Friday, July 18, 2008
Capital is a Coward
Always has been, always will be. No need to waste time talking about how to change this. It just simply is. When a country loses the political and physical stability provided by a government and finds those replaced by uncertainty, money hemorrhages out of that country.
- On Thursday, the clashes in Pakistan were not with militants near the Afghan border but in the financial districts of Pakistan's major cities as hundreds of angry investors visited their rage on stock markets that failed them.
- The recent sharp fall is being attributed to a range of factors. Most immediate was the decision of the Securities and Exchange Commission of Pakistan to remove a 1% daily limit on how far share prices could decline, bringing it back up to 5%. There was also a ban imposed on short selling. But political factors were also at play. "Short-term day traders, who were using borrowed money, were a major factor," says Yousif Nazar, an economic commentator and former head of emerging markets at Citigroup. "But investors were also unnerved by reports that the United States was planning to strike inside Pakistan and the sight of the new coalition government falling apart." Recent U.S. airstrikes into the tribal areas along the Afghan border, paired with a rise in troop levels in Afghanistan's eastern provinces have heightened fears that Washington may act unilaterally against militants in Pakistani territory.
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