Week in Review

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Week in Review

09/10/2011

For the week 9/5-9/9

Europe, Washington and Wall Street

Europe has been calling the tune for much of the past 15 months, in fits and starts, though lately it’s just giving us the former. The continent, and the euro-17 nations using the currency, particularly the likes of Greece, threatens to drag us all down. If you could find one optimistic statement this week from a responsible policy official, you’d better check the date of the copy, because herewith is the reality check.

World Bank President Robert Zoellick warned the risks to the global economy are intensifying.

“We are moving into a dangerous period.” While the U.S. is likely to avoid a recession, he told Bloomberg Television in Singapore, escaping with slow growth, the euro zone is facing a “particularly sensitive time.”

Singapore’s Minister of Finance Tharman Shanmugaratnam told Bloomberg that the U.S. and European economies are stalling and weaker global growth will have an impact on Asia. Growth in the first two is in the 1 percent range.

“We’re already at stall speed in the U.S. and Europe, which means we’re now more likely than not to see a recession.” Shanmugaratnam talked of companies holding back on spending and consumers around the world facing a loss of confidence.

Deutsche Bank CEO Josef Ackermann said, “It is obvious, not to say a truism, that many European banks would not cope with writing down the government bonds held in the banking book to market value,” a devastating statement, though no surprise to readers of this space as I’ve been talking about lack of transparency when it comes to European banks for well over a year now. In fact, I’ve hammered away at Spain’s situation, so on Tuesday, what did we see there? One of Spain’s largest savings banks, Caja de Ahorros del Mediterraneo, reported an “increase in bad loans to 19 percent of overall lending from 9 percent at the end of last year.” [New York Times] Exactly what I’ve been talking about there.

The Organization for Economic Cooperation and Development now predicts a contraction in GDP for Italy in the third quarter and a contraction in Germany in the fourth quarter. The OECD predicts growth in the U.S. will be 1.1% in Q3 and 0.4% in Q4, compared with forecasts of 2.9% and 3% at the end of May. Staggering.

OECD chief economist Pier Carlo Padoan said, “Growth is turning out to be much slower than we thought three months ago, and the risk of hitting patches of negative growth has gone up.”

Christine Lagarde, the new managing director of the IMF, said the outlook had darkened suddenly over the summer.

“There has been a clear crisis of confidence that has seriously aggravated the situation. Measures need to be taken to ensure that this vicious circle is broken.

“The spectrum of policies available is narrower because a lot of ammunition was used in 2009. But if governments, institutions and central banks work together, we’ll avoid recession,” she told Der Spiegel.

“The bottom line is that global activity has slowed and downside risks have increased, and at the same time the global rebalancing in demand that we were all expecting for sustainable growth to take place has stalled….

“The key message is…that at this stage and given the economic circumstances that we’re facing, countries and policy makers in those countries around the world must act now, must act boldly and must act together.”

But governments in the euro zone aren’t working together.

Outgoing European Central Bank president Jean-Claude Trichet said “risks to the economic outlook…are on the downside, in an environment of particularly high uncertainty” as he pledged a “very thorough analysis” of incoming data and developments, language allowing the ECB to begin to lower rates from its benchmark policy mark of 1.5% as soon as next month. The ECB revised its forecast for eurozone GDP in 2011, pegging it at 1.6%, down from 1.9% in June, and then falling to 1.3% in 2012. [At least the ECB says the inflation outlook is much improved, forecasting only 1.7% in 2012.]

Trichet then went after Germany, as sniping politicians there questioned his leadership.

“We have delivered price stability over the first 12 years of the euro – impeccably! Impeccably! I would very much like to hear congratulations for an institution that has delivered price stability in Germany over almost 13 years at 1.55% approximately…which is better than has been obtained in this country over the last 50 years.”

Speaking of Germany, Chancellor Angela Merkel won a victory when the constitutional high court rejected a series of legal challenges to last year’s Greece Bailout I, but the court insisted a new German parliamentary budget committee of 41 be consulted in the future in advance of any new bailout measures, which could complicate future crisis management amongst the euro-17.

Had the court declared the bailouts unconstitutional, it would have been devastating.

Merkel expects to win a government majority in the Bundestag on September 29 when the vote on the European Financial Stability Facility comes up.

The thing is, when it comes to the needed political leadership in Europe, consider this. The three key players these days, Merkel, France’s Sarkozy and Italy’s Berlusconi, all have approval figures and/or recent poll tests in the 20s! Merkel’s Christian Democratic Union scored a whopping 23.1 percent of the vote in her home state of Mecklenburg-Western Pomerania last Sunday, its worst tally since voting began in the state in 1990 after reunification, with another key vote coming up in Berlin on Sept. 18.  Merkel’s coalition has been defeated or lost votes in all six German state elections this year, not exactly an endorsement for putting more taxpayer money into bailouts.

But as we entered the weekend, and with European and U.S. stocks swooning all over again, there were new stories of severe strains in the short-term lending markets, while Germany was rumored to be drawing up plans to shore up their banks should Greece default, an operation you can be sure is also taking place in France and elsewhere. 

Additionally, ECB executive board member Juergen Stark resigned on Friday over policy differences on how to fight the debt crisis. Stark has been an opponent of the ECB’s bond purchases for the likes of Italy and Spain and was supported by the central banks of Austria and the Netherlands, as well as many of his fellow Germans, so his resignation is a huge blow less than two months before Trichet’s departure when his term ends. The ECB has spent $176 billion on the bonds of distressed governments in an attempt to keep their yields low but it can’t do so forever (unlike our Federal Reserve, for example, with its technically unlimited balance sheet). Stark argues the bond purchases blur the line between fiscal and monetary policy. Take the case of Italy. This week the Italian Senate finally passed a $76 billion austerity program, demanded by the IMF and ECB after the Berlusconi government began to backtrack on initial proposals, such as a tax hike on the rich.

The biggest immediate technical issue, however, aside from Greece’s imminent default, is the European Financial Stability Facility (EFSF), which hasn’t been ratified by the 17 euro parliaments yet (with Slovakia saying it wouldn’t address the issue until December). Once funded, then the issue is what does it do? Europe’s central bankers want the EFSF to take over the bond-buying duties if markets remain skittish over Italy and Spain. Christine Lagarde, however, wants the facility to be used for increasing the level of bank capital to “cut the chains of contagion.” So just as the U.S. Treasury did in 2008, force Europe’s biggest banks to accept capital injections, using both the EFSF and public funds, if necessary.

Oh, and this week the Dutch, who hate the Greeks, are calling for an EU budget tsar that would lord over all 17 nations using the euro and have the power to tax and spend as he or she saw fit, while anyone who then didn’t cooperate would be kicked out of the eurozone. Well you can imagine how that went over in some countries.

By the close on Friday, Germany’s 10-year bund traded at an all-time record low yield of 1.76 % in a flight to safety, while Greece’s two-year note saw its yield rise to 64%, last I saw. Not a bad return, right seniors?

Of course to beat a dead horse, Europe, like the U.S., needs growth and as some of the above shows that is not forthcoming. Europe made its debt bed and now it’s sleeping in it. The only way Greece gets its bailout money is to show its serious about reforming its ways so the government had to announce a further 20% cut in government employment this week. The economy shrank a revised 7.3% in the second quarter.

Elsewhere, Italy’s austerity program deeply slashes local governments and public services, which both impact the middle class. Industrial production in Spain fell 2.8% in July. Even German exports fell for a second consecutive month as it slows. Non-euro Britain saw retail sales decline in August for a second consecutive month…and on and on.

Meanwhile, general strikes in places like Italy, Greece and Spain are growing in intensity and it’s only a matter of time before the anarchists and far right increasingly have their way.

