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Visit our home page for more up to date information on currencies and commodites and samples of our mkt updates. BaghdadApr 03, 2003 - 2233 GMTSummary Source: www.stratfor.com From the beginning of the war-planning process, Baghdad posed the greatest challenge. The United States does not want to fight an urban battle, but the conquest of Iraq cannot be complete without the fall of Baghdad. The initial U.S. action -- trying to kill Saddam Hussein -- was designed to trigger a political capitulation that would make a battle for Baghdad unnecessary; it didn't. Iraqi resistance may collapse simply out from attacks and internal weakness. But if this doesn't happen, three war-fighting models will be available. One is the fall of Paris in 1944 -- the favored U.S. strategy. The second is the siege of Budapest in 1944-45 -- six weeks of encirclement and bombardment, with civilian casualties. The third is the fall of Berlin in 1945, with the attackers losing almost 80,000 men in three days. Berlin is out of the question. Paris is the model the United States wants, but the danger is that it will slip into a Budapest mode. Analysis Any discussion of the war in Iraq has always turned on the conquest of Baghdad. The capital city is the heart of Iraq. It is the country's political, administrative and structural center. The fall of Baghdad does not necessarily mean that all resistance will immediately end in the rest of Iraq. However, without the fall of Baghdad, this war cannot end. The fall of Baghdad has always been the central challenge facing U.S. war planners. Baghdad is a world-class city in terms of size and population, with more than 5 million people. The U.S. Army has never taken a city of this size in the face of significant opposition. Few armies have done so. In direct assault, capturing a large city against resistance tends to cause large casualties among the attacking forces. In 1945, the Red Army had Berlin completely surrounded; it had complete air superiority and massed artillery. The city was held by the defeated remnants of the German army, including large contingents of young boys and old men poorly armed and ill-trained. The Soviets were battle-hardened veterans. Moreover, the Soviets had no compunctions about nor political liabilities attached to causing massive casualties among the civilian population. They controlled the pattern and tempo of the offensive. Nevertheless, in the direct assault on Berlin, the experienced Soviet forces suffered nearly 80,000 dead and close to a quarter-million wounded in about three days of fighting. There are other strategies for subduing large cities. In 1944-45, the Red Army surrounded Budapest for six weeks, pounding it with artillery fire and aerial bombardment, before entering the city. By the time Soviet forces entered the heart of the city, resistance had collapsed. The siege took weeks and cost countless civilian lives, but Soviet losses were relatively light, compared to other battles fought. Other battles for cities ended poorly for the attacker: The Germans failed to take either Leningrad or Stalingrad after investing heavily in both battles. The point is that urban warfare is one of the most difficult exercises in warfare, and most armies avoid direct assaults on cities, since these are risky operations and almost invariably carry high casualty rates. This is particularly true in large cities. Moreover, in a war in which civilian casualties represent a significant political consideration, an assault on a city is generally to be avoided. The United States did take one world-class city in its history: Paris in 1944. It took the city with very light casualties to either its forces or to the civilian population, despite the fact that German troops had garrisoned the city. The key was political, not military. The German high command had ordered that troops resist and that they carry out a scorched-earth policy, in which defeat would mean the catastrophic destruction of the city. The local German commanders neither resisted nor carried out the order. Rather, they capitulated. The United States was able to occupy the city without assaulting it. Indeed, if an assault had been necessary, Eisenhower would have insisted on bypassing Paris. He was not about to engage in high-intensity conflict in a city the size of Paris. Paris was as much about politics as about warfare. The German commanders in Paris command were disaffected with the German political leadership. They were certain that the war was lost. Neither the commanders nor the troops were eager to die for a hopeless cause, and the commanders were aware that not only would the Allies hold them accountable for the destruction of Paris, but that a peaceful capitulation of Paris would put them in an excellent position in a postwar world dominated by the United States and its allies. The negotiations that occurred took place not between the Allied high command and the German commanders, but between resistance leaders in Paris and the garrison commander. However, the