BALTIMORE – The Dow rose 126 points on Thursday – just shy of 1%. Not enough to reverse the market’s apparent downward bias [ed note: the rebound gathered pace on Friday].
Stocks are most likely headed down because the thing that sent them up has come to an end. Here is a chart that tells the tale:
Federal Reserve assets vs. the S&P 500 Index
As you can see, over the last six years or so, gains for the S&P 500 have closely tracked the ballooning of the Fed’s balance sheet under QE. After shelling out almost $4 trillion on bonds, the Fed’s QE is on pause. And stocks are struggling. Coincidence? We don’t think so.
Deep State Cronies in Action
We stuffed a few copies of the Hindustan Times in our bag before boarding the plane back from Mumbai. On the front page, French president Francois Hollande is receiving an awkward hug from India’s top man, Narendra Modi.
Over in the entertainment section is another note of interest. Actress Julie Gayet has put together a film production company. And lucky for her – she has backing from one of India’s biggest conglomerates, the Reliance group.
Nowhere does the paper mention that Ms. Gayet is Mr. Hollande’s main squeeze. She is the woman for whom he snuck away on a motor scooter from the presidential palace, where he lived with his then First Girlfriend, journalist Valerie Trierweiler.
Mr. Hollande and his old squeeze Valerie Trierweiler (left) and her replacement Julie Gayet (right)
Reliance is owned by the Ambani family, which lives in Mumbai in the most expensive house ever built. It is 60-story skyscraper, put up at a cost of $1 billion, which now takes a staff of 600 to keep the furniture dusted. On Sunday, the two events were reported. On Monday, the paper added the connective tissue. It announced that India and France had inked “$15 billion in business deals.”
No mention was made of how Reliance may benefit from any of the French investment. But Mr. Hollande’s deepening ties with India… and Ms. Gayet’s deepening ties with Mr. Hollande… can’t have hurt the former TV actress’s bid for funding from one India’s most powerful and well-connected families. But this is written on Friday, so it’s time to reach back into the archives.
The Ambani House in Mumbai
Photo credit: India Today
U.S. Marine Corps Major General Smedley Butler – who twice won the Medal of Honor – knew war far better than most. “War is a racket,” he wrote. But it’s the Deep State’s favorite racket – partly because there is so much money in it… partly because its main mission is to protect the Deep State’s own elite… and partly because the typical citizen never catches on to what a racket it is. In today’s essay from the archives, we look at why war is so appealing…
War and Peace
[Ed. note: originally published on April 9, 2003]
“The heart has reasons reason cannot reach.”
Sylvie (my French tutor), quoting Sommeil
Man is badly designed. Not in every particular but in a few. That insight comes not as a theoretical point but as a bit of practical information. Sketching out a man’s internal plumbing on a piece of prescription paper, Dr. Moreau of the staff of the American Hospital’s emergency room revealed a design flaw.
“As you can see,” he explained, with the impatience of a nuclear physicist explaining photons to an orangutan, “it’s bound to cause trouble, sooner or later.”
What a strange thing: The same God that built such an exquisite universe seemed to have lost interest when he got to man’s entrails.
For there, on the left side of the intestinal tract, is a little appendix – with no role except to create problems. And then, down below are various tubes and passages. Had one of them been made just a little more commodious… I would have been spared a visit to the American Hospital.
Useless organs meeting (Spleen to Eye: “I see something you don’t”)
“And look at that,” said Dr. Moreau, holding up an X-ray as though it were an aerial photo of the Hindu Kush. “You’re going to have trouble here.”
He was pointing to the range of lower vertebra. After years of heavy lifting, the cushions between the bones have been worn down.
“You must have lower back pain from time to time,” the doctor noted. It is not our place to carp and criticize. But it would have been nice if the manufacturer had installed more durable cartilage in the 1948 models. And more flexible tubing.
“But that is the problem,” said my French tutor. “Men are not as you want them to be; they are as they are.”
What had set Sylvie off was neither my plumbing nor my neglect of the subjunctive, but my thoughts on war and peace.
“Almost every war Americans have ever fought turned out to be a mistake,” I had told her. I had taken her on a brief tour of American military history. Every war had its “reasons,” but they were all absurd.
“What good did the American Revolution accomplish,” I wondered aloud, “when other colonies of Britain negotiated their way to independence and were no worse off for it?”
“What about the War Between the States? If it was fought to get rid of slavery, it was a poor way to do it. Slavery disappeared from the rest of the world with hardly a single fatality. And if it was fought to “Preserve the Union,” it was a fraud. Said union was founded on the principle that people could decide for themselves what government they wanted to plunder them.
The wreck of the USS Maine – the sinking of the ship was used as a pretext to start the Spanish-American war.
