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The Daily Reckoning PRESENTS: Plus �a change, plus c'est la 
m�me chose... This DR Classique was originally aired on 
October 12, 2001.


THE GOD OF WAR
by Bill Bonner

"Americans are walking right into a trap," said a friend at 
lunch the other day. 

"Terrorists don't expect to defeat the US. They know they 
can't do that," he continued. "These people are not 
dumb...I lived among them for many years. They have a 
different idea of how the world works. 

"They had a reason for striking the US," he explained. "It 
was very simple. They wanted to show the rest of the 
radical Muslims that they could reach right into the heart 
of the 'Great Satan.' More importantly, they wanted to 
provoke a response. As big a response as possible. They 
don't care if they live or die. They will measure their 
success by the extent they set the world on edge and 
radicalise other Muslims."

Here at the Daily Reckoning our beat is money. But we look 
to the rest of life - love, war, poetry - for instruction. 
A man may be driven wild by love, or by war, or by a bubble 
market. He may act wisely...or foolishly...depending on the 
circumstance. 

And he may be ruined or saved, often as not, by the grace 
of the gods as by his own perspicacity.

What turns our attention to war is the fact that we seem to 
be in one. And what causes us to comment is the fact that 
the nation's bellicose spirit seems to have formed a grand 
alliance with its wishful bullishness...thus are we drawn 
into the war by alliances...like Germany and Russia into 
WWI.

That war, too, began with a terrorist incident. Gavrilo 
Princip, too, wanted to stir things up...to provoke the 
authorities. He succeeded beyond his wildest dreams. By the 
time the war was over, the major monarchies of Europe had 
all fallen - the Hohenzollerns in Germany, the Romanoffs in 
Russia and the Hapsburgs in Austro-Hungary - and every 
major government of Europe had been replaced.

Ninety-three years later, Wall Street and the Pentagon 
march to the same drummer. One of the causes of yesterday's 
169-point increase in the Dow was a rumour - that Osama Bin 
Laden had been captured or killed. In the group mind, the 
"war on terrorism" (the war of "infinite justice" has been 
quietly dropped...) is as certain as a bull market on Wall 
Street. It may take time. There may be ups and downs...but 
the inexorable march of history is towards higher prices on 
Wall Street and an American victory against terrorism. 

We do not know better, or worse. But a victory over bear 
markets and terrorism is so widely anticipated and so 
little questioned that we cannot help but wonder - in 
today's letter - what surprises the gods may have in 
store.

"Surprise lies at the foundation of all undertakings, [in 
war] without exception," wrote Carl von Clausewitz, in his 
tome "On War" in the early 19th century. Clausewitz, a 
Prussian soldier, had seen Napoleon's army sweep through 
Europe. He, too, wondered who the god of war might favour, 
and why.

A general who catches his enemy off-guard has control of 
the field, Clausewitz noticed. Not only does he cause 
confusion and discouragement in the opposing troops, he 
also determines the place and terms of battle - an 
immense advantage.

In the present war, such as it is, it was the enemy who 
made the surprise move. The American response, as far as we 
can tell, has been as predictable as a teenager's slouch. 
It is not only the response the enemy expected...but the 
one he wanted.

Sometimes you can win by doing what the enemy intends. But 
few enemies are gracious enough to set traps for 
themselves. More often, they set traps for their opponents. 

That is why it is rarely wise to attack an enemy head-on. 
Instead, a smart commander, Clausewitz explains, attacks at 
the unexpected point - on the enemy's flanks. "By directing 
a force against the enemy's flank and rear its efficacy may 
be much intensified," the Prussian continues. 

Military history - like the history of markets - is a sad 
chronicle of mob-thinking inspiring people to do moronic 
things. Among the common stupidities is the direct attack 
against fortified positions. "The defensive form of war is 
in itself stronger than the offensive," Clausewitz 
believed. Military strategy should be focused not on how to 
attack the enemy, but how to get the enemy to attack you. 
The enemy then exhausts himself - like the Confederate army 
at Gettysburg...or the French in the early days of WWI - 
against the defensive barriers.

This principle is especially relevant in cases of guerrilla 
warfare. The guerrilla knows he cannot beat his enemy in a 
pitched battle, so he hits with limited resources at 
carefully-selected targets - blowing up trains...shooting 
archdukes...or driving commercial aircraft into skyscrapers 
- inviting his opponent to strike back with massed force.

"The immediate object here is neither the conquest of the 
enemy's territory nor the defeat of his armed force," 
Clausewitz observed, "but merely to do him damage in a 
general way." If the god of war smiles on your enterprise, 
the enemy is provoked to attack in force and then he is 
worn out by "a gradual exhaustion of the physical powers 
and of the will by the long 
continuance of exertion."

That is what happened to the Soviets in Afghanistan. Could 
it happen to US forces too?

I don't know. But, occasionally, the gods go over to the 
other side.

Your editor, American, and flaunting it...

Bill Bonner

P.S. I have nothing against people killing themselves for 
what they believe in - especially if it is something 
insane. But, given my preference, I'd rather die of natural 
causes...and I'm not even very happy with that.

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