Bin Laden’s (Long Overdue) Day of Reckoning

Today’s news of Osama bin Laden being brought to justice was long overdue. It brought up bittersweet feelings of closure regarding that fateful day a decade ago.

For those unfamiliar, my office was headquartered on the 29th floor of 2 WTC. (I was in the Long Island office).  On 9/11, I managed to get my head trader on the phone, who gave me a running narrative of what he witnessed from the street. He and I published that on September 12th, 2001 (A Personal Recollection From a Day of Horror).

I have always wondered how much OBL had to do with the 2008-09 collapse. In a weird way, Greenspan’s overreaction on rates post 9/11 was a key element in the run up to the collapse. Indirectly, the 9/11 attacks were a factor in the 2008-09 crisis.

The Butterfly Effect is why great nations should not be over-extended militarily except for emergencies; Why they should not take on too much collective debt; why their peoples should not be over-leveraged. In short, intelligent nations should have a margin of safety that allows them to absorb unanticipated externalities and random events, tragedies and even attacks easily. We may not know where the next Black Swan is coming from, but we do know its coming.

I don’t want to rehash the prior arguments I have made; rather, I am compelled to point out the horrific cost of our incompetency; From those ultra-low rates to the wrongheaded response of the United States pulling troops away from Afghanistan to invade a country that had nothing to do with 9/11 served to postpone Osama bin Laden’s day of reckoning. That this fucker did not meet the Devil 10 years ago is yet another part of this tragedy.

Regardless, we must get back to business and ask: 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.


A Personal Recollection From a Day of Horror (September 12th, 2001)

Postscript (September 16th, 2001)

Feedback from around the World (September 19th, 2001)

9/11 Reflections (September 11th, 2010)

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