War Monuments

“One of the most extraordinary military campaigns ever conducted.”

– Dick Cheney

What was remarkable about the war against Iraq was not the performance of U.S. troops…for that was expected, but the incompetence of their opponents.

It was not so much that the Iraqi military made a pitiful adversary for the U.S…but that Iraq seemed not to have a military at all. The small groups of resistance fighters seemed to be acting on their own, with no general, coordinated plan of defense. Bridges were left intact for the enemy to drive over as if commuting to work. Defensive positions were abandoned…or never put up in the first place. Oil wells continued to pump…and Saddam, at what appeared to be a crucial moment, did not lay waste to the country in front of the enemy’s advance…nor did he appear on the battlefield, like Napoleon or Lee, to bolster his troops…instead, he went out to lunch!

Even before the war began, foreign correspondents in Iraq reported very little preparation for war. And then, when the war began, Iraqi soldiers did not rush to man the defenses, for the country had none.

The whole spectacle was not so much tragic, as pathetic. It was as if Goliath attacked David and found the lad without a slingshot. Worse, these hapless Davids didn’t even know how to use one.

Imperial Wars: Looking for a Pretext

Last week, we wrote to express our disappointment in George W. Bush. Today, we write to express our admiration. We now see more clearly the genius of the Bush Administration’s hawks: threaten your enemy with war if he fails to disarm…send inspectors to make sure he has disarmed…and then attack him because the weapons inspectors failed to turn up anything.

The tactic was worthy of the ancient Romans. No one likes to be the first one to attack; the gods of war do not favor an aggressor. But if you must attack first, you usually try to find a good reason…or pretext…for taking action.

“The Romans would send over the sacred chicken,” my friend Michel explained a few weeks ago. “They would send a chicken to the barbarian tribes as a ‘peace gesture’. Of course, the barbarians – not realizing the chicken was sacred – would eat it. Then, the Romans felt they were justified in going to war – because their enemies had eaten the sacred chicken!”

All over modern Rome are monuments to its imperial wars…or to the emperors and generals who led them. They are built into the basement walls of breweries and churches…or stand out in the open, after centuries of dirt have been pushed aside.

We have come to Rome, dear reader, not to study the history of empire, but to wallow in it. We roll around in it as if in mud…until it sticks in our hair and under our fingernails. And what we notice is that America’s wars against Iraq and Afghanistan…while they may be extraordinary…are hardly unprecedented.

From its very beginnings, in the 8th century B.C., Rome saw the need to defend its frontiers by subduing enemies – actual and potential. The Etruscans, Sabines, Ligurnians – one tribe after another…the Sicanes…the Sardinians… Picanians…Illyrians…Euganians…Celts…Gauls… Germans…Parthians…Medes…Carthaginians…

Imperial Wars: The Battle of Khambula

The list goes on and on, with each mention marked by battles, wars, and triumphs…and occasional defeats…

But we needn’t go back to the ancient world to find wars as extraordinary as the war against Iraq. Indeed, as recently as the 19th century, the colonial battles fought by the British as they expanded their empire were not so different. In these encounters – such as the battle of Khambula against the Zulus in 1879 – small, well-organized, and disciplined groups of British troops, armed with the latest technology, were able to defeat armies far superior in number…and subjugate land areas many times the size of Britain itself.

Or perhaps we could compare it to the Greek War of Independence…in which Britain intervened against the Turks early in the 19th century. The Turks were so badly organized and so badly trained that British naval officers maintained that “the safest place to be is in front of the Turkish guns”. The war might have been billed as Operation Greek Freedom, if the British had had more regard for opinion polls; the liberators thought they were freeing the descendants of Plato and Euclid from the shackles of Moslem oppressors. The English were soon masters of the military situation…but they had no idea of what they had gotten themselves into.

Lord Byron, for example, went to Greece to help finance, personally, the war of independence. He was soon appalled and embarrassed by the whole thing. For what the Greeks wanted was not so much independence as an excuse to cut the Turks’ throats…and what the English had begun was not so much a noble war of liberation, but a general bloodbath – in which Turks and Greeks killed each other by the thousands.

