The Troops STILL Can’t Come Home?

“From 1882 until 1922, the British promised the international community 66 times that they would leave Egypt, but they never did.” -Niall Ferguson

We got Osama bin Laden, and we’ve been slapping the Taliban around for 10 years now. We’ve gotten an eye for eye, have we not? Maybe a few eyes? But we can’t declare victory and bring the troops home? While the federal government is on the brink of bankruptcy? Seems crazy, right? Well, it’s not. And it has happened before.

The US dollar was de-linked from the gold standard because of the need to print money to keep the Vietnam War going. Our troops could have easily forced Hanoi to surrender, but they were told to play nice with the north. Defense contractors were making a fortune on the war, and they wanted to keep the party going.

They did…

…until the federal government went belly-up. In the post-World War II Bretton-Woods system, the dollar was pegged to gold, and major currencies were pegged to the dollar. Spending on the Vietnam War forced Nixon to cut the dollar loose from gold in 1971. That brought down the system and ushered in the inflationary 1970s.

And here we are again. Waging endless, pointless war, and going bankrupt.

If you think that the military-industrial complex will say: “Golly, the federal government might default. We better scale things back a bit” then you get an F- on your paper.

The military-industrial boat anchor will sink the federal government just like they did in 1971 – without blinking an eye. They couldn’t care less, as long as the fat contracts keep rolling in. As a matter of fact, if the Treasury Department stopped paying interest to China, for example, that’s more money that could be spent on new military projects.

That’s how they look at the situation.

You have been warned.

And there were more than economic consequences for Vietnam-War spending. There were geopolitical consequences. The federal government’s financial problems were plain for the world to see. Our enemies knew that we were weak, and many American-owned oil facilities around the world were nationalized during that period. Even worse, the Soviets trained and equipped the Egyptian army and sent them into Israel in 1973, which brought on the Arab Oil Embargo.

Nice, right?

The consequences of imperial overstretch can arrive quickly. Already, there are tectonic shifts going on in the Middle East. Lucky for us, this time around it is the bumbling Persians who are the troublemakers rather than the far more competent Russians. The Saudis are distancing themselves from the USA and building a Muslim coalition to counter Iran. The Saudi-led GCC has already taken over Bahrain, and Pakistan has boots on the ground there, with more to come if needed.

Do we need to do something about Iran? Maybe not. Imagine the Saudi-Israeli-GCC-Sunni coalition that would rapidly grow in our absence. It would have the money, manpower, and military know-how to thwart Iran.

There’s an exit strategy for you.

What about Afghanistan? Sure, there’s a sprinkling of terrorists left, but one thing we have learned is that fighting terrorists with aircraft carriers isn’t exactly cost-effective.

The way to de-imperialize a place like Afghanistan is to stop enforcing the phony borders drawn by the British Empire, let the tribes fight it out and establish defensible borders. Let a thousand “stans” bloom. I’m no fan of the Taliban, but if they take over Pashtunistan, my guess is that they would be a little more careful about allowing terrorist camps on their turf. If not, what would stop us from going back and delivering further punishment?

There’s another exit strategy for you.

After getting bin Laden, the Obama administration started to “worry” about “uninformed” citizens insisting on bringing the troops home. That’s a sign that there are no plans to even pause our quest for global military domination. It’s similar to what we did after we won the Cold War. After the Soviet Union collapsed, we actually went on offense, with the CIA biting off chunks of former Soviet territory in places like Ukraine and Georgie via “color revolutions”. (That strategy ultimately backfired; the Russians felt cornered, and elected a strong man: Vladamir Putin.)

We are still on the offense now – even if it is “community organizer” style warfare in Libya.

Now, if the oil companies need the US military to make Central Asia safe for oil and gas development, then they need to step up and start paying for the service. Or maybe an “Oil Security” tax is in order? Clearly, $4 gas and a huge national debt due to excess military spending aren’t exactly working out for the taxpayer, now are they? Much of our military spending can be seen as a transfer from taxpayers to oil company shareholders.

The USA has no military rivals. And even the best terrorists don’t amount to anything more than ankle-biters in the grand scheme of things. What would happen if we cut our defense/intelligence budget in half and saved about $500 billion dollars per year? Would there be any geo-political consequences?

Maybe not.

