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Money matters: False profits?
Part 1
Graham Macdonald
MBMG International Ltd.
There are plenty
of reasons to feel nervous right now about the global economy. There are even
more reasons to distrust all those folks out there telling you not to worry,
it’s all under control and although booms are normally followed by busts, this
time will be different.
A few weeks back, we attended a presentation excellently
organised by AustCham, featuring Saul Eslake, chief economist of ANZ Bank. Saul
was extremely well-informed about the Aus economy (as you’d expect from a
chief economist), extremely witty (as you might not expect from a chief
economist) and eminently approachable. We particularly enjoyed his description
of Asia funding US consumers’ purchases of imports as the greatest vendor
financing scheme of all time (vendor financing is generally where
manufacturers/distributors lend to their clients - who otherwise wouldn’t be
able to secure sufficient credit - to allow the clients to buy their products or
services in order to generate the profits to repay the loans. The vendors are
happy to lend the money knowing full well that the profit margin on their goods
and services ensures that, as long as the rate of default isn’t too extreme,
the additional revenue generated will be sufficiently profitable to justify the
whole process). Going forwards, Saul made the following assumptions:
- Oil and other commodities have peaked and will fall in
price slightly over the next 2 years
- World economic growth will hold up at 4% per year for the
next 2 years
- The Fed will continue to raise rates by 0.25% at frequent
intervals, reaching 5% by mid 2006.
- The US$ will strengthen due to reduced interest rate
differentials
- Asian central banks will resist revaluation of their
currencies
He also believes that the Australian economy will avoid
recession this time, mainly because he feels that every recession in Australia
since WW II has been caused by politicians interfering in the sphere of
economics and now that the Reserve Bank is not subject to political control, the
bankers will avoid the mistakes made previously by the politicians. It would
appear that Saul believes in Goldilocks, but no bears!
We have our own views on the Australian economy, which are
available in a recently commissioned document, and these are rather more
complicated than “The bankers are running the country so it’s ok this
time.” We also feel that the global assumptions, including the existence of
Goldilocks, are a very limited possibility (we do empirically know that bears
exist) and probability indicates a much messier situation.
In a recent article on debt, we highlighted why we think that
the US consumer simply can’t keep spending at current rates. Saul believes
that while the US can keep borrowing, it can keep spending. His assumptions
don’t allow for a significantly increased borrowing requirement, so with
greater debt outstanding and higher interest rates, the sums just don’t add
up. He does see a risk of US recession, but not until 2007 which he thinks would
be the result of a downturn in China dampening global growth. At MBMG we’re
usually drawn to outside the box thinking but this is more cart-in-front-of
horse-thinking and the other way round is a far likelier scenario.
Meanwhile, Optimal Fund Management’s technical whiz, Cobus
Kellerman, came up with a fairly startling piece of research last month (it’s
taken us this long to fully get to grips with it, which is why it’s only
appearing in a column now) and it’s probably way beyond the talking heads of
CNBC, which is perhaps just one reason why they haven’t covered this at all.
Cobus analysed various statistical information from the
S&P 500 since 1946 (the data from 1972-1997 and 1997-date were separated to
ensure that current trends remain valid within historical precedents). He’d
found himself becoming focused on the Dividend yield relative to 3 month and 10
year T-bills (generally pretty uninteresting stuff that has been raked over
innumerable times). This time, however, he noticed something that hadn’t
previously stood out. By categorising dividend yield payments into 4 types of
categories, certain investment return characteristics became apparent. Cobus
realized that one of 4 situations can happen:
- Dividend Yields can be above the net mean and can actually
still be increasing
- They can be above the mean, but be falling
- They can be below the mean but rising
- They can be below the mean but falling
Grouped this way performance data for these periods is very
consistent: as you’d probably expect below average and rising or above average
and falling are the most common scenarios (just under 60% of the time since 1946
and just over that since 1972). Also, as you’d expect, when the yield starts
to fall (whether from above average or below average) returns are negative,
volatility is high and the Sharpe ratio (risk/reward co-efficient) turns very
ugly.
