So many things happening at once today:
Oil is up $2 today, seventh straight day of gains. What will happen in Iran? Tensions are escalating, the situation with the captured British sailors seems to be beyond the control of either Iran or the UK, and the sheer quantity of military forces operating on edge in close proximity in the Persian Gulf makes the probability of an accidental "Gulf of Tonkin" type incident more and more likely by the hour. Not to mention incidents of the non-accidental type. Now it seems that the Nimitz is heading to the gulf to replace one of the two US carriers operating there--there will, of course, be a bit of an overlap, so for a period there will be 3 US carriers in the gulf. Oh, did I forget to mention that the French carrier, the Charles de Gaul, also recently arrived in the Arabian sea? Four carriers in one place almost speaks for itself. I wonder which would better build public support for an attack on Iran, the Nimitz "getting struck by a Sunburn SSM" while trainsiting the Strait of Hormuz, or the de Gaul "hitting a mine" while making the same passage. People keep asking me when and if we're going to attack Iran. I didn't think we'd attack Iraq (booked a vacation that I had to skip, in fact), so maybe I'm overly conservative in these areas as it is, but I'm rapidly coming around to the prospect of an attack on Iran. I still think that we're looking for an incident to build support back home--and the current administration will probably keep ratcheting up the tension until such an incident becomes inevitable. Hey, if it happens before the current troop funding for Iraq expires, then Bush could force the Democrats' hand on war funding, kill the timeline issue entirely, and give McCain a 20 point lead in the '08 presidential race.
But that isn't the only rosy news. The mortgage problems are getting worse. You've heard all about the sub-prime mortgage issue. Now take two minutes and carefully look at this graph:
Scared? If not, look again. That's $ 500 BILLION in sub-prime ARMs set to adjust higher in the next 24 months, and given the recent events, these people will not be able to get new sub-prime loans to refinance to fixed rates. The risk allocation system of Credit-Swap Derivatives did an admirable job of redistributing the first $100 billion in defaults (though only about $10 billion has actually defaulted, the rest are still at some point in the foreclosure process), but will it be able to handle this, or will it bring down the whole house of cards trying? So far only 44 mortgage lenders, including 3 of the top 10, have imploded (see the mortgage lender implode-o-meter) in the sub-prime debacle. How will the economy handle the next wave, which will be between 5 and 50 times as large? The good news is that our brilliant Congress has decided that people already inside the Ponzi scheme of our economy should bail themselves out. Seriously, they're considering a mortgage bail out. I'm sure they won't finance it with obvious taxation, but probably through inflationary debt spending that will have the same effect. Can you afford $1000 to bail out someone else's mortgage? What about the next round?
I'll end on a less negative note: check out John Robb's latest post on The Virtual Caliphate. It's fascinating, chronicles the rise of exactly the kind of state alternative that Robb has talked about before, and that I wrote about in The New Map. If nothing else the greater costs imposed on territorial Nation-States from rising energy prices and mortgage melt-downs will speed up the transition.