Tuesday, March 22, 2011

Why The Markets Hate Libya?

Off Mike Allen's PlayBook

“Libya is a big deal and not helpful to the world economy. At a minimum: Oil supplies disrupted, oil price increase is a drag on growth, war expenditures rip another unbudgeted hole in the budget … Worst case: All of the above, plus: Qaddafi survives and Libya is split between east and west (Benghazi and Tripoli). Egypt exerts dominance over the Benghazi half. Qadaffi teams up with Al Qaeda and unleashes a wave of terror in Western Europe in revenge for U.K., Italy and French participation in the coalition, Russia rearms Qadaffi, China gets the oil and Europe is driven closer to Russia (energy dependence now with no nuclear coming online and no Libyan oil). Over time, this starts to look like Iraq from 1991-2003, with a no-fly zone and ineffective oil-for-food sanctions and Saddam (now Qadaffi) still in power and a permanent thorn in our side. … Markets hate uncertainty and this situation has nothing but.”

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