MarketBeat Blog - WSJ.com : Is the Surge Working? Ask the Bond Market.

MarketBeat Blog - WSJ.com : Is the Surge Working? Ask the Bond Market. I'm a fan of good news from Iraq - this isn't it.

I'm also a fan of looking at markets to see what they tell us people are thinking and believing. It looks from this data that the insiders - the "smart money" - are betting against the "surge" in Iraq leading to lasting stability.

Clearly if folks want to disagree, here is a way to make some money - buy these underpriced Iraqi bonds and rake in the dough. However, if the "surge" does not lead to long term stability, the holders of these bonds will own zero zilch nada.

Here's the difference in the two narratives. Narrowly and militarily, the "surge" seems to be working to bring a lower level of bloodshed to Baghdad and Iraq. Broadly and politically, the "surge" is not delivering on the political changes that will allow for long term peace and stability in Iraq. The lower bloodshed is a necessary but not sufficient precondition for peace. Looks like it's not enough, at least not yet.