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To: Kenneth V. McNutt who wrote (104604)	9/13/2001 11:47:21 AM
From: Kenneth V. McNutt	Read Replies (1) \| Respond to of 152472

Food for thought SPECIAL COMMENTARY 9/12/01 Bernie Schaeffer: Thoughts on America's Tragedy I CRIED A LOT YESTERDAY. The first time was when World Trade Center Tower number one collapsed. The last time was during a late-evening report from MSNBC's Ashleigh Banfield, who related the story of a policeman who had received, via cell phone, an urgent plea for help from a fellow officer who was on the 40th floor of Tower number two. Within seconds, the phone connection dropped and the officer on the ground watched in horror as this tower collapsed. Lots of crying in between, and some now as I write these words. My tears are of sorrow and of horror and of anger. My sorrow is for those who were injured and for those who died, for those who were closest to these people, and for America and its great people. My horror and anger are more difficult to clearly express, so I'll defer to Andrew Sullivan's thoughts as he posted them at www.andrewsullivan.com . "TODAY: I have been unable to think of anything substantive to write today. It is almost as if the usual conventions of journalism and analysis should somehow remain mute in the face of such an event. How can one analyze what one hasn't even begun to absorb? Numbness is part of the intent of these demons, I suppose. So here are some tentative reflections. It feels - finally - as if a new era has begun. The strange interlude of 1989 - 2001, with its decadent post-Cold War extravaganzas from Lewinsky to Condit to the e-boom, is now suddenly washed away. We are reminded that history obviously hasn't ended; that freedom is never secure; that previous generations aren't the only ones to be called to defend the rare way of life that this country and a handful of others have achieved for a small fraction of world history. The boom is done with. Peace is over. The new war against the frenzied forces of what Nietzsche called ressentiment is just beginning. The one silver lining of this is that we may perhaps be shaken out of our self-indulgent preoccupations and be reminded of what really matters: our freedom, our security, our integrity as a democratic society. This means we must be vigilant not to let our civil liberties collapse under the understandable desire for action. To surrender to that temptation is part of what these killers want. And the other small sliver of consolation is that the constant American temptation to withdraw from the world, entertained these past few years by many, will perhaps now be stifled. We cannot withdraw; we cannot ignore. We live in a world where technology and hatred accelerate in ever-faster cycles, and in which isolation is not an option. Evil is still here. It begets evil. When you look at the delighted faces of Palestinians cheering in the streets, we have to realize that there are cultures on this planet of such depravity that understanding them is never fully possible. And empathy for them at such a moment is obscene. But we can observe and remember. There is always a tension between civilization and barbarism, and the barbarians are now here. The task in front of us (is) to somehow stay civilized while not shrinking from the face of extinguishing - by sheer force if necessary - the forces that would eclipse us." I must now turn to the subject of the US stock market. Yes, financial matters pale in significance to what happened yesterday, and to what will happen today and in the days ahead. But the dynamics that I discussed in my market commentary from Monday (Wallowing in the Mire of the Bear Market ) will not abate during a world crisis. In fact, those who would gladly separate you from your financial assets in the interests of "calm and order" are likely to redouble their efforts in the days and weeks ahead. And I feel a strong sense of responsibility to keep you informed of my perspective, which as you know often differs by 180 degrees from the conventional financial wisdom. Hence, the following Q&A with myself. Q: How do you feel about the U.S. stock market remaining closed for two consecutive sessions? A: I'll get the necessary disclaimer out of the way immediately. There is an emergency situation in the area surrounding the physical location of the New York Stock Exchange that may preclude trading from the NYSE floor for today and perhaps for some days to come. But I am concerned about a continued closure, particularly if it includes the Nasdaq, which has no central physical location. I was impressed with last night's speech by President Bush. However, if we as a nation wish to send a strong and consistent message that we refuse to live in fear of terrorists, then Mr. Bush cannot for listen long to those at the Fed and in his cabinet, who may be afraid of a sharp market decline and are hoping to stall it away. You cannot stall it away; it will only get worse a la 1987 when investors realized that the futures markets had stopped working and that Nasdaq market makers were not answering their phones. The panic, therefore, accelerated. The mantra from government officials that "trading will resume as soon as it is practicable to do so" is already beginning to ring a bit hollow with me. In my view, the resumption of trading is of extremely high priority. If there is anything resembling foot dragging on this, the U.S. stock market will pay a long-term price for the perception that trading can be suspended for long periods of time at the whim of the government. Q: What's your reaction to the various studies that have been trotted out over the past 12 hours that acts of terrorism tend to present buying opportunities in the U.S. stock market? A: Nausea. The happy-faced Wall Street spinmeisters never stop grinding out their worthless bullish gruel, even on a day that will live in infamy. References to the rally that followed the start of fighting in the Gulf War are particularly ill conceived. The market had declined by over 20 percent in the months ahead of the Gulf War in anticipation and fear of the event, and the post-hostilities rally was simply a massive "sell on the news" situation that was preceded by incredibly negative investor sentiment. The stock market weakness this year has been blamed on lots of things, but I don't recall hearing "fear of a terrorist attack on New York City and Washington, D.C." as one of them. And as you know from my prior commentaries, investor sentiment ahead of yesterday was anything but "incredibly negative." Q: So what's your take on where the market will be once it reopens? A: The best overseas proxy for the US stock market is the FTSE 100 index for the London market. The FTSE declined by 5.8 percent on Tuesday, and after some wild fluctuations is currently about 0.8 percent higher for a net five-percent loss since Monday's close. This would be my best guess for where the Dow Jones Industrial Average (INDU - 9605.5) would open right now - down by five percent, or down by nearly 500 points. It may be worse for the Nasdaq Composite (COMP - 1695.3), as my understanding is that a number of the big tech names were off very sharply (10 percent or more) in brief trading in Europe on Tuesday morning. Q: And where does the market go from there? A. My guess would be a sharp bounce to the upside, perhaps even a bounce that erases all the losses and pops the Dow above Monday's close. This would certainly please the Fed and Wall Street, and I've come to believe that these folks "have their ways" of causing the market to sing their tune for short periods of time. I'd also expect that Fed to act very promptly to further reduce interest rates and flood the economy with liquidity. But this isn't 1987. This isn't "bull interrupted." It's "bear interrupted." This economy does not need extra liquidity and it does not need lower interest rates to fix what ails it. And it certainly doesn't need higher energy prices, a weaker dollar, and lower levels of business activity due to the legitimate distractions and fears created by the new world in which we now live. So my expectation is that climactic selling and climactic fear after trading resumes could produce a temporary bottom. But the ultimate bottom remains a good distance down the road in time and in price. Bernie Schaeffer Chairman and CEO Schaeffer's Investment Research, Inc. service@sir-inc.com schaeffersresearch.com 1-800-448-2080 International 1-513-589-3800 If you have any