Is this coincidence? Find out next week in part 2.
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The above data and research was compiled from sources believed to be
reliable. However, neither MBMG International Ltd nor its officers can
accept any liability for any errors or omissions in the above article nor
bear any responsibility for any losses achieved as a result of any actions
taken or not taken as a consequence of reading the above article. For more
information please contact Graham Macdonald on [email protected]
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Snap Shots: A fancy black shoebox - Is that all it is?
by Harry Flashman
 The
world is now ‘instant’ and electronic. We do not have to do anything
other than push a button. Unfortunately, there is a tendency to think this
about photography as well. All you have to do is find your subject and pop
the shutter. Hey presto! The world’s best photograph is yours.
Unfortunately, the blurb sheet that came with your camera will also give
this impression, no matter how incorrect it is! After all, they wanted you
to buy it, didn’t they?
You see, any camera, irrespective of how clever it is
claimed to be, how advanced its electronics are, or even with its
auto-programmed multi-phasic metering, it is still in the end, just a
machine that lets light fall on unexposed film. A fancy black shoe box
with a lens at the front and film at the back.
There are always times when the camera will get it all
wrong, and this is more often than you would imagine. This is because it
is a machine, so it can’t think. Even more, it cannot mind-read so it
has absolutely no idea what is the most important subject in the clutter
of objects in the shot you are taking. In fact, in the interim it is
worthwhile, if you have an SLR, taking more frames with what you think to
be the correct exposure, rather than just relying on the camera’s
inbuilt electronic gizmos.
It works like this - taking a shot of your favourite
girlfriend on the beach, for example (or your wife if the girlfriend is
indisposed) - in working out the exposure settings, the camera takes a
reading from the blue sky, the blue sea, the yellow sand, the red beach
umbrella and finally from your subject’s face. It puts all of this
information together, adds them up and divides by the number of readings
and gets the average and applies that figure to the f stop (aperture) and
shutter speed. Even blind Freddie can see that if the background is
exceptionally bright, the camera will be influenced by this when
averaging, and come up with the wrong exposure for the subject’s face -
the reason for taking the shot in the first place. Remember once more, it
cannot read your mind.
In these types of situations (and in Thailand with the
bright sun, these situations often occur) the trick is to take the meter
reading from the subject and ignore the rest of the items in the shot. In
this example of the girl on the beach, walk in close and take the exposure
reading directly from her face. With some cameras you can “lock” that
exposure in - you should look for the AE-L facility, or just twiddle your
dials manually till you get the correct aperture and shutter speed. Now go
back and compose the shot, leaving the same aperture and shutter speed
settings. Do not be alarmed that the camera will try and tell you that the
exposure levels are wrong. It is “averaging” everything out, remember,
and your picture is hopefully not “average”. You now also know what
the correct settings are for your subject - you did it yourself!
For an interesting experiment this weekend, try taking
the above shot on any beach or lakeside anywhere. Set the camera on Auto
or Programme or whatever your model and make calls it. Take the shots. Now
go and do it the ‘manual’ way I have described and see what
differences you get. Setting things up the way you want will produce a
better exposed photograph (for the important subject) than just relying on
the camera manufacturer’s ideas on what you should have.
With the increasing complexity of modern cameras there is a tendency
not to read through the instruction manuals properly. How many of you can
honestly say you’ve read yours all the way through? Recently? Perhaps as
another interesting experiment, you should first go to find the
instruction book, and secondly, spend some time reading it and
understanding the camera’s functions (and limitations). I still carry a
very dog-eared manual for my Nikon in the camera bag. There’s always a
time when you just might need it.
Modern Medicine: Averting bloodshed by groups
by Dr. Iain Corness, ConsultantI
received a very interesting email the other day, with threats of blood being
let in the beer bars, so here is the (shortened) email, and my thoughts on
it.
