More Thailand

Apparently, Thai armed forces have leveled the protester camp and a curfew has been put in place with violence escalating in the aftermath. The BBC has this.

Here are also some close-range pictures of what by now looks like civil war in Bangkok

Surprisingly, Thai equity markets have actually held up (in USD terms):


The possible good news that may come of this is that Red Shirt leaders have asked protesters to "go home." While I do think that their concerns need to be heard and while I support their right to force government to listen to them if the democratic process fails them, I do want the violence to stop. The downside is that there are multiple equilibria into which the situation could diverge:
a) protesters lay down arms and government and protesters come to the table.
b) protesters lay down arm, "go home" and are marginalized. Problems fester and re-erupt in a few months'/years' time.
c) without a leadership protesters split into violent factions and violence increases.

Here's a theory of why financial markets' interests can be anathema to peace. Short-term traders are interested in volatility. If Thai equity markets crap out--especially if it is on risk aversion while the fundamentals of the Thai economy remain intact--that provides a good buying opportunity, only to sell stocks when political tension has settled. You can see from the above graph that at least there is potential for Thai equities to reach 55 USD (this is the ETF that seeks to replicate the MSCI Thailand Index). The recent dip as a result of violence was a welcome buying opportunity. I would not be surprised if some traders were to hope for outcome b) above so they can sell and buy another dip in markets.