Tuesday, October 19, 2010

Afghan Confusion and Economic Headwinds

The AfPak Channel has a "micro" look at what's failing in Afghan-land from the US-NATO standpoint. Many months ago, I took up the cause that the Obama Afghan surge was failing, but that has now become a mainstream and well-reported conclusion. Reports such this, however, give additional color to the extent of the apparent disaster into which the U. S. is involved.

Please read it, as excerpts can't do it justice.

What's worse, this wasteful war is bringing the German army out of retirement, as the article describes.

How many domestic cutbacks is the U. S. public truly willing to endure to finance an unclear cause of chasing Afghans around their own country, simply because nine years ago the government then in power was allied with Osama bin Laden?

Ben Bernanke isn't specifically saying, but the inflation of the 1960s and 1970s was goosed tremendously by the cost of the war in Viet Nam, and the current inflationary Fed policies are very much affected by today's war efforts, which unlike "stimulus" have no "multiplier" effect on domestic economic activity.

The surge in Iraq achieved its short-term objectives. The American people intended that the troops be brought home rapidly, but excuses to not do so have been adduced, so the Bush policy in Iraq is being followed. No change from the alleged "change" prez. Adding to the confused policies in the face of the various economic troubles at home, the new, elective Obama surge in Afghanistan is a big inflationary headwind in the face of natural economic growth.

All these wars without endpoints are helping to ruin the psyche and economy of the U. S. A.

The Fed can print all the money it wants, but if the population is dismayed by ineffective domestic and foreign policies, it won't revive animal spirits. They can think of all the equations they want, but they won't work. Reality cannot be described in an economic equation.

After the U. S. recovered from the loss in Viet Nam, it was ready for two decades of amazing economic growth with, and because of, only limited overseas military action. The Soviet disaster in Afghanistan presaged its collapse. In the past nine years, unending foreign U. S. military activities in resentful Muslim countries are-- surprise-- associated with economic disappointment after disappointment. There is a relationship.

Come home, America. It was the wrong slogan for a sensible policy for George McGovern in 1972, but it might work in 2012 if matters are unchanged "over there". If Barack Obama has the courage to skeedaddle out of where we don't belong, there will be lots of upside economic surprises to come out of America. If not, the U. S. ship of state is like a sailing ship always tacking into the wind rather than one guided by propitious trade winds.

It's his choice. As a Nobel Peace Prize recipient, the choice should be obvious. But it's not happening. IMHO a war president should send the prize back to Oslo.

Unless these wars are truly won soon or the administration changes course, the bear trend in the dollar and the bull trend in gold look to be on track, countertrend moves notwithstanding.

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