Investors priced in a 6-week Iraq War but it lasted 8 years and cost $3 trillion. They’re doing it again

As oil topped $120 a barrel Monday and Iran named a new Supreme Leader, Wall Street is still betting this war will be short—the same bet investors made about Iraq in 2003, when a conflict predicted to cost $60 billion ultimately consumed $3 trillion. Those trillions ultimately showed up as higher deficits, higher borrowing costs, and a decade of elevated geopolitical risk—a path markets never modeled in 2003.

The parallels are not subtle. When the U.S. invaded Iraq in March 2003, Defense Secretary Donald Rumsfeld famously predicted the conflict would last “six days, six weeks—I doubt six months.” It lasted eight years, injured nearly 40,000 Americans, killed 4,500, and drained what Brown University’s Costs of War project calculates as nearly $2 trillion in direct spending—with veterans’ medical and disability payments projected to add $1 trillion more over 40 years. The Bush Administration’s original estimate, reported by The New York Times, had been $50 to $60 billion.

Now, Scott Galloway— an NYU professor, entrepreneur, and co-host of the “Prof G Markets” podcast—is drawing that line explicitly. On Monday’s episode of the podcast, he and co-host Ed Elson argued that investors’ current calm is not savvy risk management. It is, in Galloway’s framing, a failure of institutional imagination—the inability of governments and markets to think beyond the first few weeks of a conflict, from the price of reconstruction to the refugees, the blowback, and the political consequences—that risks being just like the one that preceded the Iraq catastrophe,

Markets Are Calm. The Ground Is Not

The S&P 500 dipped only modestly in the immediate aftermath of U.S. and Israeli strikes that killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, and caused significant damage to government and defense infrastructure. Investors appeared to price in a brief, contained operation. Then Monday arrived.

On Sunday night, Iran was reported to have named Khamenei’s 56-year-old son as the new Supreme Leader, signaling institutional continuity rather than collapse. This was confirmed Monday morning, and oil surged past $100 a barrel—hitting $120 at its peak. Israeli Army Chief Lt. Gen. Eyal Zamir, in comments cited by the Associated Press, told military commanders on Monday: “Israel has already been in a state of prolonged emergency for two years. What we mainly need right now is perseverance and patience. It will take a long time yet.”

RBC Wealth Management’s analysis of market reactions to conflicts dating back to 1950 found the 2003 Iraq invasion produced only a 5.6% peak-to-trough drop, recovering in 28 trading days—a muted reaction that proved wildly optimistic about the war’s eventual scope and cost. The current market response is tracking similarly.

The Strategy Problem No One Is Pricing In

Galloway’s sharpest critique is not just that this war could be long—it is that no one in Washington appears to have a coherent plan for what comes after the bombs. He called the current operation “war as improv.” The administration bypassed Congress, launching strikes without an Authorization for the Use of Military Force and without briefing the Senate Intelligence Committee. “When you declare war—and this is war—you are supposed to get congressional approval,” Galloway said. He noted that the White House messaging has toggled between calling the operation a “special combat mission” and a “war” aimed at regime change.

Anthony Scaramucci, the hedge fund manager who briefly served in Trump’s first-term administration, offered a striking explanation for the strategic confusion in a March 7 appearance on Ireland’s The Pat Kenny Show. Trump, Scaramucci said, has been frustrated by his Israeli partners—who have killed off so many senior Iranian figures that Washington is running out of counterparts to negotiate with. Trump himself appeared to confirm this logic approximately four days earlier, telling reporters: “Most of the people we had in mind [to lead Iran] are dead … Pretty soon we’re not going to know anybody.”

How the Press Failed in 2003 — and What It Means Now

The strategic incoherence of the current moment has a direct media precedent. In 2003, the press largely failed to scrutinize the Bush administration’s claims about Iraq’s weapons of mass destruction. A post-mortem by CNN media reporter Howard Kurtz identified at least 140 front-page articles that effectively echoed the administration’s pro-war narrative. Harvard’s Nieman Foundation later concluded that top editors and reporters engaged in a “credulous, stenographic recitation” of official arguments, making the press “de facto accomplices to a war undertaken on false pretenses.”

Rumsfeld’s “known unknowns” and George W. Bush’s appearance under a “Mission Accomplished” banner—after six weeks of fighting and before eight more years of war—became shorthand for the gap between official confidence and operational reality. That gap may be appearing again today.

The Downstream Risks Markets Aren’t Modeling

Galloway outlined several second-order consequences that he argues are not reflected in current asset prices. Oil prices breaching $100 already threaten inflation and consumer spending globally. Iran has responded to the strikes by launching drone attacks on neighboring states, including a strike on a desalination plant in Bahrain that threatened the region’s water supply. Cyberattacks mirroring those already launched against Israel represent a further risk of escalation. And a prolonged conflict could generate refugee flows of up to 90 million people, with destabilizing consequences for Europe.

Iraq offers the benchmark for how severe those downstream effects can be. Direct Iraqi casualties remain disputed—a 2006 study in The Lancet by Johns Hopkins researchers estimated 655,000 excess deaths, extrapolated from a mortality rate that more than doubled from 5.5 deaths per 1,000 people pre-invasion to 13.3 post-invasion. A competing UN-backed survey led by epidemiologist Jon Pedersen estimated “something in the vicinity of 100,000,” calling the Lancet figure too high. Either number dwarfs the original projection. The refugee crisis that followed—over 1 million Iraqis ultimately fled into Syria—contributed directly to the Syrian Civil War that convulsed European politics throughout the 2010s. None of it appeared in the original calculus of a six-week war.

“The worst geopolitical mistake of this century” is how Galloway described the Iraq invasion. His warning, issued Monday, was straightforward: the current administration’s lack of coherent strategy risks producing a second one—and markets, once again, may be the last to see it coming.

This story was originally featured on Fortune.com