Recently, several clients have asked questions pertaining to the North Korea situation which, over the past two days, has caused some settling in the equity markets. President Trump has been facing a lot of criticism for his so-called “harsh language” and strong stance with regard to addressing the threats from North Korea. History tells us though, that appeasement of dictators and rogue nations, ultimately leads to war. History also tells us that a strong national defense posture, and clearly worded intentions, actually deters conflict and prevents war. President Clinton, President Bush and President Obama all settled for appeasement with North Korea and allowed their nuclear program to continue. That situation now is a clear and present danger to our country and allies.
In my 30 years of military experience, three of which I was a pilot of B-52 bombers dealing daily with nuclear weapons, war plans and flight training exercises to deliver those weapons, have taught me that when the Commander-in-Chief projects American strength and speaks clearly in non-political terms our enemies then clearly understand and are ultimately deterred.
A good example would be Libya, 2001. Following the cowardly terrorist attacks of September 11, 2001, America took action, and Libya shut down their chemical, biological and nuclear programs after President Bush made it ultimately clear that we were coming to destroy the Taliban in Afghanistan, and that any nation that didn’t stand with us in our effort would suffer the same consequences. George Bush, addressing Congress in regard to this unspeakable act, said that although many countries have offered sympathy and support to the United States, the rest, he said, face a choice. “Every nation, in every region, now has a decision to make. Either you are with us, or you are with the terrorists,” he said. He continued in the same address that, “From this day forward, any nation that continues to harbor or support terrorism will be regarded by the United States as a hostile regime,” and that “The only way to defeat terrorism as a threat to our way of life is to stop it, eliminate it and destroy it where it grows.” His language was strong – like President Trump. Ronald Reagan also demonstrated this strong leadership style in 1983, in what quickly became known as his “Evil Empire Speech”, having said that the Soviet Union is “the focus of evil in the modern world”. Soon after the USSR dissolved, the Iron Curtain fell, and the Berlin Wall tumbled down. Also, and most importantly to note, President Reagan also commented that “Of the four wars I’ve seen in my lifetime, none came about because the U.S. was too strong”. This goes to demonstrate that history has proven that great leaders use strong words, not weak diplomatic language that has little to no effect on despotic rulers and tyrants. Watered down language, favored by normally fearful politicians, became the norm in the previous administration but historically, that style has led to conflicts.
North Korea has sold nuclear weapons technology to Iran, Syria and other despotic regimes, making them just as much of a hostile threat to the United States as Afghanistan, the Taliban, and Al-Qaeda were to the destruction of the Twin Towers that fateful day in September 2001.
It is very important to understand that although market activity has recently reflected the fear & concern of the North Korea situation, we are confident that this effect on the market is on a very short-term basis, and should have absolutely no long term negative impact. We expect this situation to resolve quite rapidly with minimum effect on our clients’ portfolios. When it does resolve, through whatever means, valuations are likely to markedly improve as a world at peace and without maniacal threats is safer, more productive and more prosperous. Please call us if you have any questions.
Kelly Buckley, MBA, CFP®
Managing Director for Asset Management