“Dear Dr. Iain, Is there a blood shortage for falangs?
Is there a difference in falang blood and Thai blood? In the July 8th issue
of the Bangkok Post Letters to the Editor section, under the headline of
‘Donating blood for a good cause,’ a falang tourist ‘Visited the Red
Cross Thailand National Blood Centre and donated blood, primarily resulting
from the urgent need, and public media call, to farangs to donate.’ He
wrote that he became aware that there exists a constant short supply of
specific blood groups in Thailand especially those which are carried by us
Europeans/Westerners. After I read the letter to the editor, I cut it out
and went to my favourite beer bar and talked about it with my friends. Well,
Dr. Iain, you would never guess the huge fight the question ‘Is there a
difference between falang blood and Thai blood?’ caused at the bar.
Suddenly they were punching and scratching each other and rolling on the
street outside the beer bar. It was something to see. John.”
I must admit that initially I thought this was a letter
for Ms. Hillary, but on re-reading, I felt there were a few questions
raised, which should be answered. This article will, I hope, answer all your
questions, John.
Every time there is a disaster involving human life, a
call goes out for donations. In Thailand, this usually means a call for
Rhesus Negative blood group types.
Why is this so? Surely the blood collection agencies
could just stock up in this type of blood? Unfortunately the answer is no.
In fact it is impossible for Thai blood stocks to have enough Rhesus
Negative blood for any disaster, major or minor.
The reason is simple. Blood groups, which are generally
classified by the ABO system (so we are all either A, B, O or AB) differ in
their distribution in the world. There are many reasons for this, including
susceptibility to disease of various blood groups, population drifts,
inter-marriage and others; however, the end result is that simplistically
the Asian population has a different distribution of ABO groups from the
Caucasian population; for example, Blood group B is far more predominant in
the East than in the West.
When you look at one of the other blood typing systems,
the Rhesus grouping into Positive or Negative, even greater disparities
become apparent. The Asian population has very little Rhesus Negative (0.3
percent), compared to the Caucasians (15 percent). For interest, 50 percent
of Basques are Rhesus Negative, one of the highest in the world.
Consequently, when there is a need for blood for a number
of injured Caucasians in an Asian country, the chances of there being
sufficient blood stocks are virtually nil. Taken to disaster proportions,
when 30 percent of injured in the tsunami were visiting Caucasians, then you
can understand the urgent need for Rhesus Negative donations.
If you are a farang resident in Thailand, please have
your blood grouped and if you are Rhesus Negative, go on a register at the
local Red Cross, or even the nearest large hospital, so that you can be
called upon in emergencies. The Central Blood Register can be contacted at
02 259 7305.
Currently, post disaster (or ‘between disasters’)
there is no shortage, but since blood does not keep ‘forever’ there will
be times in the future when we will need Rhesus Negative blood, so don’t
spill it in the streets, spill it at the Red Cross!
Learn to Live to Learn: Postcard from London
with Andrew Watson
I arrived in London a couple of weeks ago, in a blaze
of glorious sunshine. It was uncommonly hot and the Thames seemed to
have taken on a relaxed air as it wound its way inexorably east. But it
was possible to detect a strange, uncomfortable and yet familiar
atmosphere, which seemed to hover over the city. This feeling was
evident in how people moved, the look in their eyes and in what they
said and did.
 On
the Tube, life goes on...
In the wake of the London bombings, people were
distracted, concerned, anxious, angry, saddened and paranoid. Jerusalem
syndrome had come to town.
Two weeks ago, I wrote of the intensely unpleasant
sensation of not knowing until you arrive home whether your loved ones
have been caught up in an attack. In the newspapers, I scoured the map
of London, placing the outrages, thinking, as everyone does, “Do I
know anyone there, or who travels there?” Damn it. My eldest brother
lives just behind Tavistock Square, site of the bus bomb. Is he OK, I
wonder? Relief. An email tells of how he was on the other side of the
square, heard the explosion and turned to see the burning wreckage. But
he’s OK.
