Notes from Munger are President Daniel B. Coleman‘s monthly letters to the Birmingham-Southern College community.

Sept. 13, 2021

I haven’t written my “Notes from Munger” in a while, as I have spent a lot of time over the past year writing updates on the COVID-19 pandemic. I write the “Notes” to spur thought, conversation, and debate. If there is something important going on in the world, I use “Notes” to provide context for our students.

As we just commemorated an important event in our country, the anniversary of the attacks of Sept. 11, 2001, I feel compelled to share my experience and my perspective of this day.

It has been 20 years since these attacks, and many of you had not yet been born. Those of us who were adults in 2001 have had 20 years to digest the implications. While this is not enough time to understand that day in the arc of history, it is enough time to gain perspective; it is enough time to start to move away from the personal and emotional connection.

The contextualization of events like 9/11 into the arc of history comes from discussion and debate at places like Birmingham-Southern College. With the implications of 9/11 still being interpreted with no broadly accepted conclusion, now is the time to discuss what happened and why it mattered. Out of these discussions, perhaps members of our community will come to their own conclusions and participate in the public discourse on this topic for the next 20 years.

“The Longest War in History”

For those of us who remember 9/11 clearly, watching the recent withdrawal of American troops and the rapid fall of the country into the hands of the Taliban evokes strong emotions as well as vivid memories of that day. For those of us older who remember watching the fall of Saigon on TV in April 1975, the images of helicopters rescuing people in Kabul were hauntingly familiar. And yet I think the two events will be seen very differently by historians. The “Liberation of Saigon,” as the North Vietnamese describe that day, was about expelling foreigners and consolidating their country. It was a victory that completed years of resistance to the Japanese, the French, and, finally, the Americans. There was no more need for the Vietnamese to fight.

From my point of view, the declaration of the end of the “longest war in U.S. history” with our withdrawal from Afghanistan is inaccurate. First, the Cold War with the Soviet Union lasted for nearly 45 years. Second, this war is not likely to be over. Like the Cold War, this is a war of ideology, not so much any particular geography. Moreover, as the new Taliban government is made up of member of the previous Taliban government, as the new Minister of the Interior of Afghanistan, Sirajuddin Haqqani, is on the FBI’s Most Wanted List for terrorism, it is unlikely that the new Taliban government will view the U.S. differently than the previous one did.

In this war, the battlefields can be half a world away or, as 9/11 showed us, these battles can be fought at the most familiar places at home. I hope I am wrong about this and that Afghanistan turns out to be like Vietnam, where the country turns inwards to focus on its own future. At this point, however, I am skeptical.

The Height of American Influence

I remember in 1989 watching on CNN people hack away at the concrete of the Berlin Wall. A few months before, any attempt to breach the Wall would have led to an arrest, if not shooting by guards on the eastern side. Twenty-eight years after the Wall’s construction, you could see freedom rise on the TV screen as people chipped the Wall into small rocks and future souvenirs. The euphoria at that moment must have been similar to the feeling that Americans and its allies felt after the end of World War II. The enemy was wrong and immoral. The enemy had been vanquished.

Shortly after the fall of the Berlin Wall, some public intellectuals declared ideological victory. In 1992, the American political scientist, Francis Fukuyama wrote “The End of History and the Last Man,” which declared victory for liberal democracies and capitalist economies. Notwithstanding Fukuyama’s later hedging of this declaration (he pulled back from this assessment in his 1995 book “Trust: Social Virtues and Creation of Prosperity”), much of the world felt that he was right. I don’t know if others have alluded to the time from the fall of the Berlin Wall to the time the jets crashed into the World Trade Centers, the Pentagon, and a field in Shanksville, Pa., as a distinct era. In retrospect, I see this period as the height of American influence. For 12 years, the entire world was under a Pax Americana. The final arguments against totalitarianism had been made. Liberalism had won.

These two events are seminal with respect to bookending a unique period of American power. This power was first flexed in Kuwait in 1991 (arguably another victory for liberalism with respect to the global coalition created as well as the military prowess demonstrated). The U.S. did not always use its power when needed. America stood by as many as a million civilians were killed in the genocide in Rwanda. Only after three years did the West intervene in the ethnic violence of the War in Kosovo. When the U.S. chose to act at these times, nothing seemed unreachable or unachievable.

