Notes From Underground: The Sergeant Krupke Syndrome In Foreign Policy

Let me say first off: I agree with President Obama about putting massive boots on the ground in response to the ISIS threat. I felt the same about Afghanistan in that the U.S. ought to have fully utilized the special forces in a tactical manner to determine when and the place of our choosing to do battle with a non-conventional adversary. The U.S. special ops are a potent disruptive force and when supported with the cavalry and other forms of airpower can inflict great harm. The recent acknowledgement that A-10 Warthogs have been dispatched to INCIRLIK Airbase in Turkey signifies the U.S. has the ability to severely damage the mobile capabilities of ISIS and thus limit the scope of the battlefield and enhance the effective use of U.S. Special Forces. The success that this type of operation had in the early part of the battle against the Taliban when the Special Ops allied with the indigenous Northern Alliance.

My problem with the Obama post-G-20 press conference was twofold. First, President Obama raised the issue of disaffected youth as a major reason for the fertile breeding ground of ISIS recruits and frankly the civilized world need not confront this issue until the complete destruction of the Islamic nihilists. This is why social workers do not command soldiers for we do not need the logic of West Side Story’s Sargent Krupke. Secondly, President Obama talked around the issue of some recent U.S. and allied successes in confronting the ISIS army but because he was in Turkey could not single out the Kurds as being the source of those recent victories. If the West is going to unite in response to the heinous terrorist acts, it must not kowtow to the desires of unreliable “allies.” It would have been a sign of leadership to have publicly applauded the recent military activities by the Kurds.

***Market responses to the events in Paris were fairly as expected:
1. Initial equity market reaction was to open lower but as the day continued on money went in search of assets that have been sold down over the last week. Most in demand were the defense stocks proving the old adage that Wall Street loves a good war for there’s plenty of money to be made supplying military supplies. In Europe, French President Hollande announced that fiscal austerity would have to wait as France increased its military spending. Even Larry Summers must be supportive of increased fiscal stimulus as Paris declares war on ISIS. The European debt markets rallied as it appeared that the ECB was in buying debt in support of all EU markets.
Remember, several ECB members suggested in the summer that the ECB QE program could be front-loaded if the situation demanded increased purchases above the monthly 60 billion euros. The U.S. Treasury market was basically flat on the day as there was some suggestion that the FED would be RETICENT to raise rates in December if the Paris terrorist attacks had created economic headwinds for the global economy.
2. There was an initial rally in GOLD as shorts covered since the uncertainty of geopolitical events gave way to renewed selling as the DOLLAR and SPOOS provided greater profits as a haven. I have written for the last six years that the surest way to go broke is BUYING GOLD on any type of war news for I have the investment scars to prove it over a 38-year career of trading and investing. GOLD is a monetary and commodity asset not an investment in times of violent political outbreaks. Any time you hear a talking head suggest GOLD is up on the outbreak of war, turn the page.
3. The DOLLAR performed well against the euro and it seemed to do so as the European  sovereign debt markets rallied, signalling the ECB was in the markets, spreading the salve of liquidity. The more the BUNDS and OATS rallied, the weaker the euro became. This is something to buy attention to and I will remind all my readers: IN THIS TIME OF GEOPOLITICAL UNCERTAINTY AND VOLATILITY TREAT EVERY ACTION AS A TRADE NOT AN INVESTMENT. Also, watch tomorrow’s CPI release for if the number is on the low-end of 0.2% as expected, the DOLLAR will sell off as the market will think that a December rate HIKE may be a lower probability. The U.S. 2-year note will be a very good barometer of market sentiment on the CPI.

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23 Responses to “Notes From Underground: The Sergeant Krupke Syndrome In Foreign Policy”

  1. silverbug2155 Says:

    Funny 1933 valued the GOLD higher with the onset of WW2. The debt load of Vietnam coupled with Nixon’s 71 closing of the GOLD window launched the GOLD to the best performing asset over the next 10 years till 1980. Then going into the new Millennium we planned way ahead going into Iraq and 9/11 sent the GOLD on another record tear for the next ten years till 2011. What am I missing here.

  2. yra Says:

    it wasn’t the wars it was the vast liquidity provided that sent the metal higher—-the outbreak of wars would not have resulted in profit —the Vietnam war and the over valued dollar put an end to Bretton Woods and then the appreciation of Gold but it certainly wasn’t the immediate outbreak of hostilities—-when Johnson failed to tighten fiscal policy to pay for the great society and the Vietnam war–well you do the math

  3. ShockedToFindGambling Says:

    Yra- If we don’t put substantial boots on the ground, we will at best be treading water for the next 50 years.

    At some point, ISIS will get nuclear weapons. We have to try to end this now.

  4. Peter Engelhardt Says:

    Ira,

    you are a smart man and I respect you a lot. But, you are very off base on the Paris incident.

    I wonder how long it takes and how much its costs to “rent” some suicide bombers, and plan, coordinate and execute an operation of this magnitude. And, of course, carrying all of this out, going undetected by any and all security and surveillance operations, that are in force 24/7, on a worldwide basis. If a bunch of poor and dumb bastards can pull this off, then all security is a joke. But then, if some of the people in charge of security set the deal up, not with stealth, but by subverting and circumventing controls, then this could be a planned event executed to achieve a purpose, which has not yet been clearly identified.

