Dear Clients and Friends,
Rescue efforts continue in New York despite heavy
rain since 1 AM this morning. About 10,000 tons of the approximately
450,000 tons of debris have been removed. Heavy construction cranes will
be assembled later this morning to lift major sections. Hope remains that
survivors will be found, though no survivors have been rescued since
Wednesday.
Law enforcement efforts have been documented
elsewhere. It was reported that additional hijackers were arrested in New
York yesterday, but it was subsequently shown that the arrested persons had no
relationship to the attack. It is possible that the hijacking of a fifth
plane was foiled on Tuesday by the grounding of all flights after the first
attack.
As we discussed yesterday, we are greatly concerned
about the outcome of the war that is being declared against the
attackers. World attention is increasingly focused on Afghanistan,
believed to be the host country of Osama Bin Laden and the al Qaeda movement. Afghanistan is a land
locked mountainous country surrounded by countries such as Iran that are hostile
to US interests. It's about 1000 miles from open water in the Arabian Sea
to the capital of Kabul.
 |
|
The government that flies
this flag now controls very little territory, but internationally
the flag is recognized for Afghanistan. Adopted on Dec. 3, 1992, it
contains a coat of arms in gold emphasizing traditional Muslim
values. The more reactionary Muslim forces known as the Taliban
(Taleban) fly white flags in the rest of the
country. | |
Afghanistan
 
Form of government:
Islamic emirate.
Head of state and government: Leader of
the faithful.
Population (1998): 24,792,000.
Population projection: (2000) 26,668,000; (2010)
34,098,000.
Natural increase rate per 1,000 population
(1997): 25.0 (world avg. 15.7).
Gross national product
(1996): U.S.$5,666,000,000 (U.S.$250 per capita).
Land use
(1994): forested 2.9%; meadows and pastures 46.0%; agricultural and under
permanent cultivation 12.4%; other 38.7%.
|
Diplomatic pressure is centering on Pakistan to provide over-flight and
staging privileges for a military action. Cooperation is also being
requested from China and Russia which have influence in the area. The
difficulty of subduing Afghanistan militarily cannot be underestimated.
Russia tried and failed to dominate this territory in a war lasting 10 years
from 1979-89. We have to assume that military operations will require
soldiers and equipment on the ground. Previous cruise missile strikes
against "training camps" in Afghanistan proved to be ineffective.
Our other focus of attention has been on the re-opening of US markets on
Monday. As of now, markets are scheduled to be open the usual 9:30-4:00
hours with pre-market and futures trading from 8AM. Major European markets
closed out the week with losses ranging from 5-11% and the Japanese market
closed out the week down 4%. Losses were probably mitigated by the fact
that all these markets were all down 10-20% on the year prior to the
attack. Airline stocks such as British Air and Lufthansa finished out the
week with losses of 30%. Our estimate of an initial loss in US markets of
6-10% seems about correct. We expect these losses to reverse, we just
don't know how quickly. After the outbreak of the Gulf War, US markets
fell 25% in the first month, but regained all losses within 6 months.
Many of the major brokerages and fund families have taken out full page ads
in the Wall Street Journal today advising investors that they are prepared to
operate, that clients' records are safe and that care should be taken to avoid
emotional decisions about buying or selling securities. For the time
being, our strategy remains to hold current positions unless clients have
immediate needs for funds.