If one defines liberalism as “a political and social philosophy that promotes individual rights, civil liberties, democracy, and free enterprise” (Oxford Languages), and liberalism defeated totalitarianism in 1989, this victory unleashed unforeseen forces that had lain dormant since World War II. Perhaps as individual rights, civil liberties, and the freedom of association became acceptable post totalitarian regimes, those repressed forces that held groups of people together before the rise of Soviet-backed communism began to flourish. Ethnicity and religion unleashed the powerful force of nationalism, which over time has demonstrated to not be interested in individual rights, freedom of speech, and democracy as was hoped by its liberators, the NATO-led West. In retrospect, it seems that we were ignorant of these forces; we were naïve to think that these new freedoms would lead to liberal democracies in the mold of Western Europe.

While rightfully victorious in a half-century battle against totalitarianism from the “right” and the “left,” we were deluded to thinking that the battle for liberalism ever ends. Sept. 11, 2001, was a visual, real-time, gut-wrenching dose of reality for our entire country and the West. Shots had been fired in a new battle over liberalism. Pax Americana abruptly ended. As I think back to that time, I remember that we were shocked at realizing the following two realities: First, there are people in this world who hate us and we don’t know why; and second, we are not safe from these people who hate us just because we are half a world away. ¹

 A Day Like No Other

On Tuesday morning, Sept. 11, 2001, I drove to the Branchville train station, bought my coffee, my scone, and my Financial Times and Wall Street Journal (the iPhone had not yet been invented!) and boarded the 5:59 a.m. train to New York. Fortunately for me, our trading floor at UBS (the largest in the world at the time) was across the street from the Stamford train station. My commute was about 40 minutes each way. Grand Central Station was another 45 minutes away.

I was the head of equity trading for the Americas at UBS. Any risks we took in buying or selling an equity or equity-related security reported to me. Any person executing these transactions reported to me. Each day, I would arrive on the trading floor at around 6:45 a.m. I would grab breakfast (in addition to my scone already eaten on the train) and eat it at my desk as I checked email and reviewed risk for the day. At around 8 a.m., I would walk the trading floor and talk to the heads of each desk about risk, about news of the day, about clients. Around 8:30 or so, I would often check in with my bosses in London to make sure our trading was in synch to what we were doing overseas or had done the night before in Asia.

At 8:46 a.m., American Airlines Flight 11 crashed into the side of the World Trade Center’s North Tower.  About two minutes later, someone came up to me and told me that a plane had hit one of the Twin Towers. I thought to myself, what a terrible accident. The pilot must have had a heart attack. I envisioned a single-engine plane crashing into the building and falling to the ground with minimal to no impact on the building itself. Out of curiosity, I turned on the TV at my workstation and saw the image of a massive hole in the façade of the North Tower. I immediately surmised that the impact creating this hole occurred at an angle so the entire plane could hit the building. If the crash had been an accident, the impact would have reflected some effort to avoid the building.

The stock market would not open until 9:30, but the futures market was already trading. I immediately turned to our ETF and futures trader and told him to sell $500 million of S&P Futures and their equivalents.² That was the largest order I had ever given. He asked me if I was sure, and I said yes. After a few minutes, he looked up at me and said that we were “filled” (the order had been executed). I told him to sell another $500 million. He started to execute the order. I stared at the TV screen. At 9:01, I watched live on CNBC as an explosion came out of the side of the South Tower. I did not see United Flight 175 hit the Trade Center; I just saw the explosion. The next thing I remember is my trader looking up at me to tell me that the markets just shut down. We sold $200 million more but could not sell the rest. I sat down and called London. I told them about the trades. I assured them that we would not have significant exposure even if the market fell 20 percent. In other words, they could continue to take risk in Europe and Asia as investors sought liquidity with the U.S. markets closed.

I hung up. The room was quiet except for murmur of TVs across the trading floor. I called my wife, who was home in Redding with our one-year-old daughter. She picked up the phone and asked if everything was ok. It was 9:30, the market-opening on a normal day. She knew that this was the busiest time of my morning. I told her to turn on the TV. She asked why. I said, “Just do it. I can’t explain.” She did. Neither one of us knew what to say. I told her that I would call her back. I hung up the phone, put my face in my hands, and tears started to form in my eyes. I didn’t know why I cried. I didn’t yet have any context as to what had happened or what was going to happen. I just knew that the world had just changed. As a new father, and as someone responsible for several hundred people on that trading floor, this moment was too much.

