Rage Rebellion Feedback Loop

Long War: It looks as though Gaddafi's regime is falling in Libya. As a result, over the weekend, the various Rage rebellions flared up in every Mideast country with an existing revolt and spread to Oman, which had been mostly spared thus far. The Rage rebellion is powered by three factors: 1) Food inflation which is hammering poor people in the region. Seventy percent of their disposable income goes to food and prices are zooming up. But the Rage rebellion is causing the price of oil to rocket up faster than it would otherwise, which spills directly into food inflation and causes more rebellion, which causes more inflation, which causes more rebellion. 2) Online social networks like Facebook are structured as a series of interlocking cells. This is exactly how insurgencies have been organized since the beginning of civilization. Facebook changes the dynamics of revolution permanently. 3) America is impotent to stop revolutions that masquerade as democratic upheavals because democracy is a religion to Americans. It is even possible that America will actively fuel the Rage by pulling the rug out from its allies in the region. For instance, it might ask for the King of Bahrain to step down if another a bloody crackdown were to occur. It might do this if forced by public opinion. This would cause short term relief but long term pain.

Since there are about a dozen Rage revolutions let's peel back the onion on just two. Iraq: Al-Qaeda blew up the country's largest oil refinery over the weekend, which supplies about half of all Iraqi refined products for power plants, cars, etc... Also over the weekend about 20 Iraqi Rage protesters were killed by government security forces. The protesters' main gripe is power black-outs. Obviously Al-Qaeda will make the black-outs much worse with the destruction of this refinery, which will cause more violent protests, which will siphon Iraqi security forces away from protecting energy infrastructure, which will allow Al-Qaeda to blow-up more pipelines (two hit so far in recent days) and refineries, which will cause more protests, and the loop cycles on. Djibouti: This tiny country is vital to the CIA backed efforts to clobber Al-Shabab in Somalia. There is currently a big offensive by the African Union against the bad guys in Somalia and it has been going very well. Al-Shabab has been getting shredded. But the Rage protests have been virulent in Djibouti. If the government falls there, the AU will have to stop attacking Al-Shabab and instead invade Djibouti. Other than Iran, Eritrea is the world's only jihadist nation-state. Eritrea has a simmering border dispute with Djibouti and will probably try to repel an AU invasion. This could cascade into all sorts of unpredictable events.

Last week the US dollar fell as violence exploded in the Mideast. The Japanese Yen and Swiss Franc rose as safehaven currencies, but not the dollar. This has never happened before during the decade or so of the Long War. The dollar always has gone up as a safehaven when a geopolitical crisis erupts. So financial markets for one week at least are saying that America is losing the Long War. Traditional Long War hotspots like Afghanistan and Somalia have been doing okay lately. The dozen or so Rage rebellion hotspots are not looking so great. Maybe the relatively good news from the traditional hotspots outweighs the bad news elsewhere. And maybe not.