The Cost of War: Examining the Economic Impact of Modern Conflicts

[mheslep]

I've read that Iran's best strategy would be not to attack Israel but instead attack the Saudi oil installations and the gas installations in Qatar.

Yes I've seen similar propositions, but I think Iran's advantage lies only in the threat it poses to world economics in attacking those fields. There's little military advantage in doing so (none?), and so once done Iran would loose all leverage. A rough parallel is Saddam Hussein's threat against Kuwaiti oil fields and their subsequent destruction by him. The threat was ominous, and once executed the effect horrible (temporarily), but after the fact did nothing to save him or even slow down the Western military coalition.

So today, Iran's threat against the SA and Qatar fields raises the cost of an Israeli attack on Iran, but does nothing for Iran that I can see should Iran actually carry out the threat.

 

[nismaratwork]

Maybe so. Then instead of the US, Israel will attack Iran's nuclear sites first, likely leading to Iranian indiscriminate responses against Israel, likely leading to a rapidly widening Middle East conflict.

That sounds like a doable plan to me.

 

[Desiree]

I should have added this link in the first post, but please read this article as this is exactly what I wanted to say on the national debt data:

http://www.marketoracle.co.uk/Article7826.html

 

[Desiree]

I should have added this link in the first post, but please read this article as this is exactly what I wanted to say on the national debt data:

http://www.marketoracle.co.uk/Article7826.html

The author of the article is a frequent guest on CNBC and is the author of this book too. I haven't read the book yet, but it must be a good read as it was written before crash of the stock market in Sept/October 2008.

Crash Proof: How to Profit From the Coming Economic Collapse (2007)
https://www.amazon.com/dp/0470043601/?tag=pfamazon01-20

 

[Phrak]

The author of the article is a frequent guest on CNBC and is the author of this book too. I haven't read the book yet, but it must be a good read as it was written before crash of the stock market in Sept/October 2008.

Crash Proof: How to Profit From the Coming Economic Collapse (2007)
https://www.amazon.com/dp/0470043601/?tag=pfamazon01-20

Hu? Then he would be late, publishing 7 years after the fact. The stock market hit the wall in March 2000.

 

[Desiree]

Hu? Then he would be late, publishing 7 years after the fact. The stock market hit the wall in March 2000.

My main point was what is in the article, you got that? Not how before/after the fact people like him publish their books, besides how do you know he didn't warn before 2000 that the collapse was coming?

And you must know that "crashes" are the essential part of the stock markets every decade or so...because that's how it works.

 

[OmCheeto]

My main point was what is in the article, you got that?

I read the article. It says that the U.S. Government is running a Ponzi scheme.

http://www.marketoracle.co.uk/Article7826.html
Dec 16, 2008 - 06:45 PM
By: Peter Schiff
...

The United States Government runs its own balance sheet based on the Ponzi principal as well.

...

Is that your main point? I thought this thread was about the cost of war?

hmmm... what's this?

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse.”

hmmm... thinking, thinking, eyes crossed, brain hurts, steam coming out of ears... Ah ha!

Everyone should buy the book and get rich. Then we could pay off our national debt!

Brilliant.

 

[nismaratwork]

I just thought it said. "Here is my agenda in the technical form of a rhetorical question!"

 

[Desiree]

I read the article. It says that the U.S. Government is running a Ponzi scheme.



Is that your main point?

Exactly, that is my point. When a debt grows so big over a long period of time that the only way to repay it is: 'to rob Peter to pay Paul', then it wouldn't be any different than a Ponzi Scheme and that's what the US national debt has become.

A highly critical 450-page official report into the conduct of the US Securities and Exchange Commission has revealed that the agency was alerted to suspicions surrounding Madoff as early as 1992. But although enforcement staff caught Madoff in "lies and misrepresentations‚" they failed to follow up on inconsistencies, allowing the corrupt fund manager to continue embezzling money until his confession in December 2008.

http://www.guardian.co.uk/business/2...off-sec-report

 

[Cyrus]

Exactly, that is my point. When a debt grows so big over a long period of time that the only way to repay it is: 'to rob Peter to pay Paul', then it wouldn't be any different than a Ponzi Scheme and that's what the US national debt has become.

