The US equity market held up pretty well last night but looks to me to be are underestimating risks all around.
Poor Japan seems headed toward mutliple meltdowns. Live coverage is available at the BBC. New Scientist reports that assuming meltdowns are occurring then it is only a question of whether containment of the radioactivity holds.
It seems to me quite possible that Tokyo is going to shut down and its denizens flee. Would you stay?
Across Asia, Saudi Arabia has invaded Bahrain, as predicted here yesterday. They have done so with a few UAE police along for the ride and under the sanction (fig leaf) of the Gulf Cooperation Council (GCC).
Robert Gates, US Defense Secretary, visited Bahrain just two days ago. Clearly, the plan to invade was in place by then and you’d have to be pretty naive to think that Gates wasn’t told, and that Obama didn’t give the thumbs up.
A generous interpretation is that Bahrain’s majority Shia population has been sold out so that the US is free to support Libya’s rebels, without having a second insurrection at its back, that it should, by extension, also be supporting, and can’t.
Of course, that may not be happening. It may just be that foreign policy realists are now completely in control in Washington and all dictators in the region will be left to turn back the Arab Spring. But, it’s certainly possible that even as the risks of conflict in Bahrain are falling, the risks in Libya are rising.
European anxiety has eased and again been pushed back without resolution. That, at least, seems to have taken pressure off the euro and the $US is sinking again, which is one major reason for market strength.
However, risk is everywhere.
