War between Israel and its regional rivals could be the straw the breaks the back of the global economy, an financial expert has warned.
US Secretary of State Antony Blinken told Washington's G7 allies on Sunday that Iran and Hezbollah would attack Israel in the next 24 hours to avenge the deaths of Hamas politburo chief Dr. Ismail Haniyeh in Tehran and senior Hezbollah commander Fuad Shukr, Axios reported.
"Like the story of the straw that broke the camel's back, within this very crowded geo-economic and geopolitical cauldron, any additional ingredient to this witches brew could force it to boil over," Paul Goncharoff, veteran financial analyst and co-owner of the Russia's Pivot to Asia project.
Growing concerns over Iran's potential attack have added to fears of a US recession in the aftermath of a weaker than expected jobs report which affected global markets on Monday, with stocks plummeting in Asia and Europe.
"We are witnessing a massive loss of trust among the international community as to the true intentions and goals of the US government, which just increases volatility and uncertainty," Goncharoff said.
Job growth in the US slowed dramatically in July, with employers taking on just 114,000 new staff, far fewer than economists had expected. 179,000 jobs were created in June and the figure for July was forecast at 175,000.
According to CBS News, the disappointing figures hint at a sharper economic slowdown in the future due to high borrowing costs caused by Federal Reserve interest rate hikes.
Under these circumstances, a potential escalation of the Iran-Israel standoff could become a proverbial straw which would break the global markets' back, according to the pundit.
"The region would essentially be a no-go zone, forcing up already high freight rates; oil prices would most probably rise as it would take some time for the US to re-start its oil drilling and pumping programs that were shut down," Goncharoff said.
While the dollar may see a brief stabilization, speculators should bet on "the value of gold, silver, and the key cryptocurrencies to lead the way towards safe haven stability," he added.
Goncharoff stressed that anti-Russia energy sanctions coupled with a potential conflict with Iran – yet another oil producer who controls the strategically important Hormuz Strait – would have a dramatic influence on G7 manufacturing potential.
According to the expert, the world is moving into uncharted dangerous territory, caused by Washington's irresponsible policies and dysfunctional democratic processes.