US-Syria saber-rattling is already damaging the economy – Sober Look

This is a syndicated repost courtesy of Sober Look. To view original, click here. Reposted with permission.

Even if the US threat of a potential military intervention in Syria is just a bluff, it is already doing damage to the global economy. Brent crude just broke through $117/barrel. Imagine just for a minute what this does to emerging economies whose currencies have been decimated recently (see post). They still have to pay for oil in dollars.

Brent crude October contract

Back in the US, businesses and consumers alike are dealing with a sharp spike in interest rates and a massive federal budget fight. Potential outcomes of the fiscal showdown could include cuts in federal spending (potentially impacting numerous government contractors and their employees), higher taxes, or even a federal government shutdown. Also it’s important to keep in mind that it’s been less that a year since the Eurozone-related fears began to subside. And now the country has to deal with elevated energy prices?

Those who live in the Northeast and have no access to natural gas to heat their homes will cringe when looking at the chart below – the January heating oil futures. That’s money directly out of consumers’ and businesses’ pockets. The situation with gasoline is similar.

January heating oil contract

Worst of all is the tremendous uncertainty associated with rising tensions in the Middle East. An environment such as this is not conducive to investing in growth and hiring. While the situation in Syria is tragic, the US economy simply can not afford a massive blow that would result from this conflict.

From our sponsor:

Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.