Sunday April 6, 2003 : Weekly Market Comment – John Hussman

September 1, 2011 by HWWProject Leave a Comment

After the Iraq War

With regard to the war itself, the expectation for a U.S. victory in Iraq within hours has clearly given way to more cautious expectations. What has not changed is the eagerness to look beyond the war, toward peace, stability, economic growth, and buoyant financial markets which are widely expected to be the fruit of this conflict. This eagerness is problematic. To believe that a war of this nature actually ends with the cessation of open conflict, or to base forecasts of its consequences on that belief, is to take a profoundly narrow view of history, politics, and economics. Indeed, the most predictable outcome of such conflicts is the rise of figures who use hate and resentment as platforms for ideologies bent on “purification.” Stalin, Hitler, Pol Pot, and bin Laden all fall into this pattern, to name only a few from the past century. The day that this war ends will undoubtedly be a day of victory for America. The policies that we adopt on the day after will determine the meaning and duration of that victory.

A final comment. In some of the news coverage surrounding the war, the death of humans is described using phrases like “mopping up.” This is tragic. Both we and our enemies are made of the same substance, which is humanity, and all human life is precious. It is one thing to punish evil acts, which is essential, and another thing to dehumanize those that we fight. The most heinous acts in history have always been committed by those who are willing to view their enemies as something less than human, to be eliminated when they become a liability. We should fight the willingness to do this, even in our words.

Suffering, ignorance, pride, and anger are all ulcers that create openings for the hatred and dehumanization of one’s enemies. The capacity for this is not only in our enemies, but also in us, because it is an element of human nature. It takes both strength and insight to punish evil without transforming our own suffering into hatred, and without forgetting that our enemies are human, and also suffer. Justice and defense are certainly not incompatible with compassion. If this compassion is not reciprocated by our enemies, then it is one of the things that do truly make us different.

With gratitude, admiration, and prayers for our troops, and sorrow for the lives lost on both sides of this war.