key decision was made autonomously by the local German command: Officers calculated their own interests and decided not to resist. The negotiations were more about the script of surrender than the surrender itself. Gen. Tommy Franks is no more eager to go into Baghdad than Eisenhower was to go into Paris in 1944. Like Eisenhower, he does not want to put his forces into a potential urban meat-grinder. Like Eisenhower, he is under heavy political pressure to solve the problem without massive civilian casualties or the destruction of the city. Like Eisenhower, he has no appealing choices: Direct combat, starving the city to surrender, unlimited bombardment or a combination of the three are all unacceptable options. For the United States, the ideal solution in Baghdad would be for Iraqi troops to choose not to resist. Thus far, Iraqi forces have demonstrated minimal competence. They have not been completely incompetent, as some had forecast, nor have they been highly competent. They have executed no effective counterattacks by cutting supply lines or isolating U.S. forces. They have not once taken the strategic or operational initiative away from the coalition. What they have done is demonstrated that, under certain circumstances, some units -- particularly in urban settings -- will hold their positions and return fire. In urban warfare, this minimal competence is sufficient to pose serious challenges to taking and pacifying a city like Baghdad. This is why the United States has been obsessed from the beginning with reaching a political solution. For Washington, avoiding resistance in Baghdad has always been a primary consideration. The decapitation strike against Saddam Hussein on the first night of the war was intended to trigger a political evolution in which the Iraqis would choose not to fight anywhere, but in particular would choose not to fight in Baghdad. The attempt failed but was certainly worth making, given what is now at stake.The United States is facing the very real possibility that there will be resistance in Baghdad. Given that the troops in Baghdad -- the Special Republican Guard -- are reputed to be highly motivated and that they are being joined by other army and Republican Guard units, a direct assault on Baghdad would appear to violate just about every requirement in the U.S. war goals: 1. It could result in heavy coalition casualties. 2. It could result in massive civilian casualties. 3. It could result in massive damage to Baghdad's infrastructure, up to and including rendering the city uninhabitable for a period of time. None of these are acceptable outcomes, given what appear to be the parameters that have been laid down for the war. For the United States, therefore, the Paris solution remains the most attractive option -- if it is available. The problem is that Paris was hundreds of miles from Berlin, and the local commanders were not collocated with the political leadership. Baghdad is more like Berlin than Paris: The ability of regional commanders to decide not to fight is limited by the power of the political personalities that are located only a few miles away from them. The simple geography of power makes the Paris option difficult to execute, even if Iraqi commanders wanted to try it. If there is any hope of the Paris strategy working, it is essential that the direct commanders of Iraqi divisions and brigades -- and their troops -- conclude that defeat is certain. So long as they retain anywhere in their minds the idea that the United States will, in the end, negotiate a cease-fire with the existing regime, no Paris solution is conceivable. Every commander will know that holding back would mean his own death. The commanders must believe that their choice is between certain defeat and death, and managed defeat and life. It becomes even more difficult: It is essential that the commanders reach this conclusion by themselves, without an internal conspiracy or communications with the coalition. Hussein's counterintelligence and security apparatus appears to be functioning extremely well. Any commander will have to assume that all conspiracies will be penetrated. In Paris, what little negotiation that occurred went on with the local resistance. More important, some Gestapo officials in Paris had reached the same conclusion as the military commanders and also were trying to find exit strategies. With the security apparatus in the hands of Hussein's son, however, that is unlikely to happen in Baghdad. The possibility that the Iraqi president is dead appears to be irrelevant. If he is alive, he remains a dangerous figure to those around him. If he is dead, his son has taken over and is in effective control. Therefore, in order for capitulation without resistance to occur, it is essential that the security apparatus be dismantled. That is obviously being tried, with the air assault focusing on this apparatus -- but as we have learned, the Iraqi infrastructure is more robust and resilient than it was in 1991. At this moment, there is no reason to believe that there will be no resistance