RUSSIA OUT OF WESTERN UKRAINE, THE U.S. OUT OF EUROPE.
February 28, 2022 2 Comments
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This WordPress.com site is dedicated to independent working class politics. Contact me at briangreen@theplanningmotive.com
February 28, 2022 2 Comments
THEPLANNINGMOTIVE.COM 
“Take a look at what happened on Wall Street Thursday & Friday last week after it was announced that Russia had invaded. The largest European war since the Second World War breaks out, and what does Wall Street do, it soars. Of course there were lots of opinions as to why this happened, including it was the result of “sell on the rumour buy on the fact”. Such a homily. But what was left unsaid is that war in Europe is good for business in North America. Who says imperialism does not profit from war?”
Well, now that the NYSE is in the tank, with prices having fallen into “correction territory”– about 10% of previous highs– what do you say? War isn’t that good for business? Danger of confusing momentary expressions with essential characteristics. The essential characteristic is that stock prices need not reflect the real economic circumstances.
You are wrong and right. The first five days of the war need to be separated from the subsequent period. During the former period Wall Street was unaware of any repercussions for the US economy. The prevailing view was that the economic fall out would be limited to Europe. As sanctions grew and with it the dawning realisation that the resulting shortages would drive up prices globally and significantly dislocate the world economy, only then was there a shift in observed risk and hence the fall in the share prices you describe.