I'm John Batchler. I welcome Professor John Cochran. He's a senior fellow at the Hoover Institution writing his

substack, grumpy economist, at grumpy economist. John is very sunny about what we're now

witnessing, which is the wider war that we were threatened with for years, and it's upon us.

The Strait of Hormuz is the planet, as I understand it right now, in terms of oil supply, fertilizer supply, confidence in the future, trading it all, and that translates into higher oil prices. Okay. But the question I did not owe to ask, and John helps me with his most recent column, is war and interest rates.

Professor, a very good evening to you. What I know about interest rates is that they've been high, and that Mr. Powell, at the end of his time in office, his chair, was bringing them down, and that was leading to, it was said to be, a better real estate market.

That's chiefly what I've been watching.

However, I learned that interest rates are extremely sensitive to events, not just the Federal Reserve's will.

And one of those events right now is an oil shock.

How does that translate into interest rates globally? Good evening to you,

John. Good evening. And I don't want to say I'm ever sunny about war, but I am not as doom and

gloom about economic consequences of war if our government doesn't screw things up with terrible

policies, which is, of course, the danger. So to your question, yeah, interest rates, the Fed controls short-term

interest rates. In other words, the interest rate for lending really overnight. But long-term

interest rates, 10 years, 20 years, mortgages, those are set by the market, not by the Fed, and those

look forward to what people think is going to happen in the future. And so what you're seeing in the rise of long-term

interest rates, the rise of mortgage rates is not directly anything the Fed is doing. What you're

seeing is people thinking that interest rates are going to rise in the future. So we better get

ahead of it right now for various reasons, which is to some extent of fear index.

The chart you provide first is a Eurozone chart, which is exotic to me because we're looking

at Italy, France, and Spain.

Two of those countries are uniformly associated with slow growth.

But in any event, I see on the chart that the Friday trading before the war started,

...