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Special Update #10 - The War Has Gone Well

Just weeks ago, several prominent members of Congress, John McCain and others, were criticizing President Bush and his team for not sending large numbers of US ground troops into Afghanistan to win the war against the Taliban. They are curiously silent now. Why? The Taliban has surrendered Kabul, without a shot, and has moved to remote areas of Afghanistan. On Monday, it was reported that thousands of Taliban military forces are negotiating for surrender. It was also reported that at least several hundred Taliban troops have been executed - by the Taliban - for attempting to surrender.

The Taliban regime, while still dangerous, is crumbling. Yes, they may have retreated to the mountains, where they are best equipped to fight. Yes, there may be events where US Special Operations forces are surprised, and casualties are taken, but for all intents and purposes, we have won.

What do you say now, John McCain and others, about ground forces? Did you really believe we needed them? Or did you just want to criticize our very popular president? Or did you just want more air time?

We all knew that the political unity which emerged immediately after 911 would not last. Over the last month or so we have seen partisan bickering among Republicans and Democrats steadily increase, although outright criticism of President Bush has been limited due to his continued soaring approval ratings. But this, too, will change.

On Sunday, November 17th, DOONESBURY cartoonist GARY TRUDEAU ripped President Bush. The cartoon disgusted most Americans by depicting the president as thanking the terrorists for attacking America and thus, leading to Bush's soaring approval ratings.

Trudeau, who has contributed thousands of dollars to the Democratic National Committee, depicted Bush in a political pep talk with advisor Karl Rove at the White House.

"Karl, is it still unpatriotic to criticize me?" asks Bush. Rove replies, "Yes sir." Then Bush thinks to himself: "Cool! This is great..."

At strip's end Trudeau portrays President Bush thanking the 'evildoers' for allowing him to push "the missile defense program and corporate tax cuts and subsidies for the power industry and oil drilling in Alaska."

Trudeau's DOONESBURY is seen in over 1400 daily and Sunday papers worldwide. As of this writing, no apology has been offered. If I owned a newspaper, Trudeau would be TOAST!



While the war in Afghanistan has been extremely successful, the next phase - that of implementing a new government - will be extremely difficult. Given the large number of tribal groups, their ever-changing loyalties, and the many remaining warlords, the prospects of a broad- spectrum government do not look good. Many of the old players are back on stage - armed and dangerous. As one commentator said, "They hate one another with an intensity that is hard to believe ... the only thing they hate more are outsiders trying to run their lives and their country; indeed, the most unifying event in the 150 years since the British in their red coats marched up the Khyber Pass was the Soviet invasion."

The Northern Alliance (United Front), the U.S. military, and the United Nations think that they are about to put together a stable nation. Just to give you some idea what we are facing, read the following report from November 16. You won't see this in the US media.


KARACHI - With the dramatic political and military changes in Afghanistan over the past few days it is becoming evident that a new war is beginning in which Afghanistan will be divided among Pastun and non-Pastun warlords, with the Taliban fighting a guerrilla war against the latter, and against any foreign troops that might join them.

This scenario sees the emergence of the warlords and jihadis of the Afghan resistance movement against the Soviets in the 1980s as a new and powerful force against the United States and its allies and the non-Pastun Northern Alliance. According to well-placed sources, under an accord reached in Pakistan two weeks ago between the Taliban and the Hizb-i-Islami Afghanistan, a fundamentalist faction of the mujahideen led by Gulbaddin Hekmatyar, a former prime minister in Afghanistan in pre-Taliban days, Hekmatyar's troops have taken control of most of the eastern provinces of Afghanistan. "We asked the Taliban leaders to leave these places, and they left, and now many of their commanders have melted into our forces," Hizb sources claimed.

These Hizb sources said that fighters under many of their former commanders, including the famous Kashmir Khan and Mutiullah, had taken control of Kunar province in the northeast of the country, and that Hekmatyar was expected to arrive soon from exile in Iran to take command.

Hekmatyar is a hard-line Muslim responsible for destroying much of Kabul in the post-Soviet (1989-1996) civil war. He was overthrown when rival militia leader Burhanuddin Rabbini assumed power. Hekmatyar was the strongest force during the years of Soviet occupation, largely because his party was the main benefactor of the seven official mujahideen groups recognized by Pakistan and US intelligence agencies for the channeling of money and arms. . . .

The sources said that another area of Afghanistan is under the control of another faction of the Hizb-i-Islami led by Maulvi Yunus Khalis. The 80-year-old Pashtun leader had been living in the Pakistani city of Peshawar, but he is now said to be in the Jalalabad area to command forces against the Northern Alliance.

