Tag Archives: oceania

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US Navy to scrap new vessels even as fears over China's fleet grow

The chief of the US Navy has defended the service's plans to scrap nine relatively new warships in the coming fiscal year even as the service tries to keep up with China's growing fleet.

Three of the littoral combat ships slated for decommissioning are less than three years old.

Chief of Naval Operations Admiral Michael Gilday told the House Armed Services Committee on Wednesday (US time) that the anti-submarine ships could not perform their primary mission.

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"I refuse to put an additional dollar against a system that would not be able to track a high-end submarine in today's environment," Gilday told the committee. He said the main reason for the early retirement was that the anti-submarine warfare system on the ships "did not work out technically".

The decommissioning of the ships would save the Navy approximately US$391 million ($569.34 million), according to the service's proposed budget for the next financial year.

But that recoups only a fraction of the cost of the nine littoral combat ships, which totalled about US$3.2 billion ($4.66 billion).

The USS Indianapolis, USS Billings and USS Wichita were all commissioned in 2019, which means the Navy plans on decommissioning ships that are only a fraction of the way into their expected service life.

The Navy also plans to retire six other littoral combat ships, all of the single-hull Freedom-variant, as opposed to the trimaran Independence-variant. Both variants can achieve speeds of 40-plus knots.

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Under a 2016 Navy plan, the Freedom-class variants were all homeported in Mayport, Florida, mainly for use in Atlantic Ocean operations. The Independence-class variants were homeported in San Diego, and designated for mainly Pacific operations.

The decision amounts to an embarrassing admission that some of the Navy's newest ships are not fit for modern warfare.

Despite the Navy's plans to scrap the warships, Congress has the final say on the military budget and has balked at previous requests to decommission ships. Reducing the number of warships may be even more difficult as lawmakers focus on the growing size of China's navy and the gap between the US and Chinese fleets.

Last August, Vice President Kamala Harris visited the USS Tulsa, one of the Independence-class ships, while it was operating out of Singapore. She touted the Navy's mission of "helping to guarantee peace and security, freedom of trade and commerce, freedom of navigation" and the role the ship plays in countering an increasingly assertive China in the western Pacific Ocean.

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But the embattled littoral combat ships have faced perennial problems, including repeated breakdowns and questions about their limited armament.

The ships were hailed as part of the US deterrent against China as they were designed to operate in shallow waters like the South China Sea. But the decommissioning of so many in one year appears to be an acknowledgment that the expensive surface combatants have failed to live up to expectations.

'We can't use them'

Representative Adam Smith, chair of the House Armed Services Committee, said, "We can't use them, number one because they're not ready to do anything. Number two, when they are, they still break down".

"They're incredibly expensive, and they don't have the capabilities that we expected. So regardless of how old they are, that's a lot of money to be spent to get pretty close to nothing," the Washington state Democrat continued.

Republican Oklahoma Senator Jim Inhofe, ranking member of the Senate Armed Services Committee, joined in criticising the Navy.

"With the Chinese Navy steadily climbing to 460 ships by 2030, the unforced errors in Navy shipbuilding, like the littoral combat ship, must stop. Programs that can scale up and grow our fleet must be the priority," Inhofe tweeted.

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Many of the myriad problems facing the littoral combat ship program stem from the lack of mission focus during the design process, said Emma Salisbury, a researcher at the University of London focusing on the US military weapons manufacturers.

"The LCS was essentially counted to solve every single one of the Navy's problems all at once and everything will be wonderful," Salisbury told CNN with a note of irony. The missions for the ships included surface warfare, mine countermeasures, and anti-submarine warfare, based on a modular design that was supposed to allow the Navy to customize the ship for the role.

"It was basically this magical design that would solve everything," Salisbury said.

"So that was the problem – that, because it had all of these options, it never did any of them very well."

Pentagon press secretary John Kirby defended the program and the ships at a press briefing in mid-April, saying that "they served a purpose".