in Baghdad. Undoubtedly, CENCTOM and the CIA are working intensely to cripple the security apparatus and to provide military commanders enough room to maneuver so that they might save themselves. But it is not clear that this will work -- and it is not clear that if it does work, the field commanders would opt for a Paris solution.One of the factors on the U.S. side is time. From a military standpoint -- and really from a political standpoint as well now -- the United States is not under heavy pressure to end the conflict quickly. The coalition has time to bring up forces, continue to attack Baghdad's infrastructure and to create the sense of doom and inevitability that was the foundation of the capitulation of Paris. Whatever the mood is in Baghdad now, it will evolve. However, the United States must be careful not to slip from a Paris strategy to a Budapest strategy. Siege and bombardment achieved a Soviet victory, but it was in an environment in which the political consequences of massive civilian casualties and massive infrastructure damage were not a consideration. If U.S. commanders slide into a Budapest strategy, they will, at the very least, have to accept a humanitarian disaster. A Budapest strategy is a slippery slope that could even slide into the ultimate unacceptable outcome: a Berlin strategy. Now, it is possible that the Iraqis are so delicately balanced that a sudden attack by airborne, airmobile and armored groups -- coupled with actions by covert forces already in Baghdad -- will bring the regime and the military crashing down. However, unless there is some unique intelligence in Washington pointing to underlying weakness in Baghdad, a "Hail Mary" pass designed to bring the war to a rapid conclusion is something for which CENTCOM at least has no real appetite. It could result in the airborne forces being chewed up along with now-revealed covert forces, while armor is blocked. The risk would be worth it if time were not on the coalition's side, but since it is, there is no need. Therefore, although coalition forces are certainly on the doorstep of Baghdad, it is a pretty high step. At the very least, the coalition will want to lay the groundwork for any offensive into Baghdad. In fact, the last thing that the coalition wants is such an offensive: One look at the British forces in Basra will reveal coalition feelings about urban fighting, even in a much smaller city. The United States therefore has a difficult problem. In order to create a sense of inevitable doom, it must convince elements in Baghdad that the coalition is prepared to go to any lengths to secure victory. At the very least, it must completely surround and cut Baghdad off from the world. On the other hand, it cannot impose a Budapest-type blockade and choke off the city. It is not clear how the United States will balance between appearing to be utterly ferocious without creating a humanitarian crisis. And without that humanitarian crisis, it is not clear how it will convince Iraqi field commanders that managed capitulation will not be signing their own death warrants. The United States badly wants Paris and not Berlin to be the model in Baghdad's fall. The military might have a way to assault and subdue Baghdad that does not pose the risk of bogging down in urban warfare and does not require the political cooperation of Iraqi commanders. Several ways are possible, but all assume that the appetite within the Iraqi army for resistance is minimal -- and that is simply no longer an assumption on which an operation can be based. We therefore expect prudence and caution from the coalition around Baghdad. The rush to Baghdad was well-executed and involved well-calculated and carefully thought out risks. The war to date has been an interesting combination of audacity and prudence, with Franks picking the time for each. In Baghdad, the same combination will be needed. Franks needs to know whether and how intensely the Iraqis will resist and he, as a prudent general, must begin by working from the worst-case scenario: intense resistance. U.S. forces will probe the edges of Baghdad, trying to get a sense of Iraqi intentions and capabilities. If weakness is discovered, U.S. forces will advance -- never irrevocably, never taking the chance of being trapped inside a hostile urban environment. If resistance appears too vigorous, Franks has time to execute at least a modified Budapest maneuver, surrounding the city and pressuring it. The crisis will come when the city is balanced between humanitarian disaster and the option of massive bombardment. The Russians chose bombardment of Budapest from the beginning. Carrying out an assault on a major city -- constrained by rules requiring that massive civilian casualties be avoided -- will be an enormous challenge to Franks. From his point of view, Paris is a much better place to be than Budapest. Jim's note:To understand this situation you must not just listen to TV news and financial stations. An intelligence service is absolutely necessary. My choice is www.stratfor.com Head UpGold Community AlertSunday, March 30th, 20031/ Market Action since last week's Head Up is strengthening the potential now that the cyclical low for gold and gold shares is in fact taking place. 