4/1/26: Iran Bombs Bahrain Amazon, US Allies Warn Of Disaster, Robert Pape On Iran Gaining Power, Mass Layoffs

Summary

Breaking Points with Krystal and Saagar – April 1, 2026 Episode Summary

Episode Overview

This episode dives deep into the escalating crisis in the Middle East after Iran's strike on Amazon Web Services servers in Bahrain — a move with enormous implications for geopolitics, the global economy, and the power structure of major technology companies involved in defense contracting. Hosts Krystal Ball and Saagar Enjeti, joined by Ryan Grim and special guest Professor Robert Pape, analyze the shifting international landscape, the fate of U.S. allies, the unraveling of NATO, mass layoffs, looming resource shortages, and political realignments as the war progresses.

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Key Discussion Points & Insights

1. Iran’s Strike on Amazon in Bahrain & Tech Firms in the Crosshairs

[06:25–12:35]

• Breaking News: Iran struck Amazon’s cloud/server infrastructure in Bahrain — targeting a symbolically significant U.S. tech asset in a country hosting the U.S. Navy’s Fifth Fleet.
  • Krystal and Saagar unpack the strategic importance of Bahrain, its political alignment with the U.S., and its vulnerable, largely pro-Iranian population under an autocratic regime.
• Iran’s Warning: The IRGC’s explicit threat to 18 U.S. tech giants (including Google, Apple, Nvidia, Oracle, Palantir, Microsoft, IBM, JP Morgan, HP, Boeing, and Meta) directly links these companies to U.S. military assassinations of Iranian officials. The hosts emphasize how many tech companies, often perceived as apolitical, are deeply entwined with U.S. military and intelligence programs.
  • Krystal Ball: “I think people don’t realize how involved some of these companies that you don’t ever think of as Pentagon contractors are.” [12:21]
• War’s Full-Spectrum Impact: The discussion stresses that modern conflict now targets not only military assets but also civilian infrastructure and the private sector, with far-reaching global consequences.

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2. Miscommunication & Context Omitted by Legacy Media

[08:12–13:13]

• Trump's Response: A tense exchange between Trump and journalists illustrates how context—specifically about U.S. assassination policies—is often omitted, fueling public confusion.
  • Saagar Enjeti: “So often their actions are presented without context. In this case, it's just ‘they’re threatening to bomb these tech companies.’ Well, why?” [10:12]
• Effectiveness of Assassinations: Both hosts and later Bob Baer (CIA) express skepticism about targeted killings achieving strategic goals, echoing wider debates in military circles.

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3. Escalation Trap & The Fate of U.S. Military Policy

[14:24–20:44]

• Shifting Naval Assets: News that the USS George H.W. Bush is redeploying to cover for the Gerald R. Ford, which is mysteriously inoperable, raises suspicions both of possible sabotage and U.S. willingness to remain engaged.
• Pentagon Messaging: Secretary Hegseth’s statements on the U.S. war aim ambiguity reveal a consistent lack of clear objectives.
  • Saagar Enjeti: “Did I get a B on the test? No. But I set the conditions for success.” [19:57]
• UAE and Other Allies: There’s growing pressure on U.S. allies to join the fray, particularly the UAE, which has long advocated for action against Iran. The hosts note this could spell disaster for Dubai’s economic model.

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4. Global Fallout: Economic, Political, and Social

[25:59–34:02]

• Fuel Shortages & Rationing: European and Asian leaders signal the most severe energy crisis since WWII, with rationing, price shocks, and civil anxiety.
  • UK Prime Minister Keir Starmer and Australian PM Anthony Albanese highlight their nations’ preparation for deep austerity and urge public calm and fuel conservation.
• Layoffs & Scarcity: Massive job losses (e.g., 30,000 at Oracle) and disruptions to supply chains (notably fertilizer and helium) suggest “pandemic-level” unemployment and scarcity.
• Food Security in Jeopardy: Fertilizer shortages (a result of Strait of Hormuz disruptions and China’s export ban) indicate imminent food crises and higher prices.

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5. Fracturing Alliances: NATO’s Dissolution and Global Power Shift

[41:12–47:40], [49:33–54:23]

• Robert Pape Segment:
  • Argues that Iran, now controlling up to 20% of world oil, is becoming a new “center of world power” virtually overnight. This new reality is irreversible, even if the U.S. withdraws from the conflict.
    • Robert Pape: “We’ve never seen this in our lifetimes—a new world power center created in a month.” [36:56]
  • Trump’s rhetoric against NATO, and Europe’s refusal to allow U.S. military use of their bases, effectively dismantles the alliance.
    • “NATO is dead. NATO is in the morgue and the obituary is what's being written now.” [42:41]
  • The hosts and Pape warn that the U.S. withdrawal or even “declaring victory” cannot unwind the new balance of power, and companies like JP Morgan and Amazon will face further attacks (“imperialist targets” as seen by Iran).
• Gulf States Hedging: Countries like Iraq, Oman, Qatar, Saudi Arabia, and UAE are each navigating the crisis differently, but Iran is adroitly exploiting divisions.
• Rise of a New Bloc: Pakistan, Turkey, Iran, and Saudi Arabia are forging anti-American coalitions in response to shifting realities.

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6. U.S. Domestic & Political Repercussions

[28:52–34:00], [61:43–67:26]

• Political Change:
  • AOC (Alexandria Ocasio-Cortez) announces a shift to consistently oppose all military aid, even “defensive” arms, to Israel, marking a leftward shift as public opinion sours over the war’s cost.
  • Krystal Ball: “The incentive structure has changed. This is an indication of how the politics have changed.” [33:20]
• Job & Cost of Living Crisis:
  • Real unemployment is surging as companies post fake job openings for data. Wages stagnate against inflation, and workers (including TSA agents and healthcare providers) cannot afford to commute to work.
  • Quote from a Florida citizen: “Desolate.” (Describing the current economic situation, [66:39])
• Airline Cancellations: Ticket prices spike as flights are cancelled to avoid catastrophic fuel losses.

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Notable Quotes & Memorable Moments

• Krystal Ball (on tech & war):
  “When you go to War, you are putting so much more on the line. It's not just another step in your foreign policy on paper. It's actually a whole-of-society, a whole-of-government and private sector effort.” [12:21]
• Robert Pape (on Iranian power):
  “Iran is emerging as a new global center of power...We've never seen this in our lifetimes, a new world power center created in a month.” [36:56]
• Saagar Enjeti (on Pentagon spin):
  “We've set the conditions for success to explain his failure is just so delightful...What I did is I set the conditions for success.” [19:57]
• Krystal Ball (on reality for regular Americans):
  “I struggle every day, and now I'm taking care of my mom who's older, being denied simple breathing meds...so I don't eat this week because I have to take mom to the doctors tomorrow...Desolate.” [66:11–66:39]

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Timestamps for Key Segments

• Iran Strikes Amazon in Bahrain & Tech Threats: 06:25–12:35
• White House/Journos Discuss Iran's Threats & Motivation: 08:12–13:13
• Military Posturing & "Conditions for Success": 14:24–20:44
• Global Energy/Fuel Crisis & Political Panic in Europe, Asia: 25:59–34:02
• NATO’s Disintegration, Rise of Iranian Power (Robert Pape): 41:12–47:40, 49:33–54:23
• Layoffs, Economic Bleakness, Scarcity: 60:15–67:26

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Tone & Language

The episode balances urgency, skepticism, and dark humor, openly questioning government and media narratives, while voicing empathy for ordinary people caught in the crossfire. The hosts maintain their signature anti-establishment, populist tone and frequently punctuate heavy analysis with sarcasm or self-deprecating remarks.

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Conclusion

This episode serves as a critical, real-time analysis of a rapidly evolving global crisis. From Iran’s unprecedented tech attack in Bahrain through a crumbling alliance system and a looming economic depression, Breaking Points draws a vivid, contextualized map of a world veering into uncertainty — with the U.S. public, economy, and political system being jarringly affected.

