I wanted to talk about finance and war because war is a perennial feature of human history. We're always close to war and it's just life. Chimpanzees are close to war as well by the way. They're always fighting battles with other chimpanzee groups. So it's something in our genes I think and unavoidable. So I wanted to just be clear what happens to finance given that finance usually trades long term claims, often trades long term claims. But you wonder what will happen if there is a war and a fundamental change in government. So first of all, there is no world government and I'm supposing there never will be. Organizations that help are tenuous. So you might wonder how can finance really manage if the institutions have to be defined legally by an existing government but governments get turned over and destroyed and reformed. So I want to just mention a couple of examples of wartime effects on finance. First example, World War I. Germany lost, in case you haven't heard and in 1918, people had them at their knees; they were conquered, and people were really angry. So we had the reparations that were imposed on Germany. I just want to say how do you think the reparations went? People thought Germany should pay for the crimes they committed in World War I. How did they do that though? Well, they could have just said, "We confiscate all your stocks and land and holdings. Everyone." They didn't do that. They instead demanded reparations from the government, and the government had to figure out how it would finance the reparations through taxes. So they did tax the German people to repay the victors in the war. Actually, it turns out, however, they never did it because the victors in the war saw how hostile the German population was becoming feeling a great injustice in the reparations. So they canceled them by the 1920s and they never had to pay. So that means if you own stock in a German company in Germany, go right through the war, you still own it. In World War II, it was even better because they had learned their lesson that you don't go penalizing individuals for the sins of their government. So after World War II, they just left them all alone except in East Germany. Do you know what happened in East Germany? Well, the communists took over and that was different because the communists didn't have a capitalist ideology at all and their ideology could justify just grabbing things. So that's what they did in East Germany after World War II. Later after the reunification, people could sometimes reclaim their lost property. Another example is in Iran, there was the Iranian Revolution in 1979 in which the Ayatollah displaced the Shah of Iran. These are fundamentalist Muslims. What do you think they did with financial holdings? Well, notably, a lot of the government under the Shah, employees were paid pensions and they were retired now and they were expecting to live off their pension. So what do you think their new radical Islamic government did? It left it. You know, it seems fair to them. They left it. So you could keep your pension even though it looks like you got it under a bad, to their mind, government. And then another example is South Africa in 1994 in which a white majority government that had oppressed blacks for decades, centuries took over. And what do you think? Do you think they confiscated? What about people who had pensions of insurance? They left it. So why does this happen? So you have turnovers of governments that are very hostile to the one that had defined the financial institutions. So what would your expectation be? The expectation might be that they'll leave it because they want to be reasonable. It's in their interest to be reasonable and understand that we don't just abrogate contracts that were made. On the other hand, it doesn't always work out that way. So a socialist theory allowed Vladimir Lenin, Lazaro Cardenas, Mao Tse-Tung, Mohammed Mossadegh, Gamal Abdul Nasser, Indira Gandhi and others to justify major confiscations of property and nullifications of financial arrangements. And notably after World War II, in Japan, there were the Big Four, Zaibatsu called Mitsubishi, Mitsui, Sumitomo and Yasuda that were blamed for some of the- they were powers behind the government in Japan and they were blamed for some of the things that, by the victors, that some of the things that happened in World War II. Now, in this case, it was the United States as a victor. They're not a confiscating country. But what the US did do is force the Zaibatsu to sell their assets and put the money in nominal yen government bonds. And then the Japanese government then had a massive inflation and it destroyed the real value of those bonds and they never got anything back. So the Zaibatsu were immensely diminished after World War II. So I think a war is kind of risky, ought to be very risky for financial contracts, but it isn't always the end of them because of underlying there is a certain civil society that respects individuals and thinks that individual signed contracts, they acquired property by buying it, by working hard and earning money and buying it. Why would you just abrogate those contracts after a war? So I think when you think about long term investing, you have to think about these possibilities that the world is disruptable. And you have to think about the basic ethics of the investment you're making. If it's sound and it's not abusive or odious, then it should be all right. The word odious debt has been used many times to justify confiscating it. When the debt was raised by a government that was using it for ill purposes against the will of the people, that's odious debt. And so ultimately the survival of your investment in government debt depends on whether it's odious or not. So you have to look at the moral underpinnings of the country that's issuing the debt and consider that a major factor, because ultimately it will be civil society that will decide whether you get paid back or not.