Earlier this week, the Pentagon announced the commencement of Operation Prosperity Guardian. The plan seems to be that a combined naval force will unbung the bunged up Red Sea. But ultimately this will mean a conflict with the Houthis. Even in an optimistic scenario, such a conflict would take a long time.
The new developments in weapons technology suggest that this will be a costly proposition. Politico has highlighted that the Pentagon is worried about cost differentials as $2m missiles are being fired to take down $2,000 drones. “That quickly becomes a problem because the most benefit is in their favour,” one expert told the publication.
Production times on the $2,000 drones is also far shorter than on $2m missiles, so the Houthis will have a logistics advantage.
If the Red Sea remains a no-go zone for some time, it looks like the Western world is going to have to brace for another wave of inflation. Frankly, it is not clear that our economies, beaten and bruised from the last wave, can take it. Another round of cost of living crisis? Even higher mortgage rates? The prospect of a painful inflationary recession is now very real.
The Bank of England needs to wake up. Unless something drastic changes, the talk of lower interest rates in 2024 coming from the Federal Reserve – in an election year, it should be noted – makes little sense. The Bank should be braced for another round of geo-economic turmoil.
What about the Tories? Polls indicate voters are turning against them for a number of reasons, but none more important than the state of our economy. A second round in the ring with a rising cost of living could finish them off. If current polling is indicative, and if it gets worse, there is a real possibility that the party, founded in 1834, may not survive. CCHQ would be well advised to call an election immediately.
Our second Suez Crisis is here. The world could look different after it than it does now. There are many unknowns, and we have far less control than we would like. We should batten down the hatches: another inflationary storm is coming over the horizon.
