How to stop incompetent Houthis from attacking ships in the Red Sea

Hey everybody. Peter Zion here coming to you from sunny Colorado, we’ve had a few things go down in the Red Sea that I thought were worthy to point out, just so everybody knows what’s what. The big issue that I’ve seen is back on the 21st of August, so about a week ago, shipped by the name of the Sounion was hit by Houthis. Houthis are a militant slash terrorist group that operates in Yemen, and they are the ones that have been cooking off missiles pretty regularly over the last few months, targeting commercial shipping. They started going after and everything that was associated with Israel in some way, and then it basically branched out to anyone who doesn’t pay them. And so the Chinese started paying protection money, and then they started hitting Chinese vessels. Anyway. So basically, if you’re sailing in the region, you need to get a really good insurance program, which is hard to get these days, or sail at your own risk. The so union was a Greek flag tanker who was carrying crude. It’s a Suez Mex tanker can carry about a million barrels. It was disabled and abandoned, and so it’s just been floating there full of crude. Anyway. The Houthis, a few days later, motorboated out to it and placed explosive charges throughout the vessel and started a series of fires. Now, I have long said that the Houthis are among the world’s most incompetent terrorists. They’re certainly the most incompetent in the Middle East, and they’re not very good at what they do these just that they’re operating from an area that’s basically stateless, and so there’s no authority that can kind of root them out. I have no doubt that if a quote, real, unquote military went in there, they could be destroyed really quickly. But then you would be left with ruling Yemen the next day, which is a thankless task, so nobody wants to do it. The only country that theoretically might want to try anyway, would be Saudi Arabia, and they are arguably the most incompetent military in the world, and certainly in the Middle East. So you shouldn’t expect a military solution to this anytime soon. One of the reasons I point out that the Houthis are incompetent is despite having full control of the ship and place in charges where they would, they failed to breach the hull. The ship is not sinking. In fact, they didn’t even cause an oil spill. They just caused a bunch of fires. And so it’s out there burning potential environmental catastrophe, because the Red Sea doesn’t circulate, like, say, the North Sea or Pacific does, but it hasn’t happened yet. Anyway, the point is, is that if you want to stop this, you either need to impose a Wisconsin like physical order on Yemen, which would suck for whoever was involved. Or remember, the Houthis are incompetent, you need to go the people who are sponsoring the Houthis, and that is Iran, and that is Tehran, and no one is going to do a regime change, or attempt a regime change in a place like Iran that’s basically a mountain fortress in order to solve the Houthi problem. So it would have to be a political deal. Now, no one seems chomping at the bit to do that,
even, even if, if there
was a broad spectrum deal where, say, the United States and Iran could look past their differences and kiss and make up, and it was strongly supported by both sides. And to be clear, that deal is not on the table at the moment. It’s not going to happen in American election year, and the Iranians just got a new president, and while he’s not crazy, he’s actually fairly moderate, one of his first actions is not going to be cutting a deal with the great saving. So what we are seeing in the mid time is that the Red Sea has basically just become a stateless region where anyone who sails through sailing through the road risk. And we are pushing the boundaries of what is possible with maritime insurance now, as of three years ago, just before the Ukraine war, if you had an insurance policy and you sailed into an area where there were gun exchanges, the cost of your policy would go by a factor of 10 immediately. And if somebody was actually targeting civilian shipping, your insurance policy would be null and void. But then the Ukraine war happened, and you now have major countries, most notably India, China and Russia, that are setting up these alternative insurance programs for their ghost fleets in order to get crewed out of Russia on the cheap and get anywhere else. And that has provided a weird constellation of coverage options that include things like getting shot or taken over by a government. So we do have stuff that is still trickling through there. It’s not containerized shipping, because container ships are really expensive, whereas a an oil tanker is basically just a bottle with an engine. So we’re finding out what is possible in this brave new world. And so from a weird, weird, weird point of view, the Russians and the Houthis are doing us a solid here, because they’re providing some alternative methods to ship things in a world where globalization and rule of law is breaking down. Now that does mean there are some side effects. The most obvious one is much, much, much, much, much higher insurance rates for everything. Keep in mind that every insurance. Company has its own insurance company. They’re called reinsurance companies, and all of us ultimately percolates up to the top, and the reinsurance companies have to charge higher premiums, which they pass on to insurance companies, which pass on to you for your house and your car. So yes, we are finding ways to keep maritime shipping aloft as deglobalization kicks in and we enter a more violent world, but it’s going to cost you a higher car premium. So.