President Barack Obama have asked for senator voting to partially attack Syria for using chemical weapon but senators asked to wait for UN report. Euro nations are also against war. Some of us are wondering why US senators and Euro nation are not in favor of war. In this blog I will tell you about the potential economic affects of military strike in Syria and reason why senators and euro nations not supporting it.
#1 Global slow down
As we can see there is already a global slow down and people are losing there jobs as job index is down from last 2 quarter. If there will be military strike there will be more slow down in economic growth of the world as a whole. This is the reason US senator and euro nations are not in the favor of military strike.
#2 Price of crude oil will skyrocket
One of the very first things a military strike in Syria would do is that it would severely constrict or even shut down oil shipments. World oil markets would instantly be plunged into a frenzy.
Although Syria doesn’t have much oil as it produces 60000 barrel every day which is just 0.1% of world production, but there is chance to get disruption from Iraq, Libya and Egypt also which are unstable.
The truth is that every single transaction that we make every single day is influenced by the price of oil. If the price of oil suddenly doubles or triples that will absolutely devastate the already very fragile world economic system.
#3 Fear will explode in world financial market
Even without a military strike, the dominant force in world financial markets in 2013 is fear. We are already seeing unprecedented volatility(full of ups and downs) in financial markets around the globe, and there is nothing like a war to turn fear into a full-fledged panic. And what happens when panic grips financial markets? The financial market will crash.
#4 World trade will seize up
There was a time when most of the economies of the world were relatively self-contained, so a military strike in one area would not necessarily wreck economies all over the globe. But everything has changed now. Today, the economies of virtually every nation are highly interdependent. That has many advantages, but it also has consequences to face.
If a military strike in Syria will break out, nations all over the globe would start taking sides and world trade would seize up. The global flow of goods and services would be severely interrupted. That would be enough to push many nations around the world into a full-blown depression.
#5 Military spending will escalate
Even if the United States was not pulled directly into a conflict between Syria and Iraq, there is doubt that the US would be spending a lot of money and resources to support Iraq and to build up military assets in the region in case a wider war broke out. The US has already spent somewhere around trillion of dollars on the wars in Iraq and Afghanistan. If war does break out with Iran the amount of money the US government could be forced to spend could be absolutely staggering.
The truth is that the US is already drowning in debt. At this point the US government is in over $70 trillion debt, and another military strike in Syria will put it on back foot.
#6 Massive Inflation
There already is inflation. Military strike in Syria will give a huge jump in the price of oil and dramatically increased military spending by the US and Euro nations government would most definitely lead to price inflation. We will probably see a dramatic rise in interest rates as well. In fact, it is quite likely that if military strike in Syria does break out we will see a return of “stagflation” – a situation where prices are rapidly escalating but economic growth as a whole is declining drastically.
#7 The price of precious commodities like Gold, Silver Platinum etc will go through the roof
When there is a high degree of uncertainty in world financial markets, where do investors turn? As we have seen very clearly recently, they turn to gold. As high as the price of gold is now, the truth is that it is nothing compared to what would happen if there is a military strike in Syria. When times get tough, we almost always see a flight to safety. Right now none of the major currencies around the globe provide much safety, so investors are increasingly viewing precious metals such as gold and silver as a wealth preservation tool.
So these were the economic effects of war and as a conclusion I wanna say that war is not the solution, and there is need to find a way out for the tensions in middle east.
There are so many point I have not discussed here, by the way you can ask questions in comments and share it on facebook or twitter if you liked the article.