Oct.02.2008
11:22 pm
by Chet
Fabius Gets Real
For the occasional visitor to DNI who isn’t also reading Fabius Maximus, I suggest a quick trip over to “The Last Opportunity for Effective Action Before Disaster Strikes.” As he points out, the government has tried at least 15 initiatives to contain the escalating financial crisis since it began in December 2006. You can tell from today’s headlines how well they’ve worked.
We’ve now reached the point of no return:
Now the US financial system is seizing up. The machinery remains, but the gears no longer turn. Most of you have no idea to what I am referring, but you will learn over the next few weeks. To use a bad medical analogy, the financial system has had a cardiac arrest. Rather than describe the problem, this post describes solutions.
This is serious stuff, even for Fabius:
The recession is coming, and the current financial crisis has exacerbated it. We should prepare for something longer and deeper than 1973-75 or 1980-82 (the worst since the 1930’s). Let’s not wait to begin mitigation efforts. Anyone asking “Dude, where’s my recession” should be banned from the Internet for life.
What this means is that the national security policies of the presidential candidates are irrelevant. A country that has to borrow on our scale just to keep the bare machinery of commerce going isn’t going to be spending hundreds of billions of that money on foreign adventures or even on maintaining our current posture in Iraq. The candidates might as well be debating plans to colonize Jupiter.
Readers tempted to blow off Fabius might look back over his posts on our financial crisis and judge his track record for themselves.
Filed in Boyd and Military Strategy, Budget and Fiscal Realities, Fabius Maximus, Global and Strategic Issues |
13 Responses to “Fabius Gets Real”
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“A country that has to borrow on our scale just to keep the bare machinery of commerce going isn’t going to be spending hundreds of billions of that money on foreign adventures or even on maintaining our current posture in Iraq. The candidates might as well be debating plans to colonize Jupiter.”
That’s a message that just won’t sink in.
I sense that a vast number of Americans
still just don’t get it.
Tragicaly, it will take a financial catastrophie
like the one now underway, and on the scale
that brought down the Soviet Union, to bring
Americans to thier senses.
The apparent popularity of certian candidates
in this election, and in the face of the emperical
track record of thier party is all the proof one needs,
to back this assertion.
M
I hope the US returns to the level of spending on the military seen in the Clinton ytears possibly less.
As Ike said in 1961, every dollar spent on warfare is a shirt off the back of a working man.
Some observations: In 2001 DoD consumed about 3% of GDP, the popular measure of economic activity these days, now it consumes over 4% not including supplementals.
That would clear 180B a year to go to more useful investments.
There is logic based on “opportunity cost” for reducing the warfare state and limiting militarism, unless the US is to occupy its creditors.
The economy is the true engine of security and lacking real threats the warfare state is not conducive to US long term survival.
There is a school of economics, relatively small and includes some with Austrian school and some with libertarian leanings as well as some liberals. It included Frederic Bastiat (1801-1850) and Seymour Melman (1917-2004). Melman was a professor of industrial engineering and operations research at Columbia University.
“In large part, Melman’s work amounted to an extended analysis, in light of Bastiat’s insight, of the costs not only of modern American wars but also of the defense establishment itself.1 “Industrial
productivity,” he wrote, “the foundation of every nation’s economic growth, is eroded by the relentlessly predatory effects of the military economy…. Traditional economic competence of every sort is being eroded by the state capitalist directorate that elevates inefficiency into a national purpose, that disables the market system, that destroys the value of the currency, and that diminishes the decision power of all institutions”
Excerpt:
The Neglected Costs of the Warfare State:
An Austrian Tribute to Seymour Melman
Thomas E. Woods, Jr.
Senior Fellow
Ludwig von Mises Institute
518 West Magnolia Avenue
Auburn, AL 36832
woods@mises.org
http://www.ThomasEWoods.com
700 billion !
Just how much are we talking about ?
Chet understands, I’m sure, that’s what he does.
I turn to astronomy & cosmology as a hobby of mine
on a scale to relate to such numbers.
Here’s a link that gives some perspective.
http://www.atlasoftheuniverse.com/localgr.html
Number of large galaxies within 5 million light years = 3
* Number of dwarf galaxies within 5 million light years = 46
* Number of stars within 5 million light years = 700 billion
Now, the combined cumulative US national debt is
now over $10 trillion, again, Chet understands such numbers.
