Saturday, August 29, 2009

Gold's Price Rise and Troubles in Afghanistan

With speculation having returned in a substantial way to the financial markets, ECRI bullish on the economy and now on housing prices, what can go wrong economically? EBR continues to follow the Pak-Ghanistan (Af-Pak) region, and takes as a troublesome sign that even an opponent of the Obama surge in Afghanistan, Sen. Feingold of Wisconsin, can't admit something obvious to Afghans. From the WSJ op-ed by the senator today, The Road Home From Afghanistan:

In light of their country's history with great powers, it should come as no surprise that Afghans are increasingly skeptical of our military presence. A 2007 poll (conducted by ABC News, the BBC and ARD German TV) showed most Afghans in the Southwest no longer support the presence of foreign troops, and a poll this year (conducted ABC News and the BBC) found that nationwide a plurality of Afghans want troop levels reduced, not increased. . .

Announcing a flexible timetable for when our massive military presence will end would be one of the best things we could do to advance our national security interests in Afghanistan. By doing so, we would undercut the misperception of the U.S. as an occupying force that has propped up a weak, corrupt and unpopular government, while at the same time removing a tremendous strain on our troops and our economy.

What's that about a misperception? From an Afghan and perhaps an "objective" perception (if such exists), is not the U. S. and its allies propping up a weak, corrupt and unpopular government? Are the large number of NATO troops not effectively occupying the country?

The economy will do much better, and inflation and interest rates will be much better behaved, if Afghanistan does not become Viet Nam 2. The more it smells like it, the more attractive gold becomes and then less attractive bonds become. It's too soon to draw conclusions, but it's high on my radar screen.

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