Actually, it is now 5 nuclear blasts. The test site (in the Chagai Hills) is not 30 miles from India, but 30 miles from Iran. I'd say there's probably a strong possibility that Iran aided Pakistan's nuclear program. (Iran has its own nuclear weapons program, and has bought technology like reactors from Russia. Also, intelligence sources believe that Iran covertly acquired at least 4 nuclear weapons that were stored in the former Soviet republic of Kazakhstan.)
Also, both Pakistan and India have ballistic missiles that can easily hit each other's cities (India's ballistic missiles could hit Beijing, China). The government of Pakistan just issued a statement that read in part, "the long-range Ghauri missile is already being capped with the nuclear warheads to give a befitting reply to any misadventure by the enemy."
So, how does this effect American stocks? When the sanctions against India and Pakistan really kick in, U.S. companies are going to lose a lot of business. I have heard from Indians that there already restrictions on sending money from the U.S. to India. India in particular has close ties to American high tech companies, and the trade goes in both directions. As a developing country, India has been buying a lot of equipment, but they have also been doing things like developing software for U.S. companies like Microsoft and Lotus. U.S. company earnings are going to take another hit similar to the one taken from the Asian market meltdowns, and this will eventually be reflected in U.S. stock prices, which are artificially high based on people thinking companies will be profitable.
Paul M. |