He was on the other side of the
square, heard the explosion and turned to see the burning wreckage
London came to a midday standstill in memory of the victims.
Eerie and reverential silence. Over breakfast, I interviewed Louis Bond, a
project finance manager from a large city firm. Everything seemed to be getting
back to normal, except of course, that a good deal of our discussion centred
around the politics of death, pursued by these fanatics - from Leeds, the news
told us.
“How much do you think you need to retire on in London?”
I asked. “How much do you think?” asked Louis. “A million quid.” (I
always thought a million quid was enough). “I don’t think so. Everyone’s a
millionaire in London, look at the house prices. Basically, with their assets,
they’re all worth a million pounds. I think you need ten million.” I suppose
that rules me out of a return to my home city, then.
Onwards, to meet a very close Israeli friend, a kibbutznik,
strong and silent, generous, kind, loyal and courageous. Over the phone, he had
indicated that he had been near the bus bomb. He works in the British Medical
Association (B.M.A.) building, which took the brunt of the force of the
explosion. Living in Israel, it is easy to become blas้ about bomb
attacks, especially on the kibbutz. It’s a way of dealing with them. Bravado,
I suppose.
Anyway, I thought it would be interesting to interview him in
light of the horrible irony of being an Israeli in London, leaving the Middle
East, zone of proximal danger, to London, supposed safe haven. Even though
we’ve lost friends to bus bombs in Israel, nothing could have prepared me for
what my friend had to tell me. I was, and remain, profoundly shocked by what I
heard; a graphic, uncensored, terrible and horrifying eyewitness account of the
bus bombing in Tavistock square.
My friend had no objection to his story being published but
asked that I respect his privacy by not mentioning his name. What follows is a
faithful, unabridged account, which some readers might very well find
disturbing. If you are of sensitive disposition, you might very well choose not
to read any further.
I don’t think this kind of
terror can be fought by military means
“I came into work a bit late. I parked my car walking
distance from the office and made my way into the office via the main road. I
had to stop at the bank to get money out and was stopped by a couple of US
tourists asking for directions. They were trying to get to Russell Square –
there seemed to be a problem there – we weren’t aware that there was any
problem underground. I directed them to Euston Square.
Then I entered the B.M.A. building and just as I was standing
by the lift I heard and felt the explosion. (I ask if it was a familiar
sound?) Not so much familiar, but immediately, I knew what it was. It was a
very loud blast but very short, as if all the noise was sucked in. (Did the
windows rattle or shatter?) No, strangely enough. Later I found out that the
impact of the blast was downwards so the building didn’t shake as you might
have expected. I turned my head towards the glass doors and I could see a cloud
of smoke, dust, debris and people running away.
My first instinct, without thinking, was to run outside and I
looked to my right and I saw the bus, or what was left of it, and right in front
of me was this middle aged gentleman who was probably in his 40’s who was very
badly injured and was walking in a state of shock. He had a very bad injury to
his left arm and something very bad on his head. It was bleeding a lot. I think
it was probably superficial.
Another guy appeared, I don’t know where from, and he and I
pulled the injured guy into the reception area and sat him on a table and made
him a tourniquet using a tie to stop his bleeding. He wasn’t speaking but he
was conscious.
My first instinct, without thinking, was to
run
At that point this other guy came downstairs and identified
himself as a doctor so we left this guy and ran outside towards the bus. People
were starting to try and climb out of the wreckage. I was looking up and tripped
on something. (He asks me if I want to hear this). I looked down and it
was a head that I had accidentally kicked and it was rolling.
