Drumbeats of War - Is It Crash Time?
The stock market is having problems.
A trillion dollar rescue in the European Union caused brief euphoria, and then markets worldwide began sinking on the realization that the money for the rescue came out of thin air. It was all smoke and mirrors.
In the works is a new rule that essentially will stop trading when a stock starts crashing too much. That is ascribed to the recent huge down-up spike that is said to have been human error. Horsefeathers. If that were so, there would not be a new rule. There is fear running rampant in the capitols of the world, as countries ‘too big to fail’, like France, may have their sovereign credit downgraded as larger and larger numbers of people realize there is a strong wind rattling the house of cards that is the current world economy.
The rule, if implemented, is to keep the market from crashing too quickly. That tells me that even the big boys in charge see the crash coming. Relatively conservative thinking puts the correction at no less than 2000 points. Some less generous market watchers are looking for … not a misprint… a descent to the depths where the Dow looses 8000 points. The more cynical see a long term slide to where the market bellweather is under 1,000, a loss of 10,000 points. Unbelievable? Hard to believe. Not pleasant to contemplate. But I have seen a case made for Dow at 300.
How is that even possible?
The disaster in the Gulf, which promises to exceed anything we’ve seen before in terms of ecological disaster from drilling, will give us pause about continuing our mad race to pump oil from our own resources to meet the insanely high demand for it. So where will we get it from? Iran?
Sanctions against Iran are nearing the moment of truth. And the hand of the Obama administration is fluttering mixed signals to Russia, Brazil, Turkey, and others as they try to broker deals that would stop sanctions. One of the other hands is signaling tough sanctions now now now. No one is sure which hand to watch, which is the real policy of the United States. Confusion is rampant.
Syria saw the paper tiger of Israeli diplomacy melt in a flurry of unfulfilled threats. If Syria was to give Hisballah more powerful missiles, that would be causus belli. The Syrians put the missiles on the border of Lebanon. Israeli blustered, but didn’t seem serious. So the Syrians completed the transfer. Israel did nothing.
Well, no, not nothing. The Israeli Defense Forces (IDF) raced to disperse their munitions to smaller piles, as the IDF generals went to Tel Aviv and castigated their political leaders. They said in bold and uncertain terms that the foolin’ around the politicians have been doing has laid Israel open to a grievous pounding by the countries to the north when war comes. The generals are clearly scared. Not trepidatious, not worried… scared. They have every right to be.
There are few ways out of Israel’s dilemma. None that I can see that would not entail the people in power in Israel needing to step down and allowing a non-Jewish state to replace the current Israel. Do you think that will happen?
Unless Israel makes that supreme sacrifice, they have Nasrallah of Hisballah to the north, salivating as he waits for Israel to become weak enough to attack. Even if Israel does not make a preemptive strike against Iran’s nuclear facilities, they may not avoid war.
That war will not be just a regional war. Once the first missile is fired, from anywhere, Lebanon, Israel… anywhere… the Strait of Hormuz closes for weeks, months, or longer. 40 percent of the world’s oil sits where it is for an extended time. Economies, not just our own, but globally, will enter into a state of depression unlike any we have seen before. Because if oil output is disrupted even by 5 percent, a universal line of dominos start falling against each other, and the disruption of power grids may occur on an unprecedented scale we can scarcely imagine right now. And that’s just for starters.
Enjoy today. Bask in the unbelievable wealth we currently luxuriate in. As with all things temporal, it is but a shadow passing over the grass.
But do prepare for tomorrow.
Ah… forgot… when will Crash time be? My shaky prediction, going way out on a limb here, is that the Crash may be as near as early-to-middle of next week. On that I could be so wrong. No one outside of a small group can possibly know. It’s just what should happen. Doesn’t mean it will. The market could make a short-term recovery. We could have weeks left before our world is turned upside down.
I would not bet my life on it.
August 24th, 2010 at 5:01 am
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