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04/07/2012

For the week 4/2-4/6

[Posted 6:00 AM ET]

Europe, Washington and Wall Street

Hope you enjoyed your little break from the European debt crisis because it’s back. First, Europe needs growth and there is none. Second, Europe needs a major firewall to shoot down the vultures who are circling Spain and, to a slightly lesser extent, Italy. Europe’s existing firewall is insufficient to deal with either one, if you look at the numbers honestly, let alone both at the same time. Third, both Italy and Spain desperately need real labor reform, but with Italian “superstar” Prime Minister Mario Monti caving into parliament and signing off on very weak measures, and Spain’s parliament not likely to accept anything approaching what’s needed there, the crisis will be hitting full force before long.

This week, Spain’s 10-year bond traded with a yield over 5.80%, the highest since December, while Italy’s 10-year was back up to 5.50%. If both economies were growing at 2% to 3%, you could live with those rates when weighing future refinancing needs, but knowing both are in recession, with Spain basically in depression when you consider its new record high 23.6% unemployment rate (50% among the youth), there is no way yields will remain below 6.00%.

But you know all those stories about the LTROs, the long-term refinancing operations? If I told you both Italian and Spanish paper is now at yields higher than December, what does that mean? It means the banks that sopped up all the essentially free cash and then reinvested it in higher yielding Spanish and Italian government debt, which is what the European Central Bank wanted the financial institutions to do, now have losses on those very same bonds, in some cases substantial ones. Which means what? The capital structure of these banks could be screwed up all over again. Which means what? If rates continue to inch higher, and the losses on the paper grow, they’ll have to raise more capital! Where will they find said capital? Beats the crap out of me. Cue the Homer Simpson blank stare.

I mean think about it. Europe legitimately thought that with the two LTROs, they bought about a year or so to get their fiscal house in order, helped by the fact that by year end, most euro economies would be back in solid growth mode. Well, the state of calm lasted about a quarter.

And if you think various euro nations, such as Germany, Finland and the Netherlands, are anxious to put their taxpayers further on the hook to increase the size of the firewall for Italy and Spain, then you’re just not dealing with reality.

But here are some stats on the euro-region economy, as if you needed more bad news.   The PMI on manufacturing for the 17 nations sharing the currency came in at 47.7 for March vs. 49 in February. Germany was at 48.4, a 3-month low; France at 46.7, a 33-month low; Spain at 44.5; and Greece, 41.3, to name a few.

The eurozone unemployment rate hit 10.8% in February (latest available), the highest in 14+ years. You saw Spain’s rate. Italy’s, at 9.3%, is a cycle high, plus youth unemployment there is 32%. [The good figures come from Austria, just 4.2%; Netherlands, 4.9%; and Germany, 5.7%.]

Spain’s parliament is debating $36 billion in further austerity cuts, as mandated by the ECB and EC, but its big problem is the ‘regions,’ who represent 50% of government spending. The central government is reasonably transparent (from what I know) in its finances, but the regions are hopelessly corrupt. It was the regions, after all, that fueled the housing bubble which I documented so well in this space; one in which the level of corruption between the developers and municipal governments was off the charts, both being in cahoots with the banks; all three hiding the damage on their respective books. Actually, the developers didn’t keep any books. They just left town.

No wonder Spain’s Prime Minister Rajoy, who’s wondering why he wanted the job, said his nation was in “extreme difficulty.”

Then there is Greece. You remember them. A heartbreaking event occurred this week as a 77-year-old pensioner shot himself in the head outside parliament, not wanting to leave his family with debts. It’s the kind of tragedy that galvanizes a nation. In the alleged suicide note, he said:

“The government has annihilated all traces for my survival, which was based on a very dignified pension that I alone paid for 35 years with no help from the state.

“And since my advanced age does not allow me a way of dynamically reacting…I see no other solution than this dignified end to my life, so I don’t find myself fishing through garbage cans for my sustenance.”

Crowds soon formed and there were violent, albeit small, clashes with riot police; but these particular demonstrations could grow as they now have a symbol of their despair.

