Originally Posted by
Keyser Soze
It is never possible to argue this subject with anyone on a sensible basis here in the UK, Europe or the US because of the political and religious divide:
- Aetheists and Islamics (typically pro Palestinian) versus Jews and Christians (typically pro Israel)
- Political (Nationalists & Left, typically pro-Palestinian and anti-imperial, versus Conservatives, typically Imperialist or Zionist sympathies)
My personal view is that the subject is too complex for most folk to understand, nor be interested in. But it is a fascinating one. To understand this subject well, you need an understanding of history, geo-politics (regional and strategic global alliances), energy markets, local issues and conflicts, nuclear objectives of middle east countries, and financing of militias.
If you are coming in from the religious/political angles above it is easy to see why people cannot see what is happening, nor even predict it. I have predicted a regional war to my friends since the first Houthi attack on ships in the Suez back in end of Oct / start November, and made a good sum on oil and gold trading, as a result.
This is why I am surprised at what is happening today is a surprise to people. It is possible, with an open mind, with a few weeks of reading to get a good handle on it all, but people prefer to “stay in their lane” and wave a flag. So as explaining all the above will take far too long, the only sensible thing to discuss is “What Now?” and “What Next?”
What is the current situation?
Well Iran have been financing Houthis, Lebanon, Syrian and Iraqi militias with the reversal of the oil embargo, with the 16bn dollars Biden gave back to them. Now Iran has designs on Middle East dominance, but are experts in financing and using others to do their fighting. They are master diplomats through history and this is their approach (similar to China). They don’t do open scrapping unless dragged into it directly (Iran v Iraq). They are excellent strategists.
But as Hamas were eliminated and Yemeni infrastructure destroyed, Iran knew that a far richer Hezbollah were the next Israeli target. So as of last night, Iran have attacked WITH Hezbollah and other operatives, due to the attack on the embassy. Justified? Probably. But this is the the crossing of the rubicon because this is the first point that Iran has dropped the mask. It is now out and out Iran v Israel - a situation they tried to avoid.
What does that mean?
Well given that the Iranian Revolutionary Guard explicitly wants to “eliminate Israel from the map”, and Israel sees Iran as the regional threat, unless there is a ceasefire we now have an open straight fight. They are both committed to eliminating each other. That is the short term phase we have now entered.
What Next?
The choices facing us are now close to the same as WWII. It seems that aside from an unlikely ceasefire, four sceanrios are on the table:
1. Do little. Let Iran and Israel duke it out. This would mean a drawn out war between two rich rivals, and further disruption of oil markets, and rising inflation (and thus interest rates) - no doubt with financial and military support from their masters (US/Europe for Israel, China/Russia and Lebanon, Syria, Yemen for Iran, who are already allies.
2. A further escalation regionally, where lines between Sunni and Shia muslims are dran. With Israel, Kuwait, Bahrain, Saudi, Oman and Egypt versus Israel, with Jordan, Lebanon, Syria, Yemen and a big sect of Iraq. A full regional war, with even bigger hits on inflation and interest rates.
CORRECTION: A mis-type here. Meant to say “With Israel, Kuwait, Bahrain, Saudi, Oman and Egypt WITH Israel, and Jordan, Lebanon, Syria, Yemen and a big sect of Iraq. Or something that vertly closely resembling those alliances.
3. Europe and US conduct an all out attack on Iran, but Russia and China, more focused on Ukraine and Taiwan, conserve their money and allow the US and Europe exhaust itself as it did in World War Two, on the basis that they do not fancy losing a war, military and face over Iran. Russia calculates that it has coped without Iranian oil as it has its own. China already has gas an oil from Russia so they will cope too. So they leave Iran sink or swim and live to fight another day, calculating they can win Ukraine and Taiwan if the US and Europe exhausts itself v Iran.
4. A full phase World War III. China and Russia openly back Iran with full military and financial capability, with all above parties going for it.
Now as I have thought since November, a ceasefire with Hamas nor Iran is feasible. So one of the above is will happen. I think it will be .1 or .3.
If the above happens, and a ceasefire not possible, then as a result the effects will be a scorching upwards of inflation (shipping lanes further hit, costs of food, clothing, commodities rip upwards), and a second run on higher interest rates - as I predicted in 2022/23. But as this will be more drawn out, a longer wave of rate rises, into the 10-15% range. Oil, gas and gold will keep pumping up. Food costs will be harrowing. Bank of England, The Fed and ECB will stop making silly predictions of falling rates, and house prices keep falling. Manufacturing and heavy Industry, reliant on oil, will be hurt. High interest rates due to war debt will put pressure on sterling and Euro, and goverment budgets cut due to high interest rates payments. See the 1970s for similar effects from Yom Kippur war. I also predict further social strife as pro-Iran protesters become prominent, with social division and newswires discussing more anti-Semitism and anti-Muslim sentiment.
All you can do is figure out the probabilities, and then what it means for inflation, interest rates, currencies, stocks, bonds, commodities (energies, metals and food) and gold. Because these will mean big changes. There is nothing we can win from arguing, so is all we can do.
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