via National Post.com
Here’s the bottom line: the total cost of the F-35 program is now $49 billion — an increase of $3.2 billion from the projections provided by KPMG in 2012 and DND in 2014. This includes all acquisition, sustainment and operating costs and assumes that development, disposal and attrition costs have not changed.I told you to watch that exchange rate.
Is it any wonder that Conservative Leader Stephen Harper has avoided mentioning the need for new fighter jets recently? For this $3.2 billion in additional costs will require a tough decision by any prime minister committed to balanced budgets.
One option is to purchase only 54 F-35s, which is all that $9 billion can now buy. The problem is, the RCAF has stated that it requires a minimum of 65 fighter jets.
Another option is to divert the $3.2 billion from other military projects. But the Harper government has already cut defence spending to one per cent of GDP, the lowest level in half a century.
I told you to watch the total numbers bought and to ignore projections.
I told you that I sensed desperation within this program.
I was right.
The amazing thing? The Canadians are going thru the same thing that our own DoD is experiencing. A reduction in the number of fighters they can buy? We're looking at numbers too. The problem? That will accelerate the classic death spiral. You can't afford to buy the numbers planned which increases the cost, the cost increases which means you can't buy the NEW number planned, which increases the cost, which means you can't buy the REVISED number planned and so on.
But the biggest bear in the room is the Global Dollar War.
The US started this game and others have engaged (on this one I will say its our fault). What does that mean? It means that even though the FED FAILED IN ITS RESPONSIBILITY TO RAISE RATES, it won't help the emerging markets, will allow others to further devalue their dollars and will cause OUR DOLLAR TO RISE EVEN MORE!
That basically locks in a strong US dollar thru 2016. Which means that the F-35 won't see any relief before a new administration comes onboard.
The Death Spiral is here to stay. The USMC should IMMEDIATELY begin to look at options to cover for the fact that a full allotment of F-35's WILL NOT BE funded.