Political unrest in Libya and other North African and Middle-Eastern nations, as well as here at home in Ohio, Wisconsin and Indiana pushed markets into absolute turmoil today.
The DOW dropped 1.44% today, a change of -178.46 amid continued turmoil in Libya. Oil 93.75 a barrel, up 7.37 or 8.55%, one of the biggest one-day spikes in oil prices in years. Gold closed over $1400 an ounce and silver jumped to over $32.
Political unrest in Libya is having a far greater impact on markets and the world than any had previously predicted.
Muammar Gadhafi is likely to take drastic measures in the next 48 hours, some Epicurus Institute military analysts predict. Suggestions that he may use explosives to destroy oil wells; use poison gas on protesters, or generally attempt to create a chaotic environment in Libya in a feeble effort to remain in power are wide spread in the Intelligence community.
Gadhafi has recently said he will hold on to power or die a martyr, and it appears he may get his wish. Rising hatred of him is causing dissent even within this own political power structure.
This weekend, the Deputy Ambassador at the Libyan Mission to the United Nations declared that the mission no longer represents the government of Libya, but her people. The Ambassador couldn’t be reached for comment. Early today, Libya’s Interior Minister resigned to support protesters, claiming that change could be hours to a few days away.
Meanwhile, Italian companies, having long established relationships with companies in Libya plummeted on the Borsa Italiana. Other markets took a serious turn downwards fearful of higher oil and commodity prices, disruption of oil supply and continued, spreading political unrest. Will French companies, with ties in both Libya and Algeria (also experiencing turmoil) also face strong downward pressure? Probably.
Market volatility continues to soar amid speculation over the Libyan revolution. Currency markets are also showing signs of increased volatility, particularly the US dollar and British pound.
Western nationals and companies departed Libya, en masse today in an effort to reduce risk to key personnel. Bulgaria, for example, sent two planes full of people back home, as did other nations and companies. Oil fields are said to be at minimal production capacity, or shut down entirely.
What happens when Gadhafi goes? Further political turmoil. Libya has not been known for its stability. The US went to war with Libyan pirates in the early 19th century, our first international action as a new nation. It is a large country with a sparse population, many of whom remain nomadic, making it very difficult to manage. It is also ripe for possible action by Al-Qaeda terrorists looking for a new base closer to Europe.
Democratic government, as we know it in the United States is unlikely to manifest itself without continued bloodshed, and we are sure that a power vacuum will be formed, that will be filled by yet another dictator once Gadhafi is removed from office.