No attack on Iran

Not with Russia and China holding the U.S. economy hostage:

Today, fully 21% of Russia’s monetary reserves are invested in the obligations of Fannie, Freddie and the Home Loan Banks. And the largest holder of Fannie and Freddie debt is another friendly foreigner, China. The middle kingdom, according to the FreedomWorks organization, owns $376 billion worth of U.S. agency bonds.

This is an interesting fact with some implications I had not considered before. It may explain the unusual combination of verbal bellicosity with total inaction that we’ve seen from the White House over the last six months. Despite the hysterical neocon lobbying for a third undeclared war, the Federal Reserve bailout guarantee would appear to ensure there will not be any U.S. attack on Iran without approval first being granted by the two largest holders of Fannie and Freddie debt. Now, it’s not hard to imagine Russia being at least open an invasion given how they’d stand to profit from a massive jump in oil prices. But the Russians are probably not keen to see a second U.S. military presence established so close to their area of influence. They’re also a long-time Iranian ally, Iran is an important buyer of Russian technology, and furthermore, there is no way that China, an oil importer, would be amenable to seeing its production and transportation expenses continue to rise. So, the logical conclusion is that the U.S. mortgage system is now hostage for U.S. behavior with regards to Iran.

Of course, this analysis relies heavily on the idea that the Bush administration would like to avoid the complete collapse of the U.S. mortgage banking system and the negative consequences of such a collapse on the U.S. economy. Given the near-complete contempt the administration has shown for the long-term health of the economy over the last eight years, this may be an unwarranted assumption.