Essay on Globalization: Continued
Terror and Capital Flows
America's Weak Points
America has many vulnerable areas that can be exploited by a determined enemy using terror and asymmetrical warfare.
The response to attacks will be constrained and molded by these weak points.
Excessive Debt and Leverage. Taxes and national economic policy discourage equity investment and favor debt.
The destruction of the World Trade Center, a tiny event compared to a full nuclear attack, shook over-extended airline companies.
U.S. air carriers have high levels of debt to finance equipment (encouraged by tax advantages) and are bound by high fixed costs of unionized workers.
The drop in air traffic after the terrorist attack resulted not only in lost jobs and declining revenues, but bankruptcies.
Excessive costs had already driven the quality of domestic airline service to the level of third world countries, when the government placed additional security burdens to be borne by passengers as extra fees.
The government is dependent on its ability to sell Treasury bonds to foreigners.
Since the First Gulf War, many airlines entered bankruptcy court: Continental, Pan Am, United, TWA, US Airways, Midway, KIWI, Eastern, WestPac, America West, and MarkAir.
The U.S. government is dependent on its ability to sell Treasury bonds to foreigners.
Multiple terrorist attacks that challenge the stability of the United States are likely to discourage foreign investors from holding U.S. government debt.
American political parties have been unwilling to streamline government and the cost of the war on terror, like all large wars, will lead to deficits and inflation.
Unlike the First and Second World Wars, the enemy is not a competitor in the international currency market; therefore even a U.S. victory is unlikely to strengthen the dollar.
Even a U.S. victory is unlikely to strengthen the dollar.
As America's foreign 'allies' withdraw support and cave in to terrorist threats, the U.S. is faced with a Hobson's choice: either go it alone and become weakened by the cost of prolonged war, or do nothing and suffer the destruction of cities and loss of life and international prestige.
Many U.S. corporations are vulnerable to hard times, not only because of the reduction in equity and reserves over the last generation, but also because of increasingly complex operations brought on by over-expansion and mergers, with hidden leverage in derivatives, off-balance-sheet financing, and unquantified contingent liabilities.
An Unprotected Network Society. American society is laid out in a complex network of roads, power lines, communication links, and widely dispersed cities.
An atomic bomb on any one or even a half-dozen locations will not bring down the nation.
In World War II, intensive bombing of industrial cities and the death of hundreds of thousands of civilians were not sufficient to defeat the Nazi regime.
Atomic bombs on Hiroshima and Nagasaki ended the war with Japan because the weapon was new and unexpected and the Japanese knew that America had industrial capabilities that could produce enough atomic bombs to wipe out their country, before they could develop countermeasures.
It is unlikely that terrorists will acquire enough bombs to completely destroy the American infrastructure.
In the war against Muslim terrorists, the enemies of the United States may use atomic weapons acquired from decaying security systems in Russia or from Muslim scientists working in Pakistan or Iran.
However, it is unlikely that terrorists will acquire enough bombs to completely destroy the American infrastructure.
There are vulnerabilities, however, that will effect the capital market and the economy.
The financial system depends on data stored in large central computers.
Terrorist agents hired as temporary workers could penetrate bank security and locate weak points in the defenses of any database.
Damage may be done by chemical bombs or by computer hacking, resulting in high recovery costs and lost business as investors lose confidence and withdraw accounts.
Outsourcing computer programming to countries with large Muslim populations make it possible for secret digital bombs to be planted in systems that control U.S. financial institutions.
The practice of outsourcing computer programming to countries with large Muslim populations makes it possible for secret back-doors and digital bombs to be planted in systems that control banks, clearing houses, credit card processors, mutual funds, and other institutions.
As of 2002, the Comptroller of the Currency (OCC Bulletin 2002-16) said that foreign outsourcing for such sensitive services was permissible, subject only to the board of directors and senior bank management 'ensuring that effective risk management practices are in place.'
Considering the record of bank management in assessing risk in cases like Long Term Capital Management and Enron, and that top management is rarely made up of computer experts, but rather lawyers and marketing people, we might wonder if the government has addressed the issue seriously.
The danger of back-door sabotage is even greater because much of the computer hardware used in the U.S. is not only manufactured abroad, but designed according to foreign engineering specifications.
The popularity of MBA degrees over engineering degrees for young Americans has national security implications.