Yet even as the Navy plans on scrapping nine of the Freedom-variant ships, the newest ship in the class was just christened this past weekend. The USS Beloit marked the milestone with members of Congress and Navy officials in attendance, as well as the ceremonial breaking of a bottle of wine across the bow.

Navy Secretary Carlos Del Toro said in a statement the ship would "be ready to respond to any mission, wherever, and whenever, there is a need".

The Independence-variant of the LCS has faced its own problems. The Navy has identified structural cracks on six of these ships, requiring updates to inspection procedures and a redesign of the affected areas, according to a statement from Alan Baribreau, a spokesman for Naval Sea Systems Command. The cracks, first reported by Navy Times, were initially discovered in late-2019 in high-stress areas on the structure of the ship.

"The issue was identified following routine quality assurance checks and does not pose a risk to the safety of sailors on board the ships. Similarly, the issue poses no safety risk to the ships affected nor does it hinder the ability to get underway and execute missions," Baribeau said.

The Navy plans on retiring two of these Independence-class ships in the 2024 fiscal year.

At the same time, the Navy is working on developing a new class of ships more suited to the challenges from China's rapidly expanding military and the threat Russia poses. These ships would have "more capability than the LCS" for the potential fights of the future, Kirby said.

On Thursday, Gilday said the Navy was not "sized" to handle two wars at once. When Senator Josh Hawley, a Republican from Missouri, asked Gilday about whether the US Navy would be able to "meet its operational requirements" in the US European Command area of responsibility if the US also had to use Navy ships to deter China, Gilday responded: "I think we'd be challenged".

"Right now, the force is not sized to handle two simultaneous conflicts. It's sized to fight one and to keep a second adversary in check, but in terms of two all-out conflicts, we are not sized for that," Gilday added.

The US currently has 298 "battle force" ships, according to its latest budget request, and it will add nine or more ships every year for the next five years. But because of the Navy's plans to scrap so many ships, the size of the fleet is expected to drop to 280 ships in that time.

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More than $10 trillion has been wiped out from the US stock market this year

Somebody cue the stock market's park ranger: Bears are having a picnic on Wall Street this year.

The meltdown of 2022 has wiped out more than $10 trillion in market value from the blue-chip stocks in the S&P 500.

The index is down nearly 18 per cent since the end of December.

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The S&P 500 is now barely above bear market levels (a 20 per cent decline from a recent closing high) following a 0.1 per cent drop Thursday.

The Dow, which fell about 104 points, or 0.3 per cent, Thursday, is down more than 13 per cent this year as well.

Tech stocks have been hit particularly hard.

The Nasdaq did manage to eke out a slight gain Thursday but it has plunged 27 per cent this year, putting it deep into bear market territory.

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Nearly $4.4 trillion of the S&P 500's market cap drop is from the tech sector.

Shares of tech leaders Apple, Microsoft, Amazon, Google owner Alphabet, Facebook parent Meta Platforms and Elon Musk's Tesla are all deeply in red. Netflix, down more than 70 per cent, is the worst performer in the S&P 500 this year.

The rapid plunge is raising alarm bells on Main Street too, with worries that the US economy may be losing steam following a strong recovery from the depths of the brief pandemic-induced recession.

According to data from research firm Bespoke Investment Group, the Nasdaq has plummeted more than 20 per cent in the past 30 trading days.

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A drop of that magnitude has only happened 11 times before — and nine of those declines were "associated with recessions," according to Bespoke.

Bespoke analysts said in another report earlier this week that the Nasdaq 100, or so-called QQQs, is off to the worst start for any year, ever.

Still, there are hopes that a bottom may soon be in sight. Bespoke analysts said that "prices can remain oversold … for an extended period of time, but they don't stay that way forever."

Investors are waiting for so-called capitulation, the moment where it seems like everyone has finally thrown in the proverbial towel.

When sentiment is seemingly at its lowest, that might be time to finally start buying again.

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The market might almost be at those levels.

The CNN Business Fear & Greed Index, which measures seven indicators of market sentiment, is now well into Extreme Fear territory.

The index goes from 0-100 and lower levels are associated with panic in the market. The index is currently registering a level of 6.