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Black Swan Hunting In The Red Sea
I'm supposed to tell you the Houthis are poised to crash stocks. Or drive oil prices to $200. Or disrupt global shipping such that inflation takes off again.
I don't regret the language I used to describe my raison d'être in 2016, when I decided to start writing for public consumption. The fate of markets is "inextricably intertwined with the ebb and flow of geopolitics," as I put it seven years ago. And you really can’t "fully comprehend markets without a thorough understanding of concurren
For any fans of author Mark Helprin, I highly recommend “The Oceans and The Stars”- a fictional account of a lone US ship battling its way through the Suez Canal, Red Sea and the Gulf of Aden on their way to the Indian Ocean. Very engaging.
One speculation is that the Houthis want to hit some merchant ships, would love to hit a warship or pretend to have done so, and would really like to be targeted by some US airstrikes, all to raise their profile – and then they’ll defiantly stand down.
Something like Hezbollah, who made a early show of supporting Hamas but have since dialed it back. Because none of these groups, as far as I can tell, are particularly dedicated to Hamas/Gaza – its all a means to an end.
Regardless, sailing US/other destroyers through the Red Sea, expending hundreds of $2-4MM surface-to-air missiles against cheap Houthis drones and missiles, a small percent of which will get through and hit a merchantman (or, much less likely, a US destroyer), seems an un-sustainable tactic. The Houthis can presumably play that game, and Saudi can presumably watch that game, for months.
Great point on the financial imbalance between the cost of drones and the cost of Patriot & other missiles which is often overlooked. Add in that the supply of some of these missiles is constrained as well. There are a lot of hands held out for more missiles already.
The nature of warfare is changing. Aircraft carriers are rapidly becoming a vestige from a bygone era.
Western defense acquisition practices need to carve out budget room and contracting assistance for inexpensive weapons from small, nimble companies. You don’t need a $2MM+ Sea Sparrow missile to shoot down a $500 modified hobby drone.
You know what I’d like to see? US require Saudi, UAE, and Egypt navies to participate in escort duties and their air forces to participate in strikes on Houthi targets.
This won’t happen, but it should.
You may not have followed the news too closely but the Saudis would love nothing more than being able to carry on/resume their campaign against the Houthis.
We were the ones complaining their methods were too violent, indiscriminate and amounting to civilian massacres…
When Houthis gained the ability to hit Saudi oil facilities, Saudi got more interested in ceasing hostilities.