And So It Begins

“The global importance of the Middle East is that it keeps the Far East and the Near East from encroaching on each other.”

–Dan Quayle

And So It Begins

October 14, 2024 – Here we go.

Over the weekend, the U.S. committed 100 troops, live soldiers, to Israel’s defense. The troops will be absorbed into Israel’s Iron Dome, manning the anti-missile system known as the Terminal High Altitude Area Defense (THAAD).

The order comes ahead of Israel’s highly anticipated strike against Iran.

The details of when and how troops were deployed are likely only going to matter as footnotes in long historical treatises outlining how the U.S. got so entwined in the direct defense of the geographical area established to house the Jewish state when Ben Gurion declared it so on May 14, 1948.

What a history the U.S. has of not heeding George Washington’s warning to “avoid foreign entanglements.”

Looking back, historians now point to November 1, 1955 – when President Eisenhower deployed the Military Assistance Advisory Group to train the Army of the Republic of Vietnam – as the official start of the Viet Nam war.

The 20+ years in Afghanistan “officially” started on October 7, 2001, when the U.S. launched airstrikes against Taliban and al-Qaeda targets in Afghanistan. But those targets were identified by CIA operatives already in country. The first U.S. boots on the ground arrived two weeks later.

The government spent a lot of money on each engagement, but neither accomplished much for the United States’ interests. The exits from each were historic PR disasters for the U.S. global brand.

Still, once one American trooper ends up dead in Israel, even by accident, the U.S.  military-industrial complex will be committed on a whole new level. Which begs the question:

Why do “we” routinely commit lives and treasure to such foolish global endeavors?

Scott Ritter, our guest essayist for today, digs in below.

Meanwhile, markets high on AI fumes have routinely ignored the slow escalation toward what many high-pitched voices have forecast as an impending World War III.

Using the Israel-Hamas conflict, the more articulate John Robb illustrated how the West are already in World War III, and have been, in this Wiggin Session, we published to the paid readers of Grey Swan. It’s worth understanding Robb’s perspective on the social media and network war Israel itself has been waging, and losing, since October 7, 2023.

No matter.

Stocks opened slightly higher this morning, with the S&P 500 continuing its all-time high trajectory. The tech-heavy Nasdaq rallied 1% in early trading. Oil even dropped slightly, with a barrel trading for under $75.

For now, AI-driven stocks are driving asset prices higher. This morning, we are releasing our Grey Swan analysis of what we’ve affectionately dubbed “The AI Crash”. This is another Grey Swan scenario you’ll want to understand.

Any weakness in the Magnificent Seven stock prices could bring the whole market crashing down – election year or no. We recommend you take a look. The analysis is free even if you’re not a paid member. And, if you’re not, you’ll also be given an opportunity to join our community at the end.

Enjoy Mr. Ritter’s perspective on the mess in the Middle East below. ~~ Addison

America’s Midas Touch

Scott Ridder, Scott Ridder Extra

America today believes that when it comes to foreign policy, we are possessed with the “Midas Touch”—everything we do turns to gold. But the reality is, just like King Midas of old, everything we touch dies.

King Midas was a Phrygian King believed to rule in the 2nd Millenium BC, whose territory encompassed the area of what is modern day Anatolian Plateau around the present-day city of Ankara.

Midas wished that everything he touched turned to gold. The wish was granted, and soon Midas was overjoyed by his ability to instantly create wealth. However, the fulfilled wish soon became a curse, for when Midas tried to eat food or drink, he could not do so, because it turned to gold at his touch. When his daughter tried to console him, he touched her, turning her into gold, thereby killing her. Midas finished his life alone, parched and starved.

There is no better analogy for America’s self-anointed role as global hegemon than that of King Midas.

We hold a privileged position, and yet we want more, so much so that our insatiable greed for power and wealth leaves us blind to their consequence.

We call the “American Midas Touch” by many names—we are the exceptional nation, the indispensable nation, the guardian of the rules based international order we ourselves wrote.
Democracy is our “gold,” and we seek to reach out and “touch” as many nations as possible with the wonderful “gift.”

In his National Security Strategy, published in October 2022, President Joe Biden articulated his vision of how and why America should lead the world. “Our world,” Biden wrote, “is at an inflection point.” The need for American leadership, Biden declared, is “as great as it has ever been,” especially in the present time, where America and its allies find themselves “in the midst of a strategic competition to shape the future of the international order.” The United States, Biden asserted, “will continue to defend democracy around the world” grounded in the “basic belief that the rules-based order must remain the foundation for global peace and prosperity.”

Biden has called the ongoing conflict between Russia and Ukraine a clear test for democracies around the world, labeling it a “great battle for freedom.”

But our motivations aren’t purely derived from moral benevolence; US officials openly brag about how US military aid to Ukraine directly benefits the American Defense Industrial Base (DIB)—perhaps better known by the name given to it by former President Dwight Eisenhower, the “military industrial complex.” The $44 billion dollar package dispatched to Ukraine earlier this year was sold as a vehicle to strengthen the DIB by injecting $27 billion into the coffers of defense contractors spread out in some 37 states.

