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Context of 'June 28, 2002: Conservative CEO Says Iraq Invasion Will ‘Shock’ US Stock Market Into Dramatic Increase'

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The National Review publishes an op-ed piece by Lawrence Kudlow, titled, “Taking back the market… by force,” in which he claims, “The shock therapy of decisive war will elevate the stock market by a couple thousand points.” Kudlow is the CEO of Kudlow & Co. [National Review, 6/26/2002]

Entity Tags: Research Unit for Political Economy, Lawrence Kudlow

Timeline Tags: Events Leading to Iraq Invasion

The Research Unit for Political Economy (RUPE) publishes a special issue in their journal, Aspects of India’s Economy, analyzing the true motives behind the United States’ plan to invade Iraq. The purpose for this special publication, according to RUPE, is that India (like Pakistan) has been placed within the US geostrategic agenda for the Asian region. This has been done, among other things, by declaring India to be an important military ally, and by working for a US-India political/military axis against China. RUPE argues that this will heighten the military tension in a region occupied by nuclear powers. Therefore it is necessary to understand the true motives behind the US geopolitical agenda, exemplified in the current move against Iraq, before uncritically exposing one’s country to such risks. The report concludes that protecting the security of the US dollar is a primary motive behind the US’s planned invasion of Iraq. [Research Unit for Political Economy, 11/2002]

Entity Tags: Research Unit for Political Economy

Timeline Tags: Events Leading to Iraq Invasion

In an op-ed piece published by the Wall Street Journal, Paul Bremer argues that if Iraqis are to enjoy higher living standards and political freedom, the country will need to adopt a market-based economic reform policy. He says that economic growth in Iraq will “require the wholesale reallocation of resources and people from state control to private enterprise, the promotion of foreign trade, and the mobilization of domestic and foreign capital.” [Wall Street Journal, 6/20/2003]

Entity Tags: L. Paul Bremer

Timeline Tags: Iraq under US Occupation

Joseph Stiglitz, Nobel laureate and former chief economist at the World Bank, warns in an op-ed piece that US plans to submit Iraq’s economy to shock therapy—i.e., the rapid implementation of market reforms such as privatization and deregulation—will fail in Iraq. He advises the international community to “direct its money to humanitarian causes, such as hospitals and schools, rather than backing American designs.” He writes: “When the Berlin Wall fell, the countries of Eastern Europe and the former Soviet Union began transitions to a market economy, with heated debates over how this should be accomplished. One choice was shock therapy… while the other was gradual market liberalization to allow for the rule of law to be established at the same time. Today, there is a broad consensus that shock therapy, at least at the level of microeconomic reforms, failed, and that countries (Hungary, Poland, and Slovenia) that took the gradualist approach to privatization and the reconstruction of institutional infrastructure managed their transitions far better than those that tried to leapfrog into a laissez-faire economy…. But the Bush administration, backed by a few handpicked Iraqis, is pushing Iraq towards an even more radical form of shock therapy than was pursued in the former Soviet world. Indeed, shock therapy’s advocates argue that its failures were due not to excessive speed—too much shock and not enough therapy—but to insufficient shock.” But it won’t work, he says, because instability will deter investment and those who do purchase state assets “may then be reluctant to invest in them; instead, as happened elsewhere, their efforts may be directed more at asset stripping than at wealth creation.” He adds that providing Iraq with loans will only exacerbate the country’s difficulties. He concludes: “America’s economic program for reconstructing Iraq is laying the foundations for poverty and chaos.” [ZNet, 3/17/2004]

Entity Tags: Joseph Stiglitz

Timeline Tags: Iraq under US Occupation

The Royal Bank of Scotland (RBS) predicts “a full-fledged crash in global stock and credit markets over the next three months as inflation paralyzes the major central banks.” RBS credit strategist Bob Janjuah says, “A very nasty period is soon to be upon us—be prepared.” Bolstering Janjuah’s dire predictions, the RBS bank research team warns that the Wall Street equities index, Standard & Poor’s (S&P) 500 index is likely to fall by more than 300 points to around 1050 by September as “all the chickens come home to roost” from what the Daily Telegraph describes as “the excesses of the global boom, with contagion spreading across Europe and emerging markets. Such a slide on world [markets] would amount to one of the worst bear markets over the last century.” Janjuah also warned of the credit crisis in 2007. RBS predicts that Wall Street would rally a little in early July before quickly fizzling out. “Globalization was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point,” Janjuah says. RBS debt market chief Kit Jukes says Europe will not be immune from the problems: “Economic weakness is spreading and the latest data on consumer demand and confidence are dire.” [Daily Telegraph, 6/19/2008]

Entity Tags: Bob Janjuah, Royal Bank of Scotland, Kit Jukes

Timeline Tags: Global Economic Crises

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