Let’s start this off with a curious conjunction of news articles as presented by the Google News algorithm.
And I also ran across this article over on Juan Cole’s site.
Posted on 01/03/2012 by Juan
A sharp drop in the value of the Iranian currency as a result of new American sanctions may sound like good news to hawks in the US. But actually this development may signal ways in which Americans will also be harmed, and Obama may have put a second term in jeopardy, cutting off his nose to spite his face.
An amendment to the National Defense Authorization Act signed by President Obama this past weekend will seek to slap third party sanctions on countries and enterprises that deal with Iran’s central bank. It will go into effect this summer. In effect, the law says that if you buy Iranian petroleum, you cannot do business with American financial institutions. Since the United States is still over a fifth of the world economy, and most institutions with capital need to deal with it, the hope of Congress is that Iran will be left without customers.
The measure, pushed by the American Israel Public Affairs Committee on behalf of the government of Israeli Prime Minister Binyamin Netanyahu, might well be a trap for Obama. In an election year, he could not refuse to endorse new sanctions against Iran (the Republican candidates in Iowa are practically running on promising that if elected they will launch a war on Iran; and they are lambasting the president as weak on this issue).
There’s a couple of interesting things about this line of thinking and Cole explores the direct results on this in his post.
Those two factors, the likelihood of rising Asian demand for petroleum in 2012, and investor nervousness about how tensions with Iran will play out, will probably keep petroleum prices at historically high levels in 2012, and some analysts believe that there could be a return to the overheated pricing of 2008 before the crash.
It would be much better for the American economy if prices sank back down to the levels of only a few years ago, of $50 a barrel or less.
If the Congressional sanctions actually worked, and took Iran’s roughly 2.5 million barrels a day in exports off the world market, that would take out 80% of Iran’s export income and deeply hurt the regime. But it would also send world petroleum prices through the stratosphere, deeply harming Western economies already teetering on the edge.
The NDAA (National Defense Authorization Act for Fiscal Year 2012) which has people all a-twitter about the AUMF made real, also includes the language that essentially declares economic warfare with Iran. You know how all those little dollars say “Federal Reserve Note”…well…when it comes to being the one that redeems property, one tends to have some control over who gets to officially use it for business. The NDAA (of FY 2012) essentially says that anyone who uses our money, can’t use it to buy their oil (or anything else they sell).
This was added to the NDAA by a flake. Literally, Jeff Flake (R-AZ).
Washington, D.C., Dec 9, 2011 – Republican Congressman Jeff Flake, who represents Arizona’s Sixth District, today along with 22 House Members sent a letter to House Armed Services Committee Chairman Buck McKeon (R, CA) and Ranking Member Adam Smith (D, WA) urging them to retain during conference negotiations with the Senate provisions in the National Defense Authorization Act (NDAA) that would levy sanctions on the Iranian financial sector, including the Central Bank of Iran, in an effort to severely limit the funding sources available to the Iranian regime for use in developing nuclear weapons.
You will be unsurprised to find out that Flake was one of the 81 Congressmen (only 21%) who did, in fact, take an all expense paid weeklong [edit 9 day] vacation to calm and relaxing Israel during the summer break.
Don’t worry though, no taxpayer money was (directly) used to pay for this. Lobbyists covered the whole thing.
Sponsor(s) – American Israel Education Foundation
Dates – August 18, 2001 – August 26, 2001 (9 days)
Location(s) – Israel
Purpose – Educational mission
Notes – Spouse Cheryl Flake accompanied. Other costs not specified.
Travel Cost – $7,183.20
Lodging Cost – $2,023.70
Meal Cost – $1,391.30
Other Cost – $986.00
Total Cost – $11,584.20
Additional family members – Yes
And just so you get an idea of how much of a flake this Flake guy is…
Flake was first elected to what was then Arizona’s 1st congressional district in 2000, after Republican incumbent Matt Salmon stepped down in honor of a self-imposed term limit. The district was then renumbered to the 6th district as Arizona gained two Congressional seats due to the results of the 2000 census.
In his campaign in 2000, Flake had pledged to serve no more than three terms in Congress, leaving no later than January 2007, but in early 2005, shortly after being elected for a third time, Flake announced that he had changed his mind and would in fact run for re-election in 2006. “It was a mistake to limit my own terms,” Flake said.
So…long story short…get ready for much higher gas prices this summer and the Republicans constantly blaming Obama for it. There’s a decent chance that the actual reason for the rise in prices will not be a constraint in supply, but instead an increase in middleman costs caused by the sanctions leading to a run-up in the price of oil…if not a full-on closing of the Straight of Hormuz by Iran (if the sanctions work too well and they realize they are fucked either way.)
Whatever the reason, higher oil prices (even if only caused by the threat of increased hostilities…raising risks raises prices) will slow the already crawling economic recovery in the U.S., leaving it, most likely, continuing to sputter along like an old car running low on…well…gas.
What I find really funny here (funny in an ironic way), is that while Obama will be in actuality taking a political hit from the slowing economy from increased oil prices, he’s also going to continue to be hit for “throwing Israel under the bus” even while taking the economic hit that comes with directly targeting the money supply of Iran.
Pretty funny, if you think about it.
I still don’t think it’s going to be enough to convince more Americans to vote for Romney than Obama, however.
The election is going to be literally a Wall Street Tycoon vs a Community Organizer.
Ask your average Tea Party member which one of those they support (using those labels), and do it while they are community organizing for even greater lulz.