Latest / Breaking Points with Krystal and Saagar / 5/4/26: Oil Spikes Amid Hormuz Chaos, US Bases Damaged By Iran, Spirit Airlines Goes Bankrupt

Transcript

5/4/26: Oil Spikes Amid Hormuz Chaos, US Bases Damaged By Iran, Spirit Airlines Goes Bankrupt · Breaking Points with Krystal and Saagar

0:00
Speaker 1: Hey guys, Saga and Crystal here.
0:01
Speaker 2: Independent media just played a truly massive role in this election,
0:05
Speaker 2: and we are so excited about what that means for
0:07
Speaker 2: the future of this show.
0:08
Speaker 3: This is the only place where you can find honest
0:10
Speaker 3: perspectives from the left and the right that simply does
0:13
Speaker 3: not exist anywhere else.
0:14
Speaker 2: So if that is something that's important to you, please
0:17
Speaker 2: go to Breakingpoints dot com. Become a member today and
0:19
Speaker 2: you'll get access to our full shows, unedited, ad free,
0:22
Speaker 2: and all put together for you every morning in your inbox.
0:25
Speaker 3: We need your help to build the future of independent
0:27
Speaker 3: news media and we hope to see you at Breakingpoints
0:29
Speaker 3: dot com.
0:33
Speaker 1: Good morning, everybody, Happy Monday. I'm an amazing show for
0:35
Speaker 1: everybody today. Would we have personal.
0:37
Speaker 2: Indeed, we do fast moving developments this morning, claims and
0:40
Speaker 2: counterclaims from the Iranians and the Americans. We do know
0:43
Speaker 2: the US is announcing new rules of engagement to target
0:45
Speaker 2: Iranian ships. We also have Trump saying we're going to
0:48
Speaker 2: guide ships through the straight Upford moves That apparently just
0:50
Speaker 2: meant like giving them a map or something.
0:52
Speaker 4: Of that nature.
0:53
Speaker 2: Anyway, Treta Parsi is going to join us. Do let
0:55
Speaker 2: us know as best we can tell where we are
0:57
Speaker 2: this morning, where things are likely to be headed, what
1:00
Speaker 2: the Iranians position is at this point. We're also going
1:03
Speaker 2: to take a look at the way the Gulf Arab
1:05
Speaker 2: countries are reacting there in crisis and increasingly divided.
1:09
Speaker 4: Spirit Airlines is dead.
1:12
Speaker 2: Competing claims there about what exactly happened. Israel is applying
1:16
Speaker 2: the Gaza model to Lebanon. There might be a secret
1:20
Speaker 2: Jeffrey Epstein suicide note that we're just learning about now.
1:23
Speaker 2: And economics professor Richard Wolf is going to join us
1:26
Speaker 2: to talk about the global economic impacts of the Iran war,
1:30
Speaker 2: in particular this move that China just made where they
1:33
Speaker 2: said effectively like no, we're not going to comply with
1:37
Speaker 2: US sanctions, which is kind of a first. It's a
1:40
Speaker 2: significant step on their part. So interested to hear from
1:43
Speaker 2: him the significance that he finds in their actions there.
1:46
Speaker 1: That's right.
1:46
Speaker 3: Thank you to everybody subscribing to the Showbreakingpoints dot com.
1:49
Speaker 3: We are doing our AMA live today from the studio.
1:53
Speaker 1: That's all I can tease for right.
1:55
Speaker 3: I don't have any exclusive thoughts, let's say on marijuana
1:57
Speaker 3: that you may be able to hear Thank you to
1:59
Speaker 3: everybody who has has been subscribing also to our YouTube channel.
2:02
Speaker 1: We deeply appreciate it.
2:03
Speaker 3: If you're listening to this on a podcast, please share
2:05
Speaker 3: an episode with a friend. Really helps other people find
2:07
Speaker 3: the show. But let's go ahead and start very fast
2:09
Speaker 3: moving developments with Iran. We've already added multiple different ones
2:13
Speaker 3: not even eight am here in.
2:14
Speaker 2: The Yeah, as I was coming in like texting, I
2:17
Speaker 2: got to put this in the show.
2:18
Speaker 4: So, Iran is claiming.
2:19
Speaker 2: That they stopped a US warship from entering the straight
2:22
Speaker 2: up from those who can put this up from sky
2:24
Speaker 2: News they are claiming, and this is from state news
2:27
Speaker 2: Persian media in Iran, two missiles hit a US warship
2:32
Speaker 2: near Jask Island after ignoring Iranian warnings. Again, according to
2:37
Speaker 2: state media there in Iran. US is already out denying
2:41
Speaker 2: this sentcom putting on a statement we can put up
2:44
Speaker 2: on the screen.
2:45
Speaker 1: Claim.
2:45
Speaker 2: Iranian state media claims that Roan's Islamic Revolutionary GUARDCREP hit
2:48
Speaker 2: a US warship with two missiles. Truth, no US Navy
2:52
Speaker 2: ships have been struck. US forces are supporting Project Freedom
2:55
Speaker 2: and enforcing the naval blockade on Iranian ports.
2:59
Speaker 4: So that's as much as we know about that at this.
3:02
Speaker 2: Point, and I'm sure eventually we will learn who is
3:04
Speaker 2: telling the truth in this particular scenario. We can also
3:07
Speaker 2: put the next one up on the screen. This is
3:10
Speaker 2: from the UAE. They are claiming that one of their carriers,
3:15
Speaker 2: one of their oil tankers, was targeted and struck while
3:19
Speaker 2: trying to transit the Strait of Pormuz, so we have
3:22
Speaker 2: that development as well. In addition, this part is solid
3:27
Speaker 2: in terms of.
3:28
Speaker 4: The US position.
3:28
Speaker 2: We could put Barack Ravied's latest report here up on
3:31
Speaker 2: the screen, US official saying that the rules of engagement
3:35
Speaker 2: for US forces in the region have been changed and
3:38
Speaker 2: they were authorized to strike immediate threats against ships that
3:42
Speaker 2: crossed the street, like IRGC fast boats or Iranian missile positions.
3:47
Speaker 2: So all of these things point in the same direction
3:50
Speaker 2: of increasing escalatory situation, very fraught, very dangerous. Where the
3:57
Speaker 2: Iranians are claiming they struck a US warship, the US
4:01
Speaker 2: is saying we will hit your ships if you try
4:03
Speaker 2: to impede any ships that are transitting the Strait of Hormuz.
4:07
Speaker 2: And soccer this comes on the heels of this Trump truth.
4:10
Speaker 2: This is a one guys, we can put this up
4:12
Speaker 2: on the screen where he is claiming that the US
4:15
Speaker 2: is going to guide this is his language, going to
4:18
Speaker 2: guide help free up ships which are locked in the
4:21
Speaker 2: Strait of Hormuz and guide them through the ship for
4:25
Speaker 2: the good of Iran, the Middle East of the United States.
4:28
Speaker 2: We have told these countries we will guide their ships
4:30
Speaker 2: safely out of these restricted waterways so they can freely
4:33
Speaker 2: and ably get on with their business. He goes on
4:37
Speaker 2: to say a lot of other things as well, but
4:39
Speaker 2: that's sort of the primary piece that he's putting out here,
4:42
Speaker 2: and you know, immediately soccer courses rare.
4:44
Speaker 4: He's like, well, what do you mean by that.
4:46
Speaker 2: When you hear that language you're going to guide them through,
4:49
Speaker 2: you assume US naval and perhaps air assets are going
4:53
Speaker 2: to be utilized to ensure their safety. But pretty quickly
4:56
Speaker 2: after that we got word that no, no, no, we're
4:59
Speaker 2: not going to use any US military assets. We're going
5:01
Speaker 2: to just tell ships they can go through and give
5:03
Speaker 2: them some indication of what we think would be a
5:05
Speaker 2: safe pass.
5:06
Speaker 1: Exactly right, let's put a zer d guys on the screen.