2/ The longer it takes to find a point of resolution to the Iraq War, the less likely it is that that such an event will result in a euphoria stock market or dollar rise of any duration. 3/ Since the administration publicly anticipated a different scenario for the Iraq war, there is less of a chance that what was anticipated as the form of victory will in fact be that which is declared as victory. 4/ One of the goals of this operation was defined as impressing the Islamic world with both the US strength and determination. Should that impression not be fully delivered the march towards the euro and gold in the Islamic world will accelerate offsetting the market effect of Iraq oil settlement solely for US dollar under US management. 5/ Bureaucratic administration as nation building unless wholeheartedly embraced by the citizens of that nation will prove impossible task to accomplish. There is almost no understanding in the US of the Islamic mind and ways. The endless tea and strong coffee drinking before business, the need for a 5% sponsor to get anything done and the underling teachings of Islam that penetrate all activity are totally inscrutable to the American way of thinking and doing. To place an American lady in a major position although natural to us is an insult to the Islamic men and women she shall attempt to administrate. This is akin to showing an Arab the bottom of your foot or putting you thumb out to hitch a ride. In both cases you are "flicking off" whoever sees it. We stop our cars in an accident but in the Middle East, Asia or Africa for an American that is one of the swiftest, easiest ways to get yourself killed by a crowd. Wait until a capable and able lady tells the Kurds that they have to be governed by anyone, not a Kurdish male from anywhere. Do you really believe a US Bureaucrat knows how to tell one sect of Islam from the other? Do you really believe those same people that gave you the IRS, The Post Office, and Army Intelligence (the ultimate oxymoron) are going to deliver to the world a united Iraq with a modern form of government? That stands as much of a chance as Lawrence of Arabia did when he really believed he had become a fill fledge Bedouin chieftain. We are more apt to get the same treatment from the "Shock and Awed" citizens of Iraq that Lawrence of Arabia received from the Turk.In terms if world class boners, the only events to surpass our expectations that we would be welcomed by the Iraqis with massive surrenders and flowers is the absurd expectation that we can financially afford to police the entire world and that we are capable of building a new Islamic nation administered by US bureaucrats galore during that building phase. We have learned nothing from the Korean police action. We have learned from Vietnam. We have learned nothing from the ruble that went to rubble and destroyed communism. Capitalism is in trouble and the whole story will be told by the action of the US Dollar. 6/ It is becoming clear that the lack of vitality in the economy which is being blamed on the war, it is not the result of the war but rather an over debted consumer afraid of the level of unemployment that represents the heart of the recessionary psychology. 7/ The statements of Chairman Greenspan and Governor Bernanke concerning methods of super liquefying the financial system are being rehashed continually by the establishment press in anticipation of such a need and event. Conclusion: You are in a long-term bull market in gold which has completed its reaction from this market's first try to better $400. We are preparing for the second attempt. March 26, 2003 US in Economic Cross Hairs of Emerging "Sino-Russian-Islamic Hegemony"Preemptive Action Can Win this War for the US! But Will the Bush Economic Administration Act? There was a messenger that history speaks well of. And his ride on horseback to announce the arrival of the British at Concord, Massachusetts so the local militia could defend themselves, is a part of American folklore. I am not for a moment comparing myself to this great patriot (Paul Revere). But I'd be derelict in my duties to the gold community by not raising an alarm that must be communicated within and outside of this community. The trend is all too obvious as to what is about to happen. The Master of the Universe who defeated the Soviet Union was none other than Chairman Volker of the US Federal Reserve. When Volker took action in March of 1980 by cranking interest rates through the ceiling, he killed more than inflation. He killed all commodity-producing countries in the world which represented 100% of the client nations of the Soviet Union. The Soviet Union never reduced its military spending as its Federal deficit skyrocketed. Their fatal mistake, however, was the invasion and occupation of Afghanistan. The final outcome of that debacle was the implosion of the Russian Ruble which was followed