From... The Daily Reckoning
Eric Fry, from the Street...
- The "Coalition of the Unwilling" is fleeing Iraq even more
swiftly than its "willing" counterpart stormed into the troubled
Middle Eastern nation one year ago. Over the last 12 months, the
non-U.S. component of the Coalition of the Willing had been very
willing to build bridges, fix potholes, drill wells and direct
traffic, as long as the local belligerents were targeting US
GIs... and only US GIs.
- But now that the Iraqi militiamen and terrorists are broadening
their range of potential targets to include Italians, Japanese
and Ukrainians, many members of the coalition are becoming less
willing to stand behind the U.S. but ever more willing to turn
tail and run. Singapore's troops returned home this week and
Norway is planning to "focus on peace-keeping in other parts of
- President Bush must be hoping that no one near the Baghdad
airport resurrects P.T. Barnum's infamous sign: "This Way to the
- "In 1841, entrepreneur extraordinaire P.T. Barnum opened a
museum of oddities and immediately ran into a logistical
problem," explains Professor Janet Davis, author of "Under the
Big Top: History of Circus as a Mirror of American Society."
"Customers came in and liked what they saw so much that they
didn't want to leave. Barnum couldn't fit new customers into the
- "To solve the problem, Barnum posted a sign that read 'This Way
to the Egress.' Most visitors, unaware that egress meant exit,
eagerly walked through a door, expecting to see an animal
straight out of their nightmares, and found themselves outside.
To re-enter the museum, they had to relinquish another quarter.
- "In that little anecdote," says Davis, "lies a lot of Americana
and a nugget of what the circus means to some -- ballyhoo,
deception, sleight of hand, exotica, spectacle, illusion and good
old American salesmanship."
- President Bush now finds himself the ringleader of a different
sort of circus. For the last 12 months, the Bush Big Top has
featured an exotic collection of clowns, along with a dazzling
array of spectacles and "good old American salesmanship."
- Unfortunately, many of our foreign allies are tiring of both
the spectacles and the salesmanship and are becoming increasingly
eager to rush for the exit.
- Perhaps we should simply annex Iraq as the 51st state, or
perhaps we should pack up our duffle bags and leave tomorrow. We
here at the Daily Reckoning do not know... finance is our beat.
But curiously, no one else seems to know exactly what we
Americans are – or should be -- doing in Iraq, which brings us
right back to the financial markets.
- Up to this point, neither the ill-defined rationale for
invading Iraq, nor the ambiguous outcome of our efforts-to-date
has troubled stock market investors. As long as U.S. casualties
merely trickled in and our exit from the troubled region seemed
imminent, investors paid little attention to news from Iraq.
- Much more troubling to the mutual-fund buying lumpeninvestoriat
has been the months-long barrage of poor employment reports and
the ever-present threat of rising interest rates. But now that
hostilities are escalating and our allies are "bugging out" and
the likely timetable for exiting the country is lengthening,
investors may worry anew about the economic and geopolitical
consequences of our Iraqi campaign... .
- Recent polls conducted here in the States reflect a change of
heart toward our Commander-in-chief, which could presage a change
of heart toward the richly priced U.S. stock market.
- "Three surveys released Friday reflected growing doubts about
George W. Bush's strategy in Iraq and overall lackluster support
for his presidency," the Associated Press reports. "With pictures
of dead and wounded soldiers splashed onto television screens, a
new Gallup poll showed that 64 percent of Americans now believe
things in Iraq are going either 'very badly' or 'moderately
badly' for the United States, up from 43 percent who felt that
way a month ago.
- "The findings are borne out by a survey conducted by CBS News,"
the AP continues, "[in which] fifty-seven percent said the war in
Iraq was not worth the costs, compared to 34 percent who said it
was." A survey by Fox News/Opinion Dynamics produced virtually
identical results. It showed backing for the war at 50 percent,
down from 65 percent last summer.
- The bloody TV images from Iraq produced a fitful, fretful week
on Wall Street, where the Dow slipped 38 points to 10,442 and the
Nasdaq slumped 4 points to 2,053. The gold price also slipped
slightly during the week - down $1.80 to $420.70 an ounce. But
crude oil surged 8% to its biggest weekly gain in a year – up
$2.75 to $37.14 a barrel.
- Given the hostilities in Iraq, the nervous trading in the stock
market and the rebounding oil price, it's little surprise that
hedge funds are adding to their gold positions. According to the
Commodity Futures Trading Commission, hedge funds raised their
gold holdings for the fifth straight week. "Hedge funds and other
large speculators bought 144,252 more gold futures than they had
sold [last week]," Bloomberg News reports. "It was the biggest
amassment of gold futures by hedge funds in more than 20 years."
- Hmmm... what do the hedge funds know?