Market Overview

How Would an Extraterrestrial Arrival Affect the Markets?

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As Russians gathered in Moscow recently to protest parliamentary elections, something strange was seen hovering above the crowd. Was it a bird? Was it a plane? No, it was a UFO. While at first "European and American media jumped on the story", a Russian journalist recognized the mysterious "UFO" as being a camera-drone used by a Russian news agency. Of course, one has to wonder why extraterrestrials would take such an interest in Russian politics, but the recent story demonstrates the worldwide interest in extraterrestrials.

Where the idea of aliens arriving or revealing themselves was once thought as pure fantasy, recent news reports highlight the continuing fascination with finding intelligent life in the universe. Astronomers recently announced that they had found the existence of an Earth-like planet, Kepler 22-b, located 600 light-years away from our planet in the habitable zone in its solar system. According to the BBC, Kepler 22-b "is the closest confirmed planet yet to one like ours -- an 'Earth 2.0'."

As mankind is currently a bit limited in its space-travel capabilities, some scientists hope that the discovery of intelligent extraterrestrials will come about via radio signals. Seth Shostak, senior astronomer at the SETI (Search for Extraterrestrial Intelligence) Institute, has said that "we are going to find alien life within the next 20 years". Shostak: "I think that we will eventually find [intelligent extraterrestrial life]... I do believe that the intelligent variety [of alien life] is out there, and it's only a matter of time before we find proof of that."

In light of the hope of discovering extraterrestrials in our lifetime, I thought it would be interesting to consider what effects the arrival or discovery of extraterrestrials would have on the financial markets and the economy. While Nobel Prize-winning economist Paul Krugman recently commented that a fake alien invasion would boost the economy, one has to wonder how the public would realistically respond to the prospect of an imminent extraterrestrial arrival and/or invasion. Would an alien invasion bring about economic recovery or mass panic with a breakdown of law & order?

Whereas the discovery of radio signals from another planet might more or less be met with skepticism or apathy, an apparent arrival of extraterrestrials would be difficult to ignore. There are as many possible market outcomes to an extraterrestrial arrival as there are possible scenarios. For the sake of this article, I would like to discuss three alien arrival scenarios: (1) where intelligent extraterrestrials invade the planet in a hostile manner seeking to wipe out humanity, the "War of the Worlds/Independence Day option", (2) where a higher intelligence arrives to quell human conflicts and makes their presence known without directly interfering with humanity, but for the most part simply remains in the sky (the "Childhood's End option"), and (3) where a semi-benevolent, conversational, and highly developed humanoid race of beings arrives to quell current global conflicts and works to impose their ways, beliefs, & customs upon humanity, (the "Apocalypto/Lord of the Flies option").

1.  The War of the Worlds/ Independence Day Option

There is a good chance that if extraterrestrials developed the ability to travel through space across the galaxy, they would hopefully be more enlightened than to be using violent means to achieve their ends. Far from coming down in futuristic tanks and robots, there would be much more cost-efficient ways of wiping out humanity without destroying all life and all structures on the planet, i.e. by way of a virus or by terraforming the planet. Nevertheless, given the fears of science fiction fans and even Stephen Hawking, perhaps extraterrestrials would arrive as violent invaders.

Imagine that you woke up one morning and after you turned on your computer, you went to the Drudge Report where the main headline was all in red: "ALIEN INVASION!!!!!" You would see in the top left corner of the page minor headlines in red that say things like, "We're not alone" or "Paris destroyed in 1/2 hour" or "'They look like 10' tall lizards'" or "Nukes dropped in Europe, Asia, Africa". Most likely, in such a situation the markets would drop significantly -- were they to even have the ability to open.

Far from economic considerations, the main goal for humanity in such a scenario would be the survival of the human species. Were aliens to arrive with guns blazing, most likely the markets would simply collapse or cease to function. Were the extraterrestrials wise, they would first find some way of shutting down all electronic and telecommunication systems across the globe prior to their invasion. One looking to trade on the stock market would want to short everything in sight, but at that point it would be too late. Computers wouldn't work, telephones wouldn't work, the markets wouldn't work. Game over.

Of course, maybe all those gold and silver coins you kept would pay off in the meantime as society collapsed. Were a higher intelligent race of extraterrestrials capable of near light-speed travel to arrive seeking to wipe out humanity, there's a good chance that the human race would not be able to put up a decent fight. The day a hostile race of extraterrestrials arrives to conquer planet Earth and wipe out humanity would most likely be a very bad day for the markets. Were that day to occur, the Dow Jones Industrial Average might not even get a chance to drop to zero. Far from bringing about an economic recovery in the spirit of Paul Krugman's suggestion, there is a good chance that actual news of a hostile, violent alien invasion would cause mass panic & a breakdown of law & order throughout society -- thereby effectively shutting down commerce and the markets.

