Submitted by William Bonner, Chairman – Bonner & Partners
Wisely Staying Out, Once Upon a Time …
PARIS – Paris was calm last night.
We walked across the River Seine…
Pausing to take a photo of the Eiffel Tower along the way.
Paris shows its colors
Photo credit: Frank Augstein / AP Photo
We were living in Paris in 2003 when President George W. Bush and his team decided to attack Iraq.
The menu: Blood, toil, shock and awe.
Cartoon by Steve Bell
Our misgivings were recorded in the Daily Reckoning e-letter we were writing at the time. As we put it:
“The U.S. invasion was arguably the best thing that ever happened to jihadists. It challenged them. It forced them to grow and adapt. Like an oversupply of antibiotics in a New Delhi hospital, U.S. interference has wiped out the weakest of the terrorists and forced others to mutate into much more lethal varieties.
The war in Iraq led to dozens of experiments and innovations — in the art of insurgency as well as in organizational skills and management. What was just a handful of nut-job jihadists a few years ago, under pressure from the U.S. military, has become far more powerful and much less amateurish.”
But the worst thing that could come from an aggressive attack, we warned, would be victory. It would encourage even more stomping around where we have no business.
Belated reassessment of victory
Cartoon by Steve Bell
We reported that the French had wisely, in our view, decided to stay out of it and suggested that Americans might be better off out of it too.
This view so infuriated readers that thousands canceled their free subscriptions. One wrote to say he hoped the U.S. would “bomb Paris on its way to Baghdad.”
Big Boost for the Dow
But let’s look at what happened in the markets on Wednesday. The Dow got a big boost. Up 248 points… or 1.4%. The mainstream media attributed it to a “forthcoming rate hike.”
Said increase in the federal funds rate – the base lending rate for the entire economy – is thought to be coming, thanks to a healthier U.S. economy. This would make it possible, say the headlines, for Fed policy to return to a more normal footing. Maybe…
DJIA, daily. The market now celebrates both the perception that there will be no rate hikes and the perception that rate hikes will come. In other words, nothing can possibly derail it – it’s all good. This idea that the market is bullet-proof is reminiscent of investor behavior in the late stages of previous bubble periods – click to enlarge.
But if the economy really is improving, it will bring with it higher interest rates… higher wages (and lower corporate profits)… fewer buybacks… and lower stock prices.
Most likely, to get rid of the trash, mistakes, and excess debt now blocking the path, truly healthy economic growth will have to be preceded by a stock market crash and a credit wipe-out.
Put another way, real growth in a healthy economy is the opposite of what has put the Dow over 17,000. Instead, stockholders owe their gains not to healthy growth but to collusion, deception, and corruption. They won’t give it up readily.
Real, healthy growth will not be tolerated. Not that there is much threat of it. But even if there were, the Fed would have to nip it in the bud before it got out of control.
Buying In …
Politics, culture, and religion always produce emotional reactions. But war beats them all. It is not a subject that is easy to think about, let alone write about. Military men, for example, are not expected to think about war; they’re only expected to win. And most people line up behind their boys in uniform.
“Support Our Troops,” say the bumper stickers.
“Thank you for your service,” they say to the men at arms.
Thinking too much about what service they are providing is practically treason. We have a better understanding of this phenomenon now, after reading Yuval Noah Harari’s book, Sapiens: A Brief History of Mankind.
Yuval Noah Harari’s book Sapiens – A Brief History of Humankind
Harari, a professor of history at the Hebrew University of Jerusalem, explains that large human communities and large-scale collective undertakings (such as war) are made possible by shared myths.
You have to believe the same thing everyone else believes. You have to “buy in” to the same narrative. If individuals stop to think about it, the whole adventure could seem pretty stupid (the Trojan War… the Crusades… Napoleon’s attack on Moscow… World War I… the first and second Gulf wars).
“What’s in it for them?” they might ask. Often, the answer is: “Nothing.”
Then the myth breaks down… the project fails… the solidarity that large-scale enterprises need (the Catholic Church… World War II… the United States of America) can’t be maintained. That’s why there is so much pressure to NOT think independently but instead to go along with whatever cockamamie program is in the news.
A Monster of Our Own Creation
That is probably also what is driving so much negative commentary from our dear readers after Monday’s issue (in which we noted that the Paris attacks were a “smallish affair” when compared to massacres throughout history).
We are not solidaire, as the French say, with U.S. and European bumbling in the Middle East. We wonder what’s in it for us. But you can’t be solidaire and ask that kind of question – not at the same time at least.
Anthropologists, physicists, pollsters – all find the same thing. Even your presence, while trying to figure out what is going on, distorts the picture. You need to keep some distance or you won’t see it clearly.
So, what is going on? Ben Norton at Salon.com:
“Up until the 1990 Gulf War, throughout the Iran-Iraq War that consumed the 1980s, the U.S. supported Saddam Hussein – the very same dictator it would violently depose in 2003.
Declassified CIA files show how the U.S. government helped Hussein when he was unleashing chemical weapons on Iranian civilians. The British government allowed Hussein’s regime to create chemical weapons using agents that were sold to Iraq by British corporations. These Western-provided weapons were also used in Hussein’s campaign of genocide against the Kurds.
Saddam Hussein was the first Frankenstein’s monster U.S. policy created in Iraq, al-Qaida was the second, and now ISIS is the third.”
One monster giving birth to another
To the man on the street, those military adventures are “defending the homeland” or “fighting terrorists.” Most people stand behind their leaders. They regard anyone who doesn’t as a traitor. But the homeland is rarely in danger. And the terrorists are more often created by the foreign legions… than exterminated by them.
Always something to do ….
But few people wonder if these policies really make sense. And those who do question them tend to see them as aberrations or mistakes. We have a different, and even more unpopular, perspective: The U.S. is an empire, as we noted in a book published in 2007, Empire of Debt: The Rise of an Epic Financial Crisis.
Empires do things normal nations don’t. They are almost always engaged in military operations somewhere on the periphery. And they are almost always directed by a small group of elite people, industries, and special interests – the “Deep State.”
These overseas wars are neither “mistakes” nor “aberrations.” They are intentional. And inevitable. They benefit the few who control the empire. Everyone else pays.
The end result (file under unintended consequences)
Cartoon by Steve Bell