Random Musings On America's Multiple Wars
"It takes twenty years or more of peace to make a man; it takes only twenty seconds of war to destroy him." - Baudouin I 1930-1993, King of the Belgians
We have sat quietly, waited and watched hoping someone out there would pay attention and make people understand the implications of what Osama Bin-Laden said last year in October. The news media played the story once or twice but no one seemed to take time to analyse the significance of his statements and their long-term implications. (We are going to slowly tie this article into several different investing concepts).
Osama basically stated that he and his guerrillas bled Russia for 10 years and forced them into bankruptcy during their occupation of Afghanistan. As a result Russia was forced to withdraw because it could no longer afford to fight an unseen enemy. He then went on to state how they had now applied the same principle with the US. The September 9-11 attack cost them roughly $500,000 dollars, but the cost to America was in excess of 450 billion. For a partial break down of the costs of 9-11, click on this link http://www.iags.org/costof911.html.
Simple math will reveal that for every one dollar they spent we lost almost a million dollars. Stop to let this sink in for a second; the ratio of what they spent to what we lost is mind-boggling. They could actually bankrupt a country by just simply maintaining this cost ratio. That is exactly what Bin Laden and his followers are currently doing. A shoulder fired stinger missile costs about 50-60,000 dollars and yet it can be used to bring down a multi million dollar helicopter. In addition unlike the US army, which is currently stretched thin, Bin Laden seems to have no problem recruiting new candidates.
Now the above situation is scary enough when one views the financial implications but when we add in Iraq the picture simply becomes terrifying. Just look at the cost of this war alone, we have already gone through over 100 billion and the US has put in another request for another 100-200 billion (this figure is simply going to keep getting higher) just for this year only.
Jan. 13 (Bloomberg) - The U.S. spent $102 billion through Sept. 30 on the invasion and occupation of Iraq, with costs averaging $4.8 billion a month, the Pentagon comptroller's office said today. "It does not necessarily reflect the true costs of the operations in Iraq," Kosiak said. "We may have some significant bills yet to be paid for replacing some equipment worn out by these operations." http://www.bloomberg.com/apps/news?pid=10000087&sid=asC2oZAGbhZE&refer=top_world_news
Conservative estimates have this war lasting anywhere from 5-10 years, it is costing us say 100billion a year, then this war could cost us an additional one trillion dollars (and we are being conservative here). The reality is that this war is never going to end because the enemy is not fixed, he cannot be seen and so it's game of hide and seek. Where the seekers pay in the millions to find the hiders who can be easily replaced at a cost of a few thousand dollars.
One of the main reasons this war is going to fail is because we are trying to bring and forcefully implement our way of life in the Middle East. Even before this war began we stated that it would cost several times more then the official estimates and last 10 times longer then their wildest estimates.
"Our armies do come into your cities and lands as conquerors or enemies but as liberators" who do you think made this statement. If you think it was one of the big US generals or George Bush you are completely wrong. It was a British General by the name of Fredrick Maude in March 1917. Subsequently they captured all the oil fields and massacred thousands of Iraqis and established a so-called Democracy (to the Iraqi people it must have looked more like a dictatorship as founding one on blood is hardly the right way to proceed). Fast forward, our closest allies today are none other then the British and many Iraqis have not forgotten what took place, so it's no wonder that they are sceptical of our intentions. This also is one of the main reasons why there is so much antagonism directed towards the US.
To understand why democracy is not a way of life there we need to examine Islam in a bit more detail.
The word "ISLAM" is derived from the Arabic words "salaam", which means peace and "taslim", which means submission. The follower of Islam is a Muslim. The word "Muslim" translated to English literally means "the one with peace". To the Muslim it has a greater meaning, Muslims believe that true peace is experienced only when Mankind acknowledges, obeys and worships the Creator, i.e. submits to the One God. So to the Muslim it means "the one who submits in peace".
According to Muslims, Islam is the way of God and the religion of all the prophets; from Adam to the final prophet of God Muhammad (peace be upon them all). The prophet Moses (peace be upon him) said to his people; "Shalom I bring to you".
Shalom in Hebrew means Salaam (Arabic). The prophet Jesus (peace be upon him) said to the people;
To become a Muslim a person has to declare, "there is No god but Allah and Muhammad is His servant and messenger."
This known as the Shahada or the bearing of witness. The message of Islam is:
I spoke to a few non-radical Muslims who respect all other religions and have no desire to impose their views on anyone to verify if the above information was accurate. They all agreed that more or less it was a fair representation.
So in essence Islam means submitting to God's will and that God's law over rules any other law. Since democracy is essentially the will of the masses (in other words the majority wins) the people decide what is right or wrong. This leads to direct conflict with Islam and by now we all know that to a true Muslim, God's will is supreme and must be obeyed above all. This debate has not really been resolved amongst Muslims; should they obey God's will all the time even though it might conflict with some rules and regulations set by men. Muslims with little exposure to the West say God's will is supreme. Muslims who are more westernised generally lean towards democracy. However we all know that most Muslims in the Middle East have very little exposure to western culture; hence democracy is not well received by most. So democracy by its nature could be said to be in direct conflict with Islam and that is why perhaps there has never ever been a democratic state or nation in the Middle East. The radial Muslims are definitely going to take advantage of this possible loophole to its fullest extent and use it to promote their agenda.
If you pay attention to the news the war on terrorism has taken second place to the desire to bring democracy to the Middle East. Hardly a day goes by without the D word (democracy) being mentioned in some news broadcast. Now just stop and think about this for a second do we really have the right to tell them what they should do and how they should lead their lives. Think about it this way, how would you feel if suddenly an army of Muslims landed in Pennsylvania and decided to force Islamic law onto everyone in that state. Outrage, horror etc etc, we would be ready to take arms and fight to the very end.
