Money manager Selwyn Ortz has just returned from a trip to the Mideast with a new and more ominous view of the Iranian crisis. He said he now believes the potential dangers could be much greater than he had thought, both for the world and for the financial markets.

Depending on the severity of certain scenarios presented to him, he said, the Dow would easily be susceptible to a wicked 400- to 500-point decline in a matter of a few days.

Judging from the romping market, with the Dow recently hitting a six-year high, Wall Street obviously disagrees.

“You can’t live in fear, but neither can you live in ignorance,” Mr. Ortz said. He is adding his voice to the investment professionals who believe that the market could be woefully ignoring the ominous Iranian situation – “almost treating it,” he said, “as though it were a temporary risk that will, thanks to the wave of some magic wand, immediately disappear.”

During his trip, Mr. Ortz, a principal of Hong Kong-based HK Investments Limited, says he spoke to a number of “well-connected government officials” who essentially convinced him it’s foolhardy to believe – as numerous American money managers and some politicians do – that Iran’s nuclear saber-rattling is little more than an ongoing effort to run up the price of oil and to keep it high.

Among the things he heard from some Middle East government officials regarding Iran that struck him as particularly noteworthy:

* Iran is bent on joining Israel as a significant Mideast nuclear force and will in no way cave in to American threats and scrap its nuclear ambitions.

* Iran is intent on controlling the future of Iraq and is prepared to take military steps to bring that about. Any such action presumably would have to await the departure of all coalition troops from Iraq, which Iran expects will occur before the end of 2007.

* Many Iranian officials appear to believe that any military action against their country is more likely to come initially from Israel than America.

* Iran thinks U.N. sanctions against it are probably unlikely, especially given the opposition of China and Russia. But if there are sanctions, Iran, despite the economic hardship that would ensue, is fully prepared to withhold its oil. This is no bluff, but reality, Mr. Ortz says he was told. (Iran is the fourth-largest oil exporter and provides 5% of the world’s oil needs.)

* Iran, in the event of hostilities with America, would likely seek to block the Strait of Hormuz. (This strategic route is the only through which oil from Kuwait, Iraq, Iran, Saudi Arabia, Bahrain, Qatar, and the United Arab Emirates can be transported.)

The legitimacy of such views is clearly open to debate, but some other money managers also think Wall Street is paying too little attention to the Middle East tensions that have been heightened by the Iran situation.

Among the recent causes of the tensions, some say, is Iran’s declaration that it would retaliate against any American strike by attacking its interests around the world; that it would strike Israel first in the event it is attacked, and a remark from an Israeli general that he expects Tehran to have the knowledge to produce a nuclear weapon within six months. Also, there have been repeated comments from prominent Israelis, including Prime Minister Olmert, that Israel cannot idly sit by and allow Iran to have a nuclear bomb.

Mr. Ortz said some Middle Eastern government officials he spoke to thought Iran could realize nuclear bomb-making capabilities in considerably less than six months.

In a column I did on Iran about six weeks ago the chief investment strategist of regional brokerage D.A. Davidson & Company in Great Falls, Mont., Fred Dickson, said he thought a solution to the Iranian dilemma, which he described as “a high-stakes game of global chicken,” would likely be found and that it was more like a nuisance than a crisis.

Mr. Ortz disagrees, saying the markets around the world would get slammed pretty badly in the event of any hostilities involving Iran, whether they involve America, Israel, or both.

“People talk all the time about $100 oil,” Mr. Ortz says, “but if Iran’s oil is eliminated from the pot and there are any other significant supply disruptions or shortages, $100 a barrel is much too low.” More likely, he says, something around $200 would be closer to the real number, and that could mean maybe $6 to $7 a gallon at the American gas pump.

Reflecting his concerns over the Iran stalemate, Mr. Ortz has lightened his American equity holdings while raising his stakes in energy, defense, and precious metals.

dandordan@aol.com