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03/24/2012

For the week 3/19-3/23

[Posted 6:00 AM ET]

Europe, Washington and China

This was not a good week on the Euro front, especially if you read between the lines a bit. You know how the combination of the approval of Greek Bailout II and the second Long Term Refinancing Operation, or LTRO, was to have finally provided needed stability among the Euro-17?

Well not so fast, sheriff, err Mario…as in European Central Bank chief Mario Draghi, who once again was strutting like a peacock looking for a mate, it being spring and all, as he proclaimed in an interview with a German paper, “The worst is over, but there are still risks. The situation is stabilizing.”

Well, that was a little squishy. If one of the risks reemerges, the situation won’t be stable.

No doubt, crisis was averted last fall but it’s increasingly looking like we are heading right back into one, sooner than later, like within 4 to 8 weeks, I’ll say.

For one thing, the economic data in the euro region has been putrid. A combination service and manufacturing sectors reading for March has come in worse than expected, 48.7 vs. 49.3 in February (50, remember, being the dividing line between growth and contraction), while a separate reading on manufacturing came in at 47.7 for the month. This isn’t good.

We also learned that Ireland is back in recession as GDP fell 0.2% in the fourth quarter after a 1.1% decline in the third. 

And the more you read about Portugal the worse it is there, with humongous local debts that need to be serviced by the central government but probably won’t, seeing as they have their own rather serious issues. 

The U.K. saw retail sales sink in February, while Germany is exhibiting signs of a distinct slowdown.

So while you have the likes of Greek Fake Prime Minister Lucas Papademos (he’s unelected, you see) declaring that “we are more than halfway along the path to economic recovery,” which is a crock of yogurt, what is most apparent is that Spain is about to become the next crisis. Maybe not tomorrow. Maybe not April 5.   But it’s coming.

Worrisomely, the Spanish 10-year bond is back to 5.50% as huge downside remains on the real estate front. The Financial Times’ Wolfgang Munchau writes, “Spain’s house price adjustment is still less than halfway complete,” while official estimates say there will be only mild declines from here and a quick rebound in the economy.

But with a deficit of 8.5% of GDP last year, and the government’s own admission that 2012’s is going to be closer to 6% than 5%, Munchau concludes, “The deleveraging of the public sector will be vicious,” with unemployment at nearly 23% as it is (youth unemployment 50%). “The question is not whether the Spanish economy rebounds in 2012 or 2013, but whether it can rebound at all before the end of this decade.”

And here’s the thing. How long have we been talking about the eurozone needing an expanded firewall beyond the planned 500 billion euro ESM (European Stability Mechanism)? The EFSF (European Financial Stability Facility) has about 250 billion euro remaining, but that’s earmarked for Greece, Portugal and Ireland, so the 500 billion ESM is really all that’s left to backstop Italy and Spain, which we know is absurd.

It’s the same old story. The IMF and European Commission want an increased firewall, but Germany remains obstinate in its belief there is enough there and that the system is now stabilized through the LTROs.

But sentiment can turn on a dime and the vultures are beginning to swirl over Spain. It needs growth in the worst way and none is forthcoming.

One last comment on Europe for now. I like Jim O’Neill, who heads up asset management at Goldman Sachs and is a longtime strategist. He always has some interesting comments.

But the other day he’s on CNBC and said, “Who cares about Greece?” 

Everyone should care about Greece…and soon, Spain. I’ve always said the story with Greece is not about the size of its puny economy, but whether the country explodes into a spasm of anarchy and violence that could rapidly spread to other nations in the region. It’s the Balkans, after all. Thus far, the demonstrations and rioting we’ve seen there have been manageable. At a moment’s notice, however, the situation could change drastically. That’s why one should keep their eyes on Greece.

Washington and Wall Street

Lots of talk about energy and oil prices this week; some of it coming from the White House was quite comical.

But first, Saudi Arabia’s oil minister Ali Naimi sought to reassure the world that $105+ oil, $125 on Brent crude, was “unjustified” and that the Saudis had lots of spare capacity to boost output if needed; the Saudis understanding that it does them no good if the world plunges back into recession.

Of course $15 to $20 of the price of oil is an Iran risk premium and until that situation resolves itself, oil will remain stubbornly high. Case closed. Yes, you have refinery issues as well, which doesn’t help any, but it’s Iran Iran Iran, friends, and nothing Barack Obama or Mitt Romney or Newt Gingrich says can change matters. [President Obama’s actions regarding Iran are a different matter.]

But that’s what’s so comical. Our politicians really do treat us like a bunch of schmucks sometimes, while more than a few Americans don’t bother to think themselves, or read a good newspaper, before spouting off at the mouth. It’s a good time to avoid cocktail parties, actually, because you’d hear a lot of idiotic drivel…but I digress.

Anyway, there was our president this week in Cushing, Oklahoma, getting all folksy, as he is prone to do. He has different voices. A good, stern, articulate one for most Washington appearances and speeches. His ghetto voice when he’s in front of a crowd of African Americans, and his folksy voice for the Okies. 

So there’s Obama:

“Today I’ve come to Cushing, an oil town, because producing more oil and gas here at home has been and will continue to be a critical part of an all-of-the-above energy strategy,” a strategy he stole directly from the Republicans, as you all know.

A new pipeline running south from Cushing is needed, he continued, because “there’s a bottleneck right here because we can’t get enough of the oil to our refineries fast enough,” he added, taking credit, as the Los Angeles Times’ Christi Parsons and Neela Banerjee reported, “for an upturn in domestic oil production which has the industry pumping more than at any time in the last eight years.”

But then Obama had to play to his environmental base, so he told the Okies about why he couldn’t approve the Keystone XL pipeline that would have gone from Canada to Cushing, and if you knew what was going on you just shook your head, as I did watching him on television, because it was so freakin’ phony.

Plus, as the L.A. Times’ reporters noted, opponents of Keystone are still torqued off that Obama approved the southern portion because it still means oil from Canada’s dirty tar sands could still find its way to Cushing and then Texas.

So the president is flailing about, trying on different voices like John Byner or Frank Gorshin, but when it comes to November and Americans pushing the lever for president, how educated are most voters really going to be on the critical issues of our time…be it energy policy or Iran or China?

Sorry for the helter-skelter commentary, but even I can’t follow the president sometimes. And, believe me, I’m not saying Republicans are any better on a lot of issues themselves these days.

Meanwhile, in terms of the gas price at the pump, the national average as I write is $3.86 (California and New York being among the states with an average over $4.00), with 54% saying the president has influence on prices according to a CBS News/New York Times survey. Oh brother.

I do just have to add two tidbits on this topic. A New York Times story noted that the nation imported a record high 60% of its oil in 2005 and in 2011 that figure was down to 45%, so we’re making progress on the energy independence front.

And the future does look bright. As Ed Morse, a commodities analyst and former State Department official wrote in a Wall Street Journal Op-Ed:

“The United States has become the fastest-growing oil and gas producer in the world, and it is likely to remain so for the rest of this decade and into the 2020s. Add to this output the steadily growing Canadian production and a likely reversal of Mexico’s recent production decline, and theoretically total oil production from the three countries could rise by 11.2 million barrels per day by 2020, or to 26.6 million barrels per day from around 15.4 million per day at the end of 2011.”

And natural gas output should also continue to explode in both the U.S. and Canada; all the more reason why President Obama’s insulting Canadian Prime Minister Stephen Harper by shelving the Keystone pipeline, even if temporarily, was incredibly stupid.

Elsewhere on the economic front, the numbers on housing were mixed, at best, with February housing starts pretty solid, but a breakdown showed single family starts were down and multi-family were up, continuing trends on both. 

Existing home sales for February were down over January, but the two-month pace was the best since May 2010. Here, though, prices were unchanged from a year ago, so the bottoming process continues.

But then we had the figure on February new home sales and they were less than expected.

Barron’s had a story on the real estate sector and a recovery, finally, in spring 2013.   Sure, that’s possible. But I certainly don’t see a robust one in terms of prices unless we have rampant inflation.

Finally, the U.S. Supreme Court has scheduled an unprecedented six hours of hearings on President Obama’s Patient Protection and Affordable Care Act for March 26, 27 and 28; the key provision being the requirement that virtually everyone in the country has to buy insurance or pay a penalty. Legal experts believe the four Democratic-appointed justices will have no trouble ruling for ObamaCare in concluding Congress did not overstep its authority in adopting the individual mandate. So the issue then becomes, which of four Republican-appointed justices will join Clarence Thomas, the most likely to vote against.

Charles Krauthammer / Washington Post

“ObamaCare was carefully constructed to manipulate the standard 10-year cost projection of the CBO (Congressional Budget Office). Because benefits would not fully kick in for four years, President Obama could trumpet 10-year gross costs of less than $1 trillion - $938 billion to be exact.

“But now that the near-costless years 2010 and 2011 have elapsed, the true 10-year price tag comes into focus. From 2013 through 2022, the CBO reports, the costs of ObamaCare come to $1.76 trillion – almost twice the phony original number.

“It gets worse. Annual costs after 2012 are more than a quarter of $1 trillion every year – until the end of time. That, for a new entitlement in a country already drowning in $16 trillion of debt….

“Ultimately, the question (before the Supreme Court) will hinge on whether the Commerce Clause has any limits. If the federal government can compel a private citizen, under threat of a federally imposed penalty, to engage in a private contract with a private entity (to buy health insurance), is there anything the federal government cannot compel the citizen to do?....

“Rarely has one law so exemplified the worst of the Leviathan state – grotesque cost, questionable constitutionality and arbitrary bureaucratic coerciveness. Little wonder the president barely mentioned it in his latest State of the Union address. He wants to be reelected. He’d rather talk about other things.

“But there’s no escaping it now. Oral arguments begin Monday at 10 a.m.”

And a word on China.

It’s really funny how there are two highly divided camps out there. One believes China is in the midst of a hard landing; the other believes that such talk is “vastly overblown,” as economist and China expert Stephen Roach continues to state. In Roach’s mind, the Chinese government “has done a fantastic job of controlling inflation,” the chief worry there, and now has ample room to lower rates and/or reserve requirements, unlike the West which has moved rates to zero and come the next crisis is screwed because it has few, if any, options left.

In fact while some talk of Armageddon in China, Nomura and Deutsche Bank raised their 2012 GDP forecasts to 8.2% and 8.6%, respectively.

But the bear case was indeed bolstered by HSBC’s March PMI reading of 48.1, the fifth consecutive fall and down from February’s 49.6 reading, though the government’s official numbers come out April 1.

The bears keep bringing up China’s real estate bubble, and on this I share the concern, as property prices fell a fifth consecutive month in February, but this is exactly what the government has been trying to engineer; a gradual decline. Premier Wen Jiabao said last week, “Home prices are still far above a reasonable level. Therefore, we must not relax tightening.”

So the hard part is for the government to stay the course on the property front, while also stimulating growth elsewhere. According to some of the stories I’ve read, Chinese consumer confidence is returning, with more and more believing the worst is over.

I focus on the comments of U.S. corporations dealing there and almost to a man, executives admit China is going through a slow patch, but that the second half will be better.

And on the local government debt front, another major concern, Moody’s this week said China was getting a handle on the problem a significant statement coming from them.

I have a few more tidbits below on China, but I’m expecting to learn far more this coming week with the probable earnings release from my major holding there. I’ll have some general personal portfolio comments at that time as well.

Street Bytes

--Stocks finished mixed with the Dow Jones losing 1.1% to 13080, while the S&P 500 fell 0.5%, back below 1400 at 1397, and Nasdaq rose 0.4% to 3067. With one week to go in a terrific quarter for equities, attention is about to turn to Q1 earnings, which are not expected to be good, as in the estimate for the S&P 500 is down 0.5% vs. Q1 2011. We’ll learn a ton from the accompanying comments on the outlook for the rest of 2012 and I strongly suspect the language is not going to be good in many cases as CEOs may have been a little too optimistic in January when they last gave their forecasts. Growth is not going to be as strong as it was in Q4 and now the biggest issue is how still rising energy prices, and normal weather (maybe) impacts Corporate America. I’ve been saying for weeks, don’t discount the positive impact weather has had and we’ll find out in April and May if sales, such as on the auto front, will be negatively affected. March, however, looks strong when it comes to car buying.

Separately, on Friday, there was pure chaos with the IPO of BATS, Bats Global Markets Inc., a six-year-old equity exchange. That is the company hoped to go public, only trading in the security went haywire, with Bloomberg showing what was supposed to be an initial public offering of shares at $16 that suddenly was trading for pennies. By day’s end, the stock never did officially open and all trades were canceled. While this was happening, a single 100 share trade of Apple triggered a circuit breaker that suspended trading in it for a while, though this didn’t impact where it finished up on the day.

BATS (Better Alternative Trading System) is one of those electronic firms that rose to prominence  with the proliferation of similar outfits now dominating the scene.  Not exactly the kind of thing that engenders confidence in the markets overall and as I go to post, no real explanation for BATS’ problem has been given. Actually, it doesn’t matter what BATS says. They should be toast…and Wall Street has a serious issue on its hands.

--U.S. Treasury Yields

6-mo. 0.14% 2-yr. 0.35% 10-yr. 2.23% 30-yr. 3.31%

The Congressional Budget Office reported President Obama’s budget would produce a $977 billion deficit next year - $75 billion more than predicted by the White House.

--In a late-breaking development involving the investigation into the collapse of MF Global, an e-mail sent by a treasurer for the firm, Edith O’Brien, shows that Jon Corzine, MF Global CEO, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase accounts in London, three days before the collapse, with the transfer of funds being “Per JC’s direct instructions.”

This flies in the face of previous statements and testimony before the House Financial Services Committee that customers’ segregated funds were safe.

In fact, it’s now come to light that JPMorgan’s risk officer called Corzine directly to seek assurances that the funds belonged to MF Global and not customers. JPM drafted a letter to be signed by O’Brien to ensure that MF Global was complying with rules requiring customers’ collateral to be segregated. [Bloomberg News]

Corzine testified he never intended a misuse of customer funds at MF Global and that he didn’t know where the funds went. Back in December, Corzine told lawmakers, “I did not instruct anyone to lend customer funds to anyone.”

