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Osama Bin Laden Killed

The Economic Impact Of Bin Laden's Death

Here are three economic perspectives on the life and death of Osama bin Laden.

1. At the Washington Post, Ezra Klein asks::

Has any single human being, either directly or indirectly, cost the United States more money than Osama bin Laden?

Even a very partial, very haphazard, tallying of the costs from 9/11 reaches swiftly into the trillions of dollars.

2. At FT Alphaville, PIMCO CEO Mohamed El-Erian writes that bin Laden's death means a long-term reduction in global economic risk — but an increase in short-term risk due to the threat of reprisals.

In net terms, the markets are likely to treat this mix — of a durable reduction in security threats and some possibility of isolated disturbances — as involving a net overall reduction in risk premia. This would bolster equity prices worldwide while placing some pressure on those government bond markets that traditionally benefit from flight to quality.

Oil markets face a more uncertain outlook as, here, the impact of reduced risk aversion interacts most directly with the possibility of some increase in supply concerns.

Importantly, the significance of President Obama's announcement could go well beyond this by serving as a catalyst for a renewed sense of unity and purpose in the US. Were this to materialize, it would help re-establish some of the key ingredients needed for policymakers to make real progress on a number of critical economic and financial fronts.

3. Via Business Insider, Citi analyst Andrew Cox suggests the impact on the U.S. economy is likely to be small.

It is unclear whether Bin Laden's death will alter US foreign policy in the region or accelerate the withdrawal of US forces from Afghanistan. The impact of the news on the trajectory of fiscal imbalances and macroeconomic policy will likely be modest.

So far, investors don't seem to think bin Laden's death will have much of an impact on the global economy. There were no big moves this morning in the price of stocks, or oil, or any other major asset classes.

Of course, the relationship between daily news and daily market moves is often unclear. But with news this big it seems worth considering.