“The Middle East war is widening, but that may be better than the alternative: new inflationary pressure from an obscure fundamentalist militia 8,000 miles from US shores.
The US and UK militaries finally struck back at Houthi forces in Yemen on Jan. 11 and 12, in response to at least 27 Houthi attacks on commercial ships navigating the Red Sea between northern Africa and Saudi Arabia. There were legitimate military reasons for the retaliatory strikes, given that the Houthis have targeted US and allied forces, including Israel. But there was a powerful economic incentive too: The attacks on commercial vessels were starting to drive up shipping costs and threatening to reignite inflation, just as the Biden administration feels it is finally taming the biggest barrier to a second term for President Biden.
The Red Sea is a crucial shipping lane because the Suez Canal, at its northern tip, connects waters that serve Western markets with the Indian Ocean and routes to Asia. Ships unable to transit the Red Sea need to take the much longer and costlier journey around the southern tip of Africa. About 15% of world trade transits the area.”