Policy Tensor

Anusar Farooqui, Founder and CEO, Systematic Portfolios LLC. Words:

[Policy Tensor @policytensor]

THE BULL CASE FOR CRUDE

Mercy, a Schelling-style competition in pain tolerance, requires costly signaling. You have to eat costs to signal resolve. The more painful the costs that are absorbed, the stronger the resolve signal since it faithfully distinguishes between a highly resolved 'strong type' from a poorly resolved 'weak type'. This is called a separating equilibrium in the theory of asymmetric information games.

'See how resolved I am? See how much pain I am willing to take to get my way? You better back down.'

Given the incentives and motivations of all politicians, particularly narcissistic ones, Trump's unwillingness to capitulate to save his party in the midterms is a very strong signal of his resolve. He may not have known the scale of the disaster that awaited him. But Susie is not stupid. She told him in broad terms the costs he was likely to bear if he did not make a deal. He chose to eat the costs rather than capitulate. Why?

The reason is that he is unwilling to give the concessions that the Iranians are demanding. I doubt he cares about the money. And Iran has been prepared from even before the war to make concessions on the nuclear file that he can sell as a great victory. So what is the blockage?

The blockage is quite specific and related to what I have called Iran's big ask. The Iranians are demanding that the US accept their authority over Hormuz. People have misunderstood this issue from the very beginning. It is not about tolls — tolls are not the end of the world. It is not about Iran's ability to shoot at ships — that is not going anywhere regardless of any agreement.

The issue is that US-Iran agreement that gives Iran the authority to regulate transit through Hormuz is tatamount to the US accepting Iranian mastery over the gulf. Iran would be able to use the Hormuz weapon against the Gulf Arabs, targeting them individually to secure compliance with its foreign policy objectives. It will be able to similarly coerce countries that rely on access to gulf energy: Japan, India, the Europeans. And it will be able to do so without triggering a casus belli.

As @vali_nasr put it, surrendering Hormuz to Iran will turn the gulf into an Iranian lake. And this in turn would turn Iran into the fourth world power, as @ProfessorPape pointed out very early on the pages of the NYTimes.

So the Hormuz question is really about who will be the master of the gulf. Trump or any other US president cannot surrender Hormuz under anything except extreme duress. For imperial managers, such a surrender is almost unthinkable. It is a very difficult pill to swallow because it blows US pretensions to global primacy to smithereens.

Why are the Iranians demanding mastery over the gulf as the price of letting the US go? The answer is that the Iranians came to believe as early as March that the Hormuz weapon is their get out of jail free card. It a gun cocked at the head of the West. Without it, the West will place them into the sort of box it put Saddam in after Kuwait. With it, they can rely on a balance of economic terror to keep the West in line.

So one can see the point of the big ask. But at what price? As far I can tell, the Iranians are resolved to hold fast for as long as it takes, even if it takes many years.

What we have learned from the midterms is that the US is also highly resolved. There is a chance that we get a post-imperialist president in 2029, one who is willing to capitulate on the Hormuz question as part and parcel of a general abandonment of the empire and pull back to the western hemisphere. But it is only a small chance. The bulk of the probability is that the US will remain resolved for years until the costs become truly prohibitive. The empire is prepared to die on this hill. At any rate, there is no reason now for the Administration to capitulate right after it has paid such a hefty price.

That is why there is not going to be a deal. That is the bull case for crude.

[Policy Tensor @policytensor]

@nikhil_palsingh Not serious.

[Policy Tensor @policytensor]

Dems off on the right foot. Anyone who imagines 2028 will be a walk in the park is not very familiar with Democrats.

[Alex JER-dun @alexjordanATL]

made sure to tweet about it but couldn’t bother to get your members to show up for the vote. unbelievable

[Policy Tensor @policytensor]

Chinese Persian speaker. Strong buy she were a stock.