by the exposure of the non-functional balance sheet condition of everything Russian. Communism collapsed before Capitalism thereby reinforcing the inherent strength of the capitalist system in people's eyes. Capitalism then moved towards Global Markets during an administration of the "Music Man" whose economic team did everything economically inappropriate long-term and extremely practical short-term to boost US equity markets into the stratosphere to the glee of Wall Street and the brainless financial TV talking heads who became the Gurus of the techies. From 1996 onward, it has been official Asian/Islamic buyers of US treasury instruments that have financed the ever-mounting transmission of capital out of the US into non-US hands. The smart bombs without a mechanism for jamming their GPS targeting are twofold: First it is the mountain of US Treasury instruments held by the Sino-Russian-Islamic challenge. This is because these instruments can be utilized to bomb the US Treasury markets into oblivion simply by a slow-down in purchasing under present circumstances. Second is the purchase of every ounce of gold sold by every central bank, by every cartel member, by every disinvestor and by every gold producer hedger. Now it is the United States that is in the position that the Soviet Union was in when the final nuclear economic event killed Communism. Now the US is the largest debtor nation, getting ready to go ballistic in their debt structure via Guns, Butter and Rebuilding Iraq and maybe Afghanistan. The $350 billon Senate surprise reduction of the Bush tax cut was a step in the right direction but by no means a solution to the growing problem. Now the US has both Afghanistan and Iraq on its hands without the financial means to sustain its objectives. Have you noticed that there is a major action taking place in Afghanistan over the past three days? The Afghans have been fighting for more generations than even they can recall. The game is fall-down when the opposing force arrives, then slowly stand up again and start their traditional guerrilla warfare. This is exactly what happened to the Russians and it is starting now for the US. It is exactly what Saddam Hussein plans after he negotiates his way out of Baghdad when we are stalemated there. Now there is a clear probability that the greatest advantage long-term from our military presence in Afghanistan and Iraq will be the new triumvirate of power: the Sino-Russian--Islamic challenge against US Hegemony. There is a strategy that could be used by the US to win this economic war. First, understand the weakness that is the "Clear and Present Danger" to the US. That weapon is the huge amount of debt we think we have stuffed down the throats of Asian nations. Note that Russia is already a net seller of US Treasuries. All the Sino-Russian-Islamic nations need to do to defeat the US is to hammer the US Treasury market with those instruments and the US dollar will follow the old Soviet Union's ruble into oblivion and the fall of capitalism will be right behind it. That is pure fact! The worst concept is that of the "Intellectual Establishment Economic Ostrich" with its head in the sand thinking no one can hurt it. I have heard it said that this would never happen because foreign selling of US Treasuries would hurt the seller of the US Treasury instruments as much as the US and the US dollar. That is nonsense because US TREASURY INSTRUMENTS USED THIS WAY ARE SMART WEAPONS and this is war for survival OF THE FITTEST. The concept that General Patton would hurt himself by firing all his ammunition in the first 15 minutes of a conflict never occurred to him in battle. He was one of the greatest generals in US history because of this self confidence. These financial instruments, the US Treasuries, are national assets of the Sino-Russian-Islamic hegemony. They are weapons and they will be fired. It is true that the greatest risk now is not the "Evil Empire" or "Axis of Evil" but rather the "Amoral Personal Enterprise Financial Genius" that will form the "Evil Corporation" that now plans to own the world. Well, it is happening now in the corporate merger of Sino-Russian-Islamic Inc. and the US has a perfect defense but will they use it? Probably not! The defense is simple and Chairman Greenspan plus Governor Bernanke may well already know they have it. The mechanism to prevent a huge run up in the gold price (above $529) and fall in the dollar (below .62 on the USDX) is gold itself. But before dealing with gold, the US must decide exactly what will be the event upon which victory can be claimed in Iraq. Is Victory?1/ Armed forces reaching Baghdad?2/ A siege of the city of Baghdad?3/ An attack on the city of Baghdad?4/ An uprising of the non-military citizens within the city of Baghdad?5/ Our armed forces camped out at the red line around Baghdad for six months?6/ An about face and return home? Since the constraints imposed upon the military include not killing anything shielding Iraqi forces (civilians), a classic victory is not possible. We need to bring closure in