US Corporate Profits Are Sustained by Endless War

October 9th, 2014 - by admin

Glenn Greenwald / The Intercept & Richard Clough / Bloomberg – 2014-10-09 00:22:53

US Corporate Profits Can Only Be Sustained by Endless War

Glenn Greenwald / The Intercept

(October 7, 2014) — Long before Americans were introduced to the new 9/11 era super-villains called ISIS and Khorasan, senior Obama officials were openly and explicitly stating that America’s “war on terror,” already 12 years old, would last at least another decade. At first, they injected these decrees only anonymously; in late 2012, The Washington Post — disclosing the administration’s secret creation of a “disposition matrix” to decide who should be killed, imprisoned without charges, or otherwise “disposed” of — reported these remarkable facts:

Among senior Obama administration officials, there is a broad consensus that such operations are likely to be extended at least another decade. Given the way al-Qaida continues to metastasize, some officials said no clear end is in sight. . . . That timeline suggests that the United States has reached only the midpoint of what was once known as the global war on terrorism.”

In May 2013, the Senate Armed Services Committee held a hearing on whether it should revise the 2001 Authorization to Use Military Force (AUMF). A committee member asked a senior Pentagon official, Assistant Secretary Michael Sheehan, how long the war on terror would last; his reply: “At least 10 to 20 years.” At least. A Pentagon spokesperson confirmed afterward “that Sheehan meant the conflict is likely to last 10 to 20 more years from today — atop the 12 years that the conflict has already lasted.” As Spencer Ackerman put it: “Welcome to America’s Thirty Years War,” one which — by the Obama administration’s own reasoning — has “no geographic limit.”

Listening to all this, Maine’s independent Sen. Angus King said: “This is the most astounding and most astoundingly disturbing hearing that I’ve been to since I’ve been here. You guys have essentially rewritten the Constitution today.”

Former Bush DOJ lawyer Jack Goldsmith — himself an ardent advocate of broad presidential powers — was at the hearing and noted that nobody even knows against whom this endless war is being waged: “Amazingly, there is a very large question even in the Armed Services Committee about who the United States is at war against and where, and how those determinations are made.”

All of that received remarkably little attention given its obvious significance. But any doubts about whether Endless War — literally – is official American doctrine should be permanently erased by this week’s comments from two leading Democrats, both former top national security officials in the Obama administration, one of whom is likely to be the next American president.

Leon Panetta, the long-time Democratic Party operative who served as Obama’s Defense Secretary and CIA Director, said this week of Obama’s new bombing campaign: “I think we’re looking at kind of a 30-year war.” Only in America are new 30-year wars spoken of so casually, the way other countries speak of weather changes.

He added that the war “will have to extend beyond Islamic State to include emerging threats in Nigeria, Somalia, Yemen, Libya and elsewhere.” And elsewhere: not just a new decades-long war with no temporal limits, but no geographic ones either. He criticized Obama — who has bombed 7 predominantly Muslim countries plus the Muslim minority in the Phillipines (almost double the number of countries Bush bombed) — for being insufficiently militaristic, despite the fact that Obama officials themselves have already instructed the public to think of The New War “in terms of years.”

Then we have Hillary Clinton (whom Panetta gushed would make a “great” president). At an event in Ottawa yesterday, she proclaimed that the fight against these “militants” will “be a long-term struggle” that should entail an “information war” as “well as an air war.” The new war, she said, is “essential” and the US shies away from fighting it “at our peril.” Like Panetta (and most establishment Republicans), Clinton made clear in her book that virtually all of her disagreements with Obama’s foreign policy were the by-product of her view of Obama as insufficiently hawkish, militaristic and confrontational.

At this point, it is literally inconceivable to imagine the US not at war. It would be shocking if that happened in our lifetime. US officials are now all but openly saying this. “Endless War” is not dramatic rhetorical license but a precise description of America’s foreign policy.

It’s not hard to see why. A state of endless war justifies ever-increasing state power and secrecy and a further erosion of rights. It also entails a massive transfer of public wealth to the “homeland security” and weapons industry (which the US media deceptively calls the “defense sector”).

