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Thoughts On War and Investing
|by Gaurang Bhatt, MD|
From early history to the introduction of long range cannons, missiles and air attacks, fortresses and moats have been the prime mode of defense. The great wall of China was built to withstand attacks from so called barbarian hordes. Hadrian's wall in Britain was meant to keep the attacking Scots at bay. A moat surrounding a castle was an added deterrent from attackers being able to scale the walls easily. The ability of a company to deter competitors from entering its field because of technological, financial or logistics barriers is characterized as the original company having a wide moat of safety.
In the present era, it would be almost impossible for a new car company to succeed unless it had a tremendously better or cost effective technology. Similarly, a new company would find it very difficult if not impossible to compete with UPS or FedEx because of expensive logistics and fixed investment. This is why technology companies despite having high profit margins, have to spend much of their profits on R&D. See how leaders of yesterday like Yahoo, Ebay and even Microsoft have been overtaken by Google, Amazon, because entry barriers are low and paradigm changing technologies lurking round the corner in a new inventor's mind. It is much more difficult for new drug companies to emerge because of high costs and time delay for becoming profitable. Successful new ones like Genentech, Gilead and Amgen have to tie up with majors like Roche, Glaxo or Pfizer for distribution and marketing.
The nuclear bombing of Hiroshima and Nagasaki was not to defeat Japan or reduce US casualties. It was a veiled threat to the USSR which had no nuclear weapons at that time, to desist from any further annexation of territory to shroud in its iron curtain. Contrary to the hoopla and false propaganda, it was the army of the Soviet Union that dealt Nazi Germany a deadly defeat at the cost of 20,000,000 million casualties, ten percent of its population. Eisenhower planned the D-Day invasion and delayed it to make the USSR bear the predominant brunt of the German war machine to deliberately weaken both.
A first use of nuclear weapons is just a terror technique of a powerful nation to intimidate the weak, just as a similar policy by Pakistan is a desperate threat of a weak and fearful nation chastised by having previously lost its east wing.
Rockefeller's Standard Oil bought up other kerosene makers and sellers by under-pricing and after eliminating competitors, raised prices to make windfall profits. Walmart uses similar tactics but within the legal framework. Presently the big banks by their sheer size and stranglehold on the economy have obtained massive taxpayer bailouts even though they were the culprits that sank the economy. Politicians the world over, are mostly shameless selfish whores. That is why Obama and the Congress are shoveling money by the truck full to the banks and mouthing platitudes and verbal sympathy to homeowners under water with their mortgages, but offering no monetary or interest rate help.
Hercules during one of his labors had to defeat the giant Anteus in wrestling. Anteus was born from the earth and every time Hercules knocked him to the ground, his mother, he got up ten times stronger. Jason's problem was that if he killed the dragon men, from every drop of their blood falling on the ground there arose more. The US military problem is that the death of innocent civilians by bombing increases the number of insurgents, their hatred of the US and their insatiable desire for revenge. To make matters worse, the US is now repeating its foolish, self-defeating policy in the tribal areas of Pakistan, ignoring the advice of its own expert in counterinsurgency, David Kilcullen.
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