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My Briefing from General Petraeus

I have not been called a war criminal for at least 35 years. But that’s what was screamed at me when I muscled my way through a crowd of chanting anti war protesters on my way to a briefing from General David Petraeus, Commander of the US Central command.

Every senior military officer in the San Francisco Bay Area could be found in the packed, steamy hall at the Marines Memorial Association, including at least 20 generals and admirals. With just two bars on my collar, I was way beyond my pay grade, but a few phone calls in Washington can move mountains. Petraeus is a four star with a PhD in international affairs from Princeton’s Woodrow Wilson School who is best known in the services for being the brassy young cadet who married the commandant’s daughter at West Point. Today he ran through a polished PowerPoint presentation that would have made Goldman Sachs proud.

He laid out how he was going to get our 130,000 troops out of Iraq by 2011. Only a caretaker force providing close air support from remote bases will be left behind to back a large civilian presence. A dramatic change in counterinsurgency strategies has brought the daily number of attacks from 160 down to 10 since 2007, and monthly suicide bombings from 130 to 10.

The goal is to “Iraqritize” the country so it can stand on its own feet, both politically and militarily. Iraq now has a reliable military of 550,000 men, but last year’s collapse in oil prices is created budgetary problems.

Afghanistan will be a much harder nut to crack, requiring more troops, money, and time. Priority one is to wipe out the poppy fields in the South from which the Taliban derives its financing and local support. Rising wheat prices will help this effort. Some 70% of the violence is in 10% of the country in the mountains that border Pakistan.

The good news is that Pakistan is fighting its own war, not our war, for its own interests. Their nukes are secure and safe. Petraeus is bringing to bear incredibly sophisticated technology, including sensors mounted on the ground, in towers, balloons, drones, aircraft, and satellites, many of which are controlled remotely in the US and Europe. Is says a lot that the previous stop on his US road show was with the Microsoft crowd at Redmond Washington. Both Al Qaida and the Taliban are reeling from a series of predator drone attacks which is steadily wiping out the senior and middle leadership. Bandwidth is his most valuable weapon.

He told me his staff prepared an itinerary for his day off in San Francisco, which included yoga, aromatherapy, a seminar on website construction, and a visit to the farmer’s market to buy organic bean sprouts. He decided to pass, and instead went for a long run along our waterfront Embarcadero, drinking in the brisk, cool air, an unavailable pleasure in Baghdad. I asked him to look out for my nephews, young men in their early twenties who are fluent Arabic speakers, who are joining his cyber warfare group.

I follow the war in Iraq closely because I know the neighborhood first hand and have family in harm’s way. There also is the issue of  the $1 trillion in immediate costs and $2 trillion in long term costs we have already run up, on top of the 4,200 American and 100,000 plus Iraqi lives lost. This war is bleeding us white in more ways than one. Losing wars, or at least not winning them, is bad for the economy and terrible for the stock market. One only has to look as far back as Vietnam to see why. Maybe that’s why stock investors have earned a zero return over the last decade?  I hope Petraeus is able to achieve his ambitious goals.  The fate of governments depends on it.

For more iconoclastic and out of consensus analysis, you can always visit me at , where the conventional wisdom is mercilessly flailed and tortured daily. You can also download past programs on Hedge Fund Radio.