John Hussman 2003 Prior to War in Iraq

February 28, 2009 by HWWProject Leave a Comment

I rarely discuss political risks, but these are becoming increasingly central to the investment markets. It is difficult to discuss war in relation to finance, because such discussions often appear terribly cold to the human tragedy of it. With the understanding that politics is never a subject that evokes agreement, here are my thoughts.
On a historical basis, war has not been particularly bad for the markets, because early uncertainty has been followed either by a certain numbness or by resolution. In both cases, risk premiums have initially spiked higher, followed by a decline. Prices move opposite to risk premiums, of course, leading to the characteristic sharp selloff and prolonged recovery related to war.
With regard to current risks, however, I don’t think we can be so neutral about them. A military action in Iraq is likely to lead to much wider ramifications than the Gulf War. If the greatest fear of our enemies is that the U.S. is willing to use its power to threaten or prevent their sovereignty, what stronger way to validate these fears than to overthrow one of their governments? As a result, a military action in Iraq carries with it a much greater risk of retaliation in the form of renewed terrorist attempts. This would most probably drive risk premiums to high and fairly sustained levels, with economic effects on profits further depressing equity values.
The human risks to a war in Iraq are of far greater concern. Many of the “hawks” favoring war seem to have little combat experience, and are relying on a cakewalk to Baghdad – convinced that the U.S. made an error by failing to “finish the job” in the Gulf war. One wonders whether they recall that Eisenhower chose not to “finish the job” by making a northern push to Berlin in World War II. The Russians pushed ahead, and lost roughly 400,000 soldiers doing so – more than the U.S. lost in the entirety of World War II. The Iraqi army is certainly not the German army, but war, if it comes, will not be confined to the desert as it was during the Gulf War. The U.S. would certainly minimize casualties by destroying as much as possible from the air before land troops were deployed. But I doubt that the total number of casualties on both sides would be reduced by such destruction. Though we are Americans first, every life lost in war is a tragedy.
It strikes me that the U.S. has lost much of the international support and sympathy that it enjoyed last year, largely because of a White House foreign policy team that seems intent on escalation of conflicts to the exclusion of diplomatic alternatives. That’s unfortunate, because already the White House’s unfathomable doctrine of “preventive war” has provoked a destabilization of nuclear risks in North Korea. To a great extent, our enemies hate us not because of our freedoms, but because they believe that we are willing to deny them the same freedoms that we defend for ourselves. If our enemies understood America from the standpoint of its principles, its ideals, and its people, they would see these fears as unreasonable. But such fears can certainly be fanned by the foreign policy of a particular Administration, and this one is doing a good job of it.
The heightened nuclear tension in North Korea is a predictable response from a country identified as the third vertex of an “axis of evil,” in the face of a planned military overthrow of one of the other vertices. What country, so identified, would not move to defend itself in the face of a potential invasion of Iraq? Understanding this, the best answer from the White House would be some gesture to assure that the U.S. does not intend a preemptive attack on North Korea as well. The resolution of any dispute requires one to ask “To what is each side entitled?” – and North Korea has asked for a nonaggression pact. Even if our response falls short of such formality, there are certainly some gestures that the U.S. can make along those lines to de-escalate the threat there.
All peace is based on a willingness – however distasteful – to understand one’s enemy. Hate and evil typically have their origins in fear, ignorance, suffering, and perceptions of injustice. It is always possible to make gestures that address these without compromising one’s own security or justice.
Is the group of hawks in the White House wise enough to understand its enemies? Maybe not. U.S. foreign policy is increasingly based on the notion that enemies should be eliminated. But if our enemies believe the same thing, the equilibrium cannot be peace without devastating losses first. Escalation is a long road, and the end of that road may not be peace after all. As Zen master Thich Nhat Hanh says, there is no way to peace – peace is the way. Understanding our enemies requires us to contemplate their fears, ignorance, suffering, and perceptions of injustice – however distasteful that is to imagine. Understanding does not prevent us from defending ourselves, or from seeking justice, but it informs a multitude of decisions and actions that can help, and as a result, that can stabilize our world.
As we enter a new year, there seem to be no fewer risks than in the year that is ending. But always, we can be full of hope.
I want to thank you for the opportunity to come into your computer monitor every week to analyze, discuss, teach, rant, and occasionally make no sense at all. (Those of you who have flat panels are also forcing me to buff up, so thanks for that too). As always, I appreciate your business, and I hope that I have served you well. But most of all, I am thankful for your trust.
Wishing you health and happiness in the New Year. – John

Beyond Vietnam

January 19, 2009 by HWWProject Leave a Comment

In Honor of Dr. Martin Luther King, Jr.

[Dr. King’s words seem as relevant today as when he originally spoke them. The details have changed, but the principles are enduring – John]

Excerpted from “Beyond Vietnam,” April 4, 1967, via John Hussman

As I have walked among the desperate, rejected and angry young men I have told them that Molotov cocktails and rifles would not solve their problems. I have tried to offer them my deepest compassion while maintaining my conviction that social change comes most meaningfully through nonviolent action. But they asked — and rightly so — what about Vietnam? They asked if our own nation wasn’t using massive doses of violence to solve its problems, to bring about the changes it wanted. Their questions hit home, and I knew that I could never again raise my voice against the violence of the oppressed in the ghettos without having first spoken clearly to my own government. For the sake of those boys, for the sake of this government, for the sake of hundreds of thousands trembling under our violence, I cannot be silent.

Now, it should be incandescently clear that no one who has any concern for the integrity and life of America today can ignore the present war.

