Saturday, July 19, 2008

When will Israel hit the Iranian nuclear program? (part 2)

Chicagodudewhotrades is back with another installment from last week's post.

First of all, I want to thank everyone who read the first part of this. I also want to thank all my friends with blogs who post my articles. Part 2 is mostly your thoughts and ideas about Israel hitting Iran. There are too many people who shared their thoughts with me on this subject, so I'd need pages to name you all. I just want to say "Thank You" to all of you. This article is more random thoughts/possibilities, then a hard article. But it is interesting to just brainstorm this stuff out. Here we go:

Israeli/US possibilities short of airstrikes:

Naval blockade of Iranian ships entering/exiting Persian Gulf: Iran has publicly stated if attacked they will close the Straits of Hormuz. If they can threaten International shipping then why can't we threaten Iranian shipping? Iran makes money if their crude gets out to the market. If their shipping is blocked, there goes their entire economy quick. Granted, Blockades are considered a act of war, but hey, If Iran can threaten this, then I don't see why they can't have it done to them. Another way to do it, would be to allow Iran crude to be exported, but incoming refined product not being allowed into Iran. A not well known fact about Iran is the dismal state of their national refining capacity. This is a country that sits on a sea of the stuff but they have GAS SHORTAGES because their refining capability sucks. If we block tankers from delivering refined gas to Iran their country shuts down.

Something related to the above involves tanker insurance. Readers have noted that the Iranians don't have to totally shut down the Straits to achieve their goal. If they attack 1 or 2 tankers the insurance cost goes through the roof. Once again, this tactic could be used against tankers that carry Iran crude. If you make tankers carrying Iran crude a target, no more tanker trips to Iran. Even if Iran starts hitting tankers, I'm sure the US, Japan (totally dependent on imported gas) and maybe other countries would step up and foot the bill for tanker insurance. Another possibility is 're-flagging' tankers under the Stars and Stripes and giving them USN protection. If Iran hits a US-flagged tanker, then it is game over for Iran.

Some type of airburst of a tactical nuke over Iran that would trigger an EMP-caused shutdown of a lot of Iranian electronics: In case people don't know what an Electromagnetic Pulse is, here is a link of what it is: and here: Personally, I view this idea as extremely unlikely. Even tactical nukes detonated in the air is a huge red line that cannot be taken lightly. Therefore, unless Israel has convincing proof that Iran was about to nuke them, I don't think Israel is considering this as a viable option. Other facts to consider about the EMP idea. The pulse wouldn't stop at Iran's border. Also, I don't think Iran is as fully computerized/technology-dependent a nation like the nations in the West. Yes, an EMP strike over Iran would do them damage, but not on the scale, say, an EMP over London would do.

Israeli hacker attack on Iran's computer systems: Again, doubtful for the reason mentioned above.

This seems to be the limit of non-airstrike ideas. Let us move back to airstrikes and what types could be launched.

Israeli airstrikes on Iranian economic targets: I like it. Make the cost of Iranian nuclear weapons development too expensive for Iran to afford. Effects on Iran's economy already discussed above. Downside: Iranian leadership doesn't seem to give a damn about their people. Iran seems willing to sacrifice their nation in the pursuit of nukes. Therefore , economic problems for their citizens may not even compute to the leadership. Something worth pondering is the affect any type of airstrike would have on the people of Iran. Would they get all nationalistic and rally around the Mullahs, or do the opposite? I just don't know enough about the Iranian people to say anything one way or the other. One more imponderable.

A couple of reader comments about if a Israeli strike would happen before or after the US elections:

"Make Obama take a side on the issue. if he condemns Israel, he could dry up his jewish support including cash. If he supports Israel. the left goes nuts".

"Conventionial wisdom says Israel won't do anything before the US election".

Here are my thoughts. Yes , Israel views the US as a friend, but their domestic security needs will trump the concerns of a effect on US domestic elections any day of the week. PM Olmert looks to be in deep sh$% because of personal corruption issues. I hate to be cynical, but maybe he would green-light an Op to take heat off him? Another personal thought: I think deep down some Israeli political leaders just don't trust Obama to not sell them out. They may as well hit Iran while the US president is a friendly one.

What are Iran's options when they get hit? Would Hezbollah hit targets outside the Mid-East? If Israel hits, would Iran wait until after the US elections to retaliate? Do the Iranians view President Bush as a political aberration? Do they view Obama as more 'understanding' of them? I think Israel needs to get ready for a multi-front retaliatory strike. They may face strikes from Syrian-controlled Lebanon, Gaza, and maybe long-range missiles from Iran.