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For listeners in a hurry, focus on:

• Start at [06:25] for the Iran-Amazon strike context.
• [34:55–56:24] for Robert Pape’s analysis of the new world order.
• [60:15] onward for a look at the economic fallout and job market implosion.

Transcript

[Krystal Ball]

This is an iHeart podcast. Guaranteed Human. Hey, guys, Sagar and Krystal here. Independent media just played a truly massive role in this election and we are so excited about what that means for the future of this show. This is the only place where you can find honest perspectives from the left and the right that simply does not exist anywhere else. So if that is something that's important to you, Please go to BreakingPoints.com, become a member today and you'll get access to our full shows unedited ad free, and all put together for you every morning in your inbox.

[Saagar Enjeti]

We're.

[Krystal Ball]

We need your help to build the future of independent news media and we hope to see [e-mail]

[Saagar Enjeti]

all right, good morning and welcome to Breaking Points. We had some tech issues in the studio this morning, so we're probably gonna bloviate a little bit less and do a little bit more news to try to get through. The entire show. Won't be a two and a half hour behemoth that lands in your inbox.

[Krystal Ball]

Yeah, you say that now at the beginning of taping and we're gonna push

[Saagar Enjeti]

three hours or something and we're close to 2 million subscribers on the YouTube platform if that's where you watch this show. So if you watch it there and you haven't yet subscribed, go ahead and do that. Do you get a second plaque? Is that how that works?

[Krystal Ball]

I don't know. It might be 5 million, it might be 1 and then 5, if I'm remembering the thresholds correctly.

[Saagar Enjeti]

We can make our own. There are plaque shops.

[Krystal Ball]

We should make our own, like a bowling trophy.

[Saagar Enjeti]

And of course, while you still have money, because Donald Trump is doing everything he can to crash the global economy in a way that it hasn't been probably since 2007 and 8. Before he does that, while you still have money, make. Make sure you become a premium subscriber to brainpoints. Don't do the monthly thing. Do the all at once because you're not going to be able to afford the monthly pretty soon.

[Krystal Ball]

I mean, you're losing money if you don't go all in right now.

[Saagar Enjeti]

Go all in right now.

[Krystal Ball]

Maybe literally. Big show.

[Saagar Enjeti]

If you need a refund, you know, welcome. We probably won't have any money either.

[Krystal Ball]

Yes, actually, maybe you should just do it now. So, Big show. Donald Trump announced last night he is giving a speech, an address to the nation with updates about the Iran war this evening while we all wait for on just the edge of our seats, Ryan, for that to happen, Many, many updates to go through. So Trump was taking questions yesterday. That gave us some indication to the extent that's possible of where his head might be at. We have quotes and videos from that to go through. Also an announcement from Iran that they are now going to target major US Tech companies in the Gulf region.

[Saagar Enjeti]

There are already.

[Krystal Ball]

There are a lot of of major tech companies who also double as defense contractors, not really double as defense contractors. A huge source of their business. We're going to get into this in just a moment. There's a preview of it up on your screen right now. So the show the Escalation Trap. Actually, speaking of the escalation trap, we're going to have Robert Pape back on the show, but that gives you some sense of how quickly the escalation trap is escalating, just looking at all of those company logos on the screen. So we will have Pape back on to go through updates and understand where they fit into his paradigm of how this war is going to is likely to unfold. Ransom economic updates. Big, big layoffs at Oracle yesterday.

[Saagar Enjeti]

Yep. And nobody can get helium. Asia and Europe are shutting down as if it's Covid again. And the UK says they have one more tanker of jet fuel coming and after that they're out. Hmm. That should be fine for them. It's not like they have a tunnel that can get to Paris, right? They don't have to fly.

[Krystal Ball]

No, there's nothing to worry about.

[Saagar Enjeti]

Yeah, they'll be fine.

[Krystal Ball]

Everything's in good shape. All according to plan. Ryan, you're also going to bring us some updates about a little guy in Cuba.

[Saagar Enjeti]

Yes. So a week and a half ago, we were in Cuba with and we toured a hospital with Liz Oliva Fernandez, a Cuban journalist, and Brace Belden, American journalist and co host of the TrueNom podcast. We're going to have both of them on today. Absolutely. Like, fascinating story. A Russian oil tanker broke Trump's oil blockade and is now unloading its fossil cargo at the port of Havana. We'll talk about what that means and what it means for Cuba and for the health care system there.

[Krystal Ball]

And one really compelling story of gonna be a compelling.

[Saagar Enjeti]

You're gonna. We don't wanna spoil it, but it's good stuff.

[Krystal Ball]

It'll be a little bit of heartwarming content, which we don't normally do.

[Saagar Enjeti]

Indeed.

[Krystal Ball]

The next block will be anything but heartwarming. We're gonna cover the updates from former DHS secretary Kristi Noem, who we now know was vulnerable to an enormous potential blackmail Threat. We're gonna have updates on this awful, sad, kind of funny at the same time story about Kristi Noem's husband Brian being.

[Saagar Enjeti]

How do we describe this?

[Krystal Ball]

Cross dresser.

[Saagar Enjeti]

Yeah, she's basically trying to mimic the FBI director. I don't. I'm not saying anything about Cash. The old one, Hoover.

[Krystal Ball]

Yes. And one under discussed element of this is probably also how it seems to have unraveled in the media. It looks like there was an interesting tip coming from a person perhaps aggrieved by the administration's immigration policy. So we have. We will have breakdowns on that for everyone. And Bob Bear Ryan, this was a great interview we did yesterday. Fascinating interview.

[Saagar Enjeti]

Yeah. Interesting. Kind of a legendary CIA case officer turned author, Bob Baer. It's going to be on the show. You can Wikipedia. He's got quite an incredible life story, including they tried to prosecute him for planning to assassinate Saddam Hussein. And his defense was I was doing it as part of my day job for the CIA. And they're like, oh, okay, you're good then.

[Krystal Ball]

Yeah, listen, you can't prosecute someone for doing their job.

[Saagar Enjeti]

I mean, you probably should maybe, but we're not going to put it that way.

[Krystal Ball]

All right, well, reminder, we are on the cusp here of 2 million. So go ahead, be that 2 millionth subscriber. We'll appreciate it. It helps us support our independent journalism that we do here, which we of course think is very important in times like these where the legacy media is failing you just about every single day. So appreciate it. Now let's get onto the show and update just as we filming this morning, Ryan, which is a zero. We can put this up on the screen. Reports now that Iran has struck Amazon and servers hosting Amazon Web Services in Bahrain. Literally just breaking this morning.

[Saagar Enjeti]

Yes. So Bahrain, of course plays host to the Fifth Fleet. And so they are the only country, the only Gulf country that hasn't even tried to deny that they are allowing the United States to launch operations against Iran from there. They have a population that is pretty in general supportive of Iran, but they are, you know, that population is occupied by the current dictatorship. All of our allies there basically dictators. And so if you put up a one here yesterday, the IRGC said if there are future assassinations of Iranian officials, these are the tech companies that we consider to be involved in these assassination programs and which we will then attack directly. And we are warning all of the employees in the region that they need to work from home. If you're engaged in assassination plots now, you notice Amazon is not on there. They had previously said that Amazon was a legitimate target because of its involvement with these assassinations programs. And also, they don't always announce every single one. Sometimes they'll announce these listless and then they'll go and hit those. But I don't know. Well, Trump was asked about this, and then we can talk about it. So in the Oval Office, Trump was asked by a journalist, what do you think about the fact that Iran is now saying it's going to respond to assassinations? I don't know. Did they even bring up the assassinations? In the Western press, you kind of often leave out the rationale for the adversarial action. It just kind of comes out of nowhere. Let's see. I don't actually remember. So let's roll a 1B.

