Serious Naval Matters
August 21, 2017
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
The situation on the Korean Peninsula has quieted greatly down in the course of the past week or so, with the egomaniacal Kim Jung-un proving that he may be an egomaniac but that he is not “mad.” Having pushed the US to brink of war, Kim stood down; blinked and took the better course by not sending missiles toward Guam.
He tested the US’ resolve on this issue and found that our resolve was strong and that he could not assure himself that Mr. Trump would not retaliate violently and massively. Kim’s one intention is to remain at the helm of North Korea and thus to remain alive. China keeps him under wraps from the North; we and the South Koreans keep him under wraps from the South and he keeps everyone at bay by making it quite clear that his nuclear program is serious and growing. For now, stalemate is the order of the day on the Peninsula, with Kim remaining in power; with the Chinese continuing to have the “buffer state” they want in the region and with South Koreans and the US military still massively involved in the region. Mutually assured destruction… MAD… worked for the US and the Russians during the Cold War and MAD is working in the Korean Peninsula.
The big news overnight is the stunning news out of Singapore and the Straits of Malacca where the USS John S. McCain … named after the grandfather and father of Senator John McCain, both of whom were Admirals in the US Navy… has struck an oil tanker there, with ten US sailors missing and five injured. The McCain is an Arleigh Burke-class Aegis destroyer, homeported at the Yokosuka Naval Base in Yokosuka, Japan.
This is the 4th… the 4th!!!… such collision between a US naval vessel and a private ship this year, all of which have taken place in the waters off of Asia. We are left then to wonder just what in God’s name is happening to our Navy?! Try as we might to find some reason not to be fearful of the situation we cannot help by wonder how it is that the world’s most powerful navy, with the world most advanced technologies, keeps ramming into other ships at sea. Is the training of our naval officer corps that seriously compromised that these things are happening? Is our technology compromised? Is the quality of our Navy in jeopardy? And how shall the US’ enemies abroad view the situation, wondering if these ships really are as invincible as they had believed or feared previously.
This is not to be taken lightly, for not only shall the US’ enemies view this with a wary eye, but so too shall the US’ allies in the region. How shall Japan view what has happened, and shall the supporters of a more militarist Japan view this as a reason to increase their influence upon the Japanese political scene? Certainly they will not have their voices diminished.
At any rate, we have argued for decades that the very nature of the US dollar’s reign as the world’s reserve currency has been predicated upon US naval superiority for the nation that has controlled the world’s shipping lanes has been the world’s reserve currency. Portugal was once the world’s naval leader and for a while she was the reserve currency nation. Portugal was supplanted by Spain, which dominated the seas in centuries past, until her naval superiority was “trumped” by the British navy that “ruled the waves” for several hundred years and whose Pound Sterling also reigned.
The US assumed that role from the British in the post World War II period as US military superiority was unquestioned… until now. Four such mishaps are inexcusable; something is very, very wrong with the US Navy and the world is less safe as a result.