the War that never ends

[Terrance]

Doug Millison wrote:
> 
> For those of you who don't believe that the "first war
> of the 21st century" (to use our Pres. Bush's happy
> phrase) will benefit weapons makers in particular and
> provide an overall stimulus to a sagging U.S. economy,
> just watch a few hours of financial market coverage on
> the CNBC cable TV network, where the government
> spending for this war (and, almost incidentally,
> rebuilding lower Manhattan, which I expect was insured
> anyway, but what the hell), is talked about in
> precisely those terms.

GeeeWizz Skippy, you mean those properties were insured and re-insured? 
Obviously the financial networks didn't explain how RE insurance works. 

This is going to hurt. It's already caused a lot of pain. 
People are not getting work building bombs, they are being laid off. 
People are not getting rich, they are losing their asses. 
Not just here in NYC, not just in California, but around the globe. 
Free markets, and there is no market as free as the USA financial
market,  have a psychological component that should not be
underestimated. 

The pain, the sickness in this economy,  has spread like a 
metastasizing cancer to the emerging markets. These emerging markets 
are suffering the impact of last week's attack
on the US. That's right, they feel our pain. But the real pain will not
be felt  until they need to return to the capital markets to refinance
borrowings. This need will be more urgent for some, for nations
like Pakistan. But already there is evidence that emerging 
debt is out of favor with investors. Trading volumes in emerging market
debt are at one-third of normal levels. If I were a portfolio manager I
would sell everything and buy UST 30 years. And that's exactly what
smart
money is doing. Risk aversion has clearly increased and so money is
flowing away from emerging debt and into UST debt. 

Did they put up a chart on the financial TV program that shows how the
spread or the
difference between the yields on UST debt and emerging debt has widened?
In countries in Latin America with close links to the US economy,
particularly Mexico, people are not getting all pumped up about the
stimulus of the new war economy, they are trying to figure out how they
can keep their economies from falling into the toilet. 

You know, those financial programs spend a lot of time on the stock
market, the Dow. But the Dow, the stock markets, all of them, are a drop
in the ocean of
debt. Debt makes this old world go round and round. And right now,
the world has nearly stopped. If you think this is a good thing for the
defense contractors and the arms merchants and the banks, you must be
either drunk or totally ignorant of even the basics micro and macro
economics. 

What about those nasty airlines and bomb builders? 
The U.S. air carriers, already feeling the pinch of the weak economy, 
were nearly running on empty before last Tuesday's tragedy. When the
planes hit, an unprecedented two-day shutdown of U.S. airspace, reduced
travel, and it has not, understandably, returned to normal, on top of
this,  higher jet fuel prices and higher security-related costs, are
killing the industry.   Some stimulus this war.                

The airline industry was already expected to lose between $2 billion and
$2.3 billion this year. But since the attacks, that estimate has
skyrocketed to about $7 billion.  Some stimulus. This "war" has pushed
many carriers to the brink of bankruptcy. Airline officials are now
seeking as much as $24 billion in
disaster relief from the government to stabilize the industry. To
stabilize it! That's not stimulating to the economy. 
And there are costs, unrecoverable losses, that will be incurred by the
banks, by the insurance companies. Get out your red pen. To add injury
to insult, the airlines will need to pay higher interest for loans
because their credit ratings have dropped through the floor. The losses
here are dragging credit ratings down across the board. Banks and
insurance companies will lose billions. But the brunt of it will be felt
by those that own the bonds and stocks of the airlines. The leverage on
a lot of these airlines is huge, and the bonds are secured by the
planes, they are  equipment loans. So, if you have an insurance policy,
on your life, on your wife, if you have a pension, it's probably got a
GIC (it is guaranteed by an insurance company), if you have mutual fund, 
any retirement plan, you are going to feel the pain, if you have not
already, of this stimulating war. 

I could go on and on, but it's a very sad tale. Doug, I think P was onto
something in 1973.  He saw what was happening in the cold war and the
aftermath of W.W.II, but this ain't W.W.II and applying P's fictional
paranoia to the current situation is to totally go off the deep end. And
it hurts.

Here, take some of this.