Does Bin Laden death mean anything for economy?

Well, the Dow has given up most of its gains this morning - if that's any indication. NYT columnist Paul Krugman says, "Good, and good riddance. But it's hard to see how it changes anything important." Others speak of a narrowing in the so-called risk premium - that's the extra rate of return from a chancier investment and always a factor in places like the Middle East. That could mean a drop in the price of oil. Here are two views (via Real Time Economics):

-Bin Laden's death is highly significant within the context of domestic US politics. The operation will boost Obama's drooping popularity and give him a springboard from which to launch his 2012 re-election campaign. During his 2008 campaign, Obama criticised his predecessor George W Bush for devoting insufficient resources to the bin Laden manhunt, and the Al-Qaeda leader's death is an endorsement of Obama's approach to external security. Moreover, it allows Obama to portray his wider military "surge" in Afghanistan as a success. If Obama is re-elected next year, then the events of 1 May will be viewed as crucial in that victory. -James Brazier, IHS Global Insight

-What might this mean going forward to markets, economy, and prices? The euphoric reaction of markets is likely to be short lived. This does not impact earnings or unemployment or economic expansion immediately. It may even cause a backlash of terror attacks short term. However, the best case scenario is quite positive, and could have broad implications for the economy: The Arab street, especially the youth, have become more enamored with Democracy than a political belief system that promises suicide bombings; We were moving towards a Post- Al-Quada era previously; this now cements it; Anything that contributes to increased long term stability in the Middle East should work to reduce high oil prices; Ultimately, this should be a global macro positive; the benefits of this will take time to accrue, but should be felt for years.-Barry Ritholtz, Fusion IQ



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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
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