Is President Obama Insane?

Obama’s recent dust-up with Israeli president Benjamin Netanyahu has got to make you wonder. With Jewish Americans providing about 50% of the campaign contributions to his party, you might think that the president would coordinate a bit more closely with Netanyahu. But he didn’t. Instead, he shot from the hip, acting as if he could dictate Israel’s borders.

Guess again, Mr. President.

OK, knocking off Osama bin Laden is the sort of thing that can puff up your ego. So, we have to allow for that. But if not insanity, this was clearly a case of hubris. And not from just a domestic political perspective.

Why, may I ask, are the borders of Israel the only borders up for discussion? Iraq’s borders were drawn on the map in 1916 by Britain and France in their secret Sykes-Picot Agreement. The British Durand Line of 1893 slices through the heart of Pashtun lands in Afghanistan and Pakistan. (The Taliban is Pashtun.)

We have conquered both Iraq and Afghanistan. If we care so much about borders, why are we making no effort to re-arrange things along more practical tribal lines?

I will tell you why.

Because we CONQUERED those countries and we are not about to give back a single grain of sand – Nobel Peace Prize winning president or not. And even if we withdraw our troops, we will still make every effort to keep “friendly” regimes in power.

The acreage that we have conquered in the past 10 years dwarfs that of Israel. Iraq is 169,234 square miles, Afghanistan is 251,772 square miles, and Israel is 8,522 square miles.

So, we have conquered the equivalent of 49.4 Israels, and we preach to them about borders?


Wouldn’t it have been funny of Netanyahu had demanded that the USA withdraw to its 1848 borders? You know, the ones we had before we conquered half of Mexico? Take a look at the Mexican Cessation map. That’s a nice chunk of real estate, no?

Too Stupid to Work

If the unemployment rate remains stubbornly high when the 2012 elections roll around, it looks like the Democrats will try to blame it on the people:

“You Americans are too stupid to work in our fabulous, high-tech global economy. And it’s your fault for not letting us spend more money on education to knock some sense into you.”

This is also a strategy to prevent cuts to education budgets in the battle over the federal deficit and national debt.

The trial balloons are already floating. You can see talking heads on TV yammering about “structural unemployment” and other such BS.

This is not a good strategy for the Democratic party since poor, unemployed people are a major constituency. Why berate your base?

And is it really their fault? Imagine you have an IQ of 90, and you used to work in an assembly plant making auto parts. You were no Einstein, but you showed up for work on time and did a quality job. Then your genius leaders moved all the assembly plants out of the country. Is it your fault that you are still unemployed and haven’t morphed into an engineer working on the Android platform at Google?

Of course not. Don’t be ridiculous.

Now maybe the Democrats are thinking:

“Well, people with low IQs are stupid and therefore easy to fool. We can convince them that it’s their fault.”

And maybe they are right. After all, President Obama can sell refrigerators to Eskimos, so maybe it will fly. And so far the 44 million people on food-stamps haven’t developed a political voice. Maybe they are too stupid to organize. But that’s a lot of people, and the Democrats shouldn’t take their votes for granted.

A better strategy would be to make campaign promises about bringing the factories home, and blaming the loss of jobs on the free-trading Republicans and Libertarians. Of course, the multinationals would have to be notified that it’s just political theater in order to keep the campaign contributions coming.

That strategy should work well as long as the food-stamp checks issued by our fiscally challenged federal government don’t start bouncing and cause 44 million people to go on a rampage.

Why Donald Trump Quit the Presidential Race

Trump balked when he realized how much work it would take to campaign in New Hampshire and Iowa. And he withered under media ridicule. Comedians like Seth Meyers, and whoever wrote the jokes for President Obama at the White House Correspondents Dinner, can take credit for bringing down Trump.

Trump wimped out.

He revealed himself to be lazy and thin-skinned.

What are the consequences for America? Unless another candidate picks up Trump’s themes, we will continue on with our quest for global military domination while simultaneously de-industrializing. A plan that can’t possibly work. During our conquest of Iraq, we couldn’t make enough bomb-proof steel to armor our Humvees against IEDs. We managed to win the war, but many soldiers were killed and maimed unnecessarily.

Turns out that factories are important to warfare. Who knew, right?

