[This post launched before complete because the usual sort of reasons. I expect to have it done by 8:00 AM EDT, so please return or refresh your browsers then for a final version]
Warren Buffett said, “Only when the tide goes out do you discover who has been swimming naked.” We have compared the looming economic crisis to a tsunami, where the first big sign is water seemingly harmlessly retreating far further from the shore than normal before the powerful wall of water surges in, sweeping away pretty much everything in its path.
We appear to have entered the “swimming naked” part of this war, with the US exposing both private parts and belly flab. We’ll discuss an exchange of fire between the US and Iran which would normally be too tactical to merit more than passing attention. But as we’ll soon explain, US media reports state that the Navy had to deploy what amount to fallback armaments, indicating that stocks of primary weapons are now visibly short. Mind you, this could be the result of poor planning, which with this military, is entirely conceivable, if also a bad look.
We will also turn to some extremely informative YouTube talks, one with John Kirakou, which puts the Iran war in a bigger, ugly, great power conflict frame, and with analyst Jeff Currie, who earlier published A Crude Awakening an important alert on the severity of the coming supply crisis. His full report is at the end of this post.
The level of kinetic action in the Iran war has risen to the level of pretty fierce skirmishes in the Persian Gulf and its shores, making the Team Trump claims that the ceasefire is still on look silly.1 Critically, Iran has again humiliated Trump by refusing to respond formally to his one-page peace scheme in his stipulated 48 hour time frame, although many Iranian insiders have already said it contains unacceptable demands and so will be rejected at least in part, if not in whole.
The current Bloomberg lead headline rubs that fact in:
From the article:
The US said it expects Iran to respond to its latest proposal to end their war imminently, as clashes in the Strait of Hormuz threatened to further fracture a month-long ceasefire.
Iran has still given no indication whether it will accept President Donald Trump’s plan, sent on Wednesday, which proposes that the Islamic Republic reopen the strait and the US end a blockade on Iranian ports over the next month.
If I were the Iranians, I would reject it with some belligerent noises after the US financial markets open next week to hit Trump at one of his known vulnerable points, paper energy prices.
Daniel Davis, in the early part of his latest talk, argue that Trump really really wants out of this war but faces powerful opposing forces.
It is gratifying to see Davis taking apart dangerously stupid talking heads pushing for moar war.
Yet Trita Parsi describes how Trump’s continued use of extremely belligerent rhetoric is making it impossible for his to use one possible exit, negotiations:2
Mind you, with all due respect to Parsi, who is generally extremely insightful: he, like some other prominent YouTube figures, seems so obsessed with the idea of negotiations that he cannot see what ought to be obvious. There will be no meaningful negotiations ex a regime change in the US or Israel, and likely not even then. Iran and the Russians know full well that the US is not agreement capable, and as Chas Freeman and others have pointed out, under Trump is not ever operationally equipped to handle talks.
Also, and this is an update after the post first launched, the US is escalating against China. Bye bye Xi summit! The lead story at the Financial Times:
Back to the original text:
Independent media outlets are covering the attacks and counter-attacks of the last 48 hours, despite the fogginess of the information and the difficulty of giving an easily-digested account. For instance:
If you have a high tolerance for pain, this segment also includes yet more Trump threat display and Starmer ‘splaining his decision to try to hang on.
Julian Macfarlane sets forth the conflicting US and Iranian accounts of what happened and then tries to make sense of it in The Fudge of War:
There seems to be a difference of opinion. If the Iranian story is to believed the 3 Aegis destroyers were not exactly sightseeing in Hormuz, they were carrying out military operations against tankers, backed up by aerial assets, launching air strikes. Of course, Qesm Island, Bandar Khamir, Sirik are not only “civilian” sites, they are fortified sites for launching missiles and drones .
It would seem that the US Navy was testing the boundaries, carrying out SEAD strikes as per American military doctrine before exposing its three Aegis destroyers tasked with intercepting Iranian tankers. Or perhaps the tankers were just an excuse, with the real targets Iranian defenses along the strait…
The operation was conducted in two primary phases within the Strait of Hormuz…
Macfarlane then explains that on May 4,The USS Truxtun and USS Mason enter the Strait of Hormuz and are attacked pronto; a third destroyer, USS Rafael Peralta, arrives on May 7. The Iranians attack the trio bigly.
Back to Macfarlane:
The US Navy should have known by now that its ships would run out of ammunition in the face of dedicated swarm attacks, in this case missiles, drones and fast boats as I described yesterday. Did the Americans think that sinking a few fast boats would frighten the Iranians? And CIWS magazines are empty in just 20 seconds…
Once a vessel is reduced to CIWS, it’s in trouble. This is the point at which the destroyers fired off Tomahawks which could not, however, hurt Iranian launch sites which are mostly underground but I am sure they hoped would keep the Iranians busy. Each Tomahawk costs about $4 million. Aegis destroyers have 96 launch tubes, so carrying offensive missiles reduces the number of defensive missiles, a vulnerability under swarm attack.
Some reports suggest that the ships were damaged. CENTCOM says no but that denial is meaningless given who it comes from. These are the people who said the Iranians attacked them for no reason at all.
