Will Occupy Wall Street Destroy the Financial Markets?
I have to admit that I've largely ignored the Occupy Wall Street protest movement. I'm a native New Yorker so you'd think that I would know more about it, but it's been a while since I've lived in the city and there isn't a protest of this kind anywhere near where I now live.
However, this past week, I could ignore it no longer. The global protest movement held last Saturday, in solidarity with the ideals of the Occupy Wall Street movement shows the kind of pent up anger that is permeating the world today. How will this affect your investments? Should you be worried? Here's what you need to know:
What is Occupy Wall Street?
In case you've been living in a cave, or like me, just never paid much attention to the movement, Occupy Wall Street is a movement, inspired in part by the Arab Spring, which says that the banking system in the United States and indeed all over the world is corrupt. This is borne out they say by the fact that so many banks have received massive bailouts to keep them afloat while ordinary homeowners and wage earners have lost homes, jobs and livelihoods in part while helping to pay for these "?fat cats."
What Does Occupy Wall Street Stand for?
I haven't been able to get a clear handle on what the Occupy Wall Street movement is about, other than extreme anger, which I admit is partially justified. At its most extreme, the movement has called for taxing the wealthiest 1% of the world's population in order to help the other 99% get lifted out of depression and poverty. To me, it sounds like the exact opposite of the American Tea Party movement, which seems to have championed the idea of no new taxes, no matter how much the economy is hurting and the deficit is ballooning.
Extremes Aren't Good for Anyone
The thing is, as we all know – extremes of any kind don't help anyone to do anything. Obviously the 1%/99% movement is just as silly as the 9/9/9 tax plan being championed by Herman Cain in the United States. Neither is going to solve problems and both would make things worse if they were ever implemented – both for the United States and for the world at large.
But Will They Affect Anything?
Now here is the million dollar question (no pun intended). Will the global protests this past weekend have any real affect on the Forex market and on world investments? I'm going to go out on a limb and say "?yes, but"¦"
The "?But"¦" (Forex)
I say "?yes, but"¦" because I mean that there will (hopefully) be some changes made. If Europe begins to realize that the Euro isn't infallible and that financial regulations need to be imposed to ensure that banks and governments don't destroy the currency, then that would be a good thing.
I think that the global protest movement will have an effect on European leaders to moderate their austerity plans, though I also believe that they will impose new regulations. This in turn should help to lift the European currency in the long term since a productive Europe will mean a strong Euro. Similarly, I believe that the American dollar may be strengthened by the Occupy Wall Street movement because ultimately it may spur much needed investment in new jobs.
However, I don't believe the movement will have any mass effects on the Forex market since governments are likely to implement much more moderate changes than the protestors are demanding.
As for Stocks
I do expect the stock market to take a beating in the short term because of the Occupy Wall Street and global protest movements. There is a lot of anger at major corporations and banks and this will scare investors in the short term. However, I also believe that this could be a great time to invest in some bargain blue chip companies who are likely to ride out the storm and emerge stronger at the other end.
No One Gets Everything
The key thing to realize here is that while these protest movements are inspired by the Arab Spring, they're not trying to accomplish the same things that the Arab Spring was trying to accomplish. Except for a handful of radicals, these movements simply want things to work again and aren't interested in imposing draconian changes on their governments. This means that the Occupy Wall Street movement can have a moderating effect on government, to the point where it will try to mollify the protesters by offering some things, but by no means everything. And ultimately, that kind of give and take is what will lift the world economy out of the doldrums it currently finds itself in.