Well, I don’t need to state the obvious. A hearing is slated for March 28. O’Brien is due to be there. There is no word yet on Corzine.

--Apple finally decided to do something with its massive pile of cash, which if you stacked it up, dollar by dollar, would stretch from here to Mars, or at least to the space station, by announcing a quarterly dividend of $2.65 a share in the quarter beginning in July, plus a buyback totaling $10 billion over ten years, or a total of about $45 billion in that period. Seeing as it’s sitting on more than $100 billion (the current estimate, see below), and generating cash as fast as geese fertilizing a New Jersey golf course, this is nothing. Not that shareholders have any right to complain about anything when it comes to Apple.

Apple said it sold more than 3 million iPads during its debut weekend for its latest model; a record for an opening weekend, including a single-day record for iPad sales on March 16.

And I really should note that Apple has most of its cash overseas and plans to keep it there. At last official report, $64 billion overseas, $33.6 billion in the U.S.

--China increased gasoline and diesel prices for the second time in less than six weeks, though the likes of China Petroleum & Chemical Corp. (Sinopec) and PetroChina Co., will continue to face crushing margins on the refinery front as the price hike still leaves prices some 10% below where these two break-even.

--China’s power consumption is expected to rise 8.5%-9.7% in the first half of the year vs. a year ago, according to the power producers association.

--Luxury car dealers in China are slashing prices as the country’s Association of Automobile Manufacturers revised its estimate of 8% sales growth this year to 5%. Rolls-Royce, though, said it still expects double-digit growth. Mercedes, on the other hand, has cut the price on its high-end models by up to 25%.

--Speaking from China, Caterpillar CEO Doug Oberhelman, said he remained confident.

“We look at China as a long-term market here. It’s the largest construction equipment market in the world today. We want to be here in a bigger way and of course we are investing a lot of time for what would be a 20- or 30-year run.”

Oberhelman told CNBC he expects construction markets in the U.S. and Europe to remain “depressed,” though he was more optimistic about growth in Eastern Europe and the Middle East. Boy, I wouldn’t be when it comes to the former.

--I have to admit I never thought about this, but exports of U.S. wheat to Iran are legal, as all U.S. and European sanctions against the mullahs exempt agricultural products.

So as CNN reports, Iran is buying American wheat for the first time in three years, and tons of it, as it seeks to hedge against the growing impact of sanctions and weather issues. Iran may ultimately buy 400,000 tons of U.S. wheat in 2012. Smart move by the Iranians to stockpile it.

Back in 2008, Iran imported 1,564,000 tons of U.S. wheat when the country was experiencing a drought.

--I’ve been impressed by the Volkswagen Passat when I see it on the road and it turns out VW sold 8,189 of the vehicle in February, its biggest month since 2003, so the automaker is adding 800 jobs to its factory in Chattanooga, Tenn. Overall, VW has a goal of selling 800,000 cars in the U.S. by 2018. It sold 324,400 last year. Good for them.

--Chile’s economy grew at a 6% pace in 2011. As Ronald Reagan would have said; not bad, not bad at all.

--McDonald’s CEO Jim Skinner is stepping down at the end of June after 41 years at the company, the last eight as CEO. Talk about one of the greats. His performance has been nothing short of spectacular, in my book. Virtually every move he has made, in terms of menu items and expansion, has worked beautifully. Last year was McDonald’s strongest for comparable store sales in the U.S. since 2006, with plans to open 1,300 outlets worldwide in 2012. Skinner is being replaced by COO Don Thompson, a 22-year veteran.   Skinner is 67.

--Wendy’s has officially surpassed Burger King as the second-largest chain in the burger biz, with $8.5 billion in sales, followed by the King’s $8.4 billion. [McDonald’s is at $34.2 billion.]

--The SEC appears to be stepping up an investigation into rapid-fire trading firms and their links to the computerized stock exchanges, according to the Wall Street Journal. Of course the “flash crash” that was caused by such high-frequency trading outfits was back in May 2010, or almost two years ago. Ergo, SEC officials once again are proving that their focus continues to be on porn…as in spending the bulk of their days viewing same. [And now they have the BATS issue, which will really screw up their schedules.]

--Hartford Financial Services Group suddenly announced it was exiting the annuity business as hedge fund manager John Paulson pressured the company to take drastic measures to boost the company’s share price. Hartford’s wholesalers were totally blindsided. Hartford’s business in this sector never recovered from the financial crisis.

--Goldman Sachs CEO Lloyd Blankfein, under pressure after the New York Times Op-Ed, is having e-mails and phone calls scanned looking for employees who disparaged clients. A spokesman declined they were looking for scapegoats. Mrs. Blankfein, worried over her husband’s status and a possible drastic reduction in her shopping budget, was caught by our secret microphone at lunch at the Four Seasons telling her girlfriends, “I told my Lloyd, you better do something!”

The Weekly Standard’s “Scrapbook” column (3/26/12) echoed my sentiments on the Times’ (Greg Smith) column, as I expressed last time.

“(What) struck us with the force of a Goldman Sachs derivative was the following day’s front page of the New York Times. The lead story was not about Afghanistan, or the Republican campaign, or the visit of the British prime minister to Washington. It was about Greg Smith’s op-ed piece in the previous day’s New York Times.

“ ‘Public Rebuke of Culture At Goldman Opens Debate,’ screamed the lead headline, and the subhead described ‘An Unusual Cry From a Financial Insider – Discussion of Greed and Excess.’ In the Business section of the Times there were three – count ‘em, three – separate stories about the Times’ op-ed, and each headline was more tantalizing than the one before: ‘Public Exit From Goldman Raises Doubt Over a New Ethic,’ ‘Name It; Clients Are Called It,’ and The Scrapbook’s particular favorite, ‘Goldman Executive’s Resignation Letter Draws Backers, Detractors and Satirists.’

“This is what is known in the business as manufactured news.”

--Meanwhile, the New York Times said it has 454,000 paid subscribers to the paper’s website and digital products, up from 390,000 end of December, which isn’t bad. Unfortunately, I’m now one at a hefty monthly price.

[Free access to the Times is being severely restricted, from 20 articles a month to just 10.]

--Wells Fargo is now the nation’s biggest bank in terms of market value, not JPMorgan Chase, not Citigroup, and, it has even overtaken Europe’s largest, London’s HSBC. Pretty impressive, seeing as Wells Fargo’s executives still travel in stagecoaches….

…I was just informed that the wagons I see in my local Wells Fargo branch are just a symbol and not executives’ preferred mode of transportation. Never mind…

--The world’s biggest airlines are projecting profits will be down 60% in 2012 owing to soaring fuel prices, even as traffic has picked up with an improving global economy.

--Hewlett-Packard plans to combine its personal computer and printing divisions in a massive reorganization, which will be more than a bit unnerving to the company’s 350,000 employees. While HP is still No. 1 in the U.S. PC market, market share is falling. 

--Oracle, the largest maker of database software, said new software-license sales, a predictor of revenue growth, increased 7%, far higher than analysts’ 3% estimate. Profit, excluding certain items, rose to 62 cents a share, also ahead of expectations. Oracle shares rose a bit.

--Bernie Madoff is at it again, from prison, attacking his wealthy victims, as he told biographer Diana Henriques that he’s also “very sorry that I chose not to go to trial.” Of some of his victims, Bernie said in a series of e-mails that he had no sympathy for them because they had signed documents declaring themselves to have enough wealth to withstand trading losses.

“The pure greed and untruthful cries of some who now have to sell their second or third vacation homes, which were paid for with the years of legitimate profits but because they now find themselves without the income stream I provided is what angers me.”

Oh, shut up.

--Total student debt outstanding passed the $1 trillion mark last year, according to the Consumer Financial Protection Bureau, the new federal agency created in the wake of the financial crisis; 16% higher than an estimate given last year by the Federal Reserve Bank of NY. As a story in the Wall Street Journal puts it:

“(As) more people go to college and assume bigger loans for education, they may take longer than previous generations to hit key milestones such as buying a house or getting married, U.S. officials and economists say. It could take longer for heavily indebted graduates to save money for a down payment on a home, or it could be harder for them to qualify for mortgages.”

Of course it would also help if the universities would stop hiking tuitions at a rate more than the cost of living.

--I’ve been to Hong Kong numerous times and love the place, but the pollution can be a bit overwhelming if you’re not prepared for it. So as Chief Executive Donald Tsang steps down after seven years in office, he leaves a city that has the world’s most valuable stock exchange, is the best place in the world for business, but also the most polluted financial center. A think tank, Civic Exchange, said air pollution is responsible for more than 3,000 premature deaths a year there vs. ongoing concerns over bird flu, which has killed 350, worldwide, since 1997.

As a piece in Bloomberg notes, one of the biggest things the city could do to improve air quality is get rid of its aging, smoke-belching buses.

By the way, if you go, don’t go in May, as I’ve done a few times. The one time I went in October-November, the air was much cleaner.

--Here in the Northeast, the weather fact I find most staggering is we haven’t had a coastal storm since October, and now the experts at Colorado State Univ. announced that the six-month Atlantic hurricane season that opens June 1 should be quieter than normal. Last year was a mild one for Atlantic hurricanes, just six forming, but one, Irene, caused over $7 billion in damage.

--Tourism in America was up 8.1% last year to $1.2 trillion, owing in no small part to 62.3 million foreign visitors, up 4% from 2010. Foreign tourists spent a record $153 billion. The Commerce Department estimates that travel spending supported 7.6 million U.S. jobs last year.

--As part of Newsweek’s ‘time machine’ issue (basically co-branding with AMC’s “Mad Men”), the magazine compared 1965 with 2012.

On an inflation-adjusted basis, a gallon of milk was $6.84 then vs. $3.30 today. An issue of the New York Times was 0.72 vs. $2.50. An ounce of gold, $252 vs. $1,659. Gas…$2.25 vs. today’s $3.83.

But per my comment above on college tuition, check this out.

1965…tuition, room, and board at four-year university…$1,051.00
2012…$22,450.00

--Walt Disney announced it would incur a $200 million writedown on the film “John Carter.” The film has generated over $200 million in global ticket sales, vs. $300 million in estimated production costs, but half the take goes to cinema chains. They would have been better off doing a slapstick, low-budget film titled “Billy Carter.”

--The New York Times’ Patrick McGeehan did a story on New York’s harbor and the labor market there, 58 years after “On the Waterfront.” As in 58 years later, “no-show jobs held by relatives of mobsters and other well-connected people continue to vex government officials trying to make the ports more efficient and more competitive.”

Talk about egregious…as a new report by the Waterfront Commission of New York Harbor found:

“The work rules result in many workers’ being paid for 24 hours per day and, in some cases, as many as 27 hours within one day.”

Some shipping companies “paid salaries that exceeded $400,000 for jobs that ‘require little or no work.’”

--Can you believe Tim Tebow is now a New York Jet? Us Jets fans can’t. Good thing the Knicks’ Jeremy Lin inked a deal with Volvo because Tebow could be endorsing just about every quality product in the area within the next month. Madison Avenue is salivating like Homer Simpson eyeing a keg of Duff Beer.

Foreign Affairs

France: The killing of the self-described al-Qaeda operative in Toulouse, Mohammed Merah, a man responsible for the deaths of four Jews, three of whom were children, and three Muslim soldiers, has roiled the French presidential election.

Far-right candidate Marine Le Pen of the National Front, said:

“It is time to wage war on these fundamentalist political religious groups who are killing our children. The threat of Islamic fundamentalism has been underestimated.

“I have been talking about this for months and months, and the political class has rejected [me]. Some are going to have difficulty explaining themselves but I have a clear conscience.”

Well, it’s true. This has been Le Pen’s platform, as I saw firsthand last May Day in Paris. She has regularly attacked immigration and the influence of Islam in French society.

But, just as Americans normally rally around a president in similar situations, it is President Nicolas Sarkozy who, in these first days after the successful manhunt, is benefiting at the polls, suddenly now leading Socialist candidate Francois Hollande by two points in one survey I saw.

It’s the power of the office. Sarkozy had the television cameras trained on him as he met with Jewish and Muslim leaders and led the ceremony for the murdered soldiers.

The whole issue is complicated by the fact the soldiers were Muslim, with France having Europe’s largest Muslim population.

You also have questions as to why French security forces felt the need to end the siege in the manner they did, not knowing Merah was lying in wake in a bathroom in a final attempt to ambush them. Authorities could have extracted more information from the guy.

One positive tone was set during the week in relation to Merah’s claim he killed the Jewish children to avenge Palestinian children killed by Israel. Palestinian Prime Minister Salam Fayyad replied:

“It is time for these criminals to stop marketing their terrorist acts in the name of Palestine and to stop pretending to stand up for the rights of Palestinian children who only ask for a decent life.”

A heroic statement on Fayyad’s part.

I also have to say that this incident in Toulouse was yet another reason for my adage “wait 24 hours.” I didn’t comment last time on the killing of the three French soldiers because I didn’t have time to collect all the facts, as I would see them, with all manner of theories being put forth initially; think those first hours after Oklahoma City. There were news reports from France the killer had to be a neo-Nazi.

Iran: The new round of discussions between the five permanent members of the U.N. Security Council, Germany and Iran over Iran’s atomic activities are slated for April 13 in Geneva and will not extend beyond July 1, which is when new EU restrictions on purchases of petroleum from Iran are to be implemented. But now we are hearing of all manner of exemptions on the sanctions front being granted various nations (Japan plus ten in the EU), exactly what wasn’t supposed to happen. At least not what the U.S. Congress wanted, it having pushed the Obama administration into the tougher sanctions regime program in the first place.

And Iran is saying the international community must accept its ‘civilian’ program or incur “heavy losses,” as stated by an Iranian lawmaker, Alaeddin Boroujerdi, who heads the National Security and Foreign Policy Committee in parliament. This a-hole is advising the P5+1 to avoid a “policy of confrontation” with Iran, while calling on the United Nations Security Council to lift existing sanctions.

