As Missiles Fly, Who Runs the Defense Department?

The only place you’ll find Lloyd Austin is on the back of a milk carton. [The Rude Awakening] January 18, 2024 [WEBSITE]( | [UNSUBSCRIBE]( As Missiles Fly, Who Runs the Defense Department? [Sean Ring] SEAN RING Before we head into Byron’s great defense piece, - [Check out this AI mastermind]( Jim Rickards hosted and learn how a tiny mathematical formula playing out in the AI markets could be set to create an entirely new generation of economic winners and losers in just the next few months (making a few savvy investors very wealthy in the process). - [Get the details on a strategy]( you can use to target profits of 1,000% or more in the coming months playing AI’s Second Wave (A strategy one member of our team has used to take home returns as high as a rare 138,000% in just 4 and a half years). But you need to hurry. Because due to publishing constraints [this mastermind]( will only be available until tonight at midnight. Go watch it right after you read Byron’s piece. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( [LIVE DEMO: Elon Musk's AI hits 65 MPH]( [Click here to learn more]( I just taped a live demonstration of Elon Musk’s AI in action. [Click here to watch: it’s around 2 minutes long.]( Elon already created an “army of millionaires” with Tesla. Looks like he’ll do it again with his AI. Because unlike ChatGPT, Elon’s AI works in the REAL world. That’s why I think Elon’s AI will be [100X stronger than ChatGPT.]( [See Elon Musk's AI in action.]( [Click Here To Learn More]( As Missiles Fly, Who Runs the Defense Department? [Byron King] BYRON KING You’ve seen the news, right? U.S. and British forces (but mainly U.S.) bombed Yemen in reply to attacks on Western shipping in the Red Sea by a group called the Houthis. Meanwhile, U.S. and allied forces are shooting down $50,000 drones with $2 million missiles. We know very little about this proto-war from the outside, and that’s by design. Whatever you read in Pentagon press releases, it’s a bare outline of the overall story. Much else is happening on the other side of the world; sooner or later, it will cost us all bigly. Who Is Running the Defense Department? Given this, it’s fair to wonder who runs the Defense Department. In the first week of January, the Secretary of Defense (SecDef), Lloyd Austin, was absent for over four days. He was out of contact, hors de combat. He’s back, they say, but working from home for a while. He had complications after a medical procedure. In that sense, he’s keeping a very low profile. This is all very strange because SecDef is one of the key people in the U.S. government; as I’ll discuss below, he just dropped off the scope. Then, this missing-man story didn’t even break until a week into events via a Pentagon press office dump after 5:00 pm on Friday, January 5. Nothing to see here, right? Move along, eh? Well, no. Because almost immediately, the rumor mill spooled up. My favorite juicy story explained that SecDef Austin was in Ukraine for a conference over the New Year's weekend and was injured in a Russian missile strike. Well, apparently not. From what we sort of know, the explanation is far more mundane. Austin is dealing with prostate cancer, which is not an uncommon problem with 70-year-old males. However you look at it, this is no way to run the Department of Defense. And I know a few things about that because, long ago, I served on the Chief of Naval Operations staff, deep in the heart of the Pentagon. And having been there and done that, I know how things are supposed to happen at very high levels. In this case, the ailing SecDef is the number two guy in the U.S. military chain of command, right after the Commander in Chief, the U.S. President. SecDef holds a critical spot in what’s called “continuity of government” (COG). If the president isn’t around to give Big Orders (if you know what I mean), if not to push The Button (ditto), then the authority passes to Mr. SecDef himself. And yet, for the better part of a week early in January, the top man of the nation’s war machine was isolated and, from all reports, quite ill. How does that happen? Whoops, Sorry… Now that it’s public, after the fact, SecDef says he’s sorry. He didn’t mean to go shadowy on you. It’s just that he’s a “private person,” or so some say. Mr. Austin takes “full responsibility,” as political climbers do when they feel confident there will be no personal blowback. He promises that he’ll do better in the future. The basics are that, just before Christmas, Austin went into a military hospital for “elective surgery.” Well, that’s how to frame it if you want to call a procedure for prostate cancer