Whispers of
impending war in Iran,
tail-spinning stocks and fears of continually increasing US interest rates mean
that these are indeed nervous times.

Higher than expected US inflation figures caused a big sell-off of US
shares on Wednesday, which rippled through to the Australian market
yesterday, causing the biggest fall on the Australian equities market
in seven months. The All Ords index closed at 5076.2, down 95.9 and the
S&P/ASX 200 fell 98.2 points to 5119.3. The S&P/ASX 200 has
fallen 4.5% since its record high of 5364.5 points on Wednesday last
week.

If those figures
don’t mean anything to you, as today’s Age points out, that’s a fall of $50 billion in the past five days on the Australian
market and, on the world’s eight largest sharemarkets, a fall of $1.5 trillion.
Big numbers.

Wall Street failed
to rally last night; after early gains the Dow Jones collapsed in the final hour
before close, losing 77 points to close at 11,128 after a fall of 214 points on
Wednesday.

Plenty of people,
including the editorial in today’s AFR, Treasury’s Dr.
Henry and the latest instalment of The Raff
Report,
are saying these latest market losses are no reason for gloom, rather the market
correcting itself after an extended period of unsustainable gains. Henry is
inclined to agree, but we might see more falls to
come.

The will he/won’t
he debate rages on; Uncle Rupert weighed in, saying that maybe now was a good
time to go out. Cossie looked like he was ready to give Murdoch a knighthood
for his utterance. Michelle Grattan said Cossie had the “look of the cat that’s
seen the cream move closer to the saucer.”

The important
question is what type of PM will Costello make? After spending many years on
the wet end of the Liberal spectrum, according to Dennis Shanahan in today’s
Oz,
it looks as though he is learning the lessons of conservatism from
JWH.

Read more at
Henry Thornton.