[simiao lin🇨🇳🇵🇸 @SimiaoLin]

آمریکای��‌ها تعجب کرد�� که زندگی روزمره ایرانی‌ها این‌قدر مدرن و قشنگه، ولی من که همیشه می‌دونستم! زبان فارسی واقعاً ملودیه و زیبایی دخترهای ایرانی هم که نیاز به تعریف نداره.
یاد گرفتن فارسی یکی از بهترین تصمیم‌های زندگی‌م بوده، مخصوصاً بعد از دیدن این ویدیو 😂

[Policy Tensor @policytensor]

Unless you recognize elementary facts about the world situation how do you expect to be taken seriously?

[Policy Tensor @policytensor]

No firm as ever been as fucking big to fail as NVDA. It's bulletproof.

[ian bremmer @ianbremmer]

jensen huang story matters for (at least) three reasons:

1) us-china relationship: spy scandal ahead of next week’s apec summit will dominate coverage, create tension, and throw a wrench in trump’s hopes to keep relations stable.

2) new congress: post-midterm dems will use investigatory powers to demand answers, push for increased oversight.

3) trump’s judgement: the president personally invited jensen on a trip to china despite noted national security concerns and is now acting like the whole scandal doesn’t matter… why?

tl;dr.. story happened at a bad time for trump, and don’t expect to see it disappear any time soon.

[Ruben Gallego @RubenGallego]

@Switch82Vet No that’s the beauty of this, we can pay the Ukrainians to kill the Russians.

[Policy Tensor @policytensor]

@daniel_dsj2110 He’s a disgrace to the FT.

[Policy Tensor @policytensor]

Are you okay Daniel? You do understand that this is shit and that there is something very peculiar going on with the ‘Janan always above the fold’ at the FT right? Maybe he is fucking the editor? This is at best good for a sophomore. Come on.

[Daniel Steinmetz-Jenkins @daniel_dsj2110]

Janan Ganesh on the Dems midterms success: “Material interest rather than high principle won the day. "Freedom of speech won't feed my children," sang the Manic Street Preachers…Brecht made the same suggestion: “Food first, then ethics.”. https://t.co/QjE43ZL4wH

[Policy Tensor @policytensor]

Russia alone outproduces the West. Iran might be close. With China, the estimates presented by the Pentagon to Congress are just laughable. We are outgunned. And it’s not even close.

[Yaroslav Trofimov @yarotrof]

Considering that it takes two ballistic missile interceptors to down one incoming missile, Iran currently out-produces America’s entire Patriot PAC-3 and Thaad output of under 900 interceptors a year.
That’s just Iran.
Not counting China, Russia, North Korea and — yes — the Houthis.

[Policy Tensor @policytensor]

What are we? Three months away from the first AGI cults?

[Shadi Hamid @shadihamid]

I asked Claude about whether I — as a Muslim — could ever believe it was "conscious." It gave me a fascinating answer. It told me to keep an open mind since sentience isn't limited to human beings in the Islamic tradition.

[Joe Weisenthal @TheStalwart]

$CRWV is up 27%

[Policy Tensor @policytensor]

@Menckenist I’ve documented them at length. You’re just poorly informed.

[Policy Tensor @policytensor]

Iran is too democratic. If they were more authoritarian, they would not be making the strategic errors that they are. Too many players in the power vertical are responsible for the strategic incoherence.

[Gregory Brew @gbrew24]

BREAKING: Authoritarian government in power would like to remain in power.

[Policy Tensor @policytensor]

Democrats need to smell the tea leaves. The habana route is a dead end. Wake the fuck up! Or JD might win the next round.

[Policy Tensor @policytensor]

For fuck’s sake fire Jeffries and Schumer. Haven’t we had enough hasbara commissars?

[Policy Tensor @policytensor]

There no conspiracy. It’s just really catchy.

