The Return of the Military-Industrial Complex

In today’s Money Morning…why Trump is no different to any other president…the old Republican-led, military-industrial complex is back…another political parasite closer to home…and more…

It’s the oldest political game in the book. When you’re under pressure at home, concoct an enemy abroad.

US President Donald Trump — facing criticism and possible investigation over his sacking of FBI Director James Comey — is trying to divert attention. From the Financial Times:

Donald Trump has launched a fierce attack on Iran, just a day after the country re-elected its moderate president on a platform of re-engagement with the outside world.

Speaking to an audience of Muslim leaders in Saudi Arabia, the US president singled out Tehran for fuelling “the fires of sectarian conflict and terror” as he called on Gulf nations to “drive out terrorists and extremists”.

When you’re under the pump, focus your attention back onto the terrorists. If you can’t look good absolutely, you can at least try and do so in a relative sense.

Ironically, Trump made his speech in Saudi Arabia, that hotbed of terrorism and authoritarianism. Echoing the simplicity of George W. Bush, Trump called the fight against terrorism a ‘battle between good and evil’.

For Trump’s sake, let’s hope the public buy it and rally around him…

The real reason for Trump’s speech and presence in Saudi Arabia was to do deals. The US signed a US$110 billion arms contract with Saudi Arabia and, before a meeting with Qatar yesterday, Trump said: ‘One of the things that we will discuss is the purchase of lots of beautiful military equipment because nobody makes it like the United States.’

Just as well the ‘good’ people are the ones making the military equipment and giving it to other good people. If we let the ‘evil’ people get their hands on it, who knows what will happen?

One thing is for sure: After a few months on the job now, there should be no doubt that Trump represents the status quo as much as any other president. That is, beholden to the military industrial complex, and completely impotent of bringing about the changes he promised his supporters.

Perhaps the prospect of Trump resorting to the politics of the military-industrial complex buoyed markets at the end of last week. US stock markets rose on Friday and commodity prices had a good session. There’s nothing like the cranking of the war machine to fire up commodities.

The Aussie market likes it too. In morning trade, the ASX 200 is up around 40 points.

The market is amoral, of course. It doesn’t judge. If Trump wants to boost the US war machine by selling arms to dubious regimes, the market doesn’t care.

It’s hardly a new development though. The ‘special’ relationship with the Saudis began back in the 1970s. The US was buying so much oil from Saudi Arabia that the trade imbalance was becoming a problem.

So the plan was to rectify it a little. One way to do so was to buy hi-tech arms. This had the benefit of entrenching the power base of the House of Saud, as well as making Saudi Arabia a regional military power.

US engineering firms like Bechtel moved in and starting building infrastructure in the kingdom, paid for with petrodollars.

The Obama administration went cold on the Saudi Arabia relationship, and tried to pose a conciliatory tone to its arch-rival, Iran.

But now Trump is in the house, the old Republican-led, military-industrial complex is back. Selling arms to tyrants and fashioning Iran as the foe.

It’s politics 101. Let’s see if everyone is dumb enough to fall for it again.

And if you were holding onto the hope that Trump is somehow different, you can forget it. Power mongers are all the same. It’s just the scale that differs.

For example, political party One Nation — the voice of the Aussie battler — revealed itself to be just another political parasite today. From the Financial Review:

One Nation is on the back foot following a leaked recording in which Senator Pauline Hanson’s chief of staff James Ashby is heard discussing how to make money from this year’s Queensland election.

Mr Ashby is heard outlining the plan in a secretly-recorded conversation featuring himself, Senator Hanson, Senator Hanson’s brother-in-law Greg Smith and a unidentified woman who appears to be opposed to the plan.

The tapes, which have now been widely leaked, including to The Australian Financial Review, record a discussion in which Mr Ashby proposes plan where the party would sell campaign material, such as corflute posters, to One Nation candidates at inflated prices.

The party would then profit when the state electoral commission refunded the candidates who had lodged receipts for expenses.

“There is an opportunity for us to make some money out of this, if we play it smart. Now I know they say you can’t make money out of state elections, but you can,” Mr Ashby is recorded as saying.

“And I’ll deny I ever said this, but, what stops us from getting a middle man, or gracing. I’m happy to grace in cash and double the price of whatever it is, and we say to the candidates, we will fund 50 per cent of this package.’

The funniest thing about the story is that Mr Ashby said it was just a ‘brainstorming’ session. And that it was illegally recorded by someone with an axe to grind.

If someone illegally records a political staff member discussing something illegal, who is in the wrong?

It seems to me that the line between politics and criminality is a very thin one indeed.


Greg Canavan,
Editor, Money Morning

Greg Canavan is a Feature Editor at Money Morning and Head of Research at Fat Tail Investment Research.

He likes to promote a seemingly weird investment philosophy based on the old adage that ‘ignorance is bliss’.

That is, investing in the Information Age means you have all the information you need at your fingertips. But how useful is this information? Much of it is noise and serves to confuse, rather than inform, investors.

And, through the process of confirmation bias, you tend to read what you already agree with. As a result, you often only think you know that you know what is going on. But, the fact is, you really don’t know. No one does. The world is far too complex to understand.

When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases.

Greg puts this philosophy into action as the Editor of Crisis & Opportunity. As the name suggests, Greg sees opportunity in a crisis. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines traditional valuation techniques with charting analysis.

Read correctly, a chart contains all the information you need. It contains no opinions or emotion. Combine that with traditional stock analysis and you have a robust stock-selection strategy.

With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the basic, costly mistakes that most private investors do every time they buy a stock.

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