Q: Doug, I hear you’ve been reading the obits recently – what’s on your mind?
Doug: Yes, I couldn’t help but note the long and generally favorable obits on Robert “the Strange” McNamara, at age 93. The obituaries ranged from glowingly positive to, at worst that I read, neutral. I was shocked and disgusted by these things. I considered the man to be a classic sociopath and a war criminal, among other things. He was one of the worst human beings ever to have lived.
Q: Don’t pull your punches, Doug…
Doug: Well, I have to say that I take his death a little personally. In life, I find that the things I regret most are not the things that I’ve done – although there are some of those – but more than that, it’s the things that I haven’t done. And one of the things I regret having not done was back in about 1995, when McNamara gave a speech at the Aspen Institute, promoting his book. I wanted very much to ask him a question. Usually, I’m pretty bold about these things, but this time, I just didn’t do it.
The question I wanted to ask him was this: “Mr. McNamara, how is it that after nearly destroying the Ford Motor Corporation, then destroying Viet Nam and almost destroying the United States, and then going on to be the president of the World Bank, where you made great strides towards destroying the world economy, how is it possible that today you can be held in high regard and stand up in front of this audience without being pelted with rotten fruit and vegetables?”
Q: So what happened? Did he leave before anyone could ask questions?
Doug: One of the few things I can say in McNamara’s favor is that he actually took questions. I believe I could have gotten a chance to ask my question. I honestly don’t remember why I didn’t do it. It was just one of those moments in which I didn’t do what I almost always do, which is to confront these people whenever I have the opportunity.
McNamara was actually an anti-libertarian in many ways. You know, he started his career as a statistical analyst evaluating the success of bombing raids in Germany and especially in Japan. He was a big promoter of raids on civilian population centers, like the carpet-bombing of Tokyo, in which 100,000 people died in one night, and it really served no useful purpose at all.
Q: Do you know why he advocated that?
Doug: It’s a good question, because he later said that he had a conversation with Curtis LeMay, his immediate superior, in which they discussed the fact that if the U.S. had lost the war, it would be Americans who would have been tried as war criminals, not Tojo, Goering, and those guys.
So, apparently, he considered the moral implications of his criminality, but… he didn’t learn a thing. He advocated the same thing in Viet Nam – but the start of his war crimes was in World War II.
He then went to the Ford Motor Company. It’s often said, especially if you read the recent obituaries, that he “saved” Ford, along with eight other wiz-kids that were in the Air Force with him. But I don’t think that was true at all. The fact that McNamara and these other number crunchers were hired by Ford is, to me, indicative of the start of the collapse of the American auto industry. Previously, American cars were generally very good. The founders were car guys. They understood the way engines work and suspensions work, etc. They liked driving them, and liked racing them, and enjoyed them as products. That’s when cars were good. But McNamara was a bean-counter.
Look at it this way: he was directly responsible for the Edsel, which even today, fifty years later, is still known as the biggest disaster in American automotive history. It was his personal baby.
The only reason earnings went up while he was at Ford was that he was the first of these guys to pinch pennies, fire people who weren’t efficient enough, and do accounting tricks. That sort of thing. He was a non-car guy, running a car company.
To me, it’s shameful, the way people credit him with saving Ford.
And then they go on to talk about Viet Nam, for which he was directly responsible for the way we conducted that war. But there were other things before that. He was behind the Bay of Pigs invasion, and he was primarily responsible for the arms race between the U.S. and the Soviet Union. He’s the one who came up with MIRV missiles, which made the Soviets believe that the U.S. was planning a first strike against them.
But his record in Viet Nam, of course, was a total and complete disaster.
Q: Surely the obits aren’t absolving him of that? Almost no one views the Vietnam War positively these days.
Doug: Well, they all seem to point out that he had moral qualms about it. But my guess is that they weren’t moral qualms at all. Here he was, attacking a simple peasant army that was living on dried rice and had basically nothing but hand-carried weapons, mounting B-52 raids, using all kinds of the highest-tech weaponry of the day, and spending gigantic amounts of money, just to kill peasants. So it doesn’t seem to me that he had any moral qualms. I think he wanted to get out of Viet Nam because he could see how hopelessly stupid it was.
Talk about stupid. Here’s a man that was highly intelligent -- he was very, very smart – but he was totally lacking in wisdom. He had no common sense at all. He was a complete fool, the type of guy that I would have loved to see confronted by Mr. T, saying, “I pity the fool!”
He was a very intelligent fool.
Q: So of course they made him the head of the World Bank.
Doug: Yes, and when he was there, he quadrupled its size. It was him who was more responsible than anyone else for the fetish they developed for building steel mills in parts of Africa that were on opposite sides of the continent from coal supplies, etc. It was another disaster.
His career is a series of unmitigated disasters, and still, he’s held in some kind of regard today.
To me, this is a sign of how totally dishonest society has become. These obituaries should show that the guy was a sociopath, a criminal, and a loser, but instead they maintain a united front in speaking no ill of the dead.