Afghanistan and Iraq before they become the cement shoes that Afghanistan was for the old Soviet Union. But this will more than likely not occur. Next we need to kill the tax bill completely and cut 15% from all spending programs, putting the rebuilding of Iraq on hold for better times. But this will not occur. We may end up facing the fact that all the gold we have sold has come to naught as it has gone into the hands of those who would oppose us. We need to know that the old tactics of making the way clear for the cartel of common interest to play the short side of gold every day in every way, sell gold from central banks, bad mouth gold at ever opportunity, and use the Exchange Stabilization fund via huge spreads to manipulate the gold market lower intra-day, will be of no use whatsoever to offset what is coming down the pike. Gold is going to be remonetized by official Islamic sources. Gold will benefit from the fall that will occur in the US Treasuries. Gold will benefit from the fall in value of US Treasuries and from the resulting fall in the US dollar. To offset this scenario, the US economic functionaries of this administration must remonetize gold as the tool to prevent gold from opposing the dollar before there is a confirmed technical top in Treasury Bonds. There will be precious little time to defend once the US treasury market is confirmed technically (today's market religion) in a bear market and therefore recognized as such within the establishment circles. I have given you here the mode of remonetization that is feasible now for the US dollar which is the "Federal Reserve Gold Certificate Ratio" tied to M3. I have suggested that it will come before June of 2004 but now feel it must come immediately. The dollar has to start becoming as good as gold if we are to avoid the downfall surely planned for us. As the ruble left the Soviet Union in rubble, the dollar can be the demise of the Western Capitalist System. If the egotism normal to establishment intellectuals continues to reject gold as being too antiquated for modern times, then modern times are over. So now for the long-term understanding of what is happening in markets and the world, the US Treasury market takes center stage. To know what is happening in gold short-term ,the US dollar remains of primary importance. I do not see any chance of reversing the long-term bull market in gold and the long-term bear market in the dollar. There must be a clear understanding that we are in the final days of the capitalist system and the weapon employed by those who would replace us is US Treasury Instruments, the soldier is the US dollar, and the beneficiary of continuing ignorance will be the price of gold. Alliances to Limit US Hegemony Setting Stage for Economic Cold WarByJames Sinclair Tnxinvestor@zoolink.com One thing that's glaringly clear from the second installment of the War in the Gulf is the support that Russia and China are giving to Iraq. This support has gone much further than simple opposition within the United Nations Security Council. In fact, intelligence sources now believe that Russia has provided Iraq with technology that will jam the signals from Global Positioning Systems (GPS) that help guide smart bombs to their targets. Since the major weapon being used in today's warfare is the smart bomb, this jamming technology has the ability to render smart bombs STUPID. Mind you, it doesn't affect the bomb's payload in any manner, it simply reduces the targeting capability of the shooter and increases the probability of errant missiles falling in civilian areas. The only other alternative is close fire observers using laser markers, which puts the observers at risk and is not nearly as efficient or accurate as a smart bomb. On the war front, Iraq's major population centers in the south have largely been by-passed by US and coalition forces. These cities, along with Baghdad, are supplied for six months, according to Iraqi government reports. Nonetheless, intelligence sources conclude these reports are probably unreliable, creating a scenario for enormous human suffering should the battles for Iraq's major cities be prolonged. Some are describing the military aid given by China and Russia as the "Awe & Surprise" of the Iraq war. The thesis of this support of Iraq is the "New Cold War" which is the battle for the reconstruction of the world's major power bases. Right now, we clearly have a "Sino-Russian-Islamic" power basis versus the "US & GB" with Europe (except France). This new cold war will be more economic than a head-to-head clash unless the US administration turns into a family dynasty and another Bush (Jed) arrives on the scene. It's probably worth noting that the only reason we won the first Cold War was because the Soviet Union went broke before we did, a lesson they're unlikely to repeat. Also, China, with its burgeoning economy, increasingly has the economic resources to counteract US hegemony, especially if the next target of the current administration is North Korea. Personally, I do not believe that Washington really