Most of you know that I am an optimist (though often disappointed). But I am quite optimistic that Trump will declare victory in his and Israel’s illegal war in Iran very soon. Moreover, he will offer Iran enough (lifting of sanctions, etc.) that they will end their attacks as well, including, of course, insuring safe passage through the Strait of Hormuz. Israel will also end its attacks on Iran (as well as on Lebanon, Syria, West Bank and Gaza) because Trump will tell them to (or is it the other way around).
But here is the really optimistic forecast. Trump will blame the mess in Iran on the worst, most damaging Secretary of Defense we have ever had and fire Pete Hegseth. How is that for good news!
Author: Warren Coats
I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy. I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989. After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017. Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75. I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise. In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.” My recent books are One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina; My Travels in the Former Soviet Union; My Travels to Afghanistan; My Travels to Jerusalem; and My Travels to Baghdad. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon. I live in National Landing Va 22202
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Dear Warren,
You are often mistaken—this is one of those occasions.
Recent polling, including from The Economist, suggests that the President’s support has declined, with roughly a third of the country expressing strong approval. He has clear shortcomings, but he is also pragmatic.
He is unlikely to take a conciliatory approach toward Iran (historically referred to as Persia). That has been a consistent feature of U.S. policy across administrations, including during the era of the Shah. Likewise, Israel is unlikely to fundamentally alter its security posture, as it views its actions as existential.
Speculation about changes in senior defense leadership—including Pete Hegseth—circulates periodically, often tied to political pressure and public perception. Whether that materializes remains to be seen.
Politically, the pressure on the President is increasing. Current projections suggest that Republicans could face challenges in the upcoming midterm elections, particularly in the House. Historically, this is not unusual. Presidents such as Ronald Reagan and Bill Clinton both lost congressional majorities in midterm elections and were nonetheless able to govern effectively by adapting and negotiating with the opposition.
As for personal matters, there are frequent rumors and speculation about leaders’ health. It is best to rely on verified information rather than unconfirmed reports (unconfirmed but recurrent episodes where the Pres has urinated during public speeches).
That said, Donald Trump has proven to be politically resilient. He will need to draw on that resilience, because the period ahead will likely test his presidency in meaningful ways.
Best,Sergio