The juice is in 'security' - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 30 August 2012
The juice is in 'security' A  A  A

Ouzilly, France

Go Isaac, Go! Blow ye winds... Crack ye thunder... Oh ye gods...send a hail of rain...send a wall of wind...send a tide of water that washes the Republicans out of the Florida swamps... And drives the Democrats out of the hill country in the Carolinas...

There was little action in the markets again yesterday. Stocks barely moved. Gold lost $6.

Everyone is waiting. They want to know what will happen when the Fed gets together tomorrow. Will there be an open-ended commitment to QE - as much as you want, when you want it - or will there be nothing at all?

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While we are waiting....we will turn our attention from economics to politics, which is to say, from fraud to outright theft. There's an election campaign underway.

It was Ambrose Bierce, in his Devil's Dictionary, who called an election 'an advance auction of stolen goods.' Well, in the 2012 campaign...prices are rising. Bloomberg:

Donors Invest Millions in Romney for Billions in Returns

Wealthy donors and corporations are more heavily invested in this presidential election than at any time since the 1972 Watergate scandal led to stricter campaign- finance laws.

A series of court decisions and regulatory changes in 2010 unraveled federal limits on donations, paving the way for a return of the big players. They are pooling their money in nonprofits, which keep contributor names secret, and super- political action committees, which amassed $350 million through the end of July.

Bloomberg suggests that Sheldon Adelson, the Koch Bros., and others are 'investing' in presidential hopefuls with the expectation of a fat return on their investment if their man wins.

Well...frankly...we're shocked....SHOCKED!

Does Bloomberg really mean to say that people would actually stoop to using the political process to get what they want for themselves? That they would actually try to figure out which candidate would be better for their own interests...and then invest their time and money trying to get that fellow into office?

Hey, Bloomberg...get over it. The rich do it. The poor do it. Even folks in Lahore do it.

People always seem to do what comes naturally. Can't stop 'em. Why try?

And the more there is at stake in an auction, naturally, the higher prices will go. Ideally, the only things up for grabs in an election will be a few privileged parking places and the color of the flag. Then, people can bribe each other, cajole and lie as much as they want. Who cares? But when 41% of the US economy is at play, you gotta expect that people are going to pull out all the stops to have the winning bid.

And nowhere is the bidding more fast and more furious than in 'security' spending. Why? That's where the juice is.

"Ike was Right!" writes our friend "Tom Paine:"

It's an old story: the few take advantage of the many. In the name of making the world better or safer, elites capture the government and end up killing the goose that lays the golden egg.

The United States is no exception.

Dwight Eisenhower, who had spent his entire life in the military...and then, in government...issued a warning: Upon leaving the presidency, he said farewell. And watch out for the 'military industry complex,' he added.

Eisenhower knew that the combination of profit motive and power motive is hard to stop.

At the opening of WWII, the US had nothing to fear from its own security industry. Where the Nazis devoted 23% of GDP to their war industries in 1939, the US spent only 2%. Its army was smaller than Romania's.

But WWII was good for the US military. In a matter of weeks, the orders came to US manufacturers...and the weapons began rolling off assembly lines. Even before it entered the war itself, American industry was producing more tanks, planes, guns and ammunition than anyone. Roosevelt, coming to the aid of the English, pledged to manufacture 50,000 airplanes in a single year - which seemed almost delusional at the time.

US supplies - made in US factories by US workers - were indispensable.

After the war, the soldiers came home and the factories switched to making washing machines and automobiles. War debt declined as the economy grew. The military industrial complex never gave up its grip on power and money, however. Korea, the Cold War, and Vietnam provided cover for continued high levels of 'security' spending.

And then, with the bombing of the World Trade towers in 2001, the industry was able to greatly improve its position. Fully loaded, the cost of 'security' is now about $1.2 trillion. That includes wars, Homeland Security, fortified embassies, military aid...and all the other things that help keep the US Empire in business. Much of the domestic manufacturing base that helped win WWII has been exported to China and other countries, but the US still produces its own weapons. Today, 40% of US manufacturing is destined for the security industry. Raytheon, General Dynamics, Lockheed - many of America's leading manufacturers now depend almost exclusively on orders from the Pentagon. They supplement their income by selling guns and combat gear to foreigners. The US may have lost the lead in autos, electronics, and energy, but it is number one in selling weapons.

'Security' spending - which has little to do with real security - now accounts for about one out of every three dollars spent by the US government and about 8% of the entire US GDP. It is the single biggest auction of stolen goods in the world.

No wonder it attracts so many bidders.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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