Lucky or Smart? A Tale of Two Terrorist Attacks

FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
June 1, 2010

IN THIS ISSUE:

1.  Have We Been Lucky or Smart?

2.  What If….?

3.  The Media’s Never Gonna Get It

4.  What Might the Future Hold?

Introduction

Just a month ago, a would-be terrorist attempted to detonate a car bomb in New York’s Times Square.  Had he been successful, hundreds or quite possibly thousands of people may have been killed.  This attack occurred just a few months after a failed attempt to detonate a bomb on an airplane full of travelers on Christmas Day.  As heinous as these attempts were, they have pretty much fallen off of the radar screen of the average American, thanks largely to the benign neglect of the mainstream press.

As I continue to follow what news there is about the failed Times Square bombing and remember back to the Christmas Day “underwear bomber” attempt to bring down a passenger jet, I get a bad feeling.  It seems that everyone sees these warning signs of increased terrorism on US soil, but all of us seem to think that somehow we won’t be directly affected.

This week, I’m going to delve into the uncomfortable question of how our lives may have been affected had these two recent terrorist attempts been successful.  Where would our attitudes, the press, the public debate and, most importantly, Congressional and Obama administration attention be focused right now had we just experienced two successful terrorist attacks in the short span of about four months?

Lucky or Smart?

In the investment “due diligence” process, we always evaluate track records by asking ourselves if the money manager was smart enough to have an edge, or was just plain lucky.  Sometimes, the same rule applies to political action (or inaction, as the case may be).  It’s no question that Congress and President Obama have been extremely lucky over the past five months or so.  Two major terrorist attacks have been averted, not by Homeland Security or other government intervention, but by everyday Americans and the bungling of the terrorists themselves.

The mainstream media, ever the obedient protectors of the Obama administration, have completely covered these two stories up.  Can you believe it?  It’s only been a month since the failed attempt to detonate a bomb in Times Square – which could have killed thousands – yet there’s little, if anything, still on the newswires about the attempt, the terrorist perpetrator or any foreign accomplices he may have had.  In fact, if you see anything in the mainstream press it seems to be worried more about avoiding the “T” word (terrorism) than informing the public about a real and present danger.

While many people like to point out that we have been safe from terrorism since the 9/11 attacks, nothing could be further from the truth.  Just because we’ve had two inept would-be terrorists doesn’t mean the threat has gone away.  Plus, there has been a steady string of successful and unsuccessful terrorist attacks since 9/11, and many have been thwarted by law enforcement. 

The Heritage Foundation has compiled a list of 31 foiled terrorist attacks since 9/11, though the press doesn’t like to call them that.  However, not all of the unsuccessful attempts were foiled by law enforcement.  Some, like the two most recent examples, were simply botched by the would-be terrorists.  Just a few of the more notable examples of successful and unsuccessful terrorist attacks since 9/11 are as follows:

  • 2001: Richard Reid, the “shoe bomber,” who had trained in terrorist camps in Afghanistan, unsuccessfully attempted to detonate plastic explosives during an American Airlines flight.  Gutsy flight attendants and passengers subdued him.

  • 2002: Egyptian immigrant Hesham Mohammed Ali Hadayet killed two people and wounded several others at the El Al ticket counter in the Los Angeles airport.

  • 2009: Najibullah Zazi and Zarein Ahmedzay pled guilty to charges that they plotted to bomb the New York subway system, supposedly acting under orders from senior al-Qaeda leaders in Pakistan.

  • 2009: Major Nidal Hasan, an American Muslim with ties to a radical Islamic cleric in Yemen, killed 13 US soldiers and wounded many more in a shooting spree at the Fort Hood, Texas army base.

  • 2009: After being trained by al-Qaeda in Yemen, Nigerian national Umar Farouk Abdulmutallab attempted to detonate an explosive device hidden in his underwear while aboard a Northwest Airlines flight on Christmas Day.  Dubbed the “underwear bomber,” his attempt was unsuccessful when the device failed to detonate.  Ironically, Abdulmutallab’s father tried to warn US officials that his son had been radicalized prior to the attempted bombing.

  • 2010: After receiving explosives training from the Pakistani Taliban, Faisal Shahzad allegedly attempted to detonate an improvised explosive device (IED) in a vehicle parked at Times Square in New York City.  Fortunately, the bomb did not detonate as planned.

Take a look at the list of all the foiled terrorist attacks since 9/11 by clicking on the following link from the Heritage Foundation:

http://www.heritage.org/Research/Reports/2010/04/30-Terrorist-Plots-Foiled-How-the-System-Worked

From this listing, it’s clear that Homeland Security and law enforcement agencies have, indeed, prevented several major terrorist attacks.  However, as we now see with the Christmas Day and Times Square plots, just one terrorist slipping through the cracks could still result in the loss of hundreds, or maybe even thousands, of innocent American lives.

In the remainder of this E-Letter, I’m going to discuss how the US, and possibly the world, may have been different had the two most recent terrorist attacks been successful.  As I do so, please understand that it is not my intent or desire to wish that anyone had been harmed.  Instead, my goal is to point out how complacent we have become since the days of heightened diligence we saw immediately after 9/11, and how, if we remain complacent, we do so at our own peril.

