Terrorism doesn’t rate anymore, not on financial markets anyway.
Since September 11, there has been a steady discounting of terrorist shocks to financial markets. The London car bombs at the end of last week shows the discount has become just about absolute as long as the targets are “merely” people.
The European markets all finished higher on Friday night. London was up more than half a per cent, Paris 0.8% and Frankfurt 1.1%. The Dow lost a few points, but that was thanks to an oil price pushed up by US gasoline supplies — not would-be car bombers.
And it wouldn’t have mattered much more if the bombs had gone off, killing dozens or people. Investors have learned to look through the headlines to see if any attack damages the economy.
That is why the only economically significant threat by al-Qaeda has been the plot to severely damage Saudi oil production. That was thwarted by the Saudis in April, although smaller-scale conspiracies against oil supplies are a constant.
Working against al-Qaeda’s ability to disrupt the international economy, to really damage the West, is the diversified nature of international economic growth. Only a few years ago, it would be enough to slow the US economy to wreak international havoc, but now the US can lose a full percentage point of GDP growth and the world doesn’t miss a beat.
While the politicians make their speeches and individual tragedies await, our extremely adaptable species has adjusted to the random threat of smallish bombs in our cities and is getting on with life — and business.
If not for the incredible stupidity of US foreign policy, George Bush being Bin Laden’s greatest ally, al-Qaeda has lost.
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