And it was last time, 3/17/12, I wrote the following:

“I get a kick out of those who still talk about Iranian President Ahmadinejad as if he is calling the shots. I told you long ago that wasn’t the case; that if we had a choice, Ahmadinejad was a ‘moderate’ compared to (Supreme Leader Ayatollah) Khamenei.

“But Ahmadinejad is officially irrelevant….Khamenei calls the shots.”

So on Wednesday, former Iranian parliamentarian Seyed Mousavi, said that Khamenei had neutralized all but the most extreme voices in the government, as reported by the Jerusalem Post.

“Describing Iranian President Mahmoud Ahmadinejad as having lost his role in foreign policymaking, and the reform faction as completely eliminated from the government structure, Mousavi told the Middle East Institute that Khamenei would face few checks on his perspective during fresh negotiations.”

So we know that Khamenei is not about to give up the nuclear program, and that talks are now going to drag out, potentially, through the spring, which is all part of Iran’s four-corners offense, but where does this leave Israel in terms of launching a preemptive strike?

Once again there were all manner of articles with disagreeing opinions on whether U.S. and Israeli intelligence, and leaders, agreed on the status of Iran’s program. Here’s what is clear. While the West, including Germany this week, urges Israeli restraint, Defense Minister Ehud Barak and Prime Minister Benjamin Netanyahu are certainly talking as if a strike is imminent; this spring.

Barak told Israel Radio that the state “cannot afford” to wait, though he said several months can be given to allow sanctions and negotiations to work, because during this period it would become clear “if the Iranians intend or don’t intend to stop their nuclear weapons program.”

But in a meeting with his German counterpart, Barak said, “To accept a nuclear Iran would be inconceivable and unacceptable to the whole world.”

Barak, in yet another forum said, “The world, including the current U.S. administration, understands and accepts that Israel necessarily views the threat differently than they do, and that ultimately, Israel is responsible for taking the decisions related to its future, its security and its destiny….

“(Iran) is steadily approaching maturation and is verging on a ‘zone of immunity’ – a position from which the Iranian regime could complete its program without effective disruption, at its convenience.”

Netanyahu said Sunday, “Iran, whose leader foments terrorism and violence around the globe and calls for our destruction…this regime must never be allowed to have nuclear weapons.”

The Wall Street Journal’s Brett Stephens, on the intelligence debate.

“(The debate) is mostly an irrelevance: Iran’s real nuclear-weapons program is hiding in plain sight. The serious question policy makers must answer isn’t whether Iran will go for a bomb once it is within a half-step of getting one. It’s whether Iran should be allowed to get within that half-step. That is the essence of the debate the Obama administration is now having with Israel. The president has stated flatly that he won’t allow Iran to have nuclear weapons. Good. But Israelis worry that Mr. Obama will allow them to come too close for comfort (or pre-emption). Israel cannot be reassured by the administration’s apparent decision to make its case through a series of media leaks, all calculated to head off a possible Israeli strike….

“It should come as no surprise that an intelligence community meant to provide decision makers with disinterested analysis has, in practice, policy goals and ideological axes of its own. But that doesn’t mean it is any less dangerous. The real lesson of the Iraq WMD debacle wasn’t that the intelligence was ‘overhyped,’ since the CIA is equally notorious for erring in the opposite direction. It was that intelligence products were treated as authoritative guides to decision making. Spooks, like English children, should be seen, not heard. The problem is that the spooks (like the children) want it the other way around.

“How, then, should people think about the Iran state of play? By avoiding the misdirections of ‘intelligence.’ For real intelligence, merely consider that a regime that can take a rock in its right hand to stone a woman to death should not have a nuclear bomb within reach of its left. Even a spook can grasp that.”

The Atlantic’s Jeffrey Goldberg, who recently conducted a key interview with President Obama prior to his meeting with Netanyahu in Washington, stated in an op-ed for Bloomberg:

“After interviewing many people with direct knowledge of internal government thinking…I’m highly confident that Netanyahu isn’t bluffing – that he is in fact counting down to the day when he will authorize a strike against a half-dozen or more Iranian nuclear sites.

“One reason I’m now more convinced is that Netanyahu and Defense Minister Ehud Barak are working hard to convince other members of the Israeli cabinet that a strike might soon be necessary.”

Syria: This is truly pathetic. The U.N. Security Council endorsed former U.N. Secretary General Kofi Annan’s six-point peace plan on Wednesday and U.S. ambassador Susan Rice proclaimed, “Annan’s proposal is the best way to put an end to the violence, facilitate much-needed humanitarian assistance and advance a Syrian-led political transition.”

Susan Rice is one of the all-time lightweights. She is not qualified for this job in any fashion at this particular dangerous time in world history.

And Kofi Annan is a house-sitter. Nothing more. Or as the Washington Post editorialized:

“(There) is virtually no possibility that the new initiative will accomplish any of (the goal’s enunciated by Rice) – as the Obama administration should know by now. Instead, it will likely provide time and cover for the regime of Bashar al-Assad to continue using tanks and artillery to assault Syrian cities and indiscriminately kill civilians. That’s exactly what the regime was doing Thursday - pounding the city of Hama, where at least 20 people have been reported killed in army attacks in the past two days.

“The Annan plan won’t work because, like the Arab League plan before it, it calls for the Assad government to take steps that would lead to its swift collapse – and the regime has no intention of capitulating….

“For Russia and China, the Security Council statement offered a face-saving way out of the embarrassing position of appearing to be unconditionally backing Mr. Assad. It gives Moscow hope of achieving the outcome it hopes for: a U.N.-brokered ‘peace’ that leaves the regime in power.   For the Obama administration, Mr. Annan’s mission allows the illusion that its diplomatic strategy is producing results – and that more decisive measures, such as arming the opposition or creating a protected zone inside Syria, are unnecessary.

“What the Annan mission does not offer is ‘the best way to put an end to the violence.’ It is just the opposite: a guarantee that the bloodshed will continue, and probably worsen. The fighting in Syria will end only when Mr. Assad is forced to stop – or he succeeds in killing his way to victory.”

How many times have we heard President Obama and Secretary of State Clinton proclaim, “Ultimately, this dictator will fall”? [Obama’s exact words.] 15? 25? The regime has retaken many of the cities once held by rebels and the rebels are low on ammunition, though the rebels are turning more to guerrilla tactics, including roadside bombs and ambushes.

Meanwhile, hundreds of Hizbullah fighters supposedly have been receiving training in the use of advanced anti-aircraft weapons in Syria and Iran, in recent months, according to the Israeli paper Haaretz. Israeli officials are also increasingly concerned over the potential transfer of Syria’s chemical weapons stockpile to Hizbullah. If Israel sees this happening, they will almost be forced to launch a preemptive strike on Lebanon.

One thing I’ve railed about on the Lebanon front is Israel’s constant violations of U.N. Security Council Resolution 1701 in terms of violating Lebanon’s airspace. This week, its foreign minister, Adnan Mansour, on a trip to Moscow, claimed there were over 9,000 such violations since 2006. Russian media recorded Russian Foreign Minister Sergei Lavrov as saying:

“We consider violating this resolution unacceptable, especially as far as respect for Lebanon’s sovereignty and airspace is concerned.”

I couldn’t agree more; the first and probably only time I’ll agree with Mr. Lavrov on anything.

[Update on a statement I made last week that I had written Israeli defense contractor Rafael and not received a reply. I did on Monday.]

Afghanistan: U.S. soldier Robert Bales has been charged with 17 counts of murder, according to U.S. officials. If convicted, he deserves the death penalty, though it’s unlikely it would be carried out, which makes the sentence itself a joke.

DeWayne Wickham / USA TODAY

“Even before the identity of the Army staff sergeant believed to have massacred 16 [Ed. later changed to 17] people in an Afghanistan village became known, excuses for his ghoulish acts of terror started popping up in the news media, diminishing the likelihood that justice will prevail….

“[In other such cases, think William Calley who served just 3 ½ years for My Lai], public opinion among war-weary Americans opposed harsh punishment for these mass murderers, who were seen more as victims of unpopular wars – men who were driven over the brink by the bad decision-making of their superiors or of Washington policymakers.

“Such shortsightedness damages more than the American concept of justice. It also does great injury to the democratic ideals we use to justify the continued presence of U.S. troops in Afghanistan and Iraq. And when an American soldier who commits a crime gets off with little or no punishment, it devalues the lives of their foreign victims and creates tensions that put at risk the lives of other U.S. service members who get targeted for retribution.

“Of course, war can take a heavy emotional and psychological toll on those who are sent into battle. But that’s no excuse for the brutal slaughter Bales is suspected of committing….

“To imply that a U.S. soldier who goes on a killing spree in a foreign land is less culpable because of the pressures of war slanders the incredibly good conduct of the millions of U.S. men and women who have served honorably in Iraq and Afghanistan.

“The person who massacred the Afghan villagers deserves the contempt of this nation – and the unyielding judgment of its criminal justice system.”

Meanwhile, President Karzai lumped the Taliban and the United States together at a meeting with relatives of the massacre, saying “There are two demons in our country now.”

That’s our boy, who undoubtedly has squirreled $billions in U.S. aid money away in some Swiss bank account, or Abu Dhabi. 

A European diplomat recently told the New York Times:

“Never in history has any superpower spent so much money, sent so many troops to a country, and had so little influence over what its president says and does.”

Meanwhile, it’s now been revealed that Afghan security forces have killed 13 members of the NATO-led coalition since the start of the year, but General John Allen, the U.S. soldier leading the operation, told Congress, the “campaign is on track.” Bull. I’m sick of our generals.

And I’m sick of conservative columnists, such as Michael Gerson of the Washington Post, continually making excuses for the Afghan effort, as he does this week.

“In the two years since the Afghan surge was announced, U.S. forces have systematically cleared out insurgent strongholds in the Taliban heartland. Afghan forces have grown in numbers and professionalism – showing admirable discipline and restraint after the recent Koran burning incident. About 90 percent of military operations are conducted jointly by Americans and Afghans. During the past 12 weeks, the number of enemy-initiated attacks has been 25 percent lower than a year ago.”

Much of that just isn’t true, from other accounts I’ve read, some of which I’ve posted in this space. On the other hand, of course the Taliban is just waiting us out. If I was a woman there, I’d do everything in my power to get out now.

And note to President Obama. If you are going to stick to your 2014 timetable, as administration officials have been saying since the massacre, and in the face of deaths of Americans at the hands of Afghans, then give an address to the nation. You’re not helping the cause by staying silent.

Pakistan: A parliamentary commission on Tuesday demanded an end to American drone attacks inside the country as a condition for restoring ties with the U.S. It also demanded an apology for deadly airstrikes in November, including one that killed 24 Pakistani soldiers, which then led to the closure of supply lines through the country to Afghanistan.

The commission didn’t say the closure of the U.S. and NATO lines should be permanent, rather officials will now look to charge more money for the privilege.

Iraq: Al-Qaeda claimed responsibility for a wave of bombings and shootings across the country on Tuesday that claimed the lives of at least 49. Among the attacks were two, double-car bombings in Karbala and Kirkuk, claiming 13 lives each. [First car bomb goes off, the crowd and emergency crews assemble, and then the second goes off…an al-Qaeda trademark.]

Egypt: The White House announced it was resuming funding for Egypt’s military and will bypass Congress in doing so. Recall the aid has normally amounted to $1.5 billion and was suspended during the country’s crackdown on pro-democracy groups. Congress had passed a law in December, mandating the administration certify that Egypt is making progress on the democracy front. But Sec. of State Clinton is waiving this restriction. Most egregious is that the Washington Post is reporting the administration will hand over the full amount, rather than withholding a portion for leverage.

What the heck is going on here?! Even Vermont Democratic Senator Patrick Leahy said: “I am disappointed by this decision.”

North Korea: U.N. nuclear inspectors have been invited for the first time in three years, which was part of the deal with the U.S. that would have the latter sending food aid to the Commies as long as the North agreed to suspend nuclear and long-range missile tests.

But of course then Pyongyang said it would launch a rocket-mounted satellite around April 15 to mark the 100th birthday of Great Leader Kim Il-sung. So the United States would be nuts to send anything, even stale Drake’s cakes, before observing what North Korea does in April. Then again, we’ve seen what the White House is doing with regards to Egypt and military aid.

Editorial / Wall Street Journal

“Apologists for engaging North Korea are busy assuring everyone that the satellite test is no big deal and doesn’t threaten anyone. That’s what they always say. But North Korea has built nuclear bombs as a way to give it greater political leverage, and no one should doubt that it is trying to build a ballistic missile that would threaten Japan and the U.S. as a way to gain even more international clout.   A missile launch will assist that effort even if it doesn’t complete it.

“The Obama administration had been doing well with its economic sanctions and diplomatic neglect toward the North, until it fell for one more round of offering alms for good behavior. The only message the North’s dynastic junta will understand is if the West now cuts off the food aid. Even better if the U.S. – or preferably, Japan – blows the missile out of the sky.”

The administration is on record as saying if the North launches the missile, the food deal is off. Even China announced it was concerned over the rocket-launch plans.

Meanwhile, there is a nuclear security summit meeting taking place this week in Seoul, so you can imagine it’s Spy vs. Spy in that megalopolis, as I’ve long written of the thousands of North Korean agents there. Pyongyang warned the summiteers not to insult the North. Any such criticism would be considered a “declaration of war.”

President Obama will don the official bomber jacket in going to the DMZ, I think on Monday, for a photo-op that will then be part of all his campaign videos. If he wants a real sense of the place, he should explore the tunnels.

For its part, the South Korean government wants to be able to extend its ballistic missile range beyond the 300km allowed as part of a 2001 memorandum of understanding with Washington. The Americans are concerned that doing so (even though the North is testing a missile with a range estimated at 3,000km…and appears to be targeting Australia, by last report) would lead to a further arms race on the continent.

Let Seoul do it! Geezuz, this is a no-brainer. We’re worried about China’s reaction?