elective. Post-op, he went home to rest and recover. But a few days later, he was in distress with medical complications. On January 1, New Year's Day, Austin summoned an ambulance and returned to the military hospital, where he was immediately admitted to an intensive care unit (ICU). He had internal problems, and the doctors and staff cared for him. [Note: We commend the docs and staff for their excellent medical efforts.] Who Didn’t Know, and When Didn’t They Know It? The story goes that “Nobody knew” about SecDef Austin and his serious medical issues, although that’s, beyond a doubt, false, as we’ll detail below. Yes, I believe the part about President Joe Biden not knowing; there are apparent reasons for that one. I suppose I can believe that the Deputy SecDef, a person named Kathleen Hicks, didn’t know either. Heck, she was on vacation in sunny Puerto Rico, not exactly a trip that one might take when Number One is incapacitated. And maybe I can even believe that SecDef Austin’s Chief of Staff didn’t know because she was sick at home with COVID-19. Yeah, sure. Why bother telling the laid-up COS that the boss is in the ICU? Oh, wait. Hmm… So far, much of the retelling of this tale concerns who didn’t know what and how long after the fact they found out. For example, we are told that the Chairman of the Joint Chiefs of Staff learned about SecDef’s medical issues four days after the ICU event, the National Security Adviser knew on Day Five, etc. Indeed, there’s now something of a political competition within Washington. Characteristically, inside the Beltway, people vie for bragging rights. In this case, they are arguing about who didn’t know about SecDef and how late they were after learning the news. And reading about it in the Washington Post doesn’t count. But that’s not the real story. It’s not a question of “Who was in the dark?” and “When did they learn the news?” No! That’s entirely the wrong way to approach this matter. Here’s the REAL Story The real story of the missing SecDef is that the office is a critical position of immense importance and authority within the U.S. government. That particular job comes with positive legal power to command and control nuclear weapons. There’s no room for anyone to “play cowboy,” as we used to say at the top levels of the Navy. As one might imagine, whoever the Secretary of Defense is – Lloyd Austin, or anyone else at any other time, ever – the job involves being constantly tracked, everywhere, every day, 24/7/365. In other words, the SecDef job is a fishbowl. The guy in that particular chair is at the center of a bullseye. While one holds the title, one is subject to constant observation, security, and scrutiny. People know (and I mean many people) where you are every moment. When one becomes SecDef, someone is always watching you. Every move you make is monitored and tracked as you sleep, wake up, eat breakfast, or go to the men’s room. Every letter and email, every phone call, every visitor, every trip in every vehicle, every meal, going to the gym, whatever. And there are extensive records, enough to fill archives. All this oversight and scrutiny comes with accepting a top-level job like this, namely a senior cabinet position with nuclear control and a 50-yard-line seat overseeing that COG idea. Because if you’re SecDef and the fateful signal arrives about an attack on the U.S., the handlers bundle you away. That is, someone gets a flash message, and off you go in a black SUV, or down the magic Star Trek elevator to the super-deep bunker, or to the helicopter that races you to the big jet whose engines are already turning and burning, or to wherever else might be your post at that moment. When you become SecDef, your life is no longer your own. You hold a job that involves control over supreme levels of state military power. Your privacy is gone. You are deep within a circle of observation and accountability. How Deep? Very Deep. Indeed, SecDef is surrounded not just by the typical, everyday security detail, meaning those very fit people with short haircuts, sunglasses, and bulges under their well-tailored suit jackets. The guy is also tracked by dozens of other people and offices across the national security state, including defense, intelligence, and “other” players (I’ll leave it at that). The bottom line is that keeping track of SecDef is a task that runs broad and deep. Again, it’s COG's mission- to always have a “decider” in place to make big decisions, to borrow from former President George W. Bush. There’s another angle to all this, which most outsiders don’t appreciate. Yes, there’s general super-high-level security and confidentiality around the