[Krystal Ball]

Iranian government threatened a bunch of US

[Saagar Enjeti]

companies today in the region, including Google, Apple. With what?

[Reporter/Journalist]

What did they threaten them with? PB guns. They don't have much left to threaten.

[Krystal Ball]

My question for you is, are you?

[Reporter/Journalist]

I don't know. I mean, what are they? You made a statement. What did they threaten him with? I don't know. Tell me, how did they threaten him?

[Saagar Enjeti]

All I know is that they threaten him, sir.

[Reporter/Journalist]

What does that mean?

[Saagar Enjeti]

Fair enough.

[Reporter/Journalist]

He said something nasty.

[Saagar Enjeti]

Is the government in touch with these companies? Are you helping to backstop them?

[Reporter/Journalist]

You don't even know what the threat was. What was the threat? I haven't heard it. What was the threat? Did they say they're going to blow them up? They're going to hit him? They're not, you know what they're not going to do? They're not going to hit him with a nuclear weapon.

[Krystal Ball]

And it's something you're concerned about, sir?

[Reporter/Journalist]

No.

[Krystal Ball]

Iran's IRGC issues a warning that they will target 18 US technology companies if the US continues targeted assassinations of Iranian leaders beginning on April 1st.

[Reporter/Journalist]

Those companies, Apple, most of those people are dead already. We're negotiating with them right now. They've been. Again, we have had regime change. Now, regime change was not one of the things I had as a goal. I had one goal. They will have no nuclear weapon. And that goal has been attained. They will not have nuclear weapons when we feel that they are, for a long period of time, put into the Stone Ages, and they won't be able to come up with a nuclear weapon. Then we'll leave, whether we have a deal or not. Irrelevant. We'll be leaving very soon. And if France or some other country wants to get oil or gas, they'll go up through the strait and almost straight. They'll go right up there and they'll be able to fend for themselves. I think it'll be very safe, actually. But we have nothing to do with that. What happens to the strait, we're not going to have anything to do with, because these countries. China. China will go up and they'll fuel up their beautiful ships and they'll leave and they'll take care of themselves. There's no reason for us to do it.

[Saagar Enjeti]

And I don't mean to pick on that particular reporter, Emily, but it is actually a perfect example of the way that the American public ends up being kind of misinformed about the nature of our adversaries. So often their actions are presented without context. And in this case, it's just they're threatening to bomb these tech companies. Well, why? Why are they doing it? They're doing it because they say, you should stop assassinating our officials. Stop assassin our officials. We won't do this because Trump had to play this like, I'm such a dummy. I don't understand how these things work. Card. Then the second reporter, like, just read directly from the irgc. So if you've watched the whole thing, you do get the context that they're talking about the asset. And then he's like, well, how are they. How are they gonna retaliate? I can't imagine. I don't know. I'm not a military expert. But probably by bombing them, and then within eight hours, they bombed Amazon in Bahrain.

[Krystal Ball]

Trump was really chippy in that question where he gets asked eventually, are you worried about it?

[Saagar Enjeti]

He's like, no, no.

[Krystal Ball]

Which is not at all what you take from the tone of that exchange about whether or not he's worried.

[Saagar Enjeti]

Actually, he's not worried.

[Krystal Ball]

Right. Could we put a one back up on the screen? Because I want to just go through a little bit with these. These logos. So if you're listening to this, it's some companies that you might not expect Metta, you probably definitely expect Nvidia, Oracle, Palantir, Google, Boeing, Microsoft, IBM, JP Morgan, interestingly. I mean, it's not surprising, but JP Morgan does have defense contracts. Hp. If people don't know about HP in the Pentagon, that's a longstanding relationship. Apple, I mean, just some of the most major American companies that I don't know. Right. I think people don't realize how involved some of these companies that you don't ever think of as Pentagon contractors are. And all of that is just to say when you go to War, you are putting so much more on the line. It's not just another step in your foreign policy on paper. It's actually like a whole of society, a whole of government and private sector effort. And that's where it seemed like a lot of people were just kind of breezing over this news yesterday. And here we wake up to a strike on Amazon in Bahrain.

[Saagar Enjeti]

And since these assassinations don't actually strategically work anyway, maybe we should just stop doing them well.

[Krystal Ball]

And that's the other thing that we kind of breezed over is the. Not even the ethics isn't the right word, because I wouldn't expect the media to ever discuss the ethics of an assassination. But even the legality and the legitimacy of that as an act of war, military experts have serious debates about that. It's not actually just a given. So to your point about including the context in the question, it's essential to understanding what's happening right now.

[Saagar Enjeti]

Yeah, and we'll talk to Bob Baer about this later. A CIA case officer who has been involved in planning assassinations and who's written about assassinations. And he too thinks that it's just counterproductive, setting aside the morality of just kind of killing people. It's like also trying to imagine from our perspective, let's say they went out and they killed Hegseth. Like that doesn't actually stop the Pentagon from operating.

[Krystal Ball]

Right.

[Saagar Enjeti]

And what, what a lot of Iranians have said is that some of the most incompetent people had ridden to the top, had risen to the top, and needed to be fired, but couldn't be fired. And so then Israel killed them and they're replaced by more competent people. Like that's, that's a thing. Like, it is certainly possible that if Iran did that to our Pentagon and people rose up from the ranks, the Pentagon could be more efficient. Might be. Might. There's no guarantee that you've made it worse by just in cold blood murdering

[Krystal Ball]

people or that you've made your own. Well, to your point, does it make Iran weaker or does it make Iran more chaotic and more of a risk

[Saagar Enjeti]

for your Pentagon would be like Hegseth was the compromise.

[Krystal Ball]

Oh, my gosh. So speaking of our Pentagon, let's go ahead and put this next element up on the screen. We are seeing here The Nimitz class US Navy aircraft carrier USS George H.W. bush has departed from Norfolk, Virginia as of yesterday on a scheduled deployment. The ship and its strike group are likely en route to relieve the USS Gerald R. Ford carrier strike group in Europe Really? I was gonna say striking, but that would be like. I didn't mean it as a pun, but striking to see this, Right?

[Saagar Enjeti]

Everybody check your lint traps. You know the last one. But does anybody out there believe the story that it was really just a lint fire or whatever that just randomly

[Krystal Ball]

sparked on the Gerald Ford?

[Saagar Enjeti]

On the Gerald Ford that has it now out of commission for like ever.

[Krystal Ball]

The Ryan Grimm theory is that they

[Saagar Enjeti]

either sabotaged or they got struck and aren't admitting it.

[Krystal Ball]

Or your theory is also that they

[Saagar Enjeti]

really don't want to be there sabotaging the ship. They definitely don't want to be there.

[Krystal Ball]

But then they sabotage their ship by a laundry, which is one way to do it. We can put the next element up on the screen. This is a drop site post US Embassies to coordinate with Pentagon Psyops unit and Elon Musk. We should also mention that when we were listing out those big tech companies before, Tesla was one of them. Again, not surprising. But if Elon Musk were still in our government in the same capacity that he was at this exact time last year, Ryan, I think what many people who are following the story closely understood, which is that he's so deeply intertwined at almost every layer of our national security, actually our government overall, but especially the national security apparatus. This post from Dropsite makes that very clear. It's about a Guardian story. But man, what might Elon Musk's motivations in all of this have been?

[Saagar Enjeti]

And what's funniest about this whole thing is that this is the Pentagon basically super worked up that they keep getting community notes on Twitter on their posts because they live on Twitter, they're still there and they hate it when people successfully community note one of their posts. And so this is an effort to deploy the, the resources and the manpower of the Pentagon to fight back against community notes on Twitter. And they said they're going to, and they're going to use kind of credible local allies to. It's because it's kind of, you know, I think it's hard for them when they're just rolling out their own stooges and flunkies to sound credible. So they're like, we got to find some more credible voices and we, we got to downvote these community notes. So the war effort is going to very solidly.