I pulled myself together, wiping away all evidence of moisture in or near my eyes, and walked the trading floor. One of my closest colleagues ran up to me and said, “What about Scott?” My heart sank into my stomach. Scott was the head of “client connectivity.” He was one of the first sales people on Wall Street that focused on connecting clients’ order management systems directly to their broker. He was scheduled to give a presentation that morning on electronic trading and connectivity at the Windows on the World, a restaurant on the 106^th and 107^th floors of the North Tower. I told my colleague to try to call him, which he did, but never got through. (I later found out he had given his cell phone to anyone at the meeting who did not have one so they could call their loved ones to say goodbye).

Another colleague walked up to me to tell me that Keith’s brother worked at Keefe, Bruyette and Woods, an investment bank on the 89^th floor of the South Tower (67 employees were killed). Keith was a sales trader who focused on executing risk arbitrage orders for clients. Another colleague came up to me to remind me that Carl worked at Cantor, Fitzgerald, a brokerage firm that occupied the 101^st through 105^th floors of the North Tower (and where all employees who reported for work on 9/11 were killed). Carl was a bond broker who had covered me for years when I traded convertible bonds. I looked around the trading room and realized everyone was having similar conversations. Everyone knew people who were, at that moment, likely to be trapped.

At 9:37 a.m., American Airlines flight 77 crashed into the Pentagon. Then there was news of another flight, United Flight 93, headed to the Capitol or White House. We all realized that our country was under attack. We had no idea of what would come next. An older trader came up to me in a panic, telling me that our trading floor is a target. “It is the largest trading floor in the world; why wouldn’t they come after us?” I assured him that to whomever “they are,” we are not that important. The news started showing pictures of evacuation of the Empire State Building and the Sears Tower in Chicago.

At 9:42 a.m., the FAA grounded all civilian aircraft. Most of people on the trading floor were either trying to reach out to friends and relatives in the Twin Towers, some with success and some not. Everyone was watching TV. We all knew that these buildings were burning and people had died, but we thought that the fires could be put out and the people trapped above them would eventually escape. That was the plan as firefighters ran up the stairs of both towers. On TV, the fire burned. We could see objects falling from windows. And then someone yelled out those blurry objects are people jumping.

At 9:59, the South Tower collapsed upon itself into a plume of ash. A few people yelled out on the trading floor and then there was silence. We all knew we had just watched thousands of people die. Moreover, we all knew that it was a matter of time before the North Tower fell. Twenty-nine minutes later, at 10:28 a.m., the North Tower did in fact collapse. About this time, we heard that United Flight 93 had crashed into a field in Shanksville, Pa., at 10:03 a.m. And there were no other flights in the air.

By 11 a.m., with no new information, the intensity on the trading floor began to subside. We all started asking ourselves “what just happened?” Who do we know is no longer with us? Who will we find out has died that we didn’t know was there that day? Keith’s brother was talking to him on the phone from his trading desk in the Trade Center five minutes before the building collapsed. We knew we had lost Scott. I knew I had lost my friend at Cantor. We just did not know who else we had lost.

At the end of the day, I went to the top floor of our building in Stamford with two of my colleagues. The sky was clear blue, not one cloud. From our building, we could see Manhattan 35 miles away. We could see the plume of gray ash ever-so-slowly billowing into the sky where the Twin Towers once stood.

The Aftermath

The U.S. markets would be closed the following day. We did not know for how many days. I couldn’t sleep, so I drove to work early on Wednesday around 4 a.m. The rest of the world was open and markets were down. I spent a lot of time on the phone with the global heads of risk in London. I spent hours preparing contingencies in case the market did open the following day. I spoke to recent graduates who had been working for us for about two months. I wanted to see how they were doing and to explain how we needed to be prepared for huge activity and volatility when the markets came back. In the middle of this meeting, I broke down; I stopped talking; one of my direct reports finished the meeting as I walked out of the room.