SecDef's work. But there’s also thorough communication across agencies about what’s happening, especially the status and whereabouts of this one particular person. It may seem contradictory that an aura of secrecy and security surrounds SecDef, but he’s also center stage for the biggest (classified) show in town. Well, there’s a good reason for this broad scope of oversight. If, say, a missile warning pops up, or another 9/11 event occurs, or maybe you must approve bombing Yemen, the idea is to put the SecDef instantly into live-action mode and start the action sequences. Many government agencies have a deep stake in these responses. Who Knew? Many Knew. Considering the preceding, you should not believe for even one second that “nobody knew” about Austin's going to the hospital. Of course, many people knew. Right away, there’s the obvious point that SecDef’s security detail knew he was ill and then holed up in the ICU. Their only job is to keep eyeballs on SecDef; they are not blind. Meanwhile, hospital staff knew that SecDef was a patient. People in charge of physical security had to know that someone important was behind the wire, and it’s difficult to hide a SecDef entourage. Then we have medical personnel like attending staff and doctors, plus admin people up to the head honcho in the hospital front office. As to those top dogs in the hospital, yes, absolutely they knew and don’t try to blow smoke about it. Because if you command the facility where Sec Def is under treatment – definitely when he’s in your ICU! – you must be made aware of what’s happening. Indeed, the top people surely knew about SecDef from when he crossed the curb from the highway to the driveway to when Elvis left the building, to borrow a phrase. Did SecDef Shut Down His Own System? Here’s the takeaway: There is NO WAY that the overall COG system would not have known about SecDef Austin’s medical issues and reported it throughout a broad chain, even in classified communications. The system is designed to gather and transmit critical information to key people. Then again, the SecDef himself should have shut down the reporting system. And on that point, the reaction ought to be… WHOA! The tracking system for SecDef is designed from the inside out to ensure COG, meaning active, direct command and control in the event of an attack on the nation. The wiring diagrams are broad and long. Somebody must be in position and charge, and many others must be plugged into this crucial node. Consider all this in light of the “nobody knew” story when it first emerged. How could that happen? Because what just occurred is NOT supposed to happen. So, did Austin order the standard reporting system to shut down? If so, why would he do that? Would it be for the sake of his privacy? Or for any other reason? What other reason? It gets worse. It appears that many people in the chain of command looked the other way and failed to report on Austin’s condition and whereabouts. If that’s the case, then heads must roll. If SecDef Austin values his privacy so much, he should resign. Doubtless, the Defense Department will give him a splendid farewell ceremony, complete with the Army Band. This episode also reveals something else: the nation’s system of accountability, designed to ensure constant, seamless, and effective military command and control, has been corrupted and, like much else in modern U.S. governance, turned into a personality-driven bureaucracy. Maybe we always suspected that things can be sloppy in high places, but now we have seen it play out at nuclear weapon levels with zero consequences. Thank you for subscribing and reading. Best wishes… All the best, [Byron King] Byron King In Case You Missed It… The Fed's Waller: For Pete's Sake, STFU! [Sean Ring] SEAN RING The economy is too important to be left to the whims of central bankers. Take Christopher Waller, for instance. Yesterday, the Fed Governor decided to flap his gums. The next thing I know is that I’m stopped out of my gold call options positions. I’m upset because I was wrong about my trade, but I’m happy because my risk management system worked as designed. I lost precisely the amount I was willing to risk. However… I prefer to lose because the market moves against me all on its own. Not because some bureaucrat gives a speech that clarifies nothing about nothing, and the market assumes something he may not have meant. Let me explain. What Waller Said From Nikileaks (Nick Timiraos) in [The Wall Street Journal]( A Federal Reserve official said that continued declines in inflation would allow the central bank to lower interest rates this year but that the process should be “carefully calibrated and not