As you may have heard, the Iraq war turns out to be a bigger and bigger disaster. Originally sold as a way to stop the threat from Sunni jihadists, it is now turning more and more of Iraq into the hands of….Sunni jihadists in the so-called Islamic State of Iraq and the Levant (ISIL).
In addition to subjecting millions of Iraqis to Taliban-style Islamist oppression and making the Sunni parts of Iraq another base and training ground for jihadists, it could potentially threaten oil production and exports in Iraq, which would of course raise global oil prices, something discussed by Ambrose Evans Pritchard today.
The funny thing is that he argues that higher oil prices are a threat to the global economy. That is funny because for the last few years, he has argued that deflation (and disinflation) is a big threat. But if oil prices rise, that is sure to eliminate deflation/increase inflation.