I make that 10 raised to something like the 12th power.
http://zfacts.com/p/461.html
Bush Budget
Busts the
$10 Trillion
Barrier
on Sept. 30,
2008.
http://www.cedarcomm.com/~stevelm1/usdebt.htm
http://www.ehd.org/science_technology_largenumbers.php
The height of a stack of 100,000,000,000 (one hundred billion) one dollar bills measures 6,786.6 miles. A column of bills this high would extend 28 times higher than the orbiting International Space Station.
The height of a stack of 1,000,000,000,000 (one trillion) one dollar bills measures 67,866 miles. This would reach more than one fourth the way from the earth to the moon.
The height of a stack of 100,000,000,000,000 (one hundred trillion) one dollar bills measures 6,786,616 miles. This would reach from the earth to the moon and back 14 times.
Researched and Brought to you by Maximillian.
Correction;
$10 trillion, roughly what the US national accumulated debt is,
is actually 10 to the 13th power.
which looks like this,
10×10x10×10x10×10x10×10x10×10x10×10x10=
Don’t try that at home, on your hand held calculator.
It’s claimed roughly half the debt is held by Americans, oweing
themselves. The rest is forgien held.
M
Yet more factors and costs to maintain the state of perpetual war.
http://www.cnn.com/2008/US/10/03/jets.grounded/
WASHINGTON (CNN) — The U.S. Air Force is grounding more than 100 planes used to support ground troops in Iraq and Afghanistan because of fatigue cracks in the wings, Air Force officials said Friday.
The officials said 127 A-10 Thunderbolt IIs, including some used in the United States, will be grounded until they are each inspected for the cracks.
http://tinyurl.com/4el6wc
Recruitment costs rise 25% for Army, Marines
A country that has to borrow on our scale just to keep the bare machinery of commerce going isn’t going to be spending hundreds of billions of that money on foreign adventures or even on maintaining our current posture in Iraq.
It would be remarkable if our foreign creditors would be willing to lend us hundreds of billions of dollars while we continue to outspend the rest of the world combined on the military.
We shall have to discuss military policy not in terms of optimal bang but rather of optimal bang for the buck. Developing fancy new systems will be out of the question. Rather ingenuity in piecing together whatever we have at hand will be key.
GAO Testimony: Fundamental Changes Are Needed to Improve Weapon Program Outcomes, 29 Sep 08
http://www.gao.gov/new.items/d081159t.pdf
In 2000 the defense acquisition portfolio was: 75 programs with planned commitments of $790B, increases from planned R&D of 27% and average schedule delay of 16 months.
In 2005 the defense acquisition portfolio was: 91 programs with planned commitments of $1500B, increases from planned R&D of 33% and average schedule delay of 17 months.
In 2007 the defense acquisition portfolio was: 95 programs with planned commitments of $1600B and increases from planned R&D of 40% and average schedule delay of 21months.
Trend is more R&D bucks and time for the unneeded bang………
“Developing fancy new systems will be out of the question.”
Will they ?
Although I agree with your reasoning, DK, as most here will,
sadly the assertion flys in the face of reality.
I see no indication what-so-ever of change, moreover any willingness,
or any collective recognition of that imperative within offical circles and among those who pull the purse strings.
On the contrary, we’re seeing an increasing excallation of expendature, accompanied by further diminished effectiveness, at practicaly every turn
.
As illustrated below.
I’m of a solidly convinced mind at this stage that all this will only end one way.
M
http://www.time.com/time/nation/article/0,8599,1845354,00.html
The Pentagon’s missile-defense program has already cost $100 billion and strained relations with the Russians, and it has yet to prove its real-world value. Hitting a bullet with a bullet — the heart of the system — is a difficult enough task. But a new report reveals that the Pentagon is even having problems launching the practice targets needed to test the system.
Until now, the military has relied on relics, some of them 40-year-old rockets, to launch its test targets. And that has led to a growing number of failed tests. The Government Accountability Office, in a study released last Friday, reports that the rate of target failure rose from 7% between 2002 and ‘05 (3 out of 42), to 16% between 2006 and ‘07 (6 of 38). After all, the Pentagon can’t shoot a fake warhead out of the sky if the rocket designed to put it there fails to do its job. Even more distressing, the Pentagon’s Missile Defense Agency appears to be bungling a $1 billion program to develop a new generation of test targets.
Some observations:
China and Japan each hold about a trillion bucks of US T Bills, a generic term for the instruments which make up the US national debt. Note they each hold a serious amount of Fannie and Freddie “bonds” some backed by not so good mortgages.
