Iraq and the Stock Market


Investment Index

The US Will Probably Invade Iraq --It seems to me to be probable that the US and the UK will soon invade Iraq. Sending 100,000 troops half way around the world with all their supporting equipment and logistics chains must cost billions of dollars. This probably wouldn't be done if war weren't planned. 
    Tommie Jean just informed that Saddam hired a hit man to try to assassinate George Bush, Sr. That would make things highly personal between Saddam Hussein and the Bush family. (Tommie advises that the US unintentionally killed one of Saddam Hussein's young sons in an assassination attempt upon Saddam.)
This May Lead to Inflation, Which May Lead to Lower Stock Prices
    Wars have historically been expensive. The money to pay for them typically come from taxes, which President Bush is reducing, or from the sale of Treasury bonds (indebtedness). The latter maneuver generally leads to inflation about two years after the deficit spending occurs. That would suggest that inflation will appear sometime in 2004. This, in turn, generally leads to higher interest rates, in order to fight inflation, and higher interest rates lead to lower stock prices, since stock returns have to compete with fixed interest rates. (The stock market usually anticipates the economy by six to nine months.)
    Of course, the economy is still weak, and stimulative measures are still in effect.
    The U. S. stock market sagged during the Gulf War and then rose as soon as it was over. (We were in a mild recession at the time.) 
Am I Sure of This? Absolutely Not!
    This is more like a topic of conversation, to be confirmed or invalidated through further research.
    Unfortunately, I don't expect confirmation from the experts until it's too late. The experts are paid well to deliver their interpretations to their employers, who generally want to sell or buy ahead of their competitors..