Washington

Stocks finished lower for this holiday-shortened week, and are likely to open lower on Monday, following a disappointing jobs report for March, with the economy only adding 120,000 jobs when 205,000 was the consensus estimate. [The unemployment rate ticked down to 8.2% from 8.3% only because the labor pool shrunk; as in more people stopped looking.] 

While the stock market was closed, Friday, the futures market was open and stocks dropped 1% or thereabouts, foretelling Monday’s open.

Federal Reserve Chairman Ben Bernanke looks a little prescient (for once) as he’s been warning the recent employment gains could fizzle, and the Fed’s minutes from its March 13 meeting did indicate that some members of the Open Market Committee were concerned “additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below” 2%.

So while at the time the financial markets took the March minutes as a sign there was decreased urgency for further stimulus, or QE3, with Friday’s poor jobs data, QE3 could be back on the table and that in turn could help soften the blow on Monday.

One thing is for sure. The economy has slowed, despite strong largely weather-related auto and retail sales.

But this was a week where everyone all at once seemed to focus on the deficit, and the looming train wreck following the election and a lame duck Congress that will be faced with deciding the fate of the Bush tax cuts, limits to entitlement spending, and the automatic budget cuts already planned, the “sequester” that takes effect Jan. 1 unless Congress acts beforehand. Plus, there is a very good chance we’ll have another debt ceiling debate, not just prior to year end, but possibly before the election itself.

So we’re talking about a truly tumultuous finish to the year, which will begin to give people the heebie-jeebies no later than mid-summer…as in I like my call for a crash, as first enunciated middle of last year, better and better. A crash, you understand, exacerbated by the computer program/high-frequency traders that the SEC, almost two years after the Flash Crash, is still just “investigating.” I mean seriously, folks, I don’t mention the articles that come almost every week talking of a new SEC investigation because the bottom line is they haven’t done anything, and these HFT players will one day screw us all worse than before.

Mohamed El-Erian / Financial Times

“The hesitancy (in hiring) is understandable, particularly given the uncertain outlook for demand. American consumers, as a group, still carry too much debt and have to cope with higher oil prices. The prospects for exports, which have grown markedly, are gradually dimming now that the rest of the world is slowing. Meanwhile, policymakers have yet to find a way to deal properly with a year-end fiscal cliff, the result of Washington’s repeated inability to design coherent fiscal policy….

“After a period of relative calm, Friday’s employment report should again sound alarm bells in many parts of Washington. The combined risk of an unemployment problem that is increasingly structural in nature and a rate that is bottoming out way too soon is bad news. It is the last thing America and, more broadly, the global economy need, especially at a time when Europe remains fragile.

“The hope is that Friday’s report will act as a catalyst for a renewed initiative on the part of Congress and the administration to lift the impediments to growth that have been repeatedly identified yet never suitably treated. More likely, however, is that political bickering and dithering may again deliver a depressingly familiar seasonal pattern that undermines the wellbeing of millions and renders the subsequent recovery even more difficult to secure.”

Speaking of bickering, President Obama blasted the House Republican budget of Rep. Paul Ryan (Wis.), calling it a “radical proposal,” a “Trojan horse” and “a prescription for decline.”

“This is now the party’s governing platform. It is thinly veiled social Darwinism.”

House Speaker John Boehner replied:

“Instead of reaching across the aisle to enact the changes needed to restore America’s prosperity, the president has resorted to distortions and partisan potshots, and recommitted himself to policies that have made our country’s debt crisis worse.”

What’s so incredibly stupid, and infuriating, about this debate is that broadly speaking we are only talking about reducing the rate of growth in the federal budget. But President Obama is flat-out lying in his descriptions of the Ryan plan. Nor does he refuse to level with the American people on entitlements, let alone his fellow Democrats, among which, in case you haven’t noticed, is not one…not one…leader among the bunch these days. Congressman Chris Van Hollen? Puh-leeze.

Editorial / Wall Street Journal

“The President’s depiction of the wonkish and formerly obscure House Budget Chairman as some political monster is itself telling. Mr. Obama is conceding that he can’t run on the economic recovery, the stimulus, health care, green energy or any of the other grand liberal ambitions that have dominated his time in office. All of those are unpopular or failures. He was elected on hope and change, but now his only hope is to change the subject to the ogres he claims are the disloyal opposition….

