Iraq Defeatism and its Impact on the Elections and the Markets
Iraq Defeatism and its Impact on the Elections and the Markets
By Todd Schoenberger
Monday Nov 06, 2006
Dear Reader:
On the eve of the midterm elections, it seems obvious that most voters are going to choose a candidate based on their opinion of the war in Iraq. The media has jumped on this topic recently by discussing “defeatism,” as if the insurgents have won and the terrorists are moving in.
Yes, the war, for lack of a better word, has been a challenge. But, let’s take a moment to consider what would happen if the U.S. military did what many electoral candidates have suggested -- “cut and run.”
One thing is certain if our troops leave Iraq: Terrorists would move in and control Iraq’s flow of oil. And considering Iraq is responsible for millions of barrels a day, this would have an immediate impact on oil prices that would ripple through the global economy.
It would also affect investor confidence and send bearish signals throughout the equity and bond markets. Even though we witnessed the most violent month (October) of the Iraq war since fall last year, the Dow still broke through historic highs, and the feeling from Wall Street is the good times will continue to roll following tomorrow’s elections. Any break in confidence would most likely push valuations lower.
A lot of media pundits on the Sunday talk shows like to push the oil objective as why we invaded Iraq to begin with. This is nonsense. We invaded because it was in our best interest to remove a ruthless dictator and his regime; it was also about democracy and its benefits in that region of the world.
As unpopular as that comment is to Americans right now, it’s also the reason why consumers and investors are confident here in the States. After all, if oil was the main reason, then why did we see $78+ a barrel in mid July? If we had access to millions of barrels a day, then why didn’t the per barrel price drop considering the U.S. is the largest consumer of the commodity on the planet?
Bottom line: Iraq defeatism and cut-and-run techniques are all hot-button issues for voters to choose the “other” guy. But, in reality, leaving now would have dire consequences on not just our finances and economy, but our safety. The insurgents know how to play our media, which influences public opinion. So, when heading out to the polls tomorrow, keep your mind open to what the end result may bring.
Until tomorrow,
Todd M. Schoenberger, Senior Equities Analyst
Diligent Investor
www.DiligentInvestor.net