The Wednesday Letter #232 - 8/7/2024

THIS WEEK: The Guns of August 2024; Wars of Punishment and Deterrence; Yen Carry Trade; Waiting for the Fed; Musk Sues Advertisers.

THE GUNS OF AUGUST 2024

In her book, The Guns of August, about the start of WW1, Barbara Tuchman wrote that Germany’s declaration of support for Austria-Hungary against Serbia and Russia was “the signal that let loose the irresistible onrush of events.” Today, at the start of another August one hundred and ten years later, are we seeing a similar “irresistible onrush of events”, also resulting from the array of one coalition of countries against another?

One one side there are Iran and its proxies, Hezbollah, Hamas, Houthis and various Iraqi militias. The table below shows Iran’s influence and proxies throughout the region. Further afield, if the conflict requires it, Iran can count on the support of Russia (which is supplying it with arms), Venezuela, North Korea, China and others.

Parenthetically, we take issue with this table’s characterization of Iranian influence on the Houthis as “moderate”. That influence is certainly strong, not moderate. Yemen, as we wrote in TWL #203, is a poor…