China: For eight days, since state media announced the dismissal of Bo Xilai from his job of party chief of one of China’s biggest cities, Chongqing, he has not been seen or heard from, nor has the government issued any further statement; this as rumors swirl of a potential coup in Beijing, which would be rather unsettling for those with investments there, mused your editor. It’s disturbing enough the Communist Party is tongue-tied. There never was an explanation just what Bo did wrong, only rumors a family member was being investigated for corruption and Bo was trying to block it.

So we wait to see what happens, what is said, the next few weeks in particular. After all, Premier Wen has called for further reform in China, far from the Maoist agenda Bo and his many supporters espouse.

At stake are seven of nine seats in the Politburo Standing Committee, one of which Bo was in line for, with the other two seats going to incoming president Xi Jinpinq, now vice president, who will succeed Hu Jintao, and Vice Premier Li Keqiang, who will succeed Wen.

[Sunday, March 25, is election day for chief executive for Hong Kong, the special administrative region monitored by Beijing. It’s not a pure democratic vote as 1,200 people, mostly businessmen and political leaders, make the call among three candidates; actually they then pick smaller groups who do. The system isn’t supposed to lead to surprises, since most are known to be loyal to Beijing. But this time the two leading candidates don’t have the cleanest backgrounds.]

Mali: A number of “experts” the past few months have been touting the tremendous opportunities that lie in Africa. I hope you’ve noticed I haven’t been one of them. We’ve only heard the same story for decades…this time it’s different, blah blah blah. All I need to do is look at Nigeria, a total hell-hole where al-Qaeda lookalike Boko Haram is out to slaughter all Christians, to know Africa’s future is shaky, at best. Oh sure, there are always individual opportunities, but look at one country that was supposed to be a role model of democracy, Mali.

Just weeks before he was to step down, President Amadou Toure was ousted in a coup by a bunch of drunken soldiers who looted the presidential palace, arrested ministers and declared they were in charge. Mali was preparing to hold free elections just a month from now as Toure, adhering to the constitution, was not seeking reelection.

But as the New York Times reports, with the downfall of Gaddafi in Libya, Mali was flooded with weapons, bolstering the rebel movement, which led to defeats of Malian forces. The soldiers, in turn, were fed up with a government they said wasn’t arming them sufficiently to beat back the rebels. 

As I write, there is no word on Toure’s fate, though coup leaders say he is safe.

Cuba: Pope Benedict XVI arrives on Monday for an historic visit, the first to the island since John Paul II’s 1998 trip. I’m hoping Benedict issues some very strong, pro-democracy statements, though last I read, he is not scheduled to meet with the island’s human-rights advocates, despite many of them earning papal recognition The loyalties of Cuban Cardinal Jame Ortega are being called into question as he controls the pontiff’s schedule. What will Benedict do? Just follow along with the game, or go his own way?

Random Musings

--Mitt Romney had a good week, until he didn’t. Romney won all 20 delegates in Puerto Rico, and the vast majority of Illinois’ as he defeated Rick Santorum, 46.7% to 35% in the latter, with Santorum’s campaign once again failing to properly file for at least 10 of the 54 delegates in the Land of Lincoln.

And so we finished the week, according to the AP, with the following total delegate count.

Romney 563
Santorum 263
Newt Gingrich   135
Ron Paul 50

[The next primary is today, Saturday, in Louisiana…do or die in particular for Newt Gingrich, with Santorum needing to beat Romney badly.]

Aside from his campaign’s ongoing incompetence, Santorum didn’t have a great week because he insists on opening his mouth, which most candidates have to do at one point or another, and he has said some really stupid things recently. As Karen Tumulty wrote in the Washington Post:

“Santorum prides himself on the fact that he is an unscripted candidate who will answer whatever he is asked. He has even gone so far as to declare that ‘when you run for president of the United States, it should be illegal to read off a teleprompter, because all you’re doing is reading someone else’s words to people.’

“In Santorum’s case, however, even his admirers think that might not be such a bad thing to try, at least every now and then….

“Speaking off the cuff has proven treacherous for Santorum, undercutting his efforts to expand his base of support beyond social conservatives to economically stressed voters who might be able to relate to the former senator’s blue-collar roots….

“In fact, it can sometimes seem that Santorum swings at every ball that’s pitched. On Tuesday, for instance, he criticized President Obama for allowing his 13-year-old daughter, Malia, to take a spring break trip to Mexico, parts of which the State Department has deemed unsafe.

“ ‘If the administration is saying that it’s not safe to have people down there, then just because you can send 25 Secret Service agents doesn’t mean you should do it,’ Santorum said on a conservative talk radio show. ‘And when the government is saying this is not safe, then you don’t set the example by sending your kids down there.’

“However, there is no State Department warning for Oaxaca, where she reportedly is.”

And then Santorum went off on the subject of pornography, posting on his Web site that the Obama administration had “turned a blind eye to those who wish to preserve our culture from the scourge of pornography.”

Oh brother. If I elect you president, I want you focusing on Iran and China, not Playboy.

Santorum also said, “I don’t care what the unemployment rate is going to be. It doesn’t matter to me.”

Then you had the fact he spent precious campaign time in Puerto Rico, with the result he got his butt kicked, and the strange case of the Missouri caucuses, where Santorum spent further valuable time, only the stupid process in that state doesn’t really end until June!

Jennifer Rubin / Washington Post

“Are you wondering what happened in Missouri yesterday? There were supposed to be caucuses. Rick Santorum went there a bunch of times. It sort of seemed like delegates were at stake.   But what really happened was chaos.   The St. Louis Post-Dispatch reported:

“ ‘In St. Charles County, which was to have been the biggest single prize of the day, the caucus was shut down before delegates were chosen after a boisterous crowd objected to how the meeting was being run, including an attempted ban on videotaping. Two supporters of presidential hopeful Ron Paul were arrested.

“ ‘At other caucuses, participants gathered outdoors as the appointed locations turned out to be too small to accommodate crowds, or waited for hours as organizers worked through procedural questions.

“ ‘Even before the day’s events took a rancorous turn, state Republican officials said the winner of the caucus would not be officially known until next month. But with the confusion surrounding St. Charles, and many more delegates available in a pair of caucuses next weekend, the primary picture for Missouri may have only become murkier Saturday.

“ ‘It was a joke. It was a complete joke,’ said David Nelson of St. Peters, who participated in the St. Charles County caucus.

“In fact, they were only choosing (or not choosing) delegates to another meeting. (‘They were selecting delegates who will appear at two larger meetings in April and June, who will in turn select delegates to the national convention in Tampa’). Got that?

“Well, Iowa, Nevada and Maine Republicans can breathe a sigh of relief that none of those caucuses will win the ‘worst-run contest’ title in the 2012 nominating process.”

Back to Santorum, he was asked on ABC’s “This Week” why he supported liberal, pro-choice Arlen Specter for president in 1996, to which he replied, ‘Well, you know, when your colleague is running for office, and, you know, I was his colleague in the United States Senate, he asked me to stand with him. That certainly wasn’t one of my prouder moments I look back on, but look, you know, you work together as a team for the state of Pennsylvania and I felt that Senator Spector stood up and supported me when I was running in 1994 and I did likewise.” As Jennifer Rubin wrote, “Yikes.”

But wait…there’s more! On Thursday, Santorum said, “You win by giving people a choice. You win by giving people the opportunity to see a different vision for our country, not someone who’s just going to be a little different than the person in there….If they’re going to be a little different, we might as well stay with what we have instead of taking a risk of what may be the Etch A Sketch candidate for the future.”

Well, as Newt Gingrich tweeted: “Rick Santorum is dead wrong. Any GOP nominee will be better than Obama.”

But speaking of Etch A Sketch, Romney’s gaffe, or rather that of his aide, Eric Fehrnstrom, was even worse. During a CNN interview Wednesday morning, Fehrnstrom said the general election campaign will be “almost like an Etch A Sketch – you can kind of shake it up, and we start all over again.”

Great for sales of Etch A Sketches as Santorum, Gingrich and Obama aides passed them out or used them as props; unbelievably stupid on the part of the Romney team.

So the dysfunctional Republican campaign continues, though at least Romney picked up the endorsement of former Florida governor Jeb Bush, who called on Republicans “to unite behind Gov. Romney and take our message of fiscal conservatism and job creation to all voters this fall.

“We need a leader who understands the economy, recognizes more government regulation is not the answer, believes in entrepreneurial capitalism and works to ensure that all Americans have the opportunity to succeed,” Bush said.

--Wisconsin Republican Congressman Paul Ryan released his latest budget blueprint, which includes a reduction in the corporate tax rate to 25% from 35% and reductions in the personal income tax to either a 25% or 10% rate. House Republicans also once again seek to overhaul Medicare and Medicaid.

Chris Van Hollen, Ryan’s Democratic counterpart on the House budget committee, countered: “If you’re Mitt Romney you’re going to love this budget. They provide a gilded path to prosperity for the already wealthy, while leaving working Americans and future generations behind.”

Bottom line, the Ryan budget would reduce spending over a decade by $5 trillion, while Obama’s latest proposal would increase spending by $1.5 trillion above the current baseline. And as the Wall Street Journal editorialized:

“Mr. Obama’s budget contains $1.9 trillion in tax increases over the next decade and raises income, dividend and capital gains tax rates. The Ryan budget outlines an ambitious tax reform, collapsing today’s six rates to two – 25% and 10% - while retaining the 15% tax rates on capital gains and dividends and eliminating inefficient tax deductions and credits….The Ryan plan isn’t a pure flat tax, but it takes the IRS code a giant stride in that direction and creates a tax system far more conducive to faster job creation and greater investment.”

--New York Republican Congressman Peter King held a hearing wherein we learned from various sources that Hizbullah has hundreds of operatives in America, just waiting to be activated. They’ve been blending in for ages…but they evidently love the used-car business to help them launder money.

--New York City Police Commissioner Ray Kelly has been beaten up over his anti-crime, anti-terror policies lately. The other day he fought back, as the New York Post editorialized:

“A couple of City Council midgets tried to mix it up with Ray Kelly this week, and wound up wearing lumps all over.

“Kelly, New York City’s longest-serving police commissioner, has never suffered fools well, and he made no exception for council worthies Jumaane (sic) Williams, Robert Jackson and – especially – Melissa Mark-Viverito of Harlem.

“Quick as a win, the trio went right at Kelly during a budget hearing Thursday….

“When Mark-Viverito wanted Kelly to apologize to minorities for using stop-and-frisk tactics to clear guns from the streets, the commissioner shot right back:

“ ‘If we conducted stops according to Census data, half of all stops would be women.’

“Does stop-and-frisk discriminate against minorities?

“Said Kelly: ‘Ninety-six percent of the shooting victims in this city are people of color, 90% of the murder victims are people of color,’ said Kelly.

“And then he turned the tables:
“ ‘Who do you thinks lives are being saved?’

“The council went dumb as a stump at that, so Kelly answered his own question: ‘What I haven’t heard is any solution to the violence problem in these communities.

“ ‘People are upset about being stopped, yet what is the answer? What have you said about how do we stop this violence? What have leaders of the communities of color said? What is their strategy to get guns off the street?'

“The answer, of course:
“Absolutely nothing.”

--So, let’s see. When was 9/11? 2001? 10 ½ years later, work at the National 9/11 Memorial and Museum is at a virtual standstill, as reported by the New York Post, even as costs spiral ever higher. Back in 2006, it was said the cost would be $700 million and it will end up being $hundreds of millions more.

Did you know that the space will dwarf the size of the Smithsonian Air and Space Museum in Washington? That $4.3 million was dropped on a heating/cooling system for the parapet with the 9/11 victims’ names, “so it’s pleasant to touch in summer and winter”?

And the $700 million (and counting) museum, if it’s ever completed, will sit next to a $4 billion PATH train hub, meant to serve just 60,000 commuters.

Pin the past overruns and delays on former Republican Gov. George Pataki; “Pataki’s Pit,” they call it. Completing the museum from here on, however, is now Andrew Cuomo’s responsibility, whether he likes this or not.

--So who is still a fan of Occupy Wall Street? If you are, did you know that members of the group in New York were caught on camera dumping a large trash container full of human waste onto the outside of a JPMorgan Chase branch? Did you know these same individuals dumped a container of human waste into the vestibule of an ATM? At least one arrest was made.

--Scientists at the University of Oxford have added to the research on the benefits of aspirin, finding that a daily dose could cut the risks from a range of cancers, with some benefits seen within a matter of months. Aspirin already helps guard against heart attacks and stroke.

The leader of the project, which was published in The Lancet and The Lancet Oncology, was Peter Rothwell, author of a previous landmark aspirin study.

“We showed previously that daily aspirin substantially reduces the long-term risk of some cancers, particularly colorectal cancer and esophageal cancer, but that these effects don’t appear until about eight to ten years after starting treatment.

“What we have now shown is that aspirin also has short-term effects, which are manifest after only two to three years. In particular, we show that aspirin reduces the likelihood that cancers will spread to distant organs by about 40 to 50 percent. This is important because it is this process of spread of cancer, or metastasis, which most commonly kills people with cancer.”

--Sweet! “A NASA spacecraft has found further tantalizing evidence for the existence of water at Mercury’s poles.” [BBC News]

Where there’s water, there’s life, sports fans! Perhaps a golf resort or two, though we have little evidence yet on potential real estate bubbles for properties surrounding the courses. But let me be the first to declare it so I can say in 25 years, “I told you so!”

---

Pray for the men and women of our armed forces…and all the fallen.

God bless America.
---

Gold closed at $1661
Oil, $106.81

Returns for the week 3/19-3/23

Dow Jones -1.1% [13080]
S&P 500 -0.5% [1397]
S&P MidCap -1.0%
Russell 2000 -0.02%
Nasdaq +0.4% [3067]

Returns for the period 1/1/12-3/23/12

Dow Jones +7.1%
S&P 500 +11.1%
S&P MidCap +12.7%
Russell 2000 +12.0%
Nasdaq +17.8%

Bulls 48.4
Bears 23.6 [Source: Investors Intelligence]

Have a great week. I appreciate your support.

Don’t forget the StocksandNews iPad app…recommended by the BDA…Beer Distributors of America.

