Let's suppose that the original invasion of Iraq plus Israel's disastrous adventure in Lebanon last year have brought about a fundamental change in the balance of power in the Middle East. The losers in this shift are Israel and the Saud family. The gainers are Iran and Syria. From that standpoint Bush's escalation is very rational. The US cannot afford to pull out and leave the field to the 'axis of evil'. It has to attempt to defend the gains made - and putting it bluntly, they are gains because the objective was never democracy and blah blah in Iraq, the objective was always to gain a strategic foothold for Big Oil & associates as well as a possible new base in case the Saudi regime went belly up.
So the foothold of aspiration has become a toehold in reality. Escalation was thus inevitable, given that Bush's political constituency has always been so closely linked to BO & Associates and, since the warmongering began, Big Defence & Associates. In 2001 the US was in the middle of a serious recession. I seem to recall saying back when the wars began that this would be good for the economy and it has been. However, the crash is also inevitable sooner or later - the articles about excessive liquidity in the global financial system have already begun to appear. The following is from the WSJ a couple of weeks ago:
The world's financial system is overflowing with stocks, bonds and other financial assets -- $140 trillion worth, to be precise.When the financial bubble bursts, Europeans and Americans will have squillions wiped off the value of their assets. China is in a much better position since it has no ideological problems with the Iranian regime and will be only too glad to step in when the US loses its toehold. But before that happens, the war seems very likely to spread - to Iran in the first instance. Do they seriously think they can win that one? Can your average American jackboot tell the difference between an Iraqi militiaman and an Iranian one (there are already, according to a professor at Tehran University, thousands of Iranians in Iraq lending a hand to the Shia side - or a civilian and a militiaman for that matter? Will they care? I don't think so as the stakes are too high to worry about a few mere humans.
The figure was released in a study by McKinsey & Co. that maps financial assets around the globe and seeks to track the flows of these assets as they move from one region to another, putting hard numbers on the oceans of capital washing up around the globe.
At $140 trillion in 2005, the value of the world's financial assets hit a new peak and was more than three times as large as the total output of goods and services produced across the planet that year.
The study, released today, paints a picture of a world in which investors and the banks that manage their money are spreading their bets more broadly. Flows of investment across borders hit $6 trillion in 2005, McKinsey said, above levels reached at the height of the 1990s stock-market bubble and more than double the figure in 2002.
At the epicenter of these financial flows is the U.S., which takes in about 85% of the flows from countries that are net exporters of capital -- places like Japan, China and the Middle East. "It's a pretty striking thing," says Diana Farrell, director of the McKinsey Global Institute, an in-house think tank that produced the report. "Of all the savings that citizens world-wide are willing to put outside their countries, the U.S. gets 85% of it."
Global financial flows are likely to accelerate in the coming years. "The growth in trade in financial assets is proceeding about 50% faster than the growth in trade" in goods and services, says Kenneth Rogoff, an economist at Harvard....
Ninety percent of global capital flows run between three regions: the U.S., the United Kingdom and the European countries that use the euro, the report found. Capital flows in and out of Japan in recent years, according to McKinsey's data, were smaller than China's.
The result is predictable. There will be a Shi'ite arc across the Middle East (let's face it, there already is since the election in Iraq.) Not so predictable: a new regime in Arabia? Israel pushed into the sea? Depends how far the escalation goes.