    How many generals and higher-ups in the French military have been fired for gross malfeasance – none and there will be no reprisals because those people know too much.

    Ira, this is Europe’s version of Boston and 9/11. All of this was well-paid for, carefully planned and decisively executed with the result that dead men “perpetrators” tell no tales.

    And, even a couple of hundred dead could not rock the stock markets, which are managed and controlled – that “fallout” was carefully managed. How could anyone think otherwise.

    As to American military prowess, I think you have limited understanding of what has happened to our fighting force. Obama has demoted or fired all good military commanders. The people running the the Pentagon are, to say it kindly, emasculated. I served with the 2d Brigade 101st Airborne as an Infantry Officer in Vietnam from 1968-69.

    I am in sporadic contact with the Army and was last on base at Ft. Benning 3 years ago. With the exception of a couple of elite US Army units (82nd, 101st and 173 Abn and a couple of Special Forces units), the Marines and Navy Seal Units, the rest of our boys and girls in uniform could not fight their way out of a wet paper bag and take, occupy and supervise territory in a foreign land. I have first hand experience in doing all of that.

    peter

  5. yra Says:

    shocked—the boots on the ground,in my opinion,will not solve the problem and the ability to decide when and where to confront should be our immediate weapon and once the boots are gone the ISIS types will return —the waste of lives and treasury will be ongoing and get nothing–the issue of nuclear weapons will be with us unfortunately will be with us and in the hands of millenarian nihilists will be an issue we will be forced to live with

  6. Chicken Says:

    My simple question I can’t seem to find an answer for is, how accurately are employment reports projecting on economic growth activity?

    70% of small businesses in capital beltway area plan to add jobs in the next year.

  7. the american limey Says:

    boots on the ground would be fighting a 11th century war which is what these latter day Mongols are doing. A better solution would be carry on doing what seems to be working, given they are becoming more desperate, reduce their boundaries, segment the caliphate and win the hearts and minds of the populace in the area. We need to rebuild our country not theirs.

  8. yra Says:

    limey–it is no secret why you relocated to theU.S.A.—too much wisdom for the House of Windsor

  9. the american limey Says:

    Yra
    I’m from the house of Fawkes 🙂 never a monarchist.

    • rockeye118 Says:

      The house of Fawkes… interesting. Did you remember remember the 5th of November? I celebrate it every year!

      I think we need to really understand the enemy and OUR goals before we determine what needs to be done. I don’t know everything, but the answer hasn’t been posted on this thread. I disagree with most of the comments regarding ISIS, which is unusual as I agree with most commentary here. The evil that is coming from ISIS is pretty deep and if we (US and CLOSE allies) are to engage to wipe it out, it must be done in a Machiavellian manner (which would ABSOLUTELY require ground troops). “Hearts and minds” is a joke (for the culture). It has been since day one. Trying to win hearts and minds gets our troops killed…period.

      We absolutely need to rebuild our country first, not theirs. But that requires keeping the evil out as best we can. We are letting terrorists in this country daily and the bombs are simple to make and use. The only way to protect oneself is to understand the terrorists’ tactics, techniques, and procedures; Responsibly promote the 2nd amendment, and maintain situational awareness. Not all bad things can be stopped, but almost all bad things can be mitigated. Garland, TX case in point…

      Yra, your blog is 2nd to none!

      • the american limey Says:

        Rockeye118 nope he’s an old boy of the school so we don’t celebrate what happened to him, despite the fact he got caught 🙂

        ISIL is trying to drag us into a “clash of civilizations” and putting troops on the ground would only exacerbate the people who we police. We can win the hearts and minds at a distance by treating the people who seek our help with respect and compassion. Yes we can expect scum to slip through and yes they will hit us but, speaking as someone who lived through the IRA bombing campaigns in London, the best way we can attack them is to be who I know us to be. Honest, law abiding hard working people who show compassion when merited. Being afraid all the time will play right into their hands, so frack them. I’m out and about tomorrow in the same way I was when the IRA blew the front off the Baltic Exchange 100 feet from me. I went to work the next day.

        If you think for a moment we can prevent this evil spreading by troops on the ground in some police action then you need to look at recent history, Yra is spot on in all regards in this matter. We need to be much more intelligent in how we approach this.

  10. Rob Syp Says:

    Is there such a thing as a Sargent Schultz syndrome where everyone know’s nothing?