Turning to Washington, President Obama unveiled his highly anticipated American Jobs Act, which, as it turned out, was a little bigger than expected, $447 billion vs. the $300 billion or so being bandied about, but it was hardly bold. Simply more of the same; extending payroll tax cuts and unemployment insurance coverage further, more infrastructure spending, tax credits for business if they hire someone, and, as the president said:

“Every proposal I’ve laid out tonight will be paid for.” To which the New York Post editorialized, “With monopoly money, no doubt.”

Now to be fair, much of what Obama threw out there meets the approval of Congressional Republicans, who are under the gun themselves because their approval rating is far worse than Obama’s own dismal numbers.

So there is going to have to be some agreement between the two parties, and soon, or Republicans will be blamed as much as Democrats if the unemployment rate is still hanging around 8.5% or higher come November 2012.

And therein lies the problem. Obama desperately wants to campaign against Congress, and Republicans can’t be seen as simply being the party of ‘No.’

So we’re likely to come up with a sizable package that isn’t paid for, whereupon it will be up to the new 12-member, bipartisan ‘supercommittee’ to come up with even more budget cuts to pay for the American Jobs Act, and one member already, Republican Senator Jon Kyl (AZ) said he would walk out if defense was cut further. I like Kyl, but this is incredibly stupid. And as you’ve seen from my writings of the past year or so, I’m sick of those who just blindly say defense can’t be cut because of all the emerging threats (China), blah blah blah.

What about the freakin’ $60 billion in total waste and fraud in Iraq and Afghanistan, a figure that is probably far higher? What about the $tens of billions spent on weapons systems and aircraft that either aren’t needed or don’t work! But I’ve said enough on this topic, save for an Eisenhower-related quote down below.

The bottom line is the deficit will continue to rise and I’m not changing my opinion that while Europe is meeting its Waterloo in 2011, we’ll meet ours in terms of a true deficit crisis in 2012.

Without entitlement reform, which the president hinted at in his speech but for which I’m not holding my breath, we’re doomed. And the other day I saw the perfect example of how the debate on this paramount issue is twisted and the American people manipulated.

In New York City, they are holding a special election to replace Congressman Anthony Weiner and it’s between Republican Bob Turner and Democrat David Weprin.

Weprin, some say, is a lightweight with the brain of a squirrel.   He’s such a lightweight that construction guy Turner has a good shot in a heavily Democratic district. [The district itself is likely to be redistricted out down the road.]

So I see this Weprin campaign ad and there it is…the usual scare-mongering… ‘Bob Turner is going to raise the retirement age on Social Security recipients!’ ‘Bob Turner is going to take away your Social Security and Medicare’…and so on.

But of course we have to reform Social Security and part of that process is to raise the retirement age. Anyone with more than the brain of a squirrel, when you sit them down and explain a few simple facts, understands that. But any Republican talking of reforming Social Security is of course pilloried, branded with threatening to take it away (when every single legitimate reform plan out there excludes those over the age of 50 from having to suffer any future benefit cuts, unless through means testing). It’s just this mindset that is killing America. 

“In short, the administration is putting forth a package to prevent a double-dip recession that may not come to pass with a series of measures that may not work.

“Yet it’s hard to walk away. The prospect of a double dip is truly horrifying. What happens if next month’s job’s report comes in negative? Or the one after that? Believe me, Congress will be rushing to do something then.

 “Personally, my bottom line is this: I think the president has earned a second date. He’s put together a moderate set of stimulus ideas. His plan may not be enough to jolt prosperity, but it might maintain its current slow growth.

“If he comes up with his own deficit proposal that pays for his programs with some serious entitlement reforms (and not merely with some boilerplate ‘let’s tax the rich’ plan), then Republicans would be wise to work with him to make his growth ideas more effective.

“The mainstream economic view is that we should combine near-term stimulus with long-range austerity. Up until now, the political system has been unable to perform this two-state approach. Republicans won’t touch spending, and Democrats won’t touch entitlement reform.

“The president clearly wants to give it a final shot. His tone on Thursday was feisty and will please Democrats. But the substance was heterodox and worth pursuing. In this moment of peril, the country needs a policy against the double dip.”

As for the Federal Reserve, Chairman Ben Bernanke gave a speech and didn’t tip his hand ahead of another now highly-anticipated Fed meeting on Sept. 20-21, where Ben and Co. are likely to reach into their increasingly meager bag of tricks and use a tool known as “Operation Twist,” whereby they sell short-term Treasuries and buy longer-term 10- and 30-year bonds in an effort to narrow the yield curve and lower long-term rates to, say, below 2% on the 10-year and keep them there. Well the 10-year is already at an all-time low, finishing the week at 1.92%. It would then be hoped that in combination with the new stimulus program, the economy would become a juggernaut!

Or maybe not. The point of continuing to lower rates is to get us to keep investing in the stock market until it hits new highs, the headlines in the papers and on the nightly news are trumpeting this fact, little Johnny says at the kitchen table, “Dad? Are we rich?” and you, not wanting to disappoint the tyke but knowing you’re still in deep merde, go out and buy a new car or take the kid and sixteen of his friends to Disney World anyway, just so the kid can brag how rich his family is. Which leads Bobby down the street to complain, “Mom, Dad. How come we don’t have a new Maserati like Johnny’s father just bought?!”

And that, friends, is how Ben Bernanke wants the wealth effect to work as he lowers rates to zero.

Finally, a note on the incredibly depressing weather, whether you are talking the awful fires in Texas, or the latest flooding disasters in Pennsylvania and Upstate New York. [And as the Los Angeles Times pointed out, the ongoing flooding of the Missouri River that is getting lost in the shuffle but has washed away a ton of prime farm land.]

The United States just endured its hottest summer in 75 years, according to the National Climatic Data Center, 1936 being the Dust Bowl. Four states – Texas, Oklahoma, New Mexico and Louisiana – had their warmest summer ever recorded. The average temperatures for the summer in Texas and Oklahoma, 86.8 and 86.5, respectively, “exceeded the previous statewide average temperature record for any state during any season.” [USA TODAY]

And the Mid-Atlantic? This is unbelievable but here in New Jersey, the statewide average for annual rainfall is 46.92 inches. For August it is 4.21 inches and for September 4.07 inches.

But from Aug. 8 to Sept. 8, the town of Roxbury, not far from where I live, had 26.56 inches. Freehold, 26 inches. Morris Township (five minutes from me) 24 inches. The remnants of Tropical Storm Lee added insult to injury and combined with Hurricane Irene have resulted in about $25 billion in estimated damages while being responsible for at least 55 deaths.

Yes, a summer to remember, across America, for all the wrong reasons. 

Street Bytes

--Stocks resumed their losing ways after a mixed performance the prior week as the Dow Jones dropped 2.2% to 10992, while the S&P 500 lost 1.7% and Nasdaq 0.5%. For the year the losses on the three range from 5% to 8%. [Smack dab where I said we’d finish the year, which really doesn’t mean anything today because we still have four wild months to go.]

--The Financial Times reported that “the correlation between the biggest 250 stocks in the S&P 500 over the past month has reached its highest since 1987 this week, at 81 percent, according to JPMorgan figures.

“This means those stocks move in the same direction 81 percent of the time. The historical average is 30 percent. The measure peaked at 88 percent during the October 1987 U.S. crash, when the Dow Jones Industrial Average fell 22 percent in one session.”

Normally, stocks are supposed to move on fundamentals, with some good, some bad. That’s not the case today thanks to the prevalence of high-frequency/program trading, but some believe with the upcoming earnings season, a focus on fundamentals will return to a certain extent.

