Akin to the revealed “credibility gap” that destroyed the presidency of Lyndon Johnson in 1968, a Trump administration that has declared “victory” over 60 times in its ill-conceived war with Iran is now also facing a near term reckoning.
In contrast to “victory”, certain international news sources are reporting a devastating outcome in the Mid East where not only has America lost its conventional war with Iran but also its entire defense infrastructure that has allowed the US to project its superpower across the region for decades. The scale of this setback isn’t limited to the Mid East and potentially reaches as far as Taiwan. More on this below.
Some proof for the sensational claims referenced above already exists. Most recent escalations in the conflict, for example, have been precipitated by Iran in what appear to be designed strikes to solicit either a greater response from a depleted US military to weaken it further or to even pressure an outright withdrawal of American military presence from the region. Amid such geopolitical uncertainty, necessary insurance premiums to get ships through the Strait of Hormuz remain at a peak and represent an astounding 7.5% and 12.5% of a ship’s value which is a massive jump from pre-conflict norms for of just 0.15% to 0.25% for the same metric. Higher oil prices also become much more unwieldy to control with strategic reserve stockpiles now depleted and represent an additional proof point that capital market assumptions that had been assuming a quick resolution to this war since its onset now need to be recalibrated. More permanently elevated US rates also tie into this theme of regime change.
There is precedent for America’s current moment
By adopting a “fake it until you make it…” approach in its war with the elusive, yet ubiquitous and, thanks to the Soviet Union and China, well supplied North Vietnamese communists; President Lyndon Johnson made a calculated gamble in Vietnam in 1964. It was then that Johnson used the blank check to wage war granted to him by Congress in its Gulf of Tonkin Resolution to overwhelmingly escalate the conflict in Vietnam even though, mysteriously, even after achieving conventional battlefield success, the war wasn’t going the United States’ way.
Inevitably, the US would find that defeating the “hearts and minds” of a collective people that are united with a single determinedness to achieve national sovereignty was impossible. But with such wisdom still decades away, Johnson opened an enormous “credibility gap” for his administration by placing a seismic “bet” through the Pentagon that overwhelming US force would eventually turn the war in his favor by way of an eventual decisive engagement in one “set-piece battle”, similar to what the Battle of Inchon represented in the Korean War, that would determine the outcome of the war. Until that end was achieved, the press would be censored until General Westmoreland’s, the commander of US forces in Vietnam from 1964 to 1968, vision was fulfilled.
But in contrast to the high moral ground America enjoyed during WWII in conjunction with the predominantly “conventional” style of that conflict that proved to be no match for the irresistible power of the US war machine once completely running; the US had no such advantage in Vietnam. There, the US, quickly lost whatever moral high ground it may have possessed in combating communism as the war brutally progressed toward a total war that included atrocities being committed against Vietnamese civilians who were largely impossible to distinguish from the Viet Cong. As such, the US faced a foe like no other when it went to Vietnam. Skirmishes and battles would be fought and even with US trained South Vietnamese and US troops typically winning these engagements, the Viet Cong had the ability to disappear into the jungle without leaving a trace thanks to the underground Ho Chi Minh trail that consisted of tunnels that ran thorough North Vietnam all the way to the capital of South Vietnam in Saigon. This invaluable logistical infrastructure allowed the North Vietnamese military to quickly regroup after engagement to then cause trouble for the South Vietnamese and US militaries elsewhere.
In contrast to the US military approach in the war that continuously sought to draw the Viet Cong out toward some type of decisive engagement, North Vietnam’s strategy in the war was to perpetually cause pain for their opponent with the end game being toward achieving a long, drawn out, deadly and costly war that eventually would cause America to lose its political will to remain in the conflict.
It was against this dynamic of a metaphorical boxing match where the US was seeking a decisive knockout while the Viet Cong was looking to go the distance to win by a grueling decision that the US military decided to censor the US press in Vietnam. This allowed the Johnson administration to tell the American people that the US was prevailing in Vietnam while it dramatically increased US troop presence in Vietnam from about 50,000 “advisors” in 1964 to about 485,000 US troops by the end of 1967 to finish the job. Against this backdrop, Johnson had an unforeseen vulnerability heading into 1968 which related to what if an unexpected material and negative development happened in the war that was so big that the press couldn’t miss it ? It would be then that a chasm wide gap between the Johnson administration’s narrative versus actual reality in Vietnam would be revealed. This worst nightmare for the Johnson administration played out during a massive surprise attack by the Viet Cong executed during the Vietnamese New Year of January 30th and 31st now known as The Tet Offensive.