To: Kenneth V. McNutt who wrote (104604)	9/13/2001 11:48:06 AM
From: carranza2	Read Replies (2) \| Respond to of 152472

The Israeli intelligence service seems to think Saddam is involved: worldtribune.com Iraq recruited Saudi billionaire fugitive Osama Bin Laden and his Islamic allies to carry out the suicide attacks around the United States, according to Israeli intelligence. Israeli officials and intelligence analysts said the suicide hijackings that downed the World Trade Center and destroyed parts of the Pentagon was too large an operation for any one group. The analysts said the operation was also too big even for a coalition of Islamic terrorists headed by Saudi billionaire fugitive Osama Bin Laden. Bin Laden is accused of masterminding the bombings of the U.S. embassies in eastern African in 1998. Intelligence sources briefed the Cabinet of Prime Minister Ariel Sharon on late Tuesday, hours after the catastrophe in New York and Washington, Middle East Newsline reported. The sources were quoted as telling the Cabinet that a Middle East government was probably the sponsor of the attack. The most likely sponsor for such an attack, the sources said, is Iraq. The Baghdad regime has long maintained an alliance with Bin Laden and Islamic groups. "All the steps lead to him [Bin Laden]," Reuven Paz, a leading expert on Islamic terrorism, said. "Of all the countries, Iraq seems the most reasonable [candidate]." In Baghdad, Iraqi state television appeared to welcome the bombings. The television said the spate of attacks demonstrated the vulnerability of the United States. "The massive explosions in the centers of power in America, notably the Pentagon, is a painful slap in the face of U.S. politicians to stop their illegitimate hegemony and attempts to impose custodianship on peoples," the television said. "It was no coincidence that the World Trade Center was destroyed in suicidal operations involving two planes that have broken through all U.S. security barriers to carry the operation of the century and to express rejection of the reckless U.S. policy." "The collapse of U.S. centers of power is a collapse of the U.S. policy, which deviates from human values and stands by world Zionism at all international forums to continue to slaughter the Palestinian Arab people and implement U.S. plans to dominate the world under the cover of what is called the new [world] order," the television added. "These are the fruits of the new U.S. order." The Israeli Cabinet was informed that the United States might launch a massive attack on Iraq and Afghanistan over the coming days. The sources said such an attack could prompt a regional war. On early Wednesday, Afghanistan appeared to have been a target of retaliation. Several bombings were heard in the Afghan capital of Kabul. U.S. officials denied that their country was responsible. In the aftermath of the suicide bombings in the United States, Israel closed its air space. Israel also warned the Palestinian Authority to immediately stop all attacks against the Jewish state.