5:09
Speaker 3: Also, what we added this morning, they are now saying
5:11
Speaker 3: that the rules of engagement for US forces in the
5:14
Speaker 3: region have now been changed and they were authorized to
5:17
Speaker 3: strike immediate threats against ships that cross the strait like
5:21
Speaker 3: IRGC fastboats or Iranian missile positions. However, these officials are
5:26
Speaker 3: clarifying that ships will not be actually escorting these tankers
5:31
Speaker 3: through the straits of Hormves. Remember, Trump's truth makes clear
5:34
Speaker 3: that this is about neutral countries who have been not
5:37
Speaker 3: affected and or involved in the war, and that they
5:39
Speaker 3: would basically be given like a map of where they
5:42
Speaker 3: think that there are minds being able to go through. Again,
5:45
Speaker 3: this is all very very fast moving as of this morning,
5:49
Speaker 3: but that's where things currently stand. The oil markets are
5:52
Speaker 3: going wild all just in the last two our Initially
5:57
Speaker 3: late last night Sunday they opened two percent down. At
6:00
Speaker 3: one point they were five percent up on the claim
6:03
Speaker 3: that a warship hit, and then it went down a
6:05
Speaker 3: little bit. Still remains very very high. I think before
6:08
Speaker 3: we bring in treat to Parsy, we just want to
6:09
Speaker 3: emphasize all of this chaos is exactly why the price
6:13
Speaker 3: of oil remains where it's at. It's why today as
6:16
Speaker 3: of this morning, gas price national is around four dollars
6:19
Speaker 3: and forty five cents per gallon, a thirty percent, thirty
6:23
Speaker 3: cent increase in a single week, and in fact, one
6:26
Speaker 3: of the largest single week you know gains in.
6:29
Speaker 1: Modern American history. Trump is trying his best.
6:32
Speaker 3: That's why that announcement that truth was put out right
6:35
Speaker 3: before the Brent crude market was was to open, and
6:38
Speaker 3: it did initially work, however, showing that it basically fell
6:42
Speaker 3: apart within hours after things started going you know, kinetic
6:47
Speaker 3: in the straits of hor moves, which just highlights the
6:49
Speaker 3: absolute insanity of all of this.
6:51
Speaker 1: So this is a you know, kind of a little
6:53
Speaker 1: news briefing that we've been able to do. But we
6:54
Speaker 1: do have treats. Parsi standing by.
6:56
Speaker 2: Yeah, and one last piece before I do bring in
6:58
Speaker 2: treat so we can put a one B up on
7:00
Speaker 2: the screen. Just the Iranian response here, they're saying they
7:04
Speaker 2: reject any attempt they told Jeremy skaheld us to alter
7:07
Speaker 2: quote current conditions in these straight and form moves, will
7:11
Speaker 2: respond forcefully to President Trump's so called Project Freedom. And
7:15
Speaker 2: they go on to say any commercial vessel attempting to
7:17
Speaker 2: transit to designated restrictive routes without prior coordination will be
7:21
Speaker 2: promptly intercepted by Iranian forces. Sounds like this morning they
7:25
Speaker 2: may be making good on that if the information coming
7:28
Speaker 2: from the UAE is in fact correct. So with all
7:31
Speaker 2: of that being said, to analyze where we are, we're
7:34
Speaker 2: going to go ahead and bring in treat to Parsi
7:36
Speaker 2: of the Quincy Institute.
7:37
Speaker 4: Yes, doctor Parsi, great to see you.
7:42
Speaker 5: Good to see you, sir, Good to see you guys.
7:44
Speaker 2: So I just lay down a whole bunch of things.
7:46
Speaker 2: We've got these competing claims this morning, when the UAE
7:48
Speaker 2: is saying that one of their tankers was struck, we
7:51
Speaker 2: have the US saying they're changing the rules of engagement. This,
7:54
Speaker 2: of course, all comes on the heels of Trump posting
7:57
Speaker 2: that we're going to guide ships from the straight of
7:59
Speaker 2: horm moves. It turns out that just means like give
8:01
Speaker 2: them a map. What do you make of all of
8:04
Speaker 2: these fast breaking developments.
8:06
Speaker 5: Let me first start off by saying that, according to
8:09
Speaker 5: the Foundation for Defense of Democracies, the Iranian economy should
8:13
Speaker 5: have collapsed about ten days ago thanks to the blockade
8:16
Speaker 5: that Trump and post we're now ten days past that deadline,
8:20
Speaker 5: and instead we're seeing this. That tells you quite a
8:23
Speaker 5: lot about what this blockade really was, what another illusionary
8:27
Speaker 5: silver bullet that Trump, in his desperation, accepted it frankly
8:31
Speaker 5: worse in his own situation. And now we're in a
8:34
Speaker 5: situation in which he is saying that he's going to
8:36
Speaker 5: be guiding, and as you guys pointed out in your opening,
8:39
Speaker 5: completely unclear exactly what that means. But what I think
8:41
Speaker 5: we can say is this. Throughout the war, the US
8:46
Speaker 5: Navy kept itself about three thousand kilometers away from the
8:49
Speaker 5: Iranian shorelines, precisely because of the concern that the Iranians
8:54
Speaker 5: would have missiles they could strike these ships and potentially
8:58
Speaker 5: even sink a major America can worship, and in order
9:02
Speaker 5: to avoid any American casualties, the Navy kept itself at
9:05
Speaker 5: that length. That also complicated the flight sorties in the
9:09
Speaker 5: sense that a lot of refueling was needed to be
9:11
Speaker 5: done mid air because of the fact that the aircraft
9:15
Speaker 5: carriers were so far away from Urania shorelines. Now Trump
9:19
Speaker 5: apparently is telling us that he doesn't care but American
9:22
Speaker 5: casualties because he's now suddenly going to reopen the strait
9:25
Speaker 5: of hormones. And then immediately afterwards he starts backing down.
9:29
Speaker 5: I think what we're seeing here is the desperation that
9:32
Speaker 5: yet another silver bullet did not prove to be a
9:36
Speaker 5: silver bullet. It was just another regular bullets sold by
9:39
Speaker 5: these Raelis and their allies in Washington that have just
9:43
Speaker 5: deepened the crisis for Trump, and he is increasingly desperate.
9:46
Speaker 5: There is a diplomatic way out, but it will not
9:50
Speaker 5: work unless Trump drops his maximalist Israeli positions in these negotiations.
9:55
Speaker 3: Let's go to A four doctor Parci to get your react.
9:58
Speaker 3: This was the initial truth social posts over the weekend.
10:02
Speaker 3: Trump says, I will be soon reviewing the plan Iran
10:05
Speaker 3: has just sent to us, but we can't imagine it
10:07
Speaker 3: would be acceptable in that they have not yet paid
10:10
Speaker 3: a big enough price for what they have done to
10:12
Speaker 3: humanity in the world over the last forty seven years.
10:15
Speaker 3: The details of the plan that we know of A
10:18
Speaker 3: five please, and this is what, in particular, what we
10:20
Speaker 3: want your reaction to. This is the Iranian demand withdrawal
10:24
Speaker 3: of US forces from Iran's surroundings, lifting the naval blockade,
10:27
Speaker 3: lifting sanctions, release of Iran's frozen assets, paying compensation, ending
10:31
Speaker 3: the war on all fronts. However, there was some reporting
10:35
Speaker 3: as well that they had actually agreed to some sort
10:37
Speaker 3: of a fifteen year enrichment enrichment delay.
10:42
Speaker 1: So your reaction here to their combination.
10:45
Speaker 3: Of demands and willing to move on nuclear enrichment, which, ultimately,
10:49
Speaker 3: like you said, if this is to end, it will
10:52
Speaker 3: end this way. What do you make of Iran's positions here?
10:55
Speaker 3: Are they loosening up a bit, are they showing some
10:58
Speaker 3: signs of openness, or are we still in a total scalemate.
11:02
Speaker 5: So almost all of the different variations of the proposal
11:05
Speaker 5: that has been circulating in the media have been denied
11:08
Speaker 5: one way or another by the Iranians. Some of it
11:11
Speaker 5: I do think are true. Some of it probably is not.
11:14
Speaker 5: The fifteen year moratorium as it was phrased in the
11:19
Speaker 5: Al Jazeera read out of it, I found very unlikely.
11:23
Speaker 5: In Geneva, what the Iranians had agreed to throw the
11:27
Speaker 5: omanis was that there would be enrichment only on a
11:31
Speaker 5: needs basis, meaning that if there was a need for
11:34
Speaker 5: fuel paths for a reactor, that's when they would enrich.
