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The Balance Sheet Of War
David Reavill
 April 21 2024 at 04:39 pm
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President John F. Kennedy America no longer declares war; instead, we “budget.” The last war that America declared was World War II. And yet, today, we are bogged down in endless conflict. The United States has been involved in no fewer than 13 conflicts in the 24 years of the 21st century. That’s a new war every two years. This week, the US Congress reduced the pursuit of war to a mere budget. Under the yet-to-be-designated bill, titled: Making emergency supplemental appropriations to respond to the situation in Ukraine and for related expenses for the fiscal year ending September 30, 2024, and for other purposes. The US House of Representatives rushed through a $95 Billion stop-gap appropriation principally to support the War In Ukraine but also funding the Israeli-Gaza Conflict and military aid to Taiwan. The 2024 STOU, VP Kamala Harris, President Joe Biden, Speaker Mike Johnson. It was a remarkable piece of legislative legerdemain, as Speaker of the House Mike Johnson completely switched from anti- to pro-Ukraine funding. Declaring himself a “wartime” speaker, Johnson said that we must spend $61 billion on Ukraine to be on the right side of history. “My philosophy is you do the right thing and you let the chips fall where they may…History judges us for what we do. This is a critical time right now — a critical time on the world stage..” While no one would argue that we’re living in a “critical time,” that tells us little about funding for Ukraine. It’s an assertion, not an argument. Johnson mumbles that he’s seen classified information that leads him to believe the financing of Ukraine is warranted, but he declines to reveal what those classified documents say. That’s how a “Wartime” Speaker prepares a “Wartime” supplemental appropriation, aka budget — a budget that drags the nation further into debt and further into commitment to Ukraine. Of course, Speaker Johnson is joining President Joe Biden, whom the Wall Street Journal noted six months ago: “…Looks Like A Wartime President.” It’s becoming increasingly apparent that Washington is gearing up for war. Duh! In the short three years of Biden’s Presidency, we’ve seen a disastrous withdrawal from Afghanistan, the Proxy War in Ukraine, the Proxy War in Gaza, an emerging conflict with Iran, and Operation Prosperity Guardian (the war with the Houthis). No matter how you look at it, it is a remarkable display of American military aggression. It’s a roll-up of the sleeves, bare knuckles, approach to foreign policy that we’ve never seen before. The foundation for this new American militarism is based on two concepts. First, that war is good for business, and second, that war is acceptable as long as no Americans are dying. War Is Good For Business This first foundational premise, that “war is good for business,” is remarkable in that it is the complete inversion of what the American people used to believe. In the 1960s, many of us argued that the very fact that nations might enter into war to make a profit was, in itself, immoral. It has been a Western tradition going back to Thomas Aquinas’ “Just War Theory,” in which he argues that war should only be fought to defend the homeland. He would certainly not justify war as a pursuit of profit. In his famous “Day of Infamy” speech, President Franklin Roosevelt reflects this tradition when he declares: As Commander-in-Chief of the Army and Navy, I have directed that all measures be taken for our defense.” It was clear to Roosevelt that America was entering the war with Japan, and later Italy and Germany, not to make money but to defend the United States, which was at that point under attack. Within that context, millions of Americans volunteered to serve in defense of our country. The lines at the local draft boards stretched around the street. Future soldiers, sailors, marines, and airmen were willing to risk their lives to protect this country. Regrettably, that’s no longer the case. Draft boards nationwide are empty, recruitment goals for all the major services are unmet, and the American military is progressively understaffed. It seems that men and women are not willing to die for the profitability of our Defense Contractors. And yet, that’s just how this latest supplemental appropriation was pushed through Congress: “It’s good for business.” “It will mean more jobs.” As Lindsay Graham, Senator from South Carolina, likes to say: “It’s the best money we’ve ever spent.” Profits, jobs, and a roaring economy for America. No American Lives Lost However, there is another side to this War-Business-Bonanza, a side that includes misery and death, not American deaths, but other’s deaths nonetheless. You see, while the US turns out the most advanced military equipment, bombs, guns, and missiles, those weapons are being used to maim and kill. It is generally accepted that there are over half a million Ukrainian casualties in the war with Russia, with more added each day. It is a demographic catastrophe for a country that, at the beginning of the conflict, only had a population of about 25 million. Ukraine is losing an entire generation of child-bearing age people. The War in Gaza. Likewise, the conflict in Gaza has seen over 33,000 Palestinians killed; almost all of these deaths were the result of US-supplied arms. In no small way, the American Defense industry has become the silent partner in Israel’s push throughout Palestine. And that’s how America has reduced war to a balance sheet — a profit and loss statement of “what’s good for American business is good for the World.” Today, the White House released a document extolling the benefits of promoting war (passing aid to Ukraine). It included a list of all the states that will have more jobs because America is making arms for the world. It hasn’t always been like this. There was a time when a US President talked of making peace, not war. In the Commencement Address at American University on June 10, 1963, President John F. Kennedy said: I have, therefore, chosen this time and this place to discuss a topic on which ignorance too often abounds, and the truth is too rarely perceived — yet it is the most important topic on earth: world peace. What kind of peace do I mean? What kind of peace do we seek? Not a Pax Americana enforced on the world by American weapons of war. Not the peace of the grave or the security of the slave. I am talking about genuine peace, the kind of peace that makes life on earth worth living, the kind that enables men and nations to grow and to hope and to build a better life for their children — not merely peace for Americans but peace for all men and women — not merely peace in our time but peace for all time. Follow me here on ThinkSpot for more stories from the ValueSide.
