War Spreads Across Arabia With US Missile Strikes | Stoic Finance

War Spreads Across Arabia With US Missile Strikes | Stoic Finance

Ever since October 7th and the reopening of the conflict between Israel and Hamas, the entire region has been on the brink of erupting into conflict as well.

It’s old news at this point, but the Houthis, a rebel group in Yemen which essentially control and rule over half the country have been striking at shipping in the Red Sea, in what it claims is solidarity with the Palestinian cause.

Of course the facts don’t agree with this assessment, as numerous ships have been attacked by the Houthis which have nothing to do with Israel, the United States, or even the UK or Europe.

In reality, the Houthi’s are an Iranian backed semi-state that is using this political turmoil to place pressure on the West.

And it is working, as a record 80% of naval traffic is choosing to ignore the Suez Canal and the Red Sea, and to sail around the Horn of Africa again like its the 1700s.

Now the West has begun striking back against the Houthis, attempting to erode away their capabilities and stop the attacks, begining with Houthi drones being shot down in November, followed by airstrikes within Houthi controlled Yemen in December.

This led to steady escalation within the Red Sea, but across the rest of the Levant as well, eventually leading to an Iranian backed strike against US troops in Jordan that killed 3 American Servicemen.

Unsurprisingly, the attacks against the Houthis have now been escalated further with US Air Force and Royal Air Force strikes hitting multiple Houthi targets on February the 3rd and 2nd.

Did the United States have its hand forced?

There are many choosing to critique the US administration and in particular Biden over this escalation, but in reality every single US President over the past 5 decades would have reacted in a near identical manor to what we have just witnessed.

The reality is that Israel is a close ally of the United States, and its lobbying forces have infiltrated the US Government to a very high degree.

As a result, the US does not have the political will to do anything that might resemble damage control or de-escalation regarding the conflict in Israel & Palestine.

Furthermore, once those 3 American servicement were killed, it was simply inevitable that further strikes would be made against the Houthis.

The US Administration can’t be seen to “allow” attacks on its servicemen without huge impacts to domestic polling and politics back home.

It’s also worth noting that the Houthis claim to be doing this in the name of their Palestinian brothers is dubious to say the least.

The group is essentially puppeteered by Iran, who have been working tirelessly to reduce American influence in the region for years now, and causing an escalation like this is an essential part of Iranian strategy.

Frankly, I see the supposed “solutions” being pushed online as idealism at best, and useful idiots being played like a fiddle at worst.

The reality is that geo-political tensions are rising, and we are leaving a uni-polar world, and witnessing the United States lose international standing.

Whenever this happens, and it has happened many times in human history before, it results in conflicts.

Hegemons never give up power willingly, and those vying to take over are never going to do so if they remain peaceful.

What’s next, and what about you?

Understandably, many people are wondering what is going to come of this growing issue, and the future doesn’t seem incredibly cloudy.

I do not think it unreasable, or controversial to state that the Levant or the Middle East is likely to see further turmoil, with insurgent groups striking out again.

For years we saw an unsteady peace emerge in Syria and Iraq, as the US & Russia worked towards the same aim of uprooting ISIS, but just with seperate end goals in mind.

As a result of the War in Ukraine though, Russia’s presence in the region has been greatly reduced, and this leaves room for new powers to take hold.

Iran has shown its willingness to use proxies to fight its battles time and time again, and I see no reason why that would change going forward.

An interesting development that most people are not expecting however, is the return of Saudi Arabia to its previous Western sphere.

Russia & China have been trying, and actually succeeding in drawing Saudi Arabia away from Western influence in recent years, but this is going to become increasingly difficult if they also continue to support Iran.

Saudi Arabia may have qualms with the US, and dreams of leaving the petro-dollar behind, but if it comes at the cost of growing Iranian influence my bet is, that Saudi Arabia would rather aid the status quo.

As a result of this, we may see the civil war in Yemen turn much more hot, with Saudi Arabia taking a prominent role in the war fighting as it did a few years ago.

As for our investments and markets at home, the biggest risk remains those facing our supply chains and inflation.

We are still seeing the vast majority of shipping avoid the Red Sea altogether which adds costs and time to shipping, and this will have an impact on prices in the West.

Furthermore insurance premiums for shipping have skyrocketed as a result of these attacks, and again, this will impact prices on imported goods from the west.

This in conjunction with other geo-political strife, and signs of Western economics heating up, are eerily similar to what we saw in the 70s and 80s when stagflation took hold.

The smart money today is preparing for long sustained periods of high inflation, avoiding holding cash, and investing into real, tangible businesses that are able to use branding and staying power to maintain earnings even as inflation continues to bite.

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Stay stoic,

Max