Christopher Allbritton provides the latest on a Hezbollah-fuelled conflict in Beirut, suggesting it may be a coup. Juan Cole weighs in saying it’s 2 steps closer to a civil war. But the link he provides to veteran correspondent Liz Sly includes the big picture:

The last time Lebanese fought street battles on this scale was during the 1975-90 civil war, when Muslims and Christians fought in a variety of combinations. But never did Lebanese Sunnis and Shiites directly clash, making this a dangerous new development, both for Lebanon and for a region rife with Sunni-Shiite fault lines.

Standing behind the factions are their respective patrons, the U.S. and Saudi Arabia in the case of the pro-government forces, and Iran and Syria on the Shiite side. As long as Iran and the U.S. are not talking, it is unlikely their clients elsewhere will see fit to compromise, said Paul Salem, director of the Carnegie Endowment’s Middle East Center in Beirut.

“This is a very serious deterioration,” he said. “There’s already a Sunni-Shiite war in Iraq. and if this continues there could be a third one in Bahrain, a fourth in Kuwait, a fifth in Saudi Arabia and so on. These are oil-producing areas. You’re already talking about $120-a-barrel oil now, and wars in these countries are really going to get people’s attention.”

In addition to the potential for a Middle East-wide war (with its potential to involve the entire oil dependent world) between now and Labor Day, the odds of a massive oil price spike that pushes gasoline to $5/gallon is extraordinarily high.

And just when Republicans thought things couldn’t get any worse for them … and for our exhausted troops … and for the majority of the citizens of the Middle East caught in the middle of the war zone created by extremists in their governments and the terror orgs … and for all of us who’ll foot the bills.

After the housing bubble, we’ll get our oil bubble and maybe even a war bubble. And the only bright side to all of it is that bubbles soon collapse.