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Despite the devastating terrorist attacks from only five days earlier, life in Mumbai had largely returned to normal by Monday - sidewalk vendors had resumed their business, streets were “choked” with traffic, and the train platforms—the very same platforms that the terrorists arrived on—were congested with commuters, heading in and out of the station now filled with bullet holes. Despite this appearance of normality, not unlike the activity in New York a week after 9/11, the question remains, has the world changed as a result of these attacks? Unequivocally, in our opinion, just like after prior major terrorist attacks, that answer is yes.

In contrast to our view, the main stream consensus media has decided to react differently this time, the “other” times being the other major terrorist attacks post-9/11: Madrid in March 2004 (killed 191, injured 1755) and London in July 2005 (killed 52, injured 700). In numerous reports, the media has mentioned that the terrorists coordinated the attacks with Blackberries, as if for a minute to bring the violence into the living rooms of Blackberry owners and create the image of these attacks being close to home. More generally though, the gravity of these attacks has quickly been dismissed likely because the number of victims didn’t approach the 9/11 numbers, or because Mumbai is so far from US soil.

As Keith noted in The Early Look this morning: “The facts were there – this cross border attack from Pakistan to India was not a trivial one to consider. The financial network media simply chose not to highlight it.”

What we’re left with today is a number of facts and speculation on intelligence. What we know: The 62-hour siege of Mumbai was carried out by ten heavily armed and well-trained gunmen, suspected to have links to the Islamic terrorist group Lashkar-e-Taiba (LET), which is believed to have links to Pakistan’s military intelligence agency. The goal of these terrorists was to kill over 5,000 people, which would have rivaled the 9/11 attacks, the fact that they failed does not alter the seriousness of the action.

According to Goldman Sachs, the India terror attacks won’t hurt the economy. Goldman seems to be, just like the mainstream media, painting an overly optimistic view. We actually believe the implications are potentially significant for stability in the region and tensions between Pakistan and India. This was the fifth major terrorist attack on Indian soil since May. This attack, had it been executed properly, would have been on par with the largest terrorist attack in the last decade, and finally, this action only amplifies heightened tensions between Indian and Pakistan.

We remain short India via the IFN, iShares India etf.

Daryl Jones - Managing Director
Matthew Hedrick - Analyst