But nobody has done anything. In fact, our steel production is still declining. From 98.1 million tons in 2007 to 80.6 million in 2010. China’s production has, of course, gone up during that time and is now almost eight times as much as ours at 626.7 million tons per year.

Needless to say, if the Chinese wanted to build a war machine, they have the capacity to build a huge one.

In any case, the American people have turned against free trade, and need a candidate to “lead” them. But since the big money is very fond of its Asian sweatshops, such a candidate would likely have to be rich, like the departed Trump.

Don’t hold your breath.

Note: For the details on the Trump wimp-out, read what the Republican campaign pros said here.

Note: Steel production statistics can be found here.

Factory Anachronism

It’s so funny watching old movies and seeing people talking on gigantic cell phones, or searching frantically for a phone booth. But look at this image from Steve Martin’s 1991 movie “Father of the Bride“:

Can you believe that? Steve Martin’s character was a well-to-do shoe factory owner! Hilarious!

Today, 99% of the footwear market is controlled by imports, with China accounting for 73%. The 1% of shoes that are still made in the USA probably have razor-thin profit margins.

What fabulous progress we have made! Make sure to thank the next Libertarian you see for his enlightened free-trade policies.

Fractal Dimension Range-Breakout Approachs for Small Caps

Here is a screenshot from my Fractal Stock Grapher app showing the daily chart for the IWM small-cap ETF. Look at the black arrow (click to enlarge):

The red fractal dimension index line is very close to giving an end-of-range signal. So, it’s time to be alert for a new trend to begin.

On the next chart, using my Fractal Dimension Index indicator for TradeStation, we see three red arrows pointing to the last three high-FDI readings, each of which resulted in an upside breakout:

The blue box shows why the FDI is high now – the IWM has been range-bound since early April. Traditional technical analysis says to expect the new trend to be about the magnitude of the height of the blue box. So, don’t be surprised to see a blast up to 91, or a plunge down to 77.

The FDI only signals when a breakout is likely. It does not predict the direction of the new trend. So, you have to use your own brain for that.

Which way will it break? Well, since this is a bull market until proven otherwise, and the trend is your friend, you have to favor an upside breakout. But if it breaks to the downside, it will be important for bulls not to go into denial.

Did Trump Inspire the Bin Laden Raid?

Here is what Donald Trump said about Bin Laden on April 1st:

“We pay hundreds of billions of dollars a year to Pakistan, and if we said to them, “Sorry, folks, we can’t do it. You have to give us Usama bin Laden.” You know what? He’ll be standing on the White House doorstep very quickly.”

Quickly indeed.

See for yourself 40 seconds into this video:

Fascinating, no?

The idea that US forces sneaked into Pakistan and snatched Bin Laden is preposterous. I’m no expert on stealth helicopters, but I’m pretty sure that when one crash-lands, it makes quite a lot of noise. And when such a noise occurs in a Pakistani military garrison town, it couldn’t possibly go unnoticed while Team 6 rummaged through Bin Laden’s lair for 40 minutes afterward.

Obviously, local forces were ordered to stand down. So, the Paks knew about the raid, and they had obviously been harboring Bin Laden. Chances are pretty good that they gave him up.

President Obama responded to Trump’s pressure on the birth-certificate issue. Did he also respond to Trump’s Pakistan comments? Did he run with Trump’s “threaten the Paks” idea?

Serious Journalism

I have been holding this video for several months because I couldn’t think of what to say about it. I was speechless, and still am. But now that Erin Burnett is leaving CNBC for CNN, I guess I need to post it. In any case, direct your attention to the 5:02 mark:

Does GDP Roll-Over Spell Doom?

On the chart below, you can see the black arrow pointing to GDP down-trending for the last two quarters. You can also see the blue arrow pointing to GDP topping-out in 2Q04 and dropping for five years.

Now before you scroll down, see if you can guess what the second chart will be about. (Click charts to enlarge.)

On the next chart I have added the S&P 500:

Notice that stocks rallied 33% for three years after GDP topped out in 2Q04 (green line). If that was your guess, then you get a gold star. Tell your Mom that I said it was OK.

Will history repeat? I don’t know, however I’m guessing that with the Fed holding rates at 0%, the odds of plunging back into recession aren’t all that great. But if they raise rates to fight inflation, then things will certainly get much more dicey.