I got to about three metres from the front of the bus and as
I got to the side I saw this woman. Her upper body half was hanging out of the
window. Everyone in the bus was covered in this dark grey charcoal-like dust and
this lady was covered in dust. My eyes caught hers. Actually, at this point the
amazing thing was that it was all so quiet, no screams or anything. Anyway, she
looked at me and she was reaching with her hand as if for help. But her hand was
almost completely severed and that’s when I froze. I had a vision of my wife
and children and I didn’t know what to do. At that point her eyes closed and
she lost consciousness, but her eyes rolled and I can still see the look in her
eyes as they were closing. It has been haunting me ever since. And I must admit
that there is a sense of guilt there. I decided to get the hell out of there.
British Doctors were pouring out of the B.M.A. I could hear
ambulances now but it seemed like they took forever. Where’s the police?!
Where’s the ambulances?!
I ran back deep inside the building into the offices. People
were being evacuated. It was quite hot. My sleeves were rolled up and I had
blood on my hands but strangely, none on my clothes. As I came in most people
were already leaving.
Then, on the 2nd floor, I saw the scene
from above. It was the most horrible thing I have ever seen. Body parts, people
lying there without arms and legs. Bodies hanging there, people crawling out. It
was complete carnage. I remember standing there, no more than fifteen seconds,
and I remember feeling angry. I mean, I was shocked and everything but the
sensation I remember is anger, over people who could do such a thing.
At this point, I went into automatic pilot mode and became
completely emotionless. I was acting on pure logic. I rang my wife. “I’m OK.
I can see at least six bodies just outside our offices, but I’m OK.” Then, I
rang my parents in Israel. Then I left the office and joined the people outside
at the back of the office.
(Have you had any counselling?) I am speaking to people
as much as I can. We were together for about three hours after the attack
but we haven’t been back to the building since. It’s a crime scene. I feel
my response was not adequate. I could have saved someone. I know this is a
symptom of post-traumatic stress, where people wish they had reacted
differently, but it’s there. I think it will go in time - the flashbacks and
the sense of guilt. Today is better than yesterday, yesterday was better than
the day before and I’m hoping that tomorrow will be better still. I think
I’m getting better.
At first I was addicted to the news. Trying to put faces to
the bodies lying on the street, wondering whether those two tourists I had sent
in that direction were … you know growing up in Israel is probably preparing
you to deal with the emotional impact you experience after the event, but the
one thing about this - and my parents asked me this question - surely you’ve
seen things like this before? Well, yes, but never to the same extent. So many
in the same place, so many bad injuries. This is not an environment where you
expect bad things to happen. In London, out of the blue. It caught me utterly
unprepared and this makes it more difficult to cope with initially and perhaps
later on too. Of course, it also brings back memories of people we lost in bombs
in Israel.
(Can the war on terror be won by military means?) I
don’t think this kind of terror can be fought by military means because it
would mean turning the army against homegrown targets. These people were well
integrated into society. One was a father, they had jobs. So, unless you include
intelligence and police work as military means, no.
(And what of education?) I think no matter what you do
there will always be people like this. The organisers of terrorist groups will
always find people and they need only one. In the UK, the only way is to find
access to information with the cooperation of the Muslim community. Then of
course, there are the old clich้s. Not giving in, going back to work the
next day. Showing defiance, resilience.”
And that was it. We hugged. I read somewhere that there seems
to be a message about life, about humanity, that the terror groups haven’t
remotely grasped, which can be summed up in three words: it goes on.
[email protected]
Next week: Postcard from Oxford
 Heart to Heart with Hillary
Dear Hillary,
You’re always telling us guys that we should be looking for nice Thai
girls and stay away from the bars, but you don’t say what to do when
you actually find one of these women. I have found a really nice lady in
one of the shopping centers working in the glasses shop and she is
really sweet. I had been in a few times because of problems with my eye
glasses and she always fixed them up for me for no charge. So how do I
get fixed up with her? She seems interested, speaks English, but where
from here?
Goggles
Dear Goggles,
What are you males coming to? Just what do you want me to do, my Petal?
