A pilot shortage “continues to plague the service,” and the “current generation of fighter pilots, those who have been actively flying for the past seven years, has never experienced a healthy rate of operational flying.” Fighter pilots flew a meager 10 hours a month on average in 2021, up from 8.7 in 2020 but still far below the 200 hours a year minimum needed to be proficient against a formidable opponent.
The story isn’t much better for the Army, which has lost $59 billion in buying power since 2018 due to flat budgets and inflation. The Army is shrinking not as a choice about priorities but because it can’t recruit enough soldiers—nearly 20,000 short in fiscal 2022.
The Marines scored better in the index as the only branch articulating and executing a plan to change, reorganizing for a war in the Pacific in a concept known as Force Design 2030. But the Marines are slimming down to a bare-bones 21 infantry battalions, from 27 as recently as 2011. Mission success for the Marines depends on a new amphibious ship that the Navy may not be able to deliver.
Some will call all this alarmist and ask why the Pentagon can’t do better on an $800 billion budget. The latter is a fair question and the answer requires procurement and other changes. But the U.S. will also have to spend more on defense if it wants to protect its interests and the homeland. The U.S. is spending about 3% of GDP now compared to 5%-6% in the 1980s. The Heritage report is a warning that you can’t deter war, much less win one, on the cheap.
The U.S. Isn’t Ready to Face China on the Battlefield
The invasion of Ukraine has exacerbated critical deficiencies in America’s defense industrial base.
By Seth G. Jones
The Biden administration is doubling down on its recognition of China as America’s main competitor. The recently released National Security Strategy and the soon-to-be-released National Defense Strategy—Congress has already received a version of the latter—conclude that China poses the most significant threat to the U.S. What administration officials haven’t said, however, is that the U.S. isn’t fully prepared to fight a major war against China.
The war in Ukraine has exposed deficiencies in America’s defense industrial base that could jeopardize the ability to fight a war with China. The capabilities for fighting are also essential for deterring China. Washington’s assistance to Ukraine has depleted U.S. stocks of some weapons systems and munitions, such as Stinger surface-to-air missile systems, M777 howitzers, 155mm ammunition, and Javelin antitank missile systems.
These challenges highlight an even more serious concern: The U.S. defense industrial base is inadequately prepared for the wartime environment that now exists. It is operating in a peacetime environment. In a major regional conflict—such as a war with China in the Taiwan Strait—U.S. munitions needs likely would exceed Pentagon plans and stockpiles.
In nearly two dozen iterations of a Center for Strategic and International Studies war game that examined a U.S.-China war in the Taiwan Strait, the U.S. expended all its joint air-to-surface standoff missiles and long-range precision-guided antiship missiles within the first week of the conflict. These missiles are critical because of their ability to strike Chinese naval forces from outside Chinese defenses.
The U.S. is not the only country facing this challenge. In a recent war game involving U.S., U.K. and French forces, the U.K.’s Third Division exhausted national stockpiles of critical munitions in just over a week.
Solving these problems will take time.
Defense companies are generally unwilling to take financial risks without contracts in place, including multiyear contracts. While the U.S. Defense Department signs multiyear contracts for ships and airplanes, it generally does not sign multiyear contracts for munitions. This risk aversion is compounded if companies have to make additional capital investments, especially brick-and-mortar ones.
There are also workforce and supply-chain constraints on increased demand for weapons systems and munitions required for one or more major wars. Companies need to hire, train, and retain workers. Supply chains for the U.S. defense sector are also not as secure as they should be, with some businesses shutting down or moving supply chains overseas—sometimes to unfriendly countries.
In other cases, there aren’t alternative sources for key weapons systems and munitions. The Javelin, for instance, relies on a rocket motor without a major secondary option. There are also significant vulnerabilities with some rare-earth metals, on which China has a near monopoly; other elements such as titanium and aluminum; semiconductors and other microelectronics.
