Iwo Jima

The Daily Reckoning PRESENTS: Clint Eastwood’s latest film, Flags of Our Fathers, tells the story of the men who raised the stars and stripes on Mount Suribachi at Iwo Jima…and the three of them who survived. Bill Bonner explores the amount of courage – and sheer stubbornness – displayed in World War II…


General Kuribayashi knew his goose was cooked long before the big guns opened up on February 19, 1945. He had already written to his wife to say farewell. He had prepared his seppuku sword. And now in front of him were 880 ships bearing 110,000 soldiers. And every single one of these fighting men wanted him dead.

Thus did the Battle of Iwo Jima commence: First with a naval bombardment that rattled every stone on an island smaller than Manhattan…and then with heavy bombers coming in to soften up the target.

Last night, we went to see the movie, Flags of our Fathers. Henry judged it ‘a bit slow.’ Your editor, on the other hand, was entertained and intrigued. He had been wondering about courage. This was a movie, loosely, on the subject.

Clint Eastwood’s movie tells the story of the men who raised the stars and stripes on Mount Suribachi at Iwo Jima…and the three of them who survived. The other three died within days of the flag’s raising.

It was a strange battle. Capturing the high ground and putting up the flag was hardly the end of it; it was barely the beginning. Marines made it to the top of the mountain after only a week of fighting. But the 22,000 Japanese troops were still there…and most of them still able to fight and with no apparent intention of doing anything else. They had built themselves hidden fortifications, dug into the rock and reinforced with concrete and steel…often connected to other caves by miles of interior corridors. The leathernecks looked around them and saw no enemies standing. But they kept getting shot.

The Japanese had neither left nor surrendered. They had gone underground, where it was almost impossible to get them out.

Your editor has never been in a real battle. That is probably why he likes reading about them. Battles have a certain moral appeal; in politics, foolish and absurd things often help draw a crowd or get a man elected. In markets, they can make him rich – at least for a while. Neither is in war; ignorance and cowardice are always punished; but at least the excitement of it – from a safe distance – is more engaging.

The three surviving members of the Iwo Jima flag-raising were sent back to America, while the war was still going on. They were dragged up and down the East Coast, and told to do their duty in an entirely different way; this time, the army wanted them to help push U.S. bonds. The GIs did what was asked of them and the crowds, seeing authentic heroes before them, heaved up enough cash to keep the planes flying. But the whole spectacle seemed to weigh more heavily on one of the three – a Pima Indian – than on the others. He knew the truth; he was just a marine who had done what was asked of him, not a true hero.

Maybe, some men take to deceit more readily than others. Maybe, as a Native American, he already had his own problems fitting into society. Whatever the reason, the poor soldier never seemed to recover from the war…and eventually drank himself to death.

It is rare for a soldier to be troubled by such things. Poets sometimes agonize over truth, courage and beauty. And women, who have a keen instinct for detecting deceit, tend to be more impressed by a rich coward than a poor hero. But a real fighting man doesn’t even think about it. He covers the man in front of him…and depends on the man behind him for cover. He asks for little else and even dies, when it is asked of him, with little complaint. Studying a battle carefully, we can appreciate and honor good soldiers for what they really are – not merely as hollow props for politicians and fundraising campaigns.

The Japanese strategy was simple. They knew they couldn’t hold Iwo Jima. General Kuribayashi was given the mission of inflicting as many casualties as possible on the marines, so as to make the Americans think twice before invading the Japanese home islands. General Kuribayashi was regarded as a genius in his métier. He had been educated in Canada and had toured the United States. He was a scholar and an aristocrat, whose knowledge of war was extensive.

But the Japanese high command was ignorant of the most important bit of information it could have had. The United States had at its disposal, an atomic bomb that it was just itching to try out. The more casualties Kuribayashi’s men were able to inflict, the more using the bomb seemed to make sense.

In retrospect, a much better strategy would have been to abandon the island and sue for peace. But what fighting man wants to do that? It is almost an admission of cowardice.

Even without knowledge of the atomic bomb, a truly courageous Japanese statesman would have admitted that the war was lost, for the Japanese had no fuel…and had lost control of both the sea and the air…. He would have faced up to the consequences and spared his countrymen hundreds of thousands of additional deaths.

But courage is a very rare thing, especially in the military. A good soldier is willing to die for his country and his comrades. But under no circumstances will he be willing to think…and risk being tagged a coward. There is no epithet more damning that being called a coward. To avoid it, military men will do the most absurd and preposterous things.

