Rob’s comments below are in italics.Derek’s comments below are in normal font.

You were telling me before we hit record that you’ve been reading a book called ‘Going to Tehran’. You were saying that if the people in the American establishment had read it, it would have saved everyone a lot of heartache!

Yes, it’s called ‘Going to Tehran’. It’s by Flynt Leverett and Hillary Mann Leverett, obviously a married couple. They were policy advisors or analysts in both the Bush and Clinton administrations.

When was this book written?

The book came out in 2013, with a slightly updated edition since.

It gives a very detailed, impartial description of what the Islamic Republican government of Iran has been through since it was created 47 years ago. It explains a lot about the experiences it’s had and why it’s taken the position that it does. It totally undermines the prevailing Western narrative that they’re all lunatics, fanatics and extremists.

The religious regime may not be one we would choose, but it does seem that a large majority of the population are very happy with it. The events of the last year or so have led many younger people — particularly those who didn’t live through the Shah’s rule — to reassess. The Shah, of course, was installed by American and British intelligence services in 1953, overthrowing the democratically elected Mossadegh government. He then ran a very brutal tyranny with a great deal of torture and assassination of anyone who rose up against it.

Didn’t the Shah go to boarding school in Switzerland or something? He was groomed and then put back into position.

He was totally a Western puppet. He was installed because Mossadegh wanted to nationalise the oil extraction processes. Mossadegh wasn’t even going to restrict its use; he just didn’t want it sold off at a knockdown price. He wanted a fair return to the country for the resources being extracted. It’s the same old story.

The recent events have caused many people who were looking to the West, thinking the grass might be greener, to reassess. Anyway, well worth a read. I’m only about 20% of the way through it myself at the moment.

Just while we’re on books — you obviously read a lot. Do you read 20% of a book and then dip back into it later, or what’s your preference?

Usually, if I decide it’s worth reading, I stick with it until I’ve got right through. How about you?

I’m trying to get better at giving up on books that aren’t excellent. So I’m trying to get a bit smarter about it.

I very often read the first page or so and the last page or so of each chapter to get an instant summary. It obviously depends on how they’re written, whether that’s a useful exercise. A lot of writers do open each chapter by giving a rough idea of what they’ll cover.

A lot of them also finish with a brief summary of what they’ve covered, which is good presentation practice anyway. If they do that, you can get a pretty good idea of whether you want to go into the full depth and detail. Sometimes I do that exercise and conclude I’ve pretty much got the drift.

Anyway, very interestingly, Robert Kagan — it’s very difficult to label him. I was inclined to say “right-wing,” but “right-wing” and “left-wing” no longer make much sense.

‘Right-wing’ just means he says things the establishment doesn’t agree with, doesn’t it?

Not in this case — he is the establishment. He’s the husband of Victoria Nuland, who was Assistant Secretary of State at the time of the 2014 overthrow of the Ukrainian government. So he’s a militarist, a warmonger.

I remember her. He’s part of the swamp.

In this article, he actually says that the Iran conflict is the biggest defeat in US history. So you’ve got somebody from the core of the American establishment effectively taking it for granted that the conflict is lost, whatever happens from now on.

He says the only way it could be resolved is by a land invasion and occupation. I don’t know whether he’s saying this to strengthen the military’s resolve to go ahead and do that.

It seems blindingly obvious that any attempt to do that would result in an even more humiliating defeat — and a more decisive one.

Of course, Trump was probably hoping, with this visit to China, to get some sort of support in getting the Strait of Hormuz reopened. They gave a very polite reply without actually suggesting they do anything. Have you been following the China trip at all?

I saw that he was there. To be honest, if something is really meaningful, I rely on you to tell me about it!

Well, I’m glad I’m doing something useful.

I don’t know what he expected. As somebody suggested, it was partly about stroking his ego — I’m sure it did that to some extent. There was a reception, flag-waving, bands, 21-gun salutes, a huge ceremonial banquet, and sycophantic speeches praising each other. What actually happened in any of the closed-door meetings, we don’t really know.

There haven’t been any announcements of grand progress on any front, which is no surprise. China has been as robust as it could while remaining polite in laying out its position. Before it even started, they said they had four red lines: discussions of Taiwan, democracy and human rights, their political system, and any interference with China’s right to development. So if Trump had thought he was going to make any assertions about any of those, they were off the list to start with.

In fact, Xi made a very coded reference to Taiwan and to the necessity of avoiding conflict. There are clearly very strong elements in the American political establishment that want some sort of proxy war against China to restrict its future prosperity and its ability to rival the United States, which is almost too late, I would say.

Taiwan is to do with semiconductors, right?

Well, the history of Taiwan is that the Kuomintang retreated there after losing the civil war against the communists in 1948. For quite a long time, the United States took the position that this rump of non-communist politicians in Taiwan was the actual legitimate government of China. At some point — possibly around Nixon’s visit — they had to abandon that and accept that mainland China was the real China.

The position since has been what they call the “one-China” policy — that Taiwan is actually part of China. There are strong elements within Taiwan that want a clear separation. It’s quite a muddled situation. As long as they don’t cause any trouble, the Chinese are perfectly happy to sit it out and wait.

Meanwhile, America has been selling increasing quantities of arms to Taiwan. In one light, that might be regarded as yet more profit for the military-industrial complex. By doing that, however, they’re plainly playing up to the separatist factions — there’s no point otherwise. Taiwan’s not going to have a fight with anybody except mainland China, so selling them weapons can definitely be seen as an invitation to pursue that.