Electric power is shared between distant locations through power lines that cross vast unguarded spaces.
Unguarded transmission towers may be mined with terrorists safely away, interrupting power supplies for days.
A skilled terrorist with plastic explosives could mine isolated, unguarded transmission towers at night and be safely away when the towers fall, interrupting power supplies for hours or days, costing millions in lost work and economic disruption.
The U.S. superhighway system seems indestructible; however, overpasses and roadways can be mined with explosives, blocking traffic for days.
An overheard, misunderstood conversation between Muslim medical students at a roadside diner in Georgia was enough to close down the major highway between the east and west coasts of Florida for four hours, as authorities over-reacted against a non-existent threat.
An Asymmetrical Legal System. For every terrorist that is captured, the American people will have to pay millions of dollars in legal expenses, court costs, and charges incurred under the most expensive and inefficient criminal justice system in the world.
Each successful attack will trigger lawsuits spurred by tort lawyers, leading to higher insurance rates and rising prices of goods and services.
For every captured terrorist, Americans will pay millions of dollars in legal costs under the world's most expensive criminal justice system.
Fear of invasion of privacy and distrust of government preclude defenses against a hidden enemy living among the population.
Stricter regimes might require national identity cards, coded to retinal scans and fingerprints, backed by identity checks at toll booths, bus stations, hotels, and stores throughout the country, linked to a central computer capable of detecting suspicious activity of foreign agents.
Such a system might be able to detect illegal aliens as well as domestic criminals.
However, until U.S. cities are destroyed by nuclear terrorists, this level of control will be unacceptable.
With insecure borders and lacking the means of finding and detecting terrorists once they get inside the country, America is at risk.
The legal system is biased in favor of criminals.
The ability of the FBI and the CIA to stop terrorists has been compromised by those who place greater value in protecting individual liberties than in protecting life and property.
Unprotected Borders: The U.S.-Canada border is one of the longest unguarded frontiers on earth, extended about 4,000 miles, with about one non-military border agent ever ten or fifteen miles, mostly concentrated around major crossing points.
Much of border is in wilderness areas in mountainous, heavily wooded, back country.
There are hundreds of miles of border in remote prairie farmlands and the Great Lakes.
In some places, there are road crossings without any guards.
A determined terrorist could come across the border undetected, bringing a large nuclear weapon.
Canada has lax immigration policies and regularly allows aliens to enter without identification papers.
There is no fence along the border.
A determined terrorist with reasonable skill could not only come across the border into the U.S. undetected, but could also bring a nuclear suitcase bomb, or, with a little more planning a large nuclear weapon.
The economic life of America is now dependent of imports, 95% of which arrive by ship.
Each year, goods arrive from foreign ports in over six million containers, almost all of which are not inspected.
Because of the 'asset-lite' philosophy taught in business schools and 'just-in-time' manufacturing, even the slight delay of random inspection would have an effect on the economic system.
Dependence on Foreign Goods: During World War II, the United States was self-sufficient in most of the necessities of life, as the world's leading industrial power, but nevertheless, rationing was required when imports were shut down.
Due to out-sourcing, the nation is dependent upon the rest of the world for much of its needs.
During the War on Terror, due to globalization, out-sourcing, and a long history of deindustrialization, the country is dependent on the rest of the world for much of its needs, from clothing to furniture to household appliances.
Furthermore, the ability to have these goods depends on foreigner's willingness to accept dollars in exchange.
By the millennium, the trade deficit was increasing at the rate of one billion dollars a month.
A Media-Driven, Career Conscious Bureaucracy: Perhaps the scariest word in the report of the 9/11 Commission is 'career-stopper', for in their exhaustive investigation of the attack on the Twin Towers, the Commission found that, time and again, government civil servants shied away from vital decisions for fear of repercussions on their chances for promotion.
Just as worrisome, is the Commission's evidence that fear of how their actions might be reported in the media influenced executive judgment.
Bureaucrats are more fearful for their careers and public criticism than for their country.
The long history of increasingly dishonest 'gotcha' politics, amplified by gavel-to-gavel television coverage, from Watergate to Iran-Contra to Whitewater, guided by the crassly commercial media's love of 'sound-bites' and programming almost entirely devoid of intellectual depth or content, has created in many defense, law enforcement, and intelligence organizations, legions of bureaucrats who are more fearful for their careers and of public criticism than they are for their country.
