Thursday, December 27, 2007

Rally Assassinated

Nothing ruins the economy more than social strife. Nothing could have been worse for the Santa Claus rally than the assassination of Benazair Bhutto, former Pakistani prime minister and leading candidate for this year's election.

With her death, I find myself in an odd place. First, this is my first foray into politics on this blog. Second, it significantly increases the uncertainty of the future, and therefore can only negatively impact the global economy, and as a result, global stock markets.

My politics and economics are always tied together. At a time when the US is gearing up for its primary elections, political unrest around the world will greatly weigh on the minds of average citizens, far more than usual. This will cause voters to consider strengthening our terrorism "war", and thus risking increased anti-US sentiment, which will result in decreased business.

Rather today's news will impact the market for long-run remains with how Mussaraf deals with the riots today, and what he does about the coming elections. I expect martial law to be declared and elections to be postponed. This is the predictable outcome and would calm markets.

However, if Mussaraf proceeds, then any election result will cause massive turmoil in the country, and fears will run rampant for at least the next month, devestating our struggling stock market.

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