The Middle East Is Blowing Up - John Rubino (20/6/2017)

June 20, 2017

Every day brings another scary headline from the Middle East — which makes it easy to treat them as background noise rather than a clear and present danger. But the latest batch is reminiscent of the Balkans circa 1914, which means it may be time to tune back in. Some examples:

A US Navy jet shot down a Syrian warplane. Syria is a Russian client state, so this puts the US and Russia on opposite sides in a shooting war.

Russia warned the US that it takes the destruction of its client’s military assets seriously. It suspended the hot line Washington and Moscow have used to avoid collisions in Syrian airspace and threatened to target US aircraft.

Iran has begun launching missiles into Syria targeting ISIS. This is new in at least two ways: 1) Iran hasn’t used those particular missiles in decades, and 2) it was not previously active in Syria. This escalation from advising the Assad regime to actually killing people and blowing things up adds another player on Russia’s side against the US.

Iran and the US trade threats. US Secretary of State Rex Tillerson accused Iran of destabilizing the region and promised that the United States would support “those elements inside the Islamic Republic which would bring about peaceful government transition.” Iran called those remarks “unwise and clear meddling in Iran’s internal affairs.”

Saudi Arabia claimed to arrest members of Iran’s Revolutionary Guard who were attacking a Saudi offshore oil facility, and said that three of the attackers were being interrogated. One day later Iran accused Saudi Arabian border guards of opening fire on Iranian fishermen in the area, killing one of them.

The Saudis and Iranians are leaders of Islam’s two main factions, the Shiites and Sunnis. This makes them natural rivals, but until now they’ve mostly sparred through proxies rather than directly. Here again, the conflict is going from cold to hot.

And that’s in just the past few days. The old stuff that caused most Americans to tune out hasn’t gone away: The Syrian war continues to rage, the Saudis and their allies continue to bomb Yemen even further back into the Middle Ages, Israel continues to build new settlements in Palestine and threaten to take out Iran’s nuclear facilities, ISIS is still burning and beheading its victims on YouTube, and Turkey keeps slipping further into dictatorship.

The difference is that the major players are now bumping up against one another. All it will take is for one fighter pilot or destroyer captain to miscalculate and kill another major powers’ soldiers, and – as in World War I – these interlocking alliances might pull in everyone else. And there’s not a thing the average person can do about it.

The resulting chaos will have at least one predictable result: All pretense of fiscal and monetary discipline will go out the window in the rush to move people and machines into the theater. If you think we’re over-indebted and due for a currency crisis now, just wait.

John Rubino runs the popular financial website DollarCollapse.com. He is co-author, with GoldMoney’s James Turk, of The Money Bubble (DollarCollapse Press, 2014) and The Collapse of the Dollar and How to Profit From It (Doubleday, 2007), and author of Clean Money: Picking Winners in the Green-Tech Boom (Wiley, 2008), How to Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not Wall Street(Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He currently writes for CFA Magazine.

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