11:37
Speaker 5: They would only enrich for two specific reactors, the TRR
11:42
Speaker 5: in Tehran and a new reactor that doesn't even go
11:45
Speaker 5: online for another seven years. The TRR already has fuel
11:48
Speaker 5: pads for five to seven years, which would in essence
11:52
Speaker 5: mean the Iranians would not be enriching any uranium for
11:55
Speaker 5: the next five to seven years, which would be the
11:58
Speaker 5: duration of the Trump administry some more. And that was
12:02
Speaker 5: the phase saving exit for Trump. He would be able
12:04
Speaker 5: to say that there will be zero and Richmond during
12:06
Speaker 5: his presidency because of this formula. Now, could that formula
12:10
Speaker 5: be extended to fifteen years? There's pathways to that. You
12:14
Speaker 5: could either have Russia France provide these fuel pads upfront
12:19
Speaker 5: and have a guaranteed supply for the Varnians for the
12:21
Speaker 5: next fifteen years, and as a result, the formula would
12:24
Speaker 5: still stand. It would just extend to fifteen years. You
12:26
Speaker 5: could take the sixty percent enrich uranium and down blend
12:29
Speaker 5: it to nineteen point seventy five percent and turn that
12:33
Speaker 5: into fuel pads. So there are pathways in which you
12:36
Speaker 5: can actually extend the timeline to fifteen years. But whether
12:40
Speaker 5: they have agreed to that or not it's unclear. But
12:42
Speaker 5: more than anything else, it will not be called the
12:44
Speaker 5: moratorium because it will essentially be something that is on
12:47
Speaker 5: that needs basis. But nevertheless, The bigger point that I
12:50
Speaker 5: think is coming through, despite which variation of the deal
12:54
Speaker 5: you're looking at, is that the Varnians are no longer
12:56
Speaker 5: longer looking for a ceasefire or even an end to
12:58
Speaker 5: this conflict, actually putting forward a grand bargain, something that
13:03
Speaker 5: ends forty seven years of US yvon enmity, that encompasses
13:07
Speaker 5: the entire region. It includes Israel, it includes America's proxy
13:11
Speaker 5: Israel as well as Iran's proxies, if you want to
13:14
Speaker 5: use that language. None of them can engage in any
13:17
Speaker 5: more warfare. That means and then to attacks in Gaza,
13:20
Speaker 5: and then to attacks in Lebanon. But and in return
13:24
Speaker 5: they're offering some of these nuclear things, but they will
13:27
Speaker 5: also ask for a tremendous amount of sanctions relief. Now
13:30
Speaker 5: a lot of this, of course, the Iranians know, are
13:34
Speaker 5: negotiating bits that will not be accepted by the US.
13:37
Speaker 5: I cannot see any scenario in which the United States
13:39
Speaker 5: will agree to pay reparations to Yran, or that it
13:43
Speaker 5: even will leave the region militarily as a request of
13:46
Speaker 5: an Iranian demand. I think it should leave the region
13:49
Speaker 5: because of US interests, but that's different from doing so
13:53
Speaker 5: because the Iranians are requesting in it. What worries me
13:56
Speaker 5: more than anything else is that when you at least
13:58
Speaker 5: take a look at these public versions of these negotiations,
14:02
Speaker 5: there doesn't seem to have been much movement. And as
14:05
Speaker 5: long as there's not much movement, that's when we see,
14:09
Speaker 5: you know, the higher likelihood of some sort of a confrontation.
14:11
Speaker 5: Trump getting frustrated and starting to talk about, you know,
14:16
Speaker 5: the kind of things that he wants to do in
14:18
Speaker 5: the strait of horror moves, et cetera, and the risk
14:20
Speaker 5: for military confrontation renewing significantly goes up, and time is
14:23
Speaker 5: running out. At the end of the day. This current
14:26
Speaker 5: situation cannot last forever. We just found out yesterday Kuwait
14:30
Speaker 5: has not explorted a single barrel of oil for thirty
14:34
Speaker 5: days now, has not happened in thirty years. Asian countries
14:38
Speaker 5: are suffering tremendously. This is something that we're paying very
14:41
Speaker 5: little attention to in the United States, and other countries
14:44
Speaker 5: are paying a much much higher economic cost than the US's.
14:49
Speaker 2: Doctor Parcy, I'm curious for your view on what do
14:52
Speaker 2: you think Trump was up to with this tweet about
14:55
Speaker 2: We're going to guide the ships to the straight uforma.
14:57
Speaker 2: Is this just market manipulation? Do you think he's trying
15:00
Speaker 2: to provoke a confrontation? That was something that Professor Robert
15:03
Speaker 2: Pape had floated, that they could be trying to set
15:05
Speaker 2: up some sort of Gulf of Tonkin situation because they
15:08
Speaker 2: want to go back to the war, but they want
15:10
Speaker 2: the Iranians to be perceived as the aggressor. When I
15:14
Speaker 2: was discussing this in our group chat Ryan said, well,
15:17
Speaker 2: when if we ever needed an excuse to go back
15:18
Speaker 2: to war, seems like they just restart the war if
15:20
Speaker 2: they wanted to. In any case, what do you think
15:23
Speaker 2: is the gambit here from Trump?
15:25
Speaker 5: To me, this reminds me very much of what happened
15:28
Speaker 5: when he started saying that he's going to attack the
15:31
Speaker 5: oil facilities at Harg Island, and it was all of
15:34
Speaker 5: this buzz about how dangerous that would be for the Vannius,
15:37
Speaker 5: what a significant setback that would be for their oil industry,
15:40
Speaker 5: all of that true, and then what did he end
15:43
Speaker 5: up doing. He struck the island, but he made sure
15:46
Speaker 5: that none of the missiles got anywhere near the old facilities. Instead,
15:51
Speaker 5: he struck some military facilities on that island. So what
15:55
Speaker 5: happened in that situation was that it became very clear
15:59
Speaker 5: to Trump he doesn't have these escalatory options at his
16:02
Speaker 5: disposal because the Vanyas have escalation dominance. If he had
16:06
Speaker 5: struck those old facilities, the Vanyas would have struck all
16:10
Speaker 5: of the oil facilities in the GCC countries, including the
16:13
Speaker 5: ones that can be used to sidestep the strait of hormones,
16:17
Speaker 5: and that would dramatically increase oil prices, not just immediately
16:21
Speaker 5: but in the long run, because it would take years
16:23
Speaker 5: to rebuild those that infrastructure for all. And as a result,
16:28
Speaker 5: he backed off. Seems to me that again he issued
16:32
Speaker 5: some threat or he had some plan in which he
16:34
Speaker 5: wanted to go all out, and then once it came
16:36
Speaker 5: to the implementation, he backs down. Once it comes to
16:39
Speaker 5: what happens after that tweet, he backs down even further.
16:43
Speaker 5: It's a sign of his desperation because, as I said
16:45
Speaker 5: earlier on once again another one of his silver bullets,
16:49
Speaker 5: this blockade ended up backfiring on him, rather than being
16:53
Speaker 5: this type of a quick fix that would have turned
16:56
Speaker 5: the tables and forced the Varnians to capitulate. Right.
16:59
Speaker 3: You made it earlier point about FDD and I do
17:03
Speaker 3: feel like it's important to say, can we put a
17:05
Speaker 3: eight up there on the screen. The Trump administration is
17:09
Speaker 3: now openly using FDD graphics about enriched uranium stockpiles and look,
17:16
Speaker 3: you know, to not get too inside baseball, but FDD
17:18
Speaker 3: is probably the most pro war think tank here in Washington.
17:22
Speaker 3: I would say, I don't even think they would necessarily
17:24
Speaker 3: disagree with me on that. In addition to being very allied,
17:28
Speaker 3: I guess you could say with the Israeli government's interests.
17:32
Speaker 3: So it is pretty clear here, especially also with the
17:36
Speaker 3: more recent news that Steve Whitcoff has just had somebody
17:40
Speaker 3: join him who previously also worked at FDDE where look,
17:44
Speaker 3: personnel is policy in many ways, and the people who
17:47
Speaker 3: are being empowered in this current moment all seem to
17:50
Speaker 3: be of the much more hawkish variety.
