Gasoline and Matches
War is not necessarily certain. And certainly not necessary. But like drugs and adultery, it never quite goes out of style. Instead, it goes around and comes around.
Thursday, November 21st, 2024
Bill Bonner, writing today from Baltimore, Maryland
World War I... Wall Street called it the ‘war bride’ years, was the first time America got a taste for how profitable war could be. The worse it gets around the world, the more assets will seek safe harbor (US assets?) and the worse it gets the more likely politicians sign those long-term rearmament contracts (again US assets). So I don't think risk assets are ignoring the risks, I think they are ripping because of the risks... war is good for America.
‘Say ‘goodnight’ Gracie.’
—George Burns
And now we switch tempo from ‘lamentoso’ to ‘malinconico’... that is, from ‘worse case’ to the ‘worst case’ scenario... the biggest loss of all... up to and including the end of the world as we have known it. Agence France Presse:
Russian President Vladimir Putin formally lowered Moscow’s nuclear threshold on Tuesday in response to U.S. President Joe Biden authorizing Ukraine to use long-range Army Tactical Missile Systems (known as ATACMS) to strike limited targets inside Russia... Moscow “reserves the right” to use nuclear weapons to respond to a conventional weapons attack that threatens Russia’s “sovereignty and territorial integrity,” Kremlin spokesperson Dmitri Peskov said on Tuesday. He affirmed that a Ukrainian attack using long-range U.S. missiles could trigger such a response, though the doctrine remains broad enough to allow Putin to avoid committing to nuclear engagement.
Garrett Baldwin adds:
As they head out the door, the Biden Administration and the rest of the Pro-War bureaucrats will attempt one last shock and awe. In addition to allowing Ukraine to use long-range U.S. missiles to fire into Russia, the Biden Administration reversed policies and will now allow land mines. Land mines!
Geopolitical risk will be front and center for the next sixty days.
War is not necessarily certain. And certainly not necessary. But like drugs and adultery, it never quite goes out of style. Instead, it goes around and comes around.
The Franco Prussian war of 1870 began — supposedly — because of a diplomatic slight. It only ended after a siege left Parisians so hungry they were eating the animals in the zoo. ‘La Terrine d’Antilope aux Truffes’ was said to be a favorite.
And WWI got its start, according to historian Barbara Tuchman, as the combatants were ‘sleepwalking.’ No one knew then or now what the ‘reasons’ for the war actually were. Neither side stood to gain much of anything. And in the end, neither side did gain much of anything.
But the costs were high. By the end, there were forty million corpses spread all over Europe... with a few in Africa, and the Near East too. All the major combatants, save the US, suffered major damage. The Bolsheviks took over in Russia. The Austro-Hungarian Empire was dissolved. France and England were effectively bankrupt. And in Germany, people were so humiliated by the peace settlement that they signed on to the National Socialists’ (NAZI) program in an attempt to regain their pride.
Sometimes, good leaders are able to resist war. In 1956, Dwight Eisenhower, for example, was invited to join England and France in a glorious operation to retake control of the Suez canal from the Egyptians. He demurred. Within hours, the war was over.
John F. Kennedy also avoided a war with the Soviet Union. By-passing his own “intelligence” and “diplomatic” bureaucracies, he set up a back-channel conversation with Nikita Khruschev and agreed to remove US missiles from Italy and Turkey in exchange getting Soviet firepower out of Cuba.
But Kennedy was assassinated sixty-one years ago tomorrow. Eisenhower died six years later.
Joe Biden could have followed Eisenhower and Kennedy. He could have stopped the war in the Ukraine and the massacres in Gaza, both with a phone call. Instead, he chose war.
Sometimes, people yearn for war... they search for meaning... for purpose... for someone to blame... for a victory they can feel good about... or just some way to kick someone else in the head. And war pays. Generals enjoy fat sinecures, suppliers get rich and politicians get re-elected with suppliers’ money. Veterans get special benefits. What agency has the biggest payroll in Washington? Veterans’ Affairs.
And so, from time to time, the world catches fire as the Primary Political Trend shifts from peace, freedom and fraud to war, politics and brute force.
But it is not purely random. One follows the other. “The first panacea of a mismanaged nation,” wrote Hemingway, “is inflation. The second is war...”
Most western governments are already hooked on inflation. Deep in debt... facing rising interest payments -- without some other source of funding, the political caste will be forced to cut back and lose power.
That is what makes the Musk/Ramaswamy initiative so fascinating. The two entrepreneurs believe they can save the system by making it act like more of a business. That is, they think they can provide a painless budgetary Ozempic, causing the political caste to voluntarily downsize... and reduce its own power.
It won’t work. They are taking on the entire Elite Establishment…from the universities, to the press, to Wall Street, the firepower industry, Congress, the bureaucracy and the Deep State. Their cuts will be headline news…and insignificant.
Instead, explains John Dienner... the real solution...
Will be to further debase their currencies. Of course, doing so will devastate wage earners, savers and pensioners living on fixed incomes. But that is a price elite political insiders are willing for the working classes to pay in order to remain in power for a little longer.
Trump won the election by appealing to a deep undercurrent of dissatisfaction. But rising prices, tariffs, depressions, deportations and chaos will not make the frustration go away.
The inflations and depressions of the 1920s and ‘30s provided the dry tinder for the ‘kinetic’ wars and mass murders of the 1940s. And now, looking into the haze of the future…more like a recurring nightmare than a prediction…
Is that someone carrying a can of gasoline and a pack of matches?
More... tomorrow...
Regards,
Bill Bonner
Musk and Ramaswamy are what is known in business parlance as “without portfolio”. As businessmen who have been operationally in charge of successful businesses they surely know this. They also know what it means. Recall the humorous tv commercial some years ago of the meeting where a consultant recommends large and disruptive changes to the bosses of a large enterprise. After listening to the proposal the boss smiles and says “I like it! Do it!”. The consultants face immediately becomes crestfallen and everyone gets the joke at that point. The consultant couldn’t “do” anything”. He was a second generation talking head among talking heads. Without portfolio.
But that may not actually be the point here. The point may simply be to spend some time truly educating the American people on what a giant, out of control, sclerotic and corrupt behemoth the US federal government has become. Many people today think they know. A few do, most don’t, and many remain completely in the dark, all by design of course. The situation is far worse than the imagination can keep up with. No other government on the planet can compete with it on the same playing field. Not even China. It is, in all its putrified and petrified glory, the largest criminal enterprise on earth, having lost any connection or resemblance to what it was originally created to do or to be.
Musk and Ramaswamy are in a unique position to shine a bright light on it. Time will tell if this is in fact the assignment. If so it just might be worth the price of the ticket, whatever happens to the portfolio in the near term.
There is no better cover up for government malfeasance than starting a world war.