James McKee

US Threatens To Enter Libyan Conflict



Posted: Tuesday, March 01, 2011

by James McKee
http://www.forex.tradingcharts.com

Amidst the possibility of a drawn out political crisis in Libya the United States has expressed a willingness to enter the conflict if necessary.  Such a move could spark a new, massive military conflict in which the US becomes involved with another Middle Eastern civil war.  Another war for the United States would be a financial sinkhole and would certainly signal very serious problems for the USD.  The fiscal debt America already finds itself in has doubled in the last ten years and climbing any deeper in would spell out disaster.  There are also the greater foreign relations issues to consider.

When the US entered Iraq and Afghanistan they had some support from other countries and their militaries for those actions.  If the US takes military action within Libya for any reason they will be acting alone, and in doing so they will do a lot of damage to their foreign relations.  The United States is in a precarious position as the world’s “referee” in this particular scenario because there is a lot to lose and very little to gain by entering this conflict.  The argument of putting down a new Islamic “radical” country is not something the US can necessarily run with very easily unless they intend on occupying all of the Middle East.

The implications (and message) for the US economy and USD are simple, mind your own business.  War is bad for business and the United States is in no position to be involving itself in yet another armed conflict.  The US government and its people know this and so too does the rest of the world.  Those on the forex currency exchange should pay careful attention to what occurs with Libya and the US herein because a loss of any more risk appetite could spell out trouble not only for the USD but every currency (and economy) on earth.
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.
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