The world economy is in the tank, and the Federal Reserve’s decision to extend its zero interest rate policy to, at least, the end of 2014 proves it. What will happen if the fragile world economy also has to deal with a war with Iran? That should have been the big headline coming out of the World Economic Forum in Davos, Switzerland, but what was reported was concern over slow or no growth in the world. All the signs are that the West is careening towards war with Iran, and there is not a peep about it from world leaders. Are they in a state of denial in a coming war catastrophe? I say yes.
One of the first shots fired by the EU was in the form of increased sanctions to boycott Iranian oil in about five months. The second shot looks like it will be fired by the Iranians who won’t wait for sanctions to kick in and will move to cut off oil exports of around 600,000 barrels a day to the Eurozone. (Click here for more on this story.) The Iranians have not yet cut off the oil. MSNBC reported yesterday, “The Islamic Republic declared itself optimistic about a visit by U.N. nuclear experts that began on Sunday but also warned the inspectors to be “professional” or see Tehran reducing cooperation with the world body on atomic matters. The International Atomic Energy Agency (IAEA) inspection delegation will seek to advance efforts to resolve a row about nuclear work which Iran says is for making electricity but the West suspects is aimed at seeking a nuclear weapon.” (Click here to read the latest CNBC story.)
The immediate cut off of oil to the EU would be a disaster, and the Iranians do not have to close the Strait of Hormuz to do it. This would cause major pain to a European economy teetering on the brink of collapse. How well do you think the Eurozone would perform with a spike in energy prices? Talk about no growth, how about a giant contraction and an implosion of some of the biggest banks on both sides of the Atlantic. This is not all out war, mind you, just an immediate cut of Iranian oil to Europe.
Some say this is all just a high stakes game of poker with both sides saber rattling and jockeying for position. Stratfor.com, global intelligence experts, said in a report last week, “It is in this context that the possibility of negotiations has arisen. The Iranians have claimed that the letter the U.S. administration sent to Iranian supreme leader Ayatollah Ali Khamenei that defined Iran’s threats to Strait of Hormuz as a red line contained a second paragraph offering direct talks with Iran. After hesitation, the United States denied the offer of talks, but it did not deny it had sent a message to the Iranian leadership.” (Click here to read the complete report.)
I think this view is extremely optimistic and on the edge of wishful thinking in light of the comments made by the Israeli Defense Minister a few days ago. The UK Telegraph reported, “Reviving Western concerns that his government is still contemplating unilateral military action against Iran, Ehud Barak gave one of the clearest signs yet that Israel’s support for new US and EU sanctions remains strictly limited. “We are determined to prevent Iran from turning nuclear,” he told the World Economic Forum in Davos. “And even the American president and opinion leaders have said that no option should be removed from the table. It seems to us to be urgent, because the Iranians are deliberately drifting into what we call an immunity zone where practically no surgical operation could block them.” (Click here to read the complete UK Telegraph story.) This doesn’t sound like a peace plan to me.
Debka.com, a leading intelligence website, reported the possible time table for war in a post yesterday. The Debka.com analysis says actions by the U.S. Navy on deploying a special commando ship in the Persian Gulf point to a conflict that is just a few months away. The report said, “The target date for deploying the commando platform in the Persian Gulf in four or five months indicates Washington is preparing for military clashes to blow up with Iran in the late spring or early summer.” (Click here for the complete Debka.com report.)Then again, what if the Iranians feel war is going to happen no matter what and don’t wait for the U.S. to be fully set. What if the Israelis take charge and strike first? If the U.S. lost an aircraft carrier or two, would the conflict turn nuclear? These are all real world questions with catastrophic implications for the fragile Western economy that is cocked full of insolvent banks that use phony accounting to stay afloat. If real war breaks out, the charade will be over—pronto.
I am not advocating war–just pointing out that war is coming unless something is done to avert it. If war does come, it will be bloody on both sides. The Iranians surely possess sophisticated supersonic Chinese and Russian missiles that are capable of sinking an aircraft carrier. The Iranians, also, probably have Russian torpedoes that travel at speeds of at least 200 miles per hour—underwater! Check out this example of a Russian torpedo that can sink vessels above and below the water.
Does the U.S. have countermeasures to Chinese and Russian missiles and torpedoes? Yes, but no countermeasure is 100% effective. It would be naïve to think the U.S. could come out of this conflict without a loss of vessels and lives. The U.S would win the war, but the world economy would collapse in a matter of days if the saber rattling turned into full metal-to-metal contact. An imploding global economy would happen in Internet time and would make the Great Depression look like a party.
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.