| Waiting for War |
24 February 2003
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World Bourses Needlessly Fear the Inevitable
The US and its allies are going to war against Iraq, and they will do so sooner rather than later. Investors everywhere are dithering about what to do, businesses are in a "wait-and-see" mood, and there is no reason for it. War is not enough to undermine or pump up an economy anymore. Time to get moving, and the war will come in its own good time.
Any war in the 21st century that includes an economy big enough to matter will be a short one because the powerful countries of the world have no intention of fighting one another again. Consider, as difficult as things are between Paris and Washington, is anyone considering an attack of one on the other?
This means that one side in any war will have a preponderance of power overwhelming enough to keep the fighting to weeks rather than years. The tab for the next Iraq-US war is guessed to be $100 billion or so. To an economy of $7 trillion plus, this amount doesn't really affect the bottom line.
"If the war goes badly," is a phrase many in business use, but can anyone imagine such a thing? As dreadful as the Al-Qaeda attacks were, they only hurt the economy marginally -- the gutlessness of businessmen that followed was far worse. When war comes, the US will win within 6 weeks. By win, one means establishing a military government of occupation and an end to organized resistance to that government. The flea bites of Saddam Hussein as this happens will not matter.
Yet people in business refuse to move their money around they way they should. Markets do not run on supply and demand, but rather on greed and fear. Currently, fear is beating greed, and there's no reason for that.