There is a deep motivation why I've become interested in quantitative finance, and that is that the central front on the war on terror is not in Iraq or the Middle East. It is in the major financial centers in New York, London, and Tokyo.

Ask yourself. Of all the places that bin-Laden could attack on 9/11, why did he attack the World Trade Center?

The one thing that bin-Laden understands that unfortunately most people don't is the central nature of the economic front on the war on terror. Put simply, if we get to 2100, and most of the world is living in decent middle class conditions, then bin-Laden will lose. If we get to 2100, and most of the world isn't living in decent middle class condition, then bin-Laden or someone like him will win. This will be the case no matter what actions are taken in the short term.

The other major blind spot is that I don't think that most people realize the depth of bin-Laden's evil vision of the world. When people talk about the worst thing that can happen, the thought of a nuclear attack on an American city comes up. However, this is merely a small part of what bin-Laden is after. What I think he wants is a systematic collapse of civilization comparable to the fall of Rome or the end of the Han Dynasty. That seems to be his strategic goal. To make the world, look and feel like the border regions of Pakistan and Afghanistan. The thing about this vision is that it is so broad and encompassing, that I fear that most people simply do not grasp it. It's not a matter of destroying a few cities, bad as that may be, it is a matter to completely causing civilization as we know it to collapse.

And this involves collapsing financial markets and systems. Suppose the standard of living in the Middle East doesn't improve. Suppose then you have hundreds of millions of angry foot soliders backed by nuclear weapons and control over the oil fields, add in a bit of nano-tech and you can imagine a systematic global collapse of civilization. I think that Bush is incorrect in focusing on democracy and freedom. It is not a fight between democracy and tyranny. It is a fight between civilization and barbarism, and if the civilized fight each other than the barbarians could win.

One of the few writers that gets it is Thomas PM Barnett http://www.thomaspmbarnett.com/ who sees and at least talks about the military-markets connection. But even he has one blind spot, and that is a vision of what the world would be like if we fail. He divides the world into a connected core and a disconnected gap, and in the optimistic scenario, the gap will gradually be connected to the core. But there is a frightening alternative scenario, which is that the gap will increase and consumes the whole world. People aren't talking and thinking about this, and this concerns me. The worst that people can imagine is a nuclear explosion in New York. What people aren't thinking and talking about is the possibility that in 2200, Kansas might look like the Sudan does today.

There is a tremendous lack of imagination here. I think that part of the problem is that the United States is so powerful and preeminent that it is impossible for most people to conceive of a world in which bin-Laden wins, but it is absolutely essential to stare this possibility straight in the face if one hopes to defeat him, and if the civilized world cannot raise the standards of living in the gap and if the financial networks fail, then he will win. Part of the advantage of having some background in Chinese history is that you see numerous examples of the system falling apart, and the most recent case was in living memory.

This sort of explains my motivation for working in quantitative finance, and trying to extend those sorts of networks into the developing world.

The Collapse of Civilization Nightmare

LACK OF IMAGINATION SHOULD NEVER BE AN EXCUSE

Here is a sketch of how the nightmare could happen.....

• Economic collapse or weakness in the core regions similar to the great depression due to a breakdown in international commerce. This might come as a result of a war between the United States and China over the Taiwan straits or some sort of super-SARS virus

• The "petri dish" effect on the gap. If you have unsettled conditions then a lot of nasty ideologies and leaders start arising. Most of them are incompetent or self-limiting, but if conditions are bad, then one of them will have the "right" combination of luck/skill to really do bad things. Example: The National Socialists were one of hundreds of Volkisch groups in Germany, most of whom were lead by people who were incompetent in one way or another. But if conditions are bad, you will insure that "someone" will have the evil genius to do really nasty things.

• Intentional resource exhaustion. Bin-ladenist government comes to power in Saudi Arabia and destroys the oil fields. The reality of the situation is that the world physically has the resources necessary to sustain growth, but this depends on international networks being in place.

• Letting the genie out of the bottle. Right now it is simple for a person of average skill to put together a PC that has far more computing power than anything people could have dreamed of decades ago. Suppose a nasty government produces a couple of tons of highly enriched uranium and puts it into a street corner somewhere for all takers, making it easy for anyone to put together their personal nuke. Or someone invents a "human virus" kit like the kits people have for computer viruses. At this point you have suicide bombers with nukes. Thousands of suicide bombers with nukes each with their own agendas.

• Counterreaction. Suppose bin-Ladenist governments do start forming. The nature reaction in Kansas will be to make nasty counter-ideologies really popular. Christan Identity and Militias are considered wackos. But if the international economic system crumbles, you'll have nasty petri dishes happening in Kansas

• Worse than the last time. The last time something like this happened, there was a war that killed about 50 million dead. This time, it is likely to be nastier because the large fraction of the population of the world will be in the gap, with the level of science and technology much higher.

• Result: Instead of the core shrinking the gap, the gap encompasses the core, you have genocidal wars of annihilation which destroy all viable governmental structure and civilization. New Dark Ages.

The Good News

• Allah is on our side. Ask the people of Iraq and Afghanistan under the Taliban just who are the apostates and the agents of Satan.

How to prevent a systemic collapse

• Recognize that this is not a clash of civilizations, but rather a clash between civilization and barbarism.

• This is not a war against Islam (because if it were Islam would win). Christian, Buddhists, Hindus, Marxists, nationalists can come up with plenty nasty ideologies under the right economic stresses. Remove the economic stresses and the petri dish disappears, and the agents of Satan are revealed for who they are.

• Since this isn't a war against Islam, one should logically be able to express the issues and the fight within in the language of Islamic civilization. Put simply, this is a jihad between the agents of Allah and apostate agents of the Devil. You can ask the people of Afghanistan which is which.

• Keep the core united, functioning, and healthy.

• Be willing to make and debate tradeoffs. For example, I would argue that United States should not allow for indefinite detentions and should not restrict visa applications EVEN IF the result of these policies is another 9/11. The problem with political discourse in the United States right now is that another 9/11 is considered the worst possible outcome when it is not.

• Be aware of the "greater jihad" In Islamic thought, the lesser jihad is the external struggle between good and evil. The greater jihad is the internal struggle between good and evil. How does one fight with monsters without becoming a monster? How does one fight the external evil without surrendering to the internal evil within each of us? (Curiously, but not surprisingly, the concept of the greater and lesser jihad is one which schools of Islam which are more sympathetic to bin-Laden tend to abandon.)