As if the weight of such a commitment to the life and health of America were not enough, another burden of responsibility was placed upon me in 1964; and I cannot forget that the Nobel Prize for Peace was also a commission — a commission to work harder than I had ever worked before for “the brotherhood of man.” This is a calling that takes me beyond national allegiances, but even if it were not present I would yet have to live with the meaning of my commitment to the ministry of Jesus Christ. To me the relationship of this ministry to the making of peace is so obvious that I sometimes marvel at those who ask me why I am speaking against the war. Could it be that they do not know that the good news was meant for all men — for Communist and capitalist, for their children and ours, for black and for white, for revolutionary and conservative? Have they forgotten that my ministry is in obedience to the one who loved his enemies so fully that he died for them? What then can I say to the “Vietcong” or to Castro or to Mao as a faithful minister of this one? Can I threaten them with death or must I not share with them my life?

Finally, as I try to delineate for you and for myself the road that leads from Montgomery to this place I would have offered all that was most valid if I simply said that I must be true to my conviction that I share with all men the calling to be a son of the living God. Beyond the calling of race or nation or creed is this vocation of sonship and brotherhood, and because I believe that the Father is deeply concerned especially for his suffering and helpless and outcast children, I come tonight to speak for them.

This I believe to be the privilege and the burden of all of us who deem ourselves bound by allegiances and loyalties which are broader and deeper than nationalism and which go beyond our nation’s self-defined goals and positions. We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy, for no document from human hands can make these humans any less our brothers.

They must see Americans as strange liberators. For nine years following 1945 we denied the people of Vietnam the right of independence. For nine years we vigorously supported the French in their abortive effort to recolonize Vietnam. When Diem was overthrown they may have been happy, but the long line of military dictatorships seemed to offer no real change — especially in terms of their need for land and peace.

The only change came from America as we increased our troop commitments in support of governments which were singularly corrupt, inept and without popular support. All the while the people read our leaflets and received regular promises of peace and democracy and land reform. Now they languish under our bombs and consider us — not their fellow Vietnamese — the real enemy.

Somehow this madness must cease. We must stop now. I speak as a child of God and brother to the suffering poor of Vietnam. I speak for those whose land is being laid waste, whose homes are being destroyed, whose culture is being subverted. I speak for the poor of America who are paying the double price of smashed hopes at home and death and corruption in Vietnam. I speak as a citizen of the world, for the world as it stands aghast at the path we have taken. I speak as an American to the leaders of my own nation. The great initiative in this war is ours. The initiative to stop it must be ours.

This is the message of the great Buddhist leaders of Vietnam. Recently one of them wrote these words:

“Each day the war goes on the hatred increases in the heart of the Vietnamese and in the hearts of those of humanitarian instinct. The Americans are forcing even their friends into becoming their enemies. It is curious that the Americans, who calculate so carefully on the possibilities of military victory, do not realize that in the process they are incurring deep psychological and political defeat. The image of America will never again be the image of revolution, freedom and democracy, but the image of violence and militarism.”

The world now demands a maturity of America that we may not be able to achieve. It demands that we admit that we have been wrong from the beginning of our adventure in Vietnam, that we have been detrimental to the life of the Vietnamese people. The situation is one in which we must be ready to turn sharply from our present ways.

A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand we are called to play the good Samaritan on life’s roadside; but that will be only an initial act. True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring.

A true revolution of values will lay hands on the world order and say of war: “This way of settling differences is not just.” This business of burning human beings with napalm, of filling our nation’s homes with orphans and widows, of injecting poisonous drugs of hate into veins of people normally humane, of sending men home from dark and bloody battlefields physically handicapped and psychologically deranged, cannot be reconciled with wisdom, justice and love. A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.

America, the richest and most powerful nation in the world, can well lead the way in this revolution of values. There is nothing, except a tragic death wish, to prevent us from reordering our priorities, so that the pursuit of peace will take precedence over the pursuit of war. There is nothing to keep us from molding a recalcitrant status quo with bruised hands until we have fashioned it into a brotherhood.

