"Iran, because of the great leadership of the Shah, is an island of stability in one of the more troubled areas of the world. This is a great tribute to you, your Majesty, and to your leadership, and to the respect and the admiration and love which your people give to you."-President Jimmy Carter
On New Year's Eve 1977, President Jimmy Carter went to Iran to lavish the Shah. In hindsight the comments would seem comical except they were so far off the mark as to be embarrassing, resulting in a deadly lesson. Not only did the people of Iran not love the Shah, whose rule began with a coup aided by America, they loved spiritual leader Ayatollah Khomeini, and had come to despise western ways. By September of 1978 things were so awful the Shah announced implementation of martial law. It was on September 8th that evening the street swelled with thousands of protestors—then it happened.
Black Friday
Shots began to rain over protestors in Jalen Square. To this day an official body count is unknown, but guesses range anywhere from 86 to several hundred protestors killed. This was essentially the beginning of the end. Since then there have been many other squares that sparked new purpose and determination in Middle East protest, and each inflection point came with shots being fired and protestors slaughtered in the street. In January 1979 the Shah took a permanent vacation from Iran, which succumbed to an Islamic revolution that continues to this day.
This has to be on the mind of Tayyip Erdogen as he crafts his next move against protestors in Taksim Square and Gezi Park. Turkey isn't 1979 Iran and this isn't a religious battle as much as an ideological battle with leftists, the main agitators holding out against tear gas and riot police. Violence has been held at a minimum, particularly after initial efforts to break up protest that seemed heavy handed by even impartial observers. Americans are as ignorant of Turkey today as Jimmy Carter was of Iran back in 1977. Of course the Commander in Chief should have been better schooled.
I don't think scenes from Turkey roiled our markets yesterday, but the stakes are high. This is not just a model of capitalism resurrecting a nation but it's also an Islamic democracy that could be an example to other broken nations in the region. When Tunisia erupted Khadafy chided that nation's leaders for their inability to quell a small protest. In one year Mubarak went from absolute ruler of Egypt to a feeble, bedridden derelict on trial while lying in a makeshift jail cell. The script has been the same, and in the end they've all ended with regime change.
This ideology has crushed many economies in Europe but wages on anyway.
The biggest casualty could be one of the most successful economies in the world over the past decade.
The Market
For most of the year the stock market has skipped along like a carefree child at play on a sunny day. Now dark clouds are gathering above and that idyllic backdrop of flowers, confidence, and strong corporate earnings have yielded to an ominous backdrop of tumbleweeds, anxiety and so-so corporate earnings. Market commentators are doing their best play-by-play with spooky narratives of all this volatility but the fact is 100-200 point swings in the Dow from this level are just a tempest in a teapot.
I'm not afraid and, in fact, welcome more meaningful pullbacks because I'm excited about the sun coming back out allowing carefree frolicking once more.
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