The economy is doing fine but the stock market is
slumping. So far, the blame has rightly been placed on
corporate corruption, dishonest accounting practices,
and some ill-advised protectionist trade moves by the
Bush administration. But these, it seems, are only
partly to blame.
A worrisome USA Today/CNN/Gallup poll reveals that
only one in three Americans believe the U.S. is now
winning the war on terrorism, with a full half saying
the war is at a stalemate. Compare this with last
January, when two-thirds of the country said the U.S.
was winning the war.
Could it be that a lack of decisive follow-through in
the global war on terrorism is the single biggest
problem facing the stock market and the nation today?
I believe it is.
There has been a big drop in the American spirit. The
euphoria surrounding the successful victory in
Afghanistan has given way to a gnawing fear that Osama
bin Laden and his evil followers have survived,
regrouped, and are getting ready to hit us again.
Sept. 11 may not be the seminal event. A new calamity
may befall us, one that will surely close our
businesses, shut our financial markets, block basic
family security, and inflict unimagined pain on the
nation. The down market is a manifestation of the
pained expressions on our faces.
President Bush's speech Monday set down the clear
democratic-reform principles necessary to change
Palestine from a terrorist safe-harbor into a true
member of the family of nations. He correctly
delineated U.S. support for our democratic alley
Israel, and just as clearly assigned the appropriate
blame to Arafat's piece of the evil axis. He also
communicated the principles of free elections,
representative government, and the rule of law to the
other Middle Eastern states that fail on all these
counts. Bush wasn't only speaking to Iraq, Iran, and
Syria, but also to Saudi Arabia, and perhaps even
Egypt.
But these are just more words in this global and just
war on terror. The president must now execute and
follow-through in support of these fine principles.
There can be no hesitation. In dealing with Israel and
the PLA, there can be no return to the
split-the-difference peace processes that have failed
completely in the past.
Even more, Bush must not allow Saddam Hussein and
Osama bin Laden to remain in play. That they are still
around, poised to do catastrophic mischief, is a huge
factor in just how far American confidence in this war
has deteriorated.
To be sure, the greatest mistake Papa Bush ever made
was leaving Saddam Hussein in place. Weakened or not,
he is still there – and Americans have never liked
loose ends. With weapons of mass destruction at his
disposal, and through his financing of terrorism
worldwide, Saddam is a dangerous loose end.
Decisive shock therapy to revive the American spirit
would surely come with a U.S. invasion of Iraq. Why
not begin with a large-scale special-forces commando
raid on the Iraqi oil fields? This will send a shot
across Saddam's bow; an electrifying signal to all
terrorist nations. The message will be that the game
is up. Surrender now or you will be crushed in a short
while.
Meanwhile, Saddam's cash flow can be cut off. Oil is
his only crop, his single manufacture. Without money
there will be nothing left to steal, and nothing to
use to pay off his cronies.
A couple of weeks later a final assault on Baghdad can
take place. A small war, to use Wall Street Journal
editorialist Max Boot's lexicon, led by fast-moving
special forces and leather-toughened Marines, and
assisted by high-tech precision bombs and air cover,
can get the job done. All-out war mobilization is
unnecessary. Iraq will fall with much less. At the
same time, U.S. special forces must conduct a similar
sweep to root out the bin Ladens and al Qaedas along
the Pakistani/Afghan border.
In his key war speeches thus far – the axis-of-evil
designation before Congress, the
first-strike-preemption speech at West Point, and this
week's Palestine-directed statement of
institution-building through the principles of freedom
ó Bush has kept democracy and a market economy central
to solving this world terrorism crisis. But statements
of principle only go so far. The spirit and security
of the United States now require the instrument of
war.
The shock therapy of decisive war will elevate the
stock market by a couple-thousand points. We will know
that our businesses will stay open, that our families
will be safe, and that our future will be unlimited.
The world will be righted in this life-and-death
struggle to preserve our values and our civilization.
But to do all this, we must act.
ó Mr. Kudlow is CEO of Kudlow & Co.
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