[PLAIN]http://www.noquarterusa.net/blog/wp-content/uploads/2009/02/national-debt-gdp1.gif

I'm not sure how you define "Grows so big over a period of time". Relative to what? Relative to the GDP, you're wrong.

 

[Desiree]

[PLAIN]http://www.noquarterusa.net/blog/wp-content/uploads/2009/02/national-debt-gdp1.gif

I'm not sure how you define "Grows so big over a period of time". Relative to what? Relative to the GDP, you're wrong.

Maybe my wording was ambiguous. But Government just keeps issuing new treasury bonds, notes, "IOU's"...and that means new investors/lenders are needed to keep this afloat. If China, Japan and other main foreign lenders stop lending anymore, then US government will have no choice but to default, because the inflow of money was cut off. Now you tell me, this debt has not turned into a Ponzi scheme? $13 trillion dollars and still counting. Check out the counters in the first post and see if you notice a reduction in the total public debt.

 

[Cyrus]

Maybe my wording was ambiguous. But Government just keeps issuing new treasury bonds, notes, "IOU's"...and that means new investors/lenders are needed to keep this afloat. If China, Japan and other main foreign lenders stop lending anymore, then US government will have no choice but to default, because the inflow of money was cut off. Now you tell me, this debt has not turned into a Ponzi scheme? $13 trillion dollars and still counting. Check out the counters in the first post and see if you notice a reduction in the total public debt.

Yes, I saw your counters - so what. Again, raw numbers are meaningless without a viable metric. Let's say I spend $500k on a Ferrari. Actually, let's say I spend $500,000.00 (since you like big scary numbers). That might be a lot of money for you. But for me, a wall street fat cat billionaire, the Ferrari is chump change. Raw numbers don't tell the whole story.

 

[EnumaElish]

cyrus's graph depicts national debt as a % of national income becoming lower during the vietnam years. Part of the reason was that the economy was growing, but the other reason is that the government was using newly printed greenbacks to finance the war, instead of explicit debt. That led to the inflationary period during the 70's, which further devalued the "real" value of the debt. It took Volcker's team under Reagan to go cold turkey to stop it, which contributed to the 80's recession.

 

[Cyrus]

cyrus's graph depicts national debt as a % of national income becoming lower during the vietnam years. Part of the reason was that the economy was growing, but the other reason is that the government was using newly printed greenbacks to finance the war, instead of explicit debt. That led to the inflationary period during the 70's, which further devalued the "real" value of the debt. It took Volcker's team under Reagan to go cold turkey to stop it, which contributed to the 80's recession.

There was a really good piece on CSPAN radio about the debt of the 70s, and how it was far, far worse than today. Let me see if I can dig it up.

 

[mheslep]

Exactly, that is my point. When a debt grows so big over a long period of time that the only way to repay it is: 'to rob Peter to pay Paul', then it wouldn't be any different than a Ponzi Scheme and that's what the US national debt has become.

http://www.guardian.co.uk/business/2...off-sec-report

I'm not sure how you define "Grows so big over a period of time". Relative to what? Relative to the GDP, you're wrong.

Interesting Cyrus, you dropped a word from Desiree's post that makes all the difference: long. The major reason debt/GDP bares watching is because lenders use it as a risk metric in deciding what interest rate they will demand, or whether they will lend at all in the future. The Greek crisis recently emphasized this point. That is, the key is whether or not lenders believe they will continue to be paid back in the long term. Thus war debt, especially for major powers, presents very little risk when it is run up, because wars inevitably come to an end, public sentiment for democracies is overwhelming in agreement to end them as soon as possible. As economists say, war spending, being temporary, is not structural.

Entitlement programs on the other hand such as Greece's early retirement benefits and the US's Medicare tend to have no end, have wide public sentiment to continue them (via robbing Peter to pay Paul as Disiree points out), tend to continually expand, forever as far as I can see, until they either collapse upon themselves or until they cause the state to default on its debt. Entitlement programs are structural. The point of all this is that comparing the US current debt and its trajectory to WWII debt is misleading from the stand point of the lender, the bond holder, the banker. From where they stand, the US has never had this kind of structural debt load in its entire history, not anything close to it.