rushed.” Fed governor Christopher Waller, who was a leading advocate for quickly raising interest rates and then holding them at a high level to fight inflation over the past two years, signaled a shift in his view in remarks Tuesday. He warned against keeping interest rates too high for too long. “From now on, the setting of policy needs to proceed with more caution to avoid over-tightening,” he said. That sounds reasonable and a bit dovish. He continues: As long as labor markets and economic activity are solid, “I see no reason to move as quickly or cut as rapidly” as in previous rate-cutting cycles, said Waller. “When the time is right to begin lowering rates, I believe it can and should be lowered methodically and carefully.” Even that second bit seems logical to me. But the markets threw a hissy fit, especially gold. Gold wants its rate cuts, and it wants them now. How the Markets Reacted In a word, badly. But not all that badly in the same way. For instance, the disappointment in Mandell’s speech was barely noticeable in equities. But gold and gold miners took the news much harder. Note: all the charts are daily candlestick charts. So, the last candlestick is yesterday’s movement. The Dollar [Rude Awakening] The dollar popped, along with the 10-year yield. This isn’t great. J.C. Parets popped up on The Chart Report with this post: [Rude Awakening] If the dollar is up, the assets you buy with dollars (such as stocks, gold, and crypto) will go down. So, let’s look at them next. Stocks [Rude Awakening] The SPX was down a measly 0.4% on the day. [Rude Awakening] The Nasdaq finished down 0.19%. [Rude Awakening] The Russell was down a bit more, down 1.24%. Why did the Russell 2000 take a much larger hit? That’s because the Russell 2000 is an index of midcap stocks with more volatility than large-cap stocks. Gold [Rude Awakening] Gold futures were down 1.0% yesterday. It's not great, but it's not the end of the world. [ALERT: Tiny “AI Crypto” Set To Soar?]( Jim Rickards, James Altucher, and Ray Blanco dropped a bombshell on the AI Prophet Mastermind attendees. THREE tiny AI stocks are set to explode during AI’s Second Wave. Stocks that they gave away for FREE at [this event](. In fact, one is still trading for just a couple of bucks. [Click here to get the ticker details now.]( [Click Here To Learn More]( [Rude Awakening] Kinross Gold, a gold mining stock on most gold investors' watchlists, was down 4.41% yesterday. (Disclaimer: I'm long KGC.) [Rude Awakening] Wheaton Precious Metals, the gold royalty stock, was down only 1.44%. (Disclaimer: I’m long WPM.) But Barrick Gold, whose call options I was long, got crushed. I got stopped out of my bullish trade. Barrick was down a whopping 9.52%. Painful. As in “butthole like a wizard’s sleeve” painful. [Rude Awakening] Regarding Barrick, [Dow Jones News Wires]( printed the following about 2.5 hours before yesterday’s close: Barrick Gold Corporation (GOLD) is currently at $16.26, down $1.38 or 7.82% --Would be the lowest close since Nov. 24, 2023, when it closed at $16.23 --On pace for largest percent decrease since Nov. 3, 2022, when it fell 8.65% --Currently down four of the past five days --Down 10.12% month-to-date --Down 10.12% year-to-date --Down 70.77% from its all-time closing high of $55.63 on April 21, 2011 --Down 13.28% from 52 weeks ago (Jan. 17, 2023), when it closed at $18.75 --Down 20.41% from its 52-week closing high of $20.43 on May 4, 2023 --Up 14.59% from its 52-week closing low of $14.19 on Oct. 3, 2023 --Traded as low as $16.18; lowest intraday level since Nov. 24, 2023, when it hit $16.11 --Down 8.28% at today's intraday low; largest intraday percent decrease since Nov. 3, 2022, when it fell as much as 9.27% All data as of 1:29:38 PM ET Source: Dow Jones Market Data, FactSet (END) Dow Jones Newswires Crypto [Rude Awakening] Bitcoin was down 1% but is sticking to its 50-day moving average. [Rude Awakening] Ether was down 1.65% but it looks like it’s consolidating here. What’s Next For The Markets? It’s up to the dollar. If the dollar continues to rise because the Fed is sending out feelers, the stock, gold, and crypto markets will be in deep trouble. Of course, it’ll take the bond and real estate market with them. Thanks to the Fed, we’re in a wait-and-see hole in the cycle. Wrap Up When I think of Christopher Waller, benign though his intentions probably were, I think of the 1999 Ronan Keating song, “You Say It Best When You Say Nothing At All.” I hope Mr. Waller and the rest of the Fed keep quiet until the next FOMC meeting. For all our sakes. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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