  11. arthur Says:

    Hi Yra! I believe is the FIRST time I disagree with you. I share Andrew J. Bacevich’s point of view… A war the West cannot win.

    https://www.bostonglobe.com/opinion/2015/11/14/paris-attacks-andrew-bacevich-war-west-cannot-win/UVlV0AsL8ddnE8L5gJaTXO/story.html

    • the american limey Says:

      we seemed to be winning in the 60’s and 70’s at least in Afghanistan maybe we should, as a nation, get to the truth of why it all went wrong. Most people I speak to seem to think they were in the dark ages, here is the reality

    • yra Says:

      Arthur–I don’t think we disagree .I am supporting the idea of NO BOOTS and much in favor of tactical attacks in an effort to surgically damage the infrastructure of the terrorist apparatus–it will be the time and place western intelligence chooses—totallt tactical rather then all out war—supporting those in the Arab and Persian world who want some semblance of sanity and co-habitation with those who have in the past wrought conflict in the middle-east.This is a long difficult history with NO CLEAN hands over the last 1200 years

  12. rockeye118 Says:

    Limey,

    Not sure why the blog will not allow me to reply directly to your reply, but the IRA and ISIS/Al Qaida are totally different animals (even Al Qaida and ISIS are slightly different). It would be like saying the German Army treated US POWs identical to how the Japanese treated US POWs. The IRA had a political agenda, ISIS has a much more religious AND political agenda (yes religion had something to do with IRA, but not the extent of motivation as they were not trying to turn the world Catholic), Throughout history in the US, we were able to allow mass immigration because the immigrants wanted to ASSIMILATE. That is far from the case now… Have you ever noticed the IRA helped out the FARC and Palestinians, but are/were not helping Al Qaida or ISIS? Motives and intent are different which is why understanding our enemy and our goals are the first thing to consider. Troops on the ground to fight a war with these clowns would be astute, ONLY IF our goal was to break the “Caliphate”. If our goal is to simply hinder them, then it would be STUPID to put troops on the ground and TRY to win hearts and minds. Mind you, the reason why troops on the ground was/is a perceived disaster was our concern to win hearts and minds. Our desire to win hearts and minds (leave MRAPS, HMMWV’s to the Iraqi military) is exactly why you see ISIS running around in those vehicles gaining territory.

    Also, almost 30 minutes after my reply to you last night, Dr. Sebastian Gorka was on Fox News saying EXACTLY what I said we need to do to protect ourselves, and that does not mean live in fear. If we live in fear they win. BTW, Fox news anchor made a comment that they discussed the metro jet bombing with explosives experts and they said it was VERY doubtful that device was legit… Fox News can be ignorant and have no clue…the makeup of the device was quite possible. All you have to do is acquaint yourself with Dabiq and Inspire magazines to realize the hate, will, money and information these guys have.

    Great discussion, Limey. I love talking about this stuff. Unfortunately (or fortunately depending on your viewpoint), it’s something I understand all too well.

    • the american limey Says:

      Rockeye
      I won’t chat anymore on this topic as I think we have to agree to disagree BUT here are some thoughts to show I did read your reply.
      1 Yep I am fully cognizant of the differences between the IRA and the Isil groups. In Chicago we have a few world class universities populated by professors who advice on terrorism and I listen to them. I also discuss the topics with my friends who are both muslim and Irish ( I even talk to the Scots :-)) so I have an idea as to what the differences are.

      2 they WANT us to fight a war on the ground if for no other reason that it will cost us much more to maintain and increase the probability of an incident that will trigger more hatred at the population level. As to the humvee I always preferred the Marauder.

      3 to protect ourselves we need to carry on being who we are and NOT be modified by these scum.

      Simply put, spend our money on making this a better country and equip our military with weapons that work effectively in the 21st century. The goal of any soldier should be to inflict harm at little or no cost to themselves, drones do that well boots do not. So make money in the market ( listen to Yra) and spend it making a better life for you and yours.

      these scum will evaporate soon enough.

  13. yra Says:

    May I suggest a good read of Geoffrey Vickers,Freedom In A Rocking Boat

  14. Chicken Says:

    Russia invades Turkey, no Greece?

  15. the american limey Says:

    Why, for once, can’t these buffons trade!, so Greece has a debt problem and a LOT of islands. Russia needs a warm water port so THREATEN to lease the islands to our Russian/Chinese chums and pretty much ALL of Nato will come out and make a better offer.

    How about across the board debt forgiveness. Zee Germans would love it to holiday on. All parties win, the whole greece thing is resolved and the Russians are still pissed at us 🙂

    I cite one of my favourite books ( see below) for a more complete analysis of trading practices re islands.

    “And to My Nephew Albert I Leave the Island What I Won Off Fatty Hagan in a Poker Game”

    • Chicken Says:

      Greece still has a few Elgin Marbles at their disposal I’d imagine. I’ve noticed these transactions tend to take place at the 11th hour coinciding with creditors taking possession?

  16. the american limey Says:

    yep and they are in the “protective care” of the most powerful force on the planet. The little old ladies that run the British Museum. Good luck with getting them back 🙂

    I would like someone somewhere to consider the Kelly’s heroes model rather than D-day. Notice they are taunting us to put boots on the ground and especially special forces in their latest hollywood quality vid ( hope someone is looking into that) AND we are finally calling out Erdogan’s son: Bilal Erdogan

    A happy thanksgiving for all in Yraville. Please take the time to google “and the fair land” and read it. I promised a great man that I would do so every year to remind myself why I am here.

  17. Chicken Says:

    Will 3bn more provide enough fuel and supplies to support ISIS F-16s and tanks defending Turkish interests?

    “E.U. Offers Turkey 3 Billion Euros to Stem Migrant Flow”

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