17:53
Speaker 5: Absolutely, and I think, first of all, I think you
17:56
Speaker 5: made FDD's day by calling them the most pro war
17:59
Speaker 5: think tank in Washington, DC. That is a compliment in
18:01
Speaker 5: their wife.
18:02
Speaker 1: Yeah, I don't think they were, and.
18:06
Speaker 5: It is absolutely correct. And one of the things that
18:08
Speaker 5: is quite fascinating is that in the beginning of Trump
18:11
Speaker 5: two's administration, we did not have anyone from FDD in
18:16
Speaker 5: the administration. It was a sign that some of the
18:19
Speaker 5: efforts to keep the neo cons out of the administration
18:21
Speaker 5: had been successful. There had been some, of course, but
18:24
Speaker 5: not any fd staffers, because during Trump I there were
18:28
Speaker 5: FDD staffers that were in the White House in the
18:30
Speaker 5: NST while still being on FDD's payroll. Whether that was
18:35
Speaker 5: ethical or even legal is unclear to me, but nevertheless,
18:38
Speaker 5: it's a rather unusual situation that you have someone working
18:41
Speaker 5: at the at the NSC and still being on the
18:43
Speaker 5: payroll of its previous advocacy organization. So the fact that
18:49
Speaker 5: Trump is increasingly going in this direction is also a
18:52
Speaker 5: reason as to why he's stuck. Because the entire objective
18:56
Speaker 5: of these Rabias and its pro Israel allies in Washington
19:00
Speaker 5: has not to be to resolve the situation. It is
19:03
Speaker 5: to make sure that this war gets prolonged and that
19:05
Speaker 5: at a minimum, the US never lifts any sanctions, never
19:08
Speaker 5: lifts any of the pressure on YVON, regardless of what
19:11
Speaker 5: that pressure costs the US or the global economy.
19:15
Speaker 2: Let's talk a little bit more about what that pressure
19:18
Speaker 2: is costing the US and new realities that have been established.
19:22
Speaker 2: You've just had a fantastic piece. This is a two
19:24
Speaker 2: guys that we can put up on the screen. Your
19:26
Speaker 2: headline here is Trump's war has destroyed the illusion of
19:30
Speaker 2: US military supremacy for countries that depend on US military protection.
19:35
Speaker 4: This should be a wake up call.
19:38
Speaker 2: And while we're very much in a you know, it's
19:40
Speaker 2: hard to see exactly how this conflict is going to
19:42
Speaker 2: end and what the terms of the deal are going
19:44
Speaker 2: to be, et cetera. You're pointing to some realities that
19:48
Speaker 2: have been established here, some sort of gens that are
19:50
Speaker 2: out of the bottle that are not going to be
19:52
Speaker 2: put back in in terms of the perception of the
19:54
Speaker 2: US military and its ability to ascertains dominance wherever and
19:58
Speaker 2: whatever it wants to down a little bit of the
20:01
Speaker 2: thesis of your piece and what the implications are.
20:04
Speaker 5: Yeah, what I'm write is I think that this war
20:06
Speaker 5: and the manner in which it has evolved, and in
20:09
Speaker 5: many ways at this point it is a strategic defeat
20:11
Speaker 5: for the United States, is a wake up call in
20:15
Speaker 5: terms of whether the US's grand strategy of liberal hegemony
20:19
Speaker 5: and primacy on a global scale any longer is actually feasible.
20:23
Speaker 5: Because much of the conversation so far has been that
20:26
Speaker 5: the US's domination in the region is going to come
20:28
Speaker 5: to an end, that many of the GCC countries are
20:31
Speaker 5: no longer going to rely on an America's secure umbrella
20:34
Speaker 5: that really proved to be not only unreliable but ineffective
20:37
Speaker 5: in this war. But I think he actually goes beyond that.
20:40
Speaker 5: First of all, if we compare the depth of this
20:43
Speaker 5: disaster to that of the Iraq War, I think this
20:46
Speaker 5: one goes further because at least in the Iraq War,
20:49
Speaker 5: the United States won the war in three weeks, that
20:53
Speaker 5: US's military dominance was never in question. Moreover, the United
20:57
Speaker 5: States also achieved its political objective getting rid of Saddam Hussein.
21:02
Speaker 5: That too has not been achieved in the Iran case.
21:04
Speaker 5: The Iranian regime is still there in many ways, it
21:06
Speaker 5: seems to be much stronger than what it was before.
21:09
Speaker 5: And on top of that, the Ivanians have at a
21:11
Speaker 5: minimum deny the US the victory and at a maximum
21:14
Speaker 5: score strategic victory against the United States. So this goes
21:18
Speaker 5: much beyond the type of the debacle that Iraq was.
21:21
Speaker 5: But moreover, the global consequences are far beyond that as well.
21:25
Speaker 5: You never saw the Iraq War cause famine or fuel
21:28
Speaker 5: shortages or gas prices going up in an uncontrollable way,
21:33
Speaker 5: in the manner that this war has now already caused
21:37
Speaker 5: on a global scale, and the US is, as we
21:40
Speaker 5: have discussed, already now incapable of even coming up with
21:44
Speaker 5: some ideas of how to be able to fix this
21:46
Speaker 5: using its coercive power. So the utility of American coursive
21:50
Speaker 5: power has really been denied here. It's a combination of
21:53
Speaker 5: the Iranians using new technology drones, missiles, as well as
21:57
Speaker 5: geography of course, but even if you don't have something
22:01
Speaker 5: as strategically viable as the Strait of Warmuz or vital
22:06
Speaker 5: as Strait of Ormus, you can still use the terrain
22:09
Speaker 5: as a way of denying victory for a much stronger
22:11
Speaker 5: military power. That's what the Ukrainians have done. So I
22:14
Speaker 5: think going forward, this is going to really raise questions
22:16
Speaker 5: as to whether the United States can pursue global primacy
22:19
Speaker 5: any longer, because that was based on the idea that
22:21
Speaker 5: the United States can fight two major wars on two
22:24
Speaker 5: continents at the same time. We've not been able to
22:27
Speaker 5: fight this war on one continent successfully, and this is
22:31
Speaker 5: I think going to be end up becoming an inflection point,
22:35
Speaker 5: one in which we are going to move much faster
22:38
Speaker 5: towards multipolarity than we were already on that trajectory. This
22:43
Speaker 5: sped it up even further. And one sign of it
22:46
Speaker 5: is something I think you all just mentioned earlier on
22:48
Speaker 5: in the show, which is the Chinese now coming out
22:51
Speaker 5: and saying they're no longer going to be respecting US sanctions,
22:55
Speaker 5: and that if the United States actually goes after any
22:58
Speaker 5: Chinese ships that have been carrying Ivanian oil or any
23:02
Speaker 5: oil from the Persian Gulf, the Chinese are not going
23:04
Speaker 5: to accept that. Whereas reality is, up until now, the
23:07
Speaker 5: Chinese more or less have they have been abiding by
23:10
Speaker 5: US sanctions, and now ten days or so before Trump
23:13
Speaker 5: is supposed to show up in Beijing, the Chinese change
23:16
Speaker 5: the rules of the game. It's a direct consequence of
23:18
Speaker 5: how badly this war has gone. And I think that's
23:21
Speaker 5: just the beginning of the global repercussions we're going to see.
23:27
Speaker 3: Let's turn out to the Gulf countries and also to
23:30
Speaker 3: the basis of ours which were hit. We have a
23:33
Speaker 3: CNN report here which details much of this. A ten
23:36
Speaker 3: let's take a listen.
23:37
Speaker 6: To get a sense of just how vulnerable US facilities
23:40
Speaker 6: have become. Have a look at this. It's the war
23:43
Speaker 6: room at Hutter's Lded Air Base, the theater command and
23:47
Speaker 6: control hub for US air power across twenty one nations,
23:51
Speaker 6: struck not just once, but twice, and, according to a
23:55
Speaker 6: US source, causing significant damage. The base had been largely evacuated.
