Osama bin Laden and Your Investments

The news has come that Osama bin Laden was shot and killed by U.S. Navy seals.  The conspiracy theories are already going strong and I'm not talking about Obama's speech interrupting Donald Trump's Celebrity Apprentice (although that is amusing).  The U.S. government is claiming that it dumped bin Laden's body into the sea according to Islamic practice.  Since when has the U.S. government cared anything about Islamic culture or practices?  Ok, the U.S. government kills hundreds of thousands of people and wrecks the lives of millions more in Iraq and Afghanistan, but let's make sure we give a proper burial (which it wasn't) to the person who was on the FBI's most-wanted list.  I'm starting to think the government likes seeing all of these conspiracy theories.

But let's assume that the story is true.  Even if it's not true, let's assume bin Laden is dead and the story is accepted by most people.  What are the political ramifications, the economic ramifications, and the investment ramifications?  Unfortunately, while I wish this meant the end of the war on terror and the Patriot Act and all of the other horrible violations of our liberties we have had to endure, I think we will see more of the same.  This was just one man.  Give me over a trillion dollars and I could find one man on the planet too.  But there will be someone to take his place.  If that person is captured or killed, then someone else will take his place and on and on it goes.

Back to the conspiracy theories, there are certainly a lot of reasons that Obama and others would wish for a story like this.  The American people have been quite upset with their government and unfortunately many will give the government credit for this (again, who couldn't catch someone with a trillion dollars at their disposal?).  Obama's poll ratings have been low and there will be a certain segment of the population who, like idiots, will all of a sudden support Obama again.

But another theory is that this would give Obama an excuse to withdraw from Afghanistan.  During most times, governments and presidents like wars.  But the U.S. is in major fiscal trouble and will not be able to afford these big expensive wars much longer.  The Fed can't keep printing money like crazy or it will risk hyperinflation.  If the government is forced to cut, I'm sure they would rather reduce military spending than cut Social Security and make voters even more angry.

I do not predict an end to the wars any time real soon, but having bin Laden out of the way certainly makes it easier to get out, politically speaking.  For now, I would count on more of the same.  We can expect the deficits to continue until the Fed is forced to stop creating new money.  Until that happens, it seems unlikely that the wars will end.  This story should not change our investment strategy of favoring hard assets over paper money.