And in an early estimate of holiday retail sales, the International Council of Shopping Centers estimates that sales will rise 3.5% for November and December combined. Last year, sales during the same period beat expectations, rising 4.4% in what were the best holiday results since 2006. I think we all would be thrilled by a 3.5% increase. [According to one survey of 23 retailers by Thomson Reuters, August sales rose 4.4% year over year, which I found rather surprising.]

--U.S. Treasury Yields

6-mo. 0.04% 2-yr. 0.17% 10-yr. 1.92% 30-yr. 3.25%

What more can you say?  The mortgage rate on a 30-year fixed averaged an all-time low 4.12% for the week ending Sept. 8. The last time mortgage rates were above 6% was November 2008. If you can refinance, great, but for those looking to buy a new home, good luck getting something this low.

--Bank of America is now reportedly on a path to slash up to 40,000 of its 280,000 workforce over a period of years. The Charlotte Observer had earlier reported 25,000 to 30,000 jobs would be cut (the newspaper is particularly sensitive to the issue with BofA having 15,000 employees in Charlotte itself). Just a few weeks ago, CEO Brian Moynihan had said in a memo to staff that the bank had planned to eliminate just 3,500 jobs, on top of similar earlier cuts.

Among the latest job casualties at BofA was Sallie Krawcheck, head of global wealth management (including the brokerage division). Her ouster further thinned the ranks of females holding high-ranking jobs on the Street. According to the Los Angeles Times, “From 2007 to 2010, 12.5% of women in the financial industry lost their jobs, compared with 8.8% of men…By comparison, in the overall economy during the same period, it was men who lost jobs at a higher rate.” There is no indication whatsoever Krawcheck lost her job because of discrimination.

--For those holding out hope (such as yours truly) that there is a soft landing in China’s future, the news was pretty good. While the non-manufacturing/service sector index for August fell to 57.6, it is still solidly positive, as is industrial production, up 13.5% for the month and retail sales up 17%.

Most importantly, however, the consumer price index for August came in at 6.2%, which while high is below July’s 6.5%. So, the central bank isn’t likely to keep ratcheting up interest rates, which carried the risk of sending the Chinese economy into recession. That said, most strategists are lowering their 2012 GDP forecasts here to the 8%-8.5% range, which, coupled with a better inflation picture would be just fine.

Meanwhile, Japan’s post-3/11 recovery was not as strong as once thought, at least in the second quarter, as the government revised the GDP data to reflect a 2.1% contraction, worse than the 1.3% hit originally estimated.

And Down Under, Australia reported GDP rebounded in its second quarter, up 1.2%, after a surprising fall of 0.9% in Q1. Australia’s fortunes, though, remain largely dependent on China.

--Boeing weighed in on China’s growth prospects, upping their estimate for the country’s need for commercial aircraft to 5,000 worth $600 billion over the next 20 years, a 25 percent increase in value terms over the company’s previous forecast late last year. A large portion of the new demand is for small- and intermediate-sized jets.

--Just as gambling revenues in Macau are to me a great barometer on the overall health of the Chinese economy, so are McDonald’s same-store sales a good reflection of both the domestic and global economy and on Friday, shares fell 4% because the average comps for the U.S. were up 3.9% vs. a 4.0% estimate, while Europe’s fell short by a mile (as these things go), up 2.7% when 5.5% was expected. So McDonald’s certainly helped confirm the slowdown in Europe. When they turn negative, year over year, there’s your double-dip recession, sports fans.

--I have an extensive look at the financial scene in the weeks preceding and following 9/11 on my “Wall Street History” link. Among the nuggets are the fact that ten years ago, gold was mired in the $280 range, while oil was $29.76 (and then just $25.97 on Sept. 21, after the markets had been open a full week and air travel had come to a halt, especially business travel).

But for those who want to be reminded what happens when the economy turns, recall that the tech bubble burst in the spring of 2000 and by Sept. 2001, the collapse was being felt in earnings and revenues.

As in the week ending 9/8/01, I wrote of Intel, which had “basically reaffirmed guidance for the current quarter, but when you’re now looking at $6.5 billion in revenue, after you did $8.7 billion for the year ago period, and your stock trades at a 50+ p/e multiple based on future earnings expectations (which may still be way too high)…” You get the picture. A good lesson for those strategists and analysts who are perhaps a bit too optimistic about Q4 and 2012. Just a year earlier, I’m sure there were analysts forecasting that Intel’s revenues by Q3 2001 would be $9 billion+.

--Give the Obama administration credit for some major successes in going after Medicare fraud, especially with this week’s announcement that 91 people in eight cities were charged with attempting to bilk Medicare out of $295 million, in what Attorney General Eric Holder called the biggest takedown in Medicare task force history. Among those arrested were 45 in Miami, charged with $159 million in false billings for home health care, mental health service, durable medical equipment (electric wheelchairs) and physical therapy.

--The U.N. Food and Agriculture Organization said food prices remained near record highs set in February. In keeping with the news out of China, and the global slowdown, I would think we’ve peaked, even with the poor corn harvest in the U.S., with the USDA issuing an important crop estimate this coming Monday, which is not likely to be good.

[The agricultural losses from the drought and fires in Texas is now estimated at $5.2 billion, as ranchers rush to slaughter their herds.]

--The FBI launched a surprise raid on Silicon Valley solar company Solyndra on Thursday, in an investigation centering on over $500 million in federal loan guarantees. Republicans in Congress are demanding answers about the company’s selection for the loans in the first place. The Daily Caller reported that “Solyndra officials and investors made no fewer than 20 trips” to the White House between March 2009 and April 2011.

[Meanwhile, the Department of Energy continues to hand out new loan guarantees, including for $150 million and about $250 million, for two other solar outfits.]

--The U.S. Chamber of Commerce argues in a study that a one-time tax break to repatriate $1.4 trillion in earnings held abroad by U.S. companies would produce nearly 3 million jobs nationwide over two years. This is not part of President Obama’s jobs plan, and, frankly, even some Republicans have their doubts unless it’s part of broader corporate tax reform. A similar program in 2004 did not exactly work as planned.

--The World Economic Forum came out with its annual ranking of economic competitiveness with Switzerland coming out No. 1, followed by Singapore and Sweden. The United States fell to No. 5, behind No. 4 United Kingdom. Germany was 6th. China is in 26th place. Brazil, India and Russia were all out of the top 50. The report uses 12 categories to assess a country’s ranking; including institutions, infrastructure, macroeconomic environment, health and primary education, business sophistication and innovation.

--The massive power outage affecting about five million in Southern California, Arizona and Mexico, was triggered by a lone utility worker working on a substation. But why a localized event triggered such a widespread, cascading shutdown is not known. Terrorists now have a playbook for something very simple. Shut the power down; then launch an attack with emergency services being severely hampered.

--As of this week, only five, 30-second slots remained for the 2012 Super Bowl at a record $3.5 million each.

--It was outrageous that a strike by the International Longshore and Warehouse Union (ILWU) turned violent on Thursday at the Port of Longview in Washington. 500 longshoremen broke into the facility at 4:30 a.m. and held six security guards hostage for two hours, during which time they inflicted significant damage, including cutting brake lines on rail cars and spilling grain. Lock these guys up, immediately, and give the union chief the longest term. 

But as the Wall Street Journal editorialized, it will be interesting to see if this action spreads, which would make it a national issue impacting the economy and thus “demanding the attention of a President who is desperately trying to hold his union base together. This one is worth watching.”

--Carol Bartz was fired as CEO of Yahoo! and then told Fortune magazine in her first interview that the company’s board “f---ed me over.” Yahoo’s chairman told Bartz by phone while she was attending a tech conference in New York, with Roy Bostock reading a prepared statement.

“I said, ‘Roy, I think that’s a script,’” said Bartz.  “Why don’t you have the balls to tell me yourself?”