“As for the Spanish-American War, who knows why it was fought. And who cares? “And World War I…”
“Well, at least you had a good reason for that one,” Sylvie interrupted, smiling. “To come to our aid.”
What’s the Point?
“Yes. But what was the point? If the U.S. hadn’t pumped in so much money, war material, and then soldiers, the war probably would have ended sooner. And much better.
“By 1917, both sides were nearly exhausted. They would have had to negotiate an end to the war. But the entry of the U.S. gave the Allies ammunition and the Germans targets. The U.S. encouraged the British and French to believe they could win the war, so they wouldn’t have to accept a negotiated settlement.
“So, the war continued until Germany finally capitulated. But it was Germany’s defeat, and the terms imposed on her by the Allies, that led to hyperinflation in Germany… the rise of the Nazis… World War II… and the Holocaust…
US newspaper report on the assassination of Archduke Ferdinand
“The average American couldn’t have cared less about the Archduke Ferdinand. He had no idea who Ferdinand was… or where he stood in the pecking order of European politics.
“He was as ignorant of the Austro-Hungarian Empire as he was of the contents of Austrian sausages. An American of sound mind and decent judgment would have just as soon seen the Archduke stuffed and used as a parlor ornament as revenged.
“But once stirred up by the press – and the big idea of ‘making the world safe for democracy’ – he was ready to enlist and get himself blown up believing that he was protecting Western civilization from the invading Huns.
“World War II was an exception, from a U.S. point of view,” I continued.
“The U.S. was attacked. Japan and Germany declared war on the U.S. It made sense to fight back. But for the people who started the war – the Germans and Japanese – it was a complete disaster. It would be hard to imagine a more foolish course of action. The two nations who caused the war were completely ruined by it.”
The remains of Nagasaki after the nuclear bomb
Photo via Wikimedia Commons
Sylvie had sat quietly through this rant – merely correcting my grammar as necessary. But now she calmly replied:
“You’re right, of course. War doesn’t make much sense. But so what? Who ever said it had to?”
The Absurdity of Reason
In 1910, British author, journalist, and politician Sir Ralph Norman Angell (who later won a Nobel Peace Prize) convinced many of the world’s leading intellectuals that war was a thing of the past. His argument was reasonable, logical… and, of course, ridiculous.
But you, dear reader, are already in on the secret – reason is no rampart against imbecility. Man, with his power of reason, is badly designed. Since he is able to reason, he imagines that the world – and he himself – acts the way it thinks reasonable. But as often as not, reason merely leads him into absurdity. Angell was not the only one to underestimate war. As the soldiers gathered on the eve of World War I, one intellectual argued:
“War is costly; therefore, it will be short. The Germans want to crush the French as quickly as possible so they can turn their attentions to the Russians. The Austrians want to get rid of the Serbians as fast as they can so they can turn to face the Cossacks. The Russians must get to the front as soon as possible so they can relieve France.
“And the French prepare to launch their offensive in Lorraine at the first opportunity. Everyone believes that speed is the key to success.”
“Our soldiers leave and leave gaily,” reported French newspaper Le Figaro on August 2, 1914.
“We’ll be back… It will be over quickly,” a group of infantrymen told a reporter from another French rag Le Temps.
It was widely believed that – like a barroom brawl – the war would be quick and violent. There was no time to wait… no time to think… no time to second-guess. It was time to throw a punch. The Commander-in-Chief of the French forces on the Western Front during the first two years of the war, Marshal Joffre, believed in “the offensive at all costs.”
French Marshal Joseph Joffre – believer in offensive war
Photo via uselectionatlas.org
And why not? The war would be over quickly. Why hold back? As another high-ranking French general Louis Grandmaison explained, “In the offensive, imprudence is the greatest safeguard.”
The logic was impeccable. If the war was to be swiftly decided, the winner would be the one who brought to bear the greatest force of arms the most quickly; holding back could be fatal.
General Grandmaison was a real thinker. But his thinking couldn’t make the world behave as he thought it should. He believed in “attaque à outrance” – best understood as an excessive or reckless attack. It was just such an attack that got him killed in one of the first battles of the war, at Reims.
The war continued for four long years. The final outcome was determined not by the initial attacks but by what was held in reserve: manpower, material, and money. And although the patriotic élan of the soldiers may have made their countrymen proud, it was the profit motive of the bankers and manufacturers in London and New York that decided the outcome.
The funeral of General Louis Loyseaux Grandmaison
Photo credit: Roger-Viollet
Surely, on some forgotten monument in some forgotten burg somewhere in France, you will find Grandmaison’s name among “Nos Héros… Mort Pour La France.”
Perhaps someone has inscribed a parenthetical remark: “General Grandmaison – A hero and a chump… faithfully imprudent to the end.”
Chart by: Bonner and Partners
Image captions by PT
The above article originally appeared as “A Brief Tour of America’s Military Misadventures” at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.