Finance By Other Means: The Fiscal Cliff Is Bin Laden’s Prophesy
As both political parties maneuver to avert the fiscal cliff before year end, it is interesting to note that there is one person who for over twenty years consistently predicted that the United States faced a looming fiscal crisis, one that he intended to exacerbate and exploit — Osama bin Laden.
It may surprise most Americans, but the primary battlefield that bin Laden had chosen to defeat us was always financial. In a statement recorded by bin Laden three months after 9/11 he explained to his followers that it was “the economic base that is the foundation of the military base, so … it is very important to focus on attacking the American economy by any means available.” According to bin Laden, “there are two elements to fighting; there is the fighting itself and then there is the financial element…so the struggle is both financial and physical.”
Following its crushing defeat in Iraq, Al Qaeda and its fighters received much needed solace from the economic meltdown in the Fall of 2008. In a videotaped statement Adam Gadahn, the American-born propagandist for Al Qaeda, stated that “the Muslims are on the verge of a historic victory,” noting “the expanding crisis” that the economies of “the enemies of Islam” are facing.
Bin Laden’s own strategic discourses often resembled the bloodless analysis of a Wall Street economist, frequently mentioning factors such as the United States budget deficit, unemployment, interest rates and the stock market. This statement is typical: “For example, Al Qaeda spent $500,000 on the September 11 attacks, while America lost more than $500 billion…That makes a million American dollars for every Al Qaeda dollar, by the grace of God Almighty. This in addition to the fact that it lost an enormous number of jobs – and as for the federal deficit, it made record losses, estimated at over a trillion dollars.”
Bin Laden’s focus on the economy as the critical center of gravity of the struggle between the Mujahideen and the West derived from his experience battling Soviet forces in Afghanistan in the 1980s. The economic collapse of the USSR following its military defeat in Afghanistan profoundly shaped bin Laden’s strategic thinking and ultimately launched him on his ambitious plans to take on the United States. If one superpower could not only be defeated but eliminated, why not another? The Soviet economy’s inability to bear the cost of a “hot war” in Afghanistan combined with a Cold War arms race with the U.S. led bin Laden to focus on the importance of finance and economics in his struggle with the West.
After 9/11 Bin Laden confirmed that he was “continuing the same policy” that he had successfully pursued against the Soviets — “to make America bleed till it becomes bankrupt.” In an audiotaped offer of a truce to America released in 2006 he repeated his warning: “With patience and crude weapons we battled the Soviet foe for ten years. We bled their economy and by the grace of Allah they are now nothing. In that there is a lesson for you.”
“I think the biggest threat we have to our national security is our debt,” said Admiral Mike Mullen, then Chairman of the Joint Chiefs of Staff, earlier this year. Mullen’s remarks made headlines, but he was merely echoing remarks by King Archidamus of Sparta centuries earlier. Around 500 BC Archidamus cautioned against those advocating war against Athens: “War is not so much a matter of armaments as of the money which makes armaments effective…So let us first of all see to our finances and, until we have done so, avoid being swept away by speeches from our allies.” In his own plain spoken way President Truman made the same point in the early days of the Cold War when he stated that “economic security and military security were two halves of the same walnut.”
Several years ago two professors at the University of New Mexico, Aaron Clauset and Maxwell Young, discovered that a relationship between severe stock market crashes and terrorist attacks: the frequency and severity of both events follow a mathematical relationship known as a power law. (The most well known power law relationship is the Richter scale which charts the severity of earthquakes.) According to the two physicists, extreme events like September 11 are not statistical outliers but can be predicted by power law modeling. Clauset and Young concluded that, “If we assume that the scaling relationship and the frequency of events do not change in the future, we can expect to see another attack at least as severe as September 11 within the next seven years.” Disturbingly, they made that prediction seven years ago.
In the first four days of trading after the attacks of 9/11 the Dow fell 14 percent. Wall Street recovered rapidly though, and, within a few weeks of trading, the markets regained all the ground they had lost. Today, given our nation’s much more precarious financial situation, a terrorist attack could shove our economy off a fiscal cliff more dangerous than the financial result likely to occur if political negotiations fail in Washington. In refusing to properly manage our nation’s finances, our political leaders have jeapordized our national security and made us much more vulnerable to the economic impact of a terrorist attack today than 2001.
Michael Keane is the author of PATTON: Blood, Guts, and Prayer.
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