Bartz added that the board was “spooked by being cast as the worst board in the country,” after turning down Microsoft’s bid. “Now they’re trying to show that they’re not the doofuses that they are,” she told Fortune.

The thing about Bartz, however, is that she herself was hardly a success, plus, using her language she’s a, err, you know…begins with ‘b’. She took over Yahoo in January 2009 and revenues and the share price are where they were when she came in. Profits rose but Yahoo’s market share, by different measures, continues to erode.

--Meanwhile, Facebook’s revenues doubled in the first half of 2011 to $1.6 billion. The social network company’s valuation in the secondary market has soared as it prepares for an IPO, potentially next spring.

--I’ve expressed skepticism over the potential for online coupon-seller Groupon and this week the company announced it was pulling back from going public.

--Ireland continues to reel, even as the EU praises its reform efforts. A company called Talk Talk, which runs call centers worldwide, is eliminating up to 600 jobs in Waterford.

--One bubble that hasn’t received much publicity is the bubble in new shipping tankers, such as for those conveying oil. Before the 2008 financial crisis, there had been a surge in new tanker orders and now there is significant overcapacity, as well as many heavily debt-laden operators. Daily rates are plunging, far below operating expenses, and many large operators are struggling mightily, let alone the smaller ones are dropping like flies.

--On a somewhat related note, reader Jimbo was the only passenger on a ferry from Hoboken to the World Financial Center Tuesday afternoon. As he put it, “One passenger, four crew, fifty gallons of diesel fuel. No one is making money today.”

--10 years after 9/11, the number of brokers and clerks on the floor of the New York Stock Exchange has shrunk from a high of 3,000 to just 1,200.

--The information concerning the storm-related power outages in my state of New Jersey was incredibly inaccurate. While the utilities were saying that the power had been restored to the state after one week, I can tell you it was still down about a mile from where I live in Summit. Summit’s mayor expressed the concerns of many officials when it came to Jersey Central Power and Light. As reported by the Star-Ledger:

“(Mayor Jordan) Glatt gave an example of what he said was one small vignette that would illustrate some of the problems experienced with JCP&L during and after the hurricane struck town. He said that Friday night Sept. 2 at 11 p.m. (six days after the hurricane struck) was the first contact he had with JCP&L following the storm. As of Friday night the utility was going by a list he had compiled of where the power outages were located. They had no list of their own, the mayor said.

“ ‘They were clueless. They didn’t know where their trucks were,’ Glatt said.”

The one neighborhood I was most familiar with had no utility trucks there until day six, and those were from Ohio Edison and appeared to give up after moving some wires around.

--A record 48.8 million people visited New York City last year, spending $31.4 billion and supporting the more than 310,000 New Yorkers working in the hospitality/theater sectors. The comeback from the impact of 9/11 is complete.

--Scientists from the University of Bristol believe that meteorite strikes up to 200 million years after the planet was formed are responsible for the world’s available supply of gold.

“Analyzing four-billion-year-old rocks from Greenland, experts believe they have found the ‘fingerprints’ of huge meteorite bombardments which created the deposits that are mined today..”

Said Dr. Matthias Willbold, “many key industrial processes are based and have been added to our planet by lucky coincidence when the Earth was hit by about 20 billion billion (sic) tons of asteroidal material.”

The scientists believe the meteorites were “stirred” into the Earth’s mantle by gigantic currents in the molten material. [David Wilcock / Irish Independent]

--New Jersey Republican Gov. Chris Christie declared those who visit Las Vegas in the summertime are “stupid.” Promoting a revitalization plan for Atlantic City, Christie said, “Why would you go to the middle of the desert in the summer? You’d have to be stupid to do that.”

I would remind the governor that Las Vegas’ pool scene is quite the attraction in the summer. Just sayin’, though I’m far too old for it myself these days. “Sorry, old man. Get rid of the gray and I might let you in.”

--The man perhaps most responsible for saving Chrysler back in 1979/80, adman Leo –Arthur Kelmenson, died at the age of 84. It was Kelmenson who convinced company president Lee Iacocca to go before the cameras himself in one of the most successful ad campaigns in history. In the first wave of commercials, Iacocca barked, “If you can find a better car, buy it.”

As Kelmenson told Time magazine in 1985, “The country was starved for leadership and charisma. Lee talked directly to the American people.”

Earlier, Kelmenson’s print ad campaign for Chrysler also helped bring about the government bailout that saved the automaker.

Foreign Affairs

Israel / Turkey: There was a time not too long ago when Israel and Turkey were close military allies, but now ties have frayed in a huge way over the Israeli raid on the six-vessel convoy taking aid to Gaza, May 2010, with Israeli soldiers killing nine Turkish activists on the Mavi Marmara. A leaked UN report (the Palmer report), while acknowledging Israel’s right to a four-year naval blockade of Gaza after Hamas took control of the strip, said Israel’s actions were “excessive and unreasonable.”

Israeli Prime Minister Benjamin Netanyahu has refused Turkey’s demands for an apology, so Turkey expelled Israel’s ambassador and it has escalated from there. Turkish Prime Minister Erdogan suspended all defense and trade ties with Israel, adding further sanctions would follow. Erdogan has also threatened to visit Gaza next week in a move that would infuriate the Israelis, plus, distressingly, has threatened to dispatch naval vessels to the eastern Mediterranean to confront the Israeli Navy.

So will Turkey’s membership in NATO prevent the conflict Erdogan suddenly seems to want to have? It was just last week I praised Turkey for taking part in the U.S./European missile defense shield. But then the Gaza convoy episode exploded all over again. On Tuesday, Erdogan called Israel a “spoiled child” and a supporter of “state terror.”

Now Israel is worried that Egypt and Jordan will adopt Turkey’s belligerent posture. And suddenly on Friday night, protests in Cairo turned violent with hundreds directing their rage at the Israeli embassy, whereupon the ambassador was forced to flee and the embassy was ransacked. A horrible sign, and a situation that is still developing as I go to post.

As for Erdogan, who has been in power since 2002, he sure is acting like the emerging dictator many in the opposition there have long feared and he’s feeling his oats. He’s also taking a stance many in the Middle East like, and he’s reveling in the fact he is now the most popular leader in the region, especially with his hard-line stance towards Israel.

What all of us fear, first and foremost, is an “accident” that leads to war.

As for the Palestinian statehood issue, I have warned for months that the upcoming UN General Assembly (the main portion of which starts September 20) could be explosive, not just because of the debate that will take place inside the UN over Palestinian pressure to become a full member, but also the potential for violence in protests outside the UN. Supposedly, some 140 countries are prepared to support the Palestinians. [But the U.S. can, and will, veto any request, though it won’t be able to block a vote by the General Assembly to elevate the status of the Palestinians’ nonvoting observer ‘entity’ to that of a nonvoting observer state.] 

PA President Mahmoud Abbas said the Palestinians have “knocked on all doors seeking the resumption of the peace talks, which is our first, second and third option,” adding, “Whatever we achieve at the UN, we will return to the negotiations to solve the final-status issues and the case of the prisoners [in Israeli jails].”

Chief Palestinian negotiator Saeb Erekat said the key was Israeli acceptance of the 1967 borders as the basis of a two-state solution.

The Israelis argue that any unilateral move by the Palestinians for statehood would only harm the peace process because it could give the PA added leverage to pursue Israel legally under international law.

And as if Prime Minster Netanyahu doesn’t already have his hands full, an estimated 400,000 demonstrators jammed city streets on Saturday in the largest show of force yet for the social-issues protest movement over rising prices (including for housing), fewer job opportunities for youth, income inequality, etc.

