I got fed up with this format for occasionally erasing an entire article after I spent hours on it. Also, as I wrote in one item, for unknown reasons, all the comments ever posted, and all my responses, disappeared.

Maddening.

Please bookmark the above  URL if you like to check on my latest articles from time to time.

John T. Reed

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When I researched my 2010 book How to protect Your Life Savings from Hyperinflation & Depression, I read multiple accounts of about 2,000 years of financial history.

One big point is that financial crises are sometimes triggered by gradual adding of straws on the camel’s back. But more often, they are triggered by a single substantial shock arriving when the system was weak. See the Kepner-Tregoe book The New Rational Manager for more on the “multiple causes versus single cause” debate.

Since the debt-ceiling debate in July, the financial markets worldwide have been extremely jittery. The Dow falls 300 points and pundits point to some innocuous, expected stat release like new unemployment figures. Say what?

I would not be surprised if some significant shock were to now hit the financial world and tip the world over into a truly epic financial crisis like a run on the dollar or a Great Depression.

A run on the dollar would happen if the holders of dollars and dollar-denominated assets, like U.S. Treasury bonds, worldwide, became convinced that the U.S. government either going to default explicitly on the U.S. national debt, which is a better idea than you probably think, and/or if the world financial markets became convinced that the U.S. government was going to “print” lots of money to make it easier for the U.S. government to pay its bills.

Run on the dollar

A run on the dollar would be a self-fulfilling prophecy. Imagine that you learn probably from TV that the price of gold is soaring, the value of the dollar is plummeting against foreign currencies and that merchants—like gas stations, Wal-Mart, and supermarkets—are suddenly raising their prices by huge percentages and raising them again within hours of the last raise.

You, and everyone else in the world, would immediately recognize that you need to spend your dollars before they lose more purchasing power. You would go to your local stores to try to stock up on everything.

If you read and followed my hyperinflation & depression book, you already did that and you beat the rush. If you did not already do that, good luck.

Probably you will be better off staying home and trying to spend your dollars via the internet and credit card. But I expect that whole system will lock up within 24 hours for a couple of reasons:

• banks who extend credit via credit cards will recognize that they are thereby creating dollar-denominated assets, which are poison during hyperinflation, and they will immediately stop doing that—they probably already have emergency contingency plans that tell them to do that.

• everyone on earth will be trying to spend their dollars at the same time and the credit card communications and computers will be overwhelmed

• everyone will switch to debit cards, which will not have the credit problem, but which have to use the same communications and computers

If you physically go to the store, you will find a near riot. There will probably be fist fights between customers and maybe with store personnel and people try to buy every last thing in the store and clean off the shelves. Parking will be more full than Christmas. People will probably be fighting over shopping carts, too. People will be filling their cars and calling home for their family members to bring the other car. People will be stealing stuff that is left unguarded in the parking lot for a moment. Police will be overwhelmed dealing with traffic jams and parking and fist fights at stores.

You will probably be relatively unsuccessful converting your dollars into hard goods. Yet when you return home, you will see stories on the TV about prices rising even further. When you try to convert your money to foreign currency, you will also find the whole world is trying to do the same. The U.S. government will probably announce an emergency edict preventing Americans from acquiring or owning foreign currency. That is typical in such crises. The government is trying to steal your money via the trick of “printing” too much of it. If you convert to hard goods or foreign currencies, to whom will they sell their newly “printed” money? Without holding you still while they rob you, the government, cannot succeed in paying off their debts with worthless paper. So expect all the exits from the dollar to suddenly be slammed shut.

What will the big shock be that sets off a run on the dollar?

I’m not sure. Here are some current suspects:

• end of the euro currency

• default by one or more of the PIIGS countries

• failure of a number of big banks in strong EU countries

• downgrade of the U.S. by more bond rating agencies

• sale of all its U.S. government bonds by China

• war between the U.S. and some country we are not already at war with

• reelection of Obama and loss of the House to the Democrats

• War between Israel and a Middle-Eastern country

• a costly natural disaster like a hurricane or earthquake

America and most of the world bond market are in denial. Europe, China, Japan, and America are in big financial trouble. The former East Bloc is no economic leader and has its own problems. Brazil has a fabulous future and always will.

The markets are like a cat on a hot tin roof and smoke is rising from all corners of the house the cat is on top of. There is probably still some small time to prepare. After the ’flation hits the fan, your options will be slim to few.

John T. Reed

Warren Buffett is very popular and very respected. He should be far less of each and his New York Times op-ed on 8/15/11 is more evidence of that.

Did you know he was the biggest shareholder of Moody’s bond rating service when it was rating subprime garbage AAA?

Buffett, who famously bragged he only bought stocks he understood, pleaded ignorance in the Moody’s subprime behavior. “I don’t even know where their office is,” he protested.

I repeat he was their biggest shareholder. Buffett is not a passive investor. He often manages the companies he invests in. How could he or anyone else involved in the management of a bond rating agency be respected after the events of 2000-2007?

But I digress. He periodically says the rich should be taxed more.

Easy for him to say. He would not notice if they were.

Disingenuous and illogical

But his argument is disingenuous at best and illogical.

In the NY Times, he said the super rich were not ask to share sacrifice. Bullshit! They pay far more than their share of taxes and the bottom 49% of Americans pay no income tax at all other than Social Security.

Do you favor a draft, Warren?

He said the poor and middle class are fighting for us in Afghanistan.

Oh, really? And why is that Warren?

It’s because we ended the draft in 1971. I have an article that says the draft should be reinstated.

If it were, some of Buffett’s younger relatives would be fighting in Afghanistan. They can also volunteer.

Will you be stating publicly that you agree with me that the draft should be reinstated, Warren? I didn’t think so. It would not make you popular with the masses which seems to be your motive for these periodic “raise taxes on the rich” announcements.

Speaking as an editor, what the hell does Afghanistan have to do with the super rich paying more taxes? Nothing. That was nothing but a cheap shot to help prop up an argument that makes no sense.

‘Extraordinary tax breaks’

Buffett says he and his super rich friends get extraordinary tax breaks. That’s a lie.

I dare him to list the sections of the Internal Revenue Code that he is talking about. There are no extraordinary tax breaks for the super rich. People have been saying that there are for my entire life. They do not exist. I am the author of the book Aggressive Tax Avoidance for Real Estate Investors, now in its 19th edition. As the title suggests, I am an expert in identifying such tax breaks.

They do not exist.

Carried interest

One he lists is “carried interest.” That is not an extraordinary tax break for the rich. It says that many of the profits made by hedge funds are taxed at long-term capital gains rates. Those are typically 15%. Ordinary income tax rates, at the top rate, are about 35%. But ordinary income and long-term capital gains have definitions. When you buy something and hold it for more than a year and sell it for a profit, it is a long-term capital gain. Ordinary income is defined as salary type income or current income from being self-employed.

Hedge fund managers and guys like Buffett have many such profits on stuff they acquired more than a year ago.

But it’s not an extraordinary tax break for the rich. It also applies to Joe Schmoe selling his home or his index fund for a profit.

One could argue about what percent of a hedge fund manager’s compensation is payment for his personal services during the year and what percent is long-term capital gain. But Buffett is essentially saying that there is nothing in a hedge fund manager’s income that warrants any long-term capital gains definition at all. That’s bullshit.

He mentions tax rates on tax rates on stock index futures being 15% on short-term gains. I am not familiar with that, but if it’s anything like the carried-interest rule, Buffet is probably leaving out some pertinent facts there, too.

17.4% tax rate

Buffett says his tax rate for 2010 was 17.4% and isn’t that horrible?

Why?

He had an accountant. He complied with the law. What’s the problem? He says most of his income was long-term capital gains. Well, that would explain his relatively low tax rate. As I said above, the rate on long-term capital gains is 15%. If his income fit that definition, I wonder how his rate got up to 17.4%.

He says his secretary’s tax rate was higher than his.

Of course. She probably gets relatively little of her income from long-term capital gain. And she is probably in the top tax bracket. She’s Warren Buffett’ secretary. If he paid her in stock options, I suspect she would have more long-term capital gains income and her tax rate would go down same as Buffett’s. The law taxes Buffett’s income exactly the same as his secretary’s. They simply have a different mix of types of income. The difference in rates comes from the mix, not “extraordinary tax breaks for the super rich.”

No effect on investment behavior?

Buffett mocks the idea that wealthy people make investment decisions based on pertinent tax rates. he said,

According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain.

I do not remember the “thrown a fit” part. But his statement that investors do not shy away from investments because of the tax rate on capital gains is simply a lie.

