What’s the Plan with War With Iran?

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In the face of economic meltdown, pick a fight…

Last year, your editor wrote economic problems will catch up with politics. It seems that day may be delayed by warmongering. Nothing like a political enemy to distract from economic malaise.

A nice list of reasons to worry about a war with Iran was sent to our inbox on Tuesday:

From Press TV:

Paul Craig Roberts, Assistant Secretary of the Treasury during Ronald Reagan’s presidency, [said] “The raised level of Washington’s rhetoric and demonization of Iran” is one of the signals pointing to Washington intent of a military strike on Iran. “Only the blind do not see that the US government is preparing to attack Iran … If the missiles aren’t launched, Americans would wake up the next day a bankrupt third world country. If the missiles were launched, few Americans would wake up.”

And

The US military is preparing a massive military campaign against Iran, sending thousands of American troops, warships and weaponry to Israel.

From Washington’s Blog:

“Should anything happen to Iran, should Iran get drawn into any political or military hardships, this will be a direct threat to our national security,” [said] Dmitry Rogozin, Russia’s deputy prime minister and former envoy to NATO.

A Chinese general has also allegedly said that China would launch World War III if Iran is attacked. While many Americans still believe that our government would not be crazy enough to attack Iran, economic – not national security – considerations may be driving the warmongers.

From Russia Today:

The United States is sponsoring the construction of facilities in Georgia on the threshold of a military conflict in Iran, a member of Georgian opposition movement Public Assembly, Elizbar Javelidze has stated. All in all, about 30 new hospitals and medical centers were opened in the former Soviet republic in December last year. The plan is to build over a hundred more.

From EU Observer:

US senators have warned EU foreign affairs chief Catherine Ashton that Iran’s alleged nuclear weapons programme risks igniting a military confrontation.

From The Australian:

ISRAEL is preparing to shut its nuclear reactor at Dimona, where it makes nuclear weapons, because of the site’s vulnerability in a war with Iran.

What’s rather surprising in all this is the straightforward admission from US Defence Secretary Leon Panetta that Iran isn’t even trying to develop a nuclear weapon. ‘Are they trying to develop a nuclear weapon? No. But we know they are trying to develop a nuclear capability.’

This seems like a rather important thing to take into account. Do they have nuclear weapons? Nope. Are they trying to develop them? Nope. Should we bomb them? Yep.

But try and find that quote from Panetta anywhere in the mainstream press. We couldn’t. In fact, ask the average person whether Iran is trying to develop a nuclear weapon and we reckon 90% would say ‘definitely’.

Anyway, short of getting drafted or shot at, why would Australian investors care about another war? Of course, there is Iran’s important role as an oil exporter. And its proximity to important oil infrastructure. But there’s something else worth noting as well. The last two similar wars triggered impressive rallies in the ASX200 and All Ordinaries

ASX200 and the invasion of Iraq on March 20, 2003

ASX200 and the invasion of Iraq on March 20, 2003
Click here to enlarge

Source: Yahoo Finance

All Ords and the invasion of Afghanistan on Oct 7, 2001

All Ords and the invasion of Afghanistan on Oct 7, 2001
Click here to enlarge

Source: Yahoo Finance

The first thing to jump out at you is the impressive market rally in the Australian indices shortly before the invasions. And then the stable rallies that came after.

Of course, the economic environment was a little different in 2001 and 2003 than it is now. So please don’t go buying stocks because there will be a war. Our point is that you shouldn’t stay out of the market because of the dangers of another conflict. And don’t necessarily sell up when the bombs start falling on Tehran.

Not that there aren’t other reasons to pull your savings out of stocks in the meantime.

Until next week,

Nickolai Hubble.
The Daily Reckoning Weekend Edition

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Nick Hubble
Nick Hubble is a feature editor of The Daily Reckoning and editor of The Money for Life Letter. Having gained degrees in Finance, Economics and Law from the prestigious Bond University, Nick completed an internship at probably the most famous investment bank in the world, where he discovered what the financial world was really like. He then brought his youthful enthusiasm and energy to Port Phillip Publishing, where, instead of telling everyone about The Daily Reckoning, he started writing for it. To follow Nick's financial world view more closely you can you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails.
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6 Comments on "What’s the Plan with War With Iran?"

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Joe
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The US and Israel have already attacked Iran with the computer worm Stuxnet in March 2010 trying to destroy the centrifuges in Iran’s Natanz’s nuclear facility. And recently in September 2011 the worm Duqu was found which Symantec has called “nearly identical to Stuxnet, but with a completely different purpose”. Duqu looks for information that could be useful in attacking industrial control systems. Its purpose is not to be destructive, but a Trojan that is trying to gather information. If America did bomb Iran and China joined in for WW3, I think the way China would retaliate would be online,… Read more »
Don
Guest

‘Are they trying to develop a nuclear weapon? No. But we know they are trying to develop a nuclear capability.’ ie a nuclear reactor.

then:

“ISRAEL is preparing to shut its nuclear reactor at Dimona, where it makes nuclear weapons, because of the site’s vulnerability in a war with Iran.”

You see, once you have a nuclear reactor, making nukes is so much easier yeah? Are you guys a little slow in the new year? I am not saying that an attack on Iran is a good thing, just trying to help you join the dots between nuclear capability and nuclear weapons.

Lachlan
Guest

Every major power will want a nuclear weapon to defend it’s assets. It therefore is natural that Iran would want a nuclear weapon and that is likely the major reason why people might tend to believe they are doing so. Even Ron Paul feels that Iran would naturally make that choice.

I am not condoning a war either.

Coffee Addict
Guest

Preparations may happen on a contingency/preparedness basis but that does not mean anything will happen….except for the continuation of the not so secret dirty war.

shortchanged
Guest

The US, UK, Israel, India, Russia, China, North Korea, have nuclear weapons, don’t they? and probably others too. So whats the big deal?, any number of crazed dictators could start a war. There is the economy of course, as it gets worse there has to be distractions and what is better than, WMD, My religion is better than yours, Elections, yes that’s it, now who is up for election?. Plus as well the Military Industrial Machine, lots of money to be made there. Its a question of take your pick.

Mick
Guest

[quote]But try and find that quote from Panetta anywhere in the mainstream press.[/quote]

You mean the same mainstream press that sold us the “Saddam has WMD’s” crap?

[quote]. The last two similar wars triggered impressive rallies in the ASX200 and All Ordinaries. [/quote]

An attack on Iran will bear absolutely no similarity with the Iraq/Afghanistan invasions………..once WW3 starts no-one will be playing the stock markets.

wpDiscuz
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