What we “owe ourselves” is more troubling than what the foreigners hold. Foreigners may never get their money back. The US could declare the need for liebensraum.
The OASDI (social security) trust fund has lent the US treasury over $2 Trillion since accumulating excess tax receipts began in 1983. Also US OPM civil service retirement funds make up about $.8T of the US debt and military retirement as well as balances of excess Medicare taxes make up some of the US debt.
About $50B of the debt is held by the FDIC, accumulated premiums from banks covered by the insurance, which will need to convert that to cash as they bail out banks, will take money from current taxes nd new T Bills and FDIC will run out long before failed banks stop dropping like flies.
The crisis heralded about SS is:in ten years or so social security taxes will be less than the needs of the boomers and so the SS “surpluses” intragovernmental bonds, will be redeemed for cash from current taxes, reverse of the SS surpluses the past twenty odd years lowering income taxes.
When the SS fund demands cash lots of things will be “crowded out” of the federal budget to use a term some econoist have minted.
On to A-10, “thin skin” is common to every aluminum airframe. The aluminum skin is sheets which are riveted to spars and stringers to give the wing rigidity and to make the airfoil which creates lift and minimizes drag……
Recently a commercial airliner lost a chunk of skin to ’stress fatigue’, about 25 years ago a Boeing 737 lost a chunk of skin and one pasenger was sucked out, that airplane made an emergency landing with no more damage.
I am not sure what impact a lost section of skin on an A-10 wing would have other than an in flight emergency.
It is quite expensive and costs a lot of down time to radiograph an entire skin of one aircraft. The tester characterizes the condition of the aluminum sheet around the rivet and there are many thousands of rivets on a wing.
It is likely more economical to do a study of a few wings and then computer simulate what would happen. Then develop a correction for the entire fleet.
The USAF should replace the A-10 with the venerable Jug, P-47,give it a modern turbine it would be a killer!!
Or the Douglass A-1E…………………….
[CR: Thanks. In the mid-late 1980s, I was the team leader for Lockheed's project to develop an A-10 replacement. One of our designs was later entered into the USAF CAS-X competition (if you Google really hard, you can find a few references). After evaluating all the entries, the USAF decided that the best solution was to fit 30mm gun pods onto an F-16, and you know how many of those were built.
Our original design was a turboprop that could take off from dirt fields, carried the 30mm, and would have exceeded the A-10 in both pilot protection and visual signature (it was a lot smaller). It could also turn 360s in about the size of a Wal-Mart parking lot (only a slight exaggeration). The CAS-X machine was somewhat larger and had two (as I recall) small turbines. Same gun and armor/redundancy. It had the advantage of being quieter, but was more expensive.]
I see no indication what-so-ever of change, moreover any willingness,
or any collective recognition of that imperative within offical circles and among those who pull the purse strings.
I am assuming that “those who pull the purse strings” would be our foreign creditors, who will dictate such measures as a concession for continued funding.
“Developing fancy new systems will be out of the question. Rather ingenuity in piecing together whatever we have at hand will be key.”
Is there any way to fashion an IED from the rusted hulk of an F-22?
“. After evaluating all the entries, the USAF decided that the best solution was to fit 30mm gun pods onto an F-16, and you know how many of those were built.”
Typical USAF, I watched that episode closely.
Using the F-16 for CAS, makes about as much sense as
bringing a Ferrari, or Lamborgini to a demoltian derby.
“I am assuming that “those who pull the purse strings” would be our foreign creditors, who will dictate such measures as a concession for continued funding.”
Not what I meany Duncan, look towards the US stake holders in the Mil. Ind. Complex, and the millions gamefully employed, throughout that hiarchy is tremendous political, scocial, and as President Eisenhower warned, “even spritual” influence.
M
loggie
“I hope the US returns to the level of spending on the military seen in the Clinton years possibly less.”
“As Ike said in 1961, every dollar spent on warfare is a shirt off the back of a working man.”
Makes sense, however, here’s the official plan.
Enjoy.
MaX
http://tinyurl.com/3q4c2m
Next Five Years
By Josh Rogin, CQ Staff
Pentagon officials have prepared a new estimate for defense spending that is $450 billion more over the next five years than previously announced figures.
The new estimate, which the Pentagon plans to release shortly before President Bush leaves office, would serve as a marker for the new president and is meant to place pressure on him to either drastically increase the size of the defense budget or defend any reluctance to do so, according to several former senior budget officials who are close to the discussions.