The Israeli Air force is way smaller than the USAF. If they hit Iran by themselves, because of their smaller size, there is a greater demand for them to get the strikes right. On the bright side, Israel has pretty much been in never-ending conflict since 1948. That type of existential threat to their very lives tends to produce a first-class military. When Israel hits Iran, I think they will do some things that will just totally leave the Iranians 'shocked and awed'. When the IAF hit the Syrian facility back in September, there were some media reports of "On the ground, Syria's formidable air defences went dead." and "since the alleged IAF foray over Syria last week there have been severe disturbances in Lebanese communications systems and cellular frequencies." Here are some links about the September 6 strike:

When Israel hits Iran, it will be interesting. Israel has been fighting against enemies equipped with Soviet gear since 1948. I'm sure the Israelis can write the handbook for some Soviet gear they face better then the original Soviet designers can.

The next couple thoughts aren't really related to a Israeli strike on Iran, but I think they are worth mentioning:

Last week the Iranians test fired over a couple days a bunch of missiles. It turned out that some of the missile launches were duds and had to be photo-shopped to make them look successful.I think the Iranians know they are about to get hit, and are trying to look more powerful then they actually are. They want to try to deter a attack against them. Another reason is that Iran wants to be head of the Muslim world. They want to be the 'biggest, baddest kid on the Muslim block'. To be a leader in the Muslim world, you need to have a powerful military.

I'm not sure about the possibility of this, but it is worth throwing out and talking about. If Iran was to get their hands on nukes, would Israel be the first target for them? There is a huge amount of historical hatred between Muslim Sunni and Shia. Would Shia Iran launch their nukes against Sunni Saudi Arabia? Settle the hatred between them once and for all? Plus, Iran takes out the main competitor of Iranian oil exports. Iran would dominate the global oil market and therefore set the price. I'll admit, this probably isn't likely, but worth the thought.

Once again, I'd like to thank all the folks who offered their ideas about Part 1 of this. I'd also like to apologize that this is more a brainstorm type article then a better organized piece, but I think all these ideas are worth debating.

Thanks for your time,


Monday, July 7, 2008

Chicagodudewhotrades: When will Israel hit the Iranian nuclear program?

And yet another great guest post from LGF lizardoid minion chicagodudewhotrades:

When will Israel hit the Iranian nuclear program?

I believe that the Israelis will bomb Iran's nuclear weapons program soon. By 'soon' I mean between now and October. Israel views the Iranian bomb as a threat to it's very existence. Israel has only 2 options in dealing with the Iranian bomb: either stop the program, or live life every day with the threat of being wiped off the face of the earth. Living life like that is not viable. I believe the Israelis will launch a attack by themselves. The Israelis don't have to hit every single target that is part of the Iranian nuclear program to succeed. If they inflict enough damage and /or kill enough nuclear technicians to set the Iran bomb project back, that will be a win for them. I don't believe that the US will actively participate in the bombing strikes. If the US is involved it will be on the sidelines in the form of Tanker/Electronic Warfare/Jamming support. The main US participation will be in the form of the US giving overflight rights to the IAF as the strike package flies over Iraqi airspace.

What could be the possible Iranian reactions? That depends honestly on a lot of factors that I'll admit I'm not knowledgeable enough to talk about, but here I go:

The Iranians have publicly stated that if attacked, they will close down the Straits of Hormuz. Yes, the Straits are a pretty narrow chokepoint, but to totally close it down and prevent shipping to exit/enter the Gulf is still a challenge. Their navy is a joke. When the Iranian navy went up against the US Navy in the late 1980's (Operation Preying Mantis) Their navy was soundly thrashed. Today , they have a few ex-Russian Kilo-class subs, but I don't think the overall material condition of the subs and also their crews's training standards are that high. They do have a lot of small fast speedboats . If they load one up with explosives and suicide it into a tanker that will probably kill a tanker. They could get very lucky and sink a tanker right in the straits, but even that outcome will hurt the Iranians too. After all, Iran exports oil out of the gulf just like everybody else. Since the only way the Iranians make money is by exporting oil, their economy will get crushed if the straits are blocked for a long period of time. The Iranians have in the past dumped contact mines into the gulf and damaged a few tankers, but again, if the Iranians succeed with the mines, their own economy takes a hit too.

