All posts by John Stinson

John Stinson is a semi-retired investment counselor and a historian with a special interest in the battles of World War II. He is current written books about investing, history and politics, you can read more of his work at xlibris.com. He lives on the island of Martha's Vineyard, in Massachusetts, where he keeps an extensive library on the subject.

Trailing the Fall of France

by John Stinson
Area of interest As a student of World War II, I have been fascinated by what is one of history’s greatest battles, the breakthrough that led to the fall of France in May 1940. Unlike the famous one- or two-day battles such as Waterloo, Antietam, and Gettysburg, there are no monuments or museums to this singular campaign; it is an event the western world would like to forget. But the absence of memorials is, itself, indicative of one thing: this was a battle of movement. I set out to retrace the steps of the soldiers and the tracks of the tanks in this campaign.

World War II began with the invasion of Poland on September 1, 1939. Although France and England declared war, they did nothing to help their eastern allies. After Poland fell, the “Phony War” left allied England and France, and Germany sitting quietly on their borders, with Belgium in between, hoping the Germans would leave them alone. The Maginot Line, a vast network of underground bunkers and blockhouses built between the two wars to protect France from German invaders, extended only to the southern border of Belgium, making that country all the more obvious as the invasion route. But Belgium suffered so terribly in World War I that it chose not to consider the inevitable.

The German plan was to attack through central and northern Belgium, as expected, while quietly sending a mobile Panzer corp through the southern Ardennes Forest of Luxembourg and southern Belgium in hopes of outflanking the main British and French armies–effectively going around the Maginot Line, instead of trying to go through it. The plan worked to perfection because the French thought the hilly and heavily wooded Ardennes was an unlikely line of attack, especially for tanks. Virtually unopposed, the Germans were able to reach the crucial line of the Meuse River, cross the lightly defended barrier, and move swiftly north to cut off the allied armies. The war in France was essentially over in a week, though the fighting continued for another month.

When Germany invaded on May 10, 1940, the allies advanced to planned positions in northern Belgium. This was exactly what Germany wanted. The news was all about the fighting to the north, but while attention was turned toward that battle line, the German Panzers led by Heinz Guderian unexpectedly arrived at Sedan on the Meuse, to the south.

Backtracking to the opening day, the most famous event in the northern region was the taking of Fort Eben Emael at the junction of the Albert Canal and Meuse River on the Belgium-Holland border. German glider specialists landed on top of the huge fort and neutralized it before the invading army arrived. Taking the fort was more spectacular than important–perhaps an example of Hitler’s uncanny feel for psychological warfare. World War II strategy called for bypassing such obstacles, but Eben Emael is testimony that Allied thinking was still mired in the previous war. They could not have expected the inventive mode of attack, and thus the 1,200 Allied forces inside were overwhelmed by 78 German invaders. The fort is still there, a huge rectangular structure with miles of tunnels. It lies only a few miles southwest of Maastricht, and is worth a visit, less for the fort itself than for the beautiful site.

As I traveled through the region, my attention was focused on the tank corps slipping through to the south. The Ardennes is hilly, forested, and chopped up with many streams, in other words easily defensible country. For this very reason, the French thought it was impassible for tanks. The French identified tanks with open country, overlooking that the Germans were merely using the Ardennes as an undefended highway.

Area of Interest, German invasion routeThe tank was invented during World War I and early models were cumbersome. Early tanks had a maximum speed of roughly 5 miles per hour and crossing a stream presented difficulties because of their weight; country bridges were often unable to support them. At the opening of the Second World War, German tanks were relatively light and emphasized mobility. Many French tanks were heavier and used largely in support of infantry, perhaps leading to the confusion about difficulty of passage. The British invented the idea of unified separate tank corps supported by mobile infantry, but only the Germans put the tactics to use. They tested independent use of tank divisions in Poland, but the French took little notice, even though success in Poland dictated similar tactics in France.

About half the Ardennes is in Luxembourg, which had only a ceremonial army. The French were informed by the local villagers and even had scouts in the area, but poor communications left Allied headquarters believing this German posturing was a minor event. The French commanders assumed it would take the German Panzers about 10 days to reach the Meuse. In fact, Guderian and his division made the trip in 3.

I began my excursion with a diversion to Bastogne, in southern Belgium, which gained notoriety in the Battle of the Bulge, four years later. This town has the usual tourist attractions–monuments and a war museum–and modern-day Bastogne continues to identify itself more with the war, than with anything else. Leaving Bastogne, I went south to Martelange on the Luxembourg-Belgium border, which the Germans reached on the first evening of their advance. I then took the road west to Neufchateau (Neufchateau also became well known in the Battle of the Bulge). Going east out of Neufchateau in the direction of the center of the German advance, I followed a narrow road along a stream–a road probably much the same today as in 1940. Despite the enticing lush, green landscape, this is rugged wooded country, and should have been easy to defend. Nevertheless, all the Germans had to do was drive off a few Belgian troops posted at occasional crossroads. Their target, as was mine, was Sedan, on the Meuse River.

The French state of mind is illustrated by their casual attitude toward manning a line they knew to be crucial. Part of the French mental block was the idea that rivers would stop tanks. Pontoon bridging for walking infantry, in use for centuries, requires only light equipment. The French discounted the ability of heavy trucks to carry tank-bridging equipment. Again, they had not allowed modern techniques to penetrate their World War I mentality. In particular, the French saw the Meuse River, approximately marking the western boundary of the Ardennes, as a major obstacle that would require considerable time to bridge, even though German tanks had already sprinted across larger rivers in Poland. French planning called for a minimum of 10 days to reach the Meuse based on the number of other rivers and streams that had to be crossed first.

A shallow spot in the Semios RiverThe most important of the intervening rivers is the Semois. The Semois is a meandering river with tight, graceful curves, cutting through almost pristine forestland. This river now provides a place for many to relax on its banks, or play in its water, but at the time, it represented a major entryway into French territory. The Semois is no mere stream and at that point its bridges had been blown. However, the river is extremely shallow in many places, and a shallow ford with a firm bottom could be crossed without bridging. At other points the Semois is considerably wider and therefore even shallower. Driving along the river in the area where the tanks traversed revealed many good crossings adjacent to the road. German sport fisherman had picked out ahead of time the fords with the shallowest, sturdiest bottoms where the tanks could cross without getting bogged down in the river bed.

After searching for passable fords in the area, I continued west to the spectacular town of Bouillon, on the Semois, a convenient stopping point. The town sits in the river valley at a sweeping curve of the river, its centuries-old buildings (including the Castle of Bouillon–once occupied by Godfry V, leader of the first Crusade on Jerusalem) creeping up the steep banks on either side. Not far from the ancient fort is the justly named Panorama Hotel, where Heinz Guderian spent the night of May 12. Its spectacular view makes a visit worthwhile.

By the evening of May 12 (the third day) Guderian had reached the Meuse at Sedan with the main force. Sedan is only a short drive from Bouillon. Steep banks along much of the Meuse in this region means it is easily protected; Guderian headed for Sedan specifically because the countryside there is flat on both sides of the river, making a crossing more difficult to oppose.