Iran: Sallai Meridor, former Israeli ambassador to the United States, in an op-ed for the Washington Post:

“While everyone is watching events unfold in Libya, Syria and the rest of the Arab world, Iran is watching, too. And the leaders in Tehran may decide that this is the time to rush for the bomb. Moammar Gaddafi gave it up. Bashar al-Assad fell short of getting it. Would they be next?

“The mullahs probably ask themselves a fair number of ‘what if’ questions. What if Gaddafi had had the bomb? Would NATO have dared to bomb Libya? Would the Europeans even have thought to take Gaddafi on if he had had nuclear-armed missiles aimed at Italy and France? And what if Assad had the bomb? Would Syria’s leader be as vulnerable? Would Turkey be able to act independently if Ankara and Istanbul were within reach of Syrian nuclear weapons? Would Israel be so concerned at the prospect of being targeted by Syria that it would have asked allies not to pressure Assad?

“As they watch this year’s developments throughout the Middle East, Iran’s leaders see the potential for great gains and losses….

“Above all, the mullahs must prioritize the future of their regime and the Islamist revolution. What will happen to Iran if the rage sweeping the Arab world inspires Iranians to take to the streets again, aiming, together with mounting international pressure, to oust the mullahs? Will they follow in Gaddafi’s footsteps? Will they be better prepared than Assad?

“While the world might be looking elsewhere, the Iranians have boosted the production of enriched uranium, upgraded the level of enrichment closer to weapons-grade and are reportedly moving essential production aspects to a well-protected underground facility. To the mullahs, who face growing uncertainties and are trying to draw their own lessons from events around them, what could better protect them and enhance their clout than the possession of a nuclear bomb?

“While the Iranians are watching the Arab world, the world should watch Iran.”

“Iran has taken two more steps toward producing a nuclear weapon. According to a report released Friday by the International Atomic Energy Agency, it has begun to use a new, more advanced centrifuge to enrich uranium, which could allow it to produce bomb-grade material in a much shorter time period, should it choose to do so. It also has begun installing centrifuges in a facility dug into a mountain near the city of Qom, which could be nearly invulnerable to a U.S. or Israeli air attack. Iranian officials say those centrifuges will be used to triple the production of uranium enriched to 20 percent, creating a stockpile for which Tehran has no plausible legitimate use.

“The report underlines the fact that, contrary to the impression often promoted by the Obama administration, the danger that Iran will become a nuclear power is growing, not diminishing.”

I couldn’t agree more with the above two takes. Separately, Iran is also breaching UN Security Council restrictions on the development of ballistic missiles capable of delivering nuclear weapons.

But on the Syria front, Iranian President Ahmadinejad, who appears to have weathered the crisis of leadership that threatened his status, surprisingly called on President Assad to end his violent crackdown. Iran wants to bolster its own image, while offering advice that it feels would keep ally Assad in power.

In terms of the crackdown, the death toll is up to 2,200 by some estimates. It’s difficult to keep track. 24 were killed last Sunday, 20 on Wednesday... Soldiers are defecting, but not in the numbers needed to turn the military against Assad.

Libya: Where’s Moammar? Niger? Still in Libya, as his audio tapes claim?

Reports surfaced that China offered to sell $200 million worth of arms to Gaddafi during the rebellion. The new transition council said relations with Beijing would be impacted if true. Meanwhile Russia also has issues because of close ties to Gaddafi’s sons. Both countries were looking to be involved in the oil business in Libya, which isn’t now expected to return to pre-war levels until yearend 2012. The biggest issue is the destruction of three main oil terminals in the fighting.

As to the new government and its efforts to stabilize the nation, wait 24 hours when it comes to determining who will eventually lead the place. Many of the leaders actually remain in Benghazi, not Tripoli, over security concerns.

Iraq: According to a study by the British medical journal Lancet, 12,000 Iraqi civilians have died in suicide bomb attacks since the war began, about 11 percent of the total civilian deaths from armed violence since March 2003. In contrast, 79 suicide attacks on coalition forces caused 200 deaths, or four percent of coalition deaths.

Meanwhile, a plan is being worked on that would keep 3,000 to 4,000 U.S. troops in Iraq after the yearend deadline for purposes of training security forces only. There is still a great deal of uncertainty, however, as to whether the Iraqi government would approve it, Prime Minister Maliki facing opposition from key supporter Moqtada al-Sadr.

India: Terrorists struck New Delhi’s High Court, killing 12 and injuring more than 75 in a briefcase bomb attack in the heart of India’s capital. One group claimed responsibility that has ties to the Kashmir conflict and possibly al-Qaeda. The leader of this particular group, Harka-ul Jihad al-Islami (Huji) was reportedly killed in a U.S. drone strike in northwestern Pakistan in June.

China: The U.S. Senate is looking to circumvent the Obama administration and authorize the sale of F-16 fighter jets to Taiwan, per the 1979 Taiwan Relations Act, with the proposal by Republican Sen. John Cornyn of Texas probably getting majority support in both houses, which President Obama would then find too difficult to veto if it’s attached to legislation that keeps the military funded.

On the energy front, ConocoPhillips China (COPC) has been under the gun due to its handling of a massive oil spill. There is increasing public anger, as well as claims from COPC that some interviews finding their way on television, with supposed COPC employees working on the spill, were faked in order to turn attention away from the government’s own possible culpability. COPC then later apologized and established a fund to cover all clean-up costs.

But here’s one thing I learned. Fish farmers are most particularly upset by the contamination.

Ergo…whatever you do, wait a few months before buying any farmed fish labeled “From China” because you don’t know if it’s from Bohai Bay.

Russia: I have been on a Russian airliner or two in my day and among so-called modern nations, there has never been any doubt that Russian aviation and air safety is the absolute worst. It’s not even close. Sadly, this week we saw another example of this with the crash of a Yak-42 plane that killed 43 people, including all but one member of the star ice hockey team Lokomotiv Yaroslavi, whose members spanned European national teams and the NHL. It was such a horrible, clearly preventable accident (the three-engine plane crashed during takeoff from Yaroslavi airport, striking a navigation beacon, tumbling to the ground and shattering on impact on the banks of the Volga River) that for the first time, President Medvedev and the Kremlin had to recognize deep-seated problems such as poor aircraft maintenance, a lack of pilots, poor pilot-training, aging production facilities and negligent state supervision, as spelled out by the Moscow Times. The nation is in mourning and should be outraged.

This just needs to be said. Russia, as much as I love to visit for the history (dark as it is) and the culture (often glorious…think Bolshoi or the Russian classicists) is a truly pathetic country whose leaders have failed the people to the point that Russia has become a danger for us all, different from the days of the Cold War. I truly believe a coup is in the cards, and as bad as things are today, it could get even worse.

[I’m guessing the cause of the crash will be revealed to be either bad fuel, some say already ruled out, and/or a pilot that was drunk.  And understand from a sports standpoint that some of those killed were true national heroes, like Slovak legend Pavol Demitra. The sadness in Slovakia, Czech Republic, and Latvia, among others, is palpable.]

This was the seventh commercial air crash this year in Russia. 

Ukraine: The European Union has warned Ukraine’s leadership that integration into the 27-nation bloc could be jeopardized by President Yanukovich’s “show trial” against opposition leader Yulia Tymoshenko.

On a related note, the Kremlin said it would not renegotiate gas contracts with Ukraine, as Kiev is demanding. It is the contracts, negotiated between Russia and Ukraine when Tymoshenko was prime minister that led to her incarceration. In the past such tensions have led to Russia’s Gazprom cutting off deliveries to Ukraine, which then led to shortages in Western Europe. For her part, Tymoshenko is showing the strains of her confinement.

