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Feb 3, 2010

The Pentagon runs amok - Obama is letting the generals and contractors roll over him

Pittsburgh Post-Gazette - February 3, 2010
By Dan Simpson

It is not possible to believe that it is coincidence that just as the Pentagon is being called upon to justify its immunity from the across-the-board budget freeze that President Barack Obama is declaring for the federal government, at least three provocative U.S. arms sales have been announced - to Taiwan, Poland and four Persian Gulf states.

The announcements were clearly scheduled to provoke, respectively, China, Russia and Iran. Each will now bark loudly, and perhaps take retaliatory action. Their responses will, in turn, serve as justification by the Pentagon for the 7.1 percent increase in proposed defense spending, even as painful cuts are being administered in other fields.

The other beneficiaries of this move will be the defense contractors - the happy band of manufacturers and trainers and their lobbyists - into the ranks of which many senior military officers and Pentagon officials retire once their active duty days are done.

The timing is extraordinary, if one had any inclination to consider it to be coincidental. The other "coincidental" development was the failure - again - of the missile-defense system in a $150 million trial that took place Sunday. That system, a dog that has been around for years, cleverly conceived and presented as an umbrella over the United States and some of its allies against Iranian or North Korean missiles, has two basic problems. First, it is expensive. Second, it doesn't work, although those two flaws do not necessarily deter Pentagon planners or defense contractors.

The three newly announced arms sales were surer bets, in the sense that each is sure to alarm or enrage some serious country.

The biggest sale, announced Friday, and the most serious in terms of impact, is a plan to sell $6.4 billion in arms to Taiwan. China considers Taiwan to be part of China. The island will receive from the United States 60 Black Hawk helicopters, 114 missile-defense rockets, 12 anti-ship missiles and two mine-hunting vessels, as well as communications and surveillance equipment.

The timing of the U.S. announcement - unless the furious Chinese reaction is seen as helping the Pentagon's budgetary case with the Congress - would seem to be particularly unpropitious.

The United States is asking China to sign on to sanctions against Iran. It continues to rely on China to keep North Korea in line. Mr. Obama's new initiative to double U.S. exports is dependent on China's adjusting its currency, a step it is reluctant to take in any case. And in general, China's relations with Taiwan have been improving steadily, tending more toward enhanced commercial ties, as opposed to military competition. The new U.S. arms sales would seem to cut counter to this evolution of relations and must have been a difficult decision for the Taipei government to take, one certainly encouraged by U.S. defense equipment exporters.

The Chinese reaction will probably not be pleasant for the United States. It immediately is likely to exclude U.S. companies involved in the sale, such as Boeing, from operating in China. It also will cut for the time being military-to-military contacts with the United States, and perhaps others. The most serious action China can take - one which it was already moving toward - is a reduction in its purchases of U.S. debt. That would have a grave initial and then secondary impact on the U.S. economy.

It would mean, first, that the U.S. government would have to pay higher interest rates to borrow the cash necessary to cover its enormous, growing budget deficits. Second -- and probably most serious - it would mean that the U.S. government would have to compete in U.S. financial markets to a greater degree for the capital needed to restart the engines of American industry.

That is absolutely the last thing that the Obama administration needs at this point. It makes one wonder how much pressure was put on Mr. Obama by defense industry lobbyists to obtain authorization for the arms sales to Taiwan - or worse, whether he understood what he was doing.

The second arms deal was made public when Poland announced that the United States would sell it surface-to-air missiles for deployment 35 miles from the Russian border by April. Russia has consistently opposed such U.S. action, considering it provocative and inconsistent with Mr. Obama's declaration of his intention to reset relations with Russia. Where and how Russia's reaction will come is not yet known, although cooperation on sanctions against Iran and/or the signing of a new arms reduction treaty may now be out the window.

The third major arms deal announced in recent days was that the United States will sell Bahrain, Kuwait, Qatar, the United Arab Emirates and perhaps other Arab Persian Gulf states new anti-missile defense systems, targeted against nearby Iran.

Apart from the financial aspects of the deal for companies like Raytheon, the theory is that the new weapons will make the Gulf states more comfortable hosting the U.S. military installations already on their territory.

The theory also is that Israel will be more comfortable with U.S. missile-defense systems in the Gulf to protect it from Iranian retaliation if Israel were to bomb Iranian nuclear installations. This theory is severely flawed in that Israel could equally well conclude that it now can attack Iran with less risk of Iranian retaliation against America's allies in the Gulf. The easy way to prevent Israel from starting a major Middle East war by attacking Iran is simply to tell it that the United States will not come to its rescue if it does so and then finds that it can't handle the Iranian counterattack.

The budget line for defense stands at $708 billion, 53 percent of discretionary spending, eight times more than the next largest item, health and human services. Does that reflect America's priorities? Is that who we are?
===========================
Stop NATO http://groups.yahoo.com/group/stopnato

Blog site: http://rickrozoff.wordpress.com/

The Secret Banking "Blob" On Capitol Hill That Destroys The Possibility Of Financial Reform

The Secret Banking "Blob" On Capitol Hill That Destroys The Possibility Of Financial Reform: "

A secret club of current Senate staffers and Wall Street lobbyists is dragging down the chances for meaningful financial reform.

Staffers on the powerful Senate banking committee are part of what is known as 'The Banking Blob,' a person familiar with the matter told us. The Banking Blob is made up of current banking committee staffers and former staffers who are now bankers or lobbyists. They frequently socialize together, often organizing happy hours and parties.

'They move in a pack. They socialize together,' the person says. 'Hell. They even inter-marry.'

