JEREMY HOBSON: Within minutes of the news of Osama Bin Laden’s death, jubilant Americans gathered outside the White House and at the World Trade Center in N.Y. Or they registered their excitement on Facebook and Twitter. But there has also been strong reaction in global markets.
And that’s what we’re going to talk about now with our correspondent Stephen Beard in London. He joins us live. Good morning Stephen.
STEPHEN BEARD: Hello Jeremy.
HOBSON: First of all, tell us about some of the global market reaction that we’re seeing at this point.
BEARD: The dollar is up, gold is down, so is oil and stock markets are generally higher.
HOBSON: And why are people reacting with money to this? Obviously everybody has an emotional reaction to something like this but why a financial reaction?
BEARD: Well the rational is the world just became a safer, more secure place and so investors are putting their money out of safe havens — like gold — and putting it into what are seen as assets that are a bit riskier like shares. And the hope is bin Laden’s death will lead to less tension in the Middle East, so that’s reduced the price of oil. And has also created a general feeling that this will help boost consumer confidence a bit in the United States. And that has helped lift the dollar.
HOBSON: So consumer confidence up, the dollar up, and obviously when one thing is up, something else is usual down, Stephen. Is there any negative side to all of this jubilation at this point?
BEARD: Yes indeed. Analysts have been looking at the cloud around the silver lining. Robert Cole of the financial website BreakingViews says that ironically, this good news could have an adverse affect on the U.S. government’s ability to pay its way because if the world is a safer place, that could make U.S. government bonds less attractive.
ROBERT COLE: This has been the ultimate safe haven. If people are getting more adventurous, perhaps money will come out of treasuries, which means that actually it could cost the U.S. government more in interest going forward.
HOBSON: Stephen, I know that big events like this can have a big impact on a lot of things that we don’t think about right away. But is it really conceivable that the dealt of bin Laden could have all of these financial consequences?
BEARD: Well, I mean, analysts have been pointing out there are much bigger issues around that will affect the market much more. Like, the size and scale of government debt both in the U.S. and here in Europe. And also what happens with the Arab spring. Whether this is going to disrupt oil supplies. There’s also a pretty big assumption here that the world has just got a safer place. Al-Qaida has not gone away and the State Department has been at pains to warn of the possibility of reprisals following the killing of bin Laden.
HOBSON: Marketplace’s Stephen Beard joining us live from London with the business side of the bin Laden story — thank you Stephen.
BEARD: OK Jeremy.
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