Is the Stock Market Forecasting War?

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Aug. 24, 2011, 12:01 a.m. EDT

By Todd Harrison

NEW YORK (MarketWatch) "� The future is now; we must now decipher what it will be.

The stock market is a forward-looking discounting mechanism and throughout our slow-motion summer crash, Minyanville has diligently discussed what the market is trying to tell us. See: Where do we go from here?

When I awoke yesterday, after checking the overseas price action and scrolling through the headline news "� but before my plain vanilla yoga "� I checked my inbox to find a handful of folks proclaiming, "There it is!"?

Stratfor, the well-respected global intelligence service, reported that an Israeli-Arab conflict is approaching.

No one really knows how much capital Bank of America needs, leading to a crisis of confidence about the bank's health, Deal Journal's Shira Ovide reports on Markets Hub. (Photo: AP Photo.)

Old School Minyans know that geopolitical conflict has been a concern of mine for the last few years as unintended consequences of the current policy directive and the enormity of the global financial condition manifest.

At the beginning of 2010, when we foresaw a tricky trifecta that included societal acrimony, social unrest and geopolitical strife, we offered the passage below. See: Ten Themes

In 2007, we previewed the deterioration of the middle class and the friction between the "have's"? and "have not's."? In 2008, we forecast percolating societal acrimony. Last year, we spoke of the migration toward social unrest and geopolitical conflict.

As this evolves, real risk remains across the spectrum of social strife. While this will assume many shapes and forms "� populous uprising, the rejection of wealth and an emerging class war "� we must remember that global conflicts have been historically triggered by financial hardship.

An Israeli strike on Iran remains a top-line concern, as are uprisings in South America (Venezuela), protectionist policies in China (isolationism is the death knell of globalization), and saber rattling in Russia.

Last week, as we "looked through"? the second side of the financial storm "� or, the sovereign sequel to the first phase of the financial crisis "� we further opined, as a matter of last resort,

"If we don't shift policies and alter our national direction "� or at least work together in a bipartisan manner toward a viable solution "� an unfortunate needle points to war (although it may not require bullets)."?

I don't claim to be a geopolitical expert "� I leave that for the smart folks at Stratfor "� but I've been fingering the pulse of world psychology for over 20 years. See: Handicapping the global economic recovery

When I see Germany squaring off against the euro zone (with words more than actions, for now), Russian Prime Minister Vladimir Putin calling the United States a "parasite"? and China blasting our leaders for their "debt addiction,"? you don't have to be an expert in foreign affairs to see the evolution; you just have to be awake.

This is not something one "wishes"? for; getting dinged in your P&L is one thing but strapping an M-16 to a kid and sending him to the other side of the world to fight is, well, different. I believe we're better than that "� as a society, as a country and as a world "� and I've never been accused of being a cockeyed optimist.

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