Finally, time is a major constraint. It can take roughly two years to produce some types of missiles and systems, such as the Patriot Advanced Capability PAC-2/PAC-3 air- and missile-defense system, Tomahawk V, air-launched cruise missile, and long-range precision strike missile. These lead times are generally to deliver the first missiles—not the last ones. Filling inventories requires sustained multiyear investment. Brick-and-mortar investments for factories take even longer.
These challenges don’t have quick or easy solutions. That means we have to begin now. One step is for the Pentagon to reassess total munition requirements for one or more major wars. This might include modeling the expenditure rates of critical guided munitions among land, naval and air forces in a major conflict at various levels of intensity.
The Pentagon also needs to focus on targeted investments in key munitions and weapons systems, such as long-range precision strike and integrated air and missile defenses. These investments should include signing multiyear contracts.
During World War II, U.S. and allied defense industrial production was essential to defeating both Germany and Japan. But it didn’t happen overnight. If the U.S. is serious about competing with China, it needs to put its money where its mouth is. The defense industrial base is a critical place to start.
Mr. Jones is senior vice president and director of the International Security Program at the Center for Strategic and International Studies and author, most recently, of “Three Dangerous Men: Russia, China, Iran and the Rise of Irregular Warfare.”
Who Denies Election Results?
There is nothing “unprecedented” about challenging election results. And for Democrats, there’s nothing unprecedented in trying to manipulate them.
By Victor Davis Hanson
A Democratic myth has arisen that Donald Trump’s denial of the accuracy of the 2020 vote was “unprecedented.”
Unfortunately, the history of U.S. elections is often a story of both legitimate and illegitimate election denialism.
The 1800, 1824, 1876, and 1960 elections were all understandably questioned. In some of these cases, a partisan House of Representatives decided the winner.
Presidential candidate Al Gore in 2000 did not accept the popular vote results in Florida. He spent five weeks futilely contesting the state’s tally—until recounts and the Supreme Court certified it.
The ensuing charge that George W. Bush was “selected not elected” was the Democrats’ denialist mantra for years.
In 2004, Senator Barbara Boxer (D-Calif.) and 31 Democratic House members voted not to certify the Ohio election results in their unhinged efforts to overturn the election. Those denialists included the current sanctimonious chairman of the January 6 select committee, U.S. Representative Benny Thompson (D-Miss).
After 2016, crackpot Democratic orthodoxy for years insisted that Donald Trump had “colluded” with Russia to “steal” certain victory from Hillary Clinton.
Clinton herself claimed that Trump was not a “legitimate” president. No wonder she loudly joined #TheResistance to obstruct his presidency.
The serial denialist Clinton later urged Joe Biden not to concede the 2020 election if he lost.
Also after 2016, left-wing third-party candidate and denialist Jill Stein vainly sued in courts to disqualify voting machine results in preselected states.
A denialist host of Hollywood C-list actors in 2016 cut television commercials begging members of the Electoral College to violate their oaths and instead flip the election to Hillary Clinton.
Clinton herself had hired foreign national Christopher Steele to concoct a dossier of untruths to smear her 2016 campaign opponent, Donald Trump.
The FBI took up Clinton’s failed efforts. It likewise paid in vain her ancillaries like Christopher Steele to “verify” the dossier’s lies.
The bureau further misled a FISA court about the dossier’s authenticity. An FBI lawyer even altered a document, as part of a government effort to disrupt a presidential transition and presidency.
The Clinton-FBI Russian-collusion hoax was a small part of the progressive effort to warp the 2016 election result.
The Washington Post giddily bragged about various groups formed to impeach Trump in his first days in office, on the pretext he was illegitimately elected.
Rosa Brooks, an Obama Administration Pentagon lawyer, less than two weeks after Trump’s inauguration wrote a long denialist essay in Foreign Policy outlining a strategy to remove the supposedly illegitimate president. She discussed the options of impeachment, the 25th Amendment—and even a military coup.
