(Andrew Caballero-Reynolds/AFP/Getty)
When the bombs began to rain down on Iran, I predicted Donald Trump’s Waterloo. Watching his MAGA coalition, a noxious brew of working-class resentment and tax cuts for billionaires, descend into a civil class war, I paraphrased Churchill on the Battle of El Alamein: in his second term, before Iran, Trump had never faced a serious defeat; after Iran, he will not taste another victory. While I stand by my prediction, a new observation must be grafted upon it: the Iran war has awarded Trump’s plutocratic circle a spectacularly enriching victory.
In a republic that has long since mutated into an oligarchy, albeit one with periodic elections, the plutocrats’ expanding fortunes matter disproportionately. While the blue-collar workers who returned Mr Trump to the White House are being ruined at the gas pump and in the supermarkets, the Iran war is proving a massive boon for Trump’s donor class — the oil men, cloudalists, techlords, realtors and financiers — has never had it so good. Even as the captain goes down with the ship, the first-class passengers are already aboard their lavish life rafts, bearing their freshly minted Iran war dividends.
Let’s follow the money. When Russia invaded Ukraine in 2022, within 10 weeks, companies worth at least $10 billion had lost a staggering $2.4 trillion in value. Fear, uncertainty, and the specter of a shattered global order erased wealth at a dizzying pace: shareholders learned that war in Europe was bad for their bottom line. Now compare that with the 10 weeks following the first bombs falling on Iran. In that same timeframe, companies worth at least $10 billion have gained $5.6 trillion in capitalization: five-thousand and six-hundred billion dollars conjured out of a war that almost everyone sees as the epitome of folly!
The speed of this recovery is just as impressive, bordering on the obscene. After the dot-com bubble burst in 2001, it took the New York Stock Exchange 1,016 days to recover. After the 2008 banking collapse, recovery was 1,365 days. After the Covid Shock, 217 days. Following Russia’s invasion of Ukraine, 338 days. All the stock losses triggered by Trump’s so-called “Liberation Day”, and his huge tariffs, were eliminated within 57 days. But the Iran war? A mere 12 days. That’s all it took: 12 days for Wall Street to shrug off a major war in the Persian Gulf which denied world markets one-fifth of its oil, an even larger portion of its natural gas, and almost 90% of the helium necessary to manufacture microchips — the cloudalists’ building blocks! Is it any wonder that one student of mine commented that this is not a market economy but, rather, a protection racket with ticker symbols?
What drove this lightning recovery? The usual suspects. Foremost, the cloudalists — my name for those techlords who have leapt above both the old industrial barons and the bankers in the global pecking order. The stock exchange recovery has been almost entirely due to the splurge on AI — despite the cost of microchips and the energy on which it relies. Semiconductor giants such as Nvidia and TSMC gained 26%. Alphabet added $1.038 trillion in market capitalization. Amazon: $663 billion. Microsoft: $209 billion. Oracle: $142 billion. These are not abstractions. These numbers represent the direct transfer of social wealth — yours, mine, and every working family’s future — into the asset books of a tiny coastal elite that has managed systematically to profit from death and planetary instability.
And here is where the new class war within the MAGA movement becomes unmistakable. The pain of the Iran war has hit hardest the very sectors that employ and serve the MAGA base. Companies supplying consumer goods and services — the Walmart shelves, the auto parts, the household staples that working-class Americans depend upon — have taken a hammering. The metals and mining sector has tanked, damaging pension funds in Ohio and Pennsylvania. Pharmaceutical companies have suffered alongside retailers and logistics firms, sending drug prices higher even as manufacturing jobs continue to disappear.
Perhaps most puzzlingly, even the defense industry — that venerable military-industrial complex that Eisenhower warned us about — has fared badly. Why? Because investors fear that despite healthy demand for weaponry, US arms manufacturers are failing to ramp up production. They have become fat, slow, and bureaucratic; they cannot even exploit a war efficiently. And so, as the workers of Lockheed Martin and Raytheon face an uncertain tomorrow, their CEOs complain of supply-chain issues. That’s the truest meaning of class war: the boss cannot even deliver a war competently, and the worker pays the price.
And alongside the cloudalists, the oil men are laughing. But not the ones you think. Not behemoths such as Exxon-Mobil or Shell, which actually lost out after Iran’s drones and missiles damaged Qatar’s Ras Laffan facilities — Exxon alone forfeited $25 billion in capitalization, a 4% hit. No, the real winners are the medium-sized independent frackers operating out of the Permian Basin of Texas and New Mexico. These are Trump’s people. His political base.
Unlike the majors, which have global portfolios and can weather price fluctuations, these independents have a break-even price of around $65 per barrel. Between July 2025 and February 2026, oil prices hovered below that level, leading to a 30% loss of jobs and wells. But, since Trump has rained death and destruction upon the people of Iran, and since the Strait of Hormuz was blocked, the fracking sector has boomed. If anything, the frackers are worried that the price of oil is now too high, well above their preferred price range of between $90 and $95 per barrel; the profit-maximizing point before cost-push inflation begins to eat into domestic demand — a fact that may explain, partly at least, why Trump halted the Iran war: he was hoping for a fall in oil prices toward that particular range.