This was probably even truer for the Japanese than for the Americans. Trained in the immensely demanding samurai tradition, the Japanese were expected to fight to the last man. And their commander was expected to kill himself, rather than be captured. Each man, Kuribayashi told his troops, had to kill ten Americans before he went down himself. And at the beginning of the battle, his men were actually exceeding their quotas. They opened up on the invaders from their hidden nests. On the beach, or out on the rocks, the marines found little cover. And the enemy seemed to be everywhere. No sooner had they taken out one machine gun, than another opened up from another direction.

This was the only battle against the Japanese where the United States suffered more casualties than the enemy – 26,000 as opposed to 22,000. Almost all the Japanese were killed. Many killed themselves in order to avoid capture – including the Japanese commander, who disemboweled himself in his bunker before the marines got to him.

We admit we admire General Kuribayashi. Cutting out your own intestines takes fortitude and self-discipline. But we might admire him even more if he had shown the courage to defy his superiors and give up.

We also admire the marines who fought…and those who died. Since the Japanese were unwilling to surrender, each hidden burrow had to be discovered and neutralized, one by one, at terrific cost. It was like “throwing human flesh against reinforced concrete,” say war historians.

The human flesh did what flesh does. Hurled against the concrete and rock of Iwo Jima, 6,821 marines died. Over one fourth of the Medals of Honor awarded to Marines in World War II were given for action at Iwo Jima – 27 altogether, the most ever given to soldiers in a single battle. And Iwo Jima proved useful almost immediately as an airbase and for crippled bombers to make emergency landings on the way back from Japan. Whether that was worth almost 7,000 dead men and 26,000 casualties is another thing.

Were these men – the Allies as well as the Japanese – heroes? Or were they merely fools doing what they had been told to do? We don’t know. That is for the gods to decide. We only say what occurs to us as we think of them. Our heart tells us they were brave men. Our brain tell us they could have been served better by the men and the machinery which sent them to their deaths. With another kind of bravery, neither side need have killed…or been killed. But that story might not have made as good a movie.

Bill Bonner
The Daily Reckoning
October 27, 2006

Editor’s Note: Bill Bonner is the founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of The Wall Street Journal best seller Financial Reckoning Day: Surviving the Soft Depression of the 21st Century (John Wiley & Sons).

In Bonner and Wiggin’s follow-up book, Empire of Debt: The Rise of an Epic Financial Crisis, they wield their sardonic brand of humor to expose the nation for what it really is – an empire built on delusions. Daily Reckoning readers can buy their copy of Empire of Debt – now available in paperback – just click on the link below:

The Most Feared Book in Washington!

Ah…autumn. The crisp, dried up husks of leaves all along the lower Champs-Elysee…and a whiff of wood smoke in the air…Paris is beautiful.

On the other hand, from our native land comes a whiff of desperation.

Not since the Great Depression have nationwide prices fallen for an entire year. But that is what economist Mark Zandi, of Moody’s, expects for 2007.

Still, his projected decline is modest – just 3.7 percent.

In September, the median price of a new house dropped to $217,100 – down 9.7% from a year before and erasing two years’ worth of housing gains. Not since 1970 has that happened.

But what’s this?

“New Home Prices Fall by Largest Amount in More Than 35 Years,” says an article from the Associated Press.


“Now it’s a buyer’s market,” declares U.S.A. Today. Owners are cutting prices and throwing in appliances, automobiles and other incentives. One of the largest homebuilders – Centex – says it will cut buyers a break like they’ve never seen before. They’ll accept below-market monthly payments for a full five years. Of course, the unpaid interest will be added to the principal, so the deal is a time bomb for most buyers. Still, if you suffering from a deadly disease or planning to skip the country before the five years is up, why not?

How much of a ‘buyer’s market’ it is, is anyone’s guess. True, sellers are willing to bargain. But they might be even more willing to bargain a year from now. Inventories are near record levels. And there are still millions of ARMs that need to be twisted and reset higher.

Of course, Alan Greenspan said that “most of the negatives in housing are probably behind us.” There, that settles it for us. If the maestro thinks the housing correction is over, we are confident that it will worsen substantially.

Bond investors seemed to take notice of the weakening housing sector. Yields rose…and the yield curve, said to be a reliable indicator of coming recession, inverted even more than before. The federal government can borrow for 91 days at 4.97 percent. But when it borrows longer term, say for 30 years, it pays less – just 4.72 percent. Of course, it doesn’t make sense that lenders would want higher interest rates for the near-term than for the very long term. In 30 years, compared to 91 days, there are 120 times as many things that could go wrong.

So, something is fishy.

