How to Justify US$596 Billion in Military Spending

In today’s Money Morning…2003, the human genome, camera phones and an illegal war in the Middle East…leaky newsletters explain that the non-targets and cordless phones made life hard for the NSA…we’re going to war, even if it’s to justify the incredible amount of military spending…

How to Justify US$596 Billion in Military Spending

2003 fells like an eternity ago. 13 years just seems to pass in the blink of an eye.

Can you remember much about 2003?

I was two years out of high school. Second year of university, trying to study in between parties and time spent at the uni bar.

I remember a few key events from 2003. That’s the year the iTunes music store went live. You could go online and buy digital music for 99 cents a song.

Cameraphones hit the market too. The first US cameraphone was the Sanyo SCP-5300. It had a ‘whopping’ 0.3-megapixel camera. By the end of 2003, worldwide cameraphone sales were in excess of 80 million units.

It was also the year the Human Genome Project was completed. 13 years of mapping the genome. It was a monumental event in humanity. Since then it’s seen the rise of ‘personalised medicine’, and a few billion dollar companies as well.

It was also the year the US and UK decided to invade Iraq.

This was an all-out assault to topple the Saddam Hussein regime. Remember when George Bush and Tony Blair said Iraq had ‘WMDs’ (weapons of mass destruction)?

This was after Hans Blix and the UN went looking for them in 2002, and found none…

I’m sure it’s flooding back to you now.

The Iraq war has undergone recent scrutiny in the UK through the ‘Chilcot Report’. The report (seven years in the making) was damning towards the UK, and inadvertently the US, about their involvement.

In his public statement, Sir John Chilcot said,

We have concluded that the UK chose to join the invasion of Iraq before the peaceful options for disarmament had been exhausted. Military action at the time was not a last resort.’

We have, however, concluded that the circumstances in which it was decided that there was a legal basis for UK military action were far from satisfactory.’

It is now clear that policy on Iraq was made on the basis of flawed intelligence and assessments. They were not challenged, and they should have been.’

In essence the Chilcot report indicates the UK, and by association, the US and Australia, went to war in Iraq illegally.

This whole idea of an illegal war is troubling. But not surprising. The US has been waging war for decades. Even on ‘non-targets’, just ordinary folk like you and me and the information we create.

‘Collect it all’

In 2003 the NSA were going through a tough patch. According to leaked NSA newsletters, they were struggling to intercept intelligence from HPCPs. ‘HPCPs’ are ‘high powered cordless phones’.

The need to understand this technology has been compounded by the need to provide force protection in Iraq. Emphasis on metadata analysis and target development is paramount in prosecuting the targets using this technology.’

So they did what any organisation would do, they held a conference to understand it better. The NSA organised a ‘Worldwide HPCP Conference’ for the ‘Five Eyes’ nations (US, Australia, Canada, UK and New Zealand).

There were over 500 attendees. According to the NSA it was a ‘resounding success’.

What you might have also noticed from the extract above is their use of the term ‘metadata analysis’. As far back as 2003 the NSA had the capability to intercept and analyse metadata. This is in an era of new cameraphones.

When you think about it, their capabilities were astounding.

According to the NSA’s newsletters, ‘Digital Network Exploitation’ (DNE) was increasingly important as the, ‘centre of our [Signals Intelligence] business’.

However the problem they were facing is obvious. As the internet was expanding, they had to deal with increasing volumes of metadata to analyse.

The newsletter explains further,

Each day, new types of protocols and application formats appear in our targets’ communications. Finally, our targets communications are increasingly buried by millions of non-target communications.’

In other words they were collecting everything to gain a little. Then they were sharing their intelligence amongst the Five Eyes.

The Chilcot report highlights the inadequacies of the UK in all this. But it also makes you wonder just how ineffective or illegal the NSA operations might have been, too.

You have to justify the spending somehow

You also have to wonder how many other wars are because of false intelligence. How many more will there be?

Perhaps the next war will be for no particular reason.

Maybe it will be to justify US$596 billion in US military spending?

Maybe to support the £40 billion renewal of the UK’s Trident nuclear defence program?

Or maybe to rationalise Australia’s largest ever defence contract to build our own all-new submarine fleet?

In yesterday’s Money Morning, Jason Stevenson asked, ‘Will Clinton or Trump Send the World to War?’ I say it doesn’t matter. They both will go to war. They have to. After all, they have to justify US military spending.

We’ll see war in the South China sea. War in Ukraine. War in Syria. War in Turkey. Maybe even war somewhere on mainland Europe. Such are global tensions right now, war is inevitable.

When war breaks out the war machine kicks into top gear. Markets struggle, yet companies linked to modern warfare thrive. Just look at companies like Raytheon [NYSE:RTN] or Lockheed Martin [NYSE:LMT].

These companies exist because of war. And it’s war that creates fear, uncertainty and, whether you like it or not, opportunity.

I don’t support war. But my job is to identify areas of market opportunity. And if war comes, the opportunities will (rightly or wrongly) be there for the taking. Even if it’s a war perpetuated on false information.


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