In this bold and unexpected action, over 85,000 communist (Viet Cong) troops struck more than 100 cities and towns across South Vietnam, including an attack on the U.S. Embassy compound in Saigon during the Vietnam Lunar New Year, known as “Tet”, on January 30th and 31st and in some cases related combat lasted an additional 21 weeks after including a brutal month-long battle in the city of Huế. Ultimately, U.S. and South Vietnamese forces repelled the offensive and inflicted heavy casualties on communist fighters which made it a tactical military defeat for North Vietnam through a conventional lens but nevertheless achieved what the communists wanted all along which was war transparency for the American public.
To this end, while the North Vietnamese lost on the ground in early 1968, US media coverage of the intense fighting (there was no hiding this story from a censored press as fighting erupted everywhere in South Vietnam) shocked the American public to the point that it created a deep credibility gap regarding the Johnson administration’s optimistic claims about the war in the years leading up to 1968. Tellingly, President Johnson, resigned as President of the United States on March 31st 1968 just two months after the Tet offensive. And while the Vietnam war didn’t officially end until April 1975 with the fall of Saigon, it was the Tet Offensive that was the most definitive catalyst that drove this unlikely outcome.
The War with Iran parallels the US experience in Vietnam
Fast forward to the current war with Iran and certain striking parallels with America’s ill-fated struggle in Vietnam emerge. Censored press coverage that was a feature of the Vietnam War prior to the Tet Offensive is now also a feature of the Pete Hegseth’s Pentagon to the point that Hegseth is requiring that approximately 50 high-ranking US military officers resort to polygraph tests for the purpose of plugging suspected “leaks” within the administration who are offering warnings about how bad the condition of the US military is under the direction of the former Fox News commentator.
Meanwhile, as President Trump and Secretary of War Hegseth continue to tell the American people via social media and wherever else they continue to have an audience that doesn’t fact check their claims, that Iran’s military has been destroyed and the US has already won this war; the reality on the ground is that Iran holds the upper hand in the current conflict. This uncomfortable reality even made its way into President’s most recent claims about the war where a “tell” emerged on his recent posting on Truth Social where he declared “Oil prices will drop precipitously, like everything else is dropping (but more !), when we WIN the war with Iran.” The problem for Trump in making this claim, as referenced above, is that he has already declared victory over Iran over 60 times since the war began and now admits by tweet that not only does the war continue but its outcome may be in doubt when noticing where the President decided to deploy his “caps lock” in his unconventional proclamation.
And in the spirit of awareness, the attached Substack article from Jack Rivers, “The Broken Fortress: Two Nights of Iranian Fire, and The Deafening American Silence” is written purposefully from an outside the US perspective to fill in the gaping holes not being reported to the American people in relation to the Iran War.
Substack: The Broken Fortress — Two Nights of Iranian Fire, and The Deafening American Silence
Noteworthy highlights that emerge within this revealing piece include:
The US does not have moral “high ground” in this conflict
A tragic military strike that just hit a wedding celebration causing several fatalities and multiple injuries in the Iranian coastal town of Kuhestak came specifically from the US based on independent weapons analysis from Reuters. This is a war crime that follows a string of multiple such actions coming from the US during this conflict.
The outside US perspective provided above is confirmed from within the US:
“Wes J. Bryant, who served as the Pentagon’s chief of civilian harm assessments—the man whose literal job was to ensure American strikes did not kill civilians—stated, without qualification: “Is the US intentionally targeting civilians in Iran? It is.”
This observation matters in that Secretary Hegseth has been outspoken in recent months with regard to the US emphasizing “maximum lethality” instead of observing the strict legal limits of war.
The US military is overstretched
“A New York Times investigation, which Press TV has republished in full, reveals that a single carrier strike group requires approximately 420,000 meals and eight million gallons of fuel per week. Five thousand crew per carrier. The logistics base in Bahrain, the nearest major replenishment hub, was destroyed on 28th February. The next closest are Diego Garcia, 2,200 miles away, and Singapore, 3,700 miles, via the Strait of Malacca. Crew fatigue has reached the point where suicide attempts are being recorded in operational logs…”
Bad form from Treasury Secretary Bessent…
While Treasury Secretary has been trying to sell the idea of other countries participating in sanctions against Iran to further countries pressure the country and its people, Bessent equated the Iranians and the IRGC to the “snakes” that he encountered growing up in South Carolina which only required a machete to be remedied.
