The Consequences Of Bombing Iran

The Economic Fallout From Bombing Iran -- Bloomberg Businessweek

“Nobody’s announced a war, young lady,” President Barack Obama said in New York on March 2, wagging his finger at an audience member who decried the possibility of U.S. military action against Iran. “But we appreciate your sentiment.” The crowd cheered, and a smile crossed the president’s face.

It’s too soon to say when, or whether, the long-simmering dispute over Iran’s nuclear program will erupt in armed conflict. “There is still a window that allows for a diplomatic resolution,” Obama said before meeting with Israeli Prime Minister Benjamin Netanyahu on March 5. A raft of Western economic sanctions against Tehran, including a looming embargo on Iranian oil exports to the European Union, has made the country’s rulers more willing to “recommence negotiations without preconditions, which isn’t something they were amenable to last year,” according to Karim Sadjadpour, an Iran analyst at the Carnegie Endowment for International Peace. War with Iran in 2012 “is plausible but not probable,” he says.

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My Comment: This analysis focuses on what will be the price of oil in the worse case scenario (the worse case scenario being a U.S. concerted and prolonged bombing campaign and Iran unleashing everything that they have in the region). Their prediction .... a $60 per barrel increase for a final price that will be between $150 to $200 .... as well as a two percentage point drop in economic growth.

What's my take .... who knows where we will be heading if the bombs start to drop, but I suspect that it will be an air and naval war, the use of special forces, and a prolonged conflict targeting Iran's proxies in the Middle East .... and around the world. But I must also add that this conflict can easily spiral out of control, involving major states, and easily dislocating any economic growth for the next few years if not longer.