We had cited Donald Gorbachev yesterday on the significance of the destroyer firing CIWS, which is effectively a backup weapon and demonstrates depletion of preferred armaments. CBS reported the destroyers CIWS; OSINTDefender says the destroyers did not suffer damage:
According to a report from CBS, citing U.S. officials, the USS Truxtun (DDG 103) and the USS Mason (DDG 87) came under intense attack from Iranian fast attack boats, drones, and missiles in an engagement that has been characterized as far fiercer than the past engagement the two… pic.twitter.com/UmGNhToc60
— OSINTdefender (@sentdefender) May 7, 2026
CIWS fires when the layered defense has failed. SM-2 missed. SM-6 missed. ESSM missed. RAM missed. The destroyers were down to twenty-millimeter Gatling guns at terminal range. CIWS fires for roughly thirty seconds before the magazine empties. Three destroyers fired CIWS. Three…
— Donald J. Gorbachev (@donaldgorbachev) May 8, 2026
From the detail of Gorbachev’s tweet:
CIWS fires when the layered defense has failed. SM-2 missed. SM-6 missed. ESSM missed. RAM missed. The destroyers were down to twenty-millimeter Gatling guns at terminal range. CIWS fires for roughly thirty seconds before the magazine empties. Three destroyers fired CIWS. Three destroyers withdrew.
What forced it — not the top shelf. The IRGC did not need the top shelf. The launches came from the Bandar Abbas coastline. Coastal anti-ship missiles. Noor and Ghadir family. Possibly Khalij Fars. Cruise from the shore, ballistic anti-ship from the shore, swarm geometry from the shore. The shore is twenty miles from the Strait. The shore does not need a navy.
The Fattah did not fly. The Khorramshahr did not fly. The Sejjil did not fly. The deeper magazine sat in the silos. What flew was the coastal inventory the IRGC has been showing on parade for fifteen years. The middle shelf emptied the destroyer’s top shelf. The destroyers withdrew before the IRGC reached for anything else.
Game. Set. Match. How long will the US try to keep up this pretense? Yes, it can use some of its also-depleted air power to punish Iran. But this latest development confirms that there was never a hope of the US muscling open the Strait.
Now to the promised bigger picture take, from John Kirakou on Unfiltered with S.A.M.:
Kirakou provides many important insights, such as the state of anarchy in Somalia, increasing conflict in Yemen, accelerating Israeli occupation of Cyprus, and his take on the 2028 elections. His depicts the Democrats as self-screwed, with none of Newsom, Pritzker and Harris electable. He argues that Tucker would be a welcome and viable dark horse, but he would be sure to get the RFK senior treatment.
Kinetic developments from other arenas:
On the economic front, A must watch. Jeff Currie (of the aforementioned report, A Crude Awakening) is refreshingly clear in explaining the behaviors driving the current bad normal of Mr. Market greatly under-registering near certain serious economic deterioration, and not allowing for the bias to even worse outcomes. Currie, also does not tolerate nonsense but manages to seem pleasant while engaging in information knee-breaking. When Narwal says, “What happens if the Strait stays closed for two to four weeks?” Currie rejects that, pointing out that two to four weeks has been a rolling default from the very start of the war. Yet even now, two years after Ansar Allah started messing with Red Sea transits, traffic is only at 75% of former levels. “We have one observation. Red Sea. It’s still not open.” Narwal’s reaction is telling but also typical of how too many people think: “The world needs the energy, so surely there will be transits….”
And the intermediate term oil situation in the US is not as rosy as bulls would have you believe:
The US cannot continue to be a major swing producer of oil. All growth in oil production has come from just one oil basin, and that basin has been in decline since 2018 and will soon turn negative. This is just simple geology.
Full report: https://t.co/3Hdgf6bfxT pic.twitter.com/mEDMR21P8w
— Chris Martenson (@chrismartenson) May 8, 2026
The Wall Street Journal is getting more serious about covering the jet fuel crisis and presents some new information (at least to me and I have been trying to stay on top of this issue) that the US West Coast is much more at risk than overall figures would have you believe.
Keep in mind that Wolf Richter has repeatedly provided data confirming that US consumers have kept spending despite being in a bad mood:
🇺🇸 U.S. Consumer sentiment falls to lowest reading on record pic.twitter.com/yHT0zCSdNI
— Hedgeye (@Hedgeye) May 8, 2026
However, reports like this validate the concerns of US shale and oil producers who remain reluctant to ramp up development plans in light of the old saying, “The cure for high oil prices is high oil prices” as in they destroy enough demand so as to (in not all that much time) produce lower energy prices.3
This is a weak gesture at my being too distracted by the epoch-changing Iran war to cover the accelerating crisis in private credit properly. But one thing is clear: a ton of sectors in the US are already demanding or soon to seek bailouts, with farmers and air carriers at the head of the line. Private credit looks set to be on that list. There will be too many needy causes relative to political ability and fiscal means to properly stabilize all of them. So what will be the profile of the coming triage?
Finally:
The US has been strategically-defeated in the information war too.
Reminds me Putin’s conversation with Tucker, where he asserted that this was a very hard thing to do given US information dominance. And one can see his point: where is the Kuwaiti ace? the downed airman? the… https://t.co/FKm8rqznAd
— Policy Tensor (@policytensor) May 7, 2026
I wish this were true. Sadly, those who might encounter the videos are the social media/independent media forward type, which is a minority of the population. The overwhelming majority in the Anglosphere (and Israel and Thailand) gets their news nearly entirely from orthodox sources and will never see this sort of video unless it is put in their face. And the big platforms are outright banning or suppressing amplification of this acutely needed outing of this corrupt war.
All for today! See you tomorrow!
____
1 But Congress is sure to play along. However, China will not be fooled. I anticipate that a continuation of this level of jousting means no summit with Xi, with Trump permitted the minimal face-saving ploy of pretending he cancelled when in fact the Chinese never agreed.
2 This hot-headed talk may signify that Trump has written off the idea of going to China; it’s not the sort of thing the Chinese seem likely to tacitly endorse by rolling out the red carpet.
3 I am a bit late to showcase this talk between Larry Johnson and Stanislav Krapivnik:
With my geek tendencies, I took interest in Stas’ explanation of why shutting down and then restarting an oil well was more a matter of cost and fuss than risk of irremediable damage to the well. See at 13:30.
