Tuesday Morning Notes

Iran blinks, warning signs for China, and other misc. items that are making Trump smile.

As morning breaks here overseas, I notice that Iran seems to have tacitly sued for peace, after having shot off a few of their remaining missiles in a non-serious way meant surely for domestic consumption. One strong sign the mullahs are retreating to their unmanly caves is that oil prices are falling sharply and stock market futures are up a lot ahead of Tuesday’s market opening. Financial and commodity markets are neither fully rational nor perfect leading indicators, but markets usually bias toward anxiety and potential risk.

But as the classical political philosopher Yogi Berra once cautioned, “It ain’t over till it’s over,” so we should be careful about our certainty. As of this writing, there are reports of continuing Iranian missile strikes against Israel. Even if you think the mad mullahs might be up for more pummeling at the hands of the Israeli air force, keep in mind the dogma that also guided Osama bin Laden that the U.S. and the West were the “weak horse.” Who looks like the weak horse now? More like a dead horse. Like bin Laden.

I have to say one of the most satisfying parts of this episode is Trump’s superbly humiliating social media post saying he hopes Iran “has gotten it out of their system” and that “I want to thank Iran for giving us early notice” so that no lives were lost.

A couple days ago it seemed possible the mad mullahs might escalate by trying to close down the Strait of Hormuz, but this threat evaporated immediately. I suspect they may have received a phone call from China, which sources a large proportion of its imported oil from Iran (at discount prices), and likely doesn’t want the economic disruption it would cause China’s fragile economy.

Which brings me to another aspect that has received little notice and comment. Everyone is saying the squad of B2 bombers that Trump sent to Guam late last week were a diversion from the main B2 attack that flew east from Missouri. But maybe the B2 deployment to Guam had a dual purpose of sending a message to China? China has lately stepped up its incursions and harassment of Taiwan and the Philippines, and maybe sending a few B2s that direction sends the message that we are noticing.

But while we’re on the China subject, I think I’ve spotted what might prove the undoing of China, and it won’t be American military might. It will be succumbing to the same “elite over-production” that has ruined so many elite institutions in America. Nature magazine reports:

In China, the number of doctoral students has doubled — from around 300,000 in 2013 to more than 600,000 students enrolled in PhD programmes in 2023. “The numbers are massive, and they keep growing,” says Hugo Horta, who researches higher-education policy and practice at the University of Hong Kong. There are several factors driving this growth, Horta explains, such as the increasing number of people with bachelor’s and master’s degrees, and the expectation among many in the country that an investment in higher education will provide better economic and social prospects.

But the number of jobs in academia has not kept pace with the growth in PhD holders, says Horta. People coming into these doctoral programmes are, for the most part, training to become academics, so many future graduates are going to face fierce competition for any position, he says.

Strangely, by the way, the supposedly bullet-proof computer science majors in American universities aren’t looking so good right now either. From the most recent labor market report of the New York Fed:

Happy TACO Tuesday! And thank you for your attention to this matter!