France: Dominique Strauss-Kahn has returned home with his career and reputation in tatters, the same day that First Lady Carla Bruni talked publicly for the first time about the baby she and her husband, President Nicolas Sarkozy, are expecting; the baby that is supposed to save Sarkozy’s re-election hopes, frankly.

So picture the images. A beaming Bruni, and then pictures of disgraced dirtball Strauss-Kahn. DSK’s return also does nothing to help his fellow Socialists hoping to oust Sarkozy; the leadership of which is distancing itself from him. A poll conducted 10 days before his return showed 2/3 of French voters don’t want DSK to return to a high-profile political role.

Meanwhile, Sarkozy himself was hit with a fresh scandal of his own, the reemergence of a rumor that he had had an extramarital affair with the sports minister, Chantal Jouanno. Sarkozy’s own former communications director hinted at it the other day, later claiming he had been misunderstood.

Random Musings

President Obama’s approval rating is down to 44%. 73% believe the country is headed in the wrong direction. 70% believe the economy hasn’t hit bottom yet.

In June, Obama led an unnamed Republican 45-40. Now the mystery Republican leads 44-40. But, Obama leads Rick Perry 47-42, and Mitt Romney 46-45.

Among Republicans, the NBC/WSJ poll has Rick Perry at 38%, Mitt Romney at 23%, Ron Paul 9% and Michele Bachmann 8%. [In July it was Romney 30% and Bachmann 16%.]

Obama captured 52% of the independent vote in 2008. Now only 26% would vote for him. Devastating should this hold.

In a Washington Post/ABC News survey, Rick Perry leads among Republican voters with 27% to Romney’s 22%. The irritating Sarah Palin is at 14%, with Ron Paul at 8% and Bachmann sliding to 6%.

“I’m a silver-lining kind of guy. No matter how bad the news or the experience. I will find the larger, positive lesson to be learned to move forward. The new polls from The Post/ABC News and the Wall Street Journal/NBC News on President Obama show that whatever silver lining there is for him is becoming decidedly gray….

“Obama’s approval rating in the Post/ABC poll is 43 percent, the lowest in the survey. But that of Republicans in Congress is 28 percent. Obama’s approval rating in the WSJ/NBC News poll is 44 percent. But the disapproval of Congress’ performance is at 82 percent, an all-time high.

“The WSJ/NBC News poll highlights the most promising of silver linings for the president: 65 percent of respondents described him as ‘easygoing and likable.’ That tracks with results released last week from the Pew Research Center.

“Being likable is great. People still liking Obama means they still trust him enough to hear him out, give him a chance. But that will take him only so far. One of the more infamous encounters on the 2008 campaign trail between Obama and Hillary Rodham Clinton was when he said, ‘You’re likable enough, Hillary. No doubt about it.’

“What Obama must do, starting with his jobs speech Thursday night, is ensure that the darkening national mood – revealed in at least four national polls – doesn’t result in the electorate saying on Election Day 2012, ‘You’re likable enough, Barack…But it’s time for someone new.’”

--Just one view of the two main Republican candidates after Wednesday night’s debate.

“Anyone hoping or fearing that Rick Perry would crash and burn in his first GOP debate last night can either feel depressed or rest easy.

“In his debut on the national stage, Perry proved he possesses a somewhat indefinable star quality – exactly what Republicans were distressed to feel was missing from the field….

“At the outset, he delivered a strong jab to Mitt Romney’s job-creation record in Massachusetts quietly and offhandedly – his almost diffident demeanor serving as cover for the shiv he was sticking in his rival.

“But he was unhesitating when asked by Brian Williams at the end if he lost sleep over the number of people executed in Texas. Perry said plainly that those charged with capital crimes go through the legal process, their cases then go through an appellate process all the way to the Supreme Court – and if all of that stands, the message is that if you kill a child or a police officer, you will face the ultimate justice.

“What was not a perfect answer was his reply to the gotcha question from John Harris of Politico about which specific scientists he had consulted on the question of whether global warming was man-made. He repeated the contention that the science was not settled, but in speaking on the issue, he looked lost and angry.

“More important is that Perry’s entire political rationale is that he is the guy who can get the country’s economy growing again. And said (ineloquently) last night is that the demands of the global-warming crowd make that task all but impossible. And that is unquestionably true.

“The real controversy arose from his decision not to run from the attack he launched on Social Security in his 2010 book ‘Fed Up,’ but rather to say that politicians need to be honest about the Ponzi-scheme nature of the old-age pension system.

“Romney immediately responded: ‘You can’t say that’ about a system on which so many people depend. Perry answered that it is a Ponzi scheme and we have to stop lying to people in their 20s that all the money they are paying into the system will be there when they retire.

“He’s right – it is a Ponzi scheme.  The challenge for Romney now will be making the case to primary voters that it will be fatal for the GOP’s shot at denying Barack Obama a second term to have a candidate who calls it a Ponzi scheme. He’ll have a strong case to make….

“Whatever his failings, and they may well be vast, Perry does have ‘it.’ In terms of sheer presence, he diminished Romney and everybody else on stage last night – and he left Michele Bachmann, his only real rival for the Tea Party vote, in the dust.

“From here on in, it’s just Perry and Romney. There’s little point in having anyone else on that stage any longer except as comic relief.”

--Jonathan V. Last / The Weekly Standard…on being Obama…it’s all about him.

“(Obama) complained that one of the problems his party has is that Americans don’t get to see him doing the hard work of being president. For instance, he mentioned that he reads letters from ordinary Americans all the time:

Those letters that I read every night, some of them just break my heart. Some of them provide me encouragement and inspiration. But nobody is filming me reading those letters. And so it’s hard, I think, for people to get a sense of, well, how is he taking in all this information?

“It was good of the president to let voters off the hook for not understanding how hard he works on their behalf…

“Bill Clinton’s vanity was that he wished he could have been at the center of a world historical event. Barack Obama’s vanity is that he believes he is a world historical event. And the greatness of his being dwarfs any necessity to establish greatness through action. That’s why, despite his passivity as president, we’re likely to see a much more vigorous Obama in the coming months as he switches from governing to campaigning. However ambivalent he may be about leading the country, arguing for the indispensability of Barack Obama is the one project that has always commanded his full attention.”

--Sarah Palin is going to be in South Korea attending a business forum, where she is expected to give a speech on U.S. leadership. So mark the dates Oct. 11-13 on your calendar, taking into consideration the time difference. If you’re a trader, you may not want to be ‘long’ those days because, well, it’s South Korea and lord knows what she’ll say. I mean she could cause a war if she gets North and South mixed up. 

“Sept. 11, 2001, stands as the defining event of the 21st century. For me, 9/11 remains puzzling. It was the worst day of my life and the best day. It was the worst day because of the incomprehensible death, destruction and evil. Very soon after the attacks, we began to understand the threat posed by Islamic extremist terrorism.

“Sept. 11 was also the best day because it put on display the very finest human instincts – compassion, courage, kindness, selflessness. First responders rushed into what they knew was a life-threatening emergency. Neighbors helped neighbors, and aid poured from good people all over the country and the world.

“When people endure a traumatic event, they are either defeated or made stronger. On Sept. 11, I told New Yorkers, ‘I want you to emerge stronger from this.’ My words were partially a hope and partially an observation that people in New York City handle big things better than little things. I could not be more proud of the way my city responded.

“Today, the city is stronger than 10 years ago. More people live here and its economy is stronger, even as we endure the problems plaguing the national economy. There’s been no reduction in the desire of people to live and visit New York. We are a safer and better prepared city. I believe we are spiritually stronger, as well.

“As for the country, when it comes to our national security and our awareness of the threat from Islamic extremists, we are better prepared than we were but not as prepared as we should be. Our intelligence base is better and our airport security is better, for all its frustrations. We still need work in many places – especially port security – but our general better preparedness has helped us handle unanticipated threats….