A spokesman for the Hizb-i-Islami Afghanistan in Pakistan, Gharat Bahir, has stated categorically that the group would not tolerate a monopoly of the Northern Alliance in Kabul, nor the return of former monarch Zahir Shah as head of state "at any cost". "Afghanistan is a multi-ethnic country in which Pashtuns represent 67 percent of the population. Any government in the future should comprise a proportionate representation of all of them," he said.

He added that the Hizb-i-Islami has an Islamic relationship with the Taliban, and that if they become engaged in a struggle against US forces, the Hizb-i-Islami (Hekmatyar) will be with them. Large numbers of the two Hizb factions melted into the Taliban when they took power in 1996, while others left for Pakistan and Iran. With this it was considered that both factions were in disarray. Even when, after the US bomb attacks on Afghanistan began and Hekmatyar extended his unconditional support to the Taliban, few believed that he had retained enough support to control the eastern areas, as he does now.

Under the Taliban's present strategy, says a Taliban source, they have vacated a number of areas, including Jalalabad, Logar, Paktia and Kunar, under agreements with local commanders and tribal leaders opposed to either the Northern Alliance or Zahir Shah. They will not launch any attacks on major cities such as Kabul, but they will defend their areas at all cost. . . .

Behind the resurgence of the Hizb-i-Islami is believed to be the hand of Pakistan, which is bent on ensuring that there is a strong representation of pro-Pakistan elements (political and military) in any future Afghanistan setup.

Hekmatyar was among the founding fathers of a campaign to set off an Islamic revolution in Afghanistan. He and Ahmed Shah Masoud, the assassinated leader of the Northern Alliance army, were engineering students at the University of Kabul when they joined with their teacher, Burhanuddin Rabbani, in a campaign to oust the monarchy of Zahir Shah and bring about an Islamic revolution. All three and their associates were influenced by the Islamic movements of the Muslim Brotherhood of Egypt, as well as by the writings of Syed Abul Ala Maududi, the founder of Jamaat-i-Islami Pakistan. . . .

Masoud and Hekmatyar were both projected in the Western media as charismatic leaders, but after 1986 when Hekmatyar refused to meet with then US president Ronald Reagan -- and called US policies in the Middle East tyrannical -- he was essentially blacklisted by the West.

However, he remained a favorite leader with the ISI, and continued to receive the lion's share of arms and money from them. However, when Lieutenant-General Hamid Gul, a legacy of dictator General Zia ul-Haq, was removed from the ISI by the Benazir Bhutto government, the ISI's Afghan policies changed, which upset Hekmatyar, and he retired to Iran. But he maintained his good ties with the Jamaat-i-Islami and with Gul, said to be one of the main forces behind the reemergence of the Hizb in Afghanistan. END


As you can see, the prospects for setting up any kind of viable broad-spectrum government in Afghanistan are extremely low. In addition to all those mentioned above, there is al Qaeda and, for now, bin Laden. The only possible way it could happen is for US forces to remain in Afghanistan. We could be there for years. I don't think the American people have the patience for this, especially if even limited numbers of our military forces are killed along the way by these people who hate us so much.


Assuming Osama bin Laden is captured alive, the question is what to do with him? Most Americans do not understand that we are hated throughout the Islamic world. While President Bush has tried to put a good face on it, and the media has failed to report widespread celebrations in the Islamic world for the 911 attacks, the US is now more reviled in the Islamic world than ever before.

As discussed in previous Updates, this hatred of the US is not shared by all who practice Islam, but it is universal among the militant Islamists. For these people, bin Laden has become a hero - the first to bring death and destruction to the "Great Satan."

All of which raises the question, what do we do with him if he is captured alive? Americans, of course, will demand that he be brought to the US, tried, convicted and put to death. Honestly, nothing would suit me better. However, whether bin Laden is killed by US forces in Afghanistan (if he is still there), or he is brought to the US and subsequently put to death here, he will be a martyr. Hatred of the US will soar to new heights.

One day the government reports we are "closing in" on bin Laden; the next day Donald Rumsfeld says, "he could be anywhere [in Afghanistan]." I hate to bring this up, but then again maybe you have wondered as well, WHY WOULD BIN LADEN STILL BE IN AFGHANISTAN?

He had to know what the US response would be to the 911 attacks. Even if he was not responsible for the attacks, he surely knew on September 11th that he would be one of the prime targets of our response. He had plenty of time to get out of Afghanistan before the borders were sealed (assuming they were completely sealed) and our bombing started. So I wonder if he is even there.

