fxTalks

EUR/USD 1.2961 Hi 1.3039 Low 1.2940
USD/JPY 121.72 Hi 122.12 Low 121.58
AUD/USD 0.7724 Hi 0.7780 Low 0.7719
EUR/JPY 157.79 Hi 159.03 Low 157.56

The current international GEOPOLITICAL situation defies explanation. It is hard to find a plausible explanation for why George W. launched an all-out attack on Iraq. Provided, of course, that you discount the argument that he is simply insane. This is the explanation of choice for many, but then how do you move forward if that is your premise? The USA is currently controlled by a bunch of crazies, run for your life? Financial markets, thus far, have certainly not bought into that scenario.

So let us put aside that explanation and try to understand how we got where we are now and what is likely to happen in the months ahead. Given the risks we can not afford to simply ignore GEOPOLITICS and concentrate, say, on economic statistics.

The Anglo-American invasion has not brought democracy to Iraq, only chaos and civil war. Once Saddam Hussein's regime had been removed in the early days of the invasion it seems inconceivable that there was no attempt to establish order in what is notoriously a fractured nation. Troops were not sent, those that were stood idly by as mobs rampaged. Indeed there have even been whispers of covert Anglo-American attempts to inflame the violence.

There are two plausible explanations for what happened immediately after the invasion of Iraq: colossal incompetence or malevolent intent.

Then there is the war in Afghanistan. The Anglo-American alliance led an invasion of Afghanistan in 2001. This was "officially" justified as a response to 911. And the great and the good would have us believe that Afghanistan is the just war. Not that George W. and his buddies have actually captured Osama Bin-Laden the man we are led to believe, on flimsy evidence, was responsible for 911.

Indeed the only politician who has publicly suggested that the "official" explanation of what happened on September 11 is a lie is the Former German Defense Minister, Andreas Von Buelow. Elsewhere only silence.

So let's assume that Bin-Laden is responsible for 911. The "official" version of events still remains difficult to comprehend. London did not bomb and invade Ireland, at least not this century, in an attempt to find the terrorists who were blowing up bits of Britain. So why did the U.S. attack Afghanistan?

Since the official explanations for these conflicts are constructed on such poor fundamentals we must conclude the "official" justifications for the current Anglo-American Imperial adventures are not the real reasons for these hostilities.

But we still need to know why these WARS were waged. Without that knowledge we are no closer to understanding what is likely to happen next. If we don't know why Afghanistan and Iraq were attacked then we can't understand what might provoke an Anglo-American attack on Iran.

We must consider other scenarios, other justifications. To do so we must be prepared to put our automatic loyalties aside.

If the possibility of malevolent intent is considered then these conflicts become somewhat less mysterious. Once you make the leap, then the logic of the whole sordid episode becomes, if not acceptable, then understandable. Tony Blair's lying speeches become necessary. The doctored, misleading "intelligence" can be seen to build a case for war were there was no case. And the dismissal of popular opposition to the Iraqi invasion is understandable.

When the intent is WAR from the get-go everything else is just details.

Regardless of the Conspiracy Theory you prefer, all the signs are there that suggest some kind of military action against Iran is likely in the reasonably near future. We are talking weeks. Certainly many current commentators suggest that an attack on Iran, on whatever the pretext, is imminent. Unless of course George W. is removed from office with considerable haste. That seems unlikely. Congress is divided and focused more on the 2008 Presidential elections. The next 2 years belong to George W. and to be optimistic about what he might achieve in that period seems hopelessly naive.

Iran has responded to the obvious signs that an attack is being planned by saying there will be aggressive retaliation to any U.S. attack. All things considered, the plan for WWIII seems to be going smoothly.

Currently Global Financial Markets seem more concerned about the direction of monetary policy in the U.S. and Japan than the possibility of an attack on Iran. They shouldn't be. Given the evidence it would appear that an attack on Iran is likely and there is a chance that the longer term goal is to create the conditions for a major global conflict. Financial markets meanwhile are pricing for NO VOLATILITY and no risks. Pricing for perfection at a time like this is a leap too far.

Stocks are at risk. The USD/JPY may have been granted a temporary reprieve by the anemic G-7 statement released on the weekend, but TEMPORARY is the operative word here. The United States can't afford the WARS it is waging now. More conflict is not going to help the U.S. economy, the USD or U.S. Stocks. U.S. Bonds could get blown out of the water. And ignoring the risks does not make them go away.

OIL 58.71
GOLD 668.70

The slow motion disaster of the GEOPOLITICAL mess in the Middle East has seen GOLD outperform, PPT or no PPT. That is unlikely to change.

Labels: GEOPOLITICS, Iran and WWIII, Lucifer, Priced for perfection, U.S. attack on Iran