Another Bad Deal… Iran
We woke up this morning to learn that the big western nations struck a deal with Iran to lift the economic embargo in return for nuclear concessions. In life, I have always tried to avoid rewarding bad behavior. Once you start down that path, it never ends. Just look what happened in this country with the S&L crisis, Orange County, Long-Term Capital and Bear Stearns. Talk about moral hazard! While Lehman Brothers put an end to that, look at how far we had to go as well as the consequences to break the rewarding of bad behavior.
I remember when my daughter was two and my wife and I were with her at Wal-Mart. She wanted this little toy on the shelf and we said “no”. As we approached the register, she threw herself on the ground and start kicking and screaming about the toy. Everyone looked over to see if this cute this girl was being beaten. Incredibly embarrassed, my wife and I tried desperately to calm her down, but she just kept screaming about wanting that toy. As hard as it was, my wife and I started to walk away and not turn our heads to look back. Although it seemed like minutes, our daughter leaped to her feet after about 10 seconds, stopped crying and ran straight for my wife’s leg to hug. Lesson learned. Don’t reward bad behavior.
While the same can be said of how the EU is treating finally Greece, the country has the option to go play on their own. Iran, on the other hand, is a total head scratcher to me. We know the regime sponsors terrorism. That’s a fact. We know the regime has been building an offensive nuclear program. That’s a fact. We know the regime oppresses freedom and choice. That’s a fact. And we know that the regime is about as brutal towards women and human rights as any country on earth. That’s a fact.
Why on earth would President Obama want to strike a deal with the likes of the Iranian regime? I am our friends in Saudi Arabia aren’t too happy! Why give the Iranian regime access to the energy markets and allow them to rebuild their economy? I don’t think anyone really believes that their government will actually use that money to help their own people. Are we naive enough to believe that Iran will actually curtail their nuclear ambitions? Aren’t we just giving them money to eventually funnel to terrorists in the Middle East to fight against our allies?
As I sat and read various analyses today, one particularly resonated well with me by Martin Armstrong. The Iranian deal is yet another attempt by the Obama administration to punish Russia. Until now, Russia has been the main supplier of natural gas to Europe. When the Crimea crisis hit, there were fears that Russia would halt sales of natural gas to Europe, which by the way, never happened. Now, Iran will have the opportunity sell their natural gas reserves to Europe and try to squeeze out Russia. Russia, in turn, has been solidifying and strengthening its relationship with China in the energy markets. Neither are sympathetic to anything the U.S. does and will only hurt us longer-term.
Our attempt to isolate Putin has been a disaster and this Iranian deal will be even worse. Russia is not North Korea or Cuba. It’s so interesting that the Obama administration is totally hands off on every international situation, but when it comes to Russia, they want to play hard ball. I think ISIS is a lot more worrisome and dangerous than the Russians.
This is a bad deal through and through. Who is next on the deal front? North Korea? How about Hamas?
Searching for winners?
Domestic defense is one sector that should benefit long-term as the rest of the Middle East will be seeking to increase its capacity to fight a war. And the usual European suspects will likely benefit. France for sure. You would think a company like Schlumberger or Halliburton could also see some long-term upside from the deal, but I doubt either would be a huge needle mover.
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