[Krystal Ball]

Starlink is not a non factor in this war. Tesla is now one of the companies that the IRGC has said that it's targeting. And so the flow of information domestically is not nothing extremely Significant. And so this is the State Department. It's the cable from the State Department. I'm reading from the Guardian report here, quote, signed by the Secretary of State, Marco Rubio on Monday and obtained by the Guardian. Also suggests embassies and consulates work alongside the US Military's Psychological Operations Unit to address the problem. Ryan's lac of rampant disinformation. It lays out a sweeping set of instructions for how embassy staff should push back against what it describes as coordinated foreign efforts to undermine American interests abroad.

[Saagar Enjeti]

The downvoting will continue until morale improves. Yes, excellent.

[Krystal Ball]

Perfect.

[Saagar Enjeti]

So Pete Hegseth was asked, so why are we doing this and how long are we going to do it for? And if you want to feel comforted before Trump comforts us again this evening at 9pm let's roll a little bit of our war secretary here.

[Pete Hegseth]

Not a question I'm going to answer or the president has said definitively we have our own goals and guidance and things were military objectives that we're moving toward and things that we look at. And as he's articulated, you know, he said four to six weeks, six to eight weeks, three. It could be any, any particular number. But we would never reveal precisely what it is because our goal is to finish those objectives and we're well on our way.

[Saagar Enjeti]

Excellent. Okay, Mr. War Secretary, what about opening the Strait of Hormuz?

[Krystal Ball]

Is opening the Strait an essential objective to Operation Epic Fury, or is that the job of those other countries?

[Pete Hegseth]

Our core objectives from this podium, from day one, from me, from the chairman, from the president, from the vice president, from Secretary Rubio and others have been clear. Defense, missile production and missile programs. So their entire missile program, defense, industrial base and production, ability to build and navy and power projection. So those have. And then, of course, wrapping it all. Is Iran's never going to have a nuclear weapon. So those have been very clear. Defeating the Navy is a core part of ensuring they can't project that kind of power. But ultimately, I think the president's truth this morning lays that out very well, that this Strait of Hormuz issue, which we've set the conditions for success, and we will make sure Iran knows that very clearly is not just a United States of America problem set. We've been willing to lead President Trump's lead the entire time, but it's not just us. So ultimately, I think other countries should pay attention. When the president speaks, he's proven that when he speaks, he means something. And he's pointing out, you know, you might, might want to start learning how to fight for yourself.

[Saagar Enjeti]

What I love about this guy is that he is the most obvious. Cs get degrees frat boy that's ever risen to like this level of power. And to hear him say not who's

[Krystal Ball]

ever risen to maybe who's ever risen on camera so much to this level of.

[Saagar Enjeti]

To hear him say we've set the conditions for success to explain his failure is just so delightful. It's just such an amazing turn. Did I get a B on the test? No. But I set the conditions for success. I did not succeed. And that is your fault. And if you want to succeed, you should go ahead and succeed. What I did is I set the conditions for success.

[Krystal Ball]

Yes, but he's also having to explain the conditions his boss, the commander in Chief, sets for success that are constantly shifting and impossible to pin down. Likely even if you're his war secretary. I mean, that's a job nobody's going to want. That makes an already impossible job even harder. And it's so embarrassing when it comes

[Saagar Enjeti]

to this strait of her moves issue. We have set the conditions for Success. Reminder. On February 28, when the US launched a surprise attack on Iran, blowing up our negotiations and blowing up a girls school and killing at least 165 little girls and their teachers, the Strait of Hormuz was open. Now it's not. But Hegseth has set the conditions for success. Who is going to take us over the top to success? None other than the United Arab Emirates. We can put up a seven here. The Emiratis are saying that they want to join in the fight. They have bought a whole bunch of fancy F15s. They've trained up their pilots. They famously have a couple of female fighter pilots which they used against isis. That was their big kind of propaganda effort to say, look, you know, look at how progressive and forward thinking we are.

[Krystal Ball]

It's not just that they can drive cars. Women can also.

[Saagar Enjeti]

They can even drive fighter jets. So they want in. They want in on the action. The UAE has been pushing for a strike against Iran. I believe it was 2010 or 2011. Yousef Al O Teba at the Aspen Institute let slip at the time that he wanted the US to bomb Iran. That was a big scandal at the time, created this rift between him and the Gulf countries in Iran. Ambassadors were recalled, et cetera. But it has been part of their, their national security strategy to attack Iran for now, going on about at least 15 years. They finally get what they want. It's complete catastrophe for them. Probably marks the end of the era of Dubai as we know it, but now. And they recognize that. They recognize that if Iran ends this conflict in control of the Strait of Hormuz, they're going to just tax the hell out of Dubai. And, you know, how are they then going to have indoor skiing?

[Krystal Ball]

Well, yeah, I don't. This is where the speech that Donald Trump is set to deliver tonight is very interesting because the timing, I'm curious, Ryan, if you think some of it is that Trump is trying to mitigate. Like, as you just said, this could be the end of Dubai as we know it. And that applies to not just Dubai, but other Gulf states. So what seems possible is that Trump is trying to mitigate the obvious fallout that was utterly predictable. But he's trying to kind of snatch the bleeding by coming up with a way to like say the, I mean, he keeps saying the war is over, but to like deliver a formal address to the nation saying, we're done, it's

[Saagar Enjeti]

over, mission accomplished, we'll see. And then because we have a three day weekend, the markets are closed on Friday, then maybe he launches another surprise attack. Like it's almost not even worth listening to the guy. And Robert Pape is going to talk about that. I think when we have him on. Okay, you can listen to him. Like, if you don't have anything else to do, but do not credit what he says as meaningful. I think Carolyn Levitt had a great quote yesterday where he said when the president says something, it means something. Well, but it doesn't necessarily mean what he said. Yes, it might mean something, but then you have redefined the word meaning.

[Krystal Ball]

Well, it's, it's, this is what he wrote about in Art of the Deal. Like he uses words to negotiate. Like he uses meaning to your point. Like that's an intentional. We talk about this all the time. Like, it's Happy Liberation Day anniversary to all who celebrate. We talked about this all of the time in the wake of original Liberation Day last April 2, which is, it's, to some extent you can understand how in business deals talking like that is a tool and an advantage. If it goes on for a year on tariffs and then it's going on for weeks in a war. It's not like you're just building a new casino. It's so obviously not like you're just building a new casino. And yet it's where we find ourselves.

[Saagar Enjeti]

And as a senior administration official put it to Axios this morning, quote, this isn't 3D chess, it's 12 dimensional. He contradicts himself regularly. So nobody knows what he's thinking. It's on purpose, unquote. Well, the world is just kind of moving on and just trying to say, okay, you know what? We actually, we don't know what this guy is doing, but we got to prepare ourselves for what is obviously coming. Which again, by the way, extreme hardship.

[Krystal Ball]

That again, by the way, is very similar to what certain major companies and countries have bet on with Liberation Day. And the negotiating principle has been very similar to create a totally unpredictable environment. So much so that people bet on the United States. This is like steel manning the way Donald Trump would describe this chaotic, if he even described it in a way that was coherent. But this is the Steelman argument behind his threats that are all over the map. And what we're seeing is the opposite of the intended effect. Even when you try to understand those intentions, which is like nailing spaghetti to a wall.

[Saagar Enjeti]

Yeah, well that steel man is still being made with foreign steel manufacturing jobs way down over the past year.

[Krystal Ball]

The decline is slower than it happened.

