L, it's basic Keynesian economics. Military spending increases to support a war and, just like any other increase in government spending, it is said to be stimulative.
But the issue now, IMO, is sabre rattling, which, to my knowledge, has never really sat very well with the markets or consumer and business sentiment (except for defense businesses). If Bush wants to calm investor jitters and give a boost to consumer and business confidence, he needs to stop rattling sabres and resolve the situation one way or another.
Now, some rattling may be necessary in order to get a peaceful and satisfactory resolution with Iraq, but the longer this goes on, the worse it is for the economy and the markets. And even in the Keynesian model, peaceful resolution is better than a military one if you believe that private spending is more stimulative than government spending.
JMO,
Bob |