Steel bridge over the Muese in HouxCommanding the northernmost arm of Guderian’s Panzer corps–before he became an infamous figure in the war–Erwin Rommel’s division reached the Meuse, on the same day as Guderian, but roughly 40 miles to the north, just above Dinant. His route, unlike Guderian’s, did not go through undefended Luxembourg, and Rommel ran into more resistance. But the roads were better and Rommel, himself, was driven like no other division commander. When he reached the Meuse at Yvoir, the bridge had been blown. Rommel went up river (south) to find a crossing. Here, in an area with low river banks, he found an old weir, or low dam, between the shore and a small island at the little village of Houx. The weir extended to the western bank. Rommel promptly got troops across on top of the weir, under cover of darkness. It’s all there today, except that the old wooden dam has been replaced with steel and a foot bridge. As they reached the far side, history books describe the troopers as crouching under the bank fighting off French defenders, but in fact there are no steep sides here and the country to the west is reasonably flat. The next morning, several hundred yards upstream, Flat country near Rommel’s river crossingRommel strung a cable over the river capable of carrying pontoon-supported vehicles. After commandeering another division’s bridging equipment (his had been used farther back) a full pontoon bridge was laid a mile upstream, at Bouvinges, on May 14. Tanks were moved over the Meuse both here and at Sedan.

Finding remnants of those historic days is difficult. No monuments stand to the German invaders. The Auberge de Bouvinges, a small hotel between Houx and Bouvinges on the western bank, known for its excellent dining room, has pictures of Rommel’s crossing on its walls, but these are the sole artifacts I found of those famous events.

As a military historian, I was interested in why the French thought of the Meuse as a formidable barrier. Along much of its course, in this area, the banks are high and easily safeguarded, but there are low points, principally at Sedan, and it was at these that the Germans directed their attention. Sedan is in France, so the French had not been inhibited from building defenses, but the troops there were both second line and few in number. Reinforcements were slow coming up, because attention was directed to the north.

Guderian had forced a crossing by late in the afternoon of May 13, a mere day after his arrival, before the French could react. Lack of attention to Sedan is all the more remarkable, as the city is infamous in French-German military history as the place of Napoleon III’s defeat in 1870, after which the Germans marched into Paris.Sedan is an unattractive, small city. Some of the other crossing towns, such as Dinant and Namur (the target of the Bulge counterattack in 1944) make for better stops, but no matter where you are on the Meuse, the striking geographic feature for the military historian is the river’s narrowness. At Dinant (just south of Rommel’s crossing) and Sedan, the Meuse is only 100 yards wide. Stand on the river bank just below Sedan and imagine crossing under fire in a rubber raft. Frightening, to be sure, but not impossible, especially with a rain of fire behind the paddlers and the Stuka dive bombers, their sirens screaming, causing the French defenders to protect all sides. And at such close range, tank and machine guns firing from the east bank had a strong influence. The Germans were short of artillery, but were near enough that heavy artillery was not needed. The more the German feat is analyzed, the easier it is to understand, especially given French incompetence and defeatism.

The best account of the fall of France is Alistair Horne’s To Lose A Battle. The book sets the tone for the collapse by examining the French mentality resulting from World War I and conditions in France between the wars. Horne also wrote on the Verdun battle in World War I, in his book The Price of Glory. This induced me to drive on to Verdun, an hour and a half south of Sedan, where I found a clue to the French defeat in 1940.

Monument outside VerdunVerdun is a medieval town steeped in military history–from the Treaty of Verdun in 843, which divided the vast empire of Charlemagne among his warring grandsons; to the bloody battle of 1916, in which an estimated 700,000 French and Germans lost their lives, so that no side clearly won; to the 1984 United Nations declaration of Verdun as an “International City of Peace.” Two principal forts defending Verdun still exist. One in particular, Douaumont, appears unconquerable as it dominates the surrounding terrain. However, not only did the Germans succeed in taking both forts, but the French retook them later (from the easier back side). The limitation of such strongholds under modern conditions would seem to have been demonstrated. Nonetheless, impressed by how long one of the forts held out, the French were encouraged to build the Maginot Line.

The monumental ossuary outside Verdun is striking for its deep sense of doom. This is a tomb, not a glorification of victory. The windows have plaque-like overhangs that give the appearance of tears. At the back, on a slightly lower level, is a chapel. The service being conducted while I was there befitted the utter gloom of the structure. In front is a large cemetery. Unlike the uplifting American cemeteries in
Verdun Monument
Monument outside Verdun
Europe, with beautiful crosses of white marble, the French crosses are made of concrete, left to crumble from lack of maintenance, casting a gray, desolate image.

The tone of Verdun comes from the appalling casualties in the great battle there. Mutiny surfaced late in the battle, and subsequently in other segments of the French army. The French suffered so terribly in the First World War that an unwillingness to face a similar fate a mere 22 years later is not surprising. Although German losses in World War I were severe, their land was never invaded. They were humiliated by the harsh terms of the Versailles Treaty without having been driven from the field of battle. They had the advantage of less suffering in that war, and they had the impetus for revenge. While, arguably, the French are to blame for the success of the 1940 invasion, and for allowing the Germans to rearm in the 1930s, millions of French casualties and devastation to the richest portion of the country in the first war accounts for the failure of 1940.

I found an uplifting sentiment in the American cemeteries in this and other regions. The Omaha Beach cemetery is the most often visited, but it is only one of many. There are more in this area than any other, for not only was the Battle of the Bulge here, but also the fierce fighting around Metz in the fall of 1944. The cemeteries are beautifully laid out and maintained. One of the most interesting was found by following a sign in a small village north of Verdun. After wandering in for miles through French farmland, I came to the cemetery, which had a different look from the others. It was carefully graded and formally laid out, whereas the distinguishing feature of the others was their informal rolling contours that fit the surrounding landscape. On inspecting the stones, I was surprised to find all the dates in 1918: World War I. This is rugged country, terrible for attack. Why did so many American lie here?

The answer is that the American Expeditionary Force refused to fight as integrated units with their allies because French and British commanders had thrown their men repeatedly at machine guns and shrapnel for small gains that were quickly lost because of the huge casualties. Insisting on a separate front, the Americans were naturally given one of the worst areas, under the assumption they could not possibly advance. In fact, they did advance. Some authorities think that the Germans gave up when they saw that the American civilian army really could fight. Looking around the Argonne countryside, having walked down the footpath of one of history’s greatest and most devastating battles, gives me pause, and makes me wonder how they succeeded so many years ago.

Utility Stocks – September 2002

One of the most confounding aspects of the bear market is the collapse of stocks that were seen as safe. I am not referring to GE, which was known to be playing games with its accounting and was selling at much too high a price, but specifically to utility stocks. The collapse would not have been a great surprise if investors had understood the extent to which utility companies had turned away from their conservative past and gone off in speculative directions. The stocks are down so much that they probably offer one of the best opportunities in the market, but figuring out how to act on the opening is difficult because the condition of the companies is up in the air.

With the arrival of de-regulation, utilities moved their plants formerly dedicated to the system into unregulated companies. Most set up trading departments whose inventory was their own power now available to be sold out of the system. After trading off much of their own production, they bought someone else’s as a substitute, creating a temporarily huge market in energy trading and a lot of short term trading profits. Once the initial swap-around was completed, they were left with little to do. As a result, trading departments are being abandoned or severely cut back. Left behind were trading “profits” using Enron type front loaded accounting for long term contracts, a decent portion of which are now uneconomic. The companies are now faced with writing off previously booked profits. The full extent of the losses is hard to guess, but may be substantial. Any losses could not come at a worse time because the companies are overextended in other areas and their financial condition has become precarious.

Under the stimulus of de-regulation, a lot of new capacity was built and old plants re-started, creating a surplus, and price weakness. This threatens outstanding trading contracts, leaving some companies committed to buying energy at a loss, and others to abandoning contracts. Bankruptcy at Enron and near bankruptcy at Dynergy, the most active traders, threw a monkey wrench into the contractural structure because many of the contracts in which they were involved are defunct because of being uneconomic. The regulated distribution function is required to buy the cheapest electricity on the open market (the concept behind de-regulation to begin with), leaving the companies as a whole with higher priced purchase contracts they had expected to sell into their own distribution. The surplus capacity created by a rush of new plant building based on forecasts of a rapidly growing economy places many plants on a marginal basis. Companies like Calpine were not been alone in the mad rush to build new facilities.

That is not all. Anxious to diversify, many plunged into foreign utility markets, often with unfortunate results. Desperately trying to get out to shore up their precarious balance sheets, many of the foreign operations are up for sale in a weak market. This means more writeoffs. TXU will take a $4.2 billion write off as it abandons or sells pieces of its U.K. operation for less than debt. That loss represented almost half TXU’s stockholder’s equity before a summer stock offering.

And then there is debt. As capital intensive regulated operations with limited return on equity, utilities have always been relatively highly leveraged. In the exuberance of de-regulation, and supported by the liberal conditions in the capital markets at the end of the 1990s, they borrowed to support the new directions, leaving them in a bind now that things have gone wrong. Analyzing the companies takes me back to my banking days. Good bank lending is short term in nature and based on the balance sheet, not the income statement. Utilities are still reporting good profits, though the outlook is questionable. It is the balance sheets that are in crisis. Write offs, of goodwill, of trading contracts, of assets already and to be sold, are inevitable. While these write offs can be seen as a clean up that will allow the companies to get back to selling electricity (it is amusing that they are now emphasizing their traditional operations), the losses are important for highly leveraged balance sheets. Many of the bond indentures have requirements for maintaining balance sheet ratios that will be difficult to meet (which is why they are dumping assets for liquidity). Indentures also call for maintaining a decent bond rating, which they are having trouble meeting. Most of the losses have yet to be taken, so the threat is growing. One major utility, Allegheny Energy, admitted to not being able to meet the requirements and more or less dared bondholders to do anything about it. Therein probably lies the eventual answer. It makes little sense for bondholders to put them into bankruptcy, for these are steady operations that will eventually work out of trouble. But eventually could take a while, and the threat complicates current analysis. Some of the stocks undoubtedly are selling way under their true value, but patience is needed until the picture is clearer. I expect a wave of year end write offs and some divisional bankruptcies (some already), after which sensible analysis may be possible.

One reaction of utility companies has been to flood the market with equity offerings without revealing the depth of the problems. Investment bankers have been up to their usual tricks, putting another one over on investors, and most of these offerings are now deeply in the red. Buyers should have been suspicious of massively dilutive offerings that made sense only if the companies were in trouble. Without the flood of stock offerings, there might already be blood on the street in a partial rerun of the telecommunications disaster. This makes the stocks all the more intriguing. Just think, some of the companies can be bought at 50% of what supposedly knowledgeable institutional investors paid in large quantities earlier this very year.

I made the mistake of buying some of these stocks for conservative investors looking for dividends when prices plunged. Allegheny Energy, for instance, was seen as a relatively conservative company whose stock was cheap and the dividend extraordinarily high. The problem for conservative investors is that many have cut their dividends, and more cuts are inevitable. Management has been swearing by their dividend, but reality is getting through. Longer term these will remain dividend oriented companies. As the smoke clears, yields over 10% should be available. This kind of return should lead to a doubling of the stock price.

In the end this is still a steady and needed business, and the problems will be worked out far more easily than with massively overcapacitied telecommunications. Measuring the affect of overcapacity is one of the current imponderables. Many partially completed plants will have to be finished, but everything possible has now been cut off.

Incidently, many of the new plants involve gas turbines made by GE. GE is booking cancellation fees and still delivering some turbines, but it is looking at the sudden cut off a business that has been a substantial contributor to profits in recent years. Between jet engines, gas turbines, and a squeeze on GE’s massive spreads in its financing operations from any increase in interest rates, GE’s earnings could be down sharply in a year or two. The braggadocio gushing from Immelt after he took over (he promised a higher growth rate than the already impossible rate achieved by Jack Welsh) never sounded right, and is becoming increasingly hollow. Will Jack ever cash in those 13 million plus options, presently worthless after having a value over $200 million two years ago?

The War on Terrorism – January 2002

Figuring out where we are going in the war on terrorism is extremely hard because the Bush administration has chosen to keep us in the dark. What do they have to hide? From what we know of the Bush program, a lot of sobering questions need asking.

The tough talk comes out of the heat of revenge. As we cool down, the broad suggestion of stamping out terrorism all over the world will be modified because what they are saying is so aggressive as to be imperialistic, an amazing digression from our traditions. The administration and the generals may be thinking that by smashing a few weak sisters, the major Moslem nations will roll over and clean up terrorism in their own countries. Historically, however, efforts to smash religious movements with raw power have ended up encouraging the movements.

Because the Bush program is so full of questions, they have chosen to obscure the difficulties by treating us as children, providing little information, attempting to suppress sources, and engaging in the old tricks of wartime propaganda. This kind of thing is suspicious, what are they up to? In order to throw some light on the matter, I have been reading away, and while still left with a lot to learn, here are my so far conclusions.

1) Bush is miscasting Afghanistan as a great triumph in order to build support, not an unnatural course, but one that casts a smoke screen of obscurity, a dangerous precedent.

The Taliban was a repressive over-fundamentalist regime that ruled most of Afghanistan in recent years, but it did not engage in international terrorism. If the Taliban is best done away with from a humanitarian point of view, it has little relevance to the fight against terrorism other than as an important site of terrorist training. Grass roots support in the Moslem world means new sites can be established, though the need to move probably makes it easier to find them. As in Viet Nam, our actions are likely to build enemy numbers because they support bin Laden’s main point about our aggressive intent. Most of the foreigners training in Afghanistan, which we call Al Qaeda, escaped.

The benefit of Afghanistan is not so much a direct attack on terrorism as elimination of a cesspool of anarchy, drugs, and radical Islamist anti-western feeling that was poisoning the economies and international relationships in central Asia. If we can bring order to that long anarchistic country and foster trade and understanding in the region, those countries may be motived to isolate and control radical elements. Pitching bombs is unlikely to defeat, and probably encourages, terrorism directed against us, but if we can use Afghanistan as a laboratory, and slake our thirst for revenge, the venture will have been successful (Afghanistan, though, is a tough laboratory).

2) Bin Laden is the anti-American terrorist, but there are plenty of others not directed toward us. Our worldwide hunt seems likely to provoke others to join the attack on America. Exaggerating bin laden’s importance is not useful to our understanding of the situation. Its purpose is to build enthusiasm through a personalized target.

In addition to his American emphasis, bin Laden has had a high rate of success compared to other terrorists. In general, anti-western terrorism has a high failure rate and the movement appears hesitant and poorly organized. Bin Laden is an organizer and seems to understand that you get no where in the western world with uneducated guerrilla trained fighters. Get rid of him and the movement suffers a major loss. But we are being presented an incorrect picture of him, as there are many heads to this dragon. Presenting bin Laden as the terrorist is good propaganda, but it covers up that terrorism is sponsored by many Moslem countries and supported by others. We need to understand the depth of Moslem feeling against us in order to counter it wisely.

3) Misrepresentation of bin Laden and terrorism in the Moslem world.

In the Moslem world bin Laden’s stature has been tremendously raised by the WTC. All of this fuss about the tape proving he did it is pap for the American public. They see us as evil people guided only by money and themselves as following the word of God. Bin Laden’s ideas resonate, all the more for our invasions. They see terrorism as a necessity, a desperate last weapon to fight our immense power. To them it is David versus Goliath and good versus evil. Carpet bombing and invasion strengthen and give justification to their negative impression of us.

Our actions are probably helping bin Laden by marking him as a new messiah. We need to understand that Pakistan and Iran, to name only the principle sources of terrorism, are against us. Pakistan has always been the main base for terrorism, though in the past directed against Afghanistan and India. Bin Laden’s people are retreating there because it is a safe haven. Virtually nothing has been done to prevent this, though it could easily have been anticipated. Pakistan is working us over for all the money it can get. Iran made minor concessions because they hated the Taliban, but it is the leading source of international terrorism. Saudi Arabia may be our biggest problem. Not only is it a major source of terrorists, terrorist financial support, and religious fanaticism, but the kingdom continued its arrogant course after 9/11. These countries are wondering, where are we on the U.S. list for picking off terrorist-sponsoring countries one by one? Our attitude is, fine, we want them scared.

4) The administration’s campaign of misinformation. While the administration’s thirst for revenge is personalized in bin Laden, it knows the depth of the problem. The Bush people, however, do not think we should know and are doing everything to prevent us from finding out. With Viet Nam, Johnson and Nixon lied, and to avoid the lie this time they tell us nothing and make every effort to suppress the news. I understand they are doing things like pressuring Moslem scholars not to appear on TV. The New York Times is silent, cowed by the nationalistic spirit from pointing out the depth of the problem and the hypocracy of some of our positions. European newspapers print some solid information, but apparently we are pressing them as well. Rummy’s press briefings are amusing, but he is thumbing his nose at the press and at us, while losing no opportunity to villainize.

Another difference with Viet Nam is the pursuit of an old fashioned campaign of propaganda. The administration provides as little information as possible, spins that, and directs its effort toward pumping up the bellicose spirit. This is done by screaming about inhuman evil-doers, waving the flag, talking up brave Americans, endlessly honoring the dead, and monthly ceremonies on the 11th. The simplistic moral denunciations are nothing more than old fashioned propaganda. As usual with propagandists, they misstate the enemy’s motivations, making him harder to understand. Constant reference to murders and criminals covers up the fact that among a few billion Moslems the bin Laden terrorists are heroes. This kind of propaganda is normal for warlike nations, but it is sad to see in America, and sadder to see us eating it up. How much longer will the American people fall for this drivel?

In order to understand the war and its likely difficulties, we need to appreciate that Moslems see terrorists as soldiers for Islam using the only weapon they have against our planes, bombs, and missiles. Impersonal bombing of innocent people is terrorism. As the power nation, we have the attitude that every American life is a treasure and their lives don’t matter. How many civilians have we killed in Afghanistan? Have we already taken an eye for an eye versus WTC? Probably, no one is keeping score, except terrorist recruiters (some information is just beginning to leak out in stories on other subjects). When asked about thirty villagers killed in a carpet bombing in the Tora Bora area, a general said, it was well known we were going to bomb there, they should have left (their homes!). Since they should have expected the bombing, it wasn’t terrorism.

Hope of a sensible course lies in understanding that the problem isn’t just a few terrorists, that hatred of Western ways, and specifically of America, has spread throughout the Moslem world, and it is based on religious principles. Our aggressive approach pours gas on the flames and is likely to strengthen the terrorist movement. Terrorism has always been unofficial, so it will have no trouble going further underground. Afghanistan illustrates that we can conquer, and at the same time do nothing to counter terrorism. Bombs won’t do the job any more than a police state did the job in Israel/Palestine.

We don’t seem to know anything except bombs. They are our foreign policy. Our arrogance is very evident. Can the wiser heads in the administration find an exit from the war strategy? The wolves may insist on Iraq, even though it has been a minor player in terrorism (no active terrorist movement in a dictatorially suppressed country). Going into Iraq will probably boost the terrorism movement, but they are weapons dangerous. Somalia is mentioned, though we would be criticized for picking another soft target and Somalia is about as minor a terrorist threat as you can find (going there makes us look something between stupid and scared). Hopefully, Iraq will feed the hungry mood of American warmongers, and after that we can find a reasonable course.

I think there is a way out of this thing. First, we need a realistic view of the enemy. We are not fighting suicidal maniacs, but people whose faith is so strong they are willing to give up their lives. If we sit down for realistic talks, not with bin Laden, but the major Moslem countries, they are going to want us out of Saudi Arabia. Since we need their oil, and probably the royal Saudi family to protect that oil, an agreement would be difficult. We also need to force the situation in Israel. A number of Moslem countries have shown willingness to be reasonable. The cause is not hopeless. We don’t have to bomb them back to the dark ages, they are already there.

The best hope for controlling Islamist fanatics lies within the countries themselves by encouraging capitalism and a better life. Afghanistan may serve as a focal point for interchange with other Moslem countries, including Iran. This is a long term solution and early capitalistic efforts are always filled with corruption and unfulfilled promise, but we are talking about encouraging development in backward Moslem countries. The worldwide terrorist movement exploded during the Clinton administration, perhaps in no small part from neglect of a weak state department under Christopher and Albright. The intelligence failure with the WTC was in the State department. The hero of the fight against terrorism is much more apt to be Powell than Rumsfeld (more likely someone down the road, for it will take time).

In the meantime, suppression of the news and the law, the administration’s attitude that we can’t be told the truth, and the hatred baiting in speeches laced with demagoguery, is appalling for our country. Warmongering looks like a huge political hit for Bush, but this kind of enthusiasm will be short lived.

John T. Stinson

Conversation between Osama bin Laden and Hosni Mubarak, president of Eqypt (a clearer light on true feelings in the Moslem world)

Mubarak: Congratulations, Osama, you really put it to the infidels with that WTC job.

bin Laden: Thanks, Mr. Mubarak, as they say on Wall Street, it exceeded expectations.

Mubarak: I thought you were some kind of an engineer, but you admitted on the tape you didn’t know the buildings would fall.

Bin Laden: I’m mostly into roads and underground facilities.

Mubarak: Maybe you better hit the lower floors next time so the infidels don’t escape.

Bin Laden: The high floors are more spectacular and we are not so much after bodies as scaring the shit out of them.

Mubarak: Well, you sure did, greatest show of dominos ever. Wonderful job, but don’t be getting soft in your old age. What can I do for you?

bin Laden: I thought you’d like to contribute to my working capital. Everyone’s been kicking in.

Mubarak: Ossie, baby, you’ve gotta nerve after trying to knock me off in Ethiopia few years ago.

Bin Laden: Well, even my godfather, the king, came through and you know what I’ve said about him.

Mubarak: That’s OK, I understand you don’t do it any more with the true believers now that you’ve discovered Americans.

bin Laden: I’ve got this thing going pretty well now, and what with Bush freezing some of my assets and some of the charities, I need a little help. He didn’t tie up much, but I’ve accelerated my plans now that they’re coming after me and I know you don’t want to be left out.

Mubarak: Certainly not, what are you looking for?

bin Laden: I thought 5 or 10 million American dollars was a fair allocation, it’s less than 1% of your annual shake down of the Americans.

Mubarak: I don’t want the brothers to see me as a piker, so you can count on 10. I’ll put it in your account at Egypt National today.

bin Laden: thanks Mr. Mubarak, and I want you to know I appreciate the sacrifice in not banking 25 for turning me in.

Mubarak: You know how I like American dollars, but dictatorshiping isn’t what it used to be. If I turned you in I’d have a revolt on my hands. You can’t mess around with Allah’s chose one these days.

bin Laden: Musharraf told me the same thing, but those American dollars are supremely corrupting, so I want you to know I understand the sacrifice.

Mubarak: Musharraf, eh, I thought he didn’t like you.

Bin Laden: They all say that to put off the Americans, and Mushie made them pay up big for the help.

Mubarak: You are such a thoughtful guy, Ossie. I’ll be watching closely, I want my money’s worth.

bin Laden: How many bodies do you think 10 million is worth?

Mubarak: Oh, I’m getting old, I’m not as bloodthirsty as I used to be. I’ll settle for making those infidels look foolish. A couple of aircraft carriers patrolling each coast, and 24 hour flights over every city for a couple of weeks will do. If you can run the president into Nebraska again, that would be super.

bin Laden: I don’t think that’ s possible, next time he’ll make for the site as fast as possible, like Bill. There’s an election coming, you know.

Mubarak: every time I go to the mosque I praise Allah for that one, but if he rushes to the scene you might be able to knock him off.

bin Laden: Not in the plans. We need Dubya. All that World Wrestling Federation talk about evil-doing murders and criminals brings in hoards of recruits. Besides, that Cheney’s a hard ass, might start throwing A-bombs.

Mubarak: You’ve got some to throw back, I understand.

Bin Laden: sure, but only a few suitcase models. We don’t want them scaring my boys with the big stuff.

Mubarak: How many did you lose in Afghanistan.

bin Laden: We lost a few hundred, but the bombs did more damage to those Afghan hicks than to my men. They devastated those mountain villages, but you can’t do much with caves. Most of the boys got out.

Mubarak: Good luck, Ossie, keep me informed.

bin Laden: sorry Mubbie, we don’t trust anyone, you’ll have to read it in the papers.

Dubya – May 2001

Bush’s presidency has so far followed the course indicated by study of his past. The only real surprise is the absence of any effort to protect the compassionate image. I always thought it was talk, and now he has forged ahead on his pro-business path without the slightest pass at compassion.

In a mild surprise, he has done a lot of speaking and has been much better prepared than in the past, so as to avoid the embarrassing gaffs of the past. For Republicans, the fact he has not made a complete fool of himself is taken as proof that he is not as stupid as we all thought.

The most interesting surprise is not really a surprise at all, given the fact that his only non-political success was as front man for the Texas Rangers baseball team. Many of us expected that, given his lack of experience, trouble in expressing himself, and elitist views, he would not be the front man for the administration, but would operate as sort of a team cheerleader. In fact he is up front on everything, in many cases pushing cabinet members into the background when they would have been the more appropriate spokesperson. Thinking supporters were always concerned about his smarts and experience, but the great team was supposed to carry the ball. From what we have seen so far, he has his finger in every pie. If anything, Cheney has been a disappointment, appearing up front only with the highly pro-business, anti-environment energy program. In this case, Bush had already made enough harsh statements that drew loud howls of protest so that he undoubtedly wanted to handed it off to Cheney.

The team leader thing is also interesting, for already a number of mistakes have been made that were passed off on cabinet members. It is well to remember that Bush describes the most important quality for a member of the administration as loyalty, that is loyalty to him. This is not the sign of a knowledgeable confident man.

As expected, all of the motion has been in the direction of support for business. He is pushing defense spending, oil exploration, easing environmental restrictions, pulling back on anti-trust, putting hard right people in all the government agencies, etc. He even seems to be pulling back on education in so far as it involves spending money.

While the polls are reasonably favorable, there is evidence of a widening feeling against Bush. It is not just environmentalists, but the dreadfully cocky overbearing public speaking style is a turning people off. I know many who say they can’t listen to him, the speeches are simply deplorable. Reagan used the good guy approach, but in Bush’s case what comes through is the elitism, the selfishness, the absence of a link to the common man.

I predicted that his arrogance and lack of feel for the public interest would get him into trouble, and now trouble has arrived. Here we have a 50-50 senate, which anyone else would have approached tenderly. Perhaps encouraged by the ability of the party to strong arm Republicans who were not happy with his program, especially the tax cut that went mostly to the rich, Bush attempted to ramrod his program through the Senate. Already there are defectors. Now we have the Jeffords situation. Bush tried strong arm tactics, and, appalled, Jeffords has bolted the party. Not normally a sensational deal, but hugely important in a 50-50 situation. All of a sudden, Cheney no longer controls the Senate, thanks to the arrogance of his boss. Nothing is more likely to get you into trouble than arrogance, and Bush has it in spades. I think it is so ingrained that even this setback will not temper the problem.

Clinton was criticized for governing by polls. That is not such a bad thing when the alternative is decision making by people who have little interest in popular causes, who show not a grain of human kindness.

Enron – January 2001

This chapter was written long before the Enron debacle came to light, in fact it is about the inevitability of Enrons because of wholesale cheating to boost reported earnings. Enron was not the exception, it was the rule. Enron undoubtedly passed the line and broke accounting rules, but the majority of publicly held companies push as close to the line as possible in order to enhance reported earnings. Arthur Anderson, its auditor, is not a rotten apple, all the major accounting firms aid and abet the process of overstating earnings.

Solutions do not lie with cleaning up the accounting profession, it is the source that must be attacked – the tremendous payoffs corporate management derives from stretched accounting.

Will the sensational disclosures lead to a clean up, or will the affair blow over with a few revisions to the rules for 401K plans? I am not optimistic. Enron points out once again the overwhelming power of aggressive corporate management to use company funds to benefit themselves. Sound rules carried out in a vigorous manner can solve the problem. Accountants will give us honest figures if freed from the pressure of management wielding big money for compliant manipulation. Enron paid Arthur Anderson $52 million for accounting services in 2000, $25 million just for auditing, a figure topped by only a few other and much larger public companies. That kind of money buys a lot of cooperation. The answer to the mess is truly independent auditors, both in setting rules and enforcing them.

I am utterly fascinated by Enron. A day never passes without at least two new revelations. Its tentacles are so widespread that new chapters will be unfolding for a long time. This is a much bigger story than realized. The war is a tiny affair in comparison because Enron and America are about business. Enron brings into focus many deeply troubling problems that have been swept under the rug by the long bull market.