[Saagar Enjeti]

Okay, well there we go. Good for Trump. All right, so Keir Starmer, UK Prime Minister and Anthony Albanese, the Australian Prime Minister are out there freaking everybody out because they are absolutely freaked out. Europe is, Europe and Asia are basically moving into like redos of COVID lockdowns at this point when it comes to energy usage. We, because we're a little bit down the pipeline, haven't quite started to experience what they're experiencing now. But let's roll. Keira Starmer, just to get a sense of, oh, this is, this is getting real.

[Keir Starmer]

It is now clear that the impact of this war will affect the future of our country. So today I want to reassure the British people that no matter how fierce this storm, we are well placed to weather it and that we have a long term plan to emerge from it a stronger, a more secure nation. First, let me say once again this is not our war. We will not be drawn into the conflict that is not in our national interest. And the most effective way we can support the cost of living in Britain is to push for de escalation in the Middle east and a reopening of the Strait of Hormuz.

[Saagar Enjeti]

So that comes after the kind of conservative Prime Minister of Italy Meloni said that the US can't use its bases or fly over for the war effort. And the left wing government of Spain has said the same. Anthony Albanese in Australia also warning his country that, yeah, things are getting rough, let's roll a 10.

[Anthony Albanese]

Making sure that we are prepared so that if the Global situation gets worse and our fuel supplies are seriously disrupted. Over the long term, we can coordinate the next steps together. Today we cut the fuel excise in half, cutting the tax on every litre of petrol by 26 cents. Those savings have started showing up at your petrol station. For our truckies, we have cut the heavy vehicle road user charge to zero. Both these measures will be in place for the next three months. And if you're hitting the road, don't take more fuel than you need, just fill up like you normally would. Think of others in your community, in the bush and in critical industries. And over coming weeks, if you can switch to catching the train or bus or tram to work, do so. That builds our reserves and it saves fuel for people who have no choice but to drive and all those shift workers and nurses who do so much for our country. The months ahead may not be easy. I want to be up front about that.

[Saagar Enjeti]

All right, Emily. So the entire world is rationing fuel now.

[Krystal Ball]

I don't see what could go wrong.

[Saagar Enjeti]

Doesn't seem great. So there was also a related development which.

[Krystal Ball]

Sorry, I just. Like that affects the cost of everything. Nobody needs me to say that, but that affects the. The cost, absolutely everything.

[Saagar Enjeti]

And we're moving from the cost of things to the existence of things.

[Krystal Ball]

Scarcity.

[Saagar Enjeti]

Yeah. This is bleak. And again, for what? And this is where I think Israel does not quite recognize what it's gotten itself into, because the publics in Australia, in Asia, in South America, in the uk, in Europe, and when it hits us in the United States are going to understand that whether you want to blame Trump for going along with it or not, Israel wanted this war. Israel very clearly and publicly and for decades wanted this war. They got it, we're all paying for it. So last night AOC met with DSA to go over their kind of re endorsement process called democratic process that they have. And what emerged from it are two significant shifts. One, she said she would in the future always vote against what's known as the IHRA definition of anti Semitism, which says that any criticism of Israel is also then therefore anti Semitic.

[Krystal Ball]

Yeah.

[Saagar Enjeti]

And she said, no, I will vote against that. That should not be enshrined. She also said, and we can put up a 8 here, that she will no longer. The quote is she's committed to voting against, quote, any spending on arms for Israel, including so called defensive capabilities. And this had been a flashpoint because for years she had supported whether or not she had voted for it or not. She had kind of supported the idea of iron Dome and other, quote, unquote, defensive weapons for Israel. She has tried relentlessly to chart what she understood to be kind of a reasonable middle ground where she could be seen and taken seriously by all sides and could help to be some kind of conciliator or, you know, bringing people together here that she would say, you know, innocent Israelis, you know, should not be subject to, you know, indiscriminate rocket attacks. What she's finding here, clearly, is that that's just not a sustainable position with Israel kind of lashing out constantly around the region.

[Krystal Ball]

Well, I was going to say, actually, it gets the point you were just making about. I mean, you just said Israel doesn't necessarily know what it's unleashed by provoking this war for so long. And there are plenty of people in the American government who have also been provoking and trying to bring us into this war for years as well. Because I imagine for aoc, I mean, I don't know how you've done extensive reporting on this. I don't know how sincere that middle ground position was, but this is clearly sincere. I mean, I think this sounds like the authentic aoc. The authentic aoc.

[Saagar Enjeti]

I think it was very sincere. I think that she genuinely thought that she could be somebody that could bridge these camps because she thought she could have credibility with both sides. You know, she. She was ruthlessly attacked by AIPAC and its allies. And so there was no political benefit to trying to play this reconciliation role.

[Krystal Ball]

And now.

[Saagar Enjeti]

And there was. And there was only then criticism from the other side.

[Krystal Ball]

Right.

[Saagar Enjeti]

And then what does Israel do with our endless, quote, unquote, defensive weapons? They're invading and occupying Lebanon. They're trying to annex the West Bank. They start a war with Iran. They refuse to, like, move to phase two with Gaza and allow any reconstruction or reasonable aid. They carried a genocide there. So at some point you're like, you know what? There's no political benefit for this. The country won't go a week without going to war or invading one of its neighbors. And so why am I going to kind of drag my own potential presidential campaign down over an issue that. Where I don't get any credit for it anyway?

[Krystal Ball]

The incentive structure has changed. This is an indication of how the politics have changed.

[Saagar Enjeti]

Yeah, and tough this is. This will be tough for Gavin Newsom. I think it'll challenge Ro Khanna, who I think has still been supportive of quote, unquote, defensive weapons. It's going to be like. Well, because the public is not going to. When the public is looking at $150 a barrel, five, six dollars gas. They're not going to want to hear about these distinctions about offensive and defensive weapons.

[Krystal Ball]

Right, Right.

[Saagar Enjeti]

So like they're just using our weapons to create chaos and expand their territory in the Middle East. Why should we keep doing that? Is I think what you're going to hear from the public and definitely from Democratic primary voters.

[Krystal Ball]

Well, let's get now to Professor Robert Pape, who is going to brief us on the ESC Escalation Trap. Well, as we mentioned earlier in the show, Donald Trump plans to address the nation on the Iran war with a quote update at 9pm Eastern live tonight. Now we're joined once again by Professor Robert Pape. He's been on with Crystal and Sager and is of course author of the Escalation Trap Substack, where he's going to be doing a live briefing on Saturday and wrote actually just like nine hours ago, according to Substack. I don't know if you've got enough sleep, Professor Pape, that Trump may say, oh, gosh, that's not enough. Trump may say the war is over. He's wrong. Professor Pape, of course, is professor of political science at the University of Chicago. You can and should follow the Escalation Trap on Substack. Professor, thanks so much for joining us.

[Professor Robert Pape]

Thank you very much for having me. You accommodated my schedule here. I really appreciate that. And I'm also delighted to see speak to the audience here again, which is so crucial. Your audience is so important and I just couldn't thank you enough.

[Krystal Ball]

Well, thank you. And we wanted to start with this clip of Benjamin Netanyahu talking about what Israel's goal for the region might be after the war. Obviously two nuclear or one nuclear nation potentially trying to thwart another nuclear nation from growing, which has been the focus of your entire career, Professor. So let's go ahead and roll the clip. This is the guarantee for our future. We are working on transforming Israel into a super nation in the region and globally. And we were able to do so thanks to our soldiers and our captains and all those who fought and those who died. And of course, thanks to your solidarity and your steadfastness. So, professor, the title, as I just read of your latest post on the Escalation Trap is Trump may say the war is over, he's wrong. Is this why you think if Trump tries to say the war is over, he's wrong?