[Majed | ابو دانتي @AboDantee]

تخيلوا بسبب هالاغنية قبّت حرب الكترونية الا��راك يقولون اللغة الفارسية قبيحة وناعمة ولا تنفعزالا للشعر بينما العرب يمدحونها، ولاول مرة يجتمع العرب والفرس ضد الاتراك 😂

البعض يقول الفيديو ارادت الاستخبارات الايرانية نشره عشان يكون ترند عالمي ويظهرون من خلاله ان الشعب الايراني متفتح وعايش ومبسوط الخ عشان الاعلام الغربي

الزبدة مهو معقول كمية الانتشار اللي وصل لها

[Policy Tensor @policytensor]

This is a very big deal.

[barry with the NED @bonzerbarry]

My Lahij update on events in the last day or so. Yemeni platforms report that Ansarallah has captured many vehicles due to the PLC retreat and that Saudi warplanes bombed other fleeing PLC vehicles again. Several brigades are under siege by Ansarallah after a messy and uncoordinated retreat by PLC forces. AA is only about 17km from the coast.

[Policy Tensor @policytensor]

@daniel_dsj2110 Have fun reading Janan.

[Policy Tensor @policytensor]

Is that why you had to steal it twice?

[Jonathan Chait @jonathanchait]

If the election was a test of whether Americans like Sanders’s message more or less than the standard Democratic message, the answer was clear: They like it less. https://t.co/FSDLddakE9

[Policy Tensor @policytensor]

@Efe_Incesulu @gon42281 Good. Now you don’t have to bother with what I’m saying.

[Policy Tensor @policytensor]

The year is 2028. The Iran and Russia wars have combined to form one seamless front. Azerbaijan came under joint occupation of the Russians and the Iranians last year as US pressured the Azeris to interdict Russo-Iranian intercourse. The pro-Israel regime was kicked out and replaced by a Russian puppet. The Caspian was thereby secured against Western pressure.

In Ukraine, the Russians extended their occupation to Odessa and then hunkered down to a defensive posture. The front line has been frozen solid for a year with intermittent shelling and intrusions by drones.

After the Americans cajoled the Europeans into a new onerous sanctions regime and US bombers used bases in Germany to conduct fresh strikes against Iranian missile sites, the Iranians unveiled a new policy: striking US bases in Europe as punishment for any hostile action.

The US military presence in the Rhineland-Palatinate zone was targeted first. But these attacks did not prove effective since the bases were too well defended. The Iranians have since shifted to targeting European values.

The decisive moment came when the US shot down a Iranian flight to Sana’a that it claimed was carrying missile components. This led the Houthis and the Iranians to announce a joint ‘sanctions regime’ against civilian air traffic in all countries permitting the use of their airspace to US air operations.

The counter-value campaign against Europe began with spectacular strikes on civilian airports in London, Paris and Berlin. Civilian traffic ground to a halt across Europe before recovering to a fraction of its previous levels. US intelligence alleges that the Russians, and the Chinese behind them, are supplying components for long-range missiles to Iran.

News reports have surfaced of frantic backroom diplomacy to end the Iranian missile war on Europe, or at least to prevent it from expanding out to a broader set of counter-value targets. The Iranians have so far refused to budge: ‘If you want the missiles to stop falling, remove all sanctions on Iran and stop allowing the US to use your territory for attacks on the Islamic Republic.’

Europe is now in an impasse. Europe is still not ready to defend itself. How can you kick out the Americans? If we kick out the Americans, we will have to live under the Russo-Iranian boot.

But then what is to be done about the missile threat? So far it has proven manageable, if terrifying. But with missile production ramping up across the Axis to staggering levels, Europe is facing the dark prospect of sharing the Ukrainian fate as the recipient of the output of vast automated BYD-style missile factories now perfected by the Chinese.

[Policy Tensor @policytensor]

I drew Haversine isocurves from Tehran. If Iran fires from northwest launch sites, airbases in Rhineland-Palatinate are closer to 3000km than 3800km. They should be able lob a few. The Russians will be delighted. They can’t fire at NATO Europe because of MAD, but Iran sure can!

[Policy Tensor @policytensor]

For fuck’s sake fire Jeffries and Schumer. Haven’t we had enough hasbara commissars?