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Six Years Later, the Political Effects Linger

9/11 ties directly to the coming presidential election, which has big market implications.
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This blog post originally appeared on RealMoney Silver on Sept. 11 at 7:45 a.m. EDT.

It is said that death leaves a heartache that no one can heal but that love leaves a memory no one can steal. And so it is today, Tuesday, Sept. 11, 2007, as we observe the sixth anniversary of the World Trade Center tragedy.

On this day, contributors understandably have been asked to limit our posts to investable subjects. And I want to respect that request, so today I will briefly focus on the broader political implications of the World Trade Center tragedy and the Iraq invasion, as well as other political turns of events leading to the 2008 presidential election.

This morning, General David Petraeus, the senior American adviser in Iraq, will update his views of the Iraq confrontation in his second day of testimony before the U.S. Congress. General Petraeus made his opening remarks yesterday, and here is a


of his view on the resolution of the Iraq conflict. Stated simply, General Petraeus, not surprisingly, has warned against the Democratic Party's recommendation of a quick troop withdrawal.

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The division between the Republican and Democratic parties is now crystal clear with regard to Iraq. And shortly, U.S. voters will voice their views in the 2008 presidential election. Possibly reflecting a dissatisfaction with the Iraq situation (which probably led to Sen. John McCain's quick drop from grace within his own party) when coupled with the growing risks of recession, the national head-to-head


suggest a clear and decisive Democratic win in 2008.

As I have mentioned previously, a Democratic win would provide a series of significant headwinds to the U.S. capital markets in the form of higher individual and corporate tax rates as well as the likely acceleration in trade protectionism measures.

In summary, with most eyes fixated on the subprime mess and housing's depression, another ominous market influence looms in the form of political change.

Meanwhile, my eyes remain full of tears in memory of all of those I knew and those I didn't know who were lost six years ago.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd.