Terror Attacks Bring New Warnings For The US
The Abu Hafs al-Masri Brigades, a prominent militant group in Spain with known links to al Qaeda, sent a five-page e-mail and fax to the London-based newspaper al-Quds al-Arabi last Thursday claiming responsibility for the Madrid train bombings. The claim also contained a new terror warning against the United States:
We announce the good news for the Muslims in the world that the strike of the black wind of death, the expected strike against America, is now at its final stage -- 90 percent ready -- and it is coming soon, by Gods will.
The group threatened other US allies and taunted Spanish Prime Minister José María Aznar, saying, Aznar, where is America? Who will protect you, Britain, Japan, Italy and the others from us? Al-Masri claimed its "death squad" had infiltrated "one of the pillars of the crusade alliance, Spain," and successfully executed "Operation Death Trains" in Madrid.
The reason for the Madrid bombings is that Spain has been one of Americas staunchest allies in the War On Terror and specifically in Iraq. Spain was one of the first nations to join the Coalition and send troops to Iraq. Another reason may be Spains aggressive pursuit of terrorists within its own borders ever since 9/11.
While the outcome of the Spanish elections is cause for concern in regard to other foreign allies, there is also the new threat of another major terrorist attack in the US. There is no way to know how serious the latest threat is, or if it is nothing more than hype intended to invoke new fears in America. However, it is not a threat that should be taken lightly.
Temporary Complacency
The Madrid attack was significant for a number of reasons. The West had been lulled into a temporary complacency thinking that the US was successful in taking the war to the terrorists, so they were too busy running and hiding to mount an attack. While I do think the War on Terror has been effective in disrupting the terrorist network, I think we are also foolish to believe that it has ceased to operate. The Madrid attacks prove this to be the case.
Another significant result of the attack in Madrid was the stock markets knee-jerk reaction to the news. I have consistently qualified my positive economic outlook and investment recommendations with the caveat that all bets are off if another major terrorist attack occurs on US soil. The stock market losses last Thursday showed that there are plenty of others who feel this way too. Yes, the stock markets rebounded last Friday, but the immediate response to the terrorist attacks was to head for the exits.
This is significant. We can talk all we want about the economic recovery, better corporate profits and a rising stock market, but if we see another major terror attack on US soil, all of this optimism will go south in a hurry, just as it did after 9/11.
Back To Politics
The current political discourse is based on a perception of safety in the US. Discussions about health care, tax policy, economic recovery and employment must all assume a stable environment where we feel free from attack. In the end, however, the bottom line of all of these issues depends upon how safe we actually are, not how safe we think we are. Even so, the lesson from Spain is that perceptions determine election outcomes.
Thus, the 2004 election is going to be about shaping the perceptions of American voters. The press tends to want to focus on domestic issues, where Democrats appear to be stronger, and less on the issue of terrorism. However, I think the stock markets recent knee-jerk reaction to the Madrid attacks illustrates that terrorism is not too far back in the minds of the average American.
Unfortunately, at this point in time we really dont know whether our Department of Homeland Security has protected us from additional attacks, or whether al Qaeda just doesnt yet have all of their ducks in a row for its next offensive. We hope and pray that the measures taken to tighten domestic security have been successful, but its difficult to know for sure.
Who Makes You Feel Safer?
It is widely believed that al Qaeda miscalculated the US response to the 9/11 attacks. They had viewed the US as a soft society who would not retaliate for the attacks. However, in reality they awakened a sleeping giant. In Spain, however, the attacks did have the desired effect. Does this mean that al Qaeda might try the same tactic just prior to the US elections? Now that the War On Terror is 2 ½ years old, do they think that the American public may be weary of troop deployments and almost daily losses?
As a practical matter, its probably impossible to stop all kinds of terrorist activities in the United States considering the sheer size of our borders and freedoms we enjoy. If Israel cant shut down suicide bombers, why do we think we can? So far, however, al Qaeda seems to have opted for the big event in the US, rather than numerous smaller attacks. This, I think, is in our favor since the logistics involved in a large attack require more people, planning and coordination, and thus more ways to be detected. What we dont know is how long al Qaeda will stick to this game plan.
I dont think we can count out an attack by al Qaeda prior to the US elections. When this may occur, nobody knows. The Spanish attack was successful by being just before the election, but I have read other analysts who think that al Qaeda may be planning something in the US for spring or early summer. Again, they have successfully influenced an election by changing the perceptions of Spanish voters, so you can bet that they are now trying their best to figure out when and what kind of attack would most influence American voters.
I know this type of thing is not pleasant to think about, but it is necessary in the post-9/11 world of global terrorism. Whether or not another attack occurs on US soil, its clear that al Qaeda still has the ability to strike. As a result, I think this years election is going to boil down to one question which candidate makes you feel safer? I think if you consider the track record of both candidates, the choice is easy to make.
Kerrys Waffle House
John Kerry is a decorated Vietnam veteran. However, he came back to the US and became an anti-war activist, even going so far as to recount atrocities committed by his fellow soldiers while in Vietnam, even though some of his accounts were later shown to be untrue. Even so, his outspoken opposition to the war allowed him to shed his military background and slip into a more liberal persona that would make him more electable in his home state of Massachusetts.
Now that he is on a national political stage and not in just one liberal New England state, Mr. Kerry has again picked up his military medals (you know, the ones he said he threw away but didnt) and is using his status as a veteran to try to get votes. This, plus Kerrys constant flip-flops on the issues, can only be described as a candidacy of political expediency.
In fact, Kerrys actions while running for the Democratic nomination have been political expediency in the extreme. Even the ultra-liberal website, Slate, made the following comments regarding Kerrys constant waffling on the issues:
Kerry did vote for the Patriot Act, the No Child Left Behind Act, and the war in Iraq, even though he [now] constantly trashes the Patriot Act, the No Child Left Behind Act, and the war in Iraq. He voted against the Defense of Marriage Act, which limited marriage to a man and a woman, but he now says marriage should be limited to a man and a woman.
The article goes on to list a number of other issues on which Kerry has flip-flopped during the course of the presidential campaign. (A link to the full article can be found in the Special Articles section below.) His supporters say that his waffling is nothing more than an indication of his intelligence and ability to grow and change. Its just funny that the changes seem to always be in the direction of political expediency.
So, how does this relate to the issue of terrorism? The fact is, its hard to tell. Which way will the wind be blowing if Kerry is elected president and another terrorist attack occurs? Will he immediately bring our troops home from the Middle East, or will he leave them there? Sure, his website and campaign speeches contain a plan for everything, but what will he actually do should he be elected? Your guess is as good as mine. His record indicates that you cannot go by what he says or how he votes, so youd just have to wait and see.
Bush Consistent Leadership
On the other side of the election is President Bush. While I have been a vocal critic of the president when he has abandoned traditional conservative ideals on farm subsidies, steel tariffs, and immigration, all of these issues pale in comparison to his leadership in the War on Terror.
Think about it. While enduring almost constant blistering criticism and second-guessing by Democrats and their liberal press lapdogs, Bush has stayed on target to take the War On Terror to those who represent a threat to America and our way of life. His resolve has stayed strong and has weathered the storms of inaccurate intelligence, calls to defer to the UN and being abandoned by countries that have formerly been strong allies.
Critics of President Bush like to bring up the discussion about weapons of mass destruction and the war was just about oil. The problem with these arguments is that first of all, Clinton relied on and made decisions based on the same intelligence on WMDs. Other Democratic leaders did the same. If there is a problem, its that the intelligence was wrong, not that it was manufactured.
On the war for oil issue, if Bush had wanted to control the largest Middle East oil reserves, we would have attacked Saudi Arabia and not Iraq. Given that most of the 9/11 attackers were from Saudi Arabia, as well as bin Laden himself, he might have been able to justify it.
Conclusion
In a perfect world, politicians would genuinely seek to do what is best for all of their constituents. While they may differ on specifics regarding the domestic agenda in America, it should be a top priority for any public servant to make sure that basic safety is met. Otherwise, the domestic agenda could cease to exist.
Whether you agree with President Bushs stance toward Iraq and the War On Terror or not, you have to admit that he has remained steady in his resolve to do what he thinks is best. While he has done his best to strengthen our domestic security, he has also taken the offensive to where the terrorists are, disrupting their leadership and keeping them on the move.
I believe that this leadership will be the basis upon which the election is decided. A recent poll taken by Andres McKenna Polling and Research may back this up, finding that 60% of Americans believe the terrorists would prefer Mr. Kerry to win the election. That says enough for me.
Since Im in the investment business, I just cant resist the urge to say a word about investing in these troubled times. Since I began writing this E-Letter, I have consistently recommended that you consider actively managed programs that can move you out of the market, if necessary. I believe that now it is more important than ever to have such programs in your portfolio. As we saw with Wall Streets knee-jerk reaction to the Madrid bombings, further attacks by al Qaeda can and will have an effect on the markets.
All the best,
![](http://www.investorsinsight.com/images/gdhsig2.jpg)
Gary D. Halbert