Tuesday, February 22, 2011

Egypt, Tunisia, Libya, Iran. Impact on Investments?


The headlines are full of unrest and toppled governments in the Middle East. I wish that these countries will all become democratic and that their often brutal leadership is being served the bill for the atrocities they committed over the years. But stock markets prefer the status quo, they don't like uncertainty. As soon as something changes, for the better or the good, the markets get a bout of hysteria. Especially following the incredible run up since last September, it is time for a correction and the Middle East events provide a good excuse.

But overall the economy is doing fine. Not great; just fine! And why should we be so black when a large portion of the world population is finally throwing of its bonds and aspires democracy? After all, wasn't it Bill Clinton who pointed out that for a society to truly prosper its people had to be free? Not that us Westerners are truly free; there are laws and political parties to follow. Jean Chretien was referred to as the 'Friendly Dictator' by Jeffrey Simpson and Rex Murphy called him the 'Great Dictator of Canadian Liberalism'. So everything is relative. Yet, overall we live in a free society and we have the right to own property and we have something that generously is referred to as 'Law'. These form, according to many great thinkers, the basis for a truly 'prosperous nation'. Despite expressing a certain amount of sarcasm, this writer also believes that those are winning conditions for prosperity, along with good education and the absence of corruption.

So, we should celebrate and praise the demonstrations in the Middle East since they promise a better life ahead for these people. That would benefit us too, because with less social injustice in the world we will likely also have less terrorism, better business partners and additional prosperous markets to trade with. Over the long term, the rise of Middle Eastern democracies is positive and the current market 'hic-up' is just that (I certainly hope so) - a small correction in a much larger bull market.

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