Tensions were running high between the U.S. and Iran a week ago. Our troops in Iraq and Syria were under threat and we went as far as sending the Lincoln Carrier Strike Force towards Iran. The country is threatening to stockpile nuclear materials again if Europe doesn’t give it aid to offset the damage from sanctions. And John Bolton has been calling for a pre-emptive strike against Iran since his New York Times op-ed in 2015.
It’s seems like a gas-soaked bonfire just waiting for a match. But I don’t believe war is on the cards, for many reasons, the most important of which I’ll explain in a minute.
Look, I’m not to say we won’t hear drum beats of war or see more chest thumping. In fact, this situation, along with the continuing trade war with China will likely determine whether the next correction in my Dark Window scenario is brief and shallow or longer and deeper before the final orgasmic blow-off rally.
But beyond that, this should turn out to be little more than a storm in a tea cup.
When Wars Happen…
World wars often follow depressions and long recessions, which shrink the economic pie and pit nations against each other. Wars are also a tempting way to stimulate an economy out of a depression, which is what Hitler did in the 1930s to return Germany to greatness. BUT, this was during the last negative arm of the Geopolitical Cycle.
While we’ve lived through a brutal negative turn of the Geopolitical Cycle since 2001 – as I’ve said before, just glance at the timeline I published in Sale of a Lifetime for a shocking look at how bad it’s been – we have not had a depression and the Great Recession was short lived thanks to Central Bank efforts. And, this cycle is due to bottom by late 2019/early 2020.
Still, everyone I talk to is wondering…
Will this next crash and debt deleveraging lead to a major war or World War III? I mean, I just said wars are often born out of such times. Still, my answer remains NO!
The combination of U.S. and Europe is still too strong for the likes of China or Russia… or Iran… to challenge. Besides, China and Russia may be allied against the western democracies, but they aren’t exactly “kissing cousins.”
If I were Russia, I would be worried about China targeting my vast resources in the future as my demographics continue to weaken.
Besides, the U.S. has both more and larger aircraft carriers than all of the other countries combined.
Why it Won’t…
But again, and most important, all these rumblings aren’t likely to escalate too far as this cycle bottoms…
Instead, it’s most likely to represent the crescendo of this negative arm of the cycle, which has seen horrific acts of terrorism and civil wars.
Europe is campaigning hard against escalating tensions with Iran because it fears more refugees and the repercussions of Iran closing the Strait of Hormuz. That would impact 40% of oil flows into the continent.
Russia is one of Iran’s few and only powerful ally, and even it’s pushing against deepening the rift between Iran and the U.S.
Even The Donald himself campaigned against the U.S. being involved in overseas affairs as much in his America First theme.
The People Speak…
Polls by Reuters/Ipsos show that 51% of Americans do expect some sort of war with Iran in the next few years, but a mere 12% are behind a pre-emptive strike and 60% say “hell no” – so good luck Bolton! 79%, republicans and democrats, would favor a strong retaliation if Iran struck first; 49% favor a limited response; 35% a full invasion. And 61% disagreed with The Donald pulling out of the Nuclear deal with Iraq.
So, in the end, this looks like a lot of huffing and puffing between two countries that have hated each other since the U.S. supported the overthrow by the Shah of Iran in 1979.
My Geopolitical Cycle is the first to bottom between 2020 and 2023, where the combination of my four cycles is at its worst and strongly favors a Great Depression after central banks have kicked the can down the road for more than 10 years with a little help from The Donald’s unnecessary tax cuts for corporations.
The worst of the last Great Depression from 1930-1942 happened on the front end of the cycles. The worst of this Economic Winter season from 2008-2023 should occur on the back end.
The goods news is that my hierarchy of cycles suggests the worst will both occur and be over by 2023 or so, and the next global boom will set off in 2023 and run through 2036/7. My Geopolitical Cycle is up the entire boom from 2020-2036/7, as is the U.S. Spending Wave for Millennials from 2023-2037…
But it will be a very mixed boom and not broad-based, unlike the one from 1983 to 2007. We will tell you exactly where to invest to capture it most fully.