Just yesterday, Bloomberg reported: “Led by Lockheed Martin Group (LTM), the biggest US defense companies are trading at record prices as shareholders reap rewards from escalating military conflicts around the world.” Particularly exciting is that “investors see rising sales for makers of missiles, drones and other weapons as the US hits Islamic State fighters in Syria and Iraq”; moreover, “the US also is the biggest foreign military supplier to Israel, which waged a 50-day offensive against the Hamas Islamic movement in the Gaza Strip.”

ISIS is using US-made ammunition and weapons, which means US weapons companies get to supply all sides of The New Endless War; can you blame investors for being so giddy?

I vividly recall how, in the wake of Osama bin Laden’s killing, Obama partisans triumphantly declared that this would finally usher in the winding down of the War on Terror. On one superficial level, that view was understandable: it made sense if one assumes that the US has been waging this war for its stated reasons and that it hopes to vanquish The Enemy and end the war.

But that is not, and never was, the purpose of the War on Terror. It was designed from the start to be endless. Both Bush and Obama officials have explicitly said that the war will last at least a generation. The nature of the “war,” and the theories that have accompanied it, is that it has no discernible enemy and no identifiable limits.

More significantly, this “war” fuels itself, provides its own inexhaustible purpose, as it is precisely the policies justified in the name of Stopping Terrorism that actually ensure its spread (note how Panetta said the new US war would have to include Libya, presumably to fight against those empowered by the last US war there just 3 years ago).

This war — in all its ever-changing permutations — thus enables an endless supply of power and profit to flow to those political and economic factions that control the government regardless of election outcomes. And that’s all independent of the vicarious sense of joy, purpose and fulfillment which the sociopathic Washington class derives from waging risk-free wars, as Adam Smith so perfectly described in Wealth of Nations 235 years ago:

In great empires the people who live in the capital, and in the provinces remote from the scene of action, feel, many of them, scarce any inconveniency from the war; but enjoy, at their ease, the amusement of reading in the newspapers the exploits of their own fleets and armies.

To them this amusement compensates the small difference between the taxes, which they pay on account of the war, and those which they had been accustomed to pay in time of peace. They are commonly dissatisfied with the return of peace, which puts an end to their amusement, and to a thousand visionary hopes of conquest and national glory from a longer continuance of the war.

The last thing the Washington political class and the economic elites who control it want is for this war to end. Anyone who doubts that should just look at the express statements from these leading Democrats, who wasted no time at all seizing on the latest Bad Guys to justify literally decades more of this profiteering and war-making.

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Syria-to-Ukraine Wars Send US Defense Stocks to Records
Richard Clough / Bloomberg

(September 25, 2014) — Led by Lockheed Martin Corp. (LMT), the biggest US defense companies are trading at record prices as shareholders reap rewards from escalating military conflicts around the world.

Investors see rising sales for makers of missiles, drones and other weapons as the US hits Islamic State fighters in Syria and Iraq, said Jack Ablin, chief investment officer at Chicago-based BMO Private Bank. President Barack Obama approved open-ended airstrikes this month while ruling out ground combat.

“As we ramp up our military muscle in the Mideast, there’s a sense that demand for military equipment and weaponry will likely rise,” said Ablin, who oversees $66 billion including Northrop Grumman Corp. (NOC) and Boeing Co. (BA) shares. “To the extent we can shift away from relying on troops and rely more heavily on equipment — that could present an opportunity.”

Bombardments of Islamic State strongholds added to tensions this year that include US-led sanctions on Russia for backing Ukrainian rebels and China’s feuds with neighbors over disputed South China Sea islands. The US also is the biggest foreign military supplier to Israel, which waged a 50-day offensive against the Hamas Islamic movement in the Gaza Strip.

A Bloomberg Intelligence gauge of the four largest Pentagon contractors — excluding Boeing, whose civilian airplanes business is larger than its military unit — rose 19 percent this year through yesterday, outstripping the 2.2 percent gain for the Standard & Poor’s 500 Industrials Index.

Record High
Lockheed, the world’s biggest defense company, reached an all-time high of $180.74 on Sept. 19, when Northrop, Raytheon Co. (RTN) and General Dynamics Corp. (GD) also set records. That quartet and Chicago-based Boeing accounted for about $105 billion in federal contract orders last year, according to data compiled by Bloomberg Government.