The next few days were eerie and sad. In Manhattan, people were putting up flyers on buildings, in subways, in train stations. Every flyer had a picture of someone who was missing. The vast majority of those pictures were of people who had died. When I took the train home the following week, I noticed cars parked in the same spot at the same angle at every stop between Stamford and Branchville, unmoved for days. Sitting on the train, staring out the window at each stop — Darien, Norwalk, Wilton — I realized that the owners of these cars were never coming home. I told a colleague of my realization and he told me that there were parking lots at train stations in the New Jersey suburbs that had been 20 percent full with the same cars in the same spots since Tuesday, Sept. 11.

For the next two weeks, everyone missed some work for memorial services. As we had time to gather our thoughts on these events and what they meant to us personally, we all wondered why this happened at all. If it was an attack on Wall Street, they missed. Despite its name, the World Trade Center was not the headquarters of world trade in New York. The World Trade Center had second-tier investment banks and brokerage firms, the retail offices of Dean Witter (who all managed to leave the building safely), the operations departments of companies, and the New York-New Jersey Port Authority. It was not the center of trading; it did not house global banks like JP Morgan and Goldman Sachs.

Then why did 2,606 people die in the attacks on New York? Why did citizens of more than 90 countries need to die that day? Were these attacks about Wall Street? No. By Monday, Sept. 17, Wall Street was functioning as before. These attacks did not impede the U.S. markets for more than four days. The Towers were symbolic. This was an attack on something much bigger. As we learned about the attackers and their motivations, this was an attack on what we would describe as “freedom.”

Over the following weeks, anthrax was mailed to people around the country, killing five Americans. One  letter went through the distribution center in Oxford, Conn., the one used by my post office. There were rumors of other attacks. No one could travel. All flights had been cancelled. Every day was tense.

The editor of the New York Times, BSC alumnus Howell Raines ’ 64 published a brief obituary of everyone who lost their lives in these attacks. Called “Portraits of Grief,” these short life stories reminded us every day for weeks that we had lost people with brothers and sisters and children and parents and friends. There was a sense in New York that we could not just go back to business. At a minimum, we had to acknowledge what we had lost.

The U.S. Response

On Oct. 7, the United States launched “Operation Enduring Freedom.” Our NATO allies invoked Article 5 for the first time in history, clearly aligning our allies with the U.S. against terrorism.

In New York, there was a real sense of community and resilience. In Manhattan, I felt compassion toward and from everyone as I walked down the street or rode the subway. From my colleagues in Europe, there were a lot of “we are with you” comments on our calls. There was a sense of unity felt by many Americans that I imagine was how most Americans felt at the beginning of World War II. As after the attack on Pearl Harbor, most Americans were behind “Enduring Freedom.” After all, U.S. civilians had been attacked on our soil; we had a clear mission to bring out attackers to justice and prevent future attacks.

It is hard to appreciate today how anxious America was toward the end of 2001. We went from the supreme, sole superpower since 1989 to a country vulnerable to a people on the other side of the world. In the wake of this anxiety, we passed laws that would help law enforcement track terrorists at the expense of our liberties. Almost no one argued against them. We pursued wars in Afghanistan and later Iraq, both with support of Congress. I point these facts out not to critique the decisions, but rather to give perspective to the anxiety felt by the vast majority of the country. We have not had a non-homegrown terrorist attack on U.S. soil since Sept. 11, 2001. From that point of view, these efforts have thus far met their objective.

America’s Role in the World

Since Sept. 11, 2001, we have likely entered another period, one when we saw the limits of American power as we engaged in a new war. In 2008, American policy began an explicit pullback from global engagement. Perhaps we hit a financial reality. We cannot afford to be the “world’s policeman.” Or perhaps we lost confidence in our own mission. Who are we with all of our issues to tell the world what to do? Or perhaps we are simply unwilling to engage outside the U.S. because we should be focusing on the problems inside the U.S. Whatever the reason that we have pulled back from the global stage, we are inevitably, if not purposefully, pulling back from our role as the torchbearer of liberalism.

As I watched the pictures of the U.S. leave Afghanistan and thought about Sept. 11, 2001, as well as April 1975, I became more focused on the U.S. While concerned about Afghanistan becoming a safe haven for international terrorist groups in a world that is a lot smaller than it was in 2001, I have become more concerned about the lack of willingness to defend liberalism on the home front. From the right, I have heard pundits speak admirably of the Taliban and their discipline and convictions. From the left, I hear people equating the Taliban to behavior we see in the US.³ The Taliban are the embodiment of illiberalism, enforcing their ideas with tyranny. There is nothing to admire. There is nothing yet like that here.