Enron says a lot about what is wrong with the stock market, for its revealed evils are not at all uncommon. Too many public companies are managed to elevate the stock price, rather for the long term good of the enterprise and the economy. The result is unwise activities that boost earnings over the short term, bad acquisitions, restructuring to erase past mistakes, manipulative accounting that makes investing a guessing game, and an immense waste of capital resources in frivolous ventures. There is a lot more to running a company than hyping the stock.

Some of the revelations about Enrons accounting are mind boggling. Even more amazing is that many are legal, and therefore in common use. Arthur Anderson, Enron’s accountant, is no different from the other big accounting firms. They are all thoroughly enmeshed with management in exaggerating reported earnings in an effort to elevate stock prices. Every knowledgeable person is aware of this scandal, but no one wants to think or do anything about it for fear of hurting the price of their stocks. Now the mess is out in the open.

Why not start at the top. George W. Bush had no qualifications for the presidency, he was selected by big business because as governor of Texas he demonstrated political skill and unqualified support for business. He was elected on big corporate money, though not bought, for he is wholeheartedly their man. The question for his presidency was going to be, can big business run the country? Enron says the answer is no. Destruction of the surplus with tax cuts crowded into the high brackets says no. Give Bush the benefit of the doubt, though, the jury is still out on big business’s governmental management talents, but the signs coming out of Enron are not encouraging.

Next, there is Congress. Enron was built on stock hype and bad accounting. The accounting profession was well aware of spreading misrepresentation, and its governing bodies tried to slow the trend. In the crucial decisions, notably accounting for stock options and separation of auditing and consulting, reform lost because of the intervention of campaign contribution stuffed senators and congressmen. How could these people intervene where they had no expertise when the rule making bodies were doing the right thing? Because corporate management paid them to. The connection is being made between business excesses and campaign contributions.

At yet another level, Enron demonstrates the dreadful practices that overwhelmed leading investment banks. These people are willing to finance anything they can get away with simply because the fees are large. In Enron’s case they raised the money to support many of the fraudulent partnerships and offshore entities that covered up the company’s true condition. They sold a large institutional placement offering information on the company withheld from stockholders, probably illegally, though judging by the subsequent results, the treasured information should have alerted buyers to stay away. A major commercial bank/investment banker provided a vehicle for hiding losses from recent annual reports. Why did bankers engage in these probably illegal activities? The answer is huge fees, just as with underwriting hundreds of dreadful high technology and internet IPOs. They sold manure through unqualified boosting. Lacking full disclosure, deals that violated the intent of the securities laws became everyday. To an extent investors deceived themselves, but they bought the reputation of the underwriters and the hype they provided more than the companies themselves.

American capitalism works because of a blending of the free market and government regulation. Left unfettered, the free market gets caught up in intense greed and self- destructs. Karl Marx was about the inevitable self-destruction, except Marx was wrong because government stepped in and controlled the instinctive unfairness in the free market. We operate under a delicate balance between the free market and government regulation that swings back and forth. The free market self-destructs, the government steps in and over-regulates, then the free market regains its energy and outwits government controls, only to once again self destruct in its excesses. The end of the great bull market and the Bush election probably mark the high water mark for the up phase of the free market. Now that its bad aspects are revealed in all their ugliness, the pendulum will swing back toward government control. The problems are profound and the swing to more control will take time, especially with the Bush administration manning the free market ramparts.

Many of the best minds on the market think stocks will go no where for a good many years until pricing returns to reasonable levels. Those of us who felt the market was reaching a long term peak a couple of years ago did not know what forces would end the long rise. Now we know – bad corporate practices arising out of the market’s own excesses. A flat market will be supported by modest earnings growth, making extreme overpricing stand out. Improved accounting standards will be a force holding down earnings. A slow period for the market will be helpful, as all would be forgotten if we once again entered euphorialand.

One of the most intriguing questions arising from Enron is why otherwise respectable people use manipulative accounting. The answer is the tremendous incentive in stock options. Options allow management to become extremely rich in a short period of time. We are going to find that twenty or so people at Enron became very rich on options. The present secretary of the army, a former Enroner, was a second line executive who became an eight figure multi-millionaire as the second in command of a division that was guilty of gross figure manipulation. Apparently his job was sales and he did not know the ridiculous accounting tricks being played with the long term energy contracts he brought in. Is it comforting to know that one of Bush’s cabinet members was too dumb to understand what was going on in his own division? He stretched out his sales of Enron stock, required by his government position, so clearly he was ignorant of the gimmickry. Bush shares that kind of innocence. If Clinton’s number one backer had come out as has Enron with Bush, everyone would be screaming because of knowing he had probably given something in return. In Bush’s case, his standard bewilderment about anything complicated makes it easy to believe he failed to understand the implications, particularly when catering to big business is what brought him the presidency.

There is little appreciation of the extent to which management of public companies has been stealing ownership out from under stockholders. In the more popular companies, options often represent 30% of outstanding shares. Counting already exercised options, management and employee shares can end up representing over 50% of ownership on a free ride. Management gets away with this theft because options, while obviously a form of compensation, never appear as an expense on the income statement because of a special exemption earned through congressional intervention. In addition, Enron, Cisco, Microsoft to a large extent, and practically all high technology companies because of their particular abuse of options, have never paid income taxes because they are permitted to take options as an expense at the highest valuation.

The option system is crazy. It encourages earnings enhancement because even a temporarily high level for the stock can fix management up for the rest of their lives. The set up involves no risk and no investment, because the stock is usually pay for simultaneously with cashing in the exercised options. Being fully aware of the hype that elevated the stock, management is in position to make timely purchases and sales. While options are supposed to be an incentive for good management, in fact they are just the opposite. The popular slogans, pay for performance and aligning management and shareholder interests, are baloney. One of the subtler entanglements coming to light through Enron is the role of boards of directors. Why have boards allowed management to get away with huge stock option awards, a highly anti-stockholder form of compensation? The answer is that management buys their cooperation through large fees, stock options, and inclusion in company pension plans. The total package is so fat that directors would be acetic spartans not to follow management’s lead and forget their purported job of representing stockholders. Enron brings the highly conflicted position of boards of directors, and their decisions in favor of management and against stockholders, out into the open.

On management’s part, the temptation to become very rich overrides fear of dishonesty, aided by many of the figure enhancing practices being perfectly legal. If you want to hear insistent pleas of innocence, don’t go to death row, listen to top managers pleading their devotion to Generally Accepted Accounting Principles. Management is no longer concerned about the day of reckoning that goes with bad accounting because restructuring allows the cheating to be erased.

An interesting undertone to the corrective process is that Bush, ever catering to business interests, brought in as head of the SEC a man totally conflicted by being a leading SEC lawyer for big companies and accounting firms. He began to dismantle many of the progressive moves initiated by his predecessor. He reminds me of Joseph Kennedy, who FDR named as first SEC head under the theory it takes a crook to know a crook. Now Pitt, the new head, looks like a fool, so maybe he can turn himself around and stop protecting the thieves. The cards are face up on the table, and what used to be easy to get away with no longer is. Dick Cheney’s claim that he was only consulting the experts in dealing with oil executives while drawing up energy policy might have been accepted a year ago, now it is greeted with the guffaw it deserves. Suddenly we appreciate the extraordinary greed that has overtaken corporate culture.