BTW, updating the chart to this year has the US debt to GDP ratio at 87.5% as of May 2010.

http://zfacts.com/metaPage/lib/National-Debt-GDP.gif

 

[nismaratwork]

Interesting Cyrus, you dropped a word from Desiree's post that makes all the difference: long. The major reason debt/GDP bares watching is because lenders use it as a risk metric in deciding what interest rate they will demand, or whether they will lend at all in the future. The Greek crisis recently emphasized this point. That is, the key is whether or not lenders believe they will continue to be paid back in the long term. Thus war debt, especially for major powers, presents very little risk when it is run up, because wars inevitably come to an end, public sentiment for democracies is overwhelming in agreement to end them as soon as possible. As economists say, war spending, being temporary, is not structural.

Entitlement programs on the other hand such as Greece's early retirement benefits and the US's Medicare tend to have no end, have wide public sentiment to continue them (via robbing Peter to pay Paul as Disiree points out), tend to continually expand, forever as far as I can see, until they either collapse upon themselves or until they cause the state to default on its debt. Entitlement programs are structural. The point of all this is that comparing the US current debt and its trajectory to WWII debt is misleading from the stand point of the lender, the bond holder, the banker. From where they stand, the US has never had this kind of structural debt load in its entire history, not anything close to it.

BTW, updating the chart to this year has the US debt to GDP ratio at 87.5% as of May 2010.

http://zfacts.com/metaPage/lib/National-Debt-GDP.gif

This is also a good reason to get the hell out of Afghanistan, and why the Korean war was and is such a disaster. Long wars are no good at all.

 

[mheslep]

This is also a good reason to get the hell out of Afghanistan, and why the Korean war was and is such a disaster. Long wars are no good at all.

There may be good reasons to get out of Afghanistan, but creating fears that the US will not be able to borrow any more is not one of them. Perhaps I could have been clearer. The war in Afghanistan is not that 'long' or expensive even if continues another five years compared to entitlement programs; Medicare has been around for fifty years and has an entire demographic about to retire into it; that is a long scenario. The war in Afghanistan is going to end, the US already has imposed deadlines on the surge there, maybe in a year or five; it doesn't matter from a debt standpoint. Lenders know this.

 

[Office_Shredder]

This is also a good reason to get the hell out of Afghanistan, and why the Korean war was and is such a disaster. Long wars are no good at all.

The Korean war was a disaster because our debt to GDP ratio dropped dramatically during it?

 

[Cyrus]

Interesting Cyrus, you dropped a word from Desiree's post that makes all the difference: long. The major reason debt/GDP bares watching is because lenders use it as a risk metric in deciding what interest rate they will demand, or whether they will lend at all in the future. The Greek crisis recently emphasized this point. That is, the key is whether or not lenders believe they will continue to be paid back in the long term. Thus war debt, especially for major powers, presents very little risk when it is run up, because wars inevitably come to an end, public sentiment for democracies is overwhelming in agreement to end them as soon as possible. As economists say, war spending, being temporary, is not structural.

Entitlement programs on the other hand such as Greece's early retirement benefits and the US's Medicare tend to have no end, have wide public sentiment to continue them (via robbing Peter to pay Paul as Disiree points out), tend to continually expand, forever as far as I can see, until they either collapse upon themselves or until they cause the state to default on its debt. Entitlement programs are structural. The point of all this is that comparing the US current debt and its trajectory to WWII debt is misleading from the stand point of the lender, the bond holder, the banker. From where they stand, the US has never had this kind of structural debt load in its entire history, not anything close to it.

BTW, updating the chart to this year has the US debt to GDP ratio at 87.5% as of May 2010.

Don't disagree with anything you've said (I'd probably consider myself libertarian fiscally) . I was pointing out that Desiree's said nothing of what you just listed. It's simply a link to a website with a big number.

 

[mheslep]

cyrus's graph depicts national debt as a % of national income becoming lower during the vietnam years. Part of the reason was that the economy was growing, but the other reason is that the government was using newly printed greenbacks to finance the war, instead of explicit debt. That led to the inflationary period during the 70's, which further devalued the "real" value of the debt. It took Volcker's team under Reagan to go cold turkey to stop it, which contributed to the 80's recession.

I agree with all of this except attributing all or even most of the increased spending to the Vietnam war. Johnson's domestic programs increased spending dramatically: Medicare created in '65, Medicaid in '66, War on Poverty in '64 (job corps, welfare, food stamps). Johnson also asked for and got tax cuts. By contrast, US military spending seems to have http://upload.wikimedia.org/wikipedia/commons/8/86/InflationAdjustedDefenseSpending.PNG" . I'm not inclined to run down the absolute figures on this at the moment; maybe the Vietnam war did dominate spending increases in the late 60's, but I doubt it.

