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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (17617)	12/4/2004 2:52:55 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Great nations are always strong militarily. Right now the US is at its military and economic peak. Yet as every great nation was militarily powerful, the downfall of nearly every great nation was military overexpansion. Russia collapsed under the weight of military expenditures trying to keep their empire together. France under Napoleon collapsed when it tried to over expand. Greece, Italy etc all eventually took on more than they could handle. I do not want to delve into the moral aspects of this war in Iraq but I do want to look at it and other things economically. I believe our military spending will be part of our ruin, just as military spending led to the crumbling of the Soviet block. Please let's not debate whether Reagan did this on purpose or not, but hopefully we can agree that it was a huge factor and a huge drain on the Russian economy in trying to keep the Soviet block together. The US is not trying to hold an empire together like the UK and the Soviets and Napoleon did BUT somehow we have taken it upon ourselves to be the world's policeman. We have spent over $200 Billion in Iraq and counting and I do not think that includes troop pay. Perhaps it does. Ultimately I expect the cost to be in the trillions, more if we have to pay for Iraq reconstruction. We easily did trillions of dollars worth of damages to Iraq. C-SPAN did a presentation that showed that the money appropriated for road building in Iraq almost exactly matched the amount taken out of the government's US road building budget, ditto for airports and schools. On the table are star defense initiatives that will cost trillions of dollars to protect the US against a missile attack when in all likelihood there is a far greater threat from virus mutations, smuggled in suitcase bombs, smuggled in bio weapons etc. We have no energy plan to speak of, and the medical system in the US totally sucks. As terrible as 911 was, we have more accidental deaths from people allergic to peanut butter each year than we lost in that attack. The biggest threat from terrorism is in stirring up more terrorists by our actions. A British general in Iraq was quoted as saying there were perhaps 5,000 insurgents when we arrived and there are perhaps 50,000 insurgents now. My point by now should be obvious. We have an aging infrastructure at home, no plan to develop alternative energy ports (LNG terminals perhaps), no plans to protect our harbors or ports of entry, a second rate medical system, yet we are cumulatively spending trillions of dollars on defense in attempts to force countries to mold to what we arrogantly think is best for them. The economics of that policy are this: As it sits, the world is financing us to the tune of $2 billion a day! That is 80% of the worlds savings!!! A huge portion of that is spent in trying to be the world's policeman. I am sick of debating whether or not we were morally justified in taking out Hussein. Whether or not we could economically afford to do so (in the way we went about it) is another matter indeed! Quite simply we can not afford what we are doing from an economic standpoint. When we are running trade deficits like we are, with no end in costs in sight, we simply can not economically afford to maintain our military expenditures and we simply can not afford to be the world's policeman. Unfortunately there is hardly a single person in either party (outside of Ron Paul) that would agree. Yes, we must prepare ourselves militarily and we must defend ourselves from attack when they occur, but NO, we can not economically afford to go stirring up trouble attacking countries that played no part in attacking us. That to me is the bottom line whether or not one thinks we were "morally justified"! IMO we should immediately yank all of our troops out of both Japan and Germany. That would do a couple of things, lots of things in fact. 1) Japan would have to boost spending if it wanted to protect itself. That would be a good thing for Japan. 2) Germany would have to do the same thing. I am not sure who Germany needs to protect itself from but if they wanted protection, it would boost jobs and spending in Germany. 3) Those troops from Europe and Japan could come home and protect our ports of entry and prevent illegal immigration coming in from Mexico. Instead of our soldiers spending their money in Germany and Japan, they would be spending their money here. We do not need star wars defense systems, bunker buster bombs, dozens of more submarines etc, etc, etc. That money can be better spent developing LNG terminals, more NG pipelines to Canada, and subsidies to develop coal tar sands and oil shale right here in the US. We should also look at oil from coal solutions. There is nothing "weak" about this proposal. We will have far more protection right here at home, more jobs at home, and more military spending here at home. Best of all we will be developing energy independence! We will not need Iraq's oil if we can achieve that. Our air force and navy will still be second to none. Our marines will still be second to none. Attempting to be the world's policeman is acting out of FEAR not strength. Quite simply we can not afford it, nor would it be the smart thing to do even if we could afford it. It just plain makes too many enemies, and it is exactly how WE created Bin Laden in the first place! Finally, if we leave the Arabs and Moslems alone, and/or work on building more trade ties with them, we will have far, far less to fear from them. That is a position of military and economic strength and that is what I have been proposing for a long, long time. Mish

To: russwinter who wrote (17617)	12/4/2004 5:38:05 PM
From: CalculatedRisk	Read Replies (2) \| Respond to of 116555

Kuwait calls on OPEC members to cut overproduction 2 hours, 20 minutes ago Business - AFP story.news.yahoo.com MY COMMENT: I tend to agree with Russ that "OPEC will continue to produce nearly all out", but I do think they will try to jawbone a more stable price. KUWAIT CITY (AFP) - Kuwait called on fellow OPEC (news - web sites) members to stop exceeding their production quotas as the price of crude oil falls on global markets. "We are obviously concerned by the drop in prices," Oil Minister Sheikh Ahmed Fahd al-Sabah told the press. "We should take the matter very seriously. If this decline continues as it has in the past 48 hours, (OPEC) should stop all overproduction." Speaking at the beginning of a seminar on petroleum, Sheikh Ahmed added that there "are between 1.5 million and two million barrels (of overproduction) in the market. On Friday, New York's main contract, light sweet crude for delivery in January, fell 71 cents to 42.54 dollars a barrel. In three days, New York crude has tumbled 13.4 percent. Brent North Sea crude dropped 79 cents to 39.36 dollars, completing a 13.5-percent decline in three days.