Sunday, October 10, 2010

"The Costs of War"

I always read Mike Shedlock's excellent blog... but today he outdid himself:

Today he posted an article titled the "Cost of War".... in which he tallies the outrageous expense in blood and treasure that these mindless expeditions have cost our nation... but also goes on to say that it is "time to declare victory and bring the troops home".

I am always thrilled to see my fellow Republicans of the Libertarian persuasion out and out loud.  I believe in supporting a STRONG DEFENSE - not a strong OFFENSE.  It is time to look homeward and to renounce the role of international enforcer and policeman because not only is it the right thing to do, it is also in our best interests.  The U.S. government is going to have to do some enormously unpopular things in the line of cutting social programs... it will simply be politically indefensible to do these things with a military budget consuming 5% of GDP; it might even be indefensible to do what needs to be done with a military budget of 3%.  The folks benefiting from those expenditures need to accept this, and the folks benefiting from the social programs will need to make other arrangements, too.

Neither Iraq nor Afghanistan is worth the life of my son (well, as far as I am concerned). Unfortunately, it is too late for thousands of other American families, and hundred's of thousands of Iraqi and Af-stani families.  I love to wave The Flag, but not for this.  I want to show my support for the American troops serving in Iraq and Af-stan by bringing them home and buying them a beer.


So back to  QE2...

Quantitative Easing in general, and QE2 in particular, have this one-really-big-hairy-fly-in-the-ointment:

Oil Prices.

Yes, QE2 can work for a while in forcing up certain asset prices, and; No, it won't work if one of those asset prices is Oil.

Here's the math: Without QE the price of Oil would likely have already fallen to $50 per barrel - or $200 Billion of trade deficit JUST FOR OIL. At $83 per barrel (today's price) that would increase by $133 Billion per year... or a $333,000,000 TRADE DEFICIT JUST FOR OIL, and at $100 per barrel, which is very likely given a "successful" bout of QE, that number would move up to $400 Billion (I guess there is some good news with the decline of oil imports).  In other words, we increase the national debt by $500 Billion of QE2, and $200 Billion leaves our shores the very first year in the form of higher oil prices (yes, I know that's not exactly correct, that there will be some benefit to our exports by demolishing the US$ - let me know how that works out).... but since our economy simply cannot support $100 per barrel oil, the QE of QE2 will have the unintended consequence of giving the economy another black eye, thereby requiring QE3, and QE4, and QE5... particularly since all of the stimulus monies were spent on projects that would demand more consumption of petroleum.

So, here we find ourselves once again relying on a political leadership without the slightest grasp of combinational game theory (chess), opting instead for another kick of the can.  And why? Because our political leaders have abdicated their responsibilities to the Lobbyists (given they do not even read the legislation they vote on) and have convinced the American electorate, among other things, that: something can be had for nothing; that government can make life fair; that government can overcome natural law in all things and make you whole on your expectations; and that you do not have to save, invest, accept any risks, accept any responsibility, you may eat, drink, drug... as much as you like without consequence.... and that if things don't work out according to your satisfaction, well... somebody did this to you (and not the government)... it was the corporations, illegal immigrants, or the Conservatives, or the Jews, or radical Islam, or Wall Street, or the Boy Scouts... I can hear it now... "They did this to you!!" ("it wasn't me.")


Anonymous said...

I confess, it is my responsibility as an American serf, that the first round of QE did not save our corporate lords and masters and thus I bear full responsibility.
It is my fault as an American serf that our wonderful oligarchs want eternal war in east Asia so that they may know greater glory and wealth for themselves and the Heimat.
I propose that we dissolve the Three Branches of US government since it is the source of all evil and outsource it to a private corporate contractor who will know whats best. This will save untold amounts of costs to the corporations in lobbying fees and political advertisements.
All serfs must submit now. Recognize your low place and surrender.
All glory to our Corporate Lords and Overmasters.
USA,USA number One!!!
An American Serf

tweell said...

You've been on fire these last few days, I can't comment as fast as you're posting!
As a military retiree, I agree that the reason for our huge military went away with the Soviet Union. Eisenhower was right to worry about the unholy binding between corporations and the Pentagon.
We're nation-building, which is not at all what the military is supposed to do. It's past time to bring our boys home. Next time we get attacked by RIF's (and there will be a next time) we hammer them, then leave.

bureaucrat said...

(I myself still think removing distators that terrorize their people is worth U.S. military casualties. Saddam will not be missed, and Iraq will be better off someday. I supported the Iraq thing in 2003 and 2004, before it became just another method for the rich to game the system to get richer,and create the "U.S. state of Iraq.")

(and P.S., no surprise, I do not agree with Shedlock's "brilliant" scapegoating of government employees as the problem with bloated govt. budgets. A lot more money goes straight back to the taxpayers themselves, and they know it.)

westexas said...

If we extrapolate the 2005 to 2009 rate of
increase in consumption by the exporting
countries out to 2015 and if we extrapolate
Chindia's 2005 to 2009 rate of increase in net
imports out to 2015, and if we assume a very
slight production decline among the exporting
countries (0.5%/year from 2005 to 2015), then
for every three barrels of oil that non-Chindia
countries (net) imported in 2005, they would
have to make do with two barrels in 2015.