When there is a significant difference between the after-tax and before-tax returns on any investment, you take it into account when comparing alternative investments. When the Tax Reform Act of 1986 was passed, I calculated that it dropped the value of income properties around the nation by 25% overnight. I later saw other experts quoted as having come up with the same 25% figure. Calculating the effect on asset values of changes in pertinent tax rates is an arithmetic exercise, not a matter of expert subjective opinion as Buffett implies.

Corporate executives have often said that when the tax rate on dividends is high, the investors ask them to stop paying dividends and use the money to raise the stock price. That would make the gains long-term capital gains taxed at 15%, not at the sometimes higher dividend rate.

The so-called Laffer Curve has on occasion been proven true especially with regard to capital gains tax rates. Investors whose assets have gone up in value often wait until a long-term capital gains tax rates decrease to sell. Thus the media reports that when rates were cut, tax revenues actually increased. When there are pent-up capital gains, that is exactly correct. At present, it might not work very well because there are not many gains lying around. Also, with Obama, he no sooner signs a tax decrease than he starts threatening a tax rate increase, thereby nullifying any possible increase in economic activity.

Corporations have in-house and out-house accountants and tax lawyers who constantly calculate the after-tax income of their employer and instantly recommend changes when the after-tax income could be improved by moving to a different state or country. When California imposed an inventory tax, zillions of warehouses were suddenly built in Nevada and Arizona so California sellers of goods could keep their products out of the state of California until the last minute. California has lost many a business in recent years because of overly high taxes. The companies in question moved to lower tax rates states or states with no income taxes like Texas.

New Hampshire has no sales tax. It borders Taxachusetts. Along the border of New Hampshire, on the New Hampshire side, are many shopping centers whose parking lots are full of cars with Massachusetts license plates—and Massachusetts state troopers copying down the MA license numbers.

Saying tax rates do not affect behavior is total bullshit.

Abolish the income tax

I favor abolishing the income tax. Under my head tax, Buffett and his secretary would pay the exact same amount over the course of their lives. And the U.S. would collect the same amount of tax revenue as last year. No one would have any tax breaks at all. There would be no deductions, no tax-free income, nothing. Everybody just pays a fee for living in the U.S.

With the head tax, there would be no tax rates, no breaks, no different types of income, and no tax whatsoever on any kind of income. That is as it should be. Success should not be a crime for which you have to pay taxes. Existence is not either, but we do have to chip in to pay for the military, the State Department, and the federal justice system.

If Warren wants his secretary to pay the same as him, he should support my head tax, which was the law of the U.S. from 1787 to 1913. But I expect he will not support it because he is trying to pander to the masses to be popular with them.

Payroll taxes

Buffet said the rich paid “practically nothing in payroll taxes.” That’s false. They pay the same as everyone else and they usually pay the max. Payroll taxes are for Social Security and Medicare. Those are spoken of as contributions that you get back. Buffet and the average Joe pay in a certain amount with a limit and they get out the same amount. If you make the rich pay higher Social Security and Medicare taxes, you need to give them back more when they retire. In that case, the raise in payroll taxes on the rich would be a wash giving no more net money to the government. But you won’t. You want them to pay more for the same Social Security and Medicare benefits?That’s not fair.

What’s stopping you, Warren?

Buffett and anyone else could just pay extra money to the IRS. They will accept it. He does not. Instead he gives lots of money to charities, mostly those run by Bill Gates. Why?

Because Buffett knows that government sucks and that charities, while not so hot at competence themselves, are more efficient than government. Yet he keeps pleading for us taxpayers to pay more to the government.

Buffett wants the top three tenths of one percent (people who make more than $1 million a year) to have their tax rates increased.

He admits that would change nothing regarding the deficit. It is too small of an amount of additional tax revenue. As I stated in an earlier article, if you confiscated all the income of those who make more than $200,000 a year, it would only be $221 billion against a deficit of $1.6 trillion and a debt of $15 trillion.

So why even mention it? It makes Warren popular with the masses. Gets him a little favorable publicity.

He also put down Republicans for resisting raising the debt ceiling. But he admits that the solution to the government finance problem is cuts in entitlements. Only he soft peddles it somehow making it seem like the Republicans are not any more for that than the Democrats. He compared the deficit hawks to teenagers who play chicken and throw their steering wheel out of the window before they accelerate at the other driver.

Buffett needs to decide whether he want to make an intelligent contribution to the deficit situation discussion or not. All he offered today in the Times was amateur demagoguery about a merely symbolic amount of incremental tax revenue.

John T. Reed

I am currently watching a  C-Span program that is an interview with Army Lt. Ehren Watada. He was a first lieutenant who was discharged from the Army for resisting things he disagreed with.

Since I had an experience like that, I was curious about his version.

Basically, he was an OCS officer with a college degree. After he became a lieutenant, and was on orders to go to iraq, he decided he was against the war in Iraq.

Why? Basically, he is a liberal and his reasons are the same as any liberal. Indeed, he complained about Clinton being impeached for sex but Bush not being impeached for “lying about WMD.” Just standard Main Street liberal bullshit, not any sort of inside information that he acquired from being in the military.

He refused to deploy to Iraq.

Guy’s an idiot. He came across as dumb in the interview. I thought he was a West Point graduate. I think there is another guy who is a West Point grad who did something similar. I thought this was him. But as the interview went on I was thinking, how the hell did this moron get through West Point.

Then I Googled him and found he was a cum laude Hawaii Pacific University grad. His cum laude performance in college was far from evident in the interview.

If he and I had been in at the same time, we probably would have known each other because of the common plight of being on the outs with the brass and fighting big time against them.

If he told me his story when I was in and asked my opinion, which seems like the kind of thing he would do, I would have said,

Your position is total bullshit. You took an oath to the Constitution. You are acting like you have the right to only serve under a liberal commander in chief. Are you nuts?! During the Vietnam War, the CIC changed from Democrat liberal Johnson to Republican Nixon. Based on your theory, those whole damned 553,000-man force in Vietnam was entitled to come home on inauguration day. You want to be anti-Bush, stay out of the Army. If you are in, you follow lawful, non-stupid orders regardless of who is president. You cannot get out of a combat tour with these lame political arguments.

He resigned when he was still obligated to remain in because of his original enlistment plus because of a stop-loss deployment order.

He said one Japanese-American veteran told him he was acting like a spoiled brat. Watada laughed out loud at that. The vet was right. The guy is lame. His legal theory that he can ignore his oath because he feels Bush ignored his is idiotic. His overall logic was childlike. He seemed to take a lot of strength from people who said they supported him. But his various anecdotes of support were simply other liberals who share his dislike of Bush.

The C-Span interviewer was rather uninformed and biased in favor of Watada. For one thing, some active or retired military—maybe a JAG officer— should have been interviewed to present the other side.

At one point Watada said the Americans and South Vietnamese tortured North Vietnamese soldiers during the Vietnam War. I heard that the South Vietnamese did that but I never heard of Americans doing it. I am not saying it did not happen in isolated instances, but Watada seemed to say it was official policy and standard practice. He was not born then and does not know what he’s talking about.

I discussed my experience somewhat in the Army at various articles (www.johntreed.com/military.html) and in my book Succeeding.

In short, I had a five-year commitment after West Point. I discovered in the Army two things I was extremely opposed to: OPUM and OVUM which means actions that are Officially Prohibited but Unofficially Mandatory and Officially Voluntary but Unofficially Mandatory. I resolved that I would not comply with either, do my five years as gung ho as possible and get out the moment I was allowed to. I never resigned, feeling I had made a promise regarding the five years. I volunteered for ranger and airborne schools and graduated from them and volunteered for Vietnam and did a tour there.

To my surprise, my refusal to go to Army “command performance” parties and sign false documents and such was the highest “crime” any of my superiors (except for the only West Point graduate I served under) had ever seen. They kept “counseling” me to “straighten out” and “play the game” and threatening to tighten screws on me if I did not comply.

I refused. They tightened. I refused again. They tightened some more. And so on. Ultimately, after giving me lousy jobs, lousy efficiency reports, blocking my promotion, and so on, they ran out of slack in the “screw.” So they filed papers to fire me with an honorable discharge and severance pay. I wanted to leave—when my five years were up—but they could not wait that long because my getting away with refusing to go to parties and such was embarrassing them and scaring them that other lieutenants would start doing the same. Other lieutenants did ask them, “How come I have to do this but Lieutenant Reed doesn’t?”

Watada went big with the media seeking all the media attention he could get. I sought none. In spite of that, the local daily newspaper—the Asbury Park Press—got wind of what was being done to me and wanted to do a story about it. It was sort of the talk of Fort Monmouth that I was being railroaded, Kangaroo court, and all that. Back then, during the Vietnam War, the media loved any story that was anti-military especially if the guy on the outs was a West Point airborne ranger Vietnam vet. Some of my classmates from West Point went that maximum media route as conscientious objectors and such. When the Press contacted my Army JAG lawyer, I said I did not want to go the media route and they respected my wish.

