Irrational markets ignore global trouble spots

THE increase in geopolitical stress relating to Russia, Iran, Iraq and Israel and Gaza has hardly jolted markets.

Besides the obscenity of war, notably the deaths and maiming of children, women and civilian men and general destruction, these events cannot be regarded as neutral events for the global economy and markets.

"The tendency of the markets to ignore geopolitical risk is just bizarre," commented Martin Taylor, former chief executive of Barclays Bank and external member of the Bank of England's Financial Policy Committee.

To be sure, the business uncertainty surrounding these problems could deter job-creating direct investment in factories, plant and equipment, economists caution.

Moreover, developed and several Asian and emerging markets are far from cheap. The overall US stock market, which leads global stock markets, has a current PE of 20; ie, the market is saying that it will take 20 years on current average US earnings to reach present stock …