Megatrend: No more status quo in Pakistan. That country was politically unstable in the first place. With Mussaraf weakened. (He is now a civilian president, no longer in control of the military) the ensuring political unrest in that country, in the wake of Bhutto assasination, could topple the president. US dollar instantly dropped, and precious metals rallied.
Any country that is unstable enough to allow one of their top politicians to be assassinated shouldn't really have access to atomic weaponry...................erm...
If this indicates a general meltdown in Pakistan and they get Musharraf next --- then I suspect the financial markets would take more notice If this is just Musharraf stacking the deck so that he gets to stay in power eh.
My point is that this sort of political turmoil is nothing new in Pakistan (just look at the Bhutto family history over the last 3 decades). Being neighbors doesn't really explain why Indian markets should be affected by this news (some cynical South Asians would say her assassination was inevitable). My guess is Indian markets are more affected by US economic factors rather than Pakistani political gyrations. The question to really ask is who are the "they" in Pakistan that could assassinate a previous prime minister and threaten a current military dictator. Unfortunately most media and politicians in the US are so obsessed with "Islamic fascism" that they are not viewing the situation in Pakistan accurately. Who really controls the intelligence and military agencies in Pakistan? Also, the people who really oppose Musharraf are secular and legal leaders, the sort of people who we should be supporting. But naturally none of this will be heard in this country, just more "Islamic Fascism" nonsense.
I just don't see how the stirring of a hornet's nest can be taken in stride by some folks here. Of course, I have no clue what will happen. However, I think it is curious how some people are quick to jump to status quo conclusions, not unlike those who think that an average increase of a few degrees in global temperature will do nothing more than cause a bit of mild discomfort.
Thunderdog, It's more like if you're standing in a tornado and the wind picks up by 5mph, you're still in a tornado, it's not like the situation worsened that much more. The political situation in Pakistan has been abysmal for 30+ years. It's filled with political assassinations and military coups. Obviously today's events are tragic and bad, but from a historical perspective, it's not that far off from the road they have been on for quite some time. Also, contrary to the impression that the US media is playing currently, Bhutto was never the progressive savior that is being described. She never fulfilled those expectations when she was in power previously.