Anyway, I got discharged honorably with about $4,000 severance pay four years, nine days and two hours after I graduated from West Point—about a year short of June 5, 1973, the date I was allowed to resign and determined to resign.

So I have almost nothing in common with Watada. He submitted his resignation when he was on orders to deploy to Iraq. That is illegal. I never submitted my resignation at all.

Watada was accused of illegal actions, accurately from what I learned about him just from his interview.

In my case, they said I had a “defective attitude.” The basic idea of my administrative proceeding was I was a nice guy and they would not have done anything to me if I was an enlisted man, but not quite up to the high standards of being an officer. Uh, excuse me. I had four years at West Point and another year of officer training afterward. I volunteered for Vietnam and went there. Many of my West Point classmates flunked ranger school. Some flunked airborne and satellite communications school. I passed all those. Many of my West Point classmates chose to avoid going to Vietnam. The vast majority of the officers in the Army were neither West Point nor ranger nor airborne. Based on qualifications like that, I was probably in the top 10% or 15% of all the officers in the Army at the time. (There were lots of draftee officers then.) Basically, my superiors got to a point where they went to the JAG guys and said, “Is there a regulation that we can use to get rid of this guy even though he is still not finished his West Point five-year commitment?”

Watada got court martialed, but after a mistrial it ended up in various procedural appeals until Obama took office and simply dropped the case, thereby letting Watada get away with this bullshit scot free.

I was a company commander when I was in. I am officially certified as having a “defective attitude.” But if I had been Watada’s company commander when he did this, I would have court martialed him.

John T. Reed

On 8/9/11, Freedom Watch and Judicial Watch founder Larry Klayman called for a peaceful “Assault on Washington,” a march in which the marchers demand the resignations of Obama, Geitner, and the Congressional leaders of both parties. This would begin on 9/17, which is Constitution Day and last all week—Constitution Week.

Sounds good, but I must point out that would leave Biden president. If you also got him to resign, that would make the current cabinet members president starting with Hillary.

I have no idea whether Klayman has the power to draw any significant number of people to Washington. Some of his background, like suing Judicial Watch, which he founded, and suing Facebook for $1 billion because they did not take down an anti-Israel page fast enough, sound kooky.

But the call for the march, in the context of Glenn Beck’s half million march and the Tea Party and other arising up of those who never did such things before reminds me of the lyrics of the 1967 Buffalo Springfield song “For what it’s worth.” Here is a singing performance of it. And here are the lyrics.

It is a haunting tune with haunting lyrics. Some that seem applicable to the current relationship between the American people and Congress and the White House are,

Something’s happening here

What it is ain’t exactly clear

There’s battle lines being drawn

That song was written about a police-versus-young-club-goers incident in LA. It was taken to be about the Vietnam War which was peaking around that time. But it really applies to all national policy changes to which large numbers of people are extremely opposed.

That song was an anthem of the anti-Vietnam war, anti-establishment movement generally known simply as “The Sixties.”

It must be said that movement had profound effects on the nation, effects that are still right on the surface of national debate.

And it must also be noted that back then, we only had a war. There was no credit downgrade. No stock market crashes. No subprime crisis. The debt-to-GDP ratio was around 50%, not 100%. The federal deficits was around 1% of GDP in 1967, not 11% as now. GDP Growth was 5.7%, not 1.3% as now.

In other words, the behaviors of the The Sixties were a luxury of a wealthy youth who had no worries. If they were in college or grad school, they could not be drafted. Everyone got a job upon graduation. The Sixties were a fun, spare time activity.

If you overlay the Sixties on our current economic situation, and make the protesters full-grown adults, not kids who don’t know who they are or how to get things done, you have a far more serious mixture of “battle lines being drawn.”

To a large extent, the current angry people gathering in Washington for Glenn Beck’s rally or supporting the Tea Party are the same people who were protesting college kids in 1967.

To be sure, many of them are unreformed, anti-establishment hippies like Bill Ayers, the man who provided the home where Barack Obama launched his political career. And the Sixties were largely a college kid activity. Today’s Tea Party and Glenn Beck crowd incude both sixties college grads and those who were too busy working in the sixties to have their own foreign policy.

Someone, apparently not Winston Churchill, said,

If a man is not a liberal when he is 20, he has no heart. If he is not a conservative when he is 40, he has no brain.

Those who were twenty in 1967 (I was one of them, albeit not a hippy. Such was not permitted at West Point.) are now 65 or 66.  Bill Ayers and Bernie Sanders and their ilk never got brains. But most of the others who felt “For what it’s worth” was their song did wise up.

Churchill’s driver was a staunch liberal. He wanted a tax on everyone who had 100 pounds. One day, he said he was against that. Churchill asked him what changed his mind. He answered,

I have 100 pounds now.

So do the flower children of the Sixties, along with children and grandchildren which have given them a different perspective on capitalism and the rich and all that in many cases.

I think this is a historic time. And a dangerous time.

There have always been disagreements, but this time is different. The debate is over the fundamental nature of America. And the sides are extremely angry and dug in—more so than since the Vietnam war, but that was between adults on one side and children who generally threw tantrums rather than vote on the other. This time it’s between two sets of grown-ups. And the voting seems unable to decide the matter. Republicans said the 2010 election would straighten things out. But it did not. Now they say the 2012 election will do it, assuming they will take the White House and Senate and keep the House. That has never happened in history except for 1928 and 2002. And it was no great Nirvana when it did. Democrats have always had more than enough senate seats to use a filibuster to stop anything—even in 1928 and 2002.

2012 ain’t gonna fix this and the two sides are really angry and really determined. So if the elections never fix it, and the two sides are in a state of rage and determined to get their way, where does that lead?

For one thing, the Constitution no longer works in parts. Checks and balances have turned into gridlock. That might have been okay if it happened before we got into an unsustainable situation. But it took hold after we got into an unsustainable position. Not only is our high and climbing debt-to-GDP ratio unacceptable, so is the gridlock that prevents us from fixing it. The U.S. government in its present form is what is unsustainable. Everyone who cares about what form the replacement government will take had better get involved.

Too many are acting like everything is still normal and not paying enough attention. Too many are letting others make all the decisions on the grounds that all that Washington stuff doesn’t affect them. It’s about to. And it’s a disaster because the vast majority of Americans, for their whole lives, have trusted Washington zealots to take care of it.

John T. Reed

In 1976, America had just suffered two terms of the Nixon Administration culminating in Nixon’s resignation because of Watergate and Gerald Ford serving out the second term. That same year, Democrat Jimmy Carter was elected president. The country was so disgusted by Watergate that it elected a nobody who claimed to be an evangelical Christian and who said he would never lie to us. At the time, evangelical Christians were generally unknown, but sounded like an improvement on a bunch of criminals. (Since then, the Democrats have sold the evangelical Christian voter bloc to the Republicans.) Jimmy Carter, like all politicians, lied to us.

Carter was a disaster. He was inept, not a leader, and made things worse by his knack for always choosing the wrong thing. He is famous for his malaise speech, although he did not use that word. Here is a video of that speech.

Basically, he said a sort of inexplicable foul mood had descended upon the nation and it was causing all our problems. Sort of like Satan only without the animal form. His response to the energy crisis was to ask Americans not to put up Christmas lights and he refused to put them on the White House. The darkened streets and homes during Christmas exemplified Carter’s dark view of the world, its problems, and his solutions.

Then they held an election in 1980: Jimmy Carter versus Ronald Reagan.

Reagan was a Hollywood movie star, almost always upbeat, a true believer in the Constitution and free markets and American exceptionalism. He had been elected head of the Screen Actors Guild, governor of California for two terms. In other words, he was a leader.

Carter didn’t have a chance.

Four years later, Reagan ran for re-election against Carter’s vice-president Walter Mondale.

During the 1984 campaign, Reagan’s campaign theme, was “It’s morning in America.”

Here is a video of the commercial.

Mondale had even less of a chance than Carter.

Barack Obama is the Jimmy Carter of 2008, only much worse. People who have lived in post-World War II America generally saw Carter as the worst president. Now they see Obama as the worst. In the last several days, liberal NY Times columnist Maureen Dowd  said, “We are watching Obama turn into Jimmy Carter right before our eyes.”

Carter was well-intentioned but inept—simply not up to the task.

Obama is not up to the task either. Indeed, he is less up to it than Carter was. Carter did get an impressive Egypt-Israel peace treaty signed. Obama’s greatest “accomplishment” is ObamaCare which probably will be blown up like a failed public housing building before most of it takes effect.

More importantly, Obama is not well-intentioned. No one can figure him out, but based on his rhetoric and actions, he wants to turn us into Western Europe at best and I suspect what he really wants is to be president for life of the U.N. and increase the power of the U.N. over the whole world to something like what the king of Saudi Arabia has. Obama hates business and the rich and Wall Street and the U.K. and Israel and the use of fossil fuels and the profit motive in education or medicine or energy and on and on.

