Stock markets predict the outcome of wars. At least legendary investment banker Barton Biggs reckons so. We're reading his book Wealth, War and Wisdom in preparation for the Syrian attack.

Apparently, every stock market except the French one has a habit of featuring a turning point shortly before wars do. The German market topped out when Hitler's 3rd and 4th Panzer Army spotted the spires of Moscow. From there on in it was a bear market all the way, you might say.

The American market bottomed out just before the American war effort took a turn for the better. Barton Biggs explains that the market recognised the Battle of Midway as a turning point while the media and military were all doom and gloom.

So why is the French stock market an exception to the rule? Because it predicted prosperity under the Nazis. But letting Germans run your economy turned out to be a bad idea when you're economy is French. Steel and cheese don't mix. Sixty years later, Europe is learning the same lesson under the euro.

We'll let you know what Barton Biggs suggests you do with your wealth in a war when we get to that bit of the book. So far, he's only mentioned that stocks, at least, survive. Most financial assets don't.

So what does the stock market think about the impending attack on Syria? It doesn't seem fazed. The uptrend in the S&P500 is still intact, if our limited knowledge of technical analysis serves us correctly. If Biggs' basic claim is correct, that means we won't be going to war, or America will win any war.

That might seem obvious. When it's America vs Syria, you know who's going to win. But when you're talking about bombing Syria, you've also got to worry about Russia, China and every country in the Middle East. They've all got their alliances and enemies. Not to mention Al-Qaeda is involved on the side of the Syrian rebels. One American Navy officer posted a picture of himself holding a sign that says, 'I didn't join the Navy to Fight for Al Qaeda in a Syrian Civil War.' He was smart enough to cover his face with the sign.

Strangely enough the computer game Battlefield 3 is based on a plot similar to what's going on in the real world. The Russians, Iranians and Americans get caught up fighting in the Middle East. Instead of sarin gas, it's a nuclear bomb that gets used. But nobody is sure who used it and why. First it's the Iranians that get the blame. Then the Russians. Eventually, you figure out it was some guy called Solomon who's playing everyone.

The point being that nobody really knows what's going on behind the scenes until the aftermath, if then. Not that this stops an enormous conflict from starting.

Back to reality, it looks like we may avoid that conflict. First the UK and now the US is backing away from a strike.

A note to Dan Denning and any Americans reading this, the UK's back down is a prime example of the Westminster system of government working well. The executive (Prime Minister David Cameron's cabinet) was held to account by the legislature (Parliament), preventing a war. David Cameron was forced to comply with parliament's wishes.

Over in America, the same outcome may yet be possible, with Obama turning to Congress for a decision, although Obama could theoretically go it alone if Congress refuses to back him. Only the French still seem keen to attack the Syrians. We're not sure what to make of that.

What's most telling about the western countries' political standoff over Syria is how it signals the end of an empire. We're heading back to the Dark Ages, which was the topic of our speech at Port Phillip Publishing's first ever symposium in Sydney last year. The idea being that there is no longer a dominant superpower in the world. That creates a messy landscape where alliances are important and military action less plausible.

The most important sign that we're heading back to the Dark Ages is a timeless one - the current dominant empire is running out of money. It happened to the Romans too. Their financial system was based on loot from the conquering Roman Legions. Once the conquering became more expensive than profitable, Rome's military might went from being an asset to a liability. The whole empire began do implode. Cue the Dark Ages.

Today, the Americans are in the same bind. Having military bases in about 130 countries around the world is causing more financial problems than they're worth. And now that financial crunch has come to a head. The media reports that the Pentagon (the seat of America's military) doesn't have the funds to start a war with Syria. The budget sequester and debt ceiling are biting where it really hurts - America's military pride. The Pentagon will have to request more money from Congress if it wants to pick a fight.

Which means Congress gets a vote on the war either way. A cynic would say that's the reason Obama is letting the representatives and senators have a say in the first place instead of going in guns blazing.

An even more cynical cynic might point out that starting a war would solve Obama's upcoming fiscal problems. The Americans are set to get their knickers in a twist over their budget again at the end of this month. A temporary measure called a continuing resolution expires then. Congress won't defund the military in the middle of a war, so if Obama starts one he won't have to deal with budget politics.

But you don't need to be cynic at all to be amazed at the reason the Americans gave for planning an attack on Syria in the first place.

Their ears still burning after Saddam's WMDs disappeared from Iraq, the Americans have gone and done some proper intelligence gathering this time - they typed in 'Syria' on YouTube. Here's a segment from the American government's actual statement:

'We have identified one hundred videos attributed to the attack, many of which show large numbers of bodies exhibiting physical signs consistent with, but not unique to, nerve agent exposure. The reported symptoms of victims included unconsciousness, foaming from the nose and mouth, constricted pupils, rapid heartbeat, and difficulty breathing. Several of the videos show what appear to be numerous fatalities with no visible injuries, which is consistent with death from chemical weapons, and inconsistent with death from small-arms, high-explosive munitions or blister agents. At least 12 locations are portrayed in the publicly available videos, and a sampling of those videos confirmed that some were shot at the general times and locations described in the footage. We assess the Syrian opposition does not have the capability to fabricate all of the videos, physical symptoms verified by medical personnel and NGOs, and other information associated with this chemical attack.'

Who needs the CIA or NSA when you've got YouTube?

Meanwhile WND and Yahoo are explaining how the rebels could easily have fabricated the attack the American government reckons they couldn't have fabricated. They might know where the chemical weapons came from - the Saudi's. UN officials are also sceptical, citing things like how perfectly white the foam in the victims' mouths is (it should be brown and red).

Remember, the Arabs know the power of YouTube from the Arab Spring's other success stories. They've televised their revolution. Or at least framed it to their advantage.

Getting back to the stock market, the decline of America's empire fits in nicely with stock market action if you view it over a longer time horizon. The S&P500 index has been in a secular bear market since the late 90s. The latest edition to our editorial team, Vern Gowdie, reckons the Australian market is also in one.

You can find his worrying predictions and his solutions here. In short, he thinks you should avoid risky assets and focus on connecting your wealth to what really matters. And if his predictions about the stock market are anything to go by, you're going to need a plan.

Regards,

Nick Hubble+
for The Daily Reckoning Australia