The power elites fighting the War on Terror is vastly different from the government that won World War II.
That 'Greatest Generation' produced leaders who came to Washington to serve their country honestly, sometimes for a dollar a year, and then go back to civilian life once the War was won.
Bureaucrats never make a commitment to risk their lives, fortunes, or sacred honor.
The bureaucrats that now fight the War on Terror were in Washington long before the war began, lured by cushy jobs, civil service benefits, and lifetime employment, and expect to be there long after the war is over, whoever wins.
They never made a commitment to risk their lives, their fortunes, or their sacred honor.
The heroes defending America were volunteers on the front lines of Iraq and Afghanistan, not comfortable office-holders protecting their backsides in the nation's capitol.
Because of this, courageous and necessary decisions to adequately shore up America's defenses will often not be taken.
There was a brief flurry of patriotism and flag waving following the attack of 9/11.
Although George W. Bush won spectacular victories in Afghanistan and Iraq, despite predictions that these wars would be 'quagmires', by the election of 2004, the flags had been furled.
At least half of the population had forgotten or disdained the victories, and millions had been brain-washed by Michael Moore and other propagandists of the extreme left to believe that President Bush, not Osama bin Laden, was the enemy, backing Democratic presidential candidates that called for a return to policies similar to those of 'Jimmy' Carter.
What Drives The Terrorists?
The terrorists at war with the United States come from a small, fanatical element of Muslims living in many countries.
There are hundreds of millions of Muslims in Asia that are among the finest, nicest people on earth.
If only one-tenth of one percent of Muslims are fanatical terrorists, the U.S. will face a hidden army of one million people.
However, since twenty percent of the world is Muslim, if only one-tenth of one percent are fanatical terrorists, this would be a hidden army of one million people willing to die in a Jihad against the United States – the Great Satan.
Over forty countries have large Muslim populations.
- In Russia, after the fall of the Soviets, nineteen percent of the population is Muslim.
- India, usually thought of as a Hindu society, has one hundred million Muslims.
- In the United States there are five million Muslims, forty percent of whom are African-Americans.
The al-Qaeda Manual
One way to understand the motivation that drives the enemies of America is to study the opening paragraphs from an al-Qaeda Manual found in a terrorist’s apartment in Manchester, England.
This book was translated and introduced at the New York trial of terrorists who bombed a United States embassy.
The terrorists motivate adherents with the following arguments:
'Martyrs were killed, women were widowed, children were orphaned, men were handcuffed, chaste women's heads were shaved, harlots' heads were crowned, atrocities were inflicted on the innocent, gifts were given to the wicked, virgins were raped on the alter of prostitution ...
After the fall of our orthodox caliphates on March 3 , 1924 and after expelling the colonialists, our Islamic nation was afflicted with apostate rulers who took over in the Moslem nation.
These rulers turned out to be more infidel and criminal than the colonialists themselves. Moslems have endured all kinds of harm, oppression, and torture at their hands.
Those apostate rulers threw thousands of the Haraka Al-Islamyia (an Islamic Movement) youth in gloomy jails and detention centers that were equipped with the most modern torture devices, manned by experts in oppression and pain.
Those youths had refused to move in the rulers' orbit or to hide the truth from other youths, or to oppose the idea of rebelling against the rulers.
But the rulers did not stop there; they started to fragment the essence of the Islamic nation by trying to eradicate its Moslem identity.
Thus, they started spreading godless and atheistic views among the youth.
Apostate rulers openly erected Masonic Lodges, Lions and Rotary clubs, and foreign schools.
We found some that claimed that socialism had sprung from Islam, that democracy should rule the religious councils, and that the prophet – God bless and keep him – had propagandized communism.
Colonialism and its followers, the apostate rulers, then started to openly erect crusader centers, societies, and organizations like Masonic Lodges, Lions and Rotary clubs, and foreign schools.
They aimed at producing a wasted generation that pursued everything that is Western and created rulers, ministers, leaders, physicians, engineers, businessmen, politicians, journalists, and information specialists.
'And Allah's enemies plotted and planned, and Allah too planned, and the best of planners is Allah.'
[verse from the Koran]'
