Walking along the Port Royal in Paris, we came across the statue of a dashing soldier.
Sword in hand, he was leading the charge – on foot.
Confident. Handsome. Audacious. And there, on the pedestal of the statue, was a list of the battles he fought.
It’s a good thing his own people shot him when they did, otherwise there would not have been space to list all his battles.
Neerwinden, Mainz, Neuwied, Winterthur, Hohenlinden… he had faced the enemy at least a dozen times, was wounded three times, and the Napoleonic Wars hadn’t even started yet.
Twelve years and a hundred battles later… at Waterloo, he had five horses shot from under him.
Marshal Michel Ney… now there was a soldier! There was a hero!
Tomorrow is the 200th anniversary of the Battle of Waterloo – one of the great battles in history.
So today, let us turn away from the gods of money and fraudulent conveyance. Let us turn to Mars, the god of war.
In our DNA appears to be the desire for organized combat.
Whence did it come?
We don’t know. But it seems likely that tribes of proto-humans had to be able to compete – violently on occasion. Those who lacked an instinct or talent for combat were probably wiped out by those who didn’t.
And so, we arrive in the 21st century, programmed for prehistoric warfare… and ready to fight off the invader. We expect our young men to be willing and able to enter the battle; one who shirks is regarded as a coward.
Today, the martial instinct seems unnecessary. Tennessee, for example, has only been invaded once – and then it was by troops of the Union Army.
But people have the wrong idea about war. They think war is an instrument of foreign policy and should be used rationally – like a tool – and conducted scientifically.
But that is like saying that sex is an instrument of procreation. In fact, it is an end in itself – full of mystery and majesty all its own.
Since World War II, America’s wars have been disgraceful.
In Vietnam, the U.S. promised to bomb peasants “back to the Stone Age.”
Instead, the “gooks” kicked our butts.
Thereafter, U.S. warmongers targeted smaller, more defenseless enemies. Grenada, Honduras, Panama – none was in a position to resist.
And without a worthy enemy, the whole show is shameful and embarrassing. The heroes are phony… and war is nothing more than a grab for more money and power by the elites who start them.
And now, we are once again bumbling around in the Muslim world, nearly 800 years after French crusader Louis IX.
As you’ll recall from yesterday’s Diary, Saint Louis, as he became known, at least faced a real, competent army in the Hafsids at Tunis. Our opponents are amateurs, with no real professional training.
Often, you hardly have to shoot them; they blow themselves up. They have little government backing, and only the weapons they have gotten from us.
Yes, our war industries have hit the jackpot: They supply both sides.
At huge expense, the U.S. gives tanks, guns, and thousands of Humvees to its lackeys. They promptly run away from the fight, leaving their weapons to the enemy. Then U.S. suppliers get new orders for more weapons.
Our enemy-du-jour, the Islamic State, came on the scene only a few years ago.
It is so new that we don’t know what to call it. ISIL, ISIS, ISI, IS – who knows?
As for its military capability, it is an ad hoc group of fighters whose strategies and tactics are little more than improvisation.
Still, wouldn’t it be a treat to see David Petraeus – who betrayed national securityby giving vital documents to his mistress – redeem himself by leading a charge against ISIL?
He could ride a tank… waving a sword to direct fire… encouraging his men forward in a dramatic sweep to victory.
It would be even better if he managed a wound – perhaps a patch over his left eye, like Israeli war hero Moshe Dayan.
But rather than face its new enemies in the field, the U.S. military assassinates their leaders.
In today’s news, for example, there is a report that a U.S. drone strike killed a top al-Qaeda chief in Yemen.
This strategy has the benefit of not putting U.S. troops in the line of fire – especially when drones carry out operations. But it is obviously futile. It is more or less the same barren approach the U.S. and Colombian governments used to fight the “war on drugs.”
They targeted the cartel leaders – notably, Pablo Escobar. But taking out the leaders was like cutting down big, old trees – it allowed the sunlight to shine down on dozens of saplings.
After the Colombian cops gunned down Escobar on the rooftops of Medellín, for example, competition in the cocaine business increased… with the rise of “drug federations” and “baby cartels.”
Getting rid of the old guard merely gives the new guard – with more energy, new ideas, and innovative methods – a chance to flourish.
That is how ISIL came into being: U.S. forces first took out Saddam Hussein and his Ba’athist Party apparatus. Then they assassinated many in al-Qaeda’s leadership, too.
What was left – the young fanatics who had learned, evolved, and mutated into a more dangerous enemy.
You can best appreciate the dumbness of targeting leaders simply imagining what it would do in the U.S.
Suppose some enemy was able to take out the president, his Cabinet, and the entire U.S. Congress.
Would that be a bad thing?
Except for those few directly affected, it would probably not reduce the happiness or wealth of anyone. New leaders would take over. It is hard to believe they would be worse.
More on Waterloo… Marshal Ney… and war… tomorrow.
June 16, 2015
Utilities are getting crushed…
The S&P Utilities Sector Index, which tracks the performance of electric, gas, and water utilities, is down 10% year to date. That compares with a 1% gain for the S&P 500.
This is important… even if you don’t own utility stocks in your portfolio.
You see, traditionally, utilities fare badly in rising interest-rate environments. That makes them a canary in a coal mine for where interest rates are headed.
There are two main reasons for this…
First, the power, water, and gas distribution businesses are capital intensive. Water pipes need to be upgraded. Power cables need to be maintained. And gas leaks need to be fixed.
That means utilities tend to borrow a lot of money. This makes them particularly sensitive to interest rate rises, which push up the cost of carrying debt.
Second, the utilities sector is one of the most reliable sources of dividend income available in the stock market.
Right now, for instance, XLU has a dividend yield of 3.3% versus 1.8% for the S&P 500.
Utilities operate in highly regulated environments and are protected from competition. They’re also protected from economic downturns. People need – and pay for – electricity and water no matter what the economy is doing.
No matter what the economy is doing, the price of those utility bills – as you know – tends not to move around a lot.
That means utilities have more reliable income streams then other types of companies… and can be counted on for consistent dividend payments as a result.
This makes the utilities sector hugely popular among yield-starved investors.
But when interest rates rise, so do Treasury bond yields. This means investors can pick up a higher yield in the supposedly safer bond market.
On a relative basis, this makes the yield on utilities less attractive to investors… And investing is always a relative game.
The mainstream press… and mainstream investors… may have gotten used to ultra-low interest rates as far as the eye can see.
But the big plunge in the utilities sector this year suggests that a significant number of investors sees things differently.