Becoming a brighter light during the economic winter is the path that I recommend. Let’s make the collective darkness a time for personal renewal, community resilience, and global redesign and we’ll get through and open up the possibility for a real cultural renewal on the other side.