2.  The Childhood's End Option

In the novel "Childhood's End" by Arthur C. Clarke, an advanced race of peaceful extraterrestrials known as the Overlords arrived on planet Earth seeking to lead humanity into a golden age of peace, prosperity, and growth. Even so, upon arrival the Overlords never appeared before humans, but remained in their space ships hovering in the sky.

Whereas the plot of "Childhood's End" is a bit one-of-a-kind, the novel itself is our best reference of how the markets would respond. To say the least, I think an extraterrestrial arrival in the form of the Childhood's End option would be a great time to buy. In the story, after the Overlords arrived, humanity entered an age of peace & prosperity in terms of spiritual growth, but innovation and creativity waned.

That being the case, where at first the markets would be spooked as individuals looked outside to see massive extraterrestrial ships hovering in the sky, uncertainty would decline as humanity came to terms with the peaceful and apparently benevolent nature of the alien visitors. The markets (were they to remain open in such a scenario) would most likely drop at first out of fear as the extraterrestrials first arrived, but with the prospects of peace and prosperity for humanity, there would be a strong and substantial rebound.

Even so, the rebound would not last forever. As boredom and a lack of innovation & creativity set in, the market would probably become stagnant or may even decline. Thus, were I a trader in a "Childhood's End" scenario who anticipated that the extraterrestrials would end up being peaceful & benevolent, I would want to buy after the market drops significantly at the time of the extraterrestrials' arrival. The market would then probably rebound significantly for some time as the future looked bright, and as boredom & a lack of creativity began to set in, that would be the time to sell and take profits. Of course, in the case of "Childhood's End", monetary rewards from prudent trading would be short-lived. Why? You'll have to read the novel to find out.

3.  The Apocalypto/Lord of the Flies Option

While humanity can get so bogged down in its own conflicts, the arrival of extraterrestrials would seemingly put those temporal conflicts into a cosmic perspective, i.e. human conflicts & problems are quite miniscule from a cosmic perspective of the universe. As such, were a semi-benevolent, conversational, and highly developed humanoid race of beings to arrive to end current global conflicts and to impose their ways, beliefs, & customs upon humanity, there is a fair chance that the markets would respond positively as soon as it was clear that commerce would continue and the extraterrestrials were not a threat to humanity. Many humans would welcome this benevolent extraterrestrial imperialism in light of the human-dominated alternative. Entrepreneurs may see the alien visitors as being a possible source of revenue and/or resources. Perhaps technology would increase; perhaps optimism would consume the markets providing fertile ground for business leaders. Humanity may even experience a shift in consciousness thereby restoring a sense of balance to the markets.

While the establishment of law & order helps to make an economy function properly, the arrival of a higher intelligence may cause individuals to behave more ethically and efficiently. On the other hand, a collapse of organized religion could give way to a decline in common morality. Even further, a benevolent advanced alien civilization could work to back up a sense of long-term economic security that the global economy currently lacks -- so as to say, "Now that extraterrestrials have arrived, everything is going to work because they are smarter than us and are looking over us." That sense of guidance, security, and certainty could work to significantly boost the markets. Nevertheless, the specter of cosmic panic could set in as mankind becomes wary of the alien visitors. Panic could then turn to desperation and/or mass hysteria as humanity suffers a sort of trauma in coming to terms with its lack of intelligent uniqueness in the universe.

Either way, were extraterrestrials to arrive and impose their ways, beliefs, & customs upon humanity, there is a good chance that the stock market would cease to function as it does today. Commerce could possibly dry up owing to public trauma and mass hysteria from individuals' realizing that we are not alone in the universe. Some people might even stop going to work out of a sense of temporal earthly meaninglessness. Various sectors of the economy would fail while others would soar; a new perspective on the universe might change the way humans buy and sell products and services.

In this light, whether or not the market would boom or bust in the event of the Apocalypto/Lord of the Flies option is probably a flip of the coin. Even so, one cannot help but be optimistic in that if benevolent extraterrestrials arrived, then maybe everything will work out after all. People might think to themselves, "Extraterrestrials are here...we are not alone...this is a new beginning...everything's going to work out now." A peaceful arrival of extraterrestrials would provide many with a revived sense of hope for not only the planet but also the spread of humanity throughout the universe...much like a teenager finally being able to get out of the house via car. Given the current state of the planet and cynical hopelessness regarding the course of humanity, at least in this time period, hope can be a valuable commodity.

At the end of the day, some sense of cosmic hope to the human race might be one of the most valuable things that a peaceful, benevolent extraterrestrial arrival would bring.

Posted-In: Paul KrugmanPolitics Psychology Topics Economics Media Best of Benzinga

 

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