yom kippur 88.
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Today is not merely Friday the 13th (of October) but, on the Jewish calendar, Hoshana Rabba - the day of Armageddon. Not this year, apparently, but sometime.
Yet no Jew, however devout a believer, has ever sold his investment portfolio, or even adjusted the risk exposure thereof, prior to Hoshana Rabba, because the Day of Judgement is at hand. Investment is a probability-based business, and the likelihood that the end-of-days will come davka this year is always considered too slim to warrant rearranging one's financial affairs. Anyway, try explaining it to your broker.
This way of thinking has been highlighted this week, without reference to Hoshana Rabba, by the behavior of tens of millions of investors who may be facing a different sort of Armageddon. Most of these people live in the Far East, primarily Japan. Their week began with the news that North Korea had gone ahead and realized its threat to conduct a test explosion of a nuclear "device." In the following days, a debate ensued between the experts as to whether the test that the North Koreans had proudly announced - and even gave the Chinese 20 minutes advance warning of - was indeed a nuclear explosion, or merely a large conventional one. The consensus is that it was a "fizzle," ie a nuclear one that didn't function as planned and hence failed to register the kind of seismic impact that a real atomic weapon should have.
But whether or not they followed this debate, whether they were shocked or not, one thing is clear: the citizens of South Korea, Japan and elsewhere were not sufficiently scared about what was happening in their region's nuclear-armed nut house to take far-reaching steps regarding their own money. On Monday, most of the region's national currencies and stock exchanges did indeed register sharp falls; the Japanese, as usual, contrived to have a holiday that day, so their markets were shut. By the time they opened on Tuesday, the shock had faded and the mini-panic had subsided. For the rest of the week it was business as usual - to the point that a Reuters report on the Tokyo stock market action on Wednesday included the following:
"The market has shown an indifference to the whole issue and is actually becoming a little bored by it," said Stefan Worrall, a Japanese equity broker at Credit Suisse, about North Korean security concerns.
"The North Korean test doesn't really change the status quo in regards to where the earnings outlook is for Japanese companies," he said, adding that investors expect solid first-half earnings.
If Stefan Worrall were a Yiddishe mama, he would have put it plainly: "Atom bomb, shmatom bomb - so long as the earnings rise." Although this may seem an extraordinary response to a direct nuclear threat - and by the Japanese, of all people - it is perfectly justified so long as you maintain a narrow focus. Stock markets are about corporate earnings - earnings prospects are good, so there is no justification for stocks to fall.
Far be it for Israelis to be judgmental about the Japanese and Koreans, or to consider their behavior peculiar, short-sighted or Ostrich-like. We are surrounded by people and organizations plotting constantly to blow us up, while in Tehran another bunch of madmen are pouring their country's oil wealth into a nuclear program openly proclaimed to be dedicated to our annihilation. The Israeli government even took time off Wednesday from its pressing agenda - political survival - to consider how to address the Iranian threat. But none of this has prevented the shekel from marching higher or the Tel Aviv Stock Exchange from almost regaining its record highs of earlier this year. This stunning performance is justified by analysts at home and abroad on the basis of the excellent "economic fundamentals" that the country and many of its leading corporations can boast.
People - anywhere - don't want to think about terror, let alone nuclear war. Many of them understand that North Korea has unleashed a nuclear arms race in North-East Asia and that Iran is on the verge of doing the same in this region. They realize that the crazy states have to be taken out very soon, otherwise proliferation sooner or later will lead to the use of nuclear weapons. But they don't want to internalize that understanding because that would require them to admit to themselves that the world may not be a comfortable place where they can make money and enjoy it, as they have been led to believe, but rather an increasingly dangerous and threatening place for both their money and themselves.
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