“The lesson of 9/11 is that America is truly exceptional. We withstood the worst attack of our history, intended by our enemies to destroy us. Instead, it drew us closer and made us more united. Our love for freedom and one another has given us a strength that surprised even ourselves. At the same time, it’s a strength that must be guarded and nurtured. We must rediscover our unity. We must never forget what we witnessed on that day, both the incomprehensible face of pure evil and the depth of love and compassion. Today, 10 years later, the fight continues, and the memories remain etched into our national character.”

“The events of Sept. 11 reverberated through American life, but nowhere more profoundly than in U.S. policy toward the outside world. Creaking and groaning, the supertanker that is the American foreign and defense establishment turned itself around as Americans prepared to face new enemies. We created a vast security bureaucracy, encompassing some 1,200 government organizations, 1,900 private companies and 854,000 people with security clearances, according to a Washington Post investigation last year. We launched wars in Afghanistan and Iraq. We organized counterterrorism operations in such far-flung places as the Philippines and Yemen, and we changed the culture of our military. We sharpened our focus on al-Qaeda and imitators. We spent, according to one estimate, some $3 trillion.

“And we were, in the terms defined by the war on terror, successful: Ten years after 9/11, al—Qaeda is in profound disarray. Osama bin Laden is dead. Fanatical Islam is on the decline. Our military remains the most sophisticated in the world. And yet, 10 years after 9/11, it’s clear that the ‘war on terror’ was far too narrow a prism through which to see the planet. And the price we paid to fight it was far too high.

“In our single-minded focus on Islamic fanaticism, we missed China’s transformation from a commercial power into an ambitious political power. We failed to appreciate the significance of economic growth in China’s neighborhood. When President George W. Bush traveled to Asia in late 2001, he spoke to his Malaysian and Indonesian interlocutors about their resident terrorist cells. His Chinese colleagues, meanwhile, talked business and trade….

“Finally, we stopped investing in our infrastructure – think what $3 trillion could do for roads, research, education or even private investment, if part of that sum had simply been left in taxpayers’ pockets – and we missed the chance to rethink our national energy policy. After Sept. 11, the president could have declared an emergency and explained to the nation that wars would have to be fought and paid for – perhaps, appropriately, through a gasoline tax. He would have had enormous support. In 2001, I could fill my gas tank for about $20. At the time, I’d have been happy to make it $21 if it helped the Marines in Afghanistan. Instead, the president cut taxes and increased defense spending. We are only now paying the price.

“Plenty of other mistakes have been made…But our worst mistake was one of omission. In making Islamic terrorism our central priority – at times our only priority – we ignored the economic, environmental and political problems until they became too great to be ignored.

“Let me repeat: The U-turn that American foreign policy made after Sept. 11 was not a failure. But under President Bush, we narrowed our horizons, stopped thinking in broader strategic terms and paid little attention to future competitors and domestic weaknesses. President Obama, dealt a bad hand to start, hasn’t had the energy, resources or willpower to do much better. Ten years on, could it be that the planes that hit New York and Washington did less damage to the nation than the cascade of bad decisions that followed?”

“Al-Qaeda has not just poisoned relations between countries. It has poisoned minds as well. In all of the Muslim countries polled recently by the Pew Global Attitudes Project, majorities still refuse to believe that the perpetrators of September 11th were Arabs. Pew finds that the Muslim world and the West still see the other as fanatical and violent. Muslims are liable to add that Westerners are also immoral and greedy – and largely to blame for keeping Muslims poor. An American-made peace in Palestine might have assuaged some bitter hearts, but Mr. Bush never pushed for peace hard enough, and, for all his fine speeches, Mr. Obama’s inept diplomacy ended in humiliation. A poll for the Arab American Institute reported this summer that America’s standing across the Arab world is now lower than it was at the end of Mr. Bush’s term….

“The superpower made mistakes galore after September 11th, of which the invasion of Iraq was probably the biggest. It will face new security challenges in the coming decade, such as responding with fewer resources to a rising China. And yet those who say blithely that it overreacted to the attacks of September 11th will never know how much more devastation the jihadists might have wrought if America had not pursued them into the mountains of Afghanistan and Pakistan, shredding their networks and forcing them into hiding. The trick in the next ten years will be to win back the trust of allies (especially Pakistan), use force more sparingly, go wherever possible with the grain of Muslim sentiment instead of rubbing against it. But there can be no return to the innocence of September 10th 2001 – and, sadly, no end to the vigilance.”

--Time magazine asked various figures for their thoughts on 9/11. Here is what former NBC Nightly News anchor Tom Brokaw had to say.

“What troubles me as much as anything is that I don’t think we are still very good at letting people know what the dangers are. The websites of the Department of Homeland Security, the CDC, still are not keeping pace, in my judgment. You ought to be able to go online in a central place, find out what anthrax is, what the effect of it is.”

--On Labor Day, talk at a small family gathering turned to Dwight D. Eisenhower, after a discussion of Beyonce’s pregnancy, and Dr. Bortrum was reminding my brother and I he saw President Eisenhower up close twice, once in Cleveland when he was within feet of Ike’s motorcade and could see all the makeup the president was wearing after a television appearance. Ike, and Mamie, were riding in an open top vehicle.

So I had to bring up Ike’s Farewell Address as president and how we cannot let the politicians ram huge Pentagon budgets down our throats without asking questions, admittedly a tough task, and then I read an opinion piece in BloombergBusinessweek by Ike’s grandson, David Eisenhower:

“This year marks the 50th anniversary of Dwight D. Eisenhower’s farewell address, a Presidential speech considered one of the most noteworthy – and prophetic – ever given. Often compared with John F. Kennedy’s historic inaugural three days later, Eisenhower’s farewell peered from 1961 down ‘the long lane of history yet to be written.’ Like Kennedy, he spoke about the responsibilities and challenges confronting popular government, including his famous call to ‘guard against the unwarranted acquisition of influence, whether sought or unsought, by the military-industrial complex.’….

“Because of burgeoning deficits and the estimated trillion dollars spent annually on all aspects of national security, Eisenhower’s warnings about prudence and economy resonate today. His general reflections on the challenges facing democracy will pertain for as long as Americans value democratic self-government. Were he leaving office today, Eisenhower might well speak of globalization and the social, political, and economic implications of the trillions of dollars managed by four or five New York financial institutions, a concentration of power as potentially dangerous as the military-industrial complex of his day.

“He was not the first to identify that complex, nor the first to warn of the self-interested and self-perpetuating nature of large corporate-public ‘complexes.’ But he memorably spoke of these things as a President while freshly affirming a basic truth valid then and valid today: that America’s freedoms and our quality of life ultimately depend on tens of millions of active citizens, a sense of confidence in the future, and mutual respect.”

--New York City had an eight-day period ending Monday, Labor Day, where 112 people were shot, and a staggering 25 dead. All hope it was an anomaly as the murder rate has been way down from the crack-infused totals of 1990.

“All of the suspected shooters are black or Hispanic.

“And aggressive patrolling of the (West Indian Day) Parade areas led to the confiscation of 15 illegal guns.

“All of this suggests that the principal policing problem right now has very little to do with cops paying too much attention to young minority men.

“We don’t presume to tell Police Commissioner Ray Kelly how to do his job. But clearly some people need to be reminded just how it was that New York City won its war on street crime back in the bloody ‘90s.

“That involved tough tactics for a tough time (and never mind the New York Civil Liberties Union).

“Vigorous stop-and-frisks in high-crime areas. (The 15 guns cops grabbed Monday are argument enough for that.)

“A crackdown on low-level crimes – fare beating, public urination, squeegee shakedowns and the like – thus allowing cops to check for old warrants and make arrests when they got hits….

