The New York Times is reporting that Taliban Seize Vital Pakistan Area Closer to the Capital.While investors are paying close attention to every month-to-month economic jiggle, those with more experience remember that in prior to the 21st century, everyone recognized that data always vary from month to month and that year to year comparisons are stabler. That was until our government deliberately moved away from leading off its economic press releases with year-year changes to now emphasize month-month changes in order to distract the populace from noticing unpleasant trends.
In any case, enough economists are still watching year-year and smoothed trends that you will gain limited competitive advantage from making decisions based on the same data, though of course one needs to keep one's knowledge base current. Watch for outlier events, such as news of the insertion of American military "advisers" into Pakistan (not that they are not there already). Afghanistan is not really a country as we in the West think of one, but Pakistan is a real country. Any U.S. move to "defend" Pakistan will come with the argument that it has nukes etc., etc. If President Obama wants to go that route, Pakistan's economy is alive only because of IMF sufferance, so it will have to go along with almost anything the U.S. wants. Here are some snippets from the Times article that may make you wonder if American "advisers" or an actual U. S. armed forces presence are in fact coming:
On Wednesday, Secretary of State Hillary Rodham Clinton said she was concerned that Pakistan’s government was making too many concessions to the Taliban, emboldening the militants and allowing them to spread by giving in to their demands.
“I think that the Pakistani government is basically abdicating to the Taliban and to the extremists,” Mrs. Clinton told the House Foreign Affairs Committee on Capitol Hill.
She added that the deterioration of security in nuclear-armed Pakistan “poses a mortal threat to the security and safety of our country and the world.”
A senior American official said Mrs. Clinton’s remarks were prompted in part by news of the Taliban takeover in Buner. The officials said that the further erosion of government authority in an area so close to the capital ought to stir concern not only in Pakistan but also among influential Pakistanis abroad.
The chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, arrived in Islamabad on Wednesday for the second time in two weeks, reflecting the sense of alarm in the Obama administration. He was scheduled to meet with Pakistan’s top military and intelligence commanders.
The "mortal threat" terminology means that an overt U.S. military presence in Pakistan is being seriously and I suspect favorably contemplated at the highest levels of the Obama administration. Two visits by the chairman of the Joint Chiefs within two weeks is proof positive that such a scenario is realistic rather than an obscure blogger's fantasy.
War is bad, but war at a time of economic depression is more than bad. If war involving the U.S. should come to Pakistan, gold will tend to strengthen, as may the dollar (at first), and very possibly so will Treasuries. If so, EBR believes that the Treasuries should be sold on any price strength but gold should be held and/or purchased.
Copyright (C) Long Lake LLC 2009