Q: Do you really think it’s political correctness of sorts about respecting the dead, or is it that the journalists of today, being largely products of the U.S. public education system, are simply too ignorant or too biased to see the man for what he was?
Doug: That’s a very good question. It could be that the average person writing these editorials – and they are the establishment now – basically agrees with his views and methodology. So they can only nit-pick technical issues around the edges, while they should be attacking the very core of what he stood for.
Anyway, I’m sorry he died… before I had a chance to ask him that question.
I blame myself: I consider it one of the great omissions of my life.
Q: Maybe you’ll have a chance if there’s such a thing as reincarnation.
Doug: Yes, perhaps. He’d come back as a cockroach, and I might have a chance to squash him.
Q: Just so.
Doug: So, we’ve lost one warmonger, but there are plenty more. The U.S. is making exactly the same mistakes in Iraq and Afghanistan as it did in Viet Nam. It’s almost a cookie cutter copy. We’re using all this high-tech junk -- $200 million fighter planes, $2 billion bombers, etc. – to fight a primitive peasant army on their own ground. It’s exactly the same thing as Viet Nam. I don’t see any significant differences at all.
And just as Viet Nam was a major step closer to bankruptcy for the U.S. back then, what’s happening in Afghanistan and Iraq is the same – but on steroids, because the junk we’re using is much more expensive than it was back then.
Q: So, you don’t believe our savior Obama is going to pull the soldiers out?
Doug: There’s not a chance in hell.
Think about the gigantic bases they’ve built in Iraq. I mean outside the Green Zone. They’re huge and can only signal an intention to stay for good. And the same thing is happening in Afghanistan. This is all going to end badly.
I hesitate to call myself a political handicapper, though I did predict that Obama would win, but I do think he’s going to be a one-term president. Things are going to be so bad by the time the next election comes around.
Q: Can you quantify “end badly” for us?
Doug: The war with Islam is going to heat up for the same reason the Cold War with the Soviet Union escalated under McNamara. The more the U.S. attacks them, the more they feel threatened and feel they have to counterattack. And when they do, the fearmongers in this country feel threatened, and it keeps escalating.
I don’t see any reason for it to de-escalate at this point, though I’ve got to say that in this respect, Obama is at least marginally better than Bush. At least he doesn’t talk in such a hostile and antagonistic way.
Q: And he speaks English – he can even pronounce the word “nuclear.”
Doug: Yes, that’s right. But I don’t see things turning around at all. In other words, all these secretaries of defense and such will be taking lessons from McNamara, not learning from his mistakes.
Q: When do you think this might really heat up?
Doug: Well, for one thing, forget about Obama and his promise to win this war. The threat has metastasized; it’s not just al-Qaida anymore, but now it’s thousands of people all round the world. It only takes two or three guys to get together to hatch a plan. It’s sort of like “open source” warfare. They don’t need a commander in chief in Redmond, Washington, telling them how to design their warware; there are thousands of war entrepreneurs out there now, making their own designs, driven by what the U.S. is doing.
Q: That makes sense, but again, the timing is critical. In our business, being too early is the same as being wrong.
Doug: That’s correct, but at the same time, you have to diagnose the trend correctly, which I think we’re doing. That said, I think people likely to be plotting against the U.S. have a longer time frame than Americans do. Americans want things done now. Instant gratification. Those on the other side are willing to plan and take their time assuring their revenge. And they understand that the longer the U.S. keeps spending, the more it’s going to be bled to death.
At some point, somebody is going to get hold of one or more nuclear devices, or maybe a biological weapon, from one source or another. There are many possible ways that could happen. Then they fly it into the U.S. on a commercial airliner and detonate on landing, or load it in a perfectly harmless-looking commercial boat and set it off as soon as the boat docks. I think that’s the way it’s likely to happen; they don’t need ICBMs nor cruise missiles to mount an effective nuclear attack. But the time, place, and means are impossible to predict. There are millions of people out there now with chips on their shoulders. A lot of them are going to be plotting stuff for all kinds of reasons. So, you can’t realistically say what will happen; all you can say is that it’s inevitable that something will happen.
Q: Sounds like another good reason to move to Argentina. But what other investment implications are there?
Doug: Things haven’t changed much: buy gold, buy silver, and diversify your assets internationally. That’s the basic step. After you have a firm foundation with those things, you can start looking at speculations. Use the chaos to your advantage.
Q: Given how Vietnam-like wars tend to push the states that wage them towards bankruptcy (this happened to the Soviets in Afghanistan, as well), is there a particularly leveraged way to short the government’s solvency of the sort you write about in The Casey Report?
Doug: Shorting the dollar and shorting long-term Treasury bonds are fantastic long-term bets. That’s especially so for shorting long-term Treasury bonds, as interest rates are still very close to their all-time lows, being artificially suppressed by Federal Reserve buying. That’s a one-way street where you can get huge leverage on your money, if you have a time frame of a couple years. That’s the best single bet I can think of.
Q: Makes sense – thanks for your time, Doug.
Doug: Always a pleasure. Till next week.
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Doug Casey: Signs of a Resource Sector Bottom
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