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4:23 pm, May 7th, 2026 - 11 comments
Categories: 2026 oil crisis, employment, energy, farming, farming, Financial markets, food, interest rates, Iran, jobs, news, radio, war -
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That RNZ tricolon has always been infuriating fluff. In the real world, analysts warn we are heading for a cliff.
Former financial analyst Susan Webber writing under the pseudonym Yves Smith in her blog nakedcapitalism.org has this to say:
On the economic front, the number and intensity of alarms on the financial and mainstream media are rising fast.
When an ex-IDF member, lobbyist and known Zionist is having to convey unpleasant truths about the oil market to investors, you know the situation is serious. And look at the baby talk Hochstein has to use to talk to the reporters.
Hochstein explains the divergence between the physical market for oil and the stock market price of Brent Crude which he says only buys paper. He also says there are no tankers on the water, and the resultant demand destruction is currently in the poor countries only. In his view the Straits of Hormuz are going to be under Iranian control indefinitely, and he has some very sensible solutions as to what should be done gong forward.
My favourite economist Michael Hudson confirms that the effect of higher oil prices due to supply restrictions is going to be deflationary after the initial inflation.
A lot of the financial community is saying that higher oil prices is going to be inflationary, but the effect of this price increase, that’s already occurring day after day, as long as the Strait of Hormuz is closed by the United States, this is causing deflation. Yes, oil prices are going up, but if the result is unemployment and production cutbacks in industry and agriculture, for the whole economy that’s going to be a huge deflation economy. That’s what depressions are. That’s what is really turning out to be the big threat, despite the fact of what stock markets and bond markets are saying.
I had hoped that when Corrin Dann took over the Business Editor slot on Radio New Zealand we would get better coverage that wasn’t simply reporting the Dow Jones and other financial market prices. All we’ve got is the same old fluff in a heightened tone to try to inject some excitement.
A very well informed contact told me recently to disregard finance market prices as they are set by algorithms based on whats in the mainstream news. And with Trump goosing the markets like the snake-oil salesman that he is as those in the know make huge spot bets, it is high time that Radio New Zealand looked behind the curtain of Oz and gave their listeners some real-world information.
There are big decisions to be made and we should be facing reality and getting ready now.
+100 thankyou Mike. I had the same reaction to the interview. I was 8 when the last oil crisis hit so I don’t have a full idea of how much worse this is about to get. But it’s real bad.
"And with Trump goosing the markets like the snake-oil salesman that he is … "
Thanks for that.
Fat chance of NACTF doing what is needed. Which leaves us with councils, NGOs, communities and families. We need to talk about extra-parliamentary organising.
I hope to be back to post writing in a few weeks, but will look at putting up some cross posts in the meantime.
Anyone know what the unions are doing?
It is fair to assume that this challenge will become worse before it becomes better. Even if there were a quick return to a prior stability, we face 12-18 months of readjustment and pricing challenges. A quick return is unlikely.
Moreover, the context of this shock is quite different from, for example, the 1970s energy crises. The post-2WW accommodation and institutions are in disarray. Regional insecurities are growing as flailing hegemons stumble. OPEC has its internal challenges. Some actors do not want to see a return to stability if their geo-political interests aren't served. Some actors are unclear what outcome they seek, or envisage. Uncertainty and disorder reign in international arrangements as political leadership falters.
The obvious exception may be China, but, even there, internal economic and political stability requires a degree of external order. For countries like NZ, the 1950s import-substitution model, including a contemporary emphasis on food and energy security, has new legs!
From Larry Johnson's substack:
However, the disinformation put out by the White House made someone a lot of money. The Kobeissi Letter on X has the story:
Iran’s leader of Iran’s legislative body, Mohammad Bagher Ghalibaf, reacted to the Axios story that claimed a deal was at hand:
Markets are made up of human beings responding to expectations, incentives, risk, and imperfect information rather than operating as some perfectly rational machine.
Keynesian economics has been making precisely this point for nearly a century.
It is entirely possible for financial markets, commodity markets, governments, and firms to respond differently to the same Iran-US conflict depending on their perceptions of escalation risk, duration, supply disruption, and likely political outcomes.
Markets are not simply “fake” or “real” because they are behaving differently to how a particular commentator expects. They are forward-looking, probabilistic, and often driven as much by expectations about future intervention and stabilisation as by current physical shortages.
Good point. The realm between fake & real (false/true) has always been limimal in an organic sense (twilight zone). In the Deep Green view, Bateson's metapattern principle points us to tertiary function generally, the goldilocks principle, the cultural role of intermediaries, the grey zone, triads for neopythagorean metaphysicists.
Now we see 3 in quantum computing (all possibilities between 0 & 1 simultaneously). It's why hermetic philosophy has run for upward of 2 millennia since the originator was messenger of the gods. It's why there's a dashed line medial in most roads. People aren't fake or real so much as a bit of each, depending on operational context at the time. Democracy isn't fake or real, just a bit of both mixed differently by each state.
The point is that markets can be and are manipulated and abused by insider trading.
From my perspective, sitting in an office in the DIFC, the market seems to be pricing in that there are strong economic incentives for the Iranians to reopen the strait. They don't have the pipeline capacity to send enough oil north and east, as a substitute for shipping oil out in tankers, so their revenues are being hit hard. Not as hard as Iraq, Kuwait, Bahrain and Qatar, but that's another story.
Additionally, around the world countries are running down their reserves so (at least in the v.short term) that will keep prices lower.
Whether or not those economic incentives trump (pun intended) political incentives to remain belligerent, is an open question that none of us credibly have an answer to.
One of my favourite finance lecturers at UC many many years ago, regularly said "markets are rational, but 'the market' is irrational" by which he meant that any market of buyers and sellers can find a clearing price and quantity, but there's no real institutional memory in a market and, by design, it will always be reactive to crystalisation of information rather than 'predictive' in the true sense of the word .