To which Iranian diplomat, Esmaeil Baghaei responded with “He (Bessent) mistakes the depth of Iran’s history and culture for the size of a childhood yard…Your brutal ‘war of choice’ was meant to drive the Nation of Iran to collapse. What has collapsed instead is the illusion of your absolute power, and with it every claim to moral standing…”
As an aside, Iran’s history dates back beyond 6,000 years and today has a literacy rate of 89% with an almost universal literacy rate for the 15- to 24-year-old segment of its population. In comparison, the literacy rate for the United States is approximately 79% with 54% of US adults reading below a 6th grade level.
World Bank: Iran adult literacy rate
World Population Review: US literacy rates by state
Questions around US “absolute power”
In relation to the US bombing of civilians referenced above, Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed that their counterattack (in response to the US civilian attack referenced above) on US Camp Titin “killed a large number of US personnel and destroyed several key facilities and the enemy’s attack helicopters,” to which there has been no US response.
Interestingly, while both Jordan and the US counter the claim of US casualties, one uncomfortable fact remains regardless of who is telling the truth here. With its attack on Camp Titin in Jordan, Iran has demonstrated the ability to reach deep into the defense network that the US has enjoyed for decades in projecting its power across the Mid East, which raises big questions as to what’s next for the US not only with regard to its war with Iran but also with its relationships across the region and elsewhere such as in Taiwan. See below.
Meanwhile, it is interesting to see Hegseth’s Pentagon starting to change its calculations for casualties in this conflict (see below) which speaks volumes to the uncertainty that now clouds what is going on with this war as the US press has been censored in reporting it.
ABC News: Pentagon lowers count of Iran war dead and wounded
Times of India: Iran hits US Navy Fifth Fleet base in Bahrain
Perhaps China steps into an overseer role over the Mid East…replacing a now untrustworthy and compromised US and a September 30th deadline for the US to get out of the Mid East ?
From Iranian politician Mohammad Bagher Ghalibaf who is offering an idea for a way forward after the US and Iran war is over with his, “China’s emphasis on fostering common security reflects a principle Iran has long championed,” he wrote. “Regional countries must be taking their future into their own hands, and true stability can only come through a new security architecture that is homegrown. Iran stands ready.”
And from Iraqi militia leader, Sheikh Akram al Ka abi, Secretary General of Harakat Hezbollah al Nujaba, “If any US soldier stays on past the September 30th deadline, they would go back in a coffin.”
Bottom Line
Just as the Tet Offensive shattered the Johnson administration’s benign war narrative overnight and markets had to rapidly reprice a war (there was a 7% drop in the S&P 500 in February and March of 1968 that preceded a war deescalation rally that followed Johnson’s resignation in late March) that consensus of that time assumed was being won, potential Iranian escalation and better news disclosure on the totality of US losses related to the Iran conflict this fall also have the potential to shatter the market narrative that has held so far which is that the war is contained and manageable.
Consistent with the writer’s comments of the past several months, facts coming in from international news sources contradict the narrative being told by the Trump administration. And given the abysmal track record of this administration in reporting truth, such international perspective should not be ignored especially when it makes sense as it does in the following excerpt that summarizes the anemic state of sanctions proposed last week by Treasury Secretary Bessent with:
“China, Russia, and Pakistan have formally opposed the sanctions threats. The Gulf states are simply choosing not to be the enforcers of a policy they did not author, against a neighbor they cannot afford to alienate, on behalf of a power that is, by every measurable indicator, losing the entirely unprovoked war that it started.”
Meanwhile, Israel remains intent on pursuing its “Greater Israel” project that also has it committing atrocities in Gaza with an expectation that the US has its back in a genocide to which global opposition is mounting against what is a humanitarian crisis.
Regime change is coming to the Mid East and it does not bode well for the US. And to the extent of how bad this news can be and how far this news can travel consider the attached article from the Atlantic “Will Taiwan Just Give Up ?” where the opening line reads “The Taiwanese (that produces over 90% of the world’s advanced semiconductors) don’t trust Trump, and they don’t believe America will come to their defense. A deal with China is starting to look inevitable…”
The Atlantic: Will Taiwan Just Give Up?
Given regime change and uncertainty that clouds the Mid East, it is important to note that the Dallas Fed quantified the inflation impact of a three-quarter in a row Strait of Hormuz closure as having a 1.1 percentage point impact on headline inflation. Meanwhile, the Strategic Petroleum Reserve is depleted and now offers only a finite reserve. This leaves a Fed that may end up being paralyzed between addressing inflation and or a risk of recession as events unfold.
This fall expect higher inflation, higher and volatile US rates, heightened equity market volatility and higher gold prices…brace yourself.