Iran and Investing in Asia

Iran and Investing in Asia: Crazy Talk
A Daily Reckoning White Paper
by Dan Denning

Iran and Investing in Asia: Mahmoud Ahmadinejad

A lot of people would like to dismiss Mahmoud Ahmadinejadas a lunatic, as if that saves us the trouble of having tofigure out what to do with the current president of Iranand his seemingly unstoppable nuclear program. Ahmadinejadhas certainly said the type of things that circumspectworld leaders try to avoid – namely that Israel should bewiped off the map or moved to Alaska and that the Holocaustmay not have happened and that Iran could choose to use oilas a weapon if the West tries to impose sanctions.

Iran and Investing in Asia: Is he crazy?

Is he crazy? Or is it just crazy talk? I don’t know. He’sclaimed that for 28 minutes during a speech delivered atthe U.N. in September, he was surrounded by a halo of lightand that no one in the audience blinked while he spoke.Later in November, speaking to a group of clerics inTehran, Ahmadinejad claimed that the main purpose of hisgovernment is to pave a path for the return of Islam’s 12thImam, Mahdi. Shia Muslims, from what I can gather, claimthat the 12th Imam disappeared in 941 and upon his returnwill rule the Earth for seven years before a final lastjudgment of humanity.

What do we have here, then? The leader of a nationdetermined to pursue its nuclear program and who believeshe is helping to usher in the end times is scary stuff, orso it would appear. It is scary enough that it provokedFrench President Jacques Chirac to make one of the mostremarkable statements in the last 50 years of publicdiplomacy.

In case you missed it, here’s what Chirac saidat a speech delivered from a French naval base:

“The leaders of states who use terrorist means against us,as well as those who would consider using, in one way oranother, weapons of mass destruction, must understand thatthey would lay themselves open to a firm and adaptedresponse on our part. This response could be a conventionalone. It could also be of a different kind…Against aregional power, our choice would not be between inaction orannihilation…The flexibility and reactivity of ourstrategic forces would enable us to exercise our responsedirectly against its centers of power and its capacity toact.”

Iran and Investing in Asia: Should we laugh or cry?

When this story was first reported, a lot of peoplelaughed. It’s easier to make jokes about French power anddismiss Chirac as a politically hobbled blowhard thanfigure out what the comments really mean. What the commentsreally mean is quite clear: France would consider a nuclearattack against a state sponsor of terror, like Iran, thataided or abetted an attack on French soil. Remember thoseriots outside Paris last year?

Do you think all of that discontent just went away? Do youthink that resentment from years of being frozen out ofofficial French life evaporated with a few thousand torchedcars and busted windows? No, I don’t think so, either. Iwrote at the time that things would be quiet in France fora while, but that it wouldn’t surprise me if an outsideparty calmly and quietly moved into France in an attempt toorganize the French rioters into a genuine and verydangerous French intifada.

Yet more crazy talk? Who could make that sort of thinghappen? Let’s see, which country has bankrolled andsponsored Hamas and Hezbollah? That’s right, Iran. WouldIran really try to export and bankroll a rebellion inFrance? I can’t say that I have any conclusive proof of it.

But knowledge of an attempt to do so seems like the sort ofthing that would prompt a man like Jacques Chirac, whosecountry has billions invested in Iran, to publicly threatena nuclear strike.

Now would be the time for another good joke to lighten themood. But we have to dig a little further to see what allthis means. The truth is, there are nations of the worldthat might very well like to see Iran succeed in developingnuclear power, and, later, a nuclear weapon.

If you feel like things are rumbling out of control andthat something big and important is happening, well, then,you’re not alone. But what does all of it mean for gold,for the dollar, for oil, for America? In fact, is theremore at stake than just the price of oil? Are the socialand economic structures that have defined the world sincethe end of World War II about to collapse? What willreplace them?

Iran and Investing in Asia: Three Major Trends

When I got back from my excursion to the Far East in late2004 and sat down at my desk in London to write up thestory, I emphasized three major trends that would createdanger and opportunity for investors. First, the bullmarket in energy (oil, gas, electric, nuclear) was going tobe one of the longest and strongest you and I would see inour investment lifetimes. The big drivers are the growth indemand from China and India.

Second, the general rise of Asia into the developed worldwas causing huge demographic and economic dislocations –and creating enormous investment opportunities as Asianeconomies began to consume as well as produce, to spend aswell as save.

Third, I wrote that the rise of the East was accompanied bythe simultaneous collapse of the ruling currency regime ofthe last 30 years, the dollar standard. This last point isstill so inconceivable to many people that they refuse toentertain the possibility. Too much would have to change.Too much wealth would be destroyed.

Too many vacationswould have to be canceled. Yet the inexorable rise of goldshows that this revolution in money is slowly but surelyeroding the dollar’s status. The current situation withIran doesn’t change any of those three main trends…But itcould accelerate them.

Dan Denning
for The Rude Awakening

Related Articles on Iran and Investing in Asia:

Between The Devil And The Deep Blue Sea – 2/16/2006
by Justice Litle“Iran controls the critical Strait of Hormuz, a geographical oil chokepoint through which 40% of the world’s oil travels in any given year.”

The Oil Plans of Iran – 1/16/2006
by The Mogambo Guru “Instead of an American-controlled oil market and American friends and insiders getting rich making their slimy little backroom deals, now it will be an Iran-controlled oil market.”

Related Links on Iran and Investing in Asia:
Investment International – Investment International has information on investing in asia and news articles
relating to all offshore topics.

ASrIA – Not for profit, membership association dedicated to promoting corporate responsibility and sustainable investment practice in the Asia Pacific region.
Wikipedia – Mahmoud Ahmadinejad
South China Morning PostHong Kong’s English language newspaper, bringing you Asia’s best daily news and business updates.
Yahoo! Finance – Get stock quotes, market news, mortgage rates …At Yahoo! Finance, you get free stock quotes, up to date news, portfolio management resources, international market data, message boards, and mortgage rates
NASDAQ Trader – NASDAQ Ten Most Active Share Volume. Latest Trading Halts.