Going Rogue Is So Good

Charts: The euro reached an all-time low against the New Zealand dollar. The euro is not down nearly as much against the US dollar. The New Zealand dollar is a carry trade destination and the US dollar is not. So there must be at least a bit of a euro carry trade going on. Maybe a full blown euro carry trade will evolve. This would be very good news (when and if it happens) and means we should pile into emerging market debt and stocks.

Long War: America's highest ranking military officer is now in Israel, trying to talk the Israelis into not attacking Iran. Enormous pressure is being brought to bear against the Jewish state. Promises are being made. There are discussions about establishing "red lines," i.e. certain Iranian actions will automatically trigger a US attack on the bad guys. This new policy would be simliar to the red lines concerning North Korea attacking South Korea or China attacking Taiwan. Israel has totally gone rogue and is pushing the superpower into a very aggressive stance. If Mossad and the CIA are going rogue together it is bullish for stocks.

Is CIA Director Petraeus the kind of guy who would go rogue? Consider the Iraqi surge, the offensive he masterminded that won the Iraq War a few years ago. The Joint Chief of Staff was 100% opposed to the surge at first because it involved arming, training, and leading Sunni tribes from Iraq's interior against Al-Qaeda. These tribes were fighting for Al-Qaeda right before the surge and needed to switch sides, a tall order. Nobody at the Pentagon except Petraeus thought the surge would work. President Bush and Petraeus created a parallel Joint Chief structure to implement this strategy, completely bypassing the establsihed chain of command. The brass hated Petraeus until he became a hero. So, yes, the CIA Director is a good candidate for going rogue because he already did it once.

Now consider the greatest example in American history of a general going rogue. This was when Air Force General Curtis LeMay started firing ICBM nuclear missiles over Russia at the height of the Cuban Missile Crisis. Months before the crisis erupted LeMay tricked President Kennedy into issuing a standing order stating LeMay could test fire Minutemen missiles at any time (LeMay foresaw the crisis, genius). On paper LeMay was not committing treason. But in reality he was telling the USSR that he would unleash America's nulcear arsenal against the communists whether Kennedy wanted him to or not. For a brief moment America became a dictatorship with an Air Force general in charge. This scared the holy crap out of Khrushchev. LeMay had 100% gone rogue. If he hadn't done this, then America would not have won the Cold War. Rogue is good.

By the way, the movie Dr. Strangelove was based on this incident. Rent it. Watch it.