Inauguration Commentary – January 2001

The new president is greeted with glee by comedians, but his presidency may be a watershed event. Bush Jr, to a greater extent than any predecessor, is the man of business. Reagan was all for the free market, but he was an idealist able to believe wacky ideas like voodoo economics and star wars. He never followed through on reducing the size of government. Father Bush, we forget so soon, was seen as an empty man lacking idealism. He was a competent administrator who saw the need for reducing the deficit and lost Republican support by raising taxes. Unfortunately, he had harped on no tax increases to get elected and going back on his word created the impression that Bush senior did not stand for anything.

Not so Dubya, he stands for something – unqualified support for business. Bush has sought to identify himself with education, a nice comfortable political issue, but education is a sideline. The central theme of Bush’s rule in Texas was support for business and that support is what got him elected. Business leaders picked him out as their man and provided the largest pot of money in the history of elections. He was not bought, he is a true believer that businessmen should run the country. Bush will pay absolutely no attention to McCain’s election reform effort. He is the big business candidate McCain’s program is specifically aimed at.

The cabinet appointments prove the point. Start with treasury, a businessman. Look at defense. Rumsfeld is a known supporter of increased defense spending, a powerful business issue. Bush talks about raising soldier pay, but the real support will be for new weapons. Our defense contractors sold so many advanced weapons overseas that we apparently need new ones to counter all those now in the possession of foreign powers. The appointment of a general as secretary of state (if he weren’t black we would all be shaking our heads at a general in this position) would seem to further the point.

The lesser appointments are more revealing. The original labor nominee, Chavez, is a union basher and critic of the minimum wage. Could corporations wish for anyone better. Energy: the qualification here is that the new secretary has championed closing the department. Interior: the lady’s only known position is opening up government lands to business. The most subtle is Christy Whitman as head of the Environmental Protective Agency. This may seem like a reward to a fellow member of the eastern establishment, but not so. Whitman’s predecessor introduced one of the most comprehensive environmental programs of any state and she simply disbanded it. Who better to run the EPA in the interests of business.

As for Justice, look for a dismantling of the anti-trust effort of recent years. Ashcroft’s own views are less interesting than the fact Bush would pick someone so far to the right (he did owe them a big one for repulsing the McCain bandwagon in South Carolina). The SEC – look for it to be turned over to Wall Street (an established Bush trick is turning a regulatory agency over to those being regulated) and some of the activist Levitt initiatives reversed.

The takeover of government by corporations goes beyond cabinet appointments. Business representatives, CEOs, lobbyists have swarmed the transition office seeing that sub-cabinet and other positions fall into friendly hands.

As to Prime Minister Cheney, we are so relieved to have a solid experienced man to shield us from an in-over-his-head Bush that we forget his far right views and the fact that he picked these people.

Bush endlessly talked of being a healer, but the cabinet appointments reveal the emptiness of his views on bipartisanship. Disguised by ethnic and gender diversity, the Bush appointments are blunt in-your-face moves from a man supposedly placed in a conciliatory position by the questionable nature of his win. His actions demonstrate the extend to which he is unalterably allied with big business, not the most popular interest of the common man.

The important question, will the alliance of business and the administration be good for the country? A few years ago the judgment would unquestionably have been no. Twenty years ago Bush would have been laughed at as a presidential candidate, now as the business president he is a product of changed times. Business has greatly increased its influence in government and prosperity has never been greater. Starting off with a recession, or a severe slump, means that his timing is good. Over the short run, business probably needs a helping hand and Bush is going to provide it. For the stock market over the next year, we could not ask for a better choice.

Longer term, the issue breaks down to the relative view of capitalism. The free market is seen by some as solving all economic problems and producing the greatest benefit to the greatest number. The rich may get an apparently unfair slice of the pie, but the poor end up much better off than under any other system. Certainly capitalism has proven itself in modern times. While the returns are mixed overseas because of centuries old cultural barriers, capitalism works in this country.

So the issue isn’t capitalism, it is the degree to which capitalism compromises democratic principles. Communism did not come out of the old feudal serfdom, it came out of the industrial revolution and the exploitation of labor. Free market capitalism does give rise to unfairness. The rich become greedy, they never have enough. They use money power to accumulate more and lose their sense of justice. Monopoly is an inevitable corporate goal and monopoly slows progress and leads to higher prices, defeating the free market. Enthusiasts point out that the free market ultimately destroys monopolies, but it takes time and in a democracy we are unwilling to wait. The monopoly problem may be moot, for in the fast moving high technology international economy, establishing a monopoly is almost impossible, so the anti-trust laws may have become superfluous. The government beat Microsoft, but with the peaking of the PC, Microsoft is back in a fight for its life. But the problem remains – business means big corporations and big corporations exercise great power in an undemocratic manner.

The point is that the completely free market is not utopia, it almost instinctively goes astray. I think we face a serious problem at the moment because of the crazy, greedy, indiscriminate new issuance market brought to us by Wall Street. We are seeing the downside of overselling the market and driving stocks to ridiculous levels. More significant than the immense waste of capital is the false sense of wealth that may have put the consumer behind the eight ball. Greenspan’s efforts to control stock market speculation were directed at preventing just this situation, but he failed. On the subject of Greenspan, apparently he is close to Cheney, so he may be protected, but look for the Bush people to go after him, specifically with blame for the slowdown. Business does not like Greenspan’s powerful and moderating influence on the economy, it wants a free hand.

In America we developed a government restrained capitalism to control the nastier, undemocratic practices that inevitably develop in a free market. The government is also an important partner in providing services that assist the free market to grow. The idea that government is always a hindrance is ridiculous. On the other hand, coming out of the New Deal, the need to counter the Russian threat, fears about a shortage of energy, the need for a central bank of last resort, and many other examples, government undoubtedly became too active in our lives. The environment needs protection, but the original cleanup laws of twenty-five years ago went too far. The influence of government in our lives has gradually diminished and that probably helped sustain the long prosperity of the 1990s.

Although business recognizes the contribution of government, it can’t resist fighting to reduce that role. Business wants the roads, but it does not want to pay for them. Business has captured the keys to the regulatory safe and this administration will do whatever it can to eliminate regulation. Will they overdo it? Corporations are not noted for restraint when it comes to their self-interest. The cabinet nominations are evidence of a must-have-it-our-way attitude that gets corporations in trouble. A corporation can be run as an autocracy, the country can’t.

The question is, will the business takeover be good or bad? I am a firm believer that government restraint is an important cog in the success of our form of capitalism and that given the chance business will go astray. But what do I know, maybe the unfettered market will provide new stimulus. That decision will not be made in the next four years, this is a long term contest. The pendulum of relative strength between government control and the free market has moved in favor of the free market. The result is big business flexing its muscles as never before, but that swing may be reaching a peak.

You can’t help but admire Bush’s don’t give a damn attitude, but in a democracy a business president probably holds a bad hand. I am disturbed by the constant talk show spinmeisting that this is the greatest cabinet ever, when it clearly lacks in distinction. This may reflect a defensive foreboding among Republicans about the cabinet, or an effort to obscure what this group actually stands for.

The majority of voters believe in government and anyone letting the big corporations run wild may be placing himself in an unelectable position. But maybe not. Business is on top and the majority of Americans are stockholders with a more benign view of big corporations. Business will never have a better chance to prove it can lead. The next four years will be fascinating for students of capitalism.