People accuse me of economism, of reading too many political explanations into hard-nosed economic data. But these things matter, if not to Trump personally, then at least to his circle – his realtor friends who now run his diplomacy, the techlords, the Wall Street traders. And I believe, along with my friend and colleague James Galbraith, that these people would balk at a fiercer war that might have sent oil prices soaring past $120, triggering a recession that would have entirely crushed not only the MAGA base but also the Permian basin frackers. At the same time, bringing an end to this ridiculous war risked leaving prices too low, bankrupting the frackers. By calibrating the conflict so as to deliver an intermediate price, Trump has effectively engineered a wealth transfer from American consumers — and from every business that relies on transport, heating, and plastics — directly into the pockets of his fracking cronies. To put it simply: the MAGA voter pays on average an additional $500 every month for petrol while the Permian Basin donor buys a third vacation home. That’s not statecraft. That’s the real estate business model applied to geopolitics: generate a controlled shock, inflate the asset price, and collect the rent. And it is the clearest possible evidence that the class war within MAGA has entered its hot phase. The base bleeds; the top feasts.
The broader tragedy, however, is that this war-as-wealth-transfer mechanism only works so well because the rest of the Western world has lost its capacity to resist. And nowhere is this more painfully evident than in Europe, which suffers the most from the Iran war and understands the least; its leaders stumble about in a daze, mouthing platitudes about “European sovereignty” while doing nothing to achieve it.
Europe’s industries, already reeling from shifting their dependence from cheap Russian gas to prohibitively expensive Texan and New Mexican liquefied natural gas, are being bled dry. They export manufactured goods that require stable supply chains and predictable commodity prices. Alas, the Iran war has sent shipping insurance costs through the roof and rerouted tankers around the Horn of Africa. As oil and gas price volatility cascades directly into European manufacturing costs, the disruption to Gulf energy infrastructure is rippling through every petrochemical-dependent supply chain in Europe.
European consumers, whose spending power has been eroded by 15 years of austerity, and then by the inflation shock of 2022, today face renewed pressure from imported price rises in a region with no domestic energy surplus to cushion the blow. The result is the deepening of the almost two-decades-old investment collapse across Europe — the true cause of the continent’s productivity slump and its inability to compete in the sectors that truly matter: electric cars, green energy and cloud capital. And now European industry is being forced to pay what is, essentially, a Trumpian war tax that suits the rent-seeking model of American plutocrats.
Meanwhile, our leaders in Brussels, Berlin, Paris, and Rome repeat the mantra of “strategic autonomy” as if it were a magical incantation. They announce defense funds, green transition accelerators, and chip factories — all of which remain firmly on paper. They decline to build a genuine European fiscal capacity. They refuse to confront the reality that without a unified treasury and a diplomatic drive toward a Peace and Security Agenda for Eurasia, Europe will remain the eternal victim of every conflict that American oligarchs decide to wage for their own balance sheets. And while Europe dithers, the internal American class war that is tearing MAGA apart will continue to export its costs to our factories, our welfare states, and our people.
https://unherd.com/The cruelty is mind numbing: Trump’s plutocrats understand exactly what they are doing. They think in terms of rents and asset prices. They see war not as tragedy but as a catalyst for financial repricing. And they trust that the MAGA base — the very people who lose their jobs when frackers shut wells, who pay higher prices for gasoline and food, who watch their pensions shrink as consumer sectors tank — may still turn out to vote for the man who promises to punish the elites. And if they don’t, there is no shortage of deranged men who can replace him.
This is the genius of American oligarchy: it convinces its victims to applaud their own dispossession. But the class war within MAGA is real, and it is reaching boiling point. Soon enough, the welder in Michigan is going to notice that his 401(k) is gone while the fracker in Texas has landed his new jet. At some point, the truck driver will realize that the $100 barrel was a political decision, not a market outcome. And on that day, the MAGA coalition will fracture along the only fault line that has ever truly mattered: class.
I still believe that Iran was Trump’s political death knell. The MAGA base may seem loyal, but its perseverance is not infinitely immune to its accelerating suffering. This new phase of class war within the movement means that its internal contradictions cannot be hidden indefinitely behind culture-war theatre. They are written in the price of petrol, in the collapse of consumer stocks, and in the gleaming balance sheets of the Permian Basin. Whether that realization comes in time to resuscitate American democracy — or European industry — is another question entirely. For now, though, the bombs fall, the plutocrats feast, the class war rages, and Europe sleeps.
Yanis Varoufakis is an economist and former Greek Minister of Finance. He is the author of several best-selling books, most recently Technofeudalism: What killed capitalism.
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