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U.S. Military Might Cannot Win the Economic Struggle!

Politics / Global Debt Crisis May 07, 2010 - 06:52 PM GMT

By: Sy_Harding

Politics Best Financial Markets Analysis ArticleGovernment budget deficits and the debt crisis they created in Greece, and concerns that Portugal, Spain, Ireland, and Italy may be nearing similar situations, have been dominating the news and roiling global stock, bond, and currency markets for several weeks.


Some analysts say it’s a forerunner of what is coming to the U.S. a few years down the road.

We all realize how federal budget surpluses of $200 billion in the late 1990’s turned into increasingly sizable annual deficits thereafter, the deficit expected to exceed $2 trillion this year.

It’s not possible to balance the budget with two recessions, two stock market collapses, and two expensive wars in ten years, to say nothing of the expense of the last two years of rescuing the financial system from its worst collapse since the Great Depression.

But when you look at how government spends money you have to wonder if they even try.

Most people aren’t old enough to remember Dwight Eisenhower, Supreme Commander of Allied Forces in World War II, and two-term President (1953-1961) after the war, who achieved federal budget surpluses in several of his years in office.

In his farewell speech he warned that the “greatest peril” facing the country in the future would be the “military-industrial complex”. He warned that the combined power and ability of the military and the major corporations that manufacture military equipment, to convince the nation of danger and therefore the need for huge military spending could allow them to take control of the federal budget and change the economic landscape.

I thought about that as I read the government’s release last week of the previously secret U.S. inventory of nuclear warheads.

And I thought about it again when I read the remarks this week of Defense Secretary Robert Gates regarding the size of the U.S. Navy. 

Most people who bothered to read the report on nuclear warheads were probably shocked to learn that at their peak in 1967 the U.S. had 31,255 nuclear warheads. Enough to annihilate 31,255 cities?

Several nuclear arms proliferation agreements since have resulted in the dismantling and scrapping of most of them, (that expensive process also bringing large contracts to the military contractors that built them in the first place). Yet even now we still have 5,113 warheads, enough to annihilate 5,113 cities. (I realize that is an exaggeration since some of the later warheads are smaller, for tactical use on battlefields). But still the thought of being able to set off 5,000 nuclear warheads, just from our side, seems like more than enough to annihilate the world. 

I know. I know. It’s not expected they will ever be used. They’re just a deterrent to those who would attack us. But still, an inventory of 31,255 nuclear warheads in 1967 was crazy, and the current perceived need for 5,113 not much more sane.

Could most of those hundreds of billions of dollars, perhaps $trillions, to make them in the first place, and maintain and control them for all these years, have made a difference in the annual federal budgets without affecting the safety of the country?

The number of needed nuclear warheads isn’t the only foolish decision that makes U.S. military expenses the largest segment of the Federal budget, and U.S. military spending 47% of total global military spending.

In Washington this week, in reference to the Navy’s insistence on maintaining and adding to its 300-ship navy, Defense Secretary Robert Gates asked why the U.S. Navy needs 11 full carrier strike groups when the next largest navy power has only one.

Such massive naval power is not only overkill, it doesn’t even meet the needs of modern warfare. It’s designed to prevail in battles carried out on the high seas between powerful naval forces – a form of ‘ancient’ warfare that is no longer possible, since there are no other naval powers to combat.

Has Congress and the military not noticed that the wars of the last 50 years have been fought in jungles and deserts and city streets? Nor can you win the war against small groups of terrorists from multiple countries with the threat of having 5,113 nuclear warheads, or a 300-ship navy, when the attacks are individual car bombs in crowded cities, or from high-jacked airplanes.

As Defense Secretary Gates said about modern-day threats on the high seas, “You don’t need a billion dollar guided-missile destroyer to chase down and deal with a bunch of pirates wielding AK-47 rifles.”

I think of this when I see the financial dangers facing other nations with high debt loads and their inability to cope with them, and then look at the way Congress is talking about fighting the massive U.S. budget deficits with proposals to cut back on the costs of education, social security, and the like.

I thought when the USSR turned to capitalism and broke up into smaller countries, ending the cold war, and China decided it would be easier to defeat the U.S. economically than militarily, that the U.S. military-industrial complex would be downsized to the new reality.

But as Eisenhower warned us, I underestimated the power of its lobbying efforts on Congress. There is hardly a congressional district that does not contain either a large military base, or a large manufacturer of military equipment.

China must be laughing at the way we have spent our resources so implausibly, in preparation to re-fight World War II, at the expense of potentially losing the real global competition, which is economic.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website www.StreetSmartReport.com, and the free daily market blog, www.SyHardingblog.com.

© 2010 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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