And spreading “democracy” in Ukraine isn’t our only objective—Senator Lindsey Graham, a Republican from South Carolina, recently called Ukraine a “goldmine” under which sits some $12-15 trillion in mineral deposits which the US and its allies “can’t afford to lose” to Russia.

Biden and the United States touched Ukraine.

And Ukraine died.

Biden invited Israeli Prime Minister Benjamin Netanyahu to attend his “democracy summit” back in March 2023, and nodded in agreement when Netanyahu proclaimed that the “alliance between the world’s greatest democracy and the strong, proud and independent democracy—Israel—in the heart of the Middle East is unshakeable.”

Seven months later Hamas attacked Israel, initiating a conflict which has escalated into a regional war which threatens to impact global energy security and international principles of nuclear non-proliferation. Tens of thousands—perhaps hundreds of thousands—of innocent civilians have perished because of “democratic” Israel’s apartheid policies and genocidal behaviors.

But war is good for the American DIB, which has pumped billions of dollars of weapons and ammunition into Israel’s killing machine since the conflict started.

Israel has also emerged as a significant producer of natural gas and is positioning itself to reduce Europe’s dependency on Russian energy—last year Israel was able to supply Europe with 10 billion cubic meters of gas, and this number is expected to rise.

One of the threats posed to Israel’s gas industry is the inherent instability of the situation between Israel and Hezbollah, in Lebanon, and by extension Hezbollah’s regional ally, Iran. The recent decision by Israel to expand its military operations into Lebanon seems driven by a desire to eliminate both Hezbollah and Iran as regional threats to the Israeli gas industry.

Greed, it seems, is the driver of most policies that are justified in the name of national security.

Gold.

Biden touched Israel and the Middle East.

And the Palestinians and Lebanese died.

There was a time when America was home to a nation of builders, citizens who worked to construct the infrastructure that would serve as the foundation of their nation. Men epitomized by characters such as Jimmy Stewart’s George Bailey, in Frank Capra’s 1946 holiday classic, It’s a Wonderful Life. George dreamed of being an engineer, and traveling the world, building great things.

The reality behind this fictional character is that when Jimmy Stewart portrayed him, he was less than a year removed from his own wartime service as a pilot flying B-24 bombers over Europe. He was grounded in the final months of the war for being “flak happy”—what today is known as post-traumatic stress disorder. He had nightmares of exploding airplanes and men screaming over the radio as they fell to their deaths (in one mission, Stewart’s squadron lost 13 aircraft and 130 men, most of whom were known to Jimmy).

The scenes in the movie where George Bailey suffered a nervous breakdown and tried to kill himself wasn’t acting as much as it was therapy, with Jimmy Stewart relieving his own personal demons before the camera.

Jimmy Stewart believed in the America that was portrayed in the film, a land where kindness and generosity could triumph over avarice and cruelty. America, to him, was a land filled with George Baileys, trying to make life better for everyone they met.

But the dreams and aspirations of pre-war America evaporated in the reality of a post-war America where the Masters of War took precedent over a nation of builders. Death and destruction quickly became the coin of the realm, all in the name of seeking to impose a vision of American hegemony over a globe once dominated by Empires composed of friend and foe alike.

The Cold War was about money, not ideology.

It was about the need for the United States to assert economic control over the post-war world.

It was about gold.

We touched Korea, and Koreans died.

We touched Vietnam, and the Vietnamese died (so, too, did Jimmy Stewart’s son, who was commissioned in the US Marines and died in combat leading his Marines in an action that would earn him a posthumous Silver Star medal).

We touched South and Central America, and the citizens of these lands died.

We touched Africa, and the Africans died.

We touched Afghanistan, and the Afghans died.

We touched Iraq, and the Iraqis died.

Everything we touched, died.

Everything we touch dies.

Americans would be hard-pressed to find one instance of American post-war policy intervention that did not manifest itself into death and destruction.

The America curse.

The American Midas Touch.

And this is the part most Americans fail to comprehend. There are those among us, like Senator Lindsey Graham, whose faces can contort into a combined smile-sneer as they speak about the financial benefit America will accrue by embarking on its path of blood-soaked hegemony.

But they forget the end of the Midas story.

A king driven mad by hunger and thirst, void of friends and family, because the happiness sought through the pursuit of gold only, in the end, left him surrounded by death and famine.

That is America’s fate.

America’s Midas Touch.

It will be the death of us all. ~~ Scott Ridder, Scott Ridder Extra

So it goes,

Addison Wiggin,
Grey Swan

P.S. Think the AI boom can’t go bust? Shares of Tesla Motors tanked 8% on Friday. Thursday night’s “Robotaxi” reveal showed that an AI-powered self-driving vehicle is still well in its early stages.

While the technology has come a long way in recent years, we’re also reminded of the Cybertruck reveal. First revealed in November 2019, the truck first hit the roads earlier this year, nearly five years later. Elon Musk has since tried to push the narrative that Tesla is as much an AI company as, say, Nvidia.

What would a five-year delay in next-gen AI tech mean for a chipmaker’s bottom line? Make no mistake, this could get ugly. Today’s buyers are potentially buying near the top of the market, hoping for a “greater fool” to come in and push prices even higher.

We’ll know more as earnings season unfolds over the coming weeks, and as companies start providing more detailed forward guidance into 2025.