“The list of untrue things that Mr. Obama wants Americans to believe is evidently so long that Mr. Obama associated himself with Republicans, albeit mostly dead Republicans like Lincoln and Eisenhower. For the first time we can recall, Mr. Obama even praised George W. Bush, of all people, because his predecessor created a new entitlement for prescription drugs. He also said Newt Gingrich showed how smart he was when he called Mr. Ryan’s budget ‘radical’ and ‘right-wing social engineering’ last year.

“All of this in a political fable carefully constructed to erase the record of the last three years and blame every current anxiety on a GOP House that has been in office for all of 14 months. The President claims to have ‘eliminated dozens of programs that weren’t working,’ but the savings from these eliminations amount to less than 0.1% of the budget, or less than $100 million.

“Meanwhile, the budget has grown by more than 20% since he has been President. After deficits of $1.412 trillion, $1.293 trillion, and $1.299 trillion over the last three years, and an estimated $1.326 trillion due for 2012, he still claims the deficits are all Mr. Bush’s fault – except for the extra spending on Medicare, which he likes.

“It is especially rich of Mr. Obama to accuse Republicans of breaking last summer’s debt-limit deal – given that even the most sympathetic press accounts that are now emerging make it clear that the President blew up his ‘big deal’ with John Boehner. The House Speaker was prepared to trade higher taxes for mostly notional changes to entitlements, but Mr. Obama thought he could roll him at the last minute for even greater tax increases….

“The last two days have revealed Mr. Obama at his least appealing – and least Presidential – first warning the Supreme Court not to dare overturn his health-care law, and now demonizing the motives of his political opposition. It is a long, long way from his ‘there’s no red America, there’s no blue America’ stuff of 2004, much less the inspiration of 2008.

“If nothing else, Americans are getting a preview of the rhetorical uplift, the bipartisan problem-solving, and the unifying national purpose that would attend another four years.”

Street Bytes

--The Dow Jones fell 1.1% for a second time in three weeks, closing at 13060, while the S&P 500 lost 0.7% and Nasdaq declined 0.4%, just the second losing week for Nasdaq in 2012.

--U.S. Treasury Yields

6-mo. 0.13% 2-yr. 0.31% 10-yr. 2.05% 30-yr. 3.22%

Bonds staged a huge rally on the long end following Friday’s poor jobs report.

In other economic news, the March ISM reading on manufacturing came in at 53.4 vs. 52.4 in February, while the March ISM service sector reading was 56.0, slightly less than expectations, though still solid.

--Automakers in the U.S. posted the best sales month in nearly five years, selling about 1.4 million vehicles as a combination of good weather, the desire for more fuel-efficient vehicles and the simple fact the average car in the country is ten years old, drove sales. The March total of 1.47 million was the best since August 2007.

Chrysler Group’s sales rose 34%, Ford’s were up 5% for its best March since 2007, and GM’s rose 12%.

Volkswagen’s U.S. sales, up 34.6%, represented the best March for the automaker since 1973. Nissan’s, up 12.5%, hit a record level for any month in the company’s history. Kia Motors saw a 30.2% gain for its largest monthly total ever. Hyundai’s, up 12.7%, were a monthly record as well.

Toyota’s sales in March rose 15.4% as it continues a comeback from the 2011 tsunami and earthquake. But Honda Motor was the only player to see a decline, down 5%, as demand sagged for its flagship Accord and Civic models.

--Ford announced it would spend $500 million to turn the inland Chinese powerhouse city of Chongqing into its major manufacturing facility for passenger cars – Chongqing having been led by Bo Xilai before he was removed from office (see latest below). Ford has a target of 1.3 million vehicle sales in China by the end of the decade.

Meanwhile, GM reported its March sales in China rose 11% from a year earlier to nearly 258,000 vehicles, 745,000 for the first quarter, up 8.7%.

--Speaking of China…in a highly significant move, the China Securities Regulatory Commission announced that international fund managers would be allowed in invest up to $80 billion in China’s onshore capital markets – up from a current limit of $30 billion; also increasing the amount that foreign investors can raise in Hong Kong for investment back on the mainland.