This kind of positive revolution of values is our best defense against communism. War is not the answer. Communism will never be defeated by the use of atomic bombs or nuclear weapons. Let us not join those who shout war and through their misguided passions urge the United States to relinquish its participation in the United Nations. These are days which demand wise restraint and calm reasonableness. We must not call everyone a Communist or an appeaser who advocates the seating of Red China in the United Nations and who recognizes that hate and hysteria are not the final answers to the problem of these turbulent days. We must not engage in a negative anti-communism, but rather in a positive thrust for democracy, realizing that our greatest defense against communism is to take offensive action in behalf of justice. We must with positive action seek to remove those conditions of poverty, insecurity and injustice which are the fertile soil in which the seed of communism grows and develops.

A genuine revolution of values means in the final analysis that our loyalties must become ecumenical rather than sectional. Every nation must now develop an overriding loyalty to mankind as a whole in order to preserve the best in their individual societies.

This call for a world-wide fellowship that lifts neighborly concern beyond one’s tribe, race, class and nation is in reality a call for an all-embracing and unconditional love for all men. This oft misunderstood and misinterpreted concept — so readily dismissed by the Nietzsches of the world as a weak and cowardly force — has now become an absolute necessity for the survival of man.

When I speak of love I am not speaking of some sentimental and weak response. I am speaking of that force which all of the great religions have seen as the supreme unifying principle of life. Love is somehow the key that unlocks the door which leads to ultimate reality. This Hindu-Moslem-Christian-Jewish-Buddhist belief about ultimate reality is beautifully summed up in the first epistle of Saint John :

Let us love one another; for love is God and everyone that loveth is born of God and knoweth God. He that loveth not knoweth not God; for God is love. If we love one another God dwelleth in us, and his love is perfected in us.

Let us hope that this spirit will become the order of the day. We can no longer afford to worship the god of hate or bow before the altar of retaliation. The oceans of history are made turbulent by the ever-rising tides of hate. History is cluttered with the wreckage of nations and individuals that pursued this self-defeating path of hate. As Arnold Toynbee says : “Love is the ultimate force that makes for the saving choice of life and good against the damning choice of death and evil. Therefore the first hope in our inventory must be the hope that love is going to have the last word.”

We are now faced with the fact that tomorrow is today. We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history there is such a thing as being too late. Procrastination is still the thief of time. Life often leaves us standing bare, naked and dejected with a lost opportunity. The “tide in the affairs of men” does not remain at the flood; it ebbs. We may cry out desperately for time to pause in her passage, but time is deaf to every plea and rushes on. Over the bleached bones and jumbled residue of numerous civilizations are written the pathetic words: “Too late.” There is an invisible book of life that faithfully records our vigilance or our neglect. “The moving finger writes, and having writ moves on…” We still have a choice today; nonviolent coexistence or violent co-annihilation.

We must move past indecision to action. We must find new ways to speak for peace in Vietnam and justice throughout the developing world — a world that borders on our doors. If we do not act we shall surely be dragged down the long dark and shameful corridors of time reserved for those who possess power without compassion, might without morality, and strength without sight.

Now let us begin. Now let us rededicate ourselves to the long and bitter — but beautiful — struggle for a new world. This is the calling of the sons of God, and our brothers wait eagerly for our response. Shall we say the odds are too great? Shall we tell them the struggle is too hard? Will our message be that the forces of American life militate against their arrival as full men, and we send our deepest regrets? Or will there be another message, of longing, of hope, of solidarity with their yearnings, of commitment to their cause, whatever the cost? The choice is ours, and though we might prefer it otherwise, we must choose in this crucial moment of human history.

As that noble bard of yesterday, James Russell Lowell, eloquently stated:

Once to every man and nation
Comes the moment to decide,
In the strife of truth and falsehood,
For the good or evil side;
Some great cause, God’s new Messiah,
Off’ring each the bloom or blight,
And the choice goes by forever
Twixt that darkness and that light.

Though the cause of evil prosper,
Yet ’tis truth alone is strong;
Though her portion be the scaffold,
And upon the throne be wrong:
Yet that scaffold sways the future,
And behind the dim unknown,
Standeth God within the shadow
Keeping watch above his own.

Main Menu

Tag Cloud