Since it looks like any Iranian attempt to shut down the Straits will hurt them just as much as everyone else, what other cards can the Iranians play? Iran possesses a number of ground missiles with the range to hit targets across the gulf. they could hit US bases in the gulf. However, we have anti-missile systems like Patriot to handle this threat. Besides, if one of those missiles goes off target and say, instead hits downtown Kuwait City, then the Iranians may have to deal with Israel airstrikes against them turning into other gulf nations taking up arms against them too.

The best course of action the Iranians have is doing something against Israel. They can use their surrogates in Syria and Hezbollah to launch terror attacks in Israel and/or step up the never-ending rocket strikes on Israeli border communities. I don't think the Syrians would launch conventional military attacks across the Golan. But, if they did, the Syrian Military would have a couple very exciting days before getting wiped out. If the Syrians did throw in with the Iranians, the end result would be Merkavas parked on the lawn of the Syrian presidential palace in Damascus and baby Assad taking a one-way flight to Tehran (provided he hadn't already been bombed or his presidential jet smoked out of the sky as he attempted to flee).

Another factor to consider in any Iranian reaction to airstrikes on it's nuclear facility is the Iranian national will to respond to airstrikes. Yes, the Iran nuke program is considered a point of pride by the Iranian people. but, if the Iranian people realize that their nuke program is hurting them they will probably drop support for it. There is already high Inflation and Unemployment along with low Economic growth. The Iranian leadership is already unpopular because of the domestic economic issues, if their desire to possess nukes causes a great deal of national pain...... well, Iran is a country that has had a revolution, nothing says the people can't have a second one to throw out the religious leadership. Granted, Iran is a police state, so a popular overthrow of the government is unlikely but not impossible. There are way too many possibilities to consider when thinking about a popular overthrow of the government (for example, would the Iranian military back up the government or side with the people?) to write about right now. but I do think a popular overthrow of the religious leadership is possible.

What would a attack on Iran's nuclear program mean for the rest of the world? The price of oil will shoot up, that is a given. I could see Crude Oil trading at about $200/barrel in the aftermath of any strike on Iran. Gold and Silver would also shoot higher (for the purposes of full disclosure, I'm a self-employed day-trader, I currently have small buy positions in both gold and silver because of the possibility of strikes on Iran). I think the price of Crude would depend on the amount and type of airstrikes against Iran. Again, this involves too many variables to consider (if the airstrikes are a single day's worth of airstrikes versus a days long campaign, if only Iranian nuke program targets are hit, instead of strikes that include Iranian military targets, if Syria decides to throw down with Iran, etc.).

One other possibility to consider is the effect a strike against Iranian Nuclear assets would have on the coming US presidential contest in November. Once more, there are too many possibilities to write about, but I think the aistrikes would hurt the Obama campaign and the Dems. Why? they stand together against any possibility of domestic oil drilling here. If Oil goes to $200/barrel with the resulting rise in domestic gas prices this will kill any Dem chances to win in November.

To wrap things up, here is where I see things. I believe the Israelis will hit the Iranian Nuclear weapons program soon, within the next few months. Crude Oil prices will move higher in the aftermath of any strikes. Their exact rise and how long they stay at elevated levels involve too many probabilities to figure out fully. Other commodity prices, especially, Gold and Silver will rise also. The range of possibilities in the aftermath of airstrikes goes from no Iranian reaction all the way to a regional war that could include the use of WMD'S. Sorry, this is the best I can do for outcomes. There are just too many things that need to be considered when pondering the aftermath of airstrikes. If you have any thoughts, questions, gripes, etc., feel free to email me at

Thanks for your time,

Tuesday, July 1, 2008

Is America in economic decline?

Don't you just love it when life gets in the way of blogging? Well, today I'm back with more, a guest post by Little Green Footballs lizard chicagodudewhotrades:

Is America in economic decline? Everyday, it seems there is a new economic statistic about a weakening US economy or a news report about the US$ dropping in value against other currencies. My answer is: NO. Maybe right now the dollar is at a low level and portions of the American economy could be better, but the overall economy is solid and the dollar weakness is temporary. If you read history, it seems to be a good rule to never underestimate the American people or our economy. In fact, i think some of the nation's best economic times lie ahead.

I'm writing this mostly because I'm a member of a very popular website called Little Green Footballs ( Due to my online name (chicagodudewhotrades) I get asked a lot of stock market and economic questions by my fellow LGF'ers. Writing this I hope will help my LGF friends out. This is my first attempt at writing something like this, so don't beat me up too bad!!!