Even if he is, he reportedly has several "doubles" who look just like him. Zealots that they are, they may allow one of these doubles to be killed (or kill him themselves) and claim it is bin Laden. We have to have proof that the real bin Laden is killed, or even captured for that matter. If you recall, this was an issue when we were fighting Hussein in Iraq. He also is reported to have a number of doubles.

The US has upped the bounty on bin Laden to $25 million, dead or alive. The best we can hope for is that the Northern Alliance or some other militant group in Afghanistan (or wherever he is) finds bin Laden and kills him. In terms of Islamic backlash, the worst case will be if he is killed by US forces during Ramadan. The next worst case will be if he is captured alive and returned to the US and then subsequently put to death.

While the latter is what you and I and most Americans would like to see, it would greatly fan the hatred of the US across the Islamic world. It would all but guarantee more terrorist attacks on the US. We're in a tough spot. I don't have any good answers.


As discussed above, we are far from done in Afghanistan. Yet the media is now turning its attention to whether Iraq will be next on the US hit list. National security adviser Condoleezza Rice said Sunday on NBC's Meet the Press, "We didn't need September 11 to tell us that Saddam Hussein is a very dangerous man."

I don't think it's a matter of IF we attack Iraq but WHEN. I only hope President Bush and his advisors realize that it will be very difficult to maintain a new government in Afghanistan, and that they will not get too strung out.

I have included three articles below about the plans for Iraq, another about the war on terror in general, and yet another on the latest Middle East peace initiative by the US.


Economic news continues to worsen. What I don't understand is why is this a surprise to anyone? It is widely accepted that we are headed into a recession. Simply put, there has to be a lot of bad economic news for us to go from an economy that was still in positive territory just a few months ago to one dipping into recession. Yet many talking heads and Wall Street pundits seem aghast that the economic reports of late have been bad.

At the other end of the spectrum, we have the gloom-and-doom crowd. They all but guarantee you that we are headed for a depression, the Dow is going to 1,000 or below, and you'd better have your gas masks handy for a biological attack in your neighborhood.

The fact is, there is NO REASON to believe today that we are facing anything more than a recession. We've had plenty of them before, and we will have them again. Given the information we have today, it still looks like this recession will end next year, barring any more serious terrorist attacks.

The intelligent debate now centers on when the economy will bottom out and start to recover. Some analysts believe it will occur in the first half of the new year. Others believe it will be late in the year before the economy turns the corner. I tend to think the latter, but I would welcome any upcoming reports that suggest it will be sooner.

The point is, no one knows. In any event, don't be surprised by more bad economic news. It's coming. But it DOES NOT mean we are headed for a depression.


The Dow flirted with 10,000 on Monday and closed up 20% from its post-911 lows. Stock market analysis, like the economy, generally falls along two lines of thinking. The bullish argument tends to center on the historic tendency of the stock markets to bottom and turn higher well before the end of economic recessions. As such, most of the analysts who have turned bullish in the last few weeks are betting that the recession will be short and shallow.

Generally speaking, the bears continue to argue that the recession will be worse. They also argue, and with a lot of history to back them up, that P/E ratios are still way to high for the market to have bottomed. They believe what we are seeing is merely a bear market rally which will be followed by a resumption of the downtrend.

I continue to feel that if there are no more major terrorist attacks, the markets will not fall below their post-911 lows. It's probably a good bet, however, to expect the markets to retest those lows in the weeks ahead. If so, I would consider that as a buying opportunity, especially if you got out of the market before, or shortly after, 911 and you are looking to get back in.


Let me close by wishing you and your loved ones a very happy Thanksgiving holiday! We Americans have more to be thankful for than we can ever think of. Despite the events of 911, our nation is strong and united. Our leaders have proven to be up to the challenge, and we have driven the Taliban out of power.

For those of you who are clients, let me thank you, especially, for your loyalty and your trust.

God bless!

Gary D. Halbert


Trudeau insults President & America.

Pentagon gears up to bomb Iraq.

Preparing for Iraq.

President's Big Mo!

Truth about the Mideast.

WSJ editorial on the War.

Noonan says W. is Trumanesque!


Hillary Clinton damages NYC rebuilding efforts.

President's approval numbers remain very firm.

Media re-recount vindicates Bush.

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Forecasts & Trends E-Letter is published by Halbert Wealth Management, Inc. Gary D. Halbert is the president and CEO of Halbert Wealth Management, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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