“(Obama) is too much Chamberlain and not enough Churchill.”–Chris Matthews, MSNBC.
President Obama has been in office more than a year, yet his administration’s lack of accomplish is startling.
Obamacare is DOA. The total budget is tipping towards $4 trillion per year and the federal deficit will hit a record $1.6 trillion this year.
Yet all this and an unemployment rate of almost 10 percent will not prove to be the President’s biggest blunder. That distinction will likely go to his foreign policy failures whose fruition leaves Israel set to wage war, energy prices and the dollar be damned.
It almost happened once before, almost three decades ago when I was just getting started in this business.
The morning traffic that the growing city of Spokane could muster was bottlenecked on Monroe Street as I headed south towards downtown and my dad’s offices at Myers’ Finance & Energy. It was June and the morning sun was pouring into my old Pontiac whose only climate control was rolling down the windows.
I fussed through the push-buttons on the old radio until I hit the news channel. The headline blared out of the single speaker on the dashboard: “Israeli jets have struck and apparently destroyed Iraq’s nuclear reactor.”
It was the coups de grâce in Saddam Hussein’s nuclear ambitions and the world was fortunate that Israel was able to pull it off—even if the markets were spooked. The attack and the near miss on a broader war helped push bullion prices up more than 20 percent that summer.
It is no secret that Israel is looking to launch a similar strike, this time on Iran’s nuclear processing facility.
But Iran is no Iraq. Besides the fact that Iran will not be caught flat-footed there is the fact that Iran has a far more capable military than what Iraq had 29 years ago.
There is also the fact that Israel won’t have a strategic ally if it executes another attack on a Muslim reactor. Iran cooperated with Israel during its attack on Iraq’s Osirak reactor, providing the Israeli air force with maps and other tactical information.
“There is no guarantee that the Iranian nuclear facilities would be eliminated. Iran could be expected to have learned the lessons exposed by the experiences of both Iraq in 1981 and Syria in 2007, when Israel destroyed their suspected nuclear facilities,” writes the Feb. 3, Sydney Morning Herald. “One would expect Iran to have located many of its nuclear facilities either deep underground or within the mountains to reduce their vulnerability to that type of attack.”
Not only can Iran repulse such an attack on its nuclear facilities but it can threaten the entire region in ways that Saddam Hussein could only dream off.
Iran Captures the High Ground
Last year Iran announced that it had successfully launched its first domestically produced satellite into orbit using an Iranian-built rocket. Tehran proclaimed that “the official presence of the Islamic Republic was registered in space.”
That rocket launch shows that Iran is now able to gather its own satellite intelligence and demonstrates the strides the country has made in rocket technology—the kind of rockets that can be used in a first strike on any of its neighbors.
Furthermore, Iran is working on a second nuclear power plant. It is conceivable that Israel might be successful in knocking out one of the reactors. The other would be left intact and able to develop nuclear weapons after a protracted stand-off. That sets up the possibility for the region’s two super-powers to go, as Slim Pickens said in the movie, Dr. Strangelove: “Toe to toe, nuclear combat.”
America’s Lack of Leadership
So what is the Obama administration doing? It is playing peacemaker and appeaser.
Early in his administration Obama had said he would give the Iranians until the end of 2009 to change their policy on nuclear weapons development. But a year later the Iranians continue with plans to develop a nuclear warhead.
As England did with Hitler, so far America has focused on a diplomatic solution to the “Iran problem.” The Obama administration wants to bring together a coalition that will impose what it calls “crippling economic sanctions” on the Iranians. The most decisive would be stopping Iran’s gasoline imports. But such sanctions are now unlikely as China and Russia have made it clear they will not participate.
Last week Vice President Joe Biden launched a blistering attack on Iran’s hard-line leaders, claiming they were “sowing the seeds of their own destruction.”
Biden’s comments came days after the United States sent more warships to the Gulf and pledged to America’s most important allies to increase its missile defense systems in the region. In other words, the administration is desperately trying to use tough talk and an unproven missile shield to protect the world’s strategic oil supplies in Kuwait, the United Arab Emirates and Saudi Arabia.
In the face of the greatest threat of nuclear war since the Cuban Missile Crisis, the Obama administration is launching angry words while trying to build walls to protect its allies. If it reminds you of Neville Chamberlain, you are not alone.
“If you want to compare Obama in any way, compare him to Neville Chamberlain. He says we’re going to have peace in our time,” commented Rush Limbaugh.
In part the U.S. is playing peacekeeper because it is in no position to begin another conflict. Problems in Iraq are far from over. In fact, civil war may be looming. Kurdish and Iraqi forces are said to be near the brink of a war.
Last week the Pentagon made an announcement underscoring why President Obama is so quick to look for diplomatic solutions. The Pentagon flatly stated that the U.S. is to abandon its doctrine of always being ready to fight two simultaneous-conventional wars.
This message has not been lost on Israel. If the past 60 years of history have demonstrated anything it is that the Jewish state will use its military as a first option.
When Israel successfully executed its attack on Iraq in 1981 it helped push gold prices from $390 to $463 per ounce. A strike now that is less than a resounding success could push bullion prices dramatically higher, perhaps in the $1,500 to $1,700 per ounce range. I firmly believe this because the summer of 1981 gold price spike happened when bullion was in a withering bear market. Today the Midas metal is in the midst of one of its biggest bull markets ever.
Money market funds are currently paying an average return of less than 1 percent. That is the smallest return that money markets have ever paid. Consider the fact that at this rate, it will take more than 500 years to double your money.
I believe we are at the brink of a Middle East war at a time when Washington is proving to be impotent with the economy and foreign relations. Add to it the crippling downward momentum of the dollar and you have what I believe is every reason to get out of cash and into energy investments and gold.
Action to take: Sell-off all fixed return investments (bonds) other than short-term Treasury bills and add to your holdings of physical gold. I like 1-ounce U.S. American Eagle coins as well as 1-oz. Canadian Maple Leaf and South African Krugerrand coins.
Yours for real wealth and good health,
Myers’ Energy and Gold Report