So many men were killed on both sides that a lively traffic developed in widows. Women were bought and sold even before the war…but in the carnage, the price of a woman dropped to a fraction of the pre-war level. Enterprising Englishmen donned turbans and acquired harems. Soon, dashing portraits appeared in English salons…a monument or two were set up in London…and then the whole affair was forgotten.

But where did these imperial wars lead? Were the imperial states safer…or were their people richer…?

Is there nothing more than these monuments…these relics of brick and stone…lying like the bones of some extinct beast in the warm Italian sun?

More to come…

Bill Bonner
April 11, 2003



Where is it? The post-war boom, we mean.

The Defense Department proved it could control the field of battle in the very old world…at least for a while…but so far, no department of government, nor even the nation’s central bank, has proven up to the task of controlling the economy.

As far as we can tell, Wall Street is still in its 4th straight year of a bear market…and the U.S. economy is still following the Japanese example…that is, towards a long, soft, slow, miserable correction.

The dollar was down again yesterday. It seems to have topped out on March 21st in the initial enthusiasm for Operation Iraqi Freedom.

Stocks went up slightly…but might just as well have gone down – no one seemed to care.

And more companies came forward to warn shareholders than even that their trimmed-down targets for earnings this past quarter may not be hit. Of companies offering updates, 59% had bad news to give investors…compared with only 49% a year ago. Only 20% said things might turn out better than expected.

Earnings are falling partly because consumers aren’t spending the way they used to. The fall-off in consumer buying is showing up in sales figures for retail outlets – down generally a percentage point or two – and by the declining trade deficit…which shrank, slightly, in February, to $40.3 billion.

Another thing hurting earnings is that companies are only now beginning to own up to the mistakes they made when the going was so good nobody cared. They’re writing off phony ‘goodwill’, for example, and beginning to shift to more honest accounting.

We know we don’t have to tell you, dear reader, but until businesses are able to earn some money, they’re not likely hire more people (Eric provides more details…below) or spend money on capital projects. That leaves the burden of the economy on the consumer’s back – a burden he grows less and less able to shoulder.

Neither of these trends – in consumer spending and corporate earnings – are likely to end any time soon. Instead, the slow, soft slump will probably continue…which may be the best we can hope for.

Right, Eric?


Eric Fry, reporting from New York…

– Stocks drifted aimlessly throughout most of yesterday’s session, before perking up a bit in the final minutes of trading. The Dow ended the day up 23 points to 8,221 and the Nasdaq added about half a percent to 1,366. Now that there are no more “ooohs” and “aaahs” to be had from the nightly pyrotechnic display over Baghdad, investors must content themselves with the “ughs” issuing from the U.S. economy. And there are plenty of “ughs” to go around.

– According to a survey by the Business Roundtable, whose member companies have a combined work force of 10 million and $3.7 trillion in revenues, executives at top U.S. companies expect to reduce payrolls over the next six months. Only 9% plan to hire new workers, while 45% expect to be doling out pink slips. Ugh!

– Furthermore, 27% of the nation’s top executives said they plan to cut investment spending over the next six months, while only 18% plan to raise it….Double ugh!

– To judge from these survey results, the economy may be much weaker than the official GDP numbers would suggest. Perhaps the economy is weaker than it appears because it was never as strong as it seemed in the first place, back in the bubble years.

– In other words, even when the economy was good, it wasn’t THAT good, says Dr. Kurt Richebächer. “What really counts for an economy’s inherent health and strength is not just GDP quantity but GDP quality, meaning the source and pattern of its growth,” Richebächer asserts. “Truly healthy and sustainable growth is driven by the lure of attractive profits for capital investment. Both have been badly missing in the United States.”

– The good doctor points out that from 1997 to 2001, consumption accounted for a whopping 82.6% of GDP. “That share was 15 percentage points above the long-term average,” says Richebächer. “According to official interpretation and general perception, the U.S. economy’s growth during these years [1997-2001] was led by strong investment and productivity growth. The ugly reality was consumption-led growth as usual, with one important difference: this time the consumer-borrowing binge went to an unprecedented extreme.”