As America pulls back, we see dictators like Xi, Kim Jung-un, and Putin emboldened. We see aspiring authoritarians like Duterte, Bolsanaro, and Oran curtail freedoms. In 2005, 31 countries increased freedoms for their citizens more than the number of countries that curtailed freedoms for its citizens. In 2020, 45 countries curtailed freedom for their citizens more that the countries that increased freedoms.⁴ In the last few months, the world has effectively lost five democracies: Tunisia, Myanmar, Belarus, Hong Kong, and, in the past two weeks, Guinea. What troubles me is not just the impact of the global pullback, but how that pullback is itself a part of illiberal movements in the U.S. According to Freedom House, the U.S. has dropped significantly in its standing in the freedom rankings of countries around the world:

The U.S. earned 83 out of 100 possible points this year in Freedom House’s annual rankings of freedoms around the world, an 11-point drop from its ranking of 94 a decade ago. The U.S.’s new ranking places it on par with countries like Panama, Romania and Croatia and behind countries such as Argentina and Mongolia. It lagged far behind countries like the United Kingdom (93), Chile (93), Costa Rica (91) and Slovakia (90).  Source: theguardian.org (March 2021)

Are we becoming a society more hostile to “individual rights, civil liberties, democracy, and free enterprise?” Are we becoming a society less able to accept and explore ideas different from our own? Is there a growing tendency toward authoritarianism here? One can argue the scale of our role in the world as the beacon of liberalism. But I hope that within our borders, we have a common, shared value that is not at risk.

When I think back to Sept. 11, 2001, I recall a shared sense of purpose. Our country was indeed the beacon for the rest of the world; that is why we were attacked. In retrospect, I worry that our anxiety and fear caused our government to promote illiberal policies designed to protect us. I worry that some of our actions have emboldened our internal critics of liberalism both on the left and right. I worry that the aggressors on 9/11 achieved their objective of causing us to question our own values.

Birmingham-Southern College is a place where we should discuss the implications of 9/11. The conclusive themes have not been set by the historians. In addition, Birmingham-Southern is a place where we should demonstrate that liberalism is alive and well through the promotion of free speech and civil discourse. In fact, the critical review of these issues in an open society undermines the intentions of the original terrorists. Twenty years after their ultimate sacrifice, I cannot think of a better way to honor those who were killed simply because they represented freedom.⁵

• • •

¹ I remember watching television the first couple of days after the attacks. Talk shows were full of experts explaining why someone wanted to attack us. While the government had identified the likely attacker as Al Qaeda, there was still a lot of confusion as to who they were and what they believed. For some experts, this attack was an opportunity to list all of the reasons why someone would hate America, or at least, the expert’s issues with America. Once Al Qaeda’s agenda and the Taliban’s enforcement of their view of civil society became clear, these “experts” were not invited back to cable news and other shows. What I think everyone missed at this time was that this attack was the opening of a new front in the war against liberalism, not an attack an attack on U.S. policy.

² Selling S&P futures and their equivalents is like selling the entire stock market, or at least the stock of the 500 largest companies. As head of trading, it was my responsibility to manage our risks. I knew the likely profitability and losses for our portfolio over extreme moves. That was part of my job. I knew that we were going to have an extreme move and I had to hedge it. My decision was like a muscle reaction that had been honed over a decade and a half of trading and managing risk. We did not high-five over these trades. Rather, these trades enabled us to minimize our risk in a falling market so that we could continue to provide liquidity. We were the largest trader of equities and equity-linked products in the world. Our continued participation in the markets was important to keep them functioning. It was our way of doing our part to show the world that these attacks would not have the intended impact.

³“How We Failed Afghanistan (And Ourselves) with HR McMaster”, Honestly with Bari Weiss, Podcast.

⁴https://freedomhouse.org/report/freedom-world/2021/democracy-under-siege

⁵All times on Sept. 11, 2001, were confirmed by Wikipedia. The dates of other historical events were confirmed by Wikipedia. The rest of the essay is based on memory.