The American position is that they would intervene to protect the democracy of Taiwan if China attempted to take it over by force. I can’t see there’d be much appetite on either side for armed conflict, because there’s a great deal of kinship between them — literally. There are many mainland families with relatives in Taiwan, and many Taiwanese families with relatives on the mainland. It would really take something to stir things up to that point. But of course, this is the playbook we’ve seen everywhere.

It’s too big a fish, basically. Xi’s message was that we should be careful not to fall into the Thucydides Trap, which surprised me. You don’t expect Chinese leaders to be versed in classical Greek history.

What Thucydides was referring to was that when one powerful state was growing to the point of becoming comparable to another, war would be inevitable. Xi was saying as clearly as he could — without spelling it out further — that it would be far better if the US and China could avoid going to war with one another.

He then went on to give a very diplomatic warning against any interference or provocation regarding Taiwan. We’ll see whether we get any more concrete announcements.

The other thing is that not only have we got the Strait of Hormuz closed, but Ansar Allah — generally referred to in the Western press as the Houthis — have effectively closed the strait at the mouth of the Red Sea to US shipping. Most Western shipping companies have more or less abandoned the Suez Canal route because they simply can’t afford the very real possibility of losing a ship and its cargo.

The insurance premiums for passing through that route for a fully laden container ship are now up to three-quarters of a million dollars.

How much is the cargo worth if the insurance premium is three-quarters of a million dollars?

A figure I heard was around 10 million. But that three-quarters of a million represents pretty much the entire net profit of the voyage, so it makes paying the premium uneconomical.

Routing around the Cape of Good Hope adds an extra 14 days to the journey and an extra three and a half thousand dollars in fuel. All of that will feed through to the costs of anything imported into the Western world, which of course is most consumer goods and appliances from China, Vietnam, and various other places in that region.

So there’s another front which has been somewhat eclipsed by Ukraine and Iran — the North African states: Mali, Chad, Niger, collectively referred to as the Sahel. These are all former French colonies, and there’s been considerable realisation in those areas of the extent to which they’ve still been economically subjugated even since nominal independence.

Those governments are standing up to the French. They’re making their own currency arrangements rather than ones controlled by the French central bank, and they’ve been supported in that by the Russians.

Now there’s been considerable agitation — so-called separatists, so-called freedom fighters — breaking out and striking against the government. This is almost certainly agitated by the French and also, of course, by the CIA. It’s a further rupture point in the international order that has held for the past seven or eight decades.

All of these things seem more obvious than they used to be.

Exactly. The short answer is that control of the narrative — which has been taken for granted, particularly by the US and the Western world in general — is breaking down. They could do these things and get away with them. Now it’s becoming clear.

What else has happened this week? There was an Israeli attack on yet another freedom flotilla trying to provide humanitarian supplies to Gaza. Israel attacked the flotilla 1,000 kilometres from the Israeli coast, so completely in international waters. They used planes, drones, and warships, and even included a prison ship in their attack force.

Some of the operators of that flotilla had been arrested and brutally treated by the Israelis. This is all in full view of the world. Everything Israel is doing reduces whatever respect the world as a whole has for them. The same applies to US actions — it can no longer sugarcoat the reality of what’s going on.

Meanwhile, our own governments are demonstrating that they’re increasingly out of touch. Labour got an absolute hammering in the local government elections and in the Welsh and Scottish elections. Starmer has resolutely refused to resign, but there’s growing pressure on him. It’s ironic — I saw a clip of what Starmer said when the Conservatives were in power and he was in opposition. Did you see that?

I’ve seen the meme that’s based on it, yeah.

He gave a very pompous speech. I can’t remember which Conservative Prime Minister was in office at the time of that dismal local election performance — was it Cameron?

David Cameron, yeah.

Starmer pompously said he should recognise the will of the people when it’s been expressed as clearly as that and do the decent thing. Now the boot’s on the other foot.

Of the people within the parliamentary Labour Party being touted as conceivable replacements, they all seem totally implausible to me. I did not know anything about this Wes Streeting fellow, but I cannot imagine him as prime minister. I thought it was Tommy Robinson at first — he’s got a very similar physiognomy, a very similar haircut, and a very similar accent and mode of expression.

The interesting development today is that Josie Simon has resigned her seat in parliament, which means there’ll have to be a by-election. Andy Burnham could stand in that, become a member of parliament, and then stand as a credible candidate. Not that I hold much hope for conventional politics, regardless of who’s in charge — it’s 99% theatre.

It’s a matter of time until Big Nige gets in as PM, and he’s a corporate-captured person as well, isn’t he?

Maybe. Maybe all of the Reform candidates who’ve gone on to local councils will make it abundantly clear what a bunch of incompetents they are, and people will think twice about voting for them where it’s really going to count. That’s all I could hope for.

It’s clear we’re not going to vote our way out of this. My stance is that if it made any difference, we wouldn’t be allowed to do it.

Okay, so that covers the things that have stuck out for me this past week. As we were saying, we’ll try to get back to some of the core topics we started this podcast to talk about — the nature of finance. Obviously, all of this will affect our finances one way or another.

At least for the next couple of years, we’re going to have to get by consuming far less energy than we’ve been accustomed to. That might not be a bad thing; it might be a worthwhile focus on the measures we’ll need to take and the adjustments we’ll need to make to live in a world no longer awash in fossil fuels.

I’d be more on board with that if our leaders were leading by example and not flying halfway across the world to have a cup of tea in China.

Fair enough. Let’s call it a day for this week.

All right, thanks Derek. Over the next few episodes, we’ll revisit certain topics we’ve covered in the past — like bonds and interest rates — but look at them through the lens of what’s happening now. We’ll cover that over the next few weeks.

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