The US launched its latest war of choice on Iran on February 28, 2026. The war has been underway for ten days and while the total value of damage inflicted on the world will never be exactly quantified, some obvious areas of damage can already be at least itemized.
Again, it seems necessary to caveat any discussion of this war with a disclaimer. Any discussion of mere financial and economic impacts of the 2026 United States / Iranian war must START with an explicit acknowledgment of the immorality, illegality and pure strategic folly of this war. Period. Full stop.
Beyond that, discussing the financial impacts MIGHT provide more context for individuals forced to make important personal decisions amid this turmoil or convince them to defer such crucial decisions until more stability and sanity are apparent. Discussing financial impacts might have some chance of changing the opinions of those who previously supported the criminal President and Cabinet who chose to launch this war. However, that's highly unlikely. Supporters of this American regime have proven themselves not only to be incredibly crass when it comes to financial matters and the larger public welfare but profoundly and proudly ignorant as well.
What follows isn't intended to serve as a complete encyclopedia of every ripple of economic blow-back already triggered by ten days of war. It is merely a list of a few of the more obvious lines of analysis being triggered by the last couple of days of stories about the war and the breadth of attacks seen so far.
Force Majeure
The term force majeure is used in contracts to allow parties to a contract to escape obligations under the contract when certain "external factors" occur which are not under the signatory's control and make it impossible to meet those obligations. These terms have historically included acts of war, acts of terrorism, a change in government, destruction of required infrastructure, etc. As might be expected in light of current events, businesses all over the world are now actively reviewing existing force majeure clauses to see if they can escape current contracts or to determine if contractual partners will try to escape existing contracts leading to cascading difficulties meeting other contractual obligations.
One collection of business interests now contemplating force majeure impacts are middle east sovereign wealth funds managed by the very rulers whose countries are coming under attack from Iran. These funds previously claimed to commit billions of dollars for investments in the US to curry favor with Trump. Will these deals collapse as these countries keep the dollars locally to rebuild their countries? Will these deals collapse as these countries contemplate the folly of partnering with such a corrupt President who is also phenomenally stupid? Either is possible and would make sense.
Economically, the true impact of such reversals is likely to be relatively small. Every one of those existing or promised future deals was structured to magnify the APPEARANCE of the investment in the "US" while actually minimizing it and managing to put just enough into Trump's pockets to distract him into giving them what they want. The actual amounts that would have made it into actual job-creating investments were likely to have been zero. The withdrawal of such plans won't serve as a political wake-up call to Trump supporters either. They have yet to comprehend the criminal nature of these deals and seem invested in the cult for the long haul, reality be damned.
However, the specter of force majeure declarations has REAL impacts in other ways, within the shipping insurance realm and financial contracts in general. Obviously, the halt of ships transiting the Strait of Hormuz is a huge cause but the US worsened shipping and insurance problems by at least a multiple by torpedoing an Iranian tanker off Sri Lanka. The shipping insurance players looked at that and said, "Hmmm, the war zone isn't just the Persian Gulf and Gulf of Oman, now it's the Indian Ocean. That pulls in an entirely new set of routes that affect shipments headed south around the southern tip of Africa and puts them all at risk. Shipping insurers have already retracted policies on existing shipments and brought ships to a standstill while the ship owners and cargo owners haggle over updated terms for the new reality.
Any uptick in declarations of force majeure probably increase financial risks by one or two orders of magnitude. Private equity firms have been making news on a weekly basis since June 2025 as giant losses suddenly become visible after years of rolling over bad loans to bad credit risks. This soaking of bad credit risks with transactional fees with no valid hope of ever seeing the actual loan paid off is a business model that has also taken over used cars and mobile homes. This level of weekly implosions was occurring in a climate ABSENT any larger excuses for tearing up prior contracts under the cover of force majeure declarations.
In 1998, the geniuses at Long Term Capital Management never modeled spreads in interest rates DIVERGING further into a bond's lifetime to maturity and lost roughly $4.6 billion dollars. In 2008, hundreds of billions were lost when banks continued assuming widespread mortgage defaults across all regions of the country could never happen because they never did previously, even as evidence of wholesale loan origination fraud was readily evident and defaults were already rising. In 2026, it is absolutely clear that no PE firm or hedge fund has modeled the integrity of their portfolio in a world where banks and creditors are leveraging force majeure language to escape contracts en masse.