Recent stress test of America in the form of a debt ceiling battle

The recent debt ceiling battle was very instructive about our future. When I wrote my book How to Protect your Life Savings from Hyperinflation and Depression, I said I wrote about both because neither I nor anyone else could tell which we were going to get.

The debt-ceiling fight was a stress test of sorts  of the Obama, the Democrats, the Republicans, the bond market, and the American people.

The results are in.

• Democrats plan to ride the “borrowing and spending to fund all entitlements” business plan right off a cliff, then blame Republicans, democracy, and free enterprise for the inability of the U.S. government to borrow and tax enough to keep sending out entitlement checks. They will never agree to anything other than symbolic spending cuts in the range of 1% of what is needed to avert financial disaster.

• Republicans want to rein in the spending, but lack the guts to just say no to it for fear they will get blamed for entitlement checks not going out.

• Obama’s plan is stimulus spending, enormous increases in regulation, nationalization of student loans, health care, auto manufacturing, banking, investment banking, energy, and so on—also symbolic tiny tax increases on “millionaires and billionaires.” Actually, his 2011 growth plan seems to consist entirely of his going to factories, taking off his jacket, rolling up his sleeves, and blaming everyone but himself for America’s economic prolems—and asking voters to be patient. What are we waiting for? His 2009 stimulus to finally kick in? (Actually, he never spent about a third of it. Apparently it is to be used a a slush fund to buy votes for his re-election. Your tax dollars—er, I mean dollars borrowed from China—at work. Obama is focused laserlike on reelection, re-election, re[election.)

He absolutely refuses to consider specific cuts in entitlements but he misses no opportunity to say he favors them in the abstract.

• The bond market is getting restless. S&P lowering the U.S. credit rating from AAA to AA+ was one manifestation of it. Moody’s previously had lowered the U.S. bond outlook to “negative.” Bill Gross of PIMCO, the largest private bond fund, got rid of all its U.S. bonds and shorted U.S. bond held by others (shorted means he placed bets that U.S. bonds would fall in value). Other major bond buyers like China, Russia, and so on are raising hell about the U.S. constantly increasing its debt-to-GDP ratio and making absolutely no progress on reining in borrowing and spending. Short term bonds have actually seen their yields fall slightly, which means the bond market loves them, but increasingly that seems to be a manifestation of nowhere else to go.

• The American people —The Democrat business model since a least 1965, and maybe since 1932, has been to get as many Americans as possible addicted to entitlement checks from the Federal government and thereby beholden to the Democrat party who would protect them from any cuts and even increase the amount and reasons for such checks. That business model has worked quite well. Since 1930, there have only been two years (2002-2004) when Republicans controlled both houses of Congress and the White House. And they certainly did not use that control to straighten out entitlements and the national debt.

What we learned in late Jury 2011 was that some God-awful number of Americans receive a regular check from the federal government—in the neighborhood of 100 million. They include federal retired, AFDC, social security, state governments, medicare and medicaid users, disabled, contractors, etc.

You can say about entitlement addiction what has often been said about drug addiction,

Starting is euphoric, quitting is impossible, and continuing is disaster.

The starting euphoria can be seen in the smiling faces of the president and legislators at the law signing ceremony.

Quitting is impossible was in evidence in July in the debt-ceiling fight. Congress and the president will never do the right thing and cut the addicts off.

Continuing is disaster is manifest in the riots in Greece which is a little bit ahead of us in national-debt-to-GDP ratio.

‘…from their cold dead fingers’

If you know anyone who is addicted to alcohol, gambling, or drugs, you know there is not much reason for optimism about gradual solutions. Actually, success at ending addiction at all is rare. Our seniors and federal retirees (who are as young as 37) will let us fix this when we pry their entitlement checks from their cold dead fingers and not a moment sooner.

Just as drug addicts turn into monsters who steal from their own family and friends to get a fix, America’s seniors and federal employees are stealing from their own grandchildren to get their entitlement fix. They say they are not, but they are simply lying. Actions speak louder than words.

More importantly, we learned that those recipients will agree to no cut whatsoever in their check. Many of them are in favor of cuts in federal spending in the abstract, but not any reduction in the amount of the check that THEY receive.

So what conclusions can we draw from all this?

The bond market rules

The bond market is in charge. They are the only ones dealing in reality. Actually, even they are not yet fully dealing in reality. They are still in denial that there is no longer this superpower where they can store their money safely and a superpower currency they can trust. They NEED the U.S. and the U.S. dollar to still be what it was. Irrelevant, but still affecting their behavior.

Unfortunately for them and all of us, there is an inevitable arithmetic that will hit them in the face with a bucket of reality water soon.

The financial strength of all countries is measured mainly by each country’s debt-to-GDP ratio.

Ours is now over 98%. The Euro Zone Convergence criteria say a country’s gross-government-debt-to-GDP ratio must not exceed 60%. The U.S. is not trying to join the Euro Zone. But if it did, its application would be rejected. I cite the Euro Zone rule here merely as a guide to good government. You can watch our debt-to-GDP ratio rise (at the 7th decimal point) in real time at the national debt clock web site.

Higher interest rates would end this overnight

There is also the issue of interest rates. Federal Reserve Chairman Ben Bernanke promised to hold U.S. the U.S. federal discount rate where it is now for two years. Actually, interest rates are set by the world market. Bernanke and the Federal Open Market Committee are important parts of that market, but if investors do not like the Fed rates and the resulting U.S. bond interest rates, they will not buy them.

In a free market, that would force the U.S. government to raise the interest rate in order to sell the bonds.

In 1981, the U.S. government had to pay 13.45% interest to sell U.S. government bonds. If you apply that interest rate to our current national debt of $15 trillion, you get $2.02 trillion of annual interest expense. Since total U.S. tax revenues are $2.2 trillion, That would mean the entire U.S. tax revenue would go to paying interest on the U.s. national debt. All other government activity—military, courts, entitlements, Congress, White House, and so on would shut down. It also means no one would would buy additional U.S. bonds at all. So the U.S. government would have no choice but to renounce the national debt, that is, to stiff all the owners of U.S. bonds world wide. About 3/4 of those owners are Americans.

Could we just print money?

Quantitative Easing I and II had the Federal Reserve buy almost all the U.S. bonds that were created for months. That is the equivalent of just “printing” money. That’s because the Federal Reserve purchased U.S. bonds by writing checks on an account that has no money in it. By law, Federal Reserve checks don’t bounce regardless of having no money in their account. Because of the relative lack of importance of actual physical currency, printing presses per se are no longer used.

No matter whether you print the money literally or “print” it by having the Federal Reserve buy U.S. bonds with bad checks, the effect is the same. The more money you create, the greater the inflation rate. QE I and QE II created so much money that is is amazing we do not already have extremely high inflation. The reason we do not appears to be velocity. Velocity is how many times in one year a given dollar is spent and spent again. At present, velocity is low as manifest by many corporations and individuals saving extraordinary amounts of dollars. So much that Mellon Bank announced it will charge negative interest on cash deposits. In other words, they will pay no interest and not even accept the deposits unless you pay them by the day for the privilege.

But velocity can change from zero to 10,000% in an hour. If there is some event that causes the world to fear that there will be high inflation in the dollar, they will all simultaneously try to convert their dollars to other currencies or hard goods or services. That will cause the purchasing power of the dollar to plummet to near zero or zero.

See Zimbabwe recently or Austria-Germany-Hungary in 1922 to read what that was like.

If the world bond market believes the U.S. will “print” so much money that the money will become worthless, they will demand high interest rates and ultimately refuse to buy U.S. bonds or even accept U.S. dollars at all.

In other words, while the U.S. congress and Obama currently can sell U.S. bonds, that could end tomorrow. Eventually, it is sure to end. Everyone is admitting that when they say the current course is “unsustainable.” When I say “everyone,” that includes Obama, Greenspan, Geithner, everyone. The only dispute is how long until the bond market says “no more.”

Three choices

When we can no longer sell bonds, we have three choices:

1. cut federal expenditures by about 45% overnight (the morally right thing to do)

2. renounce the national debt (immoral, but the best of the politically possible choices)

3. monetize the U.S. national debt (“print” money via the Federal Reserve buying U.S. bonds with bad checks—immoral and worse than renouncing the debt because it hurts everyone on earth who owns a dollar or a dollar-denominated asset like a bond, not just bond owners)

They will choose hyperinflation

It is now clear that the Congress and president will choose 3. They will always choose the alternative that postpones the inevitable cuts in entitlements the most.

Under current law, the Federal Reserve is independent of the Congress and president. For example, they receive no funds from Congress. They get their operating funds from interest they collect.

