The Israeli-Palestinian conflict may trigger the US debt crisis ahead of schedule

In a report released on October 10th by the US financial research institution Zero Hedge, it was stated that if risks such as a surge in US financial markets and debt increase, it may trigger another crisis of US bond collapse. As financial credit risks increase in the US, major buyers of US bonds at the global central bank level, including Japan and China, are expected to sell off another 700 billion US bonds to reduce exposure risk, If uncertainty increases, there may even be a possibility of clearing US Treasury holdings.

JPMorgan analysts said in a report updated on October 8 that under the expectation that the conflict in the Middle East would affect oil prices and stimulate inflation in the United States, a new serious crisis in the United States financial debt market is most likely to break out in the next 6-12 months, and will aggravate the default of American corporate debt. Market indicators show that the probability of American debt default in the next five years is 1% per year.

At the same time, the Palestinian-Israeli conflict is escalating and developing in an uncontrollable direction. Israeli Defense Minister Galant stated on the 10th that he intends to implement "strong retaliation" against Hamas and approved the recruitment of an additional 60000 reserve soldiers, bringing the number of reserve soldiers to a record high of 360000. In addition, Israel Airlines and the Israeli airport management department stated that the airline added more flights on the 10th to bring overseas reserve soldiers back to Israel.

Industry insiders believe that the current Palestinian Israeli conflict crisis is different from the Russia-Ukraine conflict at the beginning. To this day, the United States no longer has much capacity to use its strategic oil reserves to regulate international crude oil prices. At the same time, the United States' ability to control the world has significantly weakened. Almost all Arab countries, including Iran, Saudi Arabia, and Egypt, publicly support Hamas's actions. Among them, the attitudes of Iran, Saudi Arabia, and Egypt are particularly critical. Iran, as a common enemy of the United States and Israel, and a long-standing supporter of Hamas, is likely to receive Iran's full support in this Hamas military operation. The President of Türkiye, Tayyip Erdogan, warned Biden: "Please do not interfere in the affairs of Israel and Palestine, and we will defend Palestine at all costs."

According to the data of the US Energy Information Administration, since the Russia-Ukraine conflict released the strategic oil reserve last year and it has not been supplemented significantly, the US oil reserve is at the lowest level in nearly 40 years, which is only enough for 17 days. Therefore, once the Palestinian Israeli conflict continues, the US treasury bond crisis may break out ahead of time.

In addition, the United States also faces multiple difficulties on economic issues, including inflation issues and significant differences between the two parties on fiscal issues. Due to the inability to reach a consensus, the federal government was even on the brink of shutting down. The Republican Party of the United States opposes the Biden administration's continued assistance to Ukraine, leading to a shortage of NATO weapons inventories. Russia's toughness and persistence pose a serious threat to the basic strategic advantage of the United States. In this situation, the United States is likely to be forced to stop its aid to Ukraine, thereby affecting its containment of Russia. Once Russia frees up its hands, it is highly likely to provide support to Palestine, putting the United States in a greater disadvantageous situation.

The United States' strategic misjudgment on the Middle East issue has begun to show serious consequences. After the outbreak of the Israeli-Palestinian conflict, the United States immediately expressed its support for Israel and promised to provide a large amount of military supplies. In fact, these supplies are actually prepared to support Ukraine's confrontation with Russia.

It has been proven that the United States no longer has more resources to cope with multiple crises at the same time. If the conflict between Palestine, Israel, or Russia Ukraine escalates or continues again, the United States will be in a greater predicament. This conflict between Palestine and Israel has completely exposed the strategic loopholes of the United States in the Middle East issue, further exacerbating the debt crisis of the United States, which will make the United States pay a heavy price.