Brian Trumbore

 



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Week in Review

03/24/2012

For the week 3/19-3/23

[Posted 6:00 AM ET]

Europe, Washington and China

This was not a good week on the Euro front, especially if you read between the lines a bit. You know how the combination of the approval of Greek Bailout II and the second Long Term Refinancing Operation, or LTRO, was to have finally provided needed stability among the Euro-17?

Well not so fast, sheriff, err Mario…as in European Central Bank chief Mario Draghi, who once again was strutting like a peacock looking for a mate, it being spring and all, as he proclaimed in an interview with a German paper, “The worst is over, but there are still risks. The situation is stabilizing.”

Well, that was a little squishy. If one of the risks reemerges, the situation won’t be stable.

No doubt, crisis was averted last fall but it’s increasingly looking like we are heading right back into one, sooner than later, like within 4 to 8 weeks, I’ll say.

For one thing, the economic data in the euro region has been putrid. A combination service and manufacturing sectors reading for March has come in worse than expected, 48.7 vs. 49.3 in February (50, remember, being the dividing line between growth and contraction), while a separate reading on manufacturing came in at 47.7 for the month. This isn’t good.

We also learned that Ireland is back in recession as GDP fell 0.2% in the fourth quarter after a 1.1% decline in the third. 

And the more you read about Portugal the worse it is there, with humongous local debts that need to be serviced by the central government but probably won’t, seeing as they have their own rather serious issues. 

The U.K. saw retail sales sink in February, while Germany is exhibiting signs of a distinct slowdown.

So while you have the likes of Greek Fake Prime Minister Lucas Papademos (he’s unelected, you see) declaring that “we are more than halfway along the path to economic recovery,” which is a crock of yogurt, what is most apparent is that Spain is about to become the next crisis. Maybe not tomorrow. Maybe not April 5.   But it’s coming.

Worrisomely, the Spanish 10-year bond is back to 5.50% as huge downside remains on the real estate front. The Financial Times’ Wolfgang Munchau writes, “Spain’s house price adjustment is still less than halfway complete,” while official estimates say there will be only mild declines from here and a quick rebound in the economy.

But with a deficit of 8.5% of GDP last year, and the government’s own admission that 2012’s is going to be closer to 6% than 5%, Munchau concludes, “The deleveraging of the public sector will be vicious,” with unemployment at nearly 23% as it is (youth unemployment 50%). “The question is not whether the Spanish economy rebounds in 2012 or 2013, but whether it can rebound at all before the end of this decade.”

And here’s the thing. How long have we been talking about the eurozone needing an expanded firewall beyond the planned 500 billion euro ESM (European Stability Mechanism)? The EFSF (European Financial Stability Facility) has about 250 billion euro remaining, but that’s earmarked for Greece, Portugal and Ireland, so the 500 billion ESM is really all that’s left to backstop Italy and Spain, which we know is absurd.

It’s the same old story. The IMF and European Commission want an increased firewall, but Germany remains obstinate in its belief there is enough there and that the system is now stabilized through the LTROs.

But sentiment can turn on a dime and the vultures are beginning to swirl over Spain. It needs growth in the worst way and none is forthcoming.

One last comment on Europe for now. I like Jim O’Neill, who heads up asset management at Goldman Sachs and is a longtime strategist. He always has some interesting comments.

But the other day he’s on CNBC and said, “Who cares about Greece?” 

Everyone should care about Greece…and soon, Spain. I’ve always said the story with Greece is not about the size of its puny economy, but whether the country explodes into a spasm of anarchy and violence that could rapidly spread to other nations in the region. It’s the Balkans, after all. Thus far, the demonstrations and rioting we’ve seen there have been manageable. At a moment’s notice, however, the situation could change drastically. That’s why one should keep their eyes on Greece.

Washington and Wall Street

Lots of talk about energy and oil prices this week; some of it coming from the White House was quite comical.

But first, Saudi Arabia’s oil minister Ali Naimi sought to reassure the world that $105+ oil, $125 on Brent crude, was “unjustified” and that the Saudis had lots of spare capacity to boost output if needed; the Saudis understanding that it does them no good if the world plunges back into recession.

Of course $15 to $20 of the price of oil is an Iran risk premium and until that situation resolves itself, oil will remain stubbornly high. Case closed. Yes, you have refinery issues as well, which doesn’t help any, but it’s Iran Iran Iran, friends, and nothing Barack Obama or Mitt Romney or Newt Gingrich says can change matters. [President Obama’s actions regarding Iran are a different matter.]

But that’s what’s so comical. Our politicians really do treat us like a bunch of schmucks sometimes, while more than a few Americans don’t bother to think themselves, or read a good newspaper, before spouting off at the mouth. It’s a good time to avoid cocktail parties, actually, because you’d hear a lot of idiotic drivel…but I digress.

Anyway, there was our president this week in Cushing, Oklahoma, getting all folksy, as he is prone to do. He has different voices. A good, stern, articulate one for most Washington appearances and speeches. His ghetto voice when he’s in front of a crowd of African Americans, and his folksy voice for the Okies. 

So there’s Obama:

“Today I’ve come to Cushing, an oil town, because producing more oil and gas here at home has been and will continue to be a critical part of an all-of-the-above energy strategy,” a strategy he stole directly from the Republicans, as you all know.

A new pipeline running south from Cushing is needed, he continued, because “there’s a bottleneck right here because we can’t get enough of the oil to our refineries fast enough,” he added, taking credit, as the Los Angeles Times’ Christi Parsons and Neela Banerjee reported, “for an upturn in domestic oil production which has the industry pumping more than at any time in the last eight years.”

But then Obama had to play to his environmental base, so he told the Okies about why he couldn’t approve the Keystone XL pipeline that would have gone from Canada to Cushing, and if you knew what was going on you just shook your head, as I did watching him on television, because it was so freakin’ phony.

Plus, as the L.A. Times’ reporters noted, opponents of Keystone are still torqued off that Obama approved the southern portion because it still means oil from Canada’s dirty tar sands could still find its way to Cushing and then Texas.

So the president is flailing about, trying on different voices like John Byner or Frank Gorshin, but when it comes to November and Americans pushing the lever for president, how educated are most voters really going to be on the critical issues of our time…be it energy policy or Iran or China?

Sorry for the helter-skelter commentary, but even I can’t follow the president sometimes. And, believe me, I’m not saying Republicans are any better on a lot of issues themselves these days.

Meanwhile, in terms of the gas price at the pump, the national average as I write is $3.86 (California and New York being among the states with an average over $4.00), with 54% saying the president has influence on prices according to a CBS News/New York Times survey. Oh brother.

I do just have to add two tidbits on this topic. A New York Times story noted that the nation imported a record high 60% of its oil in 2005 and in 2011 that figure was down to 45%, so we’re making progress on the energy independence front.

And the future does look bright. As Ed Morse, a commodities analyst and former State Department official wrote in a Wall Street Journal Op-Ed:

“The United States has become the fastest-growing oil and gas producer in the world, and it is likely to remain so for the rest of this decade and into the 2020s. Add to this output the steadily growing Canadian production and a likely reversal of Mexico’s recent production decline, and theoretically total oil production from the three countries could rise by 11.2 million barrels per day by 2020, or to 26.6 million barrels per day from around 15.4 million per day at the end of 2011.”

And natural gas output should also continue to explode in both the U.S. and Canada; all the more reason why President Obama’s insulting Canadian Prime Minister Stephen Harper by shelving the Keystone pipeline, even if temporarily, was incredibly stupid.

Elsewhere on the economic front, the numbers on housing were mixed, at best, with February housing starts pretty solid, but a breakdown showed single family starts were down and multi-family were up, continuing trends on both. 

Existing home sales for February were down over January, but the two-month pace was the best since May 2010. Here, though, prices were unchanged from a year ago, so the bottoming process continues.

But then we had the figure on February new home sales and they were less than expected.

Barron’s had a story on the real estate sector and a recovery, finally, in spring 2013.   Sure, that’s possible. But I certainly don’t see a robust one in terms of prices unless we have rampant inflation.

Finally, the U.S. Supreme Court has scheduled an unprecedented six hours of hearings on President Obama’s Patient Protection and Affordable Care Act for March 26, 27 and 28; the key provision being the requirement that virtually everyone in the country has to buy insurance or pay a penalty. Legal experts believe the four Democratic-appointed justices will have no trouble ruling for ObamaCare in concluding Congress did not overstep its authority in adopting the individual mandate. So the issue then becomes, which of four Republican-appointed justices will join Clarence Thomas, the most likely to vote against.

Charles Krauthammer / Washington Post

“ObamaCare was carefully constructed to manipulate the standard 10-year cost projection of the CBO (Congressional Budget Office). Because benefits would not fully kick in for four years, President Obama could trumpet 10-year gross costs of less than $1 trillion - $938 billion to be exact.

“But now that the near-costless years 2010 and 2011 have elapsed, the true 10-year price tag comes into focus. From 2013 through 2022, the CBO reports, the costs of ObamaCare come to $1.76 trillion – almost twice the phony original number.

“It gets worse. Annual costs after 2012 are more than a quarter of $1 trillion every year – until the end of time. That, for a new entitlement in a country already drowning in $16 trillion of debt….

“Ultimately, the question (before the Supreme Court) will hinge on whether the Commerce Clause has any limits. If the federal government can compel a private citizen, under threat of a federally imposed penalty, to engage in a private contract with a private entity (to buy health insurance), is there anything the federal government cannot compel the citizen to do?....

“Rarely has one law so exemplified the worst of the Leviathan state – grotesque cost, questionable constitutionality and arbitrary bureaucratic coerciveness. Little wonder the president barely mentioned it in his latest State of the Union address. He wants to be reelected. He’d rather talk about other things.

“But there’s no escaping it now. Oral arguments begin Monday at 10 a.m.”

And a word on China.

It’s really funny how there are two highly divided camps out there. One believes China is in the midst of a hard landing; the other believes that such talk is “vastly overblown,” as economist and China expert Stephen Roach continues to state. In Roach’s mind, the Chinese government “has done a fantastic job of controlling inflation,” the chief worry there, and now has ample room to lower rates and/or reserve requirements, unlike the West which has moved rates to zero and come the next crisis is screwed because it has few, if any, options left.

In fact while some talk of Armageddon in China, Nomura and Deutsche Bank raised their 2012 GDP forecasts to 8.2% and 8.6%, respectively.

But the bear case was indeed bolstered by HSBC’s March PMI reading of 48.1, the fifth consecutive fall and down from February’s 49.6 reading, though the government’s official numbers come out April 1.

The bears keep bringing up China’s real estate bubble, and on this I share the concern, as property prices fell a fifth consecutive month in February, but this is exactly what the government has been trying to engineer; a gradual decline. Premier Wen Jiabao said last week, “Home prices are still far above a reasonable level. Therefore, we must not relax tightening.”

So the hard part is for the government to stay the course on the property front, while also stimulating growth elsewhere. According to some of the stories I’ve read, Chinese consumer confidence is returning, with more and more believing the worst is over.

I focus on the comments of U.S. corporations dealing there and almost to a man, executives admit China is going through a slow patch, but that the second half will be better.

And on the local government debt front, another major concern, Moody’s this week said China was getting a handle on the problem a significant statement coming from them.

I have a few more tidbits below on China, but I’m expecting to learn far more this coming week with the probable earnings release from my major holding there. I’ll have some general personal portfolio comments at that time as well.

Street Bytes

--Stocks finished mixed with the Dow Jones losing 1.1% to 13080, while the S&P 500 fell 0.5%, back below 1400 at 1397, and Nasdaq rose 0.4% to 3067. With one week to go in a terrific quarter for equities, attention is about to turn to Q1 earnings, which are not expected to be good, as in the estimate for the S&P 500 is down 0.5% vs. Q1 2011. We’ll learn a ton from the accompanying comments on the outlook for the rest of 2012 and I strongly suspect the language is not going to be good in many cases as CEOs may have been a little too optimistic in January when they last gave their forecasts. Growth is not going to be as strong as it was in Q4 and now the biggest issue is how still rising energy prices, and normal weather (maybe) impacts Corporate America. I’ve been saying for weeks, don’t discount the positive impact weather has had and we’ll find out in April and May if sales, such as on the auto front, will be negatively affected. March, however, looks strong when it comes to car buying.

Separately, on Friday, there was pure chaos with the IPO of BATS, Bats Global Markets Inc., a six-year-old equity exchange. That is the company hoped to go public, only trading in the security went haywire, with Bloomberg showing what was supposed to be an initial public offering of shares at $16 that suddenly was trading for pennies. By day’s end, the stock never did officially open and all trades were canceled. While this was happening, a single 100 share trade of Apple triggered a circuit breaker that suspended trading in it for a while, though this didn’t impact where it finished up on the day.

BATS (Better Alternative Trading System) is one of those electronic firms that rose to prominence  with the proliferation of similar outfits now dominating the scene.  Not exactly the kind of thing that engenders confidence in the markets overall and as I go to post, no real explanation for BATS’ problem has been given. Actually, it doesn’t matter what BATS says. They should be toast…and Wall Street has a serious issue on its hands.

--U.S. Treasury Yields

6-mo. 0.14% 2-yr. 0.35% 10-yr. 2.23% 30-yr. 3.31%

The Congressional Budget Office reported President Obama’s budget would produce a $977 billion deficit next year - $75 billion more than predicted by the White House.

--In a late-breaking development involving the investigation into the collapse of MF Global, an e-mail sent by a treasurer for the firm, Edith O’Brien, shows that Jon Corzine, MF Global CEO, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase accounts in London, three days before the collapse, with the transfer of funds being “Per JC’s direct instructions.”

This flies in the face of previous statements and testimony before the House Financial Services Committee that customers’ segregated funds were safe.

In fact, it’s now come to light that JPMorgan’s risk officer called Corzine directly to seek assurances that the funds belonged to MF Global and not customers. JPM drafted a letter to be signed by O’Brien to ensure that MF Global was complying with rules requiring customers’ collateral to be segregated. [Bloomberg News]

Corzine testified he never intended a misuse of customer funds at MF Global and that he didn’t know where the funds went. Back in December, Corzine told lawmakers, “I did not instruct anyone to lend customer funds to anyone.”