That independence is supposed to allow them to ignore screams from the seniors and federal employees and retirees demanding their monthly checks. I doubt the humans who run the Fed have the guts to refuse to “print” money.

But it doesn’t matter. The Fed’s independence is not in the Constitution. It is only in the Federal Reserve Act of 1913.

If Congress demands that the Fed “print” money, and the Fed refuses, the Congress will simply repeal or alter the Federal Reserve Act to give themselves power to “print” money themselves. Then Katy bar the door.

Before July 2011, I doubted that they would dare. Now, after seeing their behavior in July 2011, I am certain they will do anything to keep the checks going to the seniors and federal employees, no matter how immoral and disastrous. That means they will reject choices #1 and #2.

Choice #2—renouncing the national debt—would immediately eliminate all U.S. interest expense, currently $214 billion.

The other effect it would have is total inability to sell any U.S. bonds (a good thing—it would be the equivalent of a balanced budget amendment) and the confiscation of U.S. overseas assets by governments who own the U.S. bonds that were defaulted upon.

Eventually, we will be forced to do what we refused to do on August 2nd

So the only difference between #1 and #2 is the lowering of the interest expense and the preservation of the ability to sell more U.S. bonds. But Congress and the President will prefer #2 renouncing the debt because it will mean $214 billion less pain on seniors and federal employees.

I said the Congress and President will choose #3 so why am I talking about #1 and #2?

Because when the U.S. government renders the U.S. dollar worthless, the people of the U.S. and the world will refuse to accept dollars for any purpose after a matter of months (I’m guessing about six to eighteen months). Even federal employees will refuse to get up out of bed to go to work when they are paid with a wheelbarrow full of worthless paper.

So here is what I expect:

1. Bond market says no more

2. Fed refuses to “print” money

3. Congress and the President will take the Fed’s power to “print” money away from the Fed and start printing money (or the Fed may “print” the money—it makes no difference)

4. The world refuses to accept worthless U.S. dollars. Politicians in Washington blame the hyperinflation on corporations “gouging” and enact wage and price controls which shut down the entire economy because sellers will refuse to sell for less than market value.

5. If the U.S. national debt has not been “paid off” with worthless dollars, the Congress and President will renounce what remains of it.

6. Massive spending cuts of around 60% will be forced by inability to sell bonds and inability to get anyone to accept U.S. dollars.

7. America and the world will return to normal, with a new currency that is trusted because it is backed by something, and everyone who owned dollars will find it is worthless. There will be no trading in of dollars for the new currency. If you owned dollars or dollar denominated assets when the new currency was introduced, tough.

This process will take about two or three years from when the bond market goes on strike.

Have a nice day.

(Those who followed the advice in my book on hyperinflation, will fare far better than the rest.)

John T. Reed

On 8/6/11, Taliban apparently shot down a U.S. Chinook helicopter killing 38 in Afghanistan. 22 of the 38 were U.S. Navy SEALS. Eight others killed were Afghan commandoes, a dog handler and his dog, and, one presumes, the Air Force crewmen of the chopper.

This was the greatest loss of life of Americans and their allies in one incident in the Afghan war, the longest in U.S. history.

Media coverage made much of the contrast between the relative failure of this SEAL operation—which killed eight Taliban—and the killing of Osama Bin Laden three months earlier.

Media reports say none  of those killed on 8/6 were SEALs who were in the Bin Laden raid. In view of their obsessive secrecy , punctuated by zillions of self-serving public relations leaks, the public cannot really know whether any Bin Laden vets were on this mission.

The media said a number of SEAL Team Six were killed on 8/6/11. This is odd since the Navy denies SEAL Team Six ever existed.

The SEAL score board

The media did not point out, but I will, that the number of SEALs killed in the 8/6 raid was almost identical to the 24 who participated in the Bin Laden raid.

After the Bin Laden raid, many, most notably Bill O’Reilly, have celebrated the SEAL success against Bin Laden with a taunting scoreboard. In O’Reilly’s case, it is a tee shirt he sells that says SEALs 1 Bin Laden 0.

In a previous article, I noted the actual score of the number of people killed by Bin Laden compared to the number killed by the SEALs in the Bin Laden raid is Osama, 11,903; SEALs, about 400.

Bin Laden need not get credit for the 8/6 operation. He was al Qaeda, not Taliban. But the media connected the two events and the Taliban no doubt sympathized more with Bin Laden than the SEALs.

Bill O’Reilly ought to stop selling that tee shirt. War is not a sporting event. Taunting the enemy with a scoreboard is unbecoming, shows a lack of understanding of the nature of war, and, if it has any effect on the enemy, it is nothing but “bulletin board” material that motivates the enemy to work harder to kill Americans. Bill O’Reilly should not be doing that. If O’Reilly insists on taunting the enemy, he needs to enlist and walk point in Afghanistan. I assure you that if he does not, someone else will and is.

George W. Bush did something similar when he said, “Bring it on.”

He later admitted that was a mistake.

Stay out of range of the enemy’s primitive weapons

But the 8/6 losses point up a strategy that I have complained about.

The U.S. and its NATO allies have the Taliban greatly outnumbered. Furthermore, the Taliban only are armed with AK-47 assault rifles, rocket propelled grenades (RPG—the equivalent of what was called a bazooka in World War II), and artillery shells.

It was an RPG that brought down the U.S. Chinook helicopter. An RPG costs about $200. A chinook costs $35 million. An RPG is not an anti-aircraft weapon. It is designed to stop tanks and is also used against machine gun nests, humvees, and so on.

A number of readers have tried to get me to say that an anti-aircraft missile brought down the chopper, not an RPG. I shrug. The U.S. military says it was an RPG. They have an interest to say it was a missile. They would look less foolish if it was.

When the U.S. government says it was a missile, I will correct my story. But I do not do that for rumors.

Lucky shot?

The official U.S. military story is that while it was an RPG, it was “a lucky shot.” I don’t buy it. Plus it’s lame even if true. Has the U.S. military said they were lucky to get in and out of Pakistan alive on the bin Laden mission? It would be at least as valid. So when the U.S. has a success, it’s becaues of our great skill and strategy and superbly selected and trained men and all that. But when our enemy has a success, it just luck.

That is dangerous thinking that can get more Americans killed. If it was an RPG, and not a licky shot, procedures and tactics should be changed. If the brass is going to take refuge in denial of reality, more Americans will be killed unnecessarily.

Here is a section from the Wikipedia write-up on RPGs

Anti-Aircraft

Using RPGs as improvised anti aircraft batteries has proved successful in Somalia, Afghanistan and Chechnya. Helicopters are typically ambushed as they land, take off or hover. In Afghanistan, the Mujahideen often modified RPGs for use against Soviet helicopters by adding a curved pipe to the rear of the launcher tube, which diverted the backblast, allowing the RPG to be fired upward at aircraft from a prone position. This made the operator less visible prior to firing and decreased the risk of injury from hot exhaust gases. Mujahideen also utilised the 4.5-second timer on RPG rounds to make the weapon function as part of a flak battery, using multiple launchers to increase hit probabilities.

At the time, Soviet helicopters countered the threat from RPGs at landing zones by first clearing them with anti-personnel saturation fire. The Soviets also varied the number of accompanying helicopters (two or three) in an effort to upset Afghan force estimations and preparation. In response, the Mujahideen prepared dug-in firing positions with top cover, and again, Soviet forces altered their tactics by using air-dropped fuel-air bombs on such landing zones. As the U.S.-supplied Stinger surface-to-air missiles became available to them, the Afghans abandoned RPG attacks as the smart missiles proved especially efficient in the destruction of unarmed Soviet transport helicopters such as Mi-17.

Both of the Black Hawk helicopters lost by the U.S. during the Battle of Mogadishu in Somalia in 1993 were downed by RPG-7s.

The maximum range of an RPG is 1,000 yards. Its effective range is 200 meters. Effective relates to having adequate accuracy. I have no trouble believing a Taliban could get within 200 meters of a hovering helicopter delivering reinforcements to an on-going firefight, which is what happened on 8/6/11.

A Chinook is a big target. It is 98 feet long, 19 feet high, and has two 60 foot long rotors. It weighs 23,400 pounds empty and can weigh as much as 50,000 pounds on take off. It is often used for lifting heavy objects and can carry 28,000 pounds of cargo.

If the enemy can hit the broad side of a barn, which is about 20 feet by 40 feet, he can hit the broad side of a Chinook, from 200 meters away.

At top speed of close to 200 mph, it is hard to hit with an anti-tank weapon, but the one that was hit on 8/6/11 was hovering.

When I said that the Taliban had artillery shells, I need to add that they lack artillery. They use artillery shells as explosives for IEDs.