23:59
Speaker 6: At this point. No casualties were reported. Iran's visibility over
24:03
Speaker 6: its targets has never been clearer. In twenty twenty four,
24:06
Speaker 6: according to the Financial Times, Tehran's secretly acquired a Chinese
24:10
Speaker 6: satellite known as the TEEO one B, a massive upgrade
24:15
Speaker 6: from its own satellites. That means that Tehran went from
24:18
Speaker 6: looking at images of this quality to this. This is
24:21
Speaker 6: the first time America has fought an adversary with satellites
24:24
Speaker 6: that capture high res imagery almost as detailed as its own.
24:30
Speaker 6: As the scale of the damage comes into focus, many
24:32
Speaker 6: will wonder whether America's presence, once a protective shield in
24:36
Speaker 6: the Middle East, has turned into its Achilles heel.
24:40
Speaker 3: This really highlights your points, sir, which is not only
24:43
Speaker 3: about the diminishing of US military might and the ability
24:47
Speaker 3: even to project power, but to have these rock Star
24:50
Speaker 3: installations which have taken immense damage, and only a thirty
24:54
Speaker 3: eight day period, as you said, would be equivalent of
24:58
Speaker 3: not defeating Saddam in whatever thirty days that it took
25:01
Speaker 3: in the opening days of the Iraq War. It just
25:04
Speaker 3: seems as this continues to be even more of a
25:07
Speaker 3: grand strategic defeat for the United.
25:09
Speaker 5: States, certainly, and I think it raises another element here
25:13
Speaker 5: which was hinted at it the CNN report, which is
25:16
Speaker 5: quite extraordinary, but it also tells us of how much
25:19
Speaker 5: misinformation we have gotten from the US government during the
25:22
Speaker 5: war in which all of these things were being denied,
25:25
Speaker 5: and massive exaggerations of how much the audience suffered military setbacks.
25:30
Speaker 5: It is the fact that now we're going to be
25:32
Speaker 5: in a scenario in which many of these countries who
25:35
Speaker 5: have benefited from the US security umbrella, who have wanted
25:38
Speaker 5: the security umbrella, who have lobbied for it, and who
25:42
Speaker 5: have lobbied against restrainers in Washington for more than a decade,
25:46
Speaker 5: restrainers who wanted to see a different approach to security,
25:48
Speaker 5: who wanted to see the withdrawal of enclosure of many
25:51
Speaker 5: of these different bases, or at least handling over the
25:54
Speaker 5: responsibility of security to these different states that was always
25:59
Speaker 5: being pushed back is not only by the military industrial complex,
26:02
Speaker 5: but also by many of these allies who very much
26:05
Speaker 5: benefited from free riding on American security. Now they have
26:08
Speaker 5: seen that that security was a bit of an illusion,
26:11
Speaker 5: and many of them are going to be asked to
26:13
Speaker 5: pay for the rebuilding of these bases, and I'm not
26:15
Speaker 5: so sure that they will. I wouldn't be surprised if
26:17
Speaker 5: many of these bases, not all, will actually essentially be
26:20
Speaker 5: phased out. And that then means that the push against
26:24
Speaker 5: this grand strategy of liberal hegemony and this total military
26:27
Speaker 5: dominance of the world is not just going to come
26:30
Speaker 5: from the American public, but also slowly from some of
26:33
Speaker 5: these very same allies who once benefited from it, who
26:36
Speaker 5: once lobbied for it. They're going to turn against it
26:38
Speaker 5: as well because it proved to be unreliable and ineffective.
26:42
Speaker 2: There also appears to be a growing split among some
26:46
Speaker 2: of these nations. We can put a twelve up on
26:48
Speaker 2: the screen. This is from Axios, but I know you've
26:50
Speaker 2: been discussing this as well.
26:52
Speaker 4: The year that shook the Gulf.
26:53
Speaker 2: The UAE is leaving Opek Saudi Arabia's ending at Splash
26:57
Speaker 2: is foreign sports venture. The two US allies are in
26:59
Speaker 2: the midst of a messy divorce even as both face
27:02
Speaker 2: fire from Iran. So can you talk also about you know,
27:06
Speaker 2: I think I run analysis that Saudi Arabia so far
27:09
Speaker 2: actually economically had benefited from the war because they're benefiting
27:13
Speaker 2: from the premium price that they're able to sell oil from. UA,
27:16
Speaker 2: on the other hand, has been very economically damaged by
27:20
Speaker 2: the war, and certainly their brand as playground for a
27:22
Speaker 2: global elite has been very much damaged. So can you
27:25
Speaker 2: talk about those dynamics.
27:27
Speaker 5: I think the GCC as a political entity is, if
27:31
Speaker 5: not dead, about to essentially go towards its death. It
27:35
Speaker 5: is a security organization that was set up in the
27:40
Speaker 5: early nineteen eighties in response to a specific geopolitical situation
27:44
Speaker 5: at the time, which was a the smaller six GCC states,
27:48
Speaker 5: although Saudi Arabia is not small, felt a greater threat
27:51
Speaker 5: from Iraq and from Iran at the time. So notably
27:54
Speaker 5: yvon and Iraq A not part of this organization. But
27:59
Speaker 5: that's again was based on a common security imperative and
28:04
Speaker 5: a common security threat perception at the time. That is
28:07
Speaker 5: no longer the case. It's not that Yvan is not
28:09
Speaker 5: seen as a threat, but the approach of how to
28:12
Speaker 5: deal with Ivan is grammatically different. And UAE has turned
28:16
Speaker 5: into a complete Israeli ally and many of these states
28:20
Speaker 5: in the GCC view Israel as a greater threat than Iran,
28:23
Speaker 5: and on top of that, also believed that the UAE's
28:26
Speaker 5: alliance with Israel have actually undermined the broader security of
28:31
Speaker 5: the Persian Gulf as a whole. So we're seeing these splits,
28:34
Speaker 5: and on top of that, there's egos, there's an economic competition,
28:37
Speaker 5: there's competition in the Horn of Africa. There's a lot
28:40
Speaker 5: of different things that have been tiering these different countries
28:43
Speaker 5: in a different direction, and the Iran War has now
28:46
Speaker 5: really put that to the fore. We have seen that
28:48
Speaker 5: Ivanians struck at the UA much much harder than they
28:52
Speaker 5: did against any of the other countries. And they also
28:55
Speaker 5: actually spared Saudi Arabia tremendously in that war, which clearly
28:59
Speaker 5: was an indication of Ivanias wanted to keep the pathway
29:02
Speaker 5: open for some sort of a more positive relationship with
29:06
Speaker 5: Saudi Arabia after the war. So whereas when it comes
29:11
Speaker 5: to the UAE, they struck them much harder, largely as
29:14
Speaker 5: a punishment for the UAE being so close to Israel.
29:16
Speaker 5: And if Trump restarts the war, incidentally, I think one
29:20
Speaker 5: of the things we will see is not only that
29:22
Speaker 5: there will be again this horizontal escalation by the Ivanias,
29:26
Speaker 5: but I suspect that there will be even more of
29:28
Speaker 5: a laser focus on the UAE, because now the Iranians
29:32
Speaker 5: are going to try to drive an even deeper wedge
29:34
Speaker 5: between the ue and some of the other GCC countries.
29:37
Speaker 1: It makes sense.
29:38
Speaker 3: It actually fits with the news this morning the ADNAC
29:40
Speaker 3: carrier that was struck, the Abu Dhabi National Oil Corporation
29:44
Speaker 3: tanker which was struck by the Iranians this morning.
29:46
Speaker 1: That's been confirmed by the government.
29:48
Speaker 3: Of the UAE, and the ua has been the most
29:50
Speaker 3: belligerent in the United Nations and other places in calling
29:54
Speaker 3: for direct military escalation against Iran. Now that's actually kind
29:58
Speaker 3: of my last question here is when we see this
30:01
Speaker 3: fracture within the Middle East and there's alliances in these
30:04
Speaker 3: countries between Oman, the UAE, and Saudi Arabia, what do
30:07
Speaker 3: you expect, you know, the ability for US basis to
30:11
Speaker 3: even be present in the country even to be after
30:14
Speaker 3: this conflict is settled.
30:16
Speaker 1: Let's say we don't voluntarily do it.
30:17
Speaker 3: But what if those countries themselves say, hey, we don't
30:20
Speaker 3: want the use basis in our countries anymore.
