War Boom

Oh what a lovely war! That seemed to be the initial response of global markets as American missiles began to seek out what US officials described as ''targets of opportunity''. Stockmarkets across Asia opened strongly, with Tokyo''s Nikkei closing up 1.8 per cent and South Korea''s Kospi posting a gain of five per cent.
Asian bourses thus followed in the footsteps of the Dow, which had delivered its sixth straight day of gains on Wednesday.The dollar remained steady, and oil prices dropped to a three-month low as OPEC committed itself to making up for any shortage caused by the attack on Iraq. It''s interesting to look at this issue from the perspective of the financial markets, since they do not base their decisions on ethics or morality.
Instead, markets are driven by fear and greed, by ''irrational exuberance'' — to borrow a term used by Alan Greenspan in another context. They make snap decisions, rather than carefully thought out judgments. And their verdict for now clearly is that since a war was inevitable, it''s just as well that George W Bush finally grasped the nettle. Hopefully, the war will be short and swift, and it will soon be business as usual again. It''s a fond hope, but it may not be a realistic one.
Contrary to the Bush administration''s belief, Saddam Hussein may not turn out to be a pushover. Even if he is easily deposed, Washington still faces the challenge of installing a new government in Baghdad that is capable of ensuring stability in this strategically crucial, notoriously volatile region. Its recent efforts in Afghanistan, unfortunately, inspire little confidence on this score. What will be the fallout of this war on relations between the European Union and America, indeed within the EU itself? It was one thing for the euro to be perceived as a friendly rival to the dollar, with the eurozone offering economic competition but political cooperation. But the situation could get a lot more strained now, especially after the vilification unleashed by senior American officials on ''old Europe'' — especially France, and to a lesser extent Germany. And what would be the impact on the global economy if terrorist activity escalates and consumer confidence goes into a tailspin? At this stage, there are just too many uncomfortable questions left unanswered. The markets may have cheered the beginning of the war — but tomorrow is another day.