To the readers of my notes on George W Bush – November 2000

By the time some of you read this, the game will be over. One of the ideas of my notes was that Bush’s emptiness should have made him an easy opponent, but in the home stretch he seems a sure winner. What happened?

I think Gore ran one of the most pathetic campaigns in history. He got himself tied up in policy, in pandering to every voter, and missed his best theme: Bush’s weakness.

I could watch the debates only briefly, they were too pathetic. Bush’s shortcomings stood out clearly: his lack of grasp of programs, his inane rambling about lifting the nation’s spirits, compassionate conservatism, and so forth. But his weak performance was overwhelmed by Gore’s pomposity, his obnoxious condescension, his gratingly constrictive style, his overemphasis on his own policies that seemed to rob him of the insight to throw Bush’s lies and prevarication back in his face. He was constantly talking about the differences in their policies rather than taking advantage of openings to blow up what Bush said. Bush does have a personal touch Gore completely lacks and it came through. Gore always seems scripted, which makes his policies seem opportunistic rather than real. Thus, while Bush lied much more than Gore, he still seemed the more honest. In this case, his lack of a clue worked in his favor.

Bush’s favorite line has been about leadership, “you’ve got a leader on your hands!” Of course leadership is the one thing he has never displayed, except as an Andover cheer leader. Bush engaged in a good bit of demagoguery and got away with it. Much of his trash was effective because Gore had no response except back to his boring policies. Gore was afraid to talk about being one of the best VP’s ever, afraid of any relationship with Clinton, afraid even to offset Bush’s claim about nothing happening in Washington in the last eight years by pointing to the obvious target, the Republican congress. Gore left out the record, where he is strong, because it was associated with Clinton. Then all the new stuff made him seem like a bleeding heart liberal.

I don’t understand why Gore was unable to respond to the Bush trash talk. Did he want to be honorable and not get into personalities? Bush is weak on policy, so that seems a logical target, but the personal stuff is Bush’s greater weakness. Gore seemed determined not to engage Clinton, but Clinton might have been brilliant skewering Bush. He is such an inviting target and Clinton is such a clever fellow.

I have to admit to a churning stomach when seeing Bush on TV late in the campaign. He is so aggressively confident now, so fixed on himself. He thrusts his chest out and delivers the empty lines as if they were terribly important. The only positive thing is that the next four years are going to be entertaining, where they might have been dull with Gore. Will the arrogance of birth and position, now fed by this amazing triumph, ruin his presidency. Nothing is more deadly than arrogance.

The most surprising aspect of the campaign other than Gore’s incompetence is the Bush demagoguery. I noted above my inability to listen to Bush without a sinking feeling. In thinking about it, what gets me is this. It is not so much the emphasis on nothing issues like education (a pitty patty issue everyone is for), tax cuts, social security (so impractical and economically ruinous there isn’t a chance of it happening), dignity in the White House (come on), misrepresenting his position on medical assistance, it’s the way he says it. It’s loud, its chanting, its emotional. Even the voice inflections change depending on whether he is talking in the east or the west. What is he doing?

I am reading a new book on World War II and in the chapter on Hitler, there it is. Mein Kampf explains that the basis of political power is emotional support from the masses. The strength of a national leader depends on the ability to seize and manipulate emotions. Policies don’t matter, stirring the crowd does. Bush is not talking to his base constituency, Wall Street and the relatively well off, he has been after the masses and the style is Hitler. It shows in the increasingly obvious self-confidence, the strutting, the incredible “you’ve got a leader on your hands.”

If he is getting visions of greatness, he may not do what the average thinking supporter, who lacks faith in his ability for good reason, wants him to do: sit back and leave the governing to well-selected appointees. This presidency could get much more interesting than I thought.

Thoughts on George W Bush November 2000

By the time some of you read this, the game will be over. One of the ideas of my notes was that Bush’s emptiness should have made him an easy opponent, but in the home stretch he seems a sure winner. What happened?

I think Gore ran one of the most pathetic campaigns in history. He got himself tied up in policy, in pandering to every voter, and missed his best theme: Bush’s weakness.

I could watch the debates only briefly, they were too pathetic. Bush’s shortcomings stood out clearly: his lack of grasp of programs, his inane rambling about lifting the nation’s spirits, compassionate conservatism, and so forth. But his weak performance was overwhelmed by Gore’s pomposity, his obnoxious condescension, his gratingly constrictive style, his overemphasis on his own policies that seemed to rob him of the insight to throw Bush’s lies and prevarication back in his face. He was constantly talking about the differences in their policies rather than taking advantage of openings to blow up what Bush said. Bush does have a personal touch Gore completely lacks and it came through. Gore always seems scripted, which makes his policies seem opportunistic rather than real. Thus, while Bush lied much more than Gore, he still seemed the more honest. In this case, his lack of a clue worked in his favor.

Bush’s favorite line has been about leadership, “you’ve got a leader on your hands!” Of course leadership is the one thing he has never displayed, except as an Andover cheer leader. Bush engaged in a good bit of demagoguery and got away with it. Much of his trash was effective because Gore had no response except back to his boring policies. Gore was afraid to talk about being one of the best VP’s ever, afraid of any relationship with Clinton, afraid even to offset Bush’s claim about nothing happening in Washington in the last eight years by pointing to the obvious target, the Republican congress. Gore left out the record, where he is strong, because it was associated with Clinton. Then all the new stuff made him seem like a bleeding heart liberal.

I don’t understand why Gore was unable to respond to the Bush trash talk. Did he want to be honorable and not get into personalities? Bush is weak on policy, so that seems a logical target, but the personal stuff is Bush’s greater weakness. Gore seemed determined not to engage Clinton, but Clinton might have been brilliant skewering Bush. He is such an inviting target and Clinton is such a clever fellow.

I have to admit to a churning stomach when seeing Bush on TV late in the campaign. He is so aggressively confident now, so fixed on himself. He thrusts his chest out and delivers the empty lines as if they were terribly important. The only positive thing is that the next four years are going to be entertaining, where they might have been dull with Gore. Will the arrogance of birth and position, now fed by this amazing triumph, ruin his presidency. Nothing is more deadly than arrogance.

The most surprising aspect of the campaign other than Gore’s incompetence is the Bush demagoguery. I noted above my inability to listen to Bush without a sinking feeling. In thinking about it, what gets me is this. It is not so much the emphasis on nothing issues like education (a pitty patty issue everyone is for), tax cuts, social security (so impractical and economically ruinous there isn’t a chance of it happening), dignity in the White House (come on), misrepresenting his position on medical assistance, it’s the way he says it. It’s loud, its chanting, its emotional. Even the voice inflections change depending on whether he is talking in the east or the west. What is he doing?

I am reading a new book on World War II and in the chapter on Hitler, there it is. Mein Kampf explains that the basis of political power is emotional support from the masses. The strength of a national leader depends on the ability to seize and manipulate emotions. Policies don’t matter, stirring the crowd does. Bush is not talking to his base constituency, Wall Street and the relatively well off, he has been after the masses and the style is Hitler. It shows in the increasingly obvious self-confidence, the strutting, the incredible “you’ve got a leader on your hands.”

If he is getting visions of greatness, he may not do what the average thinking supporter, who lacks faith in his ability for good reason, wants him to do: sit back and leave the governing to well-selected appointees. This presidency could get much more interesting than I thought.