30:22
Speaker 5: I think most of the countries will diversify their security basket.
30:26
Speaker 5: They will continue to buy a lot of American weapons.
30:29
Speaker 5: In fact, they may increase their purchases of American weapons,
30:33
Speaker 5: but I think they will start phasing out the basis.
30:35
Speaker 5: Not all of them. They may be keeping one or two.
30:38
Speaker 5: But this type of a system in which I think
30:40
Speaker 5: right now there's about nineteen bases permanent basis in the region,
30:44
Speaker 5: I think is going to be something that we're not
30:46
Speaker 5: going to see five to ten years from now. And again,
30:48
Speaker 5: it's also going to come down to costs. The United
30:50
Speaker 5: States is not going to pay for the rebuilding of
30:52
Speaker 5: these bases. It's going to ask these states to do so.
30:55
Speaker 5: And many of them are going to say, well, we
30:56
Speaker 5: would rather use the money to buy weapons from the
30:59
Speaker 5: United States or weapons from other countries and diversify our basket. Now,
31:03
Speaker 5: the UA may be the exception. The UA may actually
31:06
Speaker 5: triple down not just on the United States, but on Israel.
31:11
Speaker 5: As well and become an even closer aully of the
31:14
Speaker 5: United States and Israel militarily.
31:16
Speaker 1: Doctor Parsi, thank you so much for joining us, Sir.
31:17
Speaker 1: We deeply appreciate your time.
31:19
Speaker 5: Thank you so much for having you appreciate it.
31:23
Speaker 3: Let's turn out to Spirit Airlines in terms of the impact.
31:26
Speaker 3: So a lot of different claims going around are out
31:28
Speaker 3: there about why Spirit Airlines not only went bankrupt but
31:31
Speaker 3: went literally ceasing operations overnight, leading to some passengers having
31:36
Speaker 3: to be rebooked. Emotional, you know, under goodbye announcements from
31:40
Speaker 3: pilots in the middle of the area. You almost never
31:42
Speaker 3: see this in the United States. Usually airlines are going
31:45
Speaker 3: to bankruptcy, that's not even all that uncommon. But to
31:47
Speaker 3: find a potential buyer, you know, they were potentially going
31:49
Speaker 3: to get a bailout from the government. None of that
31:51
Speaker 3: ended up happening, and they just genuinely went bust overnight,
31:55
Speaker 3: with yes, some signs in the immediate future, but not
31:58
Speaker 3: really many people expected this. Trump administration obviously reacting to
32:02
Speaker 3: this over the weekend, here was Secretary Scott Beston saying, actually,
32:07
Speaker 3: it's Biden's vault.
32:08
Speaker 1: Let's take a listen.
32:09
Speaker 6: The Treasury was supposed to be doing a deal to
32:12
Speaker 6: save this company.
32:13
Speaker 4: Can you tell us what happened?
32:15
Speaker 7: Sure, Maria. So this is just more of the mess
32:18
Speaker 7: we inherited from the Biden administration. In twenty September twenty
32:23
Speaker 7: twenty two, Elizabeth Warren, who loves to write letters, sent
32:27
Speaker 7: a letter to the Justice Department, to the Labor, to
32:30
Speaker 7: the Transport Department saying that they should oppose the merger
32:34
Speaker 7: with Spirit Airlines. Jet Blue wanted to buy them for
32:38
Speaker 7: three point eight billion dollars. It would have given them
32:41
Speaker 7: much more resiliency. And she and the Transportation Secretary Pete
32:47
Speaker 7: budha Jedge is probably the worst Transportation secretary in history
32:50
Speaker 7: when he came to the office. Also, they were against
32:54
Speaker 7: the merger. And if Jet Blue had merged with Spirit,
32:58
Speaker 7: we would have all these jobs that were lost. Yesterday
33:02
Speaker 7: we had thirty airport, thirty regional airports who have all service.
33:06
Speaker 7: And I can tell you what happened here. It wasn't Treasury,
33:09
Speaker 7: it was Commerce that was trying to put something together.
33:12
Speaker 7: But the reason we were here was because the merger.
33:17
Speaker 7: The Biden administration opposed the merger. We shouldn't have been
33:20
Speaker 7: here in the first place.
33:21
Speaker 3: So a lot of this is going around in terms
33:24
Speaker 3: of the blame. And I'm actually going to go and
33:26
Speaker 3: jump to the last element. Guys here in the block
33:28
Speaker 3: B seven from our friend Matt Stoller, who wrote this piece,
33:31
Speaker 3: who killed Spirit Airlines? He says it wasn't Biden's anti
33:34
Speaker 3: trust enforcers. There were many factors. Trump's Iran War jet
33:38
Speaker 3: blew the Big four airlines and behind all of that deregulation,
33:42
Speaker 3: this story has happened hundreds of times. I actually think
33:45
Speaker 3: what he points out, and obviously this is mostly about
33:47
Speaker 3: the Iran War.
33:48
Speaker 1: I think that's it more than anything. But just to
33:50
Speaker 1: address this.
33:51
Speaker 4: That's for me the final trigger that right, the.
33:53
Speaker 3: Iran War is what actually put the bullet in their head.
33:56
Speaker 3: But obviously they were dying bleeding out for many years.
33:58
Speaker 3: What happened they had to propose merger with Jet Blue,
34:01
Speaker 3: and on paper, you're like, okay, well that seems better.
34:04
Speaker 1: What I wouldn't really aware.
34:05
Speaker 3: Though from that until I really into it was Jet
34:08
Speaker 3: Blue's plan was to hike fares and to cancel like
34:11
Speaker 3: forty percent or something of their route, so not really
34:14
Speaker 3: good for the consumer. Now, maybe it'd be better off
34:17
Speaker 3: if they had merged and you know it was still
34:20
Speaker 3: moderately there. But however, what I seem to have read
34:23
Speaker 3: now is that many of the airlines were actually lobbying
34:27
Speaker 3: the Biden or the Trump administration not to bail out
34:30
Speaker 3: Spirit Airlines. Why because Spirit at the end of the day, listen,
34:34
Speaker 3: I do. I hate Spirit Airlines and I wouldn't fly it,
34:36
Speaker 3: but I fly more than once a year. The vast
34:38
Speaker 3: majority of their customers are one to three times a
34:40
Speaker 3: year flyers who are looking for a cheap discount fare
34:44
Speaker 3: to go place from A to B. And they don't
34:46
Speaker 3: care if they have to pay five if they're not
34:48
Speaker 3: going to get a soda from Washington to Denver for
34:50
Speaker 3: four and a half hour flight, right, that's not prior
34:53
Speaker 3: to pick. They're like, I don't give a shit. Just
34:55
Speaker 3: give me to get me from point A to point
34:57
Speaker 3: B so I can go see my cousin or can
34:59
Speaker 3: go on vacation.
35:00
Speaker 1: It's fine.
35:00
Speaker 3: I think that's a very valuable place in the market.
35:02
Speaker 3: So what they happened to do is that Spirits competitive
35:06
Speaker 3: fares actually dragged down basic economy fares for all of
35:10
Speaker 3: the big three carriers. So the big three carriers were
35:12
Speaker 3: desperate actually for the government not to bail out Spirit
35:15
Speaker 3: so they could go bust. This is another reason why
35:18
Speaker 3: Jet Blue really wanted to acquire Spirit and hike the
35:21
Speaker 3: rates was because they're competing against each other. So this
35:25
Speaker 3: is actually a good example of multifi factorial policy. Number
35:28
Speaker 3: one is that we had a policy where we had
35:31
Speaker 3: a discount airline which we potentially would have bailed out.
35:34
Speaker 1: I think we should have bailed about.
35:35
Speaker 3: Look, I know many people are going to be upset
35:37
Speaker 3: about that, but I think cheaper airfare is a vital
35:41
Speaker 3: and important thing to a functioning first world nation.
35:44
Speaker 1: I just really do.
35:45
Speaker 3: That's why they have Ryan Air and all those cheap,
35:47
Speaker 3: cheap options in Europe, and honestly, it's really nice for
35:51
Speaker 3: a lot of the people who live there. You can
35:52
Speaker 3: jet you know, literally across the continent.