At the same time, Premier Wen Jiabao said the nation’s biggest state-run banks had grown too much and needed to be broken up.

“Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital.

“That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly.”

And I noticed some animal spirits were returning, albeit in a haphazard way, to the China small-cap sector. Even my own main holding there stirred some.

--China’s service sector PMI rose to 58.0 from 57.3 in February (and 55.7 in January), though the service sector here is just 45% of the economy, far less a percentage than most developed nations. Nonetheless, coupled with the 53.1 PMI reading on manufacturing for March, it certainly doesn’t look like a hard landing, sports fans. A government official, one of those in the know, wink wink, estimated first-quarter GDP would come in around 8.4%. Morgan Stanley raised its 2012 estimate of growth in China to 9% from 8.4%.

--China’s Vice-Premier Li Keqiang, who is slated to take over for Wen Jiabao, said the government will stick to its policy goal of stabilizing economic growth while curbing inflation.

“The fundamentals of the Chinese economy remain good and the momentum of economic growth has not changed. We will be able to maintain steady and relatively fast development in the long term.

“Expanding domestic consumption is our top priority in adjusting the economic structure.”

However, while…

“The world economy is showing some signs of recovery, (the) deep impact from the global financial crisis has not disappeared and Europe’s sovereign debt crisis lingers.” 

Importantly, Li met with his Taiwanese counterpart, “with sources attending the meeting saying both sides were positive about boosting trade and financial ties.” [South China Morning Post]

--Gaming revenue in Macau for the month of March rose a solid 24.4%, another strong sign there will be no hard landing in China. One analyst believes gaming revenue will rise 20% this year, which would be terrific after it rose 42% in 2011. Sands Cotai Central, a $4 billion casino, hotel and shopping complex, opens April 11, which won’t hurt matters. 

For the first quarter, revenue was 27% higher than last year. 60% of the tourists to Macau were from the mainland.

--China has surpassed the U.S. as the world’s largest market for food and grocery retail, surpassing the U.S., according to research put out by IGD. I have a small position in a Chinese company that continues to increase its exposure to this sector, and it just reported super earnings, yet still trades at a P/E of one.

--Auto sales for the month of March in Japan soared 78% from year earlier levels, as government subsidies for fuel-efficient cars carried the day, while the comparison was of course helped by putrid sales in March 2011 as a result of the twin disasters.

--India’s economy is definitely in slowdown mode as its PMI reading on manufacturing hit 54.7 in March, down from February’s 56.6 and 57.5 in January. Shortages of some raw materials, such as coal, aren’t helping. One major issue hurting India is the infrastructure for bringing finished goods to market is still awful.

--Canada added its most jobs since September 2008 last month as the unemployment rate dipped to 7.2%.  

Editorial / Wall Street Journal

“Not too many years ago, Americans could get away with cracking jokes about spendthrift Canada, its weak dollar and the long wait for MRIs. These days, the joke is on Americans, as Canada’s government has cleaned up its fiscal mess and focused on private economic growth.”

Bottom line, when it comes to fiscal responsibility, and energy policy, a true vision for the future, Canada is kicking our butt all over the place.

That’s Canada…the best alternative to the United States.

--The Russian Central Bank reported that capital outflows reached $35 billion in the first quarter, almost double the rate of a year ago; this despite Vladimir Putin’s reelection and the stability that is supposed to bring.

--Russia is hosting the 2018 World Cup and it was announced this week the event would bring the nation nearly 1 million jobs. Russia needs to spend $10 billion on new stadiums and roads, before factoring in high-speed rail projects. It hasn’t been revealed yet which 12 cities will host the Cup. As for Russia hosting the 2014 Winter Olympics in Sochi, no word lately on just how far behind they are.

--Talk about a travel nightmare, due to staffing cuts as a result of government cutbacks, good luck getting through Heathrow and Gatwick. Comprehensive checks on every passenger entering Britain these days are causing massive gridlock, with some passengers being kept on board aircraft on the tarmac until congestion in arrival halls eases.

And this is just in time for the Olympics! Oh joy.