Well, I don’t need to state the obvious. A hearing is slated for March 28. O’Brien is due to be there. There is no word yet on Corzine.

--Apple finally decided to do something with its massive pile of cash, which if you stacked it up, dollar by dollar, would stretch from here to Mars, or at least to the space station, by announcing a quarterly dividend of $2.65 a share in the quarter beginning in July, plus a buyback totaling $10 billion over ten years, or a total of about $45 billion in that period. Seeing as it’s sitting on more than $100 billion (the current estimate, see below), and generating cash as fast as geese fertilizing a New Jersey golf course, this is nothing. Not that shareholders have any right to complain about anything when it comes to Apple.

Apple said it sold more than 3 million iPads during its debut weekend for its latest model; a record for an opening weekend, including a single-day record for iPad sales on March 16.

And I really should note that Apple has most of its cash overseas and plans to keep it there. At last official report, $64 billion overseas, $33.6 billion in the U.S.

--China increased gasoline and diesel prices for the second time in less than six weeks, though the likes of China Petroleum & Chemical Corp. (Sinopec) and PetroChina Co., will continue to face crushing margins on the refinery front as the price hike still leaves prices some 10% below where these two break-even.

--China’s power consumption is expected to rise 8.5%-9.7% in the first half of the year vs. a year ago, according to the power producers association.

--Luxury car dealers in China are slashing prices as the country’s Association of Automobile Manufacturers revised its estimate of 8% sales growth this year to 5%. Rolls-Royce, though, said it still expects double-digit growth. Mercedes, on the other hand, has cut the price on its high-end models by up to 25%.

--Speaking from China, Caterpillar CEO Doug Oberhelman, said he remained confident.

“We look at China as a long-term market here. It’s the largest construction equipment market in the world today. We want to be here in a bigger way and of course we are investing a lot of time for what would be a 20- or 30-year run.”

Oberhelman told CNBC he expects construction markets in the U.S. and Europe to remain “depressed,” though he was more optimistic about growth in Eastern Europe and the Middle East. Boy, I wouldn’t be when it comes to the former.

--I have to admit I never thought about this, but exports of U.S. wheat to Iran are legal, as all U.S. and European sanctions against the mullahs exempt agricultural products.

So as CNN reports, Iran is buying American wheat for the first time in three years, and tons of it, as it seeks to hedge against the growing impact of sanctions and weather issues. Iran may ultimately buy 400,000 tons of U.S. wheat in 2012. Smart move by the Iranians to stockpile it.

Back in 2008, Iran imported 1,564,000 tons of U.S. wheat when the country was experiencing a drought.

--I’ve been impressed by the Volkswagen Passat when I see it on the road and it turns out VW sold 8,189 of the vehicle in February, its biggest month since 2003, so the automaker is adding 800 jobs to its factory in Chattanooga, Tenn. Overall, VW has a goal of selling 800,000 cars in the U.S. by 2018. It sold 324,400 last year. Good for them.

--Chile’s economy grew at a 6% pace in 2011. As Ronald Reagan would have said; not bad, not bad at all.

--McDonald’s CEO Jim Skinner is stepping down at the end of June after 41 years at the company, the last eight as CEO. Talk about one of the greats. His performance has been nothing short of spectacular, in my book. Virtually every move he has made, in terms of menu items and expansion, has worked beautifully. Last year was McDonald’s strongest for comparable store sales in the U.S. since 2006, with plans to open 1,300 outlets worldwide in 2012. Skinner is being replaced by COO Don Thompson, a 22-year veteran.   Skinner is 67.

--Wendy’s has officially surpassed Burger King as the second-largest chain in the burger biz, with $8.5 billion in sales, followed by the King’s $8.4 billion. [McDonald’s is at $34.2 billion.]

--The SEC appears to be stepping up an investigation into rapid-fire trading firms and their links to the computerized stock exchanges, according to the Wall Street Journal. Of course the “flash crash” that was caused by such high-frequency trading outfits was back in May 2010, or almost two years ago. Ergo, SEC officials once again are proving that their focus continues to be on porn…as in spending the bulk of their days viewing same. [And now they have the BATS issue, which will really screw up their schedules.]

--Hartford Financial Services Group suddenly announced it was exiting the annuity business as hedge fund manager John Paulson pressured the company to take drastic measures to boost the company’s share price. Hartford’s wholesalers were totally blindsided. Hartford’s business in this sector never recovered from the financial crisis.

--Goldman Sachs CEO Lloyd Blankfein, under pressure after the New York Times Op-Ed, is having e-mails and phone calls scanned looking for employees who disparaged clients. A spokesman declined they were looking for scapegoats. Mrs. Blankfein, worried over her husband’s status and a possible drastic reduction in her shopping budget, was caught by our secret microphone at lunch at the Four Seasons telling her girlfriends, “I told my Lloyd, you better do something!”

The Weekly Standard’s “Scrapbook” column (3/26/12) echoed my sentiments on the Times’ (Greg Smith) column, as I expressed last time.

“(What) struck us with the force of a Goldman Sachs derivative was the following day’s front page of the New York Times. The lead story was not about Afghanistan, or the Republican campaign, or the visit of the British prime minister to Washington. It was about Greg Smith’s op-ed piece in the previous day’s New York Times.

“ ‘Public Rebuke of Culture At Goldman Opens Debate,’ screamed the lead headline, and the subhead described ‘An Unusual Cry From a Financial Insider – Discussion of Greed and Excess.’ In the Business section of the Times there were three – count ‘em, three – separate stories about the Times’ op-ed, and each headline was more tantalizing than the one before: ‘Public Exit From Goldman Raises Doubt Over a New Ethic,’ ‘Name It; Clients Are Called It,’ and The Scrapbook’s particular favorite, ‘Goldman Executive’s Resignation Letter Draws Backers, Detractors and Satirists.’

“This is what is known in the business as manufactured news.”

--Meanwhile, the New York Times said it has 454,000 paid subscribers to the paper’s website and digital products, up from 390,000 end of December, which isn’t bad. Unfortunately, I’m now one at a hefty monthly price.

[Free access to the Times is being severely restricted, from 20 articles a month to just 10.]

--Wells Fargo is now the nation’s biggest bank in terms of market value, not JPMorgan Chase, not Citigroup, and, it has even overtaken Europe’s largest, London’s HSBC. Pretty impressive, seeing as Wells Fargo’s executives still travel in stagecoaches….

…I was just informed that the wagons I see in my local Wells Fargo branch are just a symbol and not executives’ preferred mode of transportation. Never mind…

--The world’s biggest airlines are projecting profits will be down 60% in 2012 owing to soaring fuel prices, even as traffic has picked up with an improving global economy.

--Hewlett-Packard plans to combine its personal computer and printing divisions in a massive reorganization, which will be more than a bit unnerving to the company’s 350,000 employees. While HP is still No. 1 in the U.S. PC market, market share is falling. 

--Oracle, the largest maker of database software, said new software-license sales, a predictor of revenue growth, increased 7%, far higher than analysts’ 3% estimate. Profit, excluding certain items, rose to 62 cents a share, also ahead of expectations. Oracle shares rose a bit.

--Bernie Madoff is at it again, from prison, attacking his wealthy victims, as he told biographer Diana Henriques that he’s also “very sorry that I chose not to go to trial.” Of some of his victims, Bernie said in a series of e-mails that he had no sympathy for them because they had signed documents declaring themselves to have enough wealth to withstand trading losses.

“The pure greed and untruthful cries of some who now have to sell their second or third vacation homes, which were paid for with the years of legitimate profits but because they now find themselves without the income stream I provided is what angers me.”

Oh, shut up.

--Total student debt outstanding passed the $1 trillion mark last year, according to the Consumer Financial Protection Bureau, the new federal agency created in the wake of the financial crisis; 16% higher than an estimate given last year by the Federal Reserve Bank of NY. As a story in the Wall Street Journal puts it:

“(As) more people go to college and assume bigger loans for education, they may take longer than previous generations to hit key milestones such as buying a house or getting married, U.S. officials and economists say. It could take longer for heavily indebted graduates to save money for a down payment on a home, or it could be harder for them to qualify for mortgages.”

Of course it would also help if the universities would stop hiking tuitions at a rate more than the cost of living.

--I’ve been to Hong Kong numerous times and love the place, but the pollution can be a bit overwhelming if you’re not prepared for it. So as Chief Executive Donald Tsang steps down after seven years in office, he leaves a city that has the world’s most valuable stock exchange, is the best place in the world for business, but also the most polluted financial center. A think tank, Civic Exchange, said air pollution is responsible for more than 3,000 premature deaths a year there vs. ongoing concerns over bird flu, which has killed 350, worldwide, since 1997.

As a piece in Bloomberg notes, one of the biggest things the city could do to improve air quality is get rid of its aging, smoke-belching buses.

By the way, if you go, don’t go in May, as I’ve done a few times. The one time I went in October-November, the air was much cleaner.

--Here in the Northeast, the weather fact I find most staggering is we haven’t had a coastal storm since October, and now the experts at Colorado State Univ. announced that the six-month Atlantic hurricane season that opens June 1 should be quieter than normal. Last year was a mild one for Atlantic hurricanes, just six forming, but one, Irene, caused over $7 billion in damage.

--Tourism in America was up 8.1% last year to $1.2 trillion, owing in no small part to 62.3 million foreign visitors, up 4% from 2010. Foreign tourists spent a record $153 billion. The Commerce Department estimates that travel spending supported 7.6 million U.S. jobs last year.

--As part of Newsweek’s ‘time machine’ issue (basically co-branding with AMC’s “Mad Men”), the magazine compared 1965 with 2012.

On an inflation-adjusted basis, a gallon of milk was $6.84 then vs. $3.30 today. An issue of the New York Times was 0.72 vs. $2.50. An ounce of gold, $252 vs. $1,659. Gas…$2.25 vs. today’s $3.83.

But per my comment above on college tuition, check this out.

1965…tuition, room, and board at four-year university…$1,051.00
2012…$22,450.00

--Walt Disney announced it would incur a $200 million writedown on the film “John Carter.” The film has generated over $200 million in global ticket sales, vs. $300 million in estimated production costs, but half the take goes to cinema chains. They would have been better off doing a slapstick, low-budget film titled “Billy Carter.”

--The New York Times’ Patrick McGeehan did a story on New York’s harbor and the labor market there, 58 years after “On the Waterfront.” As in 58 years later, “no-show jobs held by relatives of mobsters and other well-connected people continue to vex government officials trying to make the ports more efficient and more competitive.”

Talk about egregious…as a new report by the Waterfront Commission of New York Harbor found:

“The work rules result in many workers’ being paid for 24 hours per day and, in some cases, as many as 27 hours within one day.”

Some shipping companies “paid salaries that exceeded $400,000 for jobs that ‘require little or no work.’”

--Can you believe Tim Tebow is now a New York Jet? Us Jets fans can’t. Good thing the Knicks’ Jeremy Lin inked a deal with Volvo because Tebow could be endorsing just about every quality product in the area within the next month. Madison Avenue is salivating like Homer Simpson eyeing a keg of Duff Beer.

Foreign Affairs

France: The killing of the self-described al-Qaeda operative in Toulouse, Mohammed Merah, a man responsible for the deaths of four Jews, three of whom were children, and three Muslim soldiers, has roiled the French presidential election.

Far-right candidate Marine Le Pen of the National Front, said:

“It is time to wage war on these fundamentalist political religious groups who are killing our children. The threat of Islamic fundamentalism has been underestimated.

“I have been talking about this for months and months, and the political class has rejected [me]. Some are going to have difficulty explaining themselves but I have a clear conscience.”

Well, it’s true. This has been Le Pen’s platform, as I saw firsthand last May Day in Paris. She has regularly attacked immigration and the influence of Islam in French society.

But, just as Americans normally rally around a president in similar situations, it is President Nicolas Sarkozy who, in these first days after the successful manhunt, is benefiting at the polls, suddenly now leading Socialist candidate Francois Hollande by two points in one survey I saw.

It’s the power of the office. Sarkozy had the television cameras trained on him as he met with Jewish and Muslim leaders and led the ceremony for the murdered soldiers.

The whole issue is complicated by the fact the soldiers were Muslim, with France having Europe’s largest Muslim population.

You also have questions as to why French security forces felt the need to end the siege in the manner they did, not knowing Merah was lying in wake in a bathroom in a final attempt to ambush them. Authorities could have extracted more information from the guy.

One positive tone was set during the week in relation to Merah’s claim he killed the Jewish children to avenge Palestinian children killed by Israel. Palestinian Prime Minister Salam Fayyad replied:

“It is time for these criminals to stop marketing their terrorist acts in the name of Palestine and to stop pretending to stand up for the rights of Palestinian children who only ask for a decent life.”

A heroic statement on Fayyad’s part.

I also have to say that this incident in Toulouse was yet another reason for my adage “wait 24 hours.” I didn’t comment last time on the killing of the three French soldiers because I didn’t have time to collect all the facts, as I would see them, with all manner of theories being put forth initially; think those first hours after Oklahoma City. There were news reports from France the killer had to be a neo-Nazi.

Iran: The new round of discussions between the five permanent members of the U.N. Security Council, Germany and Iran over Iran’s atomic activities are slated for April 13 in Geneva and will not extend beyond July 1, which is when new EU restrictions on purchases of petroleum from Iran are to be implemented. But now we are hearing of all manner of exemptions on the sanctions front being granted various nations (Japan plus ten in the EU), exactly what wasn’t supposed to happen. At least not what the U.S. Congress wanted, it having pushed the Obama administration into the tougher sanctions regime program in the first place.

And Iran is saying the international community must accept its ‘civilian’ program or incur “heavy losses,” as stated by an Iranian lawmaker, Alaeddin Boroujerdi, who heads the National Security and Foreign Policy Committee in parliament. This a-hole is advising the P5+1 to avoid a “policy of confrontation” with Iran, while calling on the United Nations Security Council to lift existing sanctions.