– Disconcertingly, the consumption binge provided no commensurate boost to corporate profitability. “Measured as a share of GDP,” Richebächer observes, “profits today are at their lowest level in the whole postwar period. During the last year of the boom, in 2000, before-tax profits of nonfinancial firms were equivalent to 4.3% of GDP. That was down from 6% GDP in 1997. This plunge of profits has to be seen against the backdrop of 18% GDP growth during this period. More recently, profits are down further to 3% of GDP. What has hammered the stock market is plainly not a lack of confidence but collapsing profits.”

– We could all bemoan consumption’s outsized share of GDP, but there’s no denying that we miss it when it’s not around. Lately, the consumer has become as scarce as an Iraqi general. The BTM-UBSW chain store sales survey showed a 0.5% drop during the week ended April 5, following a 1.4% decline in the prior week. These results continue a months- long trend of feeble consumer spending.

– “On one thing there is no doubt: The economy stopped growing in February, and it’s been going backward ever since,” writes Dr. Irwin Kellner, chief economist for North Fork Bank. “The loss of nearly half a million jobs in the past two months alone is upsetting people more than any uncertainty related to the war….The percentage of people out of work for six months or longer is at one of its highest points in the past 50 years. Sales of such big- ticket items as cars and homes are down, and airline travel has dropped with tourism on the skids as well…Not surprisingly, the nation’s factories are operating at their slowest pace in about 20 years…”

– Rumor has it that Secretary of Defense, Donald Rumsfeld may be itching for the U.S. to invade Syria. And why not? It’s so much cheaper to drop all of the bombs left over from the Iraqi conflict on some neighboring country, rather than to schlep them all back home.

– Who else, we wonder, might Rumsfeld have in his hawkish sights? Iran? Saudi Arabia? The Bahamas?…What about those shifty Canadians? Sure, they seem like decent folks at the moment. But who knows what evil schemes they might devise in the future. Wouldn’t it be preferable to topple the potentially-evil Canadian regime BEFORE it commits any dastardly deeds? Besides, Canada’s got a treasure trove of natural resources that might come in handy down the road.

– Given Rumsfeld’s bellicose contingency planning, investors might want to consider a couple contingencies of their own, like selling expensive American stocks while awaiting two key events: first, the restoration of value to the stock market (either through falling share prices or rising earnings) and second, the restoration of something approaching sanity to the Defense Department.


Bill Bonner, back in Rome…

*** We have come to Rome to reflect, idly, on the fate of empires. More below…

But our perambulations began not with homage to Caesar, but to God…with a tour of the Vatican, that is.

As near as we could tell, the Vatican is a vast art gallery. You will find the Italian masters, of course – Caravaggio, Michangelo, da Vinci, Raphael – but also a remarkable collection of pre-Christian art and artifacts, including the magnificent sculpture of Laocoon and his sons wrestling with a snake. Laocoon was a Trojan of a particulary suspicious and paranoid disposition.

“When the Greeks brought their wooden horse to the gates of the city,” our guide explained, “Laocoon thought it might be a trick. He tapped on the outside and thought he could hear noises inside. He warned that it was a trap. But the Trojans took the horse inside the city walls anyway…and the rest is, as they say, history.”

Laocoon was right – he foresaw what would happen. But the gods do not like mortals who peer into the future, even when they see it clearly. Zeus sent the serpent to kill Laocoon and his two sons.

*** Most of the paintings in the Vatican seem to portray bible scenes…or gruesome martyrdoms. There is St. Sebastian, tied to a pillar, shot through with arrows. There is St. Bartholomew, flayed alive. And St. Laurence carrying the rack on which he was roasted. “I am quite done on that side,” he is said to have remarked to his tormentors, “you may want to turn me over.”

And who is this? An early Christian martyr is having his intestines wound upon a wheel…and there is St. Paul…who, as a Roman citizen, enjoyed the privilege of a quick death; he head was chopped off.

The kids loved it.

The Daily Reckoning