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How To Out-Smart Wall Street
David Reavill
 April 10 2024 at 08:36 pm
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Wall Street Trading Desk ** I’m writing this near the Market Close on Wednesday, April 10. Currently, the Dow Jones Industrial Average is down over 400 Points, all in reaction to the report this morning that the Consumer Price Index, our most widely watched measure of inflation, advanced by an annual rate of 3.5%, up from 3.2% the month earlier. Wall Street is shocked. Stocks and bonds were hit heavily, commodities were up, anticipating rising inflation, and cryptos were higher. What made today so very interesting was an apparent large bet gone wrong. It all began yesterday when a thoroughly lackluster session had an hour left. Traders felt they might even leave early, but nothing was happening. Suddenly, a series of buy orders hit the tape. In that last 60 minutes of trading, the Dow rose nearly 200 points, and the NAS was up 120. Someone appeared to know something. And that something was undoubtedly the direction of inflation. The monthly Consumer Price Index (CPI) report was due on Thursday. Someone was placing a large wager that CPI Inflation would be tame. This likely means the Federal Reserve could begin lowering interest rates, which would be a big positive for stocks. So, anyone who purchased shares yesterday would benefit today if, and it turned out to be a big IF, inflation was lower. To the whole world, it looked like someone had insider information. They knew what the rest of us did not know: the direction of inflation. Interestingly, Zero Hedge published an article later this morning confirming our worst suspicions. The title was: “Scandal Rocks Biden’s Labor Dept For Lying About Sharing Non-Public Inflation Data With Secret Group Of Wall Street “Super Users” https://www.zerohedge.com/markets/scandal-rocks-bidens-labor-dept-lying-about-sharing-non-public-inflation-data-secret-group There was one problem: whoever made this colossal bet, a bet large enough to drive the Dow up nearly 200 points, needed to be correct. That’s right. Billions of dollars were put into play in anticipation of lower inflation, and surprise, surprise, inflation rose. It wasn’t enough to cause someone to go bankrupt or out of business. But it is just the sort of thing that some fund managers would do early in the quarter to gain an advantage over all the competition. Had the manager made the right bet, they would lead in whatever sector they invest in. That kind of performance drives billions of dollars in new assets under management (AUM) into any fund that bets right. Even though they have all the tools, from analysts to AI, modern portfolio managers have incredible ways to gain economic insight. However, they’re only sometimes on the right side of the trade. And if Zero Hedge is correct, some may even use unethical means to gain an advantage. But as we’ve been telling them for months, if you want to know where inflation’s going, there is a straightforward measure: the gas pump. Follow the price of gasoline, and you’ll see the direction of inflation. CPI Inflation (blue, left scale) Price of Regular Gasoline (red, right scale) Follow me here on ThinkSpot for more stories from the ValueSide.
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GDP Part II, This Changes Everything
David Reavill
 April 25 2024 at 01:24 pm
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President Biden's weekly economic briefing.** As we noted yesterday, today’s GDP Report is critically essential. It presages the Federal Reserve’s future actions and has tremendous political implications for the upcoming Presidential Campaign. Briefly stated, the report shows that the economy grew at a paltry 1.6% for Q1 2024, far below even the most bearish Wall Street estimate and less than one-half the growth rate of the quarter before. It’s hard to overstate just how dismal this report is. For many, the report may have come as a complete surprise following the supposed positive New Durable Goods Orders reported yesterday. While the financial press basked in the reported 2.6% gain in New Orders for March, they failed to see that this gain was in the context of a very tepid 0.3% rise for the year — a rise that was most likely due to inflation pressure rather than any real gain in the overall economy. Overall, the latest GDP numbers reveal that we’re coming to the end of the stimulative effect of Biden’s increase in Government Spending (Build Back Better). While the spending numbers remain astronomical, spending from Washington is no longer accelerating. Government spending has topped out, and the classic Keynesian stimulus is diminishing. The implications of all this are profound. The Federal Reserve will be the first to feel the heat. Its high-interest rate policy now comes into question. How long will the Fed be able to defend higher interest rates in the face of a slowing economy? And make no mistake — a GDP reading of just 1.6% is just one revision above stall speed. We’re not far from recession territory. But it will be the Biden Campaign for Reelection that will really feel the heat. One of the cornerstones of Biden’s bid for reelection has been the claim that the economy is strong. That claim just went out the window. It is now clear that this isn’t a strong economy. It’s an extremely fragile economy that relies upon increased fiscal stimulus, that is, government spending. Here, we see that as government spending has plateaued, economic growth has slowed dramatically. Biden’s last remaining claim of economic growth is the Stock Market. But even here, there are signs of danger ahead. The tepid performance of the Mag 7, those largest capitalized stocks, reveals that even the vaunted Stock Market may experience difficulty in the days ahead. When you add all this together, it’s becoming increasingly challenging for the President to defend his economic record. Follow me here on ThinkSpot for more stories from the ValueSide.