[Professor Robert Pape]

Yes. What we're going to see, and your listeners will know, I talked about three stages. We've done stage one. We've done. We're stage two. Stage three is the ground power dilemma. Well, if we don't go to the ground war, that's not de escalation as many people would hope. It's going to be a stage four, there's going to be a continuation. And that's what I'm going to explain here. And also more later. So stage four, and this is where Netanyahu is really wrong, is about what will be the new center of world power coming out of this conflict. Netanyahu said it's going to be Israel. He's wrong. It's not going to be Israel. And you can already see who it's going to be today, which is Iran is not just controlling shipping. The way people are describing oil prices, the way people are describing Iran is controlling so much world oil. So much. And oil is so critical to world power that Iran is emerging as a new global center of power. So let me just explain this a moment. So before the war, 33 days ago, there were three centers of world power. We described, we discussed the U.S. russia and China. Now, why was Russia even in that mix? Because it had 11% of the world's oil. And of course, it uses that for military purposes. Says, well, Iran now has double that amount of world oil, more than any other country on the planet. And what that's going to mean are 75, $100 billion a year more to put into military, that nuclear enrichment is now more likely than ever to become nuclear weapons. And over time, as the months and the years go on, which I know we're having a hard time coming to grips with, the reality that's occurred here is that this is going to create a new center of world power and dwarf Israel. This, as you can see right away, for all of our lifetimes, oil has been so critical. And it's not just oil, of course, it's gas. It's the energy, it's the fertilizer. This is what is what Iran has now as a chokehold on the world. But it's 20%. And there's no way you're going to make up for that in the next three or four years. Even if you start drilling now, it will take that long. So Iran is coming out of this, and we've never seen this in our lifetimes, a new world power center created in a month. That's what's on issue here. So whatever President Trump says tonight, whether he wants to go forward, ground war or not, all of this we don't know. And he may not even know let's face it, he's been all over the map. The reality I deal with the realities here and what we are seeing is escalation. Reality with strategic consequences. Those aren't over because President Trump thinks he's going to stop and go to Mar a Lago and just cut himself off from the world. No, the world will have to live now with this new center of world power. And there's no good way to deal with this. This is why I was so opposed to this war with the modeling I've been explaining. This is not like this is. This will end up being worse than Vietnam. Maybe not in battle, death. So the 58,000 dead that took 10 years, however. So we haven't been into this 10 years yet. But it's because of the consequences. There was no way Vietnam was ever going to become a center of world power. It had no nuclear enriched material. It was not going to do shocks. This one was always fundamentally different. And I realized most of the world would not know that. Why should they know that? They're not modeling this for decades. This is what was always coming. And that's why I said this is the horns of a dilemma. It's a branching with where we're at. It's not a. Well, now that we are going to not go forward with the ground war, we can all live happily ever after. Oil prices are going to come down. Iran's just going to give up the power that I'm describing. When was a country ever give up any power, let alone world power? Well, this will be my new discussion points going forward. And that's why I so appreciate coming on your show to share it. You got it first, basically an exclusive.

[Saagar Enjeti]

So I mean, your answer to the question of what country would ever just voluntarily give up power might be the United States.

[Professor Robert Pape]

Oh, yeah. Well, that's what you can. So all that talk of America first. Okay. I've been trying to argue for America. I'm not using Trump's language, I'm not a supporting that, but I'm just pointing out that was always cheap sales talk. Cheap sales talk. What you're getting now is the reality, sir. And what you are seeing is as the four centers of power now, there are now four. America's the one going down, Russia going up, China's gonna be going up, Iran's going up. Who's going down?

[Saagar Enjeti]

And so we have a little breaking news on this nine o' clock event that Trump is having. So let me get your reaction in real time. So he, he did one of these very Brief interviews with Reuters about what he's going to talk about. And he told Reuters he's going to express, quote unquote, my disgust with NATO. And it sounds like it's going to be significantly a broadside against NATO. And he said he's quote, absolutely considering withdrawing U.S. forces from NATO. So you've spent decades, he says, modeling these, the escalation trap when countries get involved. I don't know if you've ever had a model with this many variables.

[Professor Robert Pape]

Well, actually.

[Saagar Enjeti]

So this is, but I'm curious how this plays.

[Professor Robert Pape]

Your audience is not familiar with this, but that's not. It is the case, sir, that we deal with this. So let me explain first to your audience, what is NATO? Okay? NATO's not just a political club, a talking club of diplomats. It's a military organization with the American general at the top who gives orders to the other countries militaries. That's what NATO is. Okay. It's a command structure. Right now, today, sir, even though that still is in place, do you believe for a second the British army is going to follow General Kane, the American? Just imagine if General Kaine said British army, you go X. That's just not happening. So what I would just say is we've talked about the fading away of NATO for years. We're not at that point anymore. NATO is dead. NATO is in the morgue and the obituary is what's being written now. So it's already dead. There's no way the Europeans are following the American generals here. And I'm sorry to say even if it's a Democratic president comes in, they're not. We've elected Donald Trump twice now. The idea the Europeans are going to obey orders from American general, not happening. So this is really going to have also major consequences because we never had to worry about this problem of, you know, these little dust ups like on Greenland. Well this, this may be a future here and that's a horrible future. But I'm just pointing out what Donald Trump has done here. This is much larger consequences. And the oil shock and the energy shock is already astounding. I'm explaining there's a stage four here. And this is even as astounding as it's been already in 33 days. My gosh, the next six months we're gonna be, this is gonna be the reverse of the end of the Cold War. The end of the Cold War. We shot up like a rocket. Like a rocket. Those 90s, Bill Clinton's presidency. Oh my goodness, those. Yeah, everybody, you all, yeah, we all Know what? Boy, do we want those days back. Right? Well, this is the other way around. We're now on the other end of this. Going the other way. 40 trillion in debt. Oh, my gosh. Alien. I mean, the, the amount of trouble here, it's, that's why we're, I so appreciate, again, just talking to your smart audience. It's, it is, it's my favorite audience to talk to. It's, it's like being at the University of Chicago. You got, it's just the, you're, you're, I mean, it's just that, that's, don't

[Saagar Enjeti]

pass them up too much. They're going to get big heads.

[Krystal Ball]

But.

[Professor Robert Pape]

Yeah, well, they're good. And it's also your other, the other folks here. I mean, this, you're asking really the right questions.

[Krystal Ball]

And on that point, you, I wanted to ask about this, this thread that you posted yesterday, you mentioned at one point in this thread, watch the deployments. As US Forces move to secure the Strait of Hormuz, the region is already splitting. Iraq is hedging. Qatar and Oman are staying neutral. Saudi and UAE are growing more alarmed. So you posted that Again, according to X22 hours ago this morning we went to the news that I came right

[Professor Robert Pape]

out of class and by the way, so I'm teaching here in just a few hours and essentially all my students are asking. Exactly. And my class are bursting. Okay. They're all asking all of this. So that's where, that's why these thoughts are there because I'm already talking to my students about these. So what you are seeing. Oh, go ahead.

[Krystal Ball]

Well, I was just saying we woke up this morning and news that Amazon had been hit in Bahrain and that the ICC is threatening all of these major defense contractors in the Gulf region. And I was curious, from your perspective, professor, that seems like very obvious tripwires around the entire region where you could end up seeing boots on the ground to potentially defend those major defense contractors.

