Wednesday, August 11, 2010

U.S. Military Trends


Over the past week, a couple of items regarding the military.

There is little doubt that military spending has escalated significantly over the past decade.  You cannot fight two wars [or two fronts of one war] without that happening.  But while that is troubling, there are issues beyond money.

The military has become an arm of the State Department.  Soldiers are used for "nation building."  Many in government believe that is the appropriate way to handle conflict.  The old style of "nation destruction" and then look into nation building [e.g., Germany and Japan] has no favor with government thinkers [is that an oxymoron?] these days.  Consequently, even small military campaigns become budget-busters in the era of trying to make everyone our "friends."  That is a consequence of these other nations not being able to control forces within their borders... or being unwilling to do so.  Military response is unfocused, protracted, and expensive.  More effective measures are considered inappropriate.

Internally, the military has its own problems with inertia.  If you go through all of the time, expense, and manpower to create a program and weapon system, you tend to hold on to it regardless of military needs.  As systems become more complex, the real expense lies in the support area not the operational area.  Elaborate support and logistics become essential to keep things going.  And then something comes along like the new Chinese anti-ship missiles [see link above] that threatens to make your investment worth much less.

The U.S. needs to consider whether the role of the military is to protect the U.S. through application of force or whether it is to be part of the State Department.  And, furthermore, the U.S. government needs to rethink its position regarding being the policeman of the world.  By that, I do not mean withdrawing into isolationism as some would advocate.  But rather, the U.S., if it is to provide military protection services, should also provide a bill for services.  Europe can afford it.  Japan can afford it.  South Korea can afford it.  Otherwise the position should be "call us if you need us and we'll see what we can do."

There would be some benefits to our economy other than the direct reduction of the U.S. government budget.  As other countries were forced to deal with the realities of their own security, they could choose to stay within the U.S. group of "friends" or simply act in ways that are in their own best interest.  Oh, they do that already?  Well, in terms of national security, these nations are capable of paying for what they need.  That might raise taxes in those countries or simply create a lot of Switzerlands which seems to be the darling of Libertarians.

Of course, the U.S. would have to be prepared for changes in the world order.
  • Russia will become more influential in Europe.  
  • China will become dominant in Asia and Africa.  South America will become increasingly a source of problems and markets for the U.S.  
  • And, finally, trade will become more difficult as our Russian and Chinese competitors pressure potential markets to give them preferential treatment versus the U.S.
Meanwhile, the military will have to become more serious about three areas:
  • securing our borders.
  • ensuring that outer space does not become a threat [no, not from extraterrestrial aliens... aliens from earth].  China and Iran recognize the importance of militarizing high orbit positions and are in the process of developing systems for that purpose.  Obviously, China represents the greatest present potential threat in that area.  Controlling the high ground is a primary goal for all military forces.
  • creating more autonomous [self-sustaining and survivable] systems that can deliver lethal blows on both small and large scale conflicts.
This is not to say that the U.S. military is less than the world's most formidable military force.  This is to caution that the present spending and deployment trends are not sustainable due to the economic realities of this nation.



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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)