Blain’s Morning Porridge, March 27th, 2026 – The Economic Implications of the Iran War“Armchair generals talk about tactics. Soldiers worry about logistics.”The cost of Trump’s War on Iran is extraordinary - $1 bln a day plus. War Stocks are being consumed at incredible speed. A request for an additional $200 bln of DOD funding is in the works. The nature of war has changed – it could prove phenomenally destructive, expensive and ruinous to winners and losers alike. Meanwhile the economic outcomes of the war remain in the balance.When I was a very young man the global bond markets were a single column buried deep in the second section of the Financial Times…. On Monday my boss reckoned the Euromarkets could see a $ 1 bln issuance week. It happened. We were stunned. Such a huge number. Unimaginable.Now we throw $1 trillion around like its normal.One writer on financial markets to whom I pay attention to is Torsten Slok of Apollo. Earlier this week he wrote the ballooning $2 trillion US budget deficit, plus the $10 trillion of US debt to be rolled over, plus rising hyper-scaler AI infrastructure issuance, means investment grade supply of over $14 trillion dollars this year. That poses the risk of a bear squeeze on rates and credit spreads as supply overtakes demand at a time when the Fed is thinking about pre-emptive rate hikes against inflation and the Hormuz Energy shock threatens global recession.If you want to horrify yourself, open the scariest page on the internet – the US Debt Clock. Play around with the time machine function. 125% debt to GDP. Ouch.120 years ago, the UK was the dominant global power. Today, the OECD sees the UK as the most vulnerable economy to the current energy shock – hence most likely to see a bond crisis, which already threatens to metastasize through the economy. (And before you start blaming Energy Secretary Ed Milliband… the UK’s energy insecurity is a result of long-term folly, not short-term mistakes.)There could be global trouble ahead.When bond markets wobble… everything else tends to fall. A global financial crisis would play straight into Iran’s war objectives.Alongside the energy shock, the inflation risk, and worries about deeper geopolitical conflict, the war in Iran is costing the USA about $1 bln per day in war-stock munitions. According to the WSJ, over $2 bln in expensive equipment, including three F-15s (shot down by an overly keen Kuwaiti pilot), a damaged F-35, K-135 tankers and 2 very expensive radar systems taken out by Iran missiles, has been written-off. That number will rise as the pace of operations continues to run hot and planes and pilots get tired. The exhausted 9-month deployment USS Gerald R Ford has been under repair in Crete for the last few days after an internal fire left much of the crew with nowhere to sleep. (Fascinating story on the carrier’s multiple problems on Bloomberg.)You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠, and have it delivered fresh to your inbox every morning!

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