[Professor Robert Pape]

Well, you're seeing this, that we're on the horns of the dilemma. So you're seeing right there, do we defend it or do we go away? You see, this is what we're looking for here. And I suspect whatever President Trump says tonight, two weeks from now, we'll see where we're really at. That's why I say follow the deployments. Right now, we have another carrier coming to the region. We have more special forces being mobilized. We have the additional Marines coming until those forces literally reverse course in the water. And the Marine muse, that big hunk of metal ships with all those equipment, go back to Japan and go back to California and we start pulling out forces from the region and moving them to other parts of the world. This is not a reality. The rhetoric here, we've got to see that's what that deployment is. And also what you're also seeing is the second point I made is that Iran, I warned before that as Iran's horizontal escalation would continue, you would see the fracturing of the gulfs of states. That's exactly what you're seeing. And Bahrain, I explained in that tweet here, there's three groups in the Gulf states now. There's those already bandwagoning toward Iran. That's Iraq. There's those that have been in the middle, that is Oman and Qatar, and they're desperately trying to duck and avoid any getting. But they're in the middle. They're not pro America now. And now you have the others and Bahrain, uae, these have been focused here. They have some Shia, they have, there's real reasons to pressure those particular states. And that's what you're seeing Iran doing. They're being extremely smart about how they're fracturing those three pools. And what they're doing is breaking the coalition. We're not growing. We just talked about the end of NATO, where our coalition's falling apart here. And they're picking up pieces. And this is the problem. Russia will pick up some more pieces, China will pick up some more pieces. So this is what we are, we are going to see more of. And I don't know if six months from now President Trump may decide he wants to keep American forces and bases there. He may have to fight, fight to keep them there, just where they are today. So I don't mean to grow. I mean, these, the Bahrain has a big base. They may throw us out. And we may have to say, well, we'll have to topple the Bahrain government to keep that. Are we really going to do. These are the choices President Trump has put us in. Now, this is not where we were 33 days ago.

[Saagar Enjeti]

And you had written something that I there was kind of a disturbing insight which cuts against, I think, of a lot of the conventional thinking about how this unfolds. And I think the markets in general seem to think, okay, this can't go on because it's going to destroy the world. The longer this goes on, the more energy volatility we have. And by volatility, actually, it's just heading straight down. It's not even volatile. It's Just down. Trump will back off, declare victory, because the source of the problem, the source of the economic crisis is what Trump's doing. So he'll remove himself from that, therefore removing the source of the instability and the crisis, and we'll be back to normal. That seems to be the market's assumption, which is why they haven't completely bottomed out. Your argument is that, no, this instability actually kind of feeds the cyclical trap itself. Can you walk us through that a little bit? Because that.

[Professor Robert Pape]

Yeah. So the trap is. I've explained it so far here, and let me just repeat that, because it's very helpful, is at each of those stages I described, the Americans are tactically successful but strategically failing. And it's the failure and the counterproductive. We're in a worse position at each stage that sucks us to go deeper into the trap. What I'm adding now is a new layer, and that's what you're, you're noticing. And thank you very much again, smart identification of the newness here. What I'm adding is, and I'm really talking to JP Morgan, I'm talking to Jamie Dimon, I'm talking directly to those people, even though they may never have heard my name, who, by the way,

[Krystal Ball]

the IRGC threatened on that list yesterday. I was going to say J.P. morgan was on the list of defense contractors that the IRGC said are now fair game in the region.

[Professor Robert Pape]

Exactly right. I'm trying to explain why their assumption is fatally flawed for their business. I don't just mean like cocktail chatter. Okay. I'm, I'm trying to go to the heart of the matter. And, and the heart of the matter is they're assuming that the root of this can be snagged out by just simply Trump walking away. And I've heard Jamie Dahme yesterday talking about this on Fox. He's just wrong. It's just flat out wrong. And the reason is because we have created, through no intention, but we've created a new center of world power. And Iran is not going to stop trying to grow that power. They're going to want to exert more influence in the Persian Gulf. And that's what you're seeing in those Amazon attacks. And absolutely, they're going to want to knock JP Morgan and Amazon out. That's, that's Western imperialism as they see it. And they have a lot of power. And especially as if Trump pulls back, they will have even more power then they also have growing power in Asia. I've been talking to the Hong, Bloomberg Hong Kong Others in Asia. So much of the oil from the Middle east goes to Asia. And Asia right now is in a supply crunch, not just a cost crunch, but there is in the Philippines, there's 200 million people in a supply, supply crunch here, almost the size of the United States in Asia. This is generating enormous power for Iran and also in relation with China, they can do more and more together. And so what you're going to see here is this fundamental assumption that this can all just be blown over. And all we have to do is we're going to apologize for killing the Supreme Leader and yeah, Trump was stupid. And then we're all going to admit that it was just Trump here. We're just going to blame Trump, blame Netanyahu. And Iran's going to just give up world power? No. And who's going to pay the price? The businesses? JP Morgan, Amazon? This is going to have mega effects because they're not up for. If they want AI, Iran's going to get AI from somebody. It's China. And I spent two weeks in China last June touring the AI factories and shops on the, on the robot shop floor to see for myself how the BYDS and so forth are being made. And oh, my goodness gracious, China has enormous leverage here that it can share that AI with Iran. And so this idea that Iran needs JP Morgan, I don't know what, I don't. I'm just trying to explain this is, this is the fatal flaw in that thinking.

[Saagar Enjeti]

And we have other real quick, other breaking news. The manufacturing numbers are out for March and the actual is plus 7.8 points over the consensus, the highest number since mid 2022. This is oil already. Oil prices already funneling their way into manufacturing prices, which is just another way of saying you're getting poorer.

[Krystal Ball]

And meanwhile, professor, stocks, the markets just opened about an hour ago as we're speaking here in the CNBC headline is stocks are higher to start the month as optimism around Iran war ending grows.

[Professor Robert Pape]

Well, sure, they haven't caught up to the reality that I'm explaining. They still think Iran is 4% of the world's oil. They're operating as if we were 33 days ago. And all that's changed is bombing. So we end bombing and everything goes back to 33 days ago. There's just a flaw here. I don't know quite how to explain it. There's a reality, and that reality is Iran is a world power now. And as each week and month goes by, this will become more and more evident. And at some point Markets will catch up. I mean, markets are often, you know, behind. I mean, I, I always say, you know, Washington is three to six months behind and markets are typically behind more than that. That's how you get the balloon. So otherwise you would not have those balloons popping. So I, I, the fact, the market, that's just another group of smart people. I deal with smart people all the time. Everybody I deal with has, is at the University of Chicago is actually really smart. So this is not about smart versus not. This is about how to understand the reality that we're seeing versus the hopes that we also all have.

[Saagar Enjeti]

Well, that sucks. Probably should have done this.

[Professor Robert Pape]

I'm sorry to say it's. But you're allowing me, this is why I keep complimenting you folks. You're allowing me to express it. You're following. You're seeing what's new at each week because the world, I'm not just responding to yesterday's news. I'm trying to explain what to expect in the coming weeks. And I don't think that United States pulling back equals de escalation in the way we would understand it, which is the economic shock here. Iran is going to squeeze countries as they go through. And I suspect they will never let a drop of oil from Saudi Arabia or UAE pass the Strait of Hormuz here because they want to topple those governments. And I think that's why Saudi Arabia is talking to Pakistan, because Saudi Arabia is looking for who's going to help me. And Pakistan's friendly to Iran. So why is Saudi Arabia making these relationships with Pakistan here? They need a backup in case Uncle Trump bails on them. And who would. Yeah, you can see right away you're not counting on Trump. So what are you doing? You're looking for a backup plan. And Pakistan may not be your best bet, but it's probably your only bet here to help. MBS has got a real problem. How is he going to his regime survive in this situation where he's lost that much oil revenue so he can't use money as much as he could before Iran is gaining power? These are the real consequences that I'm explaining by the new center of power. And it's just not likely to change. I just don't see how Iran, even if you got a new regime in Iran, why would they give up all this power?

[Saagar Enjeti]

And Saudi Arabia reached a security deal with Pakistan. And I think the reason that Pakistan was trying to host the mediation talks is that so Pakistan could then tell Saudi Arabia, sorry, we can't participate in this war, we're mediators, but they're not.

