The Untold Story Behind Recent Market Correction by David Yu Every major war ended with economic contraction throughout history, according to NBER (National Bureau of Economic Research) business cycle statistics. Recessions in 1919, 1945, 1953, and 1973 immediately following the ends of WWI, WWII, Korean War, and Vietnam War, foreshadow recurrence of another recession at the end of Iraqi War. That might've been the shock to the system and the real story behind market pessimism. Full article at: http://www.financialsense.com/fsu/editorials/yu/2008/0114.html
If we withdraw troops from Iraq, a recession will come, that's for sure. For now, Iraq continues, as well as the half trillion defense budget.
Some interesting thoughs from Stratfor on the topic: http://blogs.stratfor.com/friedman/2008/01/08/annual-forecast-2008-beyond-the-jihadist-war/
This isn't an untold story. This is economics 101. The last 100 years has seen wars cure depression/recession and the end of wars trigger a slowdown. just a function of declining aggregate demand amidst massively increased aggregate supply not dropping so fast.
While have lots of respect for Stratfor and its predictions but disagree with it' s two of the three points. a) End of Jihadist war.........no, because this type of guerilla war can be switched on and off with little effort. Especially when US has no control over Pakistan and its under the table moves. b) Re-Emergence of Russia: a nation whose economy is hanging by the thread of oil prices. Other than oil revenues and some sort of internal discipline, there has been little change in the Russian box of candies since Putin came to power. More importantly, it seems Russia is not interested in playing the superpower or anti-US role anymore. If they can learn how to redistribute the oil wealth out and away from 'Only Moscow' region to other Russian cities and villages, then they should be fine in the long run. Other than Moscow there is little to speak of in that country. Also unlike China and India, the new wealth is falling into the hands of few folks which is not good in the long run for the economy.
Russia will be back. Only the blind cant see that. Putin is Old School. They'll close the doors to protect the Republic.
An economic boom unprecedented in history followed our victory during, and subsequent ending of, WWII. Troops came home, obtained good jobs, started families, and bought homes, cars and appliances en masse.
The end of wars coincide with shifts in economic cycles because they reduce the need for money creation. With less money being pumped into the economy, things come to a stand still.
Good post. That was the fact; the great post war boom. Esienhower also initiated the InterState system of highways, a gigantic program, the communications network of that era just as the internet is the communications network of this era.
The Autobahn was designed by Hitler for the war and coincidentally Eisenhower did the same post war. Anyway if what your saying is that economic slowdown always occurs at the end of wars because of the knockoff effects, then monetary inflation should come down resulting in gold having a major correction.