Evening Update:

Iran Bolsters Retaliation Capability In Persian Gulf, Experts Say

Iran is rapidly gaining new capabilities to strike at U.S. warships in the Persian Gulf, amassing an arsenal of sophisticated anti-ship missiles while expanding its fleet of fast-attack boats and submarines, U.S. and Middle Eastern analysts say.

The new systems, many of them developed with foreign assistance, are giving Iran’s commanders new confidence that they could quickly damage or destroy U.S. ships if hostilities erupt, the officials say.

In recent weeks, as nuclear talks with world powers have faltered and tensions have risen, Iran has repeated threats to shut down shipping in the oil-rich gulf region. Its leaders also have warned of massive retaliation for any attacks on its nuclear facilities, which the United States believes are civilian covers for an Iranian drive to acquire a nuclear-weapons capability.

Last week, Iran’s Foreign Ministry declared that the presence of U.S. warships in the gulf constituted a “real threat” to the region’s security.

Pentagon officials have responded by sending more ships, urged on by Congress as well as U.S. allies in the region. This month, the Navy announced that it would deploy the aircraft carrier USS John C. Stennis to the Middle East four months ahead of schedule. The shift will keep two carriers in the gulf region.

In either scenario, Iran’s ability to inflict significant damage is substantially greater than it was a decade ago. A Pentagon study in April warned that Iran had made gains in the “lethality and effectiveness” of its arsenal. The Pentagon declined to comment for this article.

Iran’s increased power to retaliate has led some military experts to question the wisdom of deploying aircraft carriers and other expensive warships to the gulf if a conflict appears imminent.

“If the U.S. chooses to station warships in the Strait of Hormuz during the buildup to conflict, it cedes the decision of when to fight and allows the fight to begin in the most advantageous place for Iran,” wrote the study’s author, Navy Lt. Cmdr. Colin Boynton. “This could lead to a devastating first salvo on U.S. Navy warships, which would most likely be operating under restrictive rules of engagement.”

The Navy has ordered new systems for defending against small-boat “swarms,” including ship-launched unmanned aerial vehicles and special missiles and artillery rounds for use against fast-attack craft. But many of the new defenses will not be deployed for several months, said Michael Eisenstadt, a former military adviser to the Pentagon and the State Department.

“We’re behind and we’re catching up,” Eisenstadt said. “But if there’s a conflict in the near term, we may not be completely ready.”

The (Financial) End Is Near

The US and world economy are near collapse. Sovereign debt, driven by increasingly desperate government interventions, spirals upward at accelerating rates. There is no recovery and there can be no recovery with the debt levels of both governments and citizens.

Incumbents, overwhelmingly want the appearance of a good economy in order to enhance their re-election prospects

Daniel Amerman described the motivations for printing more money:

1. Creating money out of thin air on a massive basis is all that stands between the current state of hidden depression, and overt depression with unemployment levels in excess of those seen in the US Great Depression of the 1930s.

2. It is the weapon of choice being used to wage currency war and reboot US economic growth.

3. It is the most effective way to meet not just current crushing debt levels, but to deal with the rapidly approaching massive generational crisis of paying for Boomer retirement promises.

4. Political survival and enhanced power for incumbent politicians.

Not reinstating some form of quantitative easing (printing money) would quickly reveal the bankruptcy of the federal government. Last year the Fed purchased 61% of treasuries issued. The Fed now has surpassed China (who is attempting to divest) as the largest holder of US debt. Federal funding needs are no less this year and in the future. Without printing, government cannot pay its bills. Tax collections and private capital markets are insufficient to meet the level of spending.

The entire financial system is under collapse. It’s not about the Greeks; it’s not about the Spanish; it’s not about the Italians; it’s not about the English; it’s not about the Americans; it’s not about the Chinese; it’s about everybody.

The Ponzi scheme of government has been going on for the last six or seven decades. Like all such schemes, it eventually exceeds its ability to continue. Every country in the world that has adopted the social welfare state model (a polite description of various stages of Socialism) is insolvent and hopelessly indebted to degrees from which they cannot recover.

There is no economic solution to this problem. Nor is there any other solution. The laws of arithmetic preclude one. Modern economies have reached the point where they have only two options as correctly described by Ludwig von Mises:

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.

It is just that simple. No political rhetoric or economic policies can alter the outcome.