And it was last time, 3/17/12, I wrote the following:

“I get a kick out of those who still talk about Iranian President Ahmadinejad as if he is calling the shots. I told you long ago that wasn’t the case; that if we had a choice, Ahmadinejad was a ‘moderate’ compared to (Supreme Leader Ayatollah) Khamenei.

“But Ahmadinejad is officially irrelevant….Khamenei calls the shots.”

So on Wednesday, former Iranian parliamentarian Seyed Mousavi, said that Khamenei had neutralized all but the most extreme voices in the government, as reported by the Jerusalem Post.

“Describing Iranian President Mahmoud Ahmadinejad as having lost his role in foreign policymaking, and the reform faction as completely eliminated from the government structure, Mousavi told the Middle East Institute that Khamenei would face few checks on his perspective during fresh negotiations.”

So we know that Khamenei is not about to give up the nuclear program, and that talks are now going to drag out, potentially, through the spring, which is all part of Iran’s four-corners offense, but where does this leave Israel in terms of launching a preemptive strike?

Once again there were all manner of articles with disagreeing opinions on whether U.S. and Israeli intelligence, and leaders, agreed on the status of Iran’s program. Here’s what is clear. While the West, including Germany this week, urges Israeli restraint, Defense Minister Ehud Barak and Prime Minister Benjamin Netanyahu are certainly talking as if a strike is imminent; this spring.

Barak told Israel Radio that the state “cannot afford” to wait, though he said several months can be given to allow sanctions and negotiations to work, because during this period it would become clear “if the Iranians intend or don’t intend to stop their nuclear weapons program.”

But in a meeting with his German counterpart, Barak said, “To accept a nuclear Iran would be inconceivable and unacceptable to the whole world.”

Barak, in yet another forum said, “The world, including the current U.S. administration, understands and accepts that Israel necessarily views the threat differently than they do, and that ultimately, Israel is responsible for taking the decisions related to its future, its security and its destiny….

“(Iran) is steadily approaching maturation and is verging on a ‘zone of immunity’ – a position from which the Iranian regime could complete its program without effective disruption, at its convenience.”

Netanyahu said Sunday, “Iran, whose leader foments terrorism and violence around the globe and calls for our destruction…this regime must never be allowed to have nuclear weapons.”

The Wall Street Journal’s Brett Stephens, on the intelligence debate.

“(The debate) is mostly an irrelevance: Iran’s real nuclear-weapons program is hiding in plain sight. The serious question policy makers must answer isn’t whether Iran will go for a bomb once it is within a half-step of getting one. It’s whether Iran should be allowed to get within that half-step. That is the essence of the debate the Obama administration is now having with Israel. The president has stated flatly that he won’t allow Iran to have nuclear weapons. Good. But Israelis worry that Mr. Obama will allow them to come too close for comfort (or pre-emption). Israel cannot be reassured by the administration’s apparent decision to make its case through a series of media leaks, all calculated to head off a possible Israeli strike….

“It should come as no surprise that an intelligence community meant to provide decision makers with disinterested analysis has, in practice, policy goals and ideological axes of its own. But that doesn’t mean it is any less dangerous. The real lesson of the Iraq WMD debacle wasn’t that the intelligence was ‘overhyped,’ since the CIA is equally notorious for erring in the opposite direction. It was that intelligence products were treated as authoritative guides to decision making. Spooks, like English children, should be seen, not heard. The problem is that the spooks (like the children) want it the other way around.

“How, then, should people think about the Iran state of play? By avoiding the misdirections of ‘intelligence.’ For real intelligence, merely consider that a regime that can take a rock in its right hand to stone a woman to death should not have a nuclear bomb within reach of its left. Even a spook can grasp that.”

The Atlantic’s Jeffrey Goldberg, who recently conducted a key interview with President Obama prior to his meeting with Netanyahu in Washington, stated in an op-ed for Bloomberg:

“After interviewing many people with direct knowledge of internal government thinking…I’m highly confident that Netanyahu isn’t bluffing – that he is in fact counting down to the day when he will authorize a strike against a half-dozen or more Iranian nuclear sites.

“One reason I’m now more convinced is that Netanyahu and Defense Minister Ehud Barak are working hard to convince other members of the Israeli cabinet that a strike might soon be necessary.”

Syria: This is truly pathetic. The U.N. Security Council endorsed former U.N. Secretary General Kofi Annan’s six-point peace plan on Wednesday and U.S. ambassador Susan Rice proclaimed, “Annan’s proposal is the best way to put an end to the violence, facilitate much-needed humanitarian assistance and advance a Syrian-led political transition.”

Susan Rice is one of the all-time lightweights. She is not qualified for this job in any fashion at this particular dangerous time in world history.

And Kofi Annan is a house-sitter. Nothing more. Or as the Washington Post editorialized:

“(There) is virtually no possibility that the new initiative will accomplish any of (the goal’s enunciated by Rice) – as the Obama administration should know by now. Instead, it will likely provide time and cover for the regime of Bashar al-Assad to continue using tanks and artillery to assault Syrian cities and indiscriminately kill civilians. That’s exactly what the regime was doing Thursday - pounding the city of Hama, where at least 20 people have been reported killed in army attacks in the past two days.

“The Annan plan won’t work because, like the Arab League plan before it, it calls for the Assad government to take steps that would lead to its swift collapse – and the regime has no intention of capitulating….

“For Russia and China, the Security Council statement offered a face-saving way out of the embarrassing position of appearing to be unconditionally backing Mr. Assad. It gives Moscow hope of achieving the outcome it hopes for: a U.N.-brokered ‘peace’ that leaves the regime in power.   For the Obama administration, Mr. Annan’s mission allows the illusion that its diplomatic strategy is producing results – and that more decisive measures, such as arming the opposition or creating a protected zone inside Syria, are unnecessary.

“What the Annan mission does not offer is ‘the best way to put an end to the violence.’ It is just the opposite: a guarantee that the bloodshed will continue, and probably worsen. The fighting in Syria will end only when Mr. Assad is forced to stop – or he succeeds in killing his way to victory.”

How many times have we heard President Obama and Secretary of State Clinton proclaim, “Ultimately, this dictator will fall”? [Obama’s exact words.] 15? 25? The regime has retaken many of the cities once held by rebels and the rebels are low on ammunition, though the rebels are turning more to guerrilla tactics, including roadside bombs and ambushes.

Meanwhile, hundreds of Hizbullah fighters supposedly have been receiving training in the use of advanced anti-aircraft weapons in Syria and Iran, in recent months, according to the Israeli paper Haaretz. Israeli officials are also increasingly concerned over the potential transfer of Syria’s chemical weapons stockpile to Hizbullah. If Israel sees this happening, they will almost be forced to launch a preemptive strike on Lebanon.

One thing I’ve railed about on the Lebanon front is Israel’s constant violations of U.N. Security Council Resolution 1701 in terms of violating Lebanon’s airspace. This week, its foreign minister, Adnan Mansour, on a trip to Moscow, claimed there were over 9,000 such violations since 2006. Russian media recorded Russian Foreign Minister Sergei Lavrov as saying:

“We consider violating this resolution unacceptable, especially as far as respect for Lebanon’s sovereignty and airspace is concerned.”

I couldn’t agree more; the first and probably only time I’ll agree with Mr. Lavrov on anything.

[Update on a statement I made last week that I had written Israeli defense contractor Rafael and not received a reply. I did on Monday.]

Afghanistan: U.S. soldier Robert Bales has been charged with 17 counts of murder, according to U.S. officials. If convicted, he deserves the death penalty, though it’s unlikely it would be carried out, which makes the sentence itself a joke.

DeWayne Wickham / USA TODAY

“Even before the identity of the Army staff sergeant believed to have massacred 16 [Ed. later changed to 17] people in an Afghanistan village became known, excuses for his ghoulish acts of terror started popping up in the news media, diminishing the likelihood that justice will prevail….

“[In other such cases, think William Calley who served just 3 ½ years for My Lai], public opinion among war-weary Americans opposed harsh punishment for these mass murderers, who were seen more as victims of unpopular wars – men who were driven over the brink by the bad decision-making of their superiors or of Washington policymakers.

“Such shortsightedness damages more than the American concept of justice. It also does great injury to the democratic ideals we use to justify the continued presence of U.S. troops in Afghanistan and Iraq. And when an American soldier who commits a crime gets off with little or no punishment, it devalues the lives of their foreign victims and creates tensions that put at risk the lives of other U.S. service members who get targeted for retribution.

“Of course, war can take a heavy emotional and psychological toll on those who are sent into battle. But that’s no excuse for the brutal slaughter Bales is suspected of committing….

“To imply that a U.S. soldier who goes on a killing spree in a foreign land is less culpable because of the pressures of war slanders the incredibly good conduct of the millions of U.S. men and women who have served honorably in Iraq and Afghanistan.

“The person who massacred the Afghan villagers deserves the contempt of this nation – and the unyielding judgment of its criminal justice system.”

Meanwhile, President Karzai lumped the Taliban and the United States together at a meeting with relatives of the massacre, saying “There are two demons in our country now.”

That’s our boy, who undoubtedly has squirreled $billions in U.S. aid money away in some Swiss bank account, or Abu Dhabi. 

A European diplomat recently told the New York Times:

“Never in history has any superpower spent so much money, sent so many troops to a country, and had so little influence over what its president says and does.”

Meanwhile, it’s now been revealed that Afghan security forces have killed 13 members of the NATO-led coalition since the start of the year, but General John Allen, the U.S. soldier leading the operation, told Congress, the “campaign is on track.” Bull. I’m sick of our generals.

And I’m sick of conservative columnists, such as Michael Gerson of the Washington Post, continually making excuses for the Afghan effort, as he does this week.

“In the two years since the Afghan surge was announced, U.S. forces have systematically cleared out insurgent strongholds in the Taliban heartland. Afghan forces have grown in numbers and professionalism – showing admirable discipline and restraint after the recent Koran burning incident. About 90 percent of military operations are conducted jointly by Americans and Afghans. During the past 12 weeks, the number of enemy-initiated attacks has been 25 percent lower than a year ago.”

Much of that just isn’t true, from other accounts I’ve read, some of which I’ve posted in this space. On the other hand, of course the Taliban is just waiting us out. If I was a woman there, I’d do everything in my power to get out now.

And note to President Obama. If you are going to stick to your 2014 timetable, as administration officials have been saying since the massacre, and in the face of deaths of Americans at the hands of Afghans, then give an address to the nation. You’re not helping the cause by staying silent.

Pakistan: A parliamentary commission on Tuesday demanded an end to American drone attacks inside the country as a condition for restoring ties with the U.S. It also demanded an apology for deadly airstrikes in November, including one that killed 24 Pakistani soldiers, which then led to the closure of supply lines through the country to Afghanistan.

The commission didn’t say the closure of the U.S. and NATO lines should be permanent, rather officials will now look to charge more money for the privilege.

Iraq: Al-Qaeda claimed responsibility for a wave of bombings and shootings across the country on Tuesday that claimed the lives of at least 49. Among the attacks were two, double-car bombings in Karbala and Kirkuk, claiming 13 lives each. [First car bomb goes off, the crowd and emergency crews assemble, and then the second goes off…an al-Qaeda trademark.]

Egypt: The White House announced it was resuming funding for Egypt’s military and will bypass Congress in doing so. Recall the aid has normally amounted to $1.5 billion and was suspended during the country’s crackdown on pro-democracy groups. Congress had passed a law in December, mandating the administration certify that Egypt is making progress on the democracy front. But Sec. of State Clinton is waiving this restriction. Most egregious is that the Washington Post is reporting the administration will hand over the full amount, rather than withholding a portion for leverage.

What the heck is going on here?! Even Vermont Democratic Senator Patrick Leahy said: “I am disappointed by this decision.”

North Korea: U.N. nuclear inspectors have been invited for the first time in three years, which was part of the deal with the U.S. that would have the latter sending food aid to the Commies as long as the North agreed to suspend nuclear and long-range missile tests.

But of course then Pyongyang said it would launch a rocket-mounted satellite around April 15 to mark the 100th birthday of Great Leader Kim Il-sung. So the United States would be nuts to send anything, even stale Drake’s cakes, before observing what North Korea does in April. Then again, we’ve seen what the White House is doing with regards to Egypt and military aid.

Editorial / Wall Street Journal

“Apologists for engaging North Korea are busy assuring everyone that the satellite test is no big deal and doesn’t threaten anyone. That’s what they always say. But North Korea has built nuclear bombs as a way to give it greater political leverage, and no one should doubt that it is trying to build a ballistic missile that would threaten Japan and the U.S. as a way to gain even more international clout.   A missile launch will assist that effort even if it doesn’t complete it.

“The Obama administration had been doing well with its economic sanctions and diplomatic neglect toward the North, until it fell for one more round of offering alms for good behavior. The only message the North’s dynastic junta will understand is if the West now cuts off the food aid. Even better if the U.S. – or preferably, Japan – blows the missile out of the sky.”

The administration is on record as saying if the North launches the missile, the food deal is off. Even China announced it was concerned over the rocket-launch plans.

Meanwhile, there is a nuclear security summit meeting taking place this week in Seoul, so you can imagine it’s Spy vs. Spy in that megalopolis, as I’ve long written of the thousands of North Korean agents there. Pyongyang warned the summiteers not to insult the North. Any such criticism would be considered a “declaration of war.”

President Obama will don the official bomber jacket in going to the DMZ, I think on Monday, for a photo-op that will then be part of all his campaign videos. If he wants a real sense of the place, he should explore the tunnels.

For its part, the South Korean government wants to be able to extend its ballistic missile range beyond the 300km allowed as part of a 2001 memorandum of understanding with Washington. The Americans are concerned that doing so (even though the North is testing a missile with a range estimated at 3,000km…and appears to be targeting Australia, by last report) would lead to a further arms race on the continent.

Let Seoul do it! Geezuz, this is a no-brainer. We’re worried about China’s reaction?