What If….?

So, what kind of world might we be living in today had these most recent bungled terrorist attacks been successful?  All I can do is speculate, but I think that one of the first changes would be that the public would be far more interested in the events than they are now.  Public attention has drifted away from the subject of terrorist attacks but, had they been successful, I think we would have been inundated with news reports, information (and misinformation) about the attacks, the attackers and what our response might be. 

Given that these attempted terrorist attacks failed, the stories quickly fade into the past.  Looking back over the Heritage Foundation list, how many of these attempts did you remember?  Isn’t it amazing that 31 foiled terrorist attacks have faded so fast from memory, and this doesn’t even count the attacks that were successful?

The bungled terrorist attacks have also had an effect on the debate in Washington.  With little or no public outcry for greater security, Congressional debate has been able to move forward on the liberal agenda of President Obama and the left-most wing of the Democratic Party.  Do you really think that Congressional hearings about Goldman Sachs would be on the front page of the news had a terrorist bomb just been detonated in Times Square?

The recent uproar about the Arizona law to stem illegal immigration would also probably not be the issue it is today.  In fact, had we suffered two recent terrorist attacks, Arizona may not have had to even consider its own legislation as the federal government, even under Obama, may have been forced to be more proactive on illegal immigration.  Even without a successful attack, securing our borders is extremely important.  Just last week, the Dept. of Homeland Security warned Texas law enforcement of a plan by a known al-Qaeda terrorist to sneak into the US through Mexico.

Of course, the mainstream press and activist groups like to focus on the plight of Mexican nationals entering the country illegally.  However, if those seeking employment can get through, so can terrorists from Middle Eastern countries whose only job is to kill innocent people, destroy our infrastructure and disrupt our day-to-day lives.

As an aside on the issue of immigration, political commentator Dick Morris recently wrote an excellent article about how to address illegal immigration by taking the focus off of those who seek opportunity in this great land of ours, and placing it where it belongs, on those who seek to exploit those workers for their own gain.  I have included a link to Morris’ commentary in the Special Articles below and I highly suggest you read it.

One of the biggest changes, however, may lie in the legal treatment of any terrorists and their accomplices.  The Obama administration now considers these individuals to not be “enemy combatants,” but rather common criminals to be dealt with by our civilian justice system.  Thus, a person who willingly sought to take hundreds or thousands of American lives will be thrown in the slammer along with guys that stole some hubcaps or knocked off a liquor store.

Finally, had one of the recent attacks been successful, we may have seen a resurgence of patriotism like we did after the 9/11 attacks.  Do you remember how many homes and businesses had flags flying?  Though the media eventually got around to claiming such displays of patriotism to be corny or the result of right-wing fanatics, it was refreshing to see how many people were proud to be Americans and how we all came together after 9/11.  Isn’t it a shame that it often takes a deadly jolt to our collective sensibilities to bring out these feelings that should be evident at all times?

The Media’s Never Going to Get It

The mainstream media continues to be the lapdogs of liberal Democrats in general, and President Obama in particular.  We’ve known this for a long time, but it seems that the rest of the country is catching on as well.  The mainstream media helped Obama get elected by giving him passes on issues that would have sunk even Democratic candidates in the past, and has continued providing cover as Obama works through his liberal agenda.

Had these latest two attacks been successful, however, there’s no way the media could have shuffled them to the back pages.  The public would demand to be informed about the attacks, just as they did post-9/11. Instead, these bungled attempts have allowed the media to minimize coverage of terrorism in favor of issues more near and dear to their hearts.

In my opinion, the liberal media are doing a vast disservice to the American public.  Instead of promoting increased diligence and the reality of the threat of terrorism, they wring their hands about political correctness and how they hope no one is being improperly profiled.

A good case in point is the attempted Times Square bombing.  Liberal media personalities like Robert Dreyfus of The Nation, MSNBC anchor Contessa Brewer and law professor Timothy Stoltzfus Jost writing on Politico’s Arena, among others, were swift to insinuate that right-wing extremists (read: Tea Party members) were more likely at fault for the attempted attack.  These supposed “journalists” would rather believe that we face a domestic threat than admit that we are at war with a network of radical Islamists who would prefer to see our Western way of life (including freedom of the press, by the way) disappear from the planet.  What idiots!

Had the recent terrorist attacks been successful, they may have also caused Obama to think twice about making public the number of nuclear devices currently deployed by the US.  Don’t you find it just a bit ironic that Obama failed to deliver on his promise of complete government “transparency” during the entire healthcare debate, but readily discloses formerly classified military information to those who may be our enemies?  In the face of renewed attacks on American soil, I think that Obama would have found it to be unwise regarding national security to disclose the extent of our nuclear arsenal.

The liberal media’s never going to get it but, should another major terrorist attack occur on US soil, they’ll be front and center to cover the carnage.  Knowing the mainstream press, they’ll probably try to somehow blame George W. Bush for the hatred that drove the misguided terrorists to attack us, while Obama claims that he inherited the terrorism problem.