“There’s no doubt the world is getting to be a more and more dangerous place, and there are countries around the world” that could look to buy aircraft and artillery, Jeff Babione, deputy manager of Lockheed’s F-35 Lightning II program, said in an interview in Oslo. “There’s a sense that there’s less stability in the world than there was before.”

For defense companies, the offensive against Islamic State and al-Qaeda extremists is more than a showcase for big-ticket weapons such as Lockheed’s F-22 Raptor fighter, the stealth jet that debuted in combat this week.

In its first night of airstrikes into Syria, the US dropped about 200 munitions and launched 47 Raytheon-made Tomahawk cruise missiles, according to US Central Command. The military also deployed Boeing’s GBU-32 Joint Direct Attack Munitions and Hellfire missiles from Bethesda, Maryland-based Lockheed, creating an opening for restocking US arsenals.

Warhead Assembly
The Pentagon recently authorized Waltham, Massachusetts-based Raytheon to resume assembling warheads designed to intercept intercontinental ballistic missiles, a defense against threats from countries including North Korea and Iran. The program had been suspended in 2010 after failed test launches.

Global conflicts are benefiting more than just the makers of offensive weapons, according to Howard Rubel, a New York-based analyst with Jefferies LLC. He has a buy rating on DigitalGlobe Inc. (DGI), a Longmont, Colorado-based company specializing in high-resolution satellite imagery that has supplied equipment used by NATO to monitor Russian movements along the Ukraine border.

While the 2011 Budget Control act mandated about $500 billion in cuts from proposed Pentagon spending over a decade, this year’s rally in arms stocks predates the emergence of the Islamic State in the US public eye. In June, the group declared a caliphate and later released video showing the beheadings of US journalist James Foley and other hostages.

Overseas Markets
Pentagon contractors have been responding to the pullback in US military budgets by shifting focus to international markets, said Philip Finnegan, director of corporate analysis at Teal Group, a Fairfax, Virginia-based consultant that tracks defense and aerospace companies.

Even with revenue at Lockheed, Raytheon, General Dynamics and Falls Church, Virginia-based Northrop down 4 percent since 2011, non-US sales have climbed 9 percent during that stretch. The four companies also have pared expenses, including reducing their combined workforce since 2011 by 23,000 people, or about 6 percent, according to data compiled by Bloomberg.

The improvements to profitability, combined with investor-friendly moves such as stock buybacks, may influence share prices more than the strife in Iraq and Syria, Finnegan said.

“Clearly the world has become increasingly unstable. The question of whether that has a major impact on the defense budget is uncertain,” Finnegan said. “There may be an investor psychology that suggests that there’s going to be a large benefit to these companies. But the jury is still out.”

New Conflict
US lawmakers including Representative Peter King, a New York Republican, have suggested that the new global threats could prompt Congress to reconsider planned reductions in defense spending.

Rubel, the Jefferies analyst, said Congress’s possible willingness to boost arms budgets “reflects some rational thinking.”

“The military is stretched and stressed and there’s risk that if we cut much further, we’ll cut into serious bone and risk national security,” Rubel said.

For the US military, tensions between the North Atlantic Treaty Organization and Russia may force a rethinking of plans to reduce American deployments in Europe and postpone retirements of older fighter jets such as Lockheed’s F-16 and Boeing’s F/A 18, said Michel Merluzeau, an aerospace and defense consultant based in Kirkland, Washington.

Russia’s annexation of Crimea and intervention in eastern Ukraine has spurred European governments to reassess defense strategies, too. Germany’s Krauss-Maffei Wegmann GmbH has reported new interest in its Leopard 2 tank, a peer of the US M1 Abrams from Falls Church, Virginia-based General Dynamics.

That would be a turnabout for European militaries, where armored units have dwindled in importance since the collapse of the Soviet Union more than 20 years ago.

“We haven’t seen so many territories and borders called into question since World War II,” said BMO Private Bank’s Ablin.

To contact the reporter on this story: Richard Clough in New York at


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