understands what they have started by giving Russia and China this outrageous opportunity to win the hearts, minds, pocketbooks and weapons of Islam. The best quote one can use to describe this situation was said more than two thousand years ago: "Father forgive them for they know not what they do." Replace the word "they" with Washington. March 25, 2003 It's all about the Dollar The next few days to two weeks could be the last great buying opportunity for gold in my lifetime. Gold is going, IMO, over $400 in 2003 and over $500 in 2004. Gold is trading lock step with the dollar. As the dollar rallies, gold declines; and as the dollar declines, gold rises. The only exception here is that since the shorts are presently in control, when the dollar declines they help gold go lower, faster and further. We are ten days from the idealized nadir of gold's negativity in a cyclical sense. This measure has been reasonably accurate since gold hit its low of $248. However, like all cyclical concepts "on or about" is the best rule. Cycles show the inherent strength or weakness of a market. They are relative to what the market does. In that sense if a cycle top is looked for and the market simply goes sideways, it is stronger than expected. Therefore, one does not trade on cyclical indicators but only looks at the market and its intentions as the cyclical tops and bottoms are due.What is happening now is not good for the US dollar long term. Whatever the market does, I do not believe it will reverse the present bear market in the dollar. That does not mean that you should ignore the stop/go signs that I am giving you. Let me quote to you from an article that appeared in Newsweek on March 24th: "More recently, however, there has been a significant change in how the flow of the foreign funds that is as critical to US health as the flow of oil. Over the past year, private foreign investment in the United States has fallen dramatically. It has been partially offset by increased buying of US Treasury notes by Asian governments. But, at the same time, some governments like Russia have also begun to shift some of their reserves from dollars to euros." "Thus the biggest casualty of war with Iraq may be the US economy. A dramatic increase in debt could result in a fall of the dollar that would reduce US living standards while significantly increasing the cost of projecting US power abroad. The only way to avoid this scenario is by raising taxes, something that will also reduce living standards. Another option is to become more dependent on lenders like China and Saudi Arabia. Either way, US power may not loom nearly as large as many now imagine." Jim Sinclair's Comment: Even Newsweek forgot the Russian connection but did say "R.I.P." to the US Dollar. March 23 2003 Dear Friends: The New York Times this Sunday had a telling comment which I ask you to consider. This comment was contained in an article on page A24 "Delaying Talk About the Cost of War." The article discussed the certainty of the Bush Tax Reduction Package while the administration has not yet quantified the potential cost of the war effort. Please keep in mind that estimates for the full cost of this action plus rebuilding plus macro exconomic costs were estimated in the "Economist" months ago at from USD$100 Billion to USD$1.2 Trillion.The telling comment in the Times was "The administration has stiff armed, as far as I am concerned, the congress, those that wanted to know something about what are the costs of the war," Mr. Byrd said. The White house's reticence about war costs has crystallized a sense among is political opponents, some independent observers, and even some Republicans that Mr. Bush is willing to suppress information that threatens his agenda."For this reason and because the huge run up in the equity market and drop in gold has come as a result of government released information concerning the success of the US strategy in Iraq, you have an absolute need to obtain unbiased professional intelligence reports on what in fact is happening in Iraq.If the war has not been won by Wednesday of this week, I strongly recommend that you purchase the enter level intelligence report issued by Strategic Forecasting LLC who you can reach at www.stratfor.com.If the war extends through this coming week then there is a strong probability that the huge Dow rally and gold sell-off is based on public acceptance of a war time propaganda program and possibly not on hard facts. The press who believe they have full access to this conflict by being directly immersed in the fighting units seems to have overlooked that the government chose those units in which they are placed.Regards, Jim Older Articles by Sinclair click the link below PAST ARTICLES BY SINCALIR James E. Sinclair is Chairman & CEO of Tan Range Exploration TNX on the Toronto Stock Exchange. He was Chairman of Sutton Resources from 1989 to 1995 when he personally funded that company into the development of the Bulyanhulu property before its sale to Barrick Gold. | ||||
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