Knock Out Punch
Tuesday, April 7th, 2026
Bill Bonner, writing from Baltimore, Maryland
‘Hey...maybe there’s more to war than just blowing things up.’
—A thought bubble finally appears over Pete Hegseth’s head
Our strategic objectives in the war, such as they were, have already been accomplished: We went. We saw. We kicked butt.
We are now just inflicting gratuitous violence.
And, if some analysts are correct, we will soon pay ‘reparations’ to fix what we have broken.
As of this morning, despite the 32,000 bombs dropped on Iran — the mullahs have not cried ‘uncle.’ The Strait of Hormuz is still under Iranian control...countries who want to use it will now have to negotiate with the mullahs — and pay. Nobody seems to think it can be liberated by pounding the Iranians harder.
Whether this outcome is a victory or a defeat depends on who you talk to. But it could be worse. And now emerging, like spring flowers, is a pullulating industry of early ‘post-war’ analysis and forecasting. Of course, no ‘final,’ apocalyptic battle has yet taken place. No Appomattox Courthouse. No surrender on the USS Missouri. Trump has not put a gun to his head. So, the reckonings thus far are purely speculative...incomplete...and subject to change without notice. Nevertheless, some useful insights are emerging.
Trump fans, of course, see nothing not to like in the way the war has gone so far. The stock market has not crashed. Gasoline is still under $5 a gallon. If kicking butt is an end in itself, the results are acceptable. And since no other war aim was clearly identified, this appears to be a coherent way to look at it.
But the trouble with kicking butt as a strategy is that it rarely leads to a felicitous outcome. It makes the kicker feel better about himself. More in control. Stronger. More resolute and manly. But it leaves the kickee hoping to return the favor, and looking for a steel-toed boot.
And maybe it is no victory at all.
Several analysts are already claiming that Donald Trump was “befooled by Iran’s grand strategy.”
That strategy was hardly ever hidden. A variant of the old ‘rope-a-dope’ technique used by another famous Muslim — Mohammed Ali — against George Foreman in the ‘Rumble in the Jungle,’ 1974, it allows the heavy hitter to pound away, exhausting himself. Then, the lighter opponent goes on the attack.
In the Iran theatre, the mullahs had no chance of matching US/Israeli muscle. All they could do was to hunker down...and make the Strait of Hormuz dangerous to transit. And while the warfighters can still bomb at will, the people grow weary. Trips to the gas station are painful.
America’s allies saw the problem early on...and refused to join in. Now, they approach Iran to negotiate terms of passage. But Iran demands ‘reparations.’ And here is where it gets interesting. The reparations machinery seems to be already in place. Iran will insist on a ‘toll’ to pass through the Strait, paid by the shippers and ultimately passed along to consumers. The money will be used to rebuild the schools, bridges, and military installations that have been destroyed. The worldwide price of oil will have to rise – and stay up – to cover the tolls. Thus, in theory, US consumers will pay for both sides of the conflict – at the pump.
This is such a remarkably favorable outcome for Iran, some see a new dawn for the once-benighted country. Solidarity.co.nz:
Professor Robert Pape, a top US expert on warfare, based at the University of Chicago, says Iran will likely emerge from this terrible war as a super-power. Many analysts, such as Colonel Daniel Davis, Mark Sleboda, Annelle Sheline, and John Mearsheimer, now see an Iranian victory as likely. Pape himself has run simulations of US-Iran wars for decades and is clear: “Trump made a huge mistake”.
...For the moment, the Americans and Israelis are enjoying success after success: killing leaders and school girls, blowing stuff up and so on. “That can be mesmerizing, and cause this illusion of precision control but it is not the same thing as a strategic victory. Iran before the war controlled 4% of the world’s oil. Twenty-six days later they control 20% of the world’s oil.”
As Trita Parsi of the Quincy Institute pointed out this week Denmark charged transit fees for 400 years for vessels to pass through the Øresund Strait into and out of the Baltic. Panama, Egypt and Turkey all charge transit fees.
Of course, none of this will matter very much if Iran is actually ‘obliterated.’ Trump has not only threatened to target civilian infrastructure but to ‘take out the whole country.’
What that means, exactly, is hard to say. A higher oil price most likely.
Stay tuned.
Regards,
Bill Bonner
Research Note, by Dan Denning
On August 31st, 2020, Salesforce (CRM) replaced ExxonMobil (XOM) in the Dow Jones Industrials Index. Since that time, CRM is down 30% while XOM is up over 400%. Exxon has been a Dow component since 1928. It’s replacement was supposed to mark a symbolic transition from an industrial economy to an information economy. Oil was up over $115/barrel this morning on news that the US conducted airstrikes on the Iranian oil terminal at Kharg Island ahead of President Trump’s 8pm deadline to open the Strait of Hormuz. XOM is one of seven energy stocks BPR Investment Director Tom Dyson added to the Official List of recommendations in early December of 2025. Tom’s weekly market note for paying subscribers will be published tomorrow.
Your President is a loose cannon. It can't all be blamed on age, still, a 28th amendment to make a presidential candidate no older than 70 years on taking office, might be worth some thought.
Wondering if it would be possible to constrain shipments of energy originating in the U.S. by also imposing an export fee here? If so, would this then birth a new and separate domestic energy market. One added alongside the WTI or Brent Crude indices? One that would result US energy consumers having a lower energy cost than others?