Balen For Nepal

....... any hopes that this war might be extremely brief are fading. The Trump administration may have imagined that decapitating the Iranian government would bring swift regime change, but the Islamic State isn’t a government of mere thugs — yes, they’re evil thugs, but they’re also serious religious fanatics facing what for them is an existential threat, and their grip on power isn’t that easy to break. Furthermore, it’s painfully obvious that Trump and co. had no plan beyond bombing Iran, killing its current leaders, and hoping that something good would happen. .......... war in the middle of the world’s most important oil-producing region — which is also a key source of liquefied natural gas — inevitably has major consequences for energy prices. Once upon a time US and Israeli air superiority might have contained Iran’s ability to harm its neighbors. But in an age in which even third-rate powers have the ability to launch missiles and drones, Iran has a huge stockpile of drones and also has ballistic missiles that are destructive, hard to intercept, and have a 1200 mile range. ................ The U.S. embassy in Saudi Arabia has been hit by two drone strikes. Airports in Dubai, Abu Dhabi and Doha and the U.S. consulate in Dubai have also been hit. ................ U.S. officials have urged all Americans in the region to leave, but they did so after almost all flights had been canceled. Only now are they saying that they’re going to arrange flights on military aircraft and charter flights — an airlift that will have to be immense given that there are surely tens of thousands of Americans currently stranded. Did I mention that Trump and co. clearly went to war without a plan? .............. The potential targets at risk include key parts of the region’s energy infrastructure. Above all, the war threatens tanker traffic through the Strait of Hormuz, which is how the bulk of Middle Eastern oil and gas normally reaches world markets. And the risk of Iranian attacks has effectively closed the Strait. Yesterday Trump, obviously scrambling to limit the damage, declared that he is ordering the U.S. International Development Finance Corporation to provide “guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf,” as well as telling the Navy to provide security. Do we have the resources to do all of that? ............ Oil prices are up around $15 per barrel since mid-February: ............ Indeed, it’s hard to understand why oil prices haven’t risen even more. “Why has oil not hit $100 a barrel?”, asks the Financial Times. The best answer seems to be that even now traders are betting that the Strait of Hormuz won’t stay closed for more than a few days. I hope I’m wrong, but I expect the strait to remain closed for weeks despite Trump’s assurances. ................. A $50 a barrel rise from the pre-bombing level, which would take the price to more than $120, would raise consumer prices by about 1 percent. For perspective, that’s roughly what Trump’s tariffs have done. .................. In many ways we have recreated the “shadow banking” risks that made the 2008 crisis possible. ................

this isn’t even a war of choice; it’s a war of whim, marked by a near-total lack of planning.