U.S., Russia Enter Cold War II
Good times ahead for defense contractors
•Is this war necessary?
•U.S. General: "We don't know yet ..."
•POMCUS revived ...
•Russian spies in New York ...
Dear Customer,
Russian spies ... proxy wars ... aerial standoffs. Today's headlines are just like old times for Cold War veterans. The Soviet Union is gone but tension between Russia and the West is very much alive.
Is this new, colder war necessary? Plenty of folks on both sides say no, but it's happening anyway. Maybe, we should all get used to that idea.
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In Friday's U.S. Troops Head to Ukraine and again yesterday in Greeks Eye the Grexit, I reported the rising odds of American military involvement in the Ukraine conflict. Yet, Ukraine is only one potential battlefield. Europe contains many more.
Leaders in other countries worry about a resurgent Russia, too. They're asking Washington for help… and the Obama Administration seems very willing to answer.
Sunday's Stars & Stripes U.S. military newspaper featured this interesting story:
Army looking to store tanks, equipment in eastern Europe
U.S. Army Europe will soon dispatch a survey team to eastern Europe to scout locations for tanks and other military hardware as part of a broader effort to bolster the U.S. military presence in a region rattled by Russia's intervention in Ukraine, the Army's top commander in Europe said Friday.
"We are doing surveys here in the next few weeks up in Estonia, Latvia, Lithuania, Poland, Romania and Bulgaria to see if there is a place where perhaps some of that equipment could be stored there," USAREUR chief Lt. Gen. Ben Hodges said during an interview with Stars and Stripes. "Maybe it's a company, maybe it's a whole battalion, we don't know yet until we do the survey."
General Hodges was in Kiev last week discussing plans to train Ukrainian National Guard troops. He described that operation in similarly vague terms. Are the plans really so unclear, or is he just being coy? I don't know – but I feel confident this is only the beginning of something bigger.
Cold War veterans might recognize the plan to pre-position tanks and other equipment close to the potential war zone. In the 1960s through the 1980s, the U.S. maintained vast European warehouses for the same purpose under a program called POMCUS.
The plan was that in a crisis, U.S.-based armored divisions would fly their troops to Germany, where they would jump right in to the POMCUS vehicles and head for the battlefield.
Fortunately, we never found out if that plan would have worked. I suspect the warehouses would have been a prime target for Soviet missiles long before the stateside troops arrived.
Now, we're about to do essentially the same thing again, a little further east and on a smaller scale (so far).
A POMCUS revival will be great news for defense contractors. They'll get to sell the Pentagon two of everything – one to store in Europe, and another back at home with the soldiers.
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Today's other Cold War flashback involves Soviet Russian spies. The FBI filed charges against two Russian government employees who once worked in New York, claiming they gathered economic and other intelligence for Russia.
Let's assume the charges are correct. The next question is, "Why is anyone surprised?" Everyone knows that embassies and trade missions serve as cover for intelligence activities. The U.S. does the same thing in Russia. Why charge these two men at this particular time?
The most plausible answer, in my opinion, is that the Obama Administration wants to revive Cold War fears of enemy spies behind every curtain. It will support their larger goals — which apparently include rebuilding an "Iron Curtain" against the Russian threat.
Hard to believe? I think so, too, but I don't have a better explanation. I really think our leaders want to generate tension between the U.S. and Russian people. They think they can keep it from sliding into an actual war.
We had all better hope they are right.
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Here's a reader with similar suspicions.
Reader Ron S. says: "It wouldn't surprise me at all if Putin and Obama are on the phone to each other, making plans on how to play this so each can profit from the military action in the Ukraine."
Brad: I agree, Ron, except I think Putin and Obama don't discuss it directly. Both men are smart enough to keep their hands clean. They rely on trusted associates to make the deals.
It's also fair to wonder exactly who is in charge of both countries. Is someone else pulling strings to control the presidents?
People asked similar questions in the Cold War years… one more sign that we're going back in the same direction.
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Are we entering Cold War II? If so, what are the leaders thinking? And who are the leaders, anyway? I'd like to know what you think. You can leave a comment on our website or send me an e-mail.
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U.S. stocks fell today following negative economic data and corporate earnings reports. By the closing bell, the indexes had recovered some of the morning losses but it was still a rough day.
• The Great Blizzard fizzled but much of the Northeast corridor remained frozen. NYSE volume was still well above average, though.
• New orders for durable goods dropped 3.4% in December, or 4.6% counting revisions to prior months - far below the consensus estimate for a 0.3% gain.
• Most of the decline was in the transportation sector, specifically non-defense aircraft orders.
• Microsoft (MSFT) was off as much as 10% early in the day. Lower software sales made last night's earnings report a disappointment.
• Caterpillar (CAT) dropped hard as well, after management said lower oil prices would cut into 2015 results.
• Procter & Gamble (PG) and United Technologies (UTX) both fell on what is quickly becoming the theme for this earnings season: currency headwinds.
• The strong dollar means U.S. companies earn less from overseas sales. In theory, they should make it up on higher sales volume, but that doesn't appear to be happening yet.
• Not all the news was bad. New single-family home sales surged 11.6% in December, with gains in every region except the Midwest.
• The faster sales pace brought the for-sale home inventory down to 5.5 months' supply. The median sales price rose 8.2% from a year ago.
• The Federal Open Market Committee convened in Washington today for a two-day meeting. No one expects any policy changes this time, but tomorrow afternoon's statement might shed some light in the Fed's latest thinking.
Good Luck and Happy Investing,
Brad Hoppmann
Publisher
Uncommon Wisdom Daily