A new decade arrived and the world woke up to another round of Islamic extremism.*
Last week President Barack Obama held a White House inquest into the intelligence failures that saw a man try to bring a jet down over Detroit on Christmas day.
Meanwhile the headline being pumped out by the world’s news sources reads: Yemen Jihad!
If Iraq and Afghanistan weren’t bad enough, now we have to worry about Yemen. These are getting to be trying times—especially if you are like me and have to use Google to find exactly where Yemen is.
If there is one thing aplenty these days it is information, and the above map, courtesy of the Internet, shows Yemen at the heel of the Saudi boot. That puts it pretty much at the epicenter of the Muslim world (shaded in green).
Of course, if you yearn for the return of cheap gasoline you will notice that Yemen is also dangerously close to the House of Saud and its elephant oilfields.
So what, you say? Yemen is just one more speed-bump in America’s 21st Century Autobahn.
Perhaps, but take note that the speed-bumps are starting to pile up, and if the idea of another Hundred Years War seems ridiculous, consider that the United States has already been fighting Muslim extremists since Oct. 23, 1983. On that day an organization calling itself the Islamic Jihad blew-up a Marine Corps barracks in Lebanon killing 299 U.S. servicemen. We have had to live with Islam and the radicals in it ever since.
More than a trillion dollars waged so far
All these years the U.S. has been involved in costly warfare in places like Kuwait, Somalia, Bosnia, Kosovo, Iraq and Afghanistan. And before we engage another enemy that happens to border on our most important strategic ally, Saudi Arabia, we might want to take stock of how successful these operations have been.
According to George Friedman in his new book, The Next 100 Years, A Forecast for the 21st Century: “The (Islamic) world is more fragmented then ever. U.S. defeat or stalemate in Iraq and Afghanistan is the likely outcome, and both wars will appear to have ended badly for the United States.”
One thing is for certain, these wars will have ended expensively.
According to The National Priorities Project, $950 billion dollars has been allocated to the wars in Iraq and Afghanistan. “In addition to this approved amount, the FY2010 budget shows a $130 billion request for more war spending. This would bring total war spending in Iraq and Afghanistan to more than $1 trillion,” The Project states.
In fact, you can check out the accumulating Cost of War Clock at: http://www.nationalpriorities.org/costofwar_home.
It is starting to appear that there is no end in sight for the bleeding of both men and money in this fight. That is at the crux of Washington’s bankrupt foreign policy. Already the war in Iraq alone has exceeded the inflation-adjusted cost of fighting in Vietnam. And that may be a gross underestimation.
The Washington Post says, “By the time you add in the costs hidden in the defense budget, the money we’ll have to spend to help future veterans, and money to refurbish a military whose equipment and materiel have been greatly depleted, the total tab to the federal government will almost surely exceed $1.5 trillion.”
If so, then the U.S. has spent more than $2 trillion in an attempt to re-shape the Muslim world. That is about half of what the U.S. spent in constant dollars to wage and win World War II.
Keep in mind that World War II paid huge dividends to America. It cemented it as the world’s largest superpower and allowed it to shape Western Europe and much of Asia into trade-friendly democracies.
Reconstruction loans and meeting soaring consumer demand from across the Pacific and the Atlantic created an unparrelled boon for U.S. businesses.
Fighting the extremists comes down to oil
Today American conflicts are creating more uncertainty than certainty, greater resentment than goodwill.
So the question resounds: why doesn’t America pick-up and leave the Muslims to themselves? The answer is simple: the U.S. must have future access to Arab oil.
All you have to do is consider the facts:
- The total remaining conventional oil on the planet is less than 1 trillion barrels. That is about half of the earth’s original endowment.
- The world is currently burning 80 million barrels per day. At the current rate there will be only enough oil to sustain the planet another 3 decades.
- America makes up less than 5 percent of the world’s population but consumes more than 25 percent of the world’s oil. This is an especially bleak equation when you consider that the last conventional elephant oilfield in North America was discovered more than four decades ago.
- The plum but so far undiscovered oilfields in the world lay beneath the shifting sands of the Middle East.
Unfortunately war expenditures, as well as a bevy of social spending (a.k.a. bailouts) by Washington, are putting a noose around the dollar’s neck. Our federal government has put us in harm’s way of not only Muslim extremists, but also a mounting debt crisis—a combination that could cripple the greenback and send oil prices soaring.
Terrible decade for the dollar
As the U.S. Dollar Index graph below shows, the greenback has been falling at a steady rate since 9/11.
In 2001 the U.S. dollar was trading at 120 against a basket of other currencies. Since then it has been spiraling down, the only interruption was during the economic crisis in late 2008 which spawned deflationary fears and created only temporary reprieve for the buck.
But having failed at that rally the dollar is testing historic lows. Technically a break under 72—not all that far below current levels—could be catastrophic for the dollar.
To date the Pentagon seems to have not learned a single lesson from Vietnam. More than a generation later, war planners and politicians are still unwilling to do whatever it takes—yes even the nuclear option—to kill and capture Osama bin Laden and his henchmen. Each failure by the U.S. to end terror against its own people only emboldens the jihadist radicals which include members of Iran and Pakistan’s leadership.
That is bad news for the country and for the greenback.
Action to take: continue to accumulate blue chip petroleum stocks, including holdings in Suncor Energy Corp (NYSE: SU), which is heavily invested in Canada’s oils sands project.
Yours for real wealth and good health,
Myers’ Energy and Gold Report
*Since there was no year zero, the second decade of the 21st Century actually begins next January.