Am I supposed to take you down to the glasses shop and ask her for her
hand in betrothal for you? What would you do in your own country? You
would pluck up the courage and ask her if she would like to go to a
party, or the movies, or for dinner or whatever. She would then consider
her options and say yes or no. Don’t be such a wimp, Goggles. Faint
heart ne’er won a fair lady, goes the old proverb. Right now you
appear to be Sir Chickenheart, rather than Sir Galahad. Go ahead and
just do it, as the sportswear manufacturer suggests. Just don’t offer
to buy her a house, five baht of gold, a motorcycle and a new buffalo
for Poppa on the first date, that’s a good little Goggles.
Dear Hillary,
I have an embarrassing little problem that maybe you can help me with.
It is in the old man downstairs, if you know what I mean, who seems to
have become lazy over the last few months. I don’t want to go to see a
doctor in one of the clinics near here, because I know the reception
lady knows a lot of my friends, but the problem seems to be getting
worse. Can I just get something from the pharmacy to get the lead back
in the pencil?
Willy
Dear Willy,
Before you try the pencil sharpener, there is much you can do to get
yourself over this pencil problem. You are heading in the right
direction when you mention local doctors, but if you are too shy or
worried that the receptionist will go running to all your friends, then
what about one of the large hospital clinics? You can be anonymous there
very easily. If you have a medical problem, then go to the doctor. If
you have a champagne and chocolate problem, then you come to Hillary.
It’s that easy, Petal.
Dear Hillary,
You seem to have a regular ‘client’ using the name of Mighty Mouse
who writes in every couple of weeks. He seems to fall in love with
someone new all the time. Have you met him? Is he for real? Surely there
aren’t people that easily won over these days? Be interested to know
what your take is, Hillary.
Felix the Cat
Dear Felix,
Do I detect just a touch of envy, Felix? Do you have green eyes too?
Felix, like the woman reporter in America who went to jail because she
would not name her confidential sources of information, Hillary also
cannot divulge the kind of information you are looking for, though I
doubt if I’d go to jail for Mighty Mouse, unless I was promised
unlimited Veuve Clicquot (vintage, Petal, vintage) champagne and Belgian
chocolates. Even then, I don’t think I’d last too long. The local
monkey house is not known for its five star accommodation. No Felix,
just accept the fact that Mighty Mouse does exist, is real, does write
in and maybe, just maybe, does fall in love with anything in a skirt, or
if I am to believe everything he says, anything without a skirt is even
better.
Dear Hillary,
I have an estate in the UK, where I live for six months every year. My
children are all grown up and are self supporting, and my wife is well
covered in my will. The problem I am looking at now is the fact that I
have invested in real estate in this country, and have a Thai friend who
looks after my investment for me, collects rents and the like. I would
like to make sure that he is looked after if I should die, and would
want that my Thai real estate holdings go to him, and not my UK family
which will be well off when I go, which I hope will not be too soon. How
do I go about this, Hillary?
Stewart
Dear Stewart,
Really it is not too difficult at all, but you have to follow Thai law
in this situation. Hillary cannot give you all the details, but a good
Thai lawyer can. Ask around your ex-pat friends for names of recommended
lawyers, and if needs be get advice from more than one. I would try to
keep your two sets of beneficiaries as separate as possible. There’s
nothing like a death to bring a family together - to fight about who
gets what! Add in another set of beneficiaries and you have a real
cat-fight.
Psychological Perspectives: Public policies on counter-terrorism need
to be informed by research
by Michael Catalanello,
Ph.D.
With the recent series of attacks on the
public transit system in London, together with similar events, you may be
wondering what, if anything, can be done to protect our societies from the
increasing threat of suicide terrorism. The answer to this question may lie
in a growing body of knowledge produced by the social sciences.
The increased use of suicide bombers in terrorist
attacks in recent years is a cause for particular concern. The method,
timing, and location of these attacks seem to be chosen based upon their
potential to produce maximum casualties and disruption of community life.