When rioting exploded in the streets of Washington D.C. after the election results became clear, Madonna infamously shouted to a mass crowd that she dreamed of blowing up the White House, presumably with the Trump family in it.
Was that not the most violent form of election denialism?
The election denialist Stacey Abrams became a media heartthrob and left-wing cult hero. Abrams monetized her ridiculous denialism (“voter suppression”) by stumping the country from 2018 to 2021 claiming, without evidence, that the 2018 the Georgia gubernatorial election was rigged. In truth, she lost by over 50,000 votes.
Time magazine’s Molly Ball in a triumphalist essay bragged that in 2020 a combination of Big Tech money from Silicon Valley—fueled by Mark Zuckerberg’s $419 million infusion—absorbed the balloting collection and counting of several key voting precincts weighed to help Joe Biden.
Ball bragged of careful pre-election censoring of the contemporary news by Big Tech. Most notably, that effort spread the lie that the Hunter Biden laptop scandal was “Russian disinformation.”
Left-wing interest groups modulated the often-violent Black Lives Matter and Antifa street protests of 2020 in efforts to aid the Biden campaign.
Ball summed up that left-wing election engineering effort as “a conspiracy unfolding behind the scenes” and called it “the secret history of the 2020 election.”
So, who exactly were those “secret” warpers of the 2020 election?
As Ball put it: “A well-funded cabal of powerful people, ranging across industries and ideologies, working together behind the scenes to influence perceptions, change rules and laws, steer media coverage and control the flow of information.”
It is entirely legitimate to question the probity and legality of those systematic left-wing efforts in key states to overturn long-standing voting laws passed by state legislatures.
Then followed an even larger effort to render Election Day a mere construct for the first time in American history. Over 100 million ballots were not cast on Election Day, the vast majority of them (and by design) Biden votes. Somehow customary ballot disqualification rates of mail-in ballots in some states plunged—even as their numbers exploded.
The scariest form of election interference was the 2020 “cabal.” The FBI, Silicon Valley, street protestors, and the media all conspired to work for the “right result.”
Apparently, that “conspiracy” was the denialists’ response to the 2016 victory of Donald Trump that they never accepted.
Victor Davis Hanson is a distinguished fellow of the Center for American Greatness and the Martin and Illie Anderson Senior Fellow at Stanford University’s Hoover Institution. He is an American military historian, columnist, a former classics professor, and scholar of ancient warfare. He has been a visiting professor at Hillsdale College since 2004. Hanson was awarded the National Humanities Medal in 2007 by President George W. Bush. Hanson is also a farmer (growing raisin grapes on a family farm in Selma, California) and a critic of social trends related to farming and agrarianism. He is the author most recently of The Second World Wars: How the First Global Conflict Was Fought and Won, The Case for Trump and the newly released The Dying Citizen.
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Israel Signs Historic Agricultural Agreement with Bahrain
By TPS, 10/20/22
Israel’s Agriculture Minister Oded Forer and his Bahraini counterpart, H.E. Wael Bin Nasser Al Mubarak, signed a declaration of agricultural cooperation during the International Summit on Food Technologies from the Sea and the Desert currently taking place in Eilat.
This marks yet another step forward in Israel’s warming relationship with the Arab world since the signing of the Abraham Accords in 2020. Bahrain, along with the UAE, was one of the first two Arab nations to join the Accords. They were later joined by the African nations of Morocco and Sudan.
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The Ross Rant™ ©Joel Ross 2022
The crisis in UK with the pension funds was just a warm up to what might come over the next year. The BOE may have successfully bailed out the pension funds from collapse, but the UK economy is still in deep trouble, as are the pension funds, which now have no way to meet their liabilities. Their bond holdings are now down in value, and there is nil hope the losses can be recouped as interest rates are now going to remain higher than the yields of the bonds when purchased. This problem also exists in US pension funds, and very possibly in bond funds. Rates are never going back to the ultra-low levels they had been at over last year, and so the losses are essentially permanent until maturity payoff. We have known for years that pension funds represent a pending time bomb in the US, as they have rarely ever met the return hurdles they need to meet the exceptionally large payout obligations of defined benefit plans, which is mainly government plans that were never converted to 401K. Since they were required to own an allocation of bonds, as it was foolishly believed these were safe, they are well under water now as rates rise. Not only have they been shown to not be safe in value before maturity, but they are now in a material loss position in many cases. One of these days a bailout for pension funds will be demanded in Congress. Almost all remaining pension funds are government employees and teachers, so it will be the taxpayers who will be called on to fund the bailout. The teachers’ union fund being one of the worst.