35:54
Speaker 1: Here. We've never had that where a huge country.
35:56
Speaker 3: I accept that, but a couple hundred dollars as opposed
35:58
Speaker 3: to six seven hundred dollars is really really important too,
36:01
Speaker 3: especially middle class people and or families you know, trying
36:04
Speaker 3: to get somewhere. So you have this general policy where
36:07
Speaker 3: we potentially would have done a bailout, we ultimately didn't
36:10
Speaker 3: do it.
36:11
Speaker 1: For a variety of reasons.
36:12
Speaker 3: I mostly think because the big three airlines said, hey,
36:14
Speaker 3: please don't do it, and then the Iran War doubled
36:17
Speaker 3: their jet fuel cost overnight and basically just put two bullets.
36:20
Speaker 1: In their head. Yeah, and they just had to die.
36:23
Speaker 1: It's honestly a tragic story. Yeah, it's a.
36:25
Speaker 3: Direct consequence of Iran, but of a lot of other
36:26
Speaker 3: government policy over the years.
36:28
Speaker 4: Yeah.
36:28
Speaker 2: And to your point, so the big airlines really despise
36:34
Speaker 2: them and have been trying to do everything they can
36:36
Speaker 2: to destroy them. And Matt has some reporting that's not
36:39
Speaker 2: totally confirmed, but that he hadn't from an insider about
36:43
Speaker 2: the way they would do that and so effectively. He said,
36:47
Speaker 2: consumers of low fare airlines tend to book a few
36:49
Speaker 2: weeks before their trips. So a few weeks before a
36:51
Speaker 2: Spirit flight from say New York to Orlando, one or
36:54
Speaker 2: more of the big carriers would radically discount their price
36:57
Speaker 2: on just twenty seats on a similar route, So they
37:00
Speaker 2: would poach those last twenty customers from Spirit. Now they
37:05
Speaker 2: could afford to effectively sell those seats at a loss.
37:09
Speaker 4: And what that means.
37:10
Speaker 2: Is for Spirit, it would take what would have otherwise
37:13
Speaker 2: been a profitable flight and put it in the red.
37:16
Speaker 4: And so there is a if you look.
37:18
Speaker 2: At their profitability over time, Somewhere around twenty sixteen, it
37:23
Speaker 2: seems like the big carriers figure out this strategy to
37:26
Speaker 2: effectively try to come in and destroy them. And so
37:29
Speaker 2: then now you had them on weak financial footing, looking
37:32
Speaker 2: for a bailout, really being pushed over the cliff by
37:36
Speaker 2: the Iran war and the jet fuel prices. And then
37:38
Speaker 2: who's there to come in and do that final shove
37:41
Speaker 2: over the cliff the major carriers who want them to
37:43
Speaker 2: be dead in terms of this jet merger potential merger,
37:47
Speaker 2: because this is what all the talking points are about. Oh,
37:49
Speaker 2: Biden's anti trust and even Narratian. It's not just the Republicans,
37:52
Speaker 2: by the way, Neuratanden and other corporate type democrats coming
37:56
Speaker 2: in using the same argument to argue against future anti
37:59
Speaker 2: trust and forcement were you to have another democratic administration.
38:03
Speaker 2: The other problem with it, number one, it was sort
38:05
Speaker 2: of on its face illegal. Even Spirit Airlines create a
38:08
Speaker 2: presentation for their shareholders where they're like, this is probably
38:11
Speaker 2: illegal and will probably be blocked. They were contemplating a
38:14
Speaker 2: separate deal where they would merge with another low cost
38:17
Speaker 2: carrier Frontier, which seemed to make more sense and would
38:20
Speaker 2: have preserved their business model and preserved the downward pressure
38:24
Speaker 2: that they had on prices and the positive impact they
38:26
Speaker 2: have for consumers, you know, on the on the roots
38:29
Speaker 2: that they fly. So but the shareholders ignored that advice,
38:32
Speaker 2: went ahead with it, you know, hope for the best. Ultimately, predictably,
38:36
Speaker 2: it was struck down as illegal. There's one other aspect
38:39
Speaker 2: of it too, though, which is that Jet Blue was
38:41
Speaker 2: really loaded up with debt at that time as well,
38:43
Speaker 2: and so they would have been taking on obviously an
38:45
Speaker 2: even more extraordinary amount of debt just to buy Spirit.
38:49
Speaker 2: So it's not even clear that Jet Blue would have
38:52
Speaker 2: been able to manage them their their debt service and
38:54
Speaker 2: they would have survived into the future. But it certainly
38:57
Speaker 2: would have meant that, you know, Spirit would have been
38:59
Speaker 2: killed early. It would have been killed at the time
39:01
Speaker 2: of that merger, versus being killed now by the jet
39:04
Speaker 2: fuel price surge and by the four big carriers who
39:08
Speaker 2: wanted to see them going.
39:09
Speaker 3: Let's put B four up here on the screen, because
39:11
Speaker 3: it's one thing to say jet fuel, it's another here
39:13
Speaker 3: to see the numbers. So Patrick Dehan over a gas
39:16
Speaker 3: Buddy compiled this list. Just check this out. This is
39:19
Speaker 3: from May second, so only two days ago. Just imagine
39:22
Speaker 3: what airlines are contending with. Here is the cost to
39:24
Speaker 3: fill a Boeing Triple seven today. Chicago two hundred and
39:28
Speaker 3: thirteen thousand dollars, Dallas one hundred and eighty thousand, Minneapolis
39:34
Speaker 3: one hundred and eighty thousand, New York City one hundred
39:37
Speaker 3: and eighty thousand, Los Angeles two hundred and seventeen thousand,
39:40
Speaker 3: Seattle two hundred and twenty five thousand. So yeah, that's
39:45
Speaker 3: a lot of money, all right, Like we're talking about
39:48
Speaker 3: two hundred grand in some cases to fill up the
39:51
Speaker 3: whole plane.
39:51
Speaker 1: Now, look, I get it, it's a big aircraft.
39:53
Speaker 3: Like you know, he probably picked a bigger one just
39:56
Speaker 3: to show exactly what you're dealing with. At a macro level,
40:00
Speaker 3: it does take a full take of gas to get
40:01
Speaker 3: somewhere going. But I mean, come on, two hundred thousand
40:03
Speaker 3: dollars just to fill up an airplane, Like, that's a
40:05
Speaker 3: lot of money. And that's double literally what it costs
40:08
Speaker 3: as of a month ago. So that's going to show
40:10
Speaker 3: up somewhere. There is no denying this. The Iran War
40:13
Speaker 3: is what killed spirit. Now they were again, they were
40:16
Speaker 3: bleeding out already, but it was the jet fuel crisis.
40:19
Speaker 3: Let's go ahead and put B three up there on
40:21
Speaker 3: the screen. They actually detail this in Al Jazeera. They've
40:24
Speaker 3: begun their wind down all over the jet fuel doubling
40:28
Speaker 3: in prices that will cost now thousands of jobs. But
40:32
Speaker 3: I think more importantly is that this airline. So for example,
40:36
Speaker 3: in the week between May first and May fifteenth, they
40:39
Speaker 3: had eight hundred and nine thousand seats which would have
40:43
Speaker 3: flown on four thousand, four thousand, one hundred and nineteen
40:47
Speaker 3: domestic flights. So that is almost eight hundred thousand, or sorry,
40:50
Speaker 3: four hundred thousand seats because of the status of the
40:53
Speaker 3: when they're going bankrupt, that will just not be here
40:56
Speaker 3: this week. Four hundred thousand seats on an airplane that
40:59
Speaker 3: is going to show up somewhere, and the likelihood is
41:02
Speaker 3: it will show up. And now American and Delta and
41:06
Speaker 3: United they can charge whatever they want, and they've got
41:10
Speaker 3: the jet fuel stuff on top of that, so good,
41:12
Speaker 3: you know, good luck to anybody who wants to fly
41:15
Speaker 3: right now. I don't think it's out of the question
41:17
Speaker 3: to see eight hundred thousand dollars fares even for intra
41:20
Speaker 3: East coast like in the middle of the summer, and
41:22
Speaker 3: in terms of international good luck, like I.
41:25
Speaker 1: Was looking at Dubai this morning.
