Most of the conversation around the Iran war has moved on to who won and who lost.
But Mohamed El-Erian gave me a sobering warning: the economic damage from this war is the kind that SCARS, not the kind that heals.
His core point reframed it for me.
Economists usually expect mean reversion, the rubber band snapping back.
El-Erian says this is the opposite, what he calls multiple equilibrium.
Disrupt the status quo this violently and you don't return, you drift further away. A ping pong ball knocked off a cup doesn't roll back on.
The mechanism is an inflation shock that starts in energy and spreads. Gas, then the cost of moving food, then food itself.
And because Hormuz chokes fertilizer too, he says the worst of the food price hit lands six to nine months out. But the real danger is the precedent.
Iran just showed the world that weaponizing a single choke point delivers enormous leverage.
Now the Red Sea, the Taiwan strait, the Malacca strait are all fair game.
Welcome to geo-economics, where strangling a choke point is cheaper than missiles.
The word he kept returning to was SCARRING...
Geopolitical scarring, economic scarring.
This one is going to haunt the global economy for YEARS.
@elerianm
@dm38752925@Alafasy Bunch of crazy lunatics they are, No doubt how beautiful islam is that it blessed veils to these lunatics and woe to the arabs that they left it.
@Alafasy@Alafasy@Abdulla_Alamadi
Did you protect Al-Quds ? Why are you crying about iran attacking Saudi arabia? which contains al haramain. did you not think about this when you were selling this country to the zionists?