I would like to stop here for one second just in case some of you get the wrong idea and think that we are taking sides; we are not. All we are doing is trying to take a cross-cultural analytical look at the situation. What most individuals do is that they take a subjective mono cultural look at any given situation and then make a decision based on faulty and warped data. The reason we are spending so much time on this problem is so that you can understand what a big mess we are in now and how this mess is actually going to change the lifestyle of many Americans over the next few years.
To make matters worse it seems that we are now conducting covert operations in Iran, with the intention of taking out most of their nuclear producing facilities with a few smart bombs. It seems that the pentagon has now taken control of the CIA and can engage in covert operations without letting congress know. Seymor Hersh of the New Yorker has written a long article on this subject. The fact that the pentagon took the time to respond to this article shows that there must be some truth to it. http://www.newyorker.com/fact/content/?050124fa_fact
While Europe is trying to find a peaceful way to solve this problem, America claims that some measure of force needs to be applied to drive home the point that seeking nuclear capability is not in Iran's best interest. The question comes down to this, how many wars we can fight. We are already a debtor nation and the only way to pay for these wars is to print more dollars; sooner or later the world is going to get tired of getting paid in dollars that keep losing their value at the speed of light. Wars are expensive business and already we are involved in two wars, both of which we have no chance of winning because we are fighting an unseen enemy. One of them was enough to bring the great nation of Russia to its knees and we are still looking for new wars.
Never before in History has the dollar lost value so fast (by the way this dollar rally we have been talking about is just a short to intermediate term play, long term the dollar is definitely dead)
Let's look at the dollar VS hard assets since 2001 (from their lows to their highs)
Raw materials up over 100%
Gold up over 65%
Silver up over 100%
Platinum up over 85%
Copper up over 100%
Coffee up over 120%
Soybeans up over 110%
Palladium down almost 90% (we just decided to throw this in to show the huge discrepancy and how it's a great buy)
During World War II raw materials soared up in value by over 400% if we adjust for inflation raw materials have the potential to go up by several thousand percentage points this time round. We are also not fighting one war but two wars right now and at the rate we are going, there is a very strong likelihood that we will be engaging in a third one in the not to distant future. If we ever attack Iran, the number terrorist's attacks will simply skyrocket. Iran has long-range missiles and strong ties with Hezbollah and an attack on Iran would certainly make these chaps see pure red for a long time and no one knows how they would react. Thank God we have not witnessed any suicide bombing acts in the US yet, but such an attack on Iran could lead to such an event. This is something that would have incalculable effects on the American Psyche not to mention the huge economic cost. The Europeans have been trying to negotiate with Iran but have openly stated that these negotiations are bound to fail if the United States does not participate.
The Europeans have been urging the Bush Administration to join in these negotiations. The Administration has refused to do so. The civilian leadership in the Pentagon has argued that no diplomatic progress on the Iranian nuclear threat will take place unless there is a credible threat of military action. "The neocons say negotiations are a bad deal," a senior official of the International Atomic Energy Agency (I.A.E.A.) told me. "And the only thing the Iranians understand is pressure. And that they also need to be whacked."
The alternative would be to go to the Security Council, but any resolution imposing sanctions would likely be vetoed by China or Russia, and then "the United Nations will be blamed and the Americans will say, 'The only solution is to bomb.'"http://www.newyorker.com/fact/content/?050124fa_fact
We suggest once again that you read the full article from the New Yorker by clicking on the above link. The above statements if true are very strong and will only promote more distrust and animosity in the Middle East.
These wars are going to have a serious effect on the lives of most Americans. We are now at a turning point, there is no doubt that the dollar is dead long term and now is the time to slowly start moving some of your assets out of this country. We are not talking about fleeing but just using the principle our grandparents taught us of never putting all our eggs in one basket. By the way you can still have accounts overseas that are denominated in dollars if you are looking to take advantage of the current dollar rally. You could then switch them to a stronger currency. You can also use these accounts to own Gold, Silver, palladium, energy stocks etc. We envision strong foreign currency controls being implemented in the US in the future and the movement of money outside the country will be heavily restricted. For US citizens, Canada is a good choice, its close and very stable. There is nothing illegal about moving your money overseas as long as you fill in all the paper work. You can actually take more than 10k out of the country in the form of Gold bullion or some other precious metal, but once again as long as you fill in the appropriate paper work its fully legal.
Implications of these wars
We are only going to put up a partial list of these implications as the rest are reserved for our subscribers.
Real estate in the big cities is going to take a big hit and tank. Surprisingly though rural real estate might thrive. Perhaps one of the reasons could be the safety factor.
The Swiss franc is going to become a lot stronger in the not too distant future. Switzerland is a neutral nation (they have not had a major war for several decades); we believe that it's possible to see the day where it will take 2 dollars to buy a Swiss franc. Another neutral Nation is New Zealand. The time to take positions in these currencies is after this dollar rally is over and done with.
Oil could trade as high as 300 dollars a barrel. Sometime last year we had initially put a price of 100 dollars a barrel, but then we stated that recent developments pointed too much higher prices and the developments keep getting worse.
All these prices we are putting up are very long term price targets, minimum time frame 3 years to a maximum of 10 years)
"I hate war as only a soldier who has lived it can, only as one who has seen its brutality, its futility, its stupidity." - Dwight D. Eisenhower 1890-1969, Thirty-fourth President of the USA