Six Horrible Episodes

Posted by Martin D. Weiss, Ph.D.

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imagesAs recently as two months ago, few experts in or outside of government had a clue that global terrorism would suddenly bust onto the European and American scene.

Fewer still could foresee the political and economic consequences.

But if you take a peek at Larry Edelson’s Money and Markets issues of recent years, you’ll find a series of forecasts pinpointing what’s happening today with a considerable degree of detail.

In our issue of Feb. 18, 2013, he wrote: “We are on the edge of seeing the war cycles turn violently higher [with] another surge of terrorism, massive civil unrest in the U.S., [and] a war in the Middle East.”

On May 13, 2013, he told us to expect “increased terrorism and jihadist movements, as well as domestic terrorism.”

On Dec. 23, 2013, he warned of “increasingly authoritarian leadership on both sides of the Atlantic.”

He also told us, unambiguously, that the reality — and the fear — of terrorist attacks would help send Europe into a tailspin …

Cause massive migration from the war-torn regions …

Drive flight capital to the United States …

And transform the face of American politics.

Needless to say, no one can forecast specific places, names and dates. But the key is the cause-and-effect pattern …

  1. The rapid spread and escalation of wars in the Middle East …
  2. The terrorist attacks in Europe and the U.S. …
  3. The polarization of politics on both sides of the Atlantic …
  4. And the global tsunami of flight capital to the United States.

How did he know? By carefully studying the patterns of history.

Needless to say, this is not the first time religious, ethnic and regional conflicts have had long-range consequences that reeled out of control.

Join me on a time machine through history, and consider carefully these six horrible episodes …

Ancient Rome, 64 AD. A great fire consumes the city for six days, and the population blames Emperor Nero, claiming he set the fire for his own amusement.

In order to deflect the blame, Nero points his fingers at the Christian “sect,” orders the arrest of its members, tortures them until they name other Christians, and then executes as many as he could round up. The majority of Romans feel the punishment was well-deserved.

Europe, 1930s. Most readers are very familiar with the rise of Hitler and the Holocaust. What’s not so well known is the prewar exodus of Jewish refugees from Nazi Germany and the response of host countries.

In 1938, for instance, a blaring headline in the Daily Mall of London warns of “German Jews Pouring Into This Country,” with one British government official noting that “the way stateless Jews and Germans are pouring in from every port of this country is becoming an outrage.”

We see similar sentiment in France, Belgium, Holland, Poland, Hungary, and even in the U.S. The refugees are viewed as “harbingers of a dangerous ideology” and “threats to the economy.”

In 1933, for example, the Chamber of Commerce of the French city of Metz says that “highly undesirable Jews have become a veritable plague for honest French merchants.” And by 1935, the French government enacts a series of quotas on certain professions, effectively blocking Jews — a precursor for the more pernicious and deadly forms of antisemitism still to come.

Spain, 1492. In the same month that Ferdinand and Isabella give the order for Christopher Columbus to mount an “expedition of discovery to the Indies,” they also issue an edict that “all Jews should be driven out of the kingdom and its territories.”

It doesn’t take long. By July 30 of that year, nearly the entire Jewish community — some 200,000 people — is expelled from Spain.

Tens of thousands die in transit. In some instances, Spanish ship captains charge refugees exorbitant sums only to dump them overboard at sea.

In the last days before the expulsion, rumors spread that the fleeing refugees have swallowed gold and diamonds. Many are knifed to death by bandits seeking the treasures.

The most fortunate escape to Turkey, where Sultan Bajazet welcomes them warmly. Among the most unfortunate are those who flee to neighboring Portugal, where tens of thousands are forcibly converted to Christianity on pain of death.

Ottoman Empire, 1915. On the eve of World War I, there are two million Armenians in the declining empire. By 1922, there are fewer than 400,000. The others — some 1.5 million — are killed.

Ninety years later, David Fromkin, a World War I historian quoted by the New York Times, describes it this way: “Rape and beating were commonplace. Those who were not killed at once were driven through mountains and deserts without food, drink or shelter. Hundreds of thousands of Armenians eventually succumbed.”

The primary roots of the disaster: The collapse of the Ottoman Empire — in the same country that welcomed Spanish Jews four centuries earlier. The empire’s ruler is also the caliph of the Islamic community, while Christian Armenians are concentrated largely to the East. Many of them, successful merchants and industrialists, appear markedly better off in many ways than their Turkish neighbors.

The breaking point: 1908, when the Young Turks — ambitious, discontented junior army officers — seize power and seek to “Turkify the empire.” Five years later, in March 1914, they enter World War I on the side of Germany, are soundly defeated by Russian forces, and then blame the minority Armenians for siding with the enemy.

The mass killings begin one year later, on April 24, 1915, when several hundred Armenian intellectuals are rounded up, arrested and later executed.

Soviet Union, 1945. Stalin views ethnic Germans living in the USSR as a major security risk, fearing they’ll collaborate with invading Germans. With this rationale, over one million are banished to Central Asia and Siberia, followed by another 200,000 who have been resettled by Poland.

Conditions are so severe that, by October 1945, only about two-thirds of the deportees have survived. And the resentment toward Germans is so deeply ingrained that the survivors are not “rehabilitated” until 1954 and not allowed to return to the European USSR until 1972.

Indonesia, 1965. In the early hours of Oct. 1, 1965, a breakaway group of army dissidents assassinates six Indonesian Army generals in an aborted coup attempt. Not only do they fail to topple the government, but they prompt the government to launch a massive “anti-communist” purge … which, in turn, leads to an ethnic war against Chinese immigrants and their descendants … and ultimately, the mass murder of 500,000 innocent civilians.

What are the chances something
like this could happen again?

In Syria, Iraq, and North Africa, it already has happened. As I’ve detailed here in recent months, the Islamic State has already massacred Christians, Yazidis, Sunni Muslims, and others.

In the Mediterranean Sea, the Aegean Sea, and on multiple land routes to Western Europe, thousands of war refugees have already perished, the victims of traffickers that greatly outnumber the vile Spanish ship captains of the 1490s.

And on six continents, ethnic-religious dividing lines — between Sunnis and Shiites, Muslims and Christians, Muslims and Hindus, Buddhists and non-Buddhists — are being drawn with ever greater venom, bloodshed and firepower.

All this helps explain why the United States, despite any of its failings that we may deplore, remains the number one destination for frightened families and scared money.

It helps explain why the U.S. stock market has held up so well for so long, despite a global economic slowdown.

And it’s also why all investors must remain vigilant.

The lessons of history are stark and clear: Sometimes events reel out of control.

It may not happen very often. But when war, ethnic strife, and economic deprivation line up in one time and place, the consequences can be catastrophic.

We pray the events of the years ahead will not reach some of the extremes of history. But a keen awareness of those extremes is an essential element in helping to prevent it.

Good luck and God bless!


Martin D. Weiss, Ph.D.

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The investment strategy and opinions expressed in this article are those of the author and do not necessarily reflect those of any other editor at Weiss Research or the company as a whole.