Military Convoy Crashes Economy
Washington, DC. Dec. 5th, 2005 ---- The Democrats, and some Republicans are calling for the immediate pullout of US forces from Iraq, and effectively out of the whole Middle East. (Once the US/UK forces are gone from Iraq you might as well wave bye-bye to the whole region and it's Oil.)
How will this effect the Investment Community was the question this week. It will be like a Military Convoy Crashing the Economy!
We are spending like crazy on military, military support and everything that goes towards a Wartime Economy. We stopped building roads in the United States, stopped repairing Bridges, and except or Call Centers and Distribution Depots are closing places of employment, not opening them. Everything is being sacrificed so the White House can screw up in Iraq.
Now stop the occupation, bring the legions of military, support, mercenaries and administrators back home and the whole momentum will stall. There will be no need for the tens of thousands of US contractors doing everything from cooking breakfast to beating the crap out of prisoners. There will be no need for the small businesses that have popped up feeding the insatiable appetite of a war machine. They can't reassign their production capability to civilian manufacturers, for they are all in China.
This will occur when the first waves of Baby Boomers are beginning to retire, or worse still are running out of options after being laid off. With millions of young illegal immigrants it's hard to get even a menial job when you are Sixty-something.
So we will have a rerun of Vietnam, with thousands of combat veterans dumped onto the unemployment rolls. But despite the rosy figures coming out of the White House good jobs are scarce. True there are thousands of new jobs being created in the service sector, and you can work for an Indian run Call Center in rural America, reporting to Bangladesh.
Suddenly investors are taking notice of what happens in Washington. Wall Street, which has neither understood, nor cared about Washington is realizing it needs to start taking notice, to protect those billions of dollars of bonuses. If everything goes bad and the Democrats come to power then they will be taxed like crazy to pay for George's Folly.
It's all about Oil. I have been working on several Alternative Energy projects recently, in Europe, the USA and the Far East. The ability of the levels, and cost of of oil supplies to make or break these businesses is amazing. That the price of oil is dramatically important should have been realized by everyone after Hurricane Katrina. But it has been forgotten.
Like an Ostrich a whole nation has stuck it's head into the sand, believing that Oil will be there forever and the killing of a few occupying military forces is too high a price to pay us staying in Iraq till the successful outcome. Wrong, the US forces are there to keep the oil flowing, and the losses are surprisingly low.
The critics rightfully blamed Cheney, Rumsfeld and Wolfowitz for starting a war without a strategy, or exit plan. Likewise it is absolutely crazy to just pull out and stop the military juggernaut without a carefully phased reduction, with carefully controlled risks. The whole policy of keeping a nation on a war footing, frightened and paranoid about a potential attack is unsustainable. So is the expense of that policy. Unfortunately that's life in the USA today.
Start to slow down the convoy now, and prepare a road map for the drivers, with alternative turn offs and alternative missions for the members of the convoy, and their suppliers. Increase investment in infrastructure and new jobs, away from the military/industrial complex.
But this is Washington in survival, spin and re-election mode. Watching the military convoy smash into an economic wall makes good finger pointing and material for speeches. For the millionaires in Congress will get paid, and get rich, even if another Depression flattens the dreams and prospects of the average American.