As the Financial Times warned in its editorial on Saturday, world financial markets have so far not taken sufficient account of the threat that the war in the Middle East poses to them. The idea that US markets have fallen by only a very few per cent at most is, in their opinion, quite ridiculous. The threat from this war is almost existential to the value of many of the companies that are quoted on markets in the USA, London and elsewhere, in which case the limited scale of the response appears totally irrational.
As I noted on Friday, there are other signs of turmoil. Some of BlackRock's funds have imposed withdrawal limitations. The number of jobs created in the USA during February was well below expectations. These are very real signs of stress in the oil and gas markets, and they are bound to have ramifications.
Monday morning could, then, be the day when markets crash after traders have had time to reflect over the weekend on just how dangerous the world economic environment is, particularly as it now appears that many commentators think it likely that Iran will be capable of keeping the Strait of Hormuz closed for several weeks, which is plenty long enough to create the major worldwide economic disruption that they are relying upon as a weapon of war.
The question I now have is whether the USA and Israel were aware of this when they commenced what is widely considered to be an unwarranted and illegal war. We have to either assume that they were, just as Putin was in 2022, naive in their belief that they could win this war in days (although what victory might have represented is unclear because they appear to have no specified goal for what victory might look like), or that they did not anticipate this outcome, or that they were indifferent to it. I think that the third option is most likely.
Both these countries are led by fascists for whom turmoil, fear and societal breakdown are weapons of domestic control, which is part of what they are seeking by pursuing illegal warfare overseas. So long as they have the inside market information that they need to exploit the situations that they are creating for personal gain, they will be entirely indifferent to the financial, physical or other suffering of those to whom they are supposedly accountable.
Fascists do not care about their domestic populations or their well-being. In fact, the very opposite is true. They want those populations to live in fear. If people are fearful, fascists manipulate the stress of that emotion and use it to persuade them that there are threats from which the glorious fascist leader alone can offer protection, even though the exact opposite is true because they are creating the threats in question.
Meanwhile, these fascists accumulate personal power and wealth by extracting all they can from the economies that they exploit and the people whose interests they are supposed to govern.
This is what is happening now.
We can, in fact, now expect more extreme reactions because it is now far from clear that the USA and Israel are going to win the conflicts they have started in Iran, Lebanon and elsewhere simultaneously. The economic impacts are already severe, and when people in the USA realise that their energy costs are going to rise significantly, the backlash is going to be extreme, particularly given Trump's promise not to engage in more overseas conflicts.
So it is not just the risk of major financial meltdown that is now worrying me, although that is very real. What worries me at least as much is the possibility that these extremists, when cornered and when at risk of being shown up as the illegal international facilitators of war crimes, will react even more severely and release yet more mayhem, including through the use of nuclear weapons, a possibility that cannot now be ruled out.
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I agree with you. Everyone I speak to about this thinks I’m overreacting. But when you look at the cold logic of how a fascist operates, it looks to me to be almost inevitable.
“whether the USA and Israel were aware of this” – no, awareness is not something they are functionally capable of having.
Be interested to know the “market positions” of the usual players. Whilst I despise Goldmans from a moral perspective, they usually call it the way it is wrt market positions – after all, money is money.
I see that Israel has hit Iranian oil tanks near Tehran (sub-plot: freeze transport). Won’t stop the Iranian missiles (which sit underground etc) – but it looks good on telly.
The probability is that Iran will batter the Gulf states – on the basis that they may get tired of hosting the USA & or – they then repress their large shia populations – which will then kick off yet more violence.
Wonder where it will all end. We need to keep in mind who started all this: Israel and Net&yahoo.
I agree with large amounts here but I would point out how much it strays from the praise of Clive Lewis’ article earlier.
In my mind Lewis’ article is full of ambiguous and meaningless sound and fury which signifies nothing much. Whilst Richard openly talks of the failings of Neoliberalism, fascism and the toxic ethos of Western elites which have reached their current zenith if terms of the Epstein files and operation Epstein Fury and how this is dragging the world deeper and deeper into world war 3, then Lewis makes no such observations or accusations. His article was a mere PR exercise designed to safely suggest there might be some solutions to ‘problems’ without clearly defining what those problems actually are. So instead of illustrating how Mark Carney’s speech at Davos and Marco Rubio’s speech at the MSC signify the rebirth of naked Western colonialism as the West deconstructs itself under Trump’s insane ‘stewardship’ as it inexorably hurtles toward WW3: Lewis sees no such things. Indeed to quote one of this opening lines. “As the days pass since the earthquake that was the Gorton and Denton byelection”. Seriously!!! That is the political earthquake we should all be worried about!!! Clive Lewis, like most of Western leadership have lost all grasp on reality and refuse to identify the precise nature of the problems we face. His article was meaningless and addressed nothing – unless you really think that proportional representation is going to change anything. He couldn’t even be honest enough to blame the destruction of the labour party and its betrayal of the working classes on Tony Blair and Gordon Brown who didn’t even get a mention.
I disagree. I think uyou are missing missing what he means and are failing to recognise that he has to tread with some care. It took considerable courage to write what he did.
I disagree.
What speaks to you more urgently? Lewis’ [treading carefully] piece or this interview with Jeffrey Sachs from just 5 days ago.
https://www.youtube.com/watch?v=V13sGGF3bU8
You know that but that is a ridiculous question. Thwy are nothing the same position. Use your intelligence. Please don’t waste my time.
A crash has to begin with people selling assets, fearing a sudden fall in their value. I don’t believe we are seeing any signs of this just yet which is hard to fathom. There seems to be a feeling in the air of ‘all will be well in the end’ and ‘it’ll never happen’ regarding a market crash. Maybe the wealthy think their good luck, which has persisted for 40 years with a few blips, can go on forever.
Nothing lasts forever.
The market reaction is naive in the extreme.
To a large extent “the market” is now just people putting money into tracker funds as a means of savings/pensions/excess asset allocation. It happens regardless of conditions, until things get, really, really bad…
Agreed
It’s not a happy notion, but I think it is in the nature of both Trump and Netanyahu that, if they feel their backs are against the wall and they really are going to lose their positions and power, they will resort to the use of nuclear weapons, rather than abdicate or capitulate and they are both surrounded by enough stupid individuals who will not stop them from doing so.
I tend to agree
I am worried.
Trump has said he doesn’t like wars, and promised to stop them, and get the Nobel Peace Prize along the way. That all looks tragically ridiculous now. But why did he say it? I believe it was because Trump overwhelmingly desires to win. He cannot accept losing, as we’ve seen. But war brings uncertainty, so it’s not for him, or so he thought. Now he’s in the midst of one. He can’t contemplate losing. And he’s a fascist. The unthinkable is before us, in plain sight.
Its always about money, The US-$ in particular. Venezuela was on the cusp of using its BRICS membership to sell oil in anything BUT US-$. As was Iran. Shades of the 1st Iraq war, Kuwait notwithstanding, as that was one of Saddam’s stated objective at the time, is: using anything but the US$ to sell Iraqi oil. Any currency daring to impinge on the hegemony of the almighty US$ would be swiftly brought to heel, as would its leadership & country. This is war just happens to coincide with Israel’s Anti-Iran Mania.