The US government, in a move that will do little to reassure investors, has declassified four videos of unidentified aerial phenomena. For the City, this is not a matter of little green men but of deep fiscal and security implications. The footage, released by the Pentagon, confirms what many have long suspected: that our American cousins have been spending taxpayer dollars on something other than deficit reduction.
The immediate question for markets is whether this revelation will trigger capital flight from dollar-denominated assets. Bond vigilantes, already nervous about US debt levels, may see this as further evidence of government waste. The yield on the 10-year Treasury note will be watched closely.
Central banks, already diversifying their reserves, may accelerate purchases of gold and other hard assets. British intelligence, to its credit, is assessing the security implications. But one wonders about the opportunity cost.
How many hospitals or schools could have been built for the price of this clandestine research? The Chancellor would do well to note that fiscal discipline is paramount, even in the face of cosmic curiosity. The bottom line remains: investors hate uncertainty, and unexplained objects in our airspace are about as uncertain as it gets.