China: For eight days, since state media announced the dismissal of Bo Xilai from his job of party chief of one of China’s biggest cities, Chongqing, he has not been seen or heard from, nor has the government issued any further statement; this as rumors swirl of a potential coup in Beijing, which would be rather unsettling for those with investments there, mused your editor. It’s disturbing enough the Communist Party is tongue-tied. There never was an explanation just what Bo did wrong, only rumors a family member was being investigated for corruption and Bo was trying to block it.

So we wait to see what happens, what is said, the next few weeks in particular. After all, Premier Wen has called for further reform in China, far from the Maoist agenda Bo and his many supporters espouse.

At stake are seven of nine seats in the Politburo Standing Committee, one of which Bo was in line for, with the other two seats going to incoming president Xi Jinpinq, now vice president, who will succeed Hu Jintao, and Vice Premier Li Keqiang, who will succeed Wen.

[Sunday, March 25, is election day for chief executive for Hong Kong, the special administrative region monitored by Beijing. It’s not a pure democratic vote as 1,200 people, mostly businessmen and political leaders, make the call among three candidates; actually they then pick smaller groups who do. The system isn’t supposed to lead to surprises, since most are known to be loyal to Beijing. But this time the two leading candidates don’t have the cleanest backgrounds.]

Mali: A number of “experts” the past few months have been touting the tremendous opportunities that lie in Africa. I hope you’ve noticed I haven’t been one of them. We’ve only heard the same story for decades…this time it’s different, blah blah blah. All I need to do is look at Nigeria, a total hell-hole where al-Qaeda lookalike Boko Haram is out to slaughter all Christians, to know Africa’s future is shaky, at best. Oh sure, there are always individual opportunities, but look at one country that was supposed to be a role model of democracy, Mali.

Just weeks before he was to step down, President Amadou Toure was ousted in a coup by a bunch of drunken soldiers who looted the presidential palace, arrested ministers and declared they were in charge. Mali was preparing to hold free elections just a month from now as Toure, adhering to the constitution, was not seeking reelection.

But as the New York Times reports, with the downfall of Gaddafi in Libya, Mali was flooded with weapons, bolstering the rebel movement, which led to defeats of Malian forces. The soldiers, in turn, were fed up with a government they said wasn’t arming them sufficiently to beat back the rebels. 

As I write, there is no word on Toure’s fate, though coup leaders say he is safe.

Cuba: Pope Benedict XVI arrives on Monday for an historic visit, the first to the island since John Paul II’s 1998 trip. I’m hoping Benedict issues some very strong, pro-democracy statements, though last I read, he is not scheduled to meet with the island’s human-rights advocates, despite many of them earning papal recognition The loyalties of Cuban Cardinal Jame Ortega are being called into question as he controls the pontiff’s schedule. What will Benedict do? Just follow along with the game, or go his own way?

Random Musings

--Mitt Romney had a good week, until he didn’t. Romney won all 20 delegates in Puerto Rico, and the vast majority of Illinois’ as he defeated Rick Santorum, 46.7% to 35% in the latter, with Santorum’s campaign once again failing to properly file for at least 10 of the 54 delegates in the Land of Lincoln.

And so we finished the week, according to the AP, with the following total delegate count.

Romney 563
Santorum 263
Newt Gingrich   135
Ron Paul 50

[The next primary is today, Saturday, in Louisiana…do or die in particular for Newt Gingrich, with Santorum needing to beat Romney badly.]

Aside from his campaign’s ongoing incompetence, Santorum didn’t have a great week because he insists on opening his mouth, which most candidates have to do at one point or another, and he has said some really stupid things recently. As Karen Tumulty wrote in the Washington Post:

“Santorum prides himself on the fact that he is an unscripted candidate who will answer whatever he is asked. He has even gone so far as to declare that ‘when you run for president of the United States, it should be illegal to read off a teleprompter, because all you’re doing is reading someone else’s words to people.’

“In Santorum’s case, however, even his admirers think that might not be such a bad thing to try, at least every now and then….

“Speaking off the cuff has proven treacherous for Santorum, undercutting his efforts to expand his base of support beyond social conservatives to economically stressed voters who might be able to relate to the former senator’s blue-collar roots….

“In fact, it can sometimes seem that Santorum swings at every ball that’s pitched. On Tuesday, for instance, he criticized President Obama for allowing his 13-year-old daughter, Malia, to take a spring break trip to Mexico, parts of which the State Department has deemed unsafe.

“ ‘If the administration is saying that it’s not safe to have people down there, then just because you can send 25 Secret Service agents doesn’t mean you should do it,’ Santorum said on a conservative talk radio show. ‘And when the government is saying this is not safe, then you don’t set the example by sending your kids down there.’

“However, there is no State Department warning for Oaxaca, where she reportedly is.”

And then Santorum went off on the subject of pornography, posting on his Web site that the Obama administration had “turned a blind eye to those who wish to preserve our culture from the scourge of pornography.”

Oh brother. If I elect you president, I want you focusing on Iran and China, not Playboy.

Santorum also said, “I don’t care what the unemployment rate is going to be. It doesn’t matter to me.”

Then you had the fact he spent precious campaign time in Puerto Rico, with the result he got his butt kicked, and the strange case of the Missouri caucuses, where Santorum spent further valuable time, only the stupid process in that state doesn’t really end until June!

Jennifer Rubin / Washington Post

“Are you wondering what happened in Missouri yesterday? There were supposed to be caucuses. Rick Santorum went there a bunch of times. It sort of seemed like delegates were at stake.   But what really happened was chaos.   The St. Louis Post-Dispatch reported:

“ ‘In St. Charles County, which was to have been the biggest single prize of the day, the caucus was shut down before delegates were chosen after a boisterous crowd objected to how the meeting was being run, including an attempted ban on videotaping. Two supporters of presidential hopeful Ron Paul were arrested.

“ ‘At other caucuses, participants gathered outdoors as the appointed locations turned out to be too small to accommodate crowds, or waited for hours as organizers worked through procedural questions.

“ ‘Even before the day’s events took a rancorous turn, state Republican officials said the winner of the caucus would not be officially known until next month. But with the confusion surrounding St. Charles, and many more delegates available in a pair of caucuses next weekend, the primary picture for Missouri may have only become murkier Saturday.

“ ‘It was a joke. It was a complete joke,’ said David Nelson of St. Peters, who participated in the St. Charles County caucus.

“In fact, they were only choosing (or not choosing) delegates to another meeting. (‘They were selecting delegates who will appear at two larger meetings in April and June, who will in turn select delegates to the national convention in Tampa’). Got that?

“Well, Iowa, Nevada and Maine Republicans can breathe a sigh of relief that none of those caucuses will win the ‘worst-run contest’ title in the 2012 nominating process.”

Back to Santorum, he was asked on ABC’s “This Week” why he supported liberal, pro-choice Arlen Specter for president in 1996, to which he replied, ‘Well, you know, when your colleague is running for office, and, you know, I was his colleague in the United States Senate, he asked me to stand with him. That certainly wasn’t one of my prouder moments I look back on, but look, you know, you work together as a team for the state of Pennsylvania and I felt that Senator Spector stood up and supported me when I was running in 1994 and I did likewise.” As Jennifer Rubin wrote, “Yikes.”

But wait…there’s more! On Thursday, Santorum said, “You win by giving people a choice. You win by giving people the opportunity to see a different vision for our country, not someone who’s just going to be a little different than the person in there….If they’re going to be a little different, we might as well stay with what we have instead of taking a risk of what may be the Etch A Sketch candidate for the future.”

Well, as Newt Gingrich tweeted: “Rick Santorum is dead wrong. Any GOP nominee will be better than Obama.”

But speaking of Etch A Sketch, Romney’s gaffe, or rather that of his aide, Eric Fehrnstrom, was even worse. During a CNN interview Wednesday morning, Fehrnstrom said the general election campaign will be “almost like an Etch A Sketch – you can kind of shake it up, and we start all over again.”

Great for sales of Etch A Sketches as Santorum, Gingrich and Obama aides passed them out or used them as props; unbelievably stupid on the part of the Romney team.

So the dysfunctional Republican campaign continues, though at least Romney picked up the endorsement of former Florida governor Jeb Bush, who called on Republicans “to unite behind Gov. Romney and take our message of fiscal conservatism and job creation to all voters this fall.

“We need a leader who understands the economy, recognizes more government regulation is not the answer, believes in entrepreneurial capitalism and works to ensure that all Americans have the opportunity to succeed,” Bush said.

--Wisconsin Republican Congressman Paul Ryan released his latest budget blueprint, which includes a reduction in the corporate tax rate to 25% from 35% and reductions in the personal income tax to either a 25% or 10% rate. House Republicans also once again seek to overhaul Medicare and Medicaid.

Chris Van Hollen, Ryan’s Democratic counterpart on the House budget committee, countered: “If you’re Mitt Romney you’re going to love this budget. They provide a gilded path to prosperity for the already wealthy, while leaving working Americans and future generations behind.”

Bottom line, the Ryan budget would reduce spending over a decade by $5 trillion, while Obama’s latest proposal would increase spending by $1.5 trillion above the current baseline. And as the Wall Street Journal editorialized:

“Mr. Obama’s budget contains $1.9 trillion in tax increases over the next decade and raises income, dividend and capital gains tax rates. The Ryan budget outlines an ambitious tax reform, collapsing today’s six rates to two – 25% and 10% - while retaining the 15% tax rates on capital gains and dividends and eliminating inefficient tax deductions and credits….The Ryan plan isn’t a pure flat tax, but it takes the IRS code a giant stride in that direction and creates a tax system far more conducive to faster job creation and greater investment.”

--New York Republican Congressman Peter King held a hearing wherein we learned from various sources that Hizbullah has hundreds of operatives in America, just waiting to be activated. They’ve been blending in for ages…but they evidently love the used-car business to help them launder money.

--New York City Police Commissioner Ray Kelly has been beaten up over his anti-crime, anti-terror policies lately. The other day he fought back, as the New York Post editorialized:

“A couple of City Council midgets tried to mix it up with Ray Kelly this week, and wound up wearing lumps all over.

“Kelly, New York City’s longest-serving police commissioner, has never suffered fools well, and he made no exception for council worthies Jumaane (sic) Williams, Robert Jackson and – especially – Melissa Mark-Viverito of Harlem.

“Quick as a win, the trio went right at Kelly during a budget hearing Thursday….

“When Mark-Viverito wanted Kelly to apologize to minorities for using stop-and-frisk tactics to clear guns from the streets, the commissioner shot right back:

“ ‘If we conducted stops according to Census data, half of all stops would be women.’

“Does stop-and-frisk discriminate against minorities?

“Said Kelly: ‘Ninety-six percent of the shooting victims in this city are people of color, 90% of the murder victims are people of color,’ said Kelly.

“And then he turned the tables:
“ ‘Who do you thinks lives are being saved?’

“The council went dumb as a stump at that, so Kelly answered his own question: ‘What I haven’t heard is any solution to the violence problem in these communities.

“ ‘People are upset about being stopped, yet what is the answer? What have you said about how do we stop this violence? What have leaders of the communities of color said? What is their strategy to get guns off the street?'

“The answer, of course:
“Absolutely nothing.”

--So, let’s see. When was 9/11? 2001? 10 ½ years later, work at the National 9/11 Memorial and Museum is at a virtual standstill, as reported by the New York Post, even as costs spiral ever higher. Back in 2006, it was said the cost would be $700 million and it will end up being $hundreds of millions more.

Did you know that the space will dwarf the size of the Smithsonian Air and Space Museum in Washington? That $4.3 million was dropped on a heating/cooling system for the parapet with the 9/11 victims’ names, “so it’s pleasant to touch in summer and winter”?

And the $700 million (and counting) museum, if it’s ever completed, will sit next to a $4 billion PATH train hub, meant to serve just 60,000 commuters.

Pin the past overruns and delays on former Republican Gov. George Pataki; “Pataki’s Pit,” they call it. Completing the museum from here on, however, is now Andrew Cuomo’s responsibility, whether he likes this or not.

--So who is still a fan of Occupy Wall Street? If you are, did you know that members of the group in New York were caught on camera dumping a large trash container full of human waste onto the outside of a JPMorgan Chase branch? Did you know these same individuals dumped a container of human waste into the vestibule of an ATM? At least one arrest was made.

--Scientists at the University of Oxford have added to the research on the benefits of aspirin, finding that a daily dose could cut the risks from a range of cancers, with some benefits seen within a matter of months. Aspirin already helps guard against heart attacks and stroke.

The leader of the project, which was published in The Lancet and The Lancet Oncology, was Peter Rothwell, author of a previous landmark aspirin study.

“We showed previously that daily aspirin substantially reduces the long-term risk of some cancers, particularly colorectal cancer and esophageal cancer, but that these effects don’t appear until about eight to ten years after starting treatment.

“What we have now shown is that aspirin also has short-term effects, which are manifest after only two to three years. In particular, we show that aspirin reduces the likelihood that cancers will spread to distant organs by about 40 to 50 percent. This is important because it is this process of spread of cancer, or metastasis, which most commonly kills people with cancer.”

--Sweet! “A NASA spacecraft has found further tantalizing evidence for the existence of water at Mercury’s poles.” [BBC News]

Where there’s water, there’s life, sports fans! Perhaps a golf resort or two, though we have little evidence yet on potential real estate bubbles for properties surrounding the courses. But let me be the first to declare it so I can say in 25 years, “I told you so!”

---

Pray for the men and women of our armed forces…and all the fallen.

God bless America.
---

Gold closed at $1661
Oil, $106.81

Returns for the week 3/19-3/23

Dow Jones -1.1% [13080]
S&P 500 -0.5% [1397]
S&P MidCap -1.0%
Russell 2000 -0.02%
Nasdaq +0.4% [3067]

Returns for the period 1/1/12-3/23/12

Dow Jones +7.1%
S&P 500 +11.1%
S&P MidCap +12.7%
Russell 2000 +12.0%
Nasdaq +17.8%

Bulls 48.4
Bears 23.6 [Source: Investors Intelligence]

Have a great week. I appreciate your support.

Don’t forget the StocksandNews iPad app…recommended by the BDA…Beer Distributors of America.

Brian Trumbore