Red Storm Rising was the best book by Tom Clancy where he depicted a Third World War (conventional, mainly) between USSR and USA.
Here we are again, but things have changed a lot since then and thankfully Russia is not USSR. Still it is not a joke.
This a short version, otherwise I would write a book myself!
There are three main scenarios, from the most likely to the most unlikely (but still possible).
1. Chances 93%
Russia makes a limited invasion of East Ukraine under peacekeeping justifications.
There are limited battle with the Ukrainian Army that is quickly routed.
The Western Government shout and rise the the sanction levels. Russia counteracts with Energy sanctions.
Germany brokers a deal and Russian forces are substitute by UN forces and Eastern Ukraine becomes a buffer state.
This scenario would see the SP500 returns to the 1,750 and Europe back in recession mode.
2 Chances 6%
Russia again take over Eastern Ukraine. The USS Vella Ticonderoga Class destroyer in the Black Sea (or one of the other 9 Nato warships) “illuminates” with its radar some Russian assets. The Russian misinterpret* and after a brief battle sink the ship and the US escalates. Russian forces sink the remaining 9 NATO ships as they are easy target of onshore ballistic missile. US Air Force inflicts heavy losses to the Russian Airforce.
NATO mobilizes in Poland to protect Poland and the Baltic country, while Russian spetnatz (special forces) disables transports and infrastructure.
Some NATO countries under budgetary pressure could pull out (Italy, Spain. Greece) and could be the moment for a truce. Otherwise a NATO assault on Russia would provoke a limited tactical Russian nuclear counterstrike. Germany would broker a peace.
SP 500 would plunge to 1,500 and then 1,300
3 Chances 1%
On top of the scenario 2 two things happens taking advantage of the distraction”.
Islamic State takes over Iraq that could potentially start a conflict between the arch-enemies Iran and Saudi (and surely Israel will fit somewhere)
China takes over the Japan contested island. Japan responds and invoke the US alliance.
You do not care about the SP500, take your bags and go and live in the countryside. Much safer.
*PS error in war often happens. From disclosed US document the accident in the Tonkin Bay that determined the escalation in the war in Vietnam actually was a misinterpretation of data (USS Madoxx incident).
The US entered the First World War One upon the sinking of the liner RSM Lusitania (a liner sank by the U Boot U-20. Over 1,000 casualties. But documents released much after reveal also that the cruise ship and its passenger were warned by the German Embassy that it would be considered an hostile vessel (in fact, again later, it was found out that, beyond passengers it was carrying a lot of ammunition and weapons from the US and UK- fog of war again)
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