Re ‘Eisenhour vindicated: beware of the Pentagon,’ by NM Harun (October 15).
   Although NM Harun is right about America’s propensity to use military power during the Cold War and its immediate aftermath, Pentagon may be losing its influence in framing America’s relations with the outside world. During the Cold War, fighting the Soviet Union and its brand of global communism was America’s principal foreign policy objective and the Pentagon had the single-minded goal to counter the Soviet military might.
   The Soviet Union was a formidable military superpower and was ready to use force in countries like Hungary, Czechoslovakia and Poland under its control. The Soviet Union was also propping up communist regimes in Cuba, Nicaragua and Afghanistan. The Soviet-American rivalry for global domination was at the heart of the conflict and the United States showed equal propensity to use military force to counter the Soviet Union.
   All this changed after the collapse of the Soviet Union and for a while it seemed that the days of ideological confrontation may be over. In fact, most neo-conservatives, who were the most vocal advocates for the use of America’s military power to counter the Soviet threat, thought the days of military confrontation was over. A prominent neo-conservative, Francis Fukuyama, even declared the end of history is in sight with the victory of liberal capitalism. From now on, the agenda will be how to manage democratic capitalism around the globe.
   Terrorist attacks of 9/11 changed all this. The world is again seen as a battleground between extremist Islamists and the secular West. But after two wars in Afghanistan and Iraq, the American attitudes have again changed. It is becoming increasingly clear that the Islamists are a greater threat to their own people than they are to the West. As Prof Pervez Hoodbhoy, at Quaid-i-Azam University in Islamabad, recently wrote in Karachi’s Dawn: ‘The militants are using America as a smokescreen for their real agenda. ... Their goal is to establish their writ over that of the Pakistani state. These fanatics dream of transforming the country into a religious state where they will be the law.’
   The Americans have come to realise that terrorism can be defeated only if the national governments in both Afghanistan and Pakistan have the means and the will to fight the extremists. This is why increasingly the emphasis is to prod the local governments fight the extremists with the Americans providing logistic and technical support. In this war against terrorism, the Pentagon has a lesser role to play and other agencies like the CIA and the US AID, Red Cross and NGOs have a greater role to play. After the failed mission in Iraq, the Americans have come to realise that democracy cannot be imposed at gunpoint, it must grow from within for a period of time. In this new environment, the Pentagon is no longer a big player once it was.
   Mahmood Elahi
   Ottawa, Canada

European governments have closely modelled their own financial rescue plans on a British blueprint that calls for capital injections into banks and guarantees for inter-bank lending. This at last broke the deadlock that prompted the United States move to buy stakes worth up to $250 billion in the nation’s nine leading banks. As a consequence, investors’ confidence returned and stocks worldwide, including Asia, showed the biggest gains ever recorded after a steep decline. The newly-crowned Nobel laureate in Economis, Paul Krugman, wondered whether Brown had saved the world financial system. Brown and his treasury team had, Krugman wrote, shown clarity of thought, speed of action and a decisiveness that hasn’t been matched by any other Western government. Well, let’s believe, by all means, the massive intervention by the American and European governments, led by the UK, to rescue their banks by forcing them to accept government stakes is indeed necessary to save the world capitalist economic system.
   But, let’s please not think that everything is going to be different henceforth. The world might want to better regulate the financial markets and the stock market, but that’s not going to change their character. It will continue to be oriented towards earning the largest possible profit, motivated by the usual greed. This might not be a very pleasant ambition, but is in human nature. In the future, we’ll have new types of speculation, different from those that have just failed. The entire system is being bailed out using national coffers of the Americans and Europeans –– maybe by other nations also –– and they can rest assured that when things go wrong again, their governments will be there to clean up. It couldn’t be otherwise. That’s how a capitalist system has to work.
   The financial markets are pushed not only by greed but panic too. Both occurred last week –– the steepest decline and the biggest gain in the history of bourses worldwide. In the long run, however, one cannot manipulate the market. One cannot speculate it into going up or plead it not to go down. It’s going to do whatever it’s going to do, like nature, whichever way greed and fear pull it. And the market always has the last laughter. The world stock markets have reached a stage where they’re today because they went on a greed-driven unbridled credit spree and everybody in the world is now paying the price this or that way. Because it was the largest credit spree in the world, a lot of riches are going to be smeared out. Now what we’re observing is that the market is re-evaluating and re-pricing every asset in the world, without leniency, telling each stock, bond and bank what its value is in a post-credit spree world.
   To understand better, we’ve to go back to the beginning of the problem. After the fall of the communist Soviet bloc, virtually every economy in the world moved to a capitalist system, either authoritarian or democratic, which eventually made the world flooded with money looking for investments anywhere and everywhere. It didn’t take long for ‘smart’ financial managers to outline how to move home mortgages and commercial loans from a transaction between customer and a bank, or between a company and a syndicate of banks to something much more. While a bank initiated a mortgage or loan, it was quickly packaged and sold to a second party who turned these different loans into bonds and then resold them all over the world to banks and money markets and different private funds. The upside of this kind of finance is that it powered enormous growth around the world.
   Two Americans, Andrew Weiss and Warren Buffett, told similar things, though in a different way. Professor emeritus of Economics at Boston University and manager of Boston-based Weiss Asset Management, Andrew Weiss, reportedly remarked that when nobody is afraid in the topsy-turvy world of investment, be fearful. But when everybody is afraid, be bullish. The renowned investor, and the richest man on Earth last year, Warren Buffet, said ‘I have no idea what the stock market is going to do next month or six months from now, but I do know that the American economy, over a period of time, will do very well, and people who own a piece of it will do well’.
   Sirajul Islam
   Shyamoli, Dhaka