Core inflation rose by a record amount in September at 6.6%. Gas is now rising again, and services costs are way up due to rising wages. Food continues to rise at a .8% rate in September. Eating at home cost 13^% more than one year ago. Real wages have fallen faster under Biden than during the 2008 crash. Poverty has risen. Now there is a new corporate tax and new costly regs for many industries, with many more coming. You could not create a more economy destructive policy set if you tried. Inflation has not yet peaked, and could end the year still around 7.5%, or higher, with Fed Funds at 5%. Q1 will not be good. There is nothing predictable right now. Stay conservative in your financial affairs.
In case you wondered why the market suddenly shot up on Thursday, it had nothing to do with fundamentals, all of which are very negative. There had been a rush to buy puts as the investors, almost unanimously, finally had realized the economy is getting worse, and inflation is not going down, and the stock market is going down further. The volume of puts was far out of the ordinary. The computers running portfolios for hedge funds noted this and concluded it was time to put the squeeze on these puts, and the shorts. The computers generated buy orders, and then the race was on to cover the shorts, thus the market shot up. It had nothing at all to do with a real market recovery, nor any real belief the Fed is going to stop soon. Thus, Friday was back down. And down we go from here. This is not yet a buy opportunity. We are not at the bottom.
China is not ending the zero Covid policy. They continue to shut down new cities as they open others. This is top government policy. Result is, China will continue to suffer economic slowdown for several more months at least, and potentially well into 2023 before normal returns. . That means demand for commodities from emerging markets will remain constrained as will Chinese demand for oil in the short run. There is no possible way the RMB will ever be a reserve currency, so forget that idea. The US dollar will remain supreme. China does not have the transparent legal system to be the reserve currency. Nobody trusts them. Xi will get his dictator for life election next week. The question then is, does he have true total control, or do the reformers, who do exist, have the ability to influence policy. That is yet to be seen. There may come a time in the next 2-3 years where China finds it needs to devalue the RMB in order to remain competitive. In the meantime, while Biden screws up foreign policy, China is using its substantial pool of foreign reserves to gain influence throughout Africa and S America. The US is busy wasting money on climate and other entitlement spending, while China builds a formidable military, and buys influence all across the world. Biden is digging us into a future bigger problem with China. Here is one more place that the climate obsession is doing grave national security harm by diverting precious funds from defense and foreign aid projects that buy influence.
As a result of all the chaos now happening in world financial markets, the USD is the only safe place left. Capital will continue to flow into the US markets, but for now may sit idle, but in dollars. The capital has to have been somewhere else, so those weaker countries will see an outflow of capital which will weaken their currencies which are already weaker from the rise in the US dollar. They will be using their reserves to try to maintain the value of their currencies, but it may be a losing proposition for many as the dollar continues to rise as the Fed raises rates. The defaults will begin next year, and potentially could cause a financial crisis. Credit Suisse, UBS and SocGen are all considered to be at risk based on the CDS market for those banks. The IMF has just begun to issue warnings about this risk. That means it is real, and may not be far away.
