Friday, January 27, 2012

U.S. Military Changes Coming


The Pentagon has been working on ways to trim its costs without gutting its capabilities.  On reading the following from Military Times, it looks as if they are taking a well-balanced approach as opposed to the post-Vietnam slash and burn.

Despite Panetta’s doomsday rhetoric of recent months, the budget proposal does not include any radical cuts in hardware and weapons programs that have not been widely discussed already. 
Two key aspects of the budget remain largely intact: the F-35 Joint Strike Fighter program that will supply the Air Force, Navy and Marine Corps with a so-called fifth generation aircraft; and the Navy’s carrier fleet, which will remain pegged at 11 flat-tops. 
The Army’s total force should be slashed by an additional 30,000 troops, down to 490,000 by 2017. That will bring the Army back to about the same level as 2001. The current force swelled to 570,000 in response to the wars in Iraq and Afghanistan, and previous plans called to reduce that to 520,000 by 2017. [image source
The budget plan calls for the Marine Corps to fall to 182,000, down from a peak of more than 202,000 but still higher than the roughly 172,000 personnel that the Corps had in 2001. 
“While the U.S. does not anticipate engaging in prolonged, large-scale stability operations — requiring a large rotational force — in the near- to mid-term, we cannot rule out that possibility,” according to a briefing prepared by the Pentagon. 
To keep the force flexible and capable of ramping up if needed, the Pentagon will not significantly reduce National Guard and Reserve forces. Moreover, the Army will retain a higher percentage of mid-grade officers and senior non-commissioned officers to provide leadership if a rapid expansion of the force is required down the road. 
The Air Force is likely to lose six of its 60 tactical air squadrons, bringing its total down to 54 squadrons. [image source]
The Navy will retire “low-priority cruisers that have not been upgraded with ballistic missile defense capability or that require significant maintenance, as well as combat logistics and fleet support ships.” It is unclear precisely how many ships would be affected by that move. 
The Pentagon will retain its nuclear triad — the three-pronged arsenal of land-based missiles, ballistic-missile submarines and weapons delivered by Air Force bombers. However, the Navy’s next-generation ballistic submarine can be delayed “for two years without harming the survivability of our nuclear deterrent.”
It would seem that the other branches of the military would do well to follow the Army's strategy in terms of senior-junior personnel if their total numbers are cut... although it is "feet on the ground" where most military expansion occurs.

Although 2001 represented a low point of military expenditures as a percentage of GDP, I would be surprised if this was not considered "the first round" by the Obama administration, but the second round will not be announced unless he wins re-election.


Members of Congress call DoD cuts dangerous
The $259 billion in defense cuts announced Thursday by the Defense Department drew criticism from Congress, even though these reductions are the direct result of the Budget Control Act of 2011 that...
Posted Thursday Jan 26, 2012 17:20:28 EST

DoD proposes to cut 7 squadrons, cancel C-27
Proposed reductions in defense spending would cut seven squadrons, cancel the C-27 and the Global Hawk Block 30, and retire numerous transport aircraft, according to documents obtained from sources by Air Force Times.

Navy avoids most of Pentagon’s latest cuts
The U.S. fleet keeps its 11 aircraft carriers as well as its 10 air wings. About a third of the fleet of 22 cruisers — seven ships — will be decommissioned early. A number of shipbuilding...
Posted Thursday Jan 26, 2012 17:38:24 EST

2012 IS HERE


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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)