The Refuge Problem

There is one thing in history that always causes massive disruption to economic growth, civil war and refugees.

Now this appears to be playing out in N. Africa. In my view this is a serious situation. The shut-down of news from Libya has perhaps achieved the intended government objective of influencing world opinion on the severity of the situation.

Given little if any credible news reports from Libya, equity and bond markets assume things are not so bad within the country. Since over countries have stepped forward to fill in for lost pumping capacity in Libya, investors think everything will be ok.

The following report from yesterday concerns me a great deal:

Meichtry, Stacy, 2011. Refugee crisis builds at Tunisia border. the Wall Street Journal, Mar. 2.

About 75,000 refuges have crossed from Libya to Tunisia and 70,000 have moved from Libya to Egypt.

There is potential for movement of many more people. This is destabilizing to the region and might cause even more problems for governments in the Middle East.