Capital Account -- 12/6/11

­ Iran has issued a warning amidst rising tensions between itself, israel and the united states, that if sanctions are leveled against the persian nation, that oil would reach $250 a gallon. This is something that Wendy Sherman, undersecretary of state, warned about when harsh sanctions were passed by the senate last week. She said "there is absolutely a risk that in fact the pre ice of oil would go up, which would mean that iran would in fact have more money to fuel its nuclear ambitions, not less." Is this an example of wrong-headed thinking by the US and the West? What good will this do if china is still buying iranian oil? We ask economist stephen leeb what the effect of sanctions would be on the price of oil, and if this would actually work in Iran's favor. We also ask Dr. Leeb to comment on the similarities, or rather the differences, between the 1970's commodities and price inflation, and what we are facing in this decade. Will we see wage inflation, or will prices just increase for consumers, but stagnate for workers?
 Of course, this all assumes that global growth will continue, but what about the possibility of a global slowdown, particularly a slowdown in China? If China slows down, what effect will this have on  commodities? Stephen Leeb argues that, although a hard landing
 in china would cause a drop in commodity prices, that this is not on the horizon. Lastly, we ask Stephen Leeb to comment on the events taking place in Europe, and what effect these could have on the US and Global economy. Will Germany stay in the Euro, and will the Eurozone survive in its current form?