Private Equity Losses, Inflation and Unemployment
All of these weekly losses suddenly reported by PE firms involve dozens of bad bets they've hidden on small and medium capitalized firms who are now losing their credit lifelines that have been keeping their doors open. As previously discussed on this blog, the private equity credit market is a scam jointly operated by private equity firms and large banks that continues rolling over known bad loans to failing businesses as a means to continue collecting up-front fees and higher interest payments as the company inches closer to bankruptcy. This scam depended upon PE firms and banks being confident enough in the near term of the firm's ability to pull in enough revenue to cover new fees and interest payments. As long as interest rates were low and the borrower had some remotely plausible claim to steady revenue in the short term, all of the fraudsters were willing to take another spin at the roulette wheel, hoping to dump the loan at the next re-financing. With higher unemployment, more of these businesses were seeing their revenue tank and with higher interest rates, the risk facing the next lender to spin the wheel goes up and the game grinds to a halt.
Higher inflation is likely due to all of the factors discussed here and unemployment is already rising. All of these factors are thus taking all of the energy out of this private equity credit scam. With those credit lines gone, firms previously requiring this Ponzi financing are folding but because they're all relatively small, these job losses aren't being widely reported. As an example, private equity has a big footprint in local contracting businesses like roofing firms, remodeling firms, etc. There are FAR FEWER actual local contracting firms remaining than it first seems. Even firms with names you've seen for 20 years are getting gobbled up by PE firms operating regionally or nationally while keeping their original names to maintain the "local", "hometown" vibe.
This level of consolidation is driven by the fact that much of the work performed by these firms is being covered by insurance and insurance companies require use of special cloud software for generating bids and submitting revisions during work to minimize their claims processing costs. These estimating and claim filing subscriptions are expensive to use (the estimate tools can cost north of $150 per estimate whether they win the bid or not) so a small local firm cannot afford to eat those costs for their scale.
This competitive dynamic means that when these private equity losses are being announced, there are probably at least 2 or 3 regional contracting firms instantly going out of business which control what used to be dozens of local firms that each might employ thirty to forty people. Their workers instantly lose their jobs and customers with deposits now face a struggle to recover their deposit or worse, find someone to finish work that's in progress. If they manage to time the bankruptcy to avoid stranding customer deposits or leaving unfinished jobs, local news media won't notice the actual job losses and report it but they add up.
Energy Prices and Inflation
Oil prices have already jumped from about $62/barrel on February 27 to $103 on March 9, a whopping 66 percent increase, but that spike doesn't yet reflect a further reduction in refined product supplies stemming from bombings of storage tank facilities in Iran by Israel and the pre-emptive shutdown of the world's largest LNG plant in Qatar. And on March 9, Iran struck Bahrain's largest oil refinery as well.
Americans have been misled by two decades of claims in ad propaganda from oil companies and ignorant politicians that our economy is less susceptible to uncertainty in the middle east because we now obtain virtually none of our oil from Persian Gulf supplies. It is true that America gets virtually none of its oil from Persian Gulf nations but the Gulf still supplies 20% of the world's oil and now most of it goes to China, Japan, South Korea and Vietnam who still do about 69% of the manufacturing of products consumed in the US. If energy costs rise 66 percent, EVERYTHING purchased from Asia is going to be more expensive to produce there, ship across the ocean to reach America and truck within America, triggering more inflation.
The loss of LNG production capacity is very dangerous for Europe because much of their electrical generation is dependent on LNG, as is the case within the US as well. Because oil and gas are fungible commodities, any loss in supply will raise prices everywhere it is used, spiking prices for electricity which is already rising due to AI compute demand. This will also feed into inflation in every industrialized country.
