Iran
You can check out any time you like, but you can never leave!
The war in Iran reminds me of the old Eagles classic Hotel California. Wars are easy to start. The US and Israel have overwhelming force, and they can easily knock out the Iranian army. However, the enemy also has a vote, and new technology makes it possible for a beaten enemy to keep going despite enormous losses. Drones are cheap to build and can be launched from everywhere, far from the battle theater. So, Iran can continue to create problems for its neighbours indefinitely, and hamper the flow of oil for a very long time.
The US has ammunition to pummel Iran for a month or two, but then it has to let up on the pressure. Trump hopes that the pause will lead to an uprising in Iran. However, there is no certainty in this. The Islamic Republic can reconfigure and continue the fight. In this case, Iran can turn out to be Hotel California for the Trump Administration. The American Navy can’t leave as long as their allies in the area need protection, and oil tankers need escort along the Iranian coastline.
The Russo-Ukrainian war gives us some clues. Russia lost the war a long time ago, but if Moscow can’t get Ukraine, Putin has figured out that nobody else can have it either. So, the missiles and drones keep on flying. That Russia’s economy is on the skid doesn’t seem to mean anything for the Kremlin.
Iran has been under sanctions for ages, and the economy is a basket case. What the example of Russia shows us, however, is that this doesn’t mean much if the country’s leadership has the will to fight.
My regular readers know that I’m not a doom-and-gloomer. Still, my advice at this moment is to cool it, go to the sidelines, raise some cash, and wait for clarity. The world is not coming to an end, and I don’t believe this is the start of World War III, but we all know that if oil doubles, markets are in trouble. I can easily see that we get a nasty correction in the coming weeks. Thus, good buying opportunities can arise soon. In the meantime, step aside and observe. There is no need to be a hero. Maybe everything will be ok, but I see things as so uncertain here that I would be a little careful.
If the Americans can’t leave, they will be prisoners there of their own device. It’s not easy to find the passage back when you can’t kill the beast.
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