[Professor Robert Pape]

Well, I would go a little further. I was just on for half an hour with the big Pakistani media, because I think what's being missed there is, I think Pakistan has been one of the countries understanding this emerging geopolitical power, not just the details. And so if you notice who else was there, you basically had Pakistan, you had Turkey, you had Saudi Arabia, you have Iran. This is the ant. There's a growing anti American coalition that is emerging here. As soon as we talked about arming the Kurds, we effectively lost Turkey. I mean, Turkey's got millions of Kurds. The idea we're going to arm the Kurds. The first thing those Kurds are likely to want to do is turn on Turkey. So. So this is already our ideas here are just doing everything to push away those. Those countries. And Pakistan is starting to build coalitions here. So I don't think this is just about being Mr. Nice Guy Pakistan. Let's be nice. I think that what you're seeing is the reality of how the geopolitical game is played.

[Saagar Enjeti]

All right, Professor Robert Pape, author of the Escalation Trap Substack. Probably have to talk to you again next week to get more pressing news about how we feel about it.

[Professor Robert Pape]

I'm very glad to do it. So. And thank you so much, really. Thank you. That was excellent.

[Krystal Ball]

Thank you.

[Saagar Enjeti]

You got it. All right, we'll see you later. Up next, little rundown on the economic news. And guess what? It's not great.

[Krystal Ball]

More bad news. Major announcement from Oracle yesterday. We could put C2 up on the screen here. The headline oracle slashes 30,000 jobs with a cold 6am email. 30,000 jobs yesterday. Now we can move back to element C1. Put that up on the screen. The economic indicators are starting to look very bleak indeed. This is a quote from reporter Steve Lookner, who said in a speech with echoes of the early days of the coronavirus pandemic. This is pulled from a political Europe article. EU energy chief Dan Jorgensen said Europe was facing a very serious situation with no clear end in sight. Ryan Trump has teased the speech to The Nation at 9pm last I checked, futures were up, which is interesting given all of this news that we're going through right now. But let's say we didn't have this announcement about a Trump speech. Hypothetically say we have absolutely no idea what he's going to say, which isn't just a hypothetical. That's always true of Donald Trump. People seem to believe he's going to indicate a kind of mission mission accomplished type moment. Public relations, end of the war, we've won, we're successful. What do you make, what do you make of the economic indicators? Is he responding, let's say to some of this really bleak, some of the bleak prospects from places like Europe which are saying, listen, this is pandemic level. Possibly.

[Saagar Enjeti]

Yeah. And Oracle is probably what, you know, AI related. Plus a bunch of their money comes from Gulf states.

[Krystal Ball]

They're also on the IRGC list of companies to target.

[Saagar Enjeti]

Yeah. And so this is a clash between the ability of a president to manipulate markets and actual reality. And so actual reality with the Gulf countries, which are major financiers of Oracle, are struggling because they're getting bombed constantly. And their ability to produce the thing and distribute the thing that, that undergirds their wealth is being undercut by the war. Trump thinks if he can tease that the war is going to end constantly, that that will kind of prop up the markets. But at some point people actually need the things that are being produced and they're not able to get them. And it's not just fuel, you know, helium, which is a by, you know, I guess it's a byproduct of the process of making natural gas or you need it, you know, don't take your scientific news from me.

[Krystal Ball]

I only get science news from you.

[Saagar Enjeti]

It's, it's very hard to get helium. Now we're entering a helium shortage. Liquid helium is essential to actually AI, but also, you know, MRI machines and all sorts of other like advanced technology because it is able to be cooled to an extremely low temperature, which is essential to a lot of magnetic technology that's related to these, you know, high end processing functions. Fertilizer, which is now this, I can tell you something about spring is when you plant things that I can tell you, if you didn't know that it's now spring. So there's two pieces of information. The fertilizer runs through the Strait of Hormuz. China has basically stopped exporting fertilizer because they realized they need it for their country, dastardly Chinese. And so all around the world, farmers who are beginning the planting season do not have the nitrogen rich fertilizers, phosphorus rich fertilizers that they need. That is going to, again, helping you out here mean that there's going to be less food, which means people are going to starve and people are going to pay more for, for food. Your quality of life is going to go down. And that's money that because you have to spend money on food. That's money that you're not going to have for other things.

[Krystal Ball]

And let's take a look at these numbers that Joe Weisenthal pointed out yesterday. This is the next element. Will the employment situation compound what Ryan was just describing? Weisenthal, looking at new. The new Jolts report said, wow, the hiring rate in February hit the same level. It didn't April 2020.

[Saagar Enjeti]

So April 2020. What was going on in April 2020? Was anybody hiring in April 2020? No, nobody was hiring. In other words, nobody is hiring today, like right now. This is one of the things that

[Krystal Ball]

got a new class of graduates about to enter the workforce, right?

[Saagar Enjeti]

Yeah. Yes, people. I feel so horrible for people who are graduating in, in May entering the workforce, quote, unquote workforce. This is. We've seen this for about the last year, even before it was showing up in the data, right. Readers, viewers were telling us this. People in our lives were telling us this, that like. And hiring managers were telling us this, that, like, there just are not job openings, that unemployment is remaining fairly low relative to historical highs. But if you do not have a job, trying to find one is, like, impossible. And all of these companies are putting out fake job openings for data purposes. Have you seen this?

[Krystal Ball]

Yes, I've absolutely seen this.

[Saagar Enjeti]

And so people are then applying to all these fake jobs, of course, not getting an interview or anything else, because it's not a real job. That should be illegal, by the way. And you know, they're using AI in their HR departments. The people who are creating their resumes are using AI to brush them up. So is AI talking to AI and humans? And humans are just, as you see in that chart, just cut out of

[Krystal Ball]

the equation and they're feeling it. The humans, unlike the robots, are responding. Let's roll. C4.

[Saagar Enjeti]

I struggle every day, and now I'm taking care of my mom, who's older, being denied simple, simple things like breathing meds.

[Professor Robert Pape]

So gas.

[Saagar Enjeti]

What are you going to do? So I don't eat this week because I have to take mom to the doctors tomorrow.

[Professor Robert Pape]

If you could pick one word to

[Saagar Enjeti]

describe the economy, your economy, your economic

[Krystal Ball]

situation right now under these conditions, one

[Saagar Enjeti]

word to describe that. Desolate.

[Krystal Ball]

So that was just a normal man from Florida that Ms. Now interviewed about the state of the country yesterday. And Ryan, one of the interesting things I saw in a report about tsa, I'm trying to remember which publication was off the top of my head, but they did a great interview with a TSA agent who said he actually Was he part of a strike? Yes, it sounded like he was part of a strike, but he actually couldn't fill his gas tank because he hadn't had a paycheck to commute.

[Saagar Enjeti]

Right.

[Krystal Ball]

Which when you put two and two together, is completely obvious. But that's what gas price. I mean, these are. I passed the gas station this morning. It was like 5, 20. And those are levels where obviously, I mean, gas prices are always a persistent problem for the American people, but that's

[Saagar Enjeti]

something they talked about in Cuba a lot, that people didn't have the gas to get to work.

[Krystal Ball]

And Trump has always, always, like with the market, tied his political success to things like gas prices and the stock markets. So maybe that explains whatever he's going to say tonight. We don't know yet. But the, the pressures are obvious probably to anybody outside. When they're obvious, people in D.C. you know they're bad. When, when Washington is talking about the economic pressures, you know they're bad.

[Saagar Enjeti]

Yeah. And airlines are canceling a bunch of flights because in order to, like, you know, they, let's say they sold a plane load full of tickets at 300 bucks when Jet fuel prices were what they were back in February. Now to, to operate that flight, they might lose a million dollars. So they're like, you know what? I don't think we want to lose a million dollars. Now, there's laws about whether or not they can actually do that. Guarantee you they're combing through every possible mechanism they can to say, oh, it's not because of the, that we're losing money on this flight. It's because of something we didn't foresee. Whatever it is, don't worry about it. So you're just like, just, oh, your flight's canceled. Now, if you want to rebook, here you go. It's going to cost you $1,500. Now,

[Krystal Ball]

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