The Taliban also have mortars. Those lob relatively small explosive shells on a high trajectory over a relatively short distance. They are not artillery which is much longer range and carries more powerful warheads.

The U.S. military, in contrast, has myriad weapons of enormous range, extraordinary accuracy, a full spectrum of explosive power  ranging from exploding bullets to nuclear weapons.

The Afghan Taliban are lagely illiterate. The U.S. and NATO allied troops are all literate, often possessing bachelor’s and college degrees.

We give up our advantages

How in the name of God do we lose skirmishes like the one on 8/6 given our superiority in every dimension?

In one sentence, we allow ourselves to be drawn into fights where we give up our advantages.

Special ops training irrelevant most of  the time

I got special ops training, namely Army ranger and airborne training. One of the things the media and public, and too often, the military itself, do not understand is that special ops training is only narrowly applicable. SEALs for example, are trained in underwater and water surface movements and marksmanship.

But the vast majority of your time in the military is spent in situations where your special ops training is irrelevant. On 8/6, the SEALs and Afghan commandoes were killed while being passengers in a helicopter. Obviously, whatever their extra skills, they were utterly irrelevant at the moment their chopper was hit by an RPG.

World War II paratroopers look very glamorous descending to earth under their parachutes. Not very powerful if you know that their unloaded rifle is in a pouch attached to their leg, not in their hands Hollywood style so they can shoot. But before they jump they are mere passengers in a relatively slow-moving airplane. After they hit the ground they are not much less vulnerable than when they are in the air. They are extremely lightly armed infantrymen who do not have much ammunition, water, or food and who are behind enemy lines. Sound like fun?

Jumping out of airplanes is glamorous. So is SCUBA and rappelling down cliff faces, and all those other elite military stunts. But special ops guys, including SEALs, are just ordinary guys who have some extra training in exotic transportation devices, like parachutes and swim fins, and some extra training in marksmanship and demolitions. They are not supermen.

The SEALs who were killed on 8/6 were put in a situation where the American advantages were nullified. Guerillas and jihadists are taught to only fight Americans when the guerillas or jihadists have an advantage. Smart. So why are we so dumb as to go along with that?

‘British, you lose the toss’

Bill Cosby used to do a comedy routine where he imagines wars being fought like football games and he illustrates with a coin toss before the Revolutionary War. Speaking as the referee, he explains to the opponents, “Okay British, you lose the toss, you lose the toss. That means you have to wear red  coats and walk in straight lines out in the open. Americans, you win the toss, you win the toss. That means you can wear camouflage and hide in the woods.”

So why are we now walking in straight lines out in the open and flying slow moving helicopters within range of enemy RPG’s?

More than a year ago, I wrote a web article titled, “Are helicopters viable within range of enemy weapons?” My article concluded they were not, but sometimes must be used in hot (under enemy fire) rescue missions in spite of the danger.

We can kill every Taliban on earth by firing at them weapons that have ranges that exceed the ranges of all Taliban weapons ad using robots and drones that result in no American casualties when hit by the enemy. (The pilots of many of our Afghanistan drones are actually high school grads with no traditional pilot training doing that from Nellis Air Force Base outside of  Las Vegas!) That means the Taliban has 100% casualties and we have zero. So why are we not doing that?

Because the enemy accuses us of killing innocent civilians and we fall for that.

In World War II, the civilians were told to get the hell out of the way of the war, and they generally did. (Far more civilians were killed in World War II than military—probably because of strategic bombing of cities which I oppose.) In Iraq and Afghanistan, the enemy yells “hold your fire, we have civilians,” and we do.

Either fight a war as a war or get out. Do not let American military get within range of enemy weapons. I am aware this makes it harder to avoid killing civilians.

Tough. We’re having a war here—declared on us by al Qaeda and Taliban.

In Africa, when they have their various civil wars these days, millions of refugees free to adjacent countries. But in wars against Americans, the civilians stay next door to the enemy barracks or tanks and often volunteer to be human shields e.g., Libya, knowing they are totally safe in doing so because the Americans never shoot when a civilian might be hurt.

Fight the war like a war and use our advantages to kill them while suffering few if any casualties ourselves. Is that so hard to understand?

Stated simply, we should not fly choppers full of American troops within range of Taliban weapons. We do not need to, except possibly in the case of a pilot rescue—or—too often, to rescue some damned group of special ops guys who are in over their heads—like the rangers in Mogadishu (Blackhawk Down, 18 dead) or SEALs in Operation Red Wings (Lone Survivor, 14 dead).

Gotta have thick vegetation and no dogs

Subsequent reports in the 8/6/incident revealed that the dead SEALs were not the raiders. Rather, they were a rescue party for a a group of special ops rangers that tried to approach the target house on foot. They were spotted by a Taliban patrol, pinned down by fire from that Taliban patrol, and called for help. Reportedly, none of the pinned-down rangers were were wounded.

In my article on Army rangers, I noted that they can only operate at night and need thick vegetation and an absence of dogs in the area in order to function. That also applies to other types of special ops troops like SEALs. The 8/16 operation was at night, but not in thick vegetation. I have seen no mention of dogs. Unless they are cultuurally forbidden, I would expect there were some dogs in the vicinity. They would bark at the rangers. Been there. Done that.

The rangers were walking in a desert, small-village setting where they can be seen from hundreds of yards away if there is any moonlight or artificial light.

The Moon phase in Afghanistan on 8/9 is waxing gibbous (almost full moon). Also on August 9 in Afghanistan, the moon rose at 3:28 PM and set at 12:35 AM (after midnight. I do not know the moon rise and set times for Afghanistan on the 16th.

Every time we went out on a patrol in ranger school, we were given the phase of the moon and the moon rise and moon set times. If you think that’s nutty, trying walking all night in the woods, supposedly behind enemy lines, for a couple of months. There is almost a night-and-day difference between having a moon and not having one if you’ll pardon the expression.

In view of the lack of thick vegetation and the possible proximity of dogs, the ranger commander should have refused the mission. If you think he has to follow orders, read my article on the morality of obeying stupid orders.

Brave talk from the lard ass, rear-area brass

A 8/9/11 Washingoton Post story said,

Military officials said the crash would not deter them from deploying Special Operations forces in aggressive night raids against Taliban fighters.

Oh, really. Well, how about the next time these “military officials” deploy Special Ops forces in “aggressive night raids” let’s make sure everyone in the chopper is one of those “military officials?”

If they want to use words like “aggressive,” let them put their bodies where their mouths are. Some of “Old Blood and Guts” General George Patton’s troops in World War II said,

Yeah, our blood, his guts.

The same could be said about these aggressive, macho “military officials.” Let them get their fat, rear-area asses out on a Chinook on the next quick reaction force mission.

If I were commander in chief, I would be inclined to fire the military officials who said the crash would not deter them. They would have some ‘splaining to do if they wanted to keep their jobs.

Hey, assholes. 38 men are dead. It looks like it’s your fault for doing the extremely dumb thing of sending them into a hot landing zone in a Chinook with almost no suppressing fire. Why didn’t you have them walk in? The guys they were rescuing did walk in, and out, with zero casualties. I read in the paper that you are not going to change anything as a result of this. Well, you can now explain to me why you are not going to change anything as a result of this because I am inclined to end your damned careers as my change in response to this. Start talking.

I expect the answer would be that they are going to change things, but that they lied to the press to keep their “lucky shot” story line intact.

That Post story also had this line,

It’s the danger of operating aircraft in combat.

Again speaking as commander in chief, my response would be something like this:

How many jets have the Taliban shot down? How many fixed-wing propeller planes? How many choppers have the Taliban shot down when the choppers were moving at 40 mph or more? [I expect the answer to all three would be zero.]

So it’s not the abstract “danger of operating aircraft in [generic] combat.” It’s the danger of hovering a chopper within 200 meters of enemy that you know are there. And this statement to the press is total bullshit, isn’t it?

Finally, the Post story says,

Defense Secretary Leon Panetta…said the military would not back off in the fight.

Again speaking as if I were commander in chief,

The hell you won’t back off! Backing off so that you are outside the range of the Taliban weapons, especially with hovering or slow-moving choppers, is exactly what you will do.

I also don’t care for the whole idea of this mission that was being rescued. How many bad guys were they after? Where were the bad guys? If we know what house they are in, why didn’t you blow the house up with a rocket or bomb? You risked the lives of 14 rangers to capture or kill six bad guys!? Why does that not violate third-grade arithmetic? Then you risked, and lost, the lives of 38 guys to save the 14 sent to capture or kill the six!?

What am I missing  here? This looks like the goal was not to kill the six bad guys, but to play army. It looks like the goal was to get a book contract and maybe a movie deal after your deployment. If you want to kill some bad guys, and you can do so with a rocket or bomb without risking American lives, what the hell are you doing getting 52 guys involved in an unrehearsed night-time firefight on the ground and getting 38 guys killed?

