Indefensible

Big weapons are chiefly useful at generating big costs... money that goes to Pentagon suppliers...much of which leaks back to politicians, think tanks, lobbyists, universities, and ‘retired’ officers.

The F-35, Source: Getty Images

Tuesday, September 17^th, 2024 

Bill Bonner, writing today from Ireland 

The biggest problem in the US: too much (fake) money. 

It distorts prices. Perverts federal policies. Makes some people rich, while making most people poorer. The excess money favors Wall Street with trillions in fees and capital growth.

But it destroys Main Street with inflation and a lack of real capital investment. It shrinks savings, boosts consumption, funds wasteful spending and leaves us with $100 trillion in private and public debt. 

And it undermines America’s security.  

Here’s the latest from the Wall Street Journal: 

The Once-Dominant Tank Is Getting Humbled on the Battlefield 

Tanks were once the king of the battlefield. But the proliferation of drones in Ukraine means the large, noisy vehicles can be spotted and targeted within minutes. That has seen dozens of cutting-edge Western tanks used only sparingly in the battle they were meant to shape, while others have been damaged, destroyed or captured. 

Tanks have gotten bigger... and much more sophisticated than they were in WWII. Bigger is better, at least from the producers’ point of view. And the enemy’s point of view too. They are more expensive to build... and make better targets.  

Abrams tanks can cost an estimated $40 million each over a 20-year life... but on the battlefield, they immediately bring on a shower of incoming fire... Forbes: 

Six months of brutal combat against a bigger Russian force has taken its toll on the elite 47th Mechanized Brigade. The 2,000-person unit rolled into battle in the east in February with all 31 M-1 Abrams tanks that the United States pledged to Ukraine last year. Today the brigade is down to maybe half of its Abrams, assuming not all of the visibly damaged tanks are repairable. It lost two in August despite protecting the 69-ton, four-person tanks with layers of add-on reactive armor. 

Conflict Watcher had an update yesterday: 

 
Russian armed forces have reportedly captured another American M1A1 Abrams tank used by Ukrainian troops. Analysts from the portal Bulgarian Military note that the tanks provided by the USA are being compromised on the front at an alarming rate. 

A similar phenomenon is happening at sea, where bigger... and more expensive... is not better. Reuters: 

US shifts one of two aircraft carriers away from Middle East 

One of two U.S. aircraft carrier strike groups deployed to the Middle East in part to deter Iran from carrying out a threatened attack against Israel has departed the region, the Pentagon said on Thursday. 

The back story. The National: 

US and allies fail to stem Houthis' high pace of Red Sea attacks 

Ten months into the Houthi blockade of the Red Sea, industry experts are again asking if the Iran-backed militia has defeated two international naval coalitions trying to keep open the vital shipping route through which about $1 trillion of goods pass every year. 

The US famously spends as much on ‘defense’ as the next ten countries combined. But when you have such a big hammer, you need a very big nail. Reuters: 

The U.S. Navy's efforts to build a fleet of unmanned vessels are faltering because the Pentagon remains wedded to big shipbuilding projects, according to some officials and company executives, exposing a weakness as sea drones reshape naval warfare. The lethal effectiveness of sea drones has been demonstrated in the Black Sea where Ukraine has deployed remote-controlled speed boats packed with explosives to sink Russian frigates and minesweepers since late 2022. 

Why is the navy ‘wedded to big shipbuilding projects?’ We’ve already looked at the strange and disastrous Pentagon policy of limiting industry profits, but not costs. Result: costs go up. 

And what kind of thing is liable to generate a lot of costs... often way beyond original estimates? 

Big, sophisticated, complicated hunks of steel, with electronics up the kazoo. Big ships. Big tanks. Big planes. 

The latest Ford class carriers cost about $13 billion. Drone swarms that can put them out of action, however, cost relatively little... with each drone priced at only a few thousand dollars... The idea is not necessarily to sink the carrier, but simply to render it ineffective. 

And sometimes, the new weapons are so complicated... so much like the proverbial ‘horse designed by a committee’... that it is ineffective even without enemy fire. That was the story of the F-35... a $2 trillion flop, Medium.com:  

The US Air Force Quietly Admits the F-35 Is a Failure  

The Air Force has announced a new study into the tactical aviation requirements of future aircraft, dubbed TacAir. In the process of doing so, Air Force chief of staff General Charles Q. Brown finally admitted what's been obvious for years: The F-35 program has failed to achieve its goals. There is, at this point, little reason to believe it will ever succeed. 

Big weapons are chiefly useful at generating big costs... money that goes to Pentagon suppliers... much of which leaks back to politicians, think tanks, lobbyists, universities, and ‘retired’ officers.  

A huge, richly funded ‘defense’ establishment cannot afford cheap weapons. It has too many powerful ‘constituents’ to satisfy. 

Everybody wants a piece of the action — designers, lobbyists, lawyers, bureaucrats, programmers, administrators... Wall Street...Silicon Valley...  

Politicians want the assembly plants in their own districts...  

... environmentalists want their ‘impact statements’...  

... DEI officers make sure everyone involved has undergone anti-racist indoctrination...  

... union representatives insist that every piece be made with union labor...  

... trade officials... strategy consultants... experts...  

Time passes. Costs swell. 

Of course, the feds cannot pay the costs. They’re still paying for the last aircraft carriers... and the last fighter jets. So, the unpaid bills are added to the national debt... and carried forward... further damaging America’s real economic security. 

And when the weapons finally see action... in the Red Sea... the Black Forest or the Blue Nile... they are soon either put out of action by cheap, simple weapons... or moved to safety...  

After all, they’re too valuable to lose! 

Regards, 

Bill Bonner 

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Market Note, by Tom Dyson

One of the great bear markets… the real price of crude oil.

This chart comes from one of my favorite websites, Priced In Gold, which monitors the many markets of the world in terms of gold. This chart shows 65 years of the crude oil price, in terms of gold grams. From its high of 4.7 gold grams in 2007, crude oil today sells for just 0.8 grams of gold… and 83% decline in gold terms.  

While the oil price will, of course, continue to fluctuate, I expect it will continue to trend LOWER over time as gold gradually re-establishes itself as an official reserve asset for storing oil, manufacturing and commodity trading surpluses.

We’ll be asking our natural resources expert Rick Rule about this chart in an upcoming Private Briefing to be recorded later today. If you have a question for Rick, leave it in the comments below or send it to bpr@bonnerprivateresearch.com