America's Increasing Defense Strategy Isolation
The escalating conflict is also providing lessons about weapons systems and military strategy. Iran has fired probably a few thousand drones and missiles at nearly every neighboring country within range of its weapons. But the US has fought back with $1 million dollar Tomahawk missiles and used Patriot batteries and newer THAAD (Terminal High Altitude Area Defense) systems that focus on incoming targets in their final (fastest) portion of flight. These systems seem to be working VERY well on a per-target basis but are already proving completely unsuitable due to the asymmetry in cost. No nation can sustain a defense strategy relying on weapon systems that cost ten to one hundred times the weapon they are fending off.
The key danger sign in this aspect of the war is that the Trump Administration has stupidly commented on the likely duration of the war. First a couple of days, maybe a week. Then a couple of weeks, MAYBE a month or two. Now as of March 9, September is being floated as a worst-case wrap up date. What isn't being addressed is the likelihood that this first wave of attacks from Iran has triggered the US into using up nearly ALL of its stockpiles of missiles and drones under the premise that we're almost done beating them, they'll topple any day.
Well, the Iranian government HASN'T toppled, they just declared Khamenei's son his replacement, and the quantity of daily attacks from Iran shows ZERO sign of abating. How is the US going to defend its assets and neighbors in another two weeks after further depleting our stores of our best weapons? And it is HIGHLY likely that replenishing these weapons will require semiconductor components from China and other Asian countries. Those parts will likely SKYROCKET in price or become unavailable for strategic reasons.
Europe has learned the correct lesson from watching Ukraine perfect newer defense measures that are physically effective AND cost-effective against Russian / Iranian drones. Europe has internalized this lesson to the extent that European countries have started walking away from new US designed weapons systems because US makers remain fixated on gold-plated, high-margin, cost-plus weapons systems that produce billions in profits. And that's in addition to former allies concluding that America cannot be trusted as a partner in defense alliances to begin with.
It's easy to get complacent when the weapons you make get used on "little countries" and not your own homeland. Weapons that don't work or are not cost effective are of no direct concern when they are used on "little countries" abroad, as long as profits are rolling in. As prior allies grow fed up with the arrogance and complacency of American defense firms and the US government, more of these weapon systems partnerships will end. This will reduce demand for US-built weapons, reducing design and manufacturing jobs in the US defense sector and result in even more astronomically expensive weapons systems for US-only consumption... Thus, a flawed defense strategy will create even more job losses AND inflation, in addition to failing to meet actual defense needs.
American Debt and Cash Flow
A new war whose planning was not previously shared with Congress obviously adds unplanned costs to the government's budget. It is difficult to imagine a scenario more dangerous to the financial stability of the United States than the conditions under which this war was launched. The federal government was already expected to incur a $1.8 trillion dollar budget deficit for its fiscal year 2026. The Trump Treasury department was already gambling it would succeed at forcing the Federal Reserve to LOWER interest rates by shifting VAST amounts of existing US debt from longer term maturities (ten, twenty, thirty years) to extremely short term maturities of less than a year. As of March 2026, a staggering 31.4 percent ($11 trillion of $36 trillion) of the total debt is financed for terms of twelve months or less. This is the government equivalent of financing a home with pay-day loans.
This shift toward shorter maturities when interest rates MAY be rising substantially to tame inflation and SHOULD be rising to reflect vastly higher borrower risks means the cost to America of keeping current on interest payments will SKYROCKET. The Congressional Budget Office estimates that given the distribution of the existing $36 trillion in debt across existing maturities, each one percent increase in interest rates increases yearly interest payments owed on that debt by $100 billion dollars.
A War on the Environment
Could the outcomes from this war be any worse? Absolutely. They ARE worse. All of the destruction of storage tanks and LNG facilities in the Persian Gulf is burning WEEKS worth of refined energy products which is obviously magnifying the factors contributing to global warming which are already racing beyond the tipping point. And that catastrophe is made worse by the knowledge that NO ONE on the planet is gaining anything from that damage. If the climate damage from this much energy destruction had an offsetting "credit" by having supported some effort that developed a cure for cancer, at least a debate could be had about trade-offs. There's no trade-off here. The world is literally setting part of the planet ablaze for ZERO BENEFIT and accelerating damage that will become evident in months and years, not even decades.
WTH
