By Michael Every of Rabobank
Painfully hard and painfully easy analysis
Some analysis is painfully hard. Some analysis is easy, but looking at related facts is painful.
Before the Iraq War in 2003 it was easy to predict Saddam didn’t have WMD. You just needed to see if he did, he would display them so the US wouldn’t attack him, like North Korea does.
Before 2008 it was easy to predict a devastating Global Financial Crisis. You just had to read Minsky or Austrian theory, not neoclassical economic nonsense.
Before Brexit and Trump it was easy to predict both populist victories. You just needed to listen to people outside metropolitan bubbles who didn’t read the same nonsense as above.
Before the start of the US-China Trade and Cold War it was easy to predict them. You just needed to use logic, history, ideology,… and listen to Donald Trump and Xi Jinping.
Before inflation returned, it was easy to see it wouldn’t be “transitory”. You just needed to look at vast fiscal deficits boosting demand into Covid lockdowns and supply chains that didn’t supply. On that note, yesterday’s US headline PPI was hotter than expected at 0.5% m-o-m. Let’s see what US CPI says today, as the latest set of Fed minutes underline “the Fed is not only data-dependent, but also market-dependent,” i.e., if bond yields go up, they don’t need to hike, but if yields go down on the view the Fed won’t hike, then they will ironically have to.
Before the Ukraine War, it was easy to predict it: Russia had put 250,000 troops on the border and said it would assimilate Ukraine into a “New Russia” - all you had to do was believe them.
Before Hamas’s 10/7 attack on Israel, such a tragedy was easy to predict. Not the date; not the shocking intelligence failure; but the deadly intent when given an opportunity.
After being formed in 1987, Hamas spent 30 years openly saying it wanted jihad to wipe out Israel in favour of an Islamic state. In 2017, as Al-Jazeera and Western liberals enthused, it then accepted the formation of a Palestinian state along the 1967 borders and said the conflict was not religious. A senior political analyst gushed: “[Hamas leader] Meshaal made it clear that the new Hamas, if you will, is dynamic and open-minded... they will continue to resist occupation by all means necessary. But on the other hand, they will be an open and moderate political group.”
Yes, Hamas seems open to ideas… from ISIS. After all, Meshaal just asked Muslims to show their rage globally this Friday, and to carry out jihad for Al-Aqsa, while testimony now speaks of the rape, torture, then burning alive of young children. Things like that don’t belong in this Daily: but they don’t belong anywhere, ever. I told you easy analysis can be painful.
Here's more. Hamas states it does not aim to kill civilians(!) but that it differentiates between civilians and “settlers”, who are valid targets. Yet every victim of 10/7 lived inside 1967 Israel, not in the West Bank, and most would have been vociferous opponents of the far-right Israeli government (now expanded to an emergency war one) and for a two-state solution. Are all Israelis “settlers”, which means no recognition of it? If so, how exactly is peace to be achieved? Or is it just that all Israelis are targets, even left-wing dancers at a rave for peace, as long as settlers exist?
Some “open and moderate” groups in the West backing “decolonisation”, which we liked to think stopped at literature, now quibble Hamas didn’t decapitate *all* the 40 dead babies on one kibbutz; say Germany’s Shani Louk isn’t dead, and is being treated in a Gaza hospital; and Hamas didn’t kill anyone at the rave, the Israeli army did via friendly fire. Others who think language is literal violence say appalling violence is social justice, refuse to condemn it, or blame Israel *entirely* for all of it. There are painful historic echoes in that victim blaming.
We are all aware of the appeal of fake news, but add that to ends-justifies-the-means violence, moral relativism, and ‘they made me do it’ thinking, and imagine what this implies for socio-political stability in a West wracked with inequality due to decades of idiotic neoliberal economic policy. Is that painful outcome hard to predict? The scales seem to be falling from some eyes at least, given comments from Jake Tapper, Bill Ackman, Larry Summers, and David Frum, to name just four.
Meanwhile, analysis of the geopolitical fallout from 10/7 is both painfully simple and painfully hard.
The simple part is that this war is going to get much worse, fast. Israel is now blockading Gaza of fuel, food, and water, and vowing to destroy every Hamas member globally. Last night saw a false alarm of Hezbollah opening a second front, sparking more chaos in northern Israel. False though it was, Israel is already exchanging fire with South Lebanon and with Syrian militias. When the ground war starts, imminently, so will regional escalation. We fleshed out the circles that the war is likely to expand to encompass in ‘From Ukraine War to Middle East War to…’ yesterday.
However, harder to analyze is the US claiming its intelligence now thinks Iran was “surprised” by the Hamas attack, rather than being the puppet master of it, even as the EU’s Von der Leyen was explicit in mentioning Iran in her public comments. Sadly, one has to note US intelligence agencies will say whatever is politically convenient in an election year where it helps the White House to be able to say there is no need to strike Iran even while backing Israel. What that means in terms of deterrent, or lack of it, remains to be seen.
Equally hard to parse is Saudi Arabia’s Crown Prince Mohammad Bin Salman phoning Iranian President Raisi for 45 minutes to pledge joint support for the Palestinians against Israel, mirroring what some other observers are seeing in social media posts across the Gulf. Does this herald a decisive geopolitical shift by Riyadh away from Israel and the West towards the BRICS11, with enormous global implications, or is this just an attempt to ensure Iran does not strike Saudi should the US strike Iran? That is hard to call, but I lean towards the latter for now.
So, another tense day of war looms ahead of an even tenser Friday. That analysis is easy. And painful.