I'm also writing this because I get tired of the mostly negative coverage of the economy by the national media. This is my small attempt to try and convince my fellow Americans that the economy isn't as bad as portrayed.

What gives me the right to write about economic issues? In a word: Nothing. I'm not a economist or a CEO of a business. I don't have a PH.D in Economics or International Finance. The bulk of my professional trading experience comes from several years spent working as a clerk in the trading pits of the Chicago Mercantile Exchange. However, I have been able to make a decent living from day-trading the last few years. Day-trading is a very brutal, Darwinian profession. You either make money at this or go bankrupt. I'm still doing this, so I figure my ideas and advice have some credibility.

I think the best way to explain why I believe America's best economic days are ahead of us is to run down what is happening in the world and what I think may happen in the future.


The European Union has become a huge entity whose member states have a combined population of nearly 500 Million (1). However, I have come to believe that they are too big, too slow ,and most damaging, too bureaucratic.

Yes, right now the Euro is doing well against the Dollar. However, people seem to forget that a few years ago, the euro was trading at a record low of 82 cents against the dollar. (2)

Inflation is above the European Central Bank's public goal of 2% and rising (3). Western Europe has also always had systematic higher unemployment historically than the US. Eventually, economic fundamentals like these will catch up to the Euro.

You may read a lot about the grim future of Social Security. That is true. Basically, starting in a few years, more money will start being taken out of the program than going into it. However, Europe faces the same demographic issue. The big difference is that the working-age population of Europe is declining while America's is increasing.


Today when you think of Asia, one country comes to mind: China. China is a huge country with a huge population. Because of low wages, China has become the manufacturing center of the world. All that manufacturing has brought huge sums of wealth into China.

But China has many issues. All that manufacturing has lead to huge environmental problems (4). Thanks to China's brutal 1-child policy and a Asian cultural preference for male babies, China has demographic imbalances in their youngest generations. How can a nation be successful with a demographic imbalance like that? China's biggest problem however, may be it's own Communist government. Folks, I don't know any other way to say it.: Communism , Socialism, etc, just doesn't work.. Eventually, China will pay a huge price because of their system of government. Free, democratic, open market economies work, nothing else comes close. It is truly that simple and basic.


It is hard to write off a entire continent, but unfortunately that is what I'm basically doing with Africa. I don't think Africa has moved beyond a tribal identity yet. They will not grow or be economically successful until the people of Africa start thinking in terms of national identities and not just tribal.

Middle East

Currently the Middle East is doing well because of high oil prices that bring huge amounts of wealth into their nations. Historically, however nations with commodity-dependent economies do not succeed in the long run. There is a theory in economic circles called the 'commodity curse" . The theory states that commodity-dependent nations get politically and economically lazy because of the easy money pouring into their economy. I think this will happen in the Middle East someday. The Mid-East has one principle export: oil. What happens when that export runs out? There are questions about the true proven reserves of both Saudi Arabia and Kuwait (5). Back in the late 1990's when oil prices were low. Saudi government bonds were rated 'junk' status. This will give you a idea of what happens to the economic prospects of the region when the wells run dry.

Latin America

Latin America seems to be taken a turn for the worse lately. A couple governments seem to be going back down the Socialist path. Once again, democratic free market economies work, everything else doesn't come close. Democratic open market Brazil and Colombia are doing well. The ones going down the socialist path like Venezuela and Bolivia will have problems.

I see some parallels between the Middle East of today and the Japan of the 1980's. Remember how everyone thought back then that 'Japan, Inc." was going to be the world's largest economy and how they would be the globe's dominant economic power? How did that work out for Japan? I do think that the sub-prime mess and resulting housing price slump will continue to hurt the American economy.But this is a incredibly flexible economy that will survive this mess. In fact, i think the sub-prime problem will hurt other economies worse than ours just because our national economy is so resilient and others aren't.

I wanted to keep this brief. I didn't want to write 1 huge piece that went into all the above issues in detail. However,I plan on writing more about this. I want to learn from you as well as maybe teach a thing or two. If you have questions, criticisms, any thoughts about this, feel free to contact me. I can be reached at

Thanks for your time.


1. Website of the European Union

2. Wikipedia's entry for the Euro Currency

3. Website of the European Central Bank

4. Financial Times article. China Report. Environment: 'Devasting price to pay for rampant growth' By Jamil Anderlini. Published: 9 Oct 2007

5. Reuters. "Kuwait oil reserves only half official estimate-PIW" . Published 20 Jan 2006