But stock market investors didn’t smell anything strange. They noticed neither the nation’s houses falling down all around them, nor did they notice the inverting yield curve. Yesterday, the Dow hit yet another high.

Maybe investors are convinced that nothing can go wrong – no matter how far out you look. Housing going down? Nuclear bombs in North Korea? $1 trillion trade deficit? Oil on the rise again? Nothing seems to frighten them. Volatility, a measure of fear and uncertainty, is near an all-time low.

We wonder what it will be that will finally unsettle them. We sniff the air and wait to find out…more to come on this subject in tomorrow’s weekend edition of the DR…

More news from our team at The Rude Awakening:


Chris Mayer, reporting from Gaithersburg, Maryland…

“What we have here is an asset story – another case in which you can buy a bundle of attractive, cheap, hard-to-replicate assets all in one stock. Unusual, in this case, is that these assets also come with a high-growth kicker.”

For the rest of this story, and for more market insights, see today’s issue of The Rude Awakening.


And more views:

*** Former Chinese Vice Premier Qian Qichen, in the official China Daily newspaper’s November 2004 online edition, says that the United States “is dreaming if it thought the 21st century was the American century.”

We only quote the Chinese pasha to introduce a diatribe of our own. America is dreaming that it can be a big winner from globalization. But it depends on what you mean by ‘globalization’ and what you mean by being a ‘winner.’ America is a high-cost producer, with very expensive overhead, regulatory and legacy costs. It is yesterday’s news, in many ways. Searching the American skyline, you find far fewer construction cranes, for example, than you do in Asia. Construction cranes build offices and factories – places where money can be earned. In America, the builders work much more close to the ground – and with much less steel and cement. Instead of putting up capital assets, they put up houses – places where money is spent, not earned.

This emphasis on spending has led to a shortage of savings…which further dooms the old empire in the years ahead. Without capital of its own, the United States will have to rely on foreign savers, who will have their own investment ideas. What they will do and when they will do it, we don’t know. But it is unlikely that they will want to deploy much of their capital in the United States.

They will lend to America, and buy assets in the United States, when it suits them. But the kind of development that makes people wealthy – research, innovation, training, capital investment – will, most likely, occur outside of the United States.

All economies gain from free trade. But the ones that gain the most are the low-cost, high quality producers. More and more, those most-competitive producers are not located within the 50 states.

This is just the typical process of institutional degeneration. As economies age, they become less competitive…and more laden with parasites (retirees, regulators, health plans, employment rules). Here in France, for example, we learned yesterday, that if you want an employee to end up with $60,000 in his pocket, it would cost the employer about $200,000.

Meanwhile, in Asia, an employee expects less…and it costs the employer far less to give it to him.

But when these high-cost, degenerate economies figure out that they no longer gain from free trade, they subtly change the terms of discussion. They no longer press for free trade…but for ‘fair trade.’ They demand that there be a ‘level playing field,’ meaning…they want their competitors to be as stitched up and degenerate as they are!

Employees demand that foreign products be made with the same high priced labor, organized into unions. And corporate honchos demand that their competitors face the same labor rules and tax rates that they have to face. Consumers want to think that the poor overseas farmer is getting a ‘fair’ deal for his produce. And politicians rant that the foreigners don’t play by the rules of modern democratic governments.

Jagdish Bhagwati tells us that late in the 19th century, Britain was confronted with the same sort of problem. It was still the reigning empire, but its factories and merchants were losing market share to the Germans and Americans. It, too, tried to change the terms of globalization from free trade to fair trade…without success.

America, the world’s largest customer, still favors ‘globalization’ – it still says it wants free trade, though it wants it on its own terms. Our guess is that soon even those terms will change…in the direction of ‘fair trade’ rather than ‘free’.

***We got home yesterday and found that our apartment had been hit by a freak tornado.

“Don’t be silly,” Elizabeth explained. “The Portugese plumber was over today. They just tore everything out of the bathroom so they can rebuild it.”

“What was wrong with the bathroom?”

“It worked perfectly well…but who would want to live with those fixtures…and that tile work? It was hideous when it was put together in the 1970s. Now, it’s not only hideous, it’s out of style.”

“The whole idea of a stylish bathroom surpasses our imagination,” we had to confess. “We thought it was a place to ‘do your business.'”

“Ah, but that just shows how out of contact you are. We spend a lot of time in the bathroom. And we’ve worked for more than 35 years…what were we working for? So that we would have to use a bathroom that is horrible to look at and depressing? What is the point of saving money if you’re not going to use it to improve your life in some meaningful, tangible way?”

The Daily Reckoning