Instead of being on the side of the “Blame America First” crowd, the media should be on the “Protect Americans First” team.  Instead of wringing their hands about the occasional nut jobs who openly carry signs with swastikas and references to Hitler at Tea Party rallies (though they never seemed to be bothered by these same symbols when people were protesting Bush’s policies), they should be concerned about whether there are hidden terrorist cells already in the country, just biding their time until they get the signal to attack.

What Might Lie In Our Future?

If we continue to coddle terrorists rather than treat them as the enemy combatants that they are, I fear that our country may soon change for the worse, and possibly not long from now.  I have two college-age kids and I don’t want to think of them having to live in an America where you might be the victim of an improvised explosive device by just going to the mall or a restaurant, but that day may be coming.

I remember reading warnings back in the late 1990s which predicted that a nuclear device would be exploded in a major US city by the year 2025.  It seemed unrealistic at the time, but it seems all too possible today.

Little did we know at the time that Islamic terrorists would soon be seeking out nuclear materials for the very purpose of the annihilation of a US city and its occupants.  Fortunately, making a nuclear warhead is far more complex than TV and movies make it appear.  However, it may only be a matter of time before Islamists flush with oil money find a way to get what they want.

What About the Markets?

One of the features of this E-Letter is that I try to show how politics and geopolitics affect the investment world.  While you may not think that the potential for a terrorist attack would affect the markets, it very much can.  There’s an old saying that “the markets hate uncertainty,” which usually means that they tend to fall in uncertain times.  The recent drop in the stock markets related to the Greek sovereign debt issue and its possible effects on the euro are a good case in point.

What do you think the stock market will do if and when we reach a point in time when no one can ever be confident that they won’t be the victim of a terrorist attack?  What happens when our infrastructure is the target of terrorist destruction?  I think we’ll see uncertainty on steroids if that happens, which could throw the stock market into turmoil as investors flee more risky assets.

During such times, investors often flock to Treasury securities as they are viewed as the safest port in a storm.  I would expect this behavior to continue should we suffer future terrorist attacks on a scale that the Times Square plot could have been.  However, with continued trillion-dollar deficits as far as the eye can see, who knows how long the top bond rating enjoyed by the US will stand.

A final market reaction is actually already underway.  Gold is becoming the investment du-joir for many investors because of its reputation as being the ultimate store of value.  Recent developments in exchange traded funds (ETFs) have also made it easier than ever to own securities backed by physical gold, which helps explain in part gold’s explosion in price.

I haven’t been a big fan of gold as an investment for a number of years, primarily because gold has a history of dropping off a cliff after big upswings, giving investors little time to move out of their investment before incurring huge losses.  Gold also pays no dividends or interest, so it has little or no value to those needing to take income from their investments.

Even so, I can see the value of a small allocation to gold as a long-term portfolio holding.  Accordingly, my research staff has been looking into the various ways you can participate in the current gold rush, if you have a desire to do so.  I know many of you are interested in gold, given its huge rise in price over the last few years, so I plan to focus more on gold in an upcoming E-Letter, even though I would not advise jumping in now with the price having skyrocketed in the last few years.

Conclusions

I’ll have to admit that when I started writing this article, I was very upset about the fact that we had experienced two near-misses on the terrorist front, and I still am.  However, as I reviewed the Heritage Foundation report, which documented 31 such terror attempts since 9/11, I felt somewhat better about the ability of our law enforcement agencies to prevent many planned attacks.  Yet, most of these attacks were foiled under the Bush administration, so let’s pray that the vigilance displayed by these agencies continues to be a priority under the Obama administration.

Quite frankly, I have my doubts about the Obama administration’s commitment to keeping us safe.  A case-in-point is the Wall Street Journal piece in the Special Articles link below about failed “shoe bomber,” Richard Reid.  In an effort to appease the ACLU and other like-minded groups, the Justice Dept. is giving Reid and possibly others greater civil liberties that they can use to plot ways to bring harm to you and me.

As you know, I am no stranger to controversy, but I felt that offering this “what-if?” view of the two recent terrorist attacks would help to keep our focus on the continued need for prevention.  It seems that the longer we go without a large loss of life in a terrorist attack, the more complacent the American public and our elected officials become.  And complacency is exactly what the terrorists count on to facilitate their deadly aims. 

We have been very lucky that the Christmas Day and Times Square attacks didn’t result in the loss of hundreds or even thousands of lives.  Unfortunately, I don’t think that we can count on all future terrorists being as inept as these two recent cases, so it’s going to be a matter of either being more diligent or hoping that you and your loved ones are not going to be among the victims.  Sorry to end on such a dismal note, but this seems to be our new reality.

Hoping to Protect America First,

Gary D. Halbert

SPECIAL ARTICLES:

Dry Up the Will to Cross the Border (by Dick Morris)
http://townhall.com/columnists/DickMorrisandEileenMcGann/2010/05/05/how_conservatives_should_handle_immigration?page=full

Revenge of the “Shoe Bomber” (You won’t feel safer after reading this.)
http://online.wsj.com/article/SB10001424052970203609204574317090690242698.html


Read Gary’s blog and join the conversation at garydhalbert.com.


Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, 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, ProFutures, 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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