 

[nismaratwork]

OK, let me clarify this, I meant that the Korean war never ended, and our commitment there and problems are ongoing. That's all, not that Afghanistan or Korea will bankrupt us, just that such things should be swift and decisive, and for monetary reasons as well. Look at our relationship with Japan and Germany, having crushed each, and then helped rebuild them, versus the Korean peninsula.

 

[EnumaElish]

I agree with all of this except attributing all or even most of the increased spending to the Vietnam war. Johnson's domestic programs increased spending dramatically: Medicare created in '65, Medicaid in '66, War on Poverty in '64 (job corps, welfare, food stamps). Johnson also asked for and got tax cuts. By contrast, US military spending seems to have http://upload.wikimedia.org/wikipedia/commons/8/86/InflationAdjustedDefenseSpending.PNG" , which seems to support your hypothesis.

 

[Office_Shredder]

OK, let me clarify this, I meant that the Korean war never ended, and our commitment there and problems are ongoing. That's all, not that Afghanistan or Korea will bankrupt us, just that such things should be swift and decisive, and for monetary reasons as well. Look at our relationship with Japan and Germany, having crushed each, and then helped rebuild them, versus the Korean peninsula.

We tried crushing North Korea. It didn't work

And we did crush Afghanistan, we're trying to help them rebuild. It's just that our definition of rebuild seems to be at odds with the definition that some Afghans use

 

[Count Iblis]

I think the problem in Afghanistan is that we have modernized our armies to the point that we can't deploy large numbers of soldiers anymore. Afghanistan is a case where you need to deploy a million soldiers who then don't need to do any fighting; the mere presence of soldiers in all of the remote villages will be enough. You can then start to build whatever infrastrucure you need (like the Aghan police and security forces, roads, schools etc. etc.) and leave a few years later.

The lack of forces means that a small group of insurgents can hold the country hostage. If Nato soldiers are in village A, then that means that they are not in village B, so the insurgents can go to that village for their supplies, intimidate the local population and warn them not to cooporate with Nato soldiers and set up their IED factories there.

In each village they have some limited number of supporters, who inform them via radio when the coast is clear, who has been collaborating with Nato etc. etc.

 

[Office_Shredder]

I think the problem is Afghanistan is that we have modernized our armies to the point that we can't deploy large numbers of soldiers anymore. Afghanistan is a case where you need to deploy a million soldiers who then don't need to do any fighting; the mere presence of soldiers in all of the remote villages will be enough. You can then start to build whatever infrastrucure you need (like the Aghan police and security forces, roads, schools etc. etc.) and leave a few years later.

Is there any point in US history where we could deploy a million soldiers without holding a draft?

 

[Count Iblis]

Is there any point in US history where we could deploy a million soldiers without holding a draft?

Why only the US? This is a UN/NATO mission. Why can't the World today with 6.5 billion inhabitants mobilize just one million soldiers to do a simple peacekeeping mission in which hardly any fighting would be involved, while in 1941 Germany was able to launch an http://en.wikipedia.org/wiki/Operation_Barbarossa" with 4.5 million soldiers and 600,000 motor vehicles?

 

[Office_Shredder]

Why only the US? This is a UN/NATO mission. Why can't the World today with 6.5 billion inhabitants mobilize just one million soldiers to do a simple peacekeeping mission in which hardly any fighting would be involved, while in 1941 Germany was able to launch an http://en.wikipedia.org/wiki/Operation_Barbarossa" with 4.5 million soldiers and 600,000 motor vehicles?

Because that was total war for control of the world. This is not. Again, do you think Germany pulled that off without a draft? You seem to think that somehow mobilizing the forces of the world to subdue the Taliban/Al Qaeda over the course of a couple of years would somehow be more expedient and cheaper than the current situation; do you think all those extra tanks and weapons and salaries and the massive supply line necessary to keep it all running is going to come for free?

