Stock markets around the world have been defying gravity for months and months now. Rising ever higher in the face of logic, real economic performance and common sense. It’s now a precarious gamble: hang on and hope that a greater fool will buy you out just before the music stops.

When the music stops, buyers disappear and prices plummet.

The big question is: what will be the trigger that causes the music to stop?

Ukraine looked a likely trigger … but it seems not.

A property price crash in China could still be a trigger. China’s property market is an accident waiting to happen.

The Syrian civil war? The stunning election results for the European Parliament? Negative interest rates in Europe?

No, no, and no.

Then this week a new possibility from the ever turbulent Middle East. The extraordinary events in Northern Iraq.

ISIS is not an ordinary terrorist group. They already control much of the western desert in Iraq. They have been the most “effective” opposition fighters in Syria and control part of the north of that country. They have thousands of well organised and well trained fighters. They have a sort of uniform, and a flag. And, it appears they have strong leadership and a clear (and achievable?) mission to create an Islamist State across the north of Syria and Iraq.

This week they have conducted a lightning strike and taken control of Mosel, Iraq’s second biggest city of 2 million. Reports are saying:

• Iraqi police and military personnel have taken fright and run away.
• 500,000 people have fled Mosel … (goodness knows where to?)
• ISIS has looted the Mosel Central Bank and made off with $US429 million.
• Other banks have been looted for cash and gold.
• A thousand or more prisoners have been let loose.
• ISIS has seized military hardware, including possibly Blackhawk helicopters.
• They have then moved on south to Baiji: the site of Iraq’s biggest oil refinery and a key source of energy to Baghdad.
• and so on …

The US State Department is “deeply concerned” …

… and well they might be. This could turn very ugly very quickly.

Would the markets notice a full scale civil war in Iraq? … let’s see …