In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
President Dwight D. Eisenhower, 1961 Farewell Address
This excerpt from President Eisenhower’s farewell address highlighted the threat from the growing military industrial complex and the ideal that a permanent armaments establishment designed to fight the Soviet Union which at that time an actual threat globally, could lead to future abuses if the American voter slumbered off and ignored their responsibilities.
Obviously, based on the quality of our politicians the last 30 years, America is sound asleep to this day.
The theory that war is good for business has been a concept for centuries with the US being no exception. Be it the trumped up Hall Carbine Affair or the American banking cartels exploiting France and the United Kingdom during World War I, there has always been an angle to making money off of war. The introduction of a permanent armaments industry as Ike warned has also put into place a guaranteed era of profiteering, which has lasted now over 60 years even as quality has deteriorated.
So when World War II began on September 1, 1939 a depression weary United States saw another opportunity to make money off of another European misfortune and Wall Street rallied right?
Right:
The market rallied 7.3% in one day and skyrocketed as the idea that World War II would be just like the first one and US industry would make huge profits. The rally continue strong until Poland fell in just a month and then the Sitzkrieg began. The real fighting began in earnest after the invasion of Denmark and Norway. The chart above demonstrated along with history, that war with its new technological marvels really was different.
Fast forward to yesterday’s rally in the markets and think about what we saw and heard from the US media.
Dow closes 300 points higher on cooling oil and hopes that Israel-Iran conflict will be contained
Stocks rally and oil dips after report says Iran is looking to de-escalate its conflict with Israel
Middle East Latest: Iran Signals It Wants to Talk With U.S. and Israel, Says Report
The markets of course really took off after a somewhat discredited Wall Street Journal “journalist” reported that Iran was seeking a deal, a story which was harshly denied by the Tehran regime a few hours later but that didn’t matter because these markets are looking for any excuse to rally.
The big rally yesterday basically took the markets just above where the Dow began the year so be careful about thinking or believing every headline one views flashing across the screen thus why I wrote the other night about a very choppy market environment.
A formulaic solution to every conflict that because A+B happened it means C is the outcome can not be applied in this situation. The United States is most guilty of this practice of either over-estimating or under estimating our opponents resulting in horrible military and political decisions which have economic implications which last for many years after a conflict is over.
Hopefully, we are not about to repeat a miscalculation again as it does appear Iran and Israel both have as the war appears to have the potential to intensify and expand.