“Violent crime, as the city found out last time around, not only takes a toll on victims and social life, it also strangles the economy – and the very spirit of the city.

--Peggy Noonan / Wall Street Journal…on 9/11 and being a New Yorker.

“And there were the firemen. They were the heart of it all, the guys who went up the stairs with 50 to 75 pounds of gear and tools on their back. The other people who were there in the towers, they were innocent victims, they went to work that morning and wound up in the middle of a disaster. But the firemen saw the disaster before they went into it, they knew what they were getting into, they made a decision. And a lot of them were scared; you can see it on their faces on the pictures people took in the stairwells. The firemen would be going up one side of the stairs, and the fleeing workers would be going down on the other, right next to them, and they’d call out, ‘Good luck son,’ and, ‘Thank you, boys.’

“They were tough men from Queens and Brooklyn and Staten Island, and they had families, wives and kids, and they went up those stairs. Captain Terry Hatton of Rescue 1 got as high as the 83rd floor. That’s the last time he was seen.

“Three hundred forty-three firemen gave their lives that day. Three hundred forty-three! It was impossible, like everything else.

“Many heartbreaking things happened after 9/11 and maybe the worst is that there’s no heroic statue to them, no big marking of what they were and what they gave, at the new World Trade Center memorial.

“But New York will never get over what they did. They live in a lot of hearts.

“They tell us to get over it, they say to move on, and they mean it well: We can’t bring an air of tragedy into the future. But I will never get over it. To get over it is to get over the guy who stayed behind on a high floor with his friend who was in a wheelchair. To get over it is to get over the woman by herself with the sign in the darkness: ‘America You Are Not Alone.’ To get over it is to get over the guys who ran into the fire and not away from the fire.

“You’ve got to be loyal to pain sometimes to be loyal to the glory that came out of it.”

--To say the least I have some pretty good archives on the history of our times. I’m not reopening the early years for proprietary reasons, but I have some unique material on the period around 9/11, as I noted earlier like in my current “Wall Street History” column.  I was very upset at what I saw as a lot of shills that stepped forward in the financial industry during that time, or people like Bill O’Reilly who had no business handing out financial advice, as he was prone to do. I was less than charitable to Dick Grasso, for example, and stand by my treatment of him. On the other hand, looking back I had forgotten I was effusive in my praise of Street executive Wick Simmons. I also noted that when it came to Rudy Giuliani, there isn’t one line he said during the whole time that you can remember, he just led, period. Something for some of our politicians to remember when they are looking to be loved.

But in thinking back to 9/11, I just want to note some of the following regarding my own experience.

From 1982-90, save for two years when my employer transferred me six times up and down the east coast, including back to New York after the first year, I worked downtown, in the shadows of Wall Street. I was constantly going through the World Trade Center, thinking of terrorism even back then, and before the first attempt to take down the Towers. After I started with PIMCO (then Thomson Funds) in 1990, I worked out of Stamford, Conn., but I was in New York a few times a month, making my broker/dealer contacts. The Trade Center was the hub for many of us to work out of. For starters, you knew you could find a bathroom! 

The Trade Center also had a good phone bank on the ground floor, by the Vista Hotel, and I would camp out there for an hour or so each time I was in the area, in those pre-cellphone days. After the first attack that was gone, as the Vista never reopened, if I recall correctly. 

So I have different memories of the Twin Towers. Dean Witter was in one of the towers and I was constantly visiting them and a dear friend of many of us from the business, Jim Bach. If you were having a lousy day, it was always fun going to see him. He was Old School, when Wall Street still had some class.

But what I remember most about the WTC, aside from Philippe Petit and his high-wire act in the 1970s after the Towers had opened, was the restaurant Windows on the World. That was always for special occasions, special business dinners. In my case a few dates as well. The food wasn’t the greatest, but who cared?! It was literally another world being up there, except I do remember my last time, about a year before 9/11, when it was foggy the whole evening, a chance you took when you made your reservation.

The local news networks have been running a lot of segments on the restaurant the past week. 72 died out of a staff of 450. About an hour later it could have been another 100 that would have perished as they trickled in for the lunch shift.

I don’t have a dramatic personal story about 9/11 itself. I was scheduled to play golf with a friend up in Boston, who had set me up with a reporter from Sports Illustrated. I saw the first tower go down from Dave’s office, before he had arrived, and told the secretary, “Tell Dave I’m going home. We’ll catch up later.” My only thought then was get back to New Jersey, but how?

Being in tune as I was, all I wanted to do was take the Mass Pike west (I had my car) and get onto the other side of the Hudson quickly. I didn’t dare drive south, down I-95 and eventually take the Tappan Zee, for example. Too big a target. So I crossed the Hudson at the Mass./New York border and headed down the New York State Thruway and then Rt. 287 in New Jersey, where there is a point in that road where you have a far off view of Manhattan, some 30 miles away, at least, but it was such a clear day the silhouette of the skyline was visible, as was the smoke.

When I got home, I first went to my parents’ house and then ran around the surrounding area, checking on my friends and some of their parents who had a spouse in New York who hadn’t come home yet. And once I was assured everyone was OK and there was nothing I could do, I went home, watched the coverage, and cried and cried and cried. In some respects I was kind of glad I was living alone.

I didn’t lose any close friends in the Twin Towers. I knew of one or two from town but we really didn’t know each other. Professionally, I didn’t lose anyone. Some of my friends who worked downtown, however, were shaken for quite awhile after as they relived what they saw, and the horror of getting off the island that day. I have one friend who knew at least 25 who perished.

In the ten years since, I have been to Moscow twice, Beirut twice, Istanbul twice, China three times, Hong Kong four times, Yap three times, Singapore, South Korea, Slovenia, Romania, Paraguay…but not Ground Zero.

I’ve probably been in Manhattan to visit friends, sight-see, etc. at least 75 times, but never downtown. I have no particular reason for why it’s been this way. There’s just been nothing pulling me to it.

This coming week, though, I’m going to stop in Shanksville, Pa., which I visited in the first few years after 9/11. And then someday I’ll go to the World Trade Center Memorial when it’s fully opened. But I really don’t have to. I know the area well, after all. I actually have good memories. Maybe that’s why I haven’t been.

--Finally, General David Petraeus, at his retirement ceremony:

“Before closing I also want to remember reverently those who have given the last full measure of devotion in our endeavors in recent years. They and their families must never be forgotten. In a poem published a few years ago, a British trooper who was deployed in Afghanistan captured eloquently the emotions of those who serve and those who sacrifice. He wrote,

And what is asked for the service we give?
No high praise or riches if we should live,
Just silence from friends, our name on a wall,
If this time around it is I that fall.

“To the family, friends, and countrymen of those who have fallen and to all those who have served and sacrificed on behalf of our cause, I offer my deepest respect and my eternal gratitude.”

6,300 U.S. servicemen and women have been killed in the Iraq and Afghan wars. Over 45,000 wounded. 

Pray for the men and women of our armed forces, and all the fallen. We pray for the victims of 9/11 and their families.

Gold closed at $1859
Oil, $87.24

Returns for the week 9/5-9/9

Dow Jones -2.2% [10992]
S&P 500 -1.7% [1154]
S&P MidCap -1.2%
Russell 2000 -1.4%
Nasdaq -0.5% [2467]

Returns for the period 1/1/11-9/9/11

Dow Jones -5.1%
S&P 500 -8.2%
S&P MidCap -9.2%
Russell 2000 -14.0%
Nasdaq -7.0%

Bulls  38.7
Bears  37.6 [Source: Chartcraft / Investors Intelligence]

Have a great week. I appreciate your support.

Brian Trumbore

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