Analysis: Predicting war's economic impact

[Tom Yossarian Joad]

By Hil Anderson
Published 1/5/2004 11:44 AM




SAN DIEGO, Jan. 5 (UPI) -- A confusing mix of market psychology, heated political rhetoric and calculations of the costs of war vs. continued containment of Saddam Hussein caused headaches for economists trying to quantify the risks the nation's economy faced during the uncertain days before the Iraq invasion.

The end of the major combat phase of the war has made it easier to get a handle on the dollar amounts involved in occupying and rebuilding Iraq, however economists meeting last weekend remained wary of using current economic models and the performance of financial markets as a means of determining the wisdom of the war before the fact.

"Do we want to take these kinds of numbers seriously as a guide for policy?" Charles Plosser, dean of the economics department at the University of Rochester, observed Sunday during a session on the war at the American Economics Association annual meeting. "It could be that the markets are just wrong."

The conclusion thus far has been that overall, the U.S. economy felt little impact from the war and suffered through only some short-term volatility in the equities and oil markets. However, trying to predict what might happen during the days of the U.S. military buildup and tense diplomatic efforts forced economists to largely rely on following breaking news events and the day-to-day movements in the financial markets.

more: http://www.upi.com/print.cfm?StoryID=20040104-064919-8965r

Consider the sources.

[ze_dscherman]

1. What utter BS

"The conclusion thus far has been that overall, the U.S. economy felt little impact from the war and suffered through only some short-term volatility in the equities and oil markets. "

The company I work for heavily relies on exports to the U.S. industry, expensive stuff. The first half of the year, world wide sales were horrendously low, but worst to the U.S. Much, much better now.

No one wants to invest or to buy in a climate of fear and uncertainty, as in a war. This war has badly added to the depressed state of the global economy.

[teryang]

2. They just make this stuff up as they go along

The largest cost of the Iraq war was the opportunities given up waiting for it to happen and now the opportunity costs of actually paying for it for the next few generations.