I am well aware that men die in combat in the abstract. But as long as I’m in this job, there’d better be a Goddamned good reason for each combat death. I see none here. It looks like you are biased in favor of boots on the ground special ops missions and against use of airpower. Your damned job is to kill bad guys, not get bravery medals! Or posthumous purple hearts! Do I need to put the Air Force in charge of all combat operations in Afghanistan to avoid your idiot biases getting men killed unnecessarily?

Rehearsed versus ad hoc special ops missions

In my articles on the bin Laden killing, I noted they rehearsed it with a mock-up of the Bin Laden compound for seven months. That is how you do it. Furthermore, there was no need for Navy SEALs on a mission with that much time to rehearse. They could have used rangers, green berets, Air Force special ops, an average 4th Infantry Division platoon, or even the 4th infantry Division band. Really! Seven months to rehearse means you have practiced the plan so many times the men can do it blindfolded and you have practiced every possible change in plans.

Now contrast that with the 8/6/11 rescue operation. It was ad hoc. No rehearsal. No intelligence as evidenced by the fact that the rangers were surprised and fighting at a location substantially short of their planned target. It was dark and the rescue party of SEALs was traveling in a Chinook, probably the biggest, loudest U.S. chopper. That means the Americans have no idea who they are fighting or where and the enemy knows exactly what they are fighting: that great big double main rotor chopper making the roaring noise and no doubt containing armed military personnel. That is borderline suicidal. Walking in to the rescue would almost certainly be better.

In Mogadishu, where a similar bunch of Army Rangers and Delta Forces needed to be rescued. They did not use Chinooks to rescue. They used armed helicopters to keep the enemy at bay all night and sent in armored vehicles—tanks and armored cars—to rescue the men in the morning.

If we knew where the enemy house was to walk to it, we knew where it was to fire rockets at it or to drop smart bombs on it. Might that kill some seemingly or actually innocent civilians? Yes. But 30 SEALS and air crewmen would still be alive and, to the extent there were bad guys in the house, they would be dead.

This is not rocket science, it is just rocket propelled grenade science, which is very crude science from the World War II era.

A chain is only as strong as its weakest link. American generals keep getting special ops guys killed by combining the relatively strong link of their special training with weak links like Chinooks hovering near enemy RPGs or dumb tactics like putting rangers on a hotel roof in downtown Mogadishu.

U.S. military says it killed the guy who shot down the chopper

The U.S. military said on 8/10/11 that it killed the guy who shot down the helicopter and another guy who was a Taliban leader.

Marine General John Allen, the U.S. commander in Afghanistan said the U.S. tracked the bad guys to a house after they shot down the chopper.

One presumes that was done with drones. Although it was dark so I am skeptical.

Implicit in John Allen’s statements is the claim that the U.S. also monitored the house in question 24/7 for the four days after the chopper shoot down.

Unexplained is why they did not blow the sonofabitch away while he was retreating to the house or immediately after he got there. Unexplained also is why they waited four days to do it, thereby risking the bad guys getting away.

They are releasing the names of the SEALs killed. I do not understand. They previously always claimed they did not do that to protect the families of the SEALs. They provide no explanation as to why that previous reason for extraordinary secrecy—by military standards—by the SEALs no longer applies.

I saw Allen on TV describe the action that killed the RPG shooter. He descried it as “kinetic.”

I know of no organization that spends more time inventing bullshit jargon and acronyms than the U.S. military. This is a well-known way of faux professions trying to seem to have more expertise than laymen.

What is a kinetic operation? I am supposed to feel inferior to General Allen because he knows what a kinetic operation is but I don’t, which begs the question of it’s a word that only the “professional” inside the military know it, why is the General using that word when briefing media and a TV audience.

I think he is trying to bullshit us and impress us with his non-existent expertise.

I have a dictionary. “Kinetic” means having to do with motion.

I see.

So the U.S. military now has two kinds of operations:

• kinetic

• non-kinetic

So what, pray tell General John Allen, is a non-kinetic operation? And, if you would please, gives us some examples of well-known operations from any current or past war that was non-kinetic.  I am having trouble figuring out how there could be any other type of operation than kinetic.

The new story on the rescue mission that got 38 guys killed is that it was not a rescue mission rather, they were there to stop the bad guys who were trying to get away from getting away.

I see.

That would make sense to me if they were in an unpopulated area like a desert or plain with no trees or bushes. But in an areas with small villages and such, I do not know how one could assume the bad guys would stay in a Chinook size group to be attacked. I would expect they would scatter in all compass directions disappearing into the homes of friends or ad hoc supporters or just people who open their doors to guys who point AK-47s at them and say open the door.

General Allen said he did not believe it was a mistake to use [the large Chinook and have it hover in the operation].

I do not believe that and I do not believe that General John Allen believes it. Only an idiot would lose 38 men in such a chopper shoot-down—the biggest single loss of life in the war—and decide using that helicopter in that way and situation was not a mistake. I do not care for generals who lie to me and insult my intelligence in the process.

I think the more likely explanation is that Marine General John Allen is a politician like all military generals and like all politicians he never admits a mistake. It’s bad for your political career to admit a mistake. Your rivals use it against you.

John T. Reed

http://www.bloomberg.com/news/2011-08-02/war-guilt-and-thank-you-for-your-service-commentary-by-elizabeth-samet.html

John T. Reed

And I thank you for your service.

Oh, you didn’t?

Why the hell not?

Democrat behavior with regard to the deficits, debt, and debt limit has been outrageous.

Last I heard, they were offering $7 billion in cuts—to fix a $1.65 trillion deficit!

The amount by which the U.S. is going deeper in debt is $4.1 billion per day!

$7 billion is less than two days additional new debt.

Republican behavior on the same issues has also been outrageous, albeit slightly less so.

What happened to the $100 billion of cuts? Should we care?

They vowed to get $100 billion of cuts in the 2010 campaign. They got something like $20 billion earlier this year. They explained, “We meant getting $100 billion in cuts for the next fiscal year.” Now their $100 billion has turned into $7 billion.

Plus, $100 billion was a joke from the start. The deficit is $1.65 trillion. The national debt is $14.5 trillion.

They call the $100 billion a “down payment” on the debt. No, it’s more like a no-money-down purchase by a subprime borrower. $100 billion is 69 hundredths of one percent. Plus, they are not talking about real cuts. They are talking about Washington, DC cuts. To you and me, a $100 billion cut reduces the national debt from $14.5 to $14.4 trillion. Not in DC. There a $100 billion cut reduces the amount added to the national debt from $1.6 T to $1.5 T. So the $100 billion cut they did not get would not have cut the national debt from $14.5 to $1.4 trillion. It would have cut the 2012 national debt from the $16.1 it was scheduled to hit to $16.0 trillion.

Let’s do the shut down again. It worked great in 1995.

The Democrats got out their 1995 playbook and concluded:

We can demagogue the Republicans, shut down the government like we did during the Clinton Administration, the public will blame the Republicans for it, and we will sail to huge majorities and re-election of the president in 2012.

Thus the incessant talk about “millionaires and billionaires” and “corporate jets” and autistic children and all that.

The Democrats figure the Republicans will cave. So did I. And most, like Boehner and Congressman Allen West, did.

Allen West flunks his stress tests

West is very popular, apparently because of his personality and willingness to wear military decorations Soviet politburo style on his civilian clothes. But actions speak louder than words or master paratrooper wings. He also appears to be popular in part because he is a retired Army Lieutenant colonel. I discussed the degree of respect due career paratroopers and other military extensively and in a way that reveals that Congressman West is not the only one who can talk candidly (www.johntreed.com/military.html). A common comment I get from those who visit that web page for the first time is “Wow!”

West is also having trouble handling criticism, whether from his enemies like Debbie Wasserman-Schultz or his friends like the Tea Party. This is understandable when you remember that for 25 years or so large numbers of people saluted him and called him “sir” every day. Re-entry into the real world that you had not experienced since high school can be an adjustment—especially when the portion of the real world you choose is politics. (There is no truth to the rumor that Wasserman-Schultz will be leaving Congress to pursue a career playing first wives in Hollywood.)

Three kinds of Republicans

It turns out, there are now three kinds of Republicans:

• The old school, politics-as-usual, “adults” like John Boehner

• the new Tea Party Republicans

• and the “Tea Party when it helps me get elected but not when push comes to shove” Republicans like West

The Republican “adults” caved, negotiated with themselves, acted like they were guilty of the Democrats’ demagogic accusations, in other words, their usual spastic performance. The “summer soldiers and sunshine patriots” portion of the Tea Party, like COLONEL West, caved.

But then there are the other Tea Party folks.

They did not cave. They did not blink.

