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DAVID KRUSE

By Staff | Dec 4, 2015

Post 9/11, the stock market plunged 12 percent and then recovered over subsequent weeks. My take this time is different.

Stock markets were called “resilient” by CNBC to the Paris ISIS terrorist’s attack. The difference is that the trend in equity markets had already turned lower ahead of this event and the global economic reaction to this terrorism will be for economies to tighten up, borders will be closed, trade will slow, protectionism will intensify and global GDP decline.

I believe that the S&P formed a broad distribution-type top earlier this year and the recent recovery that ended was the correction (three-waves from the August low) in a developing bear market.

While there is no immediate panic or sharp selloff in equity markets to the Paris attacks, the bear market will intensify in equities and commodities over time.

Instead of a sharp decline offering a buying opportunity as it did post 9/11, the lack of a major selloff following Paris is a selling opportunity.

The U.S. and global economy are both slowing and the Fed can’t stop it.

Referring to the Paris terrorist attacks, President Obama said the U.S. would do all that it could to help France catch the perpetrators of this crime in Paris. French President Hollande called it “an act of war” … which is it … a crime or “an act of war?” There is a huge difference between the two and the appropriate response demanded.

I think Obama is dead wrong. The terrorists didn’t rob a 7-11 for goodness sakes – they massacred and injured scores of people in the name of their caliphate with a clear objective in mind in being at war with western civilization.

If we do not kill them, they will kill us, simple as that. Obama and his White House have political issues that prevent them from getting to a war footing. They seem to think they are running down a few renegades. This was the third wake-up call now for France and we will see if it is actually awake.

We were told before Paris that our forces were doing all that could be done to batter ISIS, but after Paris there were suddenly targets available for the French and Russians to attack?

They also took out ISIS oil cargo trucks that they had previously allowed to operate bringing in $1 million/day in needed cash. This sudden change in target authorization was also striking, proving that they were not doing everything they could to hurt ISIS before Paris.

Article 5 of the NATO agreement says that an attack on one member is an attack on all and triggers mutual defense. France should invoke it. This attack was an act of war by ISIS on France and all of us. NATO supposedly has 3 million troops, 25,000 military aircraft, and 800 ocean-going combat ships from 28 member nations.

If NATO can’t kill ISIS, it is a useless defense alliance. France launched a few airstrikes on ISIS targets that should or would have been hit by our planes since most of our aircraft return with unexpended ordinance for lack of targets. I hope that it made them feel better. It was mostly a political air strike. They need to get real on military action.

Obama was doubling down on his current strategy which was not going to reach the needed end of destroying ISIS.

There is reportedly a 24/7 hotline operated by ISIS to aid and assist jihadists. Why is it operating? They have to go to wherever the location is where they man that hotline and kill them and if they move it they have to go to the next place and the next and the next until all perpetrators are dead.

Obama was arguing that sending in troops to Syria would mean ISIS popping up in Yemen or Libya or somewhere else acting like it was inconceivable for Western ground forces to go after them.

Tell that to WWII vets who fought two theaters of war. This should be NATO’s mission, but it has to get led by the Pentagon or it will get screwed up.

To defeat ISIS requires ground forces. Air power can’t do it and there will be no political settlement. Assad is not killing French kids at concerts (just his own).

The rebel opposition to Assad is not aligned with the west either so we could only find a handful of rebels vetted to our side. So we take out Assad and replace him with other groups that would continue the civil war against each other who still hate us? Screw that.

To kill ISIS I think that it takes NATO and 10 divisions (200,000 combat troops) infantry, air cavalry, airborne, and armor plus more police forces to control the areas as they are pacified.

Most NATO forces should de-port and base in Turkey. Turkey is a member of NATO and therefore should be compelled to accommodate the NATO forces.

I think that a blocking force should be established in Jordon, in western Iraq and by Assad in eastern Syria to trap ISIS forces as they flee the main thrust of the NATO forces sweeping south from Turkey in the subsequent invasion of western Syria.

I would trust the Jordanians and the Kurds, but not the Iraqis as the blocking force. That would take some U.S. troops into western Iraq to harden the anvil. The anvil has to be hard, but also flexible to net fleeing ISIS forces.

This should all be put into place to happen by next spring. Airpower can pin them down this winter, bleed supply lines, and destroy their oil revenue and then NATO forces invade, seek and destroy ISIS and their Caliphate in the spring.

I would call this “Operation Virgin Express” so as to speed the trip of the ISIS martyrs to hell where they will be surprised when they find out that those 40 virgins are not there.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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