Economic Projection 2010: Iran is the Wild Card
The global economic crisis has already inflicted crippling blows on major advanced and emerging economies. Only massive levels of public indebtedness, and wanton quantitative easing by central banks, has prevented (temporarily, in my view) the onset of another Great Depression. However, geopolitical events of an unpredictable nature can upset even the best laid plains of a Ben Bernanke, Timothy Geithner and their counterparts across the globe. The wild card in the mix is undoubtedly Iran.
I have commented before on the Iranian nuclear program, and the possibility of an Israeli pre-emptive strike on Tehran’s nuclear facilities. I’ll repeat my earlier conclusion, which is, apart from the demerits or merits of using military means to address the Iranian nuclear challenge, the inevitable response by Iran’s regime will create economic havoc, particularly with respect to oil prices.
The current issue of The Economist has an illuminating piece, entitled “The gathering storm,” which makes a persuasive case for 2010 being the year that something definitive will happen on the Iranian nuclear front. Should that prove to be the case, the resulting geopolitical reverberations may be the final nail in the coffin of the global economy. Worst case scenario: regional war in the Middle East, massive disruption of oil shipments from the Persian Gulf, resulting in a severe global economic depression. Not even money-printer Ben Bernanke will be able to dodge that bullet.
