I don't understand any of the reasoning behind your Middle Eastern war prediction. As it's been since the '90s, nobody benefits from a massive war in the Middle East.
Israel is still a strong military power in the region, so I don't understand the high probability you've given to them losing. Perhaps it's because you don't expect them to use nuclear weapons. However, if you also believe Iran will use nuclear weapons, then Israel would no longer be the first to "introduce nuclear weapons to the Middle East." Even a dud Iranian bomb could give them the political leverage to unleash their own arsenal.
We agree that the US will probably not get involved directly.
If Israel does not use nuclear weapons, and particularly if they suffer nuclear weapons being used against them, then I can understand Japan joining them as allies. In any other scenario, there is no reason for Japan to break their constitutional prohibition on offensive military forces. If Israel does use nuclear weapons, I don't expect Japan to take it very well -- even if their politicians could be pragmatic about it, their populace is probably not capable of it after generations of anti-nuclear propaganda. Ayamachi wa, kurikaeshimasen kara.
Going through expiring predictions reminded me. Just as we did for 2010 and 2011, it's time for LessWrong to make its beliefs pay rent and give hostages to fortune in making predictions for events in 2012 and beyond.
Suggested topics include: Methods of Rationality updates (eg. "will there be any?"), economic benchmarks (price of gold has been an educational one for me this past year), medical advances (but be careful not to be too optimistic!), personal precommitments (signing up for cryonics?), being curmudgeonly about self-improvement, making daring predictions about the future of AGI, and so on.
As before, please be fairly specific. I intend to put most predictions on PredictionBook.com and it'd be nice if they weren't too hard to judge in the future.
(If you want advice on making good predictions, I've tried to write up a few useful heuristics I've learned. So far in the judging process, I've done pretty well this year, although I'm a little annoyed I got a Yemen prediction right but for the wrong reasons.)