If China decided to take Hawaii by force, obviously we would not send 100,000 troops to take Shanghai, we would have a draft and force factories in America to start producing weapons of war instead of cars and toys. But that hasn't happened, so we aren't going to halt our economy for the next five years in order to win in Afghanistan, because maybe it isn't worth that. You keep talking about the cost of being mired in such a situation as we are at the moment, but are completely disregarding the cost of implementing total warfare, especially in a region as isolated as Afghanistan.

Also, this might not be a quick occupation either way. Since you love to bring up WWII, we ended up occupying Germany for 11 years

EDIT TO ADD:
Furthermore, the German occupation situation was at least as disastrous and costly as the continuation of the Korean war. The tensions it caused with the USSR and the whole Berlin airlift thing etc. certainly don't qualify as overwhelming success post occupation, and should be taken into account when discussing occupation costs.

"But wait!" you cry. "We aren't going to divvy up Afghanistan because we don't have to!" Well, why would the world commit all its troops to Afghanistan and then let the US make all the decisions? Currently we're the major policy setter because we're the major contributor of troops, if you want Russia to dedicate, say, half a million troops (more than it's current standing land army mind you), then yes, they're going to want to have control over their chunk of the country

 

[nismaratwork]

We tried crushing North Korea. It didn't work

And we did crush Afghanistan, we're trying to help them rebuild. It's just that our definition of rebuild seems to be at odds with the definition that some Afghans use

I believe that we are working from vastly different definitions of "crushed". Mine involves a reckless disregard for human life and infrastructure, and a massive investment in sustained bombing, including the use of radiological weapons, and nerve agents for tunnels.

 

[Office_Shredder]

I believe that we are working from vastly different definitions of "crushed". Mine involves a reckless disregard for human life and infrastructure, and a massive investment in sustained bombing, including the use of radiological weapons, and nerve agents for tunnels.

Wait, so you're just killing for the sake of killing, or are you trying to achieve some legitimate objective here?

Also, what do you think happened in the Korean war? We bombed the hell out of North Korea to cut off supply lines; bridges, railroads, harbors. Are you under the impression that we held back in that war? It was essentially exactly what you're recommending we do in Afghanistan today, and it didn't work because somebody didn't like having a neighbor be conquered in such a manner

 

[taozhen]

The result is quite amazing and I don't like war, and hope the world will be more peaceful.
The second link say some about the debt to the Penny, just compared to the first link. Contract the two links the result I get is the wars were supported by the all of us, this is quite sad to me.

 

[mheslep]

Because that was total war for control of the world. This is not.

The threat may not be as tangible as the armies of the Third Reich, but yes this a struggle for total control of the world.

"It is the nature of Islam to dominate, not to be dominated, to impose its law on all nations and extend its power to the entire planet."
-Hassan al-Banna, founder of the Muslim Brotherhood
http://www.ikhwanweb.com/Home.asp?zPage=Systems&System=PressR&Press=Show&Lang=E&ID=4584 That statement is not atypical.

 

[Office_Shredder]

There is a difference between someone saying they want to control the world and actually fighting a war for control of the world.

The Office_Shredder faith believes that total domination of the world is my right. Are you now going to draft 5 million people and put them on every street corner to stamp out my uprising? Our response should be based on reality, not fiction

 

[mheslep]

There is a difference between someone saying they want to control the world and actually fighting a war for control of the world.

The Office_Shredder faith believes that total domination of the world is my right. Are you now going to draft 5 million people and put them on every street corner to stamp out my uprising? Our response should be based on reality, not fiction

The Muslim Brotherhood is not some nut standing on a corner with a sign, nor is the sentimental expressed above in anyway isolated to them.

Reality:
[PLAIN]http://www.bosasomedia.com/images/somali_news/911%20spetember%2011%20world%20trade%20center%20terrorist%20attack.jpg

 

[edward]

The Muslim Brotherhood is not some nut standing on a corner with a sign, nor is the sentimental expressed above in anyway isolated to them.

Reality:
[PLAIN]http://www.bosasomedia.com/images/somali_news/911%20spetember%2011%20world%20trade%20center%20terrorist%20attack.jpg[/QUOTE]

So we invaded Iraq and when we did we lost Afghanistan.

 

[mheslep]

So we invaded Iraq and when we did we lost Afghanistan.

Afghanistan is "lost"? Since 2003 and the Iraq invasion? Apparently that kind of insight is qualification for the US Senate.
http://www.foxnews.com/story/0,2933,267181,00.html"