The flood of capital into the US as the safe haven is a good thing for the stock market as at some point that money will get invested here. The 2year is likely to become a place where money gets invested while waiting for things to settle down. It is likely to hit 4.75% soon, which is a good entry point. The 2 year is a good barometer for where the Fed is headed. The result of the rush into the US, and out of the EU, may one day cause the Euro to falter or collapse, and be the financial crisis I have been warning about. That is very unlikely, but not out of the realm of possible. You need to keep in mind that the Euro is used by numerous nations, but they all have their own cultures and national interests to protect. Germany has very different issues than Italy or Spain. In times of extreme stress on currencies and capital markets, politicians will do what they deem necessary to protect their own positions, and in times like we are now in, it is always possible one country can do its own thing as Hungry tends to do. Germany drove the EU economy for years, but now it is in real trouble. Just consider the EU a very risky place to invest these days.
Oil has a long way to go up. Some believe it could one day hit $200 when China reopens, and economies start to recover. Heating oil inventory is at a 20 year low with a much bigger world population. There will not be production to cover the demand by far. The Saudis are not going to start to pump oil just because Biden barks at them. He has managed in just 2 years to totally destroy the strong Mideast alliances we had built over decades, and which are needed to counter Iran. It was idiocy to abandon the Abraham Accords, restart talks with Iran, and then tell OPEC we won’t pump oil because it is bad, but you go ahead and pump all you can. The Arabs are not as stupid as many Americans on the left. OPEC will do whatever it has to in order to keep Brent over $90. Now, whatever Biden does to “punish” Saudis will just make it worse, and make Iran and China very happy. This is almost as imbecilic as the pull-out from Afghanistan. What do you think the Saudis think when they see the SPR get drained, and drilling shut down. They see a shortage, and an opportunity to make huge profits. Although SPR is still barely adequate, it needs to be refilled next year, putting more demand on oil production. It will take 6 months for fracking to fully ramp up from the day the regs are changed, so we are far from relief. Spare parts for wells are in short supply right now. If Putin wants to really play with Biden, he can shut off all oil exports to everyone for a few weeks. He has enough dollar reserves to do that short term. He also could decide to stop grain exports from Ukraine, which he recently threatened to do. As a result of all this, coal is in huge demand again, and is at max production. Coal has a good future again. If oil does go to a lot higher price, that is when the Euro would be in real trouble. There is zero way the EU or US can use alternative energy to make up the difference. Here is the really ignorant part. The west has decided to try to cap the price of Russian oil so they cannot make a profit. If that happens, Putin will just say, if I can’t make a profit, I will not pump, so he shuts off supply and world oil prices shoot up. Yellen seems not to understand any of this based on her speech yesterday.
It is hard to be sure where the Senate comes out in the election. Several of the Trump candidates are losing races they should be running away with, and they are very bad candidates. Walker is a disaster, and if Oz can’t soundly beat a guy who is in questionable health, radical left and against fracking, and lets criminals walk, and in this poor economy, then he is really weak. The probability is, R’s will get the senate by 2 seats, but it is not sure at all. On the other hand, inflation for the average family is a killer right now, and crime is at a point that restaurants and clubs close early, workers get mugged coming to the office in daytime, drivers get car jacked at a massive rate, people get shot and stabbed at a high rate, and criminals get released to do it all over again. People are scared and want someone to provide safety. The flow is now to Republicans again.
In two weeks after most of the earnings, we will be better able to forecast SPX earnings for year end, and apply a multiple to see where the market low will likely be. Q4 earnings will be notably lower than Q3.
The bombing of the bridge in Crimea may be a turning point because it has badly disrupted supplies needed by the Russians now in Kherson. The Ukrainians are blowing up arms depots and other supplies so that the Russian army now has shortages of ammo and weapons in that area. If the Ukrainians can continue their offensive around Kherson and cut off supplies to the Russians there by blowing up rail lines, and retaking the area around Mariupol, they have a chance to force the retreat of large portions of the Russian army in that region. The Russians in the meantime are working to set up a major counter offensive with massed tanks and troops coming in from Belarus, and also in the south. They intend to cut off the Ukrainians in the south and inflict a major loss on Ukraine. If that fails, which is very possible, then Russia will have blown its last major shot, and the war could then move to a conclusion. The next six weeks will be decisive.
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