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The Repo Act: Why America Can No Longer Be...
David Reavill
 Yesterday at 02:26 pm
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President Biden signing legislation. On Wednesday, US President Joe Biden signed a massive aid package aimed at helping Ukraine, Israel, and Taiwan strengthen their respective military. But it was also an omnibus bill that included much more than a mere aid package. Buried within its provisions were potential sanctions against the social media site TikTok and an extension of the regrettable Patriot Act. However, a third provision within the Bill may prove to be the most costly for you and me, the American Citizens. Initially presented as the “Repo Bill,” this piece of legislation proved to be so unpopular that it could not stand on its own. So, in the usual machinations of our Congress, the Repo Bill was attached to the massive aid package in the hope that few would notice. Now passed and signed into law by the President, the Repo “Act” is nothing less than an attack on Private Property and the latest blow against global trade and finance. With extreme irony, this part of the Act was labeled the “Repo” Act. As those familiar with finance know, a Repo is a shorthand for a Repurchase Agreement. In this sophisticated method, governments and other large institutions lend (sell) a security (generally a sovereign debt instrument) to another institution, with the provision that they will buy back (repurchase) that security at a future date. Central to the Repo transaction is trust — the trust that both parties will fulfill their side of the contract. This trust is so fundamental to this kind of financial transaction that it is rarely stated. It is just assumed. After all, those involved in Repo transactions, and in fact in any transactions of this size and scope, are presumed to be “good actors.” These are many of the world’s most significant governments, institutions, and endowments. The US Treasury is among them. On this Wednesday, the United States declared it had gone rogue. You see, part of the legislation passed by the US House and Senate and signed into law by President Biden incorporated the Repo Act, a provision that the United States could confiscate Russian assets held on deposit in US Banks. It wasn’t even a debatable case. There was no doubt that these were Russian assets. Institutions within Russia had placed these deposits with American financial institutions to provide collateral for trade and finance between the two countries. Remember, as late as last November, the United States was still purchasing Russian oil and gas. No doubt, some of these assets were a result of these trades. As one more step in Washington’s widening war with Russia over Ukraine, our nation is taking the step to confiscate approximately $6 billion (US) held in this country. This move is unprecedented. Never in our long history has the US Government so blatantly and publicly pilfered international funds held on deposit. It is just the sort of action that Fiduciary Laws across the country are designed to prohibit. Regrettably, this is just the latest step by the Biden Administration to disregard convention and strike a blow against Global Finance. America has promoted an all-out economic war in retaliation to Russia’s invasion of Ukraine — from multiple sanctions to removing Russia from the SWIFT System of trade reconciliation; Washington has been determined to diminish Russia’s ability to trade. While I can understand that many in this country wish to support Ukraine, the debate needs to include how Washington is destroying our resources and abilities in trade and finance. There isn’t a day that I have yet to read about the decline of the US dollar’s status as the reserve currency. Those who write about the dollar’s decline are spot on. The decline in the Petro-Dollar is especially significant, as we’ve seen Saudi Arabia express its desire to join BRICS, the emerging competitor to US Dollar hegemony. The Eurodollar is also under pressure, as Europe’s energy purchases will increasingly be made in Russian Rubles or perhaps Indian Rupees. Historically, both the Petro-Dollar and the Eurodollar came about with the need to hold on deposit American currency to expedite global trade — the very thing that President Biden and Congress now attack. From my perspective, far more than the billions spent on Ukraine, the damage done by the incorporated Repo Act will leave a lasting legacy on America. Imagine a country, the United States, that is reliant upon foreign trade to provide many of the products we consume, that is reliant upon foreign investors to purchase nearly a third of our sovereign debt, and that encourages offshore customers to purchase our natural resources, automobiles, and high-tech products that make up our exports. We are a country built over the past half-century by international trade and finance. And yet here is a president and Congress who have thrown a “monkey wrench” into the most basic of all attributes: trust. After April 25, 2024, the world can no longer trust the United States to be a fair and impartial custodian of assets. The world leader in trade and finance no longer meets the standards of a simple fiduciary. Follow me here on ThinkSpot for more stories from the ValueSide.
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