Rush Limbaugh spoke at length about how proud he is of them.

Me, too.

The American people: guilty of criminal apathy

Then there are the American people. They are guilty of not performing their civic duty to inform themselves about the important policies being decided in DC. TV and radio shows interview people on the street and ask what they think about the det crisis, Boehner, and so on.

The what? Who?

To quote Paul Simon,

Going to the candidates debate
Laugh about it, shout about it
When you’ve got to choose
Ev’ry way you look at it, you lose

It is time for the American people to stop the laughing and shouting and pay closer, more serious attention to the “candidates debate.”

And guess what. I think they are about to, because of the Tea Party guys refusal to cave.

Damn the torpedoes. Full speed ahead.

The Democrats, media, and Republican “adults” and turn coats have called the Tea Party refuseniks every name in the book:

• terrorists

• hostage takers

• purists

• Hobbits

• extremists

• racists

• crazy

• suicidal

• stupid

How have the Tea Party folks responded to that?

Steady as she goes. Maintain course. Damn the torpedoes. Full speed ahead.

Any day now, the Democrats are going to look up and say,

Holy shit! They’re still coming! And there are 26 of them! Whatever will we 53 Democrat Senators and 193 Democrat congresspersons and the Democrat president do?

Quarter of a billion really angry U.S. adults

Back to the American people. They are about a quarter of a billion adults in this country. They have been watching Jersey Shore and going to the Jersey Shore, not paying attention to the Congress.

But they can be like a herd of a quarter of a billion buffalo.

If the debt ceiling is not raised, a large percentage of the 250 million American adults are not going to get regular federal checks. In my case, my wife works for the Federal Reserve Bank of San Francisco, which is, surprisingly a dot.org, not a dot.gov. But she previously retired from the FDIC which is a dot.gov that pays her pension and our medical care premiums. Those are the kinds of checks that may not go out—$1.65 trillion of them over the course of the next year.

Like in World War II, when everyone was in the military or had a close family member or friend who was, every one of the 250 million American adults will either not get their check or know someone who did not get their check.

The herd of buffalo will stop and turn away from their normal pursuits toward the Congress and the president, eyes ablaze with road rage.

The herd will then learn the positions of the two sides:

Democrats:

• no cuts in federal spending other than some symbolic ones of less than 1%

• symbolic tax increase on “the rich” also in the less than 1% of the deficit range

• absolute refusal to agree to a balanced budget amendment ever

• no debt ceiling raise that does not push the next such raise beyond the 2012 elections

Tea Party:

• substantial cuts that will balance the federal budget in about five years

• adoption of a balanced budget amendment (by 2/3 vote of each house of Congress; 3/4 of states would then have to ratify, which I presume the Tea Party does not demand happen before raising the debt limit)

or

• cold turkey forcing of a balanced budget right now by refusing to raise the debt limit

The ‘Situation,’ (not the Jersey Shore one)

And the herd will learn the situation:

• our current deficit of $1.6 trillion is 11% of our GDP, far more than prudent guidelines like the IMF’s and Euro Zone’s 3%-of-GDP limit

• our current national-debt-to-GDP ratio of 98%, far more than prudent guidelines like the Euro convergence limit of 60%-of-GDP

• projected increases in the national debt of approximately $1 trillion per year forever

• our AAA national credit rating is about to be downgraded because of lack of a plan to stop adding to the national debt

The U.S.’s AAA credit rating

The credit rating agencies refuse to support a particular political platform, but their position is they will lower the U.S. credit rating if steps like those the Tea Party is demanding are not taken. If you read the statements of the bond rating agencies carefully, their position is essentially:

• They hate the Democrat party position

• They think the Republican “adult” position is not sufficiently different from the Democrat position

• They think the Tea Party position is correct

The bond rating agencies are the scum of the earth: lazy, incompetent, and dishonest. They gave AAA ratings to Enron, World Com, and subprime mortgages made to people who had no qualifications other than a pulse. I do not cite them here because they are diligent, competent or honest. Rather, I cite them in the sense that EVEN the guys who gave Enron, Worldcom, and subprime mortgages AAA ratings are talking about giving the U.S. government less than a AAA rating.

The real bond raters are the world bond market and you can read their ratings in the interest rates that bond issuers like the U.S. government have to pay to sell their bonds.

When the 250 million American real adults focus on all this, they will demand that the Democrats agree to a balanced budget amendment and start making substantial cuts now to get to balance in about five years.

The 250 million strong herd of buffalo will demand that Washington resume sending out those checks right now. If the Tea Party hangs tough, they will get what they are demanding. If the Democrat party hangs tough, they will be commuting to work through a million screaming citizens on the streets of Washington. The Tea Party congresspersons can simply stay home.

Who has the guts to stand up to the  political pressure?

The Tea Party position is reasonable and responsible. The bond-rating agencies’ position, obfuscated though it may be, is also reasonable and responsible.

The positions of the two major political parties are absurd, suicidal, and so irresponsible as to constitute treason or sabotage. If and when the American people focus on the situation, they will recognize that. I think they are about to.

The public need not understand the issues. They need only demand the debt ceiling be raised, combined wit the Tea Party House members hanging tough.

Failure to send out all the checks next week will give the American people and the world a preview of what will happen if the debt ceiling is raised with no balanced budget amendment and substantial cuts now. Only next time, the number of checks that cannot be sent out will be bigger than $1.65 trillion.

Cut federal spending now by at least a trillion or cut it more later. There is no other choice.

John T. Reed

In recent months and weeks, the media, including Fox which claims to be neutral in most of this programs, have totally missed the story about the economy and the federal debt.

1. The big story is the growth of the economy or lack thereof. When I was on the debate team in college, the debate question for the 1964-5 academic year (there is only one and all debate competitions that academic year are about it) was

That the federal government should establish a national program of public work for the unemployed.

As I researched it, I slowly realized that “programs” do not reduce unemployment; growth does. The research would show the jobs created by various government programs. They were tiny numbers and probably exaggerated. But then you would see a year when the number of jobs went up by millions. Why? Economic growth.

Democrats do not like economic growth that they cannot take credit for. Some immigrant family from Vietnam opening a restaurant and employing five people does not excite them. But the fact is that when employment jumps by two million in one year it is because of tens of thousands of small businesses being started.

The dominant problem in America today is lack of economic growth since December 2007. My solution is probably the correct one. It is simply

• deregulation

• restoration of the rule of law

• replacing the Internal Revenue Code with a head tax

• ending all price controls

• ending land-use controls

• ending mandates

• ending subsidies

and so on

In a phrase, get government out of the way of jobs and business start-ups. Other than Fox Business’s John Stossel, no one in media discusses such ideas.

No elected official discusses them either. They only talk about “politics is the art of the possible” stuff and, at present, the only policies that are politically possible are those that bankrupt the federal government. The different art-of-the-possible economic policies being debated differ only in how fast they bankrupt the U.S. government.

2. The federal debt story is about one number and only one number: the U.S. national debt-to-GDP ratio. It is currently about 98%. That is extremely high. It needs to be lowered. All the talk being reported by the media is about how much more to raise it. Today, one of the bond rating agencies said in a conference call that the ratio needs to be lowered by more than $4 trillion. They quoted the IMF as saying the debt of $14.5 T needs to be reduced by at least 7.5% or $1.09 T. The bond rater indicated they were not happy with either number. They want even bigger cuts.

I suspect the financial markets would accept a gradual decline in the U.S. debt-to-GDP ratio, but they will not accept continued increases in it.

There is absolutely no discussion of lowering the debt. Yet the bond market says that is what they want. All the talk about financial disaster if the debt limit is not raised is bullshit. The opposite is true. The economic disaster happens if the debt amount is not LOWERED.

The media keep pointing their cameras at politicians. The media thinks which person gets the Republican presidential nomination in 2012 is interesting and important. No, it’s not. The politicians are irrelevant.

They should be pointing their cameras at the bond market. That is, the bond rating agencies and the big bond investors like PIMCO’s Bill Gross. I saw a bond-rating guy and Gross on one Charlie Rose show, but I never saw Gross on another show. If you are a reporter and not interviewing a bond expert, you are with the wrong person.

All the politician talk, every word of which the media hangs on, is a silly waste of time.

Are you lowering the national debt?

No?

Okay. See you later. You have our number. Let us know when you are ready to debate lowering the debt by at least a trillion dollars. Until then, talk among yourselves without cameras, microphones, or print reporters paying any attention.

No politician or other pundit should get any air time if he or she is not talking about lowering the national debt by at least one trillion dollars.

The discussions about how fast to raise the national debt should not get any air time except on the Psychiatric Medicine channel in discussions of the madness of crowds and mobs and the sociopathic psychiatric defect that is possessed by nearly all federal elected officials.

John T. Reed