Hello Elmat, <<Script>> I draw a blank on the base case War Script, although I have no trouble bracketing the range of scripts.
Putting aside the often fruitless discussion of politics and geo-politics, let me try to parameterize what you and I may be talking about, namely, seriously big ideas for small Brazilian and Trinidadian minds.
Conventional war is inherently unpredictable, and if kept small, rarely resolve much of anything, unless it gets to be seriously big, in which case resolutions are achieved, and may even hold together.
If the coming conventional war gets to be seriously big, it then becomes deliriously expensive, needing mucho financing, but hardly at effectively 0% nominal rate, and so real rate must then go up, convincingly.
How does real cost of capital go up in the event that the conventional war gets seriously big? Either nominal rate must rise or USD (and in turn, USD denominated assets) must fall, seriously.
If the coming conventional war does not get seriously big, meaning that it does not merge multiple issues into one conveniently defined conventional war, then expect the already on-going unconventional war to get mind-alteringly long in elapsed time, in its own way.
Since the unconventional war is already forever until exhaustion, having lasted about 1,000 years plus or minus, so adding a few years to that time horizon is no big deal.
What do I mean by a seriously big conventional war?
Unless UN sanctioned, the US must, on its own, (a) conquer Iraq, (b) subdue Iran, (c) intimidate everybody else in that region and beyond, (d) hold the then state of interim solution in more or less static equilibrium so that semi-normal economic and trade habits can continue, and (e) make sure no one challenges the outcome, or even prepares to challenge the outcome.
Else events may unravel in uncontrollable fashion, disrupting all that makes today's globalism possible.
So, you see, we may, in effect, be talking about the opening shots of World War III.
A coming Depression coupled with an impending World War? Can you spell 'BULLISH'?
I am almost sure that not many are thinking in these terms, because CNBC did not report what might be, and the audience are simply waiting for another video war ala 1991.
The UK will be at the side of the US at the start, but I expect the UK to drop out if and when matters get seriously big or deliriously long, or go bankrupt, or go on the dole living off the US, just as Israel is already.
Asia, and specifically Chinese Asia, Japan and Korea are financing a goodly piece of all US activities, to be the policeman, to be the customer, to be the debtee. All of these economies are printing money as it is, lending to a US that is also printing money.
A side remark on a small detail. China is a weak financier, as it needs to use money. Japan is a weak hand because it imports 100% of its oil. Korea is a weak hand because it is on the front lines of another possible war. Taiwan? Hong Kong, Singapore? Be serious.
I do not know how strong the stomach here is for financing a seriously big or delirious long police action. We will know when we know, and not before.
This war party could get interesting in a seriously big and delirious long manner before folks realize that there may not be an achievable end objective, namely peace on earth, and therefore there is no time table.
May I suggest copious amount of insurance in the form of gold?
Bribing Saddam to step down may turn out to be very much cheaper, and more defined; or as Ari Fleisher already suggested undiplomatically, perhaps ... well, you know, hit squads and such unconventional methods, if regime change is the true goal, as opposed to oilfields.
What is the difference between N.Korea and Iraq? One has the bomb and no oil, and the other has the oil but also want the bomb. Given the desired combo of oil and bomb, Iraq is reaching for too much for some folks comfort level.
In the mean nasty time, there is nothing to do except to accumulate gold, as opposed to that Q stuff Maurice is hooked on.
OTOH, events may work out as most expect. Don't they always:0?
Chugs, Jay |