To make matters worse, terrorists have undoubtedly set their sights upon
acquiring the most dangerous and deadly weapons known to man. Despite
increased awareness of the threat since 9-11, and a palpably heightened
level of security, authorities seem largely incapable of preventing
someone, willing to sacrifice his or her life for a cause, from carrying
out a deadly attack against hapless civilians.
Following the London attacks, politicians could again be
heard making emotional speeches vowing to defeat the terrorists, and policy
makers could be seen scrambling to enact new laws intended to increase
security. In the midst of these events, one can’t help wondering,
however, to what degree those officials have fully grasped the nature of
the problem. To what extent have they considered the most effective means
of tackling it?
Politicians, for example, often portray suicide bombers,
as evil, inhuman, mentally deranged public misfits. President Bush has
proposed that supporters of terrorism “hate our freedoms”. Some have
suggested that conditions of extreme poverty, illiteracy, and anarchy
promote terrorism. It is assumed that policies to defeat terrorism proceed
from such assumptions. Research on these issues, however, does not suggest
that suicide attackers are necessarily crazier than the average person, nor
are they particularly ignorant, poor, and uneducated as a group. Moreover,
surveys consistently show that those who support suicide terrorism and bin
Laden, nevertheless, value democracy and the freedoms that go with it.
There is a danger that well intentioned, yet poorly
informed steps taken to combat terrorism might unintentionally exacerbate
the problem by increasing extremist sentiment, or facilitate the
recruitment of moderates by terrorist organizations. The war in Iraq, for
example, was launched for the expressed purpose of reducing the risk that
weapons of mass destruction developed by Saddam’s regime might fall into
the hands of terrorist organizations. The invasion was obviously successful
in toppling Saddam’s corrupt regime, and did lead to seemingly democratic
elections. Nevertheless, the current situation with a growing military
insurgency and increasing casualties is, to put it delicately, not looking
good.
The open-ended occupation of Iraq by American troops is
clearly an irritant to Islamic militants and Iraqi nationalists. The
American CIA recently issued a report identifying post-invasion Iraq as a
potent new training ground for extremists from around the world, providing
them with practical experience in kidnappings, assassinations, car
bombings, and other methods of urban warfare. The report warns that
militants could later export these methods to other trouble spots around
the world. It seems unlikely that those involved in planning the
American-led invasion intended this result. Academics and other experts
knowledgeable about Middle East politics, however, had predicted as much.
Another related concern is that poorly informed public
policies intended to reinforce the fight against terrorism could
unnecessarily erode the civil liberties of free nations. When government
agencies are given greater power to collect surveillance information on its
citizens, hold suspects under conditions in which their basic rights are
denied, and use threatening and coercive methods to extract information
from witnesses and suspects without due process, we are justified in being
concerned that our most cherished values have been compromised.
Given the importance of implementing effective
counter-terrorism measures and avoiding the unnecessary curtailment of
individual liberties, one would hope that public policies would be informed
by empirical research into the problem. One gets the impression, however,
that public officials often respond to terrorism in a “knee-jerk”
manner, or with an eye to public opinion, which itself may be misinformed
on our current state of knowledge about terrorism.
Our understanding of terrorism has grown tremendously in
recent years, thanks to numerous empirical investigations. An excellent
example of this work is the interesting analysis and recommendations
provided by anthropologist Scott Atran, “Mishandling Suicide
Terrorism,” available for download at http://www.
twq.com/04summer/docs/04summer_atran.pdf.
It is time for policymakers to become more informed by our current state
of knowledge concerning the nature and causes of terrorism. I believe
psychologists and other social scientists have an important role to play in
this endeavor.
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Dr. Catalanello is a licensed psychologist in his home State of Louisiana, USA, and a member of the Faculty of Liberal Arts at Asian University,
Chonburi. You may address questions and comments to him at [email protected], or post on his weblog at
http://asianupsych.blogspot.com
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