The Blob is made up of both Republican and Democratic staffers. Outsiders tend to think the Blob members view themselves as 'cooler' than other Capitol Hill staff members. Often a job on the banking committee leads to a well-paying job for a Wall Street firm or a position at a K-Street lobbyist law firm.

'The very worst example of the revolving door in Congress,' is how the person described the Blob.


'The idea that these people would actually develop legislation that Wall Street opposes' is a joke, the person said. 'They are genetically incapable of doing it.'

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be prepared for what is mathematically and historically coming

Just in from Bill H. :

Time to Inflate or Die.

To all; we are again at another point in time where the "powers that be" must either "inflate or die". Some way or somehow air MUST be shoved into the balloon immediately or the "unthinkable" deflation will take over which once started will devour everything. We have had massive monetary and fiscal stimulus for 18 months or more and the only result so far is an economic plateau at a lower level. Past recessions were normally 6-9 months in duration, if you believe the official but cooked numbers we have had a minimum 1 year of recession.

Yes we got GDP numbers on Friday showing 5.7% growth for the quarter ended in Dec.. All of the common sense, anecdotal and hard numbers argue against this fairy tale. The problem we now face is that global debt has grown so large that interest payments will and are eating away at cash flows and tax revenues. Money must be "created" (by debt) in order to have enough in the system to pay interest. The problem is that individuals, states, and sovereigns are leveraged to the gills and either don't want or can't take (the market won't give it to them) on more debt. In my opinion we have finally "arrived" at the long forecast (by the Austrian economists) debt saturation level. Once interest rates start to rise and they will worldwide, sovereign defaults will start going off like popcorn kernels because there is just not enough "money" in existence to pay the future debt service. This is why there cannot ever be an exponentially growing Ponzi scheme that goes on forever. Either the money runs out or it becomes worth less (worthless), there is no other option, it is math and logic.

The entire system has now become untenable and the inflection point is now. The collective world does not have enough money to fund the debt that the U.S. government so desperately wants and needs to continue "life as usual". The "answer" has so far been outright monetizing of debt and "printing" of whatever has been necessary by the Federal Reserve for nearly a year now (almost 40 years). The Chinese picked up on this and their response has been a basic boycott of new U.S. debt purchases. There are only 2 roads to take from here, either deflation where everything goes bust and the world literally stops dead in its tracks or currencies must be devalued on a massive scale. Unfortunately history tells us that when all things monetary go this wrong, war is the ultimate result.

The era of "Sovereign defaults" is about to begin and do not fool yourself that the US is "too big to fail". In fact, Britain, the US (and it's former puppet state Japan) are at the head of the class for most likely to go upside down financially. Yes we have Ireland, Spain, Italy Greece and several Baltic nations that are on the verge financially but they are "symptoms" of the problem. It is the West that created the derivatives and the debt in the first place that can be seen as the "cancer" that will kill the system. In reality it does not matter where the first default occurs because the world is so intertwined financially and have ALL already fired the entirety of their "magic bullets". Once one goes down, they will all fall.

We have now financially lit the fuse and set war in motion by our recent $6.4 Billion arms sale to Taiwan, China has reacted by threatening to issue sanctions on U.S. arms companies. A very stupid move on our part to piss off our biggest creditor. The "volume level" coming out of the US, Israel, Iran, Russia, and now China is deafening. War has always been a (the) way to "right" an economy. It has always been a way to inflate rather than die, history has always shown us this. The problem now however is that the weaponry available today has far longer lasting effects than ever before which makes "business as usual" afterwards very difficult.

I don't have a clue how CNBC rolls out clown after clown to tell us how recovery is here and how we need to buy the banks, hi techs etc. and get back on the train because if you look at the math in the US, municipalities and states, government agencies, the pension systems up to and including the Fed and Treasury are all upside down broke. Not only is the system bankrupt, there is nowhere left to turn to bailout anything. In a nutshell, IT'S OVER! The endgame has arrived and I believe it is very important to put your "helmet" on. People may call this a tinfoil helmet or whatever they like, the point is that very soon it will be everyone (family) for themselves. Do not expect help from any quarter, you will need to fend for yourselves and families. The helmet I speak of is your own mentality or mindset, be prepared for what is mathematically and historically coming. Don't be lulled to sleep by what the laughable US media puts on your plate everyday, open your eyes and see for yourself. Get tough mentally, have a plan and be prepared!

Regards, Bill H. - http://harveyorgan.blogspot.com/

More: Global Systemic Crisis - The Decade 2010 – 2020: Towards a knockout victory by gold over the Dollar - GEAB N°41 (January 16, 2010) -

Barack Obama in the Crosshairs: Is the military threatening to kill Obama over US war policy?

Must read of today. Go to read it here.

Related: How to Save the Obama Presidency: Bomb Iran, By Daniel Pipes, National Review Online February 2, 2010

More: Budgets, War and Blind Ambition: The Limited Minds of the American Elite
by Chris Ames and Richard Norton-Taylor - February 2, 2010 -

The American elite's unbounded, unquestioned, indeed unconscious sense of imperial entitlement and dominance -- based ultimately on war, the threat of war and the profit from war -- is one of the defining characteristics of our age. And if you would like to see a glaring example of this attitude in action, look no further than the front page of Tuesday's New York Times, where one David Sanger gives us his penetrating "news analysis" of the Administration's just-announced $3.8 trillion budget....
Read all

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Protect Your ASSets: Buy Gold or Silver NOW - If you wait you will be late.
(He who panics first, just may salvage something.