41:27
Speaker 3: Even in the couple weeks since the ceasefire, air traffic
41:31
Speaker 3: out of or passenger traffic in Dubai International Airport is
41:35
Speaker 3: down twenty percent. Now, look, some of that demand will
41:38
Speaker 3: be destroyed, let's say ten percent, But those other ten
41:42
Speaker 3: if they're still going to fly somewhere, they might have
41:44
Speaker 3: to go through Europe. So if you're trying to connect,
41:47
Speaker 3: if you're going to Asia and you're connecting through Europe
41:49
Speaker 3: or through a diff or a direct flight, you know,
41:51
Speaker 3: one of those very competitive flights from here in the US,
41:54
Speaker 3: I think it will be like thousands of dollars. Like
41:57
Speaker 3: I think the idea of an economy ticket being one
42:00
Speaker 3: to two thousand, which I still think was you know,
42:02
Speaker 3: high compared to where things were before. I think you
42:04
Speaker 3: could potentially start to see, you know, real economy seats,
42:07
Speaker 3: not premium economy seats, be like three hundred and thirty
42:09
Speaker 3: five hundred four thousand dollars in the middle of peak summer.
42:12
Speaker 3: If stuff like this continues and you have airlines adding
42:15
Speaker 3: on additional jet fuel searcharges like japan Airlines three hundred
42:19
Speaker 3: and fifty per ticket for any one way flight North
42:22
Speaker 3: America and Europe, and then so round trip that's another
42:25
Speaker 3: seven hundred bucks. Heat Row I'm sure by the end
42:28
Speaker 3: of the next few months will also have of They
42:30
Speaker 3: already have a very very high landing tax I think
42:32
Speaker 3: it could go up, you know, even more several hundred bucks.
42:34
Speaker 3: So this is just going to be unsustainable, Like you're
42:37
Speaker 3: just not gonna be able to fly anymore.
42:38
Speaker 2: Yeah, at a certain point, and looking internationally, Air India
42:41
Speaker 2: they cut all of their international.
42:42
Speaker 4: Flights through July, all of them. Oh my god, Yeah,
42:46
Speaker 4: they cut all of their This.
42:47
Speaker 3: Is a very specific niche thing, but there are a
42:49
Speaker 3: lot of families living in the Bay Area and you know,
42:51
Speaker 3: people like me who grew up as a first generation
42:54
Speaker 3: immigrants who all would go to India over the summer
42:57
Speaker 3: and book on shitty no offense, you know, offense on
43:00
Speaker 3: shitty airlines.
43:01
Speaker 4: Like India the worst.
43:04
Speaker 1: Okay, fine, let's just say it's dogshit, all.
43:05
Speaker 4: Right, We're literally cockroaches. It's not getting the.
43:09
Speaker 1: Worst airline in the world.
43:11
Speaker 3: Sorry, don't assue me, all right, it's I had a
43:14
Speaker 3: bad experience. It's my own personal, multiple bad experience, yes,
43:17
Speaker 3: but anyway, yeah, it's not good.
43:21
Speaker 2: So apparently they're flying domestically still within India, but all
43:24
Speaker 2: of their international flights through July are completely cut. But
43:27
Speaker 2: you know, going back to what you're talking about, and
43:29
Speaker 2: in terms of the impact you're domestically from Spirits closure,
43:34
Speaker 2: there was literally something called the spirit effect.
43:36
Speaker 4: When they would begin flying.
43:38
Speaker 2: A certain route, every other carrier knew they had to
43:41
Speaker 2: reduce their price. And so with them gone, now their
43:45
Speaker 2: hand is free. And you know, Stoler makes a bigger
43:48
Speaker 2: point that and really should read his whole analysis because
43:51
Speaker 2: it's typically you know, as as usual, it's very excellent
43:54
Speaker 2: and in depth and very thoughtful, which is that ever
43:58
Speaker 2: since the airline industry was deright related, you've had all
44:01
Speaker 2: of this combination of consolidations and mergers and then just
44:07
Speaker 2: so many bankruptcies. Because it really is the type of
44:11
Speaker 2: service I mean compares it to the mail service where
44:13
Speaker 2: it's like you pay the same amount for a stamp,
44:15
Speaker 2: and for some places that is you're sort of paying
44:18
Speaker 2: above cost and you're subsidizing service to rural areas. It's
44:23
Speaker 2: a similar dynamic with air travel where if you want
44:26
Speaker 2: there to be reliable, affordable access throughout the country, you're
44:31
Speaker 2: going to have to manage that from the you know,
44:34
Speaker 2: from the federal level and make sure that those routes,
44:37
Speaker 2: even the ones that are not the most profitable, that
44:40
Speaker 2: those continue to be serviced. And so, you know, undergirding
44:44
Speaker 2: this whole story, you know, going back now decades when
44:48
Speaker 2: the decision was made to deregulate airlines, that's when you
44:51
Speaker 2: get to this scenario of having you know, a handful
44:53
Speaker 2: of choices, and the big airlines with their hubs and
44:58
Speaker 2: the way they're able to operate and the way they
45:00
Speaker 2: were able to go after new entrance like spirit that
45:02
Speaker 2: we're trying to undercut them on price. That's how you
45:05
Speaker 2: end up in this situation where you know it's air
45:08
Speaker 2: travel is miserable, where you don't have access in certain
45:11
Speaker 2: parts of the country, where low cost carriers and others
45:14
Speaker 2: who are trying to innovate are quickly pushed down. Last
45:18
Speaker 2: thing here we can put B five up on the screen.
45:20
Speaker 2: It just shows you that this fuel price crunch is
45:24
Speaker 2: not just going to effect airlines. Here we already talked
45:27
Speaker 2: about Air India Soccer was talking about Ryanair. Actually, the
45:30
Speaker 2: UK is now loosening some of their rules and saying
45:33
Speaker 2: basically like, okay, if you have a flight that's going
45:35
Speaker 2: somewhere that's half empty, and you have another one later
45:38
Speaker 2: in the day, you're allowed to push those passengers to
45:42
Speaker 2: that other flight, which is something they weren't allowed to
45:44
Speaker 2: do before.
45:44
Speaker 4: But in any case, you know.
45:46
Speaker 2: This is the early days. This is the early days
45:48
Speaker 2: of the impact from the war. This is just like COVID,
45:52
Speaker 2: where you know, you drop a giant boulder in the
45:55
Speaker 2: water and then the ripples just spread and spread and spread.
45:58
Speaker 2: And this is one of the first very noticeable ripples.
46:02
Speaker 2: And you know, is it the end of the world. No,
46:05
Speaker 2: if you were hoping to go to a wedding or
46:07
Speaker 2: a funeral, or visit your relatives or god forbid, go
46:09
Speaker 2: on vacation, certainly not a happy thing. But it's not
46:13
Speaker 2: necessarily life threatening. But this is just the first of many,
46:17
Speaker 2: many impacts that we are already seeing ripple throughound our
46:19
Speaker 2: economy and the global economy.
46:21
Speaker 1: Yeah, exactly.
46:21
Speaker 3: Look what made COVID inflation miserable is nobody died because
46:26
Speaker 3: food prices went up by twenty percent or Okay, very.
46:29
Speaker 4: Few people probably did well.
46:30
Speaker 3: Yeah, very few people died because food prices went up
46:34
Speaker 3: twenty percent. It still sucked. I man's that's the whole part.
46:38
Speaker 3: What has been happening in this country since twenty twenty.
46:41
Speaker 3: Every year it gets worse, housing, food, things been more expensive.
46:46
Speaker 3: It's just like everything has more friction. Has it really
46:49
Speaker 3: gotten better? I just I don't think more crime. It's
46:52
Speaker 3: just like everything is shitty and you know, there's what
46:54
Speaker 3: is the theory, it's like and shitification. I'm sure you've
46:57
Speaker 3: heard that before with corporate corp. You know, dealing with
47:00
Speaker 3: the corporation health insurance. Right, It's just nothing is simple,
47:04
Speaker 3: and yes, maybe that is romanticizing a different time, but
47:08
Speaker 3: I don't know.
47:09
Speaker 1: I just feel like things are getting worse and worse
47:11
Speaker 1: and worse, and I don't see anything particularly getting better