Name a period, if you can, not dominated by a draft or egregious “total war” conditions, where equities were hit by our nation performing warfare. I think you would be under some effort to do so.
War is great for the US economy, which is probably why we dabble in it so frequently. Syria isn’t a trade partner with us. Back before 2011, according to Census estimates, we did about $600 million with them, gross. Private defense contractors and local economies will pull billions more in than that just in the effort to bomb Syria back to the Stone Age.
Sure, it’s all back to the US debt. But you know what? It’s a drop in the bucket. Blasting foreign nationals to pieces is nothing next to the entitlement culture we have growing under the couch here. Sure the cost of the military is huge – the cost to maintain it, that is. But using the military is cheap. A Syrian war doesn’t make that big of a difference. Unless you think we can just decomission the US armada, in which case I’d say the savings are an illusion…because we can’t do that.
Trying to argue the market should sell off because of more war in the Middle East is just a non-starter. Syria has been in civil war for two years. Have the oil markets noticed? We’re over $100 /barrel, and the latest economic numbers have gotten rough again, so oil is probably due another sharp collapse in prices, back to that $80 mark, from which it always seems to flawlessly recover. But we’ve been here so many times in the last three years, why is it relevant?
European countries have been in recession forever. Why would further Syrian turmoil hit them any harder now than it did in 2011 when the fighting started? It’s the same oil supply concern, but it’s been there for so long, it shouldn’t be a problem.
Here’s how a Syrian war will play out. We will crush Assad’s forces. Then the Muslim Brotherhood will take over, replacing hard liners with hard-er liners. Then we will act all shocked and surprised and crush the Muslim Brotherhood. Basically, we crush all of Syria, but one half at a time, so that we can pretend like we’re there to help.
We’ve been due for a market selloff for a while now. Let’s have one, I guess. But what a stupid reason to do it.
If you enjoy the content at iBankCoin, please follow us on Twitter
Just to clarify: gov’t creates a massive centrally planned economy that slowly suffocates free enterprise. Not realizing what they’ve done, politicians start war in the hope that blowing stuff up somehow brings about abundant prosperity. After all, destroying capital goods is how wealth is created, right?
Something to ponder: Money creation process different today than other post-1913 examples. In past, money creation spawned mostly from loan creation vs. today (2008-present) in which money is created primarily through excess reserves (and offsetting decline in velocity). Given the small scale of conflict (for now), as you mention above, it seems that war today would be market neutral at best. In the context of full valuations, I would only interpret war as bullish if it serves as catalyst for an increase in velocity.
Would war have been bullish under carter? This will be the first new offensive action for this admin. Possible uncertainty?
Libya
The Market typically sells off until the first bombs (literally) fall. Then start rally mode. Your guess is as good as mine as to why. AEC cheep here!
Agreed, AEC is a screaming buy
Cain,
you sure bombing them into the stone age is good?
that might move them up a few centuries !!