Batuhan: Who knows?-A A +A
Friday, August 8, 2014
THIS week, it seemed that whatever could go wrong with the world, has gone wrong.
Perhaps reflective of how dire events have turned out, the Dow Jones Industrial Average dropped 75.07 points (0.46 percent) at 16,368.27. The broad-based S&P 500 fell 10.67 (0.56 percent) to 1,909.57, while the tech-rich Nasdaq Composite Index lost 20.08 (0.46 percent) at 4,334.97.
Directly blamed for the downturn, apparently, has been the worsening conflict in Iraq. The ISIS jihadists from Syria have overrun large swathes of land, and are threatening to establish control over much of the country. In response, the US is sending in its warplanes, and planning air strikes against militant positions, in an attempt to help the beleaguered Iraqi army defend its territory.
But that’s not all that is wrong with the world these days.
Elsewhere, the fragile ceasefire that was declared between Israel and the Hamas fighters has ended, meaning the carnage could now resume with even greater intensity.
Thousands on the Palestinian side have perished – innocent men, women and children who have become collateral damage in what is increasingly becoming a senseless war.
In Israel too, there is suffering, as dozens of people are hurt and maimed by rocket fire launched randomly on Israeli territory, from belligerent Hamas positions.
Russia too, is becoming a hotbed again. Erstwhile friendly neighbors, the Ukrainians and the Russians are now trading artillery fire over parts of Ukrainian territory where there are concentrations of ethnic Russian settlers. Longing to belong once more to mother Russia, they are agitating to break free from Ukraine, and establish their own “Russian” homelands. So indiscriminate has the fighting become, and so senseless the destruction, that the Russian fighters are accused to have shot down a Malaysian Airlines plane, whose only fault was flying over disputed airspace, on its way from Schipol Airport in Amsterdam. Innocent lives, lost amid a conflict that few really understand.
And then, the stuff of science fiction is also starting to make headlines in recent days. The deadly Ebola virus has gripped parts of the African continent in fear, as hundreds across three West African countries have been killed by the virulent disease.
Even health workers, with all their protective gear, have not been spared. Still without a known cure, all the world can do is watch in fear, and pray that it does not come close to anyone’s own shores.
All these mean, of course, that Wall Street is in a tailspin once more.
News of jobless rates in America falling notwithstanding, all the major indices have trended down in recent days, “discounting” all the bad news that is happening, and reflecting it on the equity prices of company shares. But should these events even figure in the fortunes of these companies, in the medium-to-long term, that their value should be affected?
Who’s to say that ISIS would do enough damage to Iraqi oil fields, that the world’s trade in oil will be significantly disrupted? Who’s to say that the flow of African commodities will be halted by the fear of Ebola? And who’s certain that oil and natural gas supplies from Russia may be severely threatened by its conflict with Ukraine.
No one, really. Not even the UN, who are supposedly best-placed to figure all these out.
So how do we know that Wall Street traders are making the right call? That they are the people most qualified to determine future outcomes of present events, so that they can discount them into company’s economic values?
We don’t. No one does. But that is how vulnerable the world has become, to the sentiments of people who have spent all their working lives on isolated trading floors. The world’s economy is at the whim of a few, who not unlike those occupying betting terminals at a Manny Pacquiao fight, have really no idea what the future outcomes of the current events they are witnessing, are really going to be.
Published in the Sun.Star Cebu newspaper on August 09, 2014.