The White House is on fire making a case about an intervention in Syria Syria in response to the alleged chemical weapons attack on August 21. President Obama will speak to six different media on Monday; Secretary of State John Kerry spent the weekend on planes, meeting the EU foreign ministers, the Arab League and UK Foreign Secretary in Lithuania, Paris and London, respectively.
Should Congress authorize to punish Damascus, there are two possible economic scenarios.
If the attack is, as the White House is trying to sell the American public, short and with “no boots on the ground”, it would have little global economic impact beyond a temporary increase in oil prices.
However, if the conflict drags on or there is a violent reaction of Syria or its allies, it will be expensive and may compromise the recovery now that the economy seems to be back on track. The car industry is revitalized, showing better numbers before the crisis. Unemployment is going down, even if the August jobs report was decaffeinated. All that could be lost. Or delayed.
On a political level, Obama might pay a high price too. Debt ceiling is already an issue. Remember the so-called sequester? Republicans aligned with the tea party are skeptical of military intervention and unwilling to pay for another war abroad.
As for the monetary policy, we might see a more dovish Fed because many lawmakers will be reluctant to cut back stimulus in the middle of an unstable geopolitical scenario.