--For the record, Tokyo’s Nikkei index registered the best performance among leading international stock markets in the first quarter, up 19.3%. Spain was worst, down 6.5%.

--IRS Commissioner Douglas Shulman warned that next year’s tax filing could be disastrous if Congress waits until the end of the year or acts retroactively on expired tax laws owing to “total confusion” about existing tax law.

--U.S. crude oil in storage rose by 16.1 million barrels over the past two weeks, the biggest increase in absolute terms since March 2001. Meanwhile, Saudi Arabia has boosted its production to the highest level in 30 years, but as much as it wants the price to go down some in order to avoid triggering a global recession, the Saudis are using up too much of their supply domestically. In fact, Saudi Arabia now consumes more oil than Germany.

--Meanwhile, U.S. gas consumption is at an 11-year-low, down 4.3% from a year ago, which as the Wall Street Journal reports, is doing a number on independent gas stations. Station owners mark up what they pay for the fuel about 15 cents a gallon, but margins are slipping on card-processing fees, as well as less traffic for those selling other goods. It’s thus harder and harder to pay the rent or mortgage on their properties and one firm specializing in taking over distressed businesses told the Journal that it’s seen a 30% increase in gas-station defaults over the past two years.

--Macy’s Inc. was among the big retailers reporting strong March same-store sales, up 7.3%, far better than expected, as Chairman, President and CEO Terry Lundgren said in a statement, “The early warm weather drew attention to our outstanding assortments of fresh spring goods.” Yup, it was all about the weather. Target’s sales for the month were also up the same 7.3%.

--Facebook selected Nasdaq to list its shares, under the symbol “FB,” when it goes public, reportedly in May, though the timetable could stretch into June. Needless to say the New York Stock Exchange is disappointed. Facebook’s planned $5 billion issuance of stock would be the largest U.S. IPO ever on Nasdaq.

--Yahoo is laying off 2,000, or 14% of the workforce. This is the company’s sixth mass layoff in the past four years. Yahoo deserves to be enshrined in the StocksandNews Hall of Blowdom.

--Avon Products Inc. rejected a buyout offer from beauty company Coty Inc., the latter not being affiliated in any way with the kody-mundy of Mutual of Omaha’s Wild Kingdom fame.

--JPMorgan Chase & Co.’s Jamie Dimon picked up $23 million in cash and prizes for 2011. Dimon earned $49.9 million in 2007, before the crash. In his annual shareholder letter, Dimon blasted U.S. and international officials for making “the recovery worse than it otherwise would have been,” adding, “We have hundreds of rules, many of which are uncoordinated and inconsistent with each other. Complexity and confusion should have been alleviated, not compounded.”

--Richard Fisher, president of the Federal Reserve Bank of Dallas, and Harvey Rosenblum wrote an op-ed in the Wall Street Journal calling for a breakup of the big banks.

“Since the early 1970s, the share of assets controlled by the five largest banking institutions in the U.S. has tripled to 52% from 17%. With size came complexity, magnifying the opportunities for opacity, obfuscation and mismanaged risk.

“The phrase ‘too big to fail’ is misleading. It really means too complex to manage. Not just for top bank executives, but too complex as well for creditors and shareholders to exert market discipline. And too big and complex for bank supervisors to exert regulatory discipline when internal management discipline and market discipline are lacking.”

--For the archives, I forgot to note last time that Ray Dalio of Bridgewater Associates made more money than any other hedge fund manager in 2011, $3.9 billion. Bridgewater is the largest hedge fund in the world, with $70 billion in assets under management. Carl Icahn was next at $2.5 billion, followed by quant king James Simons of Renaissance Technologies, who made $2.1 billion. The wives and mistresses of these three are undoubtedly very proud of their beaus.

--Detroit evaded bankruptcy as it was able to restructure $13.2 billion in long-term debt. It will receive $137 million in needed cash in coming months to pay essential services, though city workers will have to make further concessions as Detroit slides into total oblivion.

[Statewide, Michigan has seen the steepest decline in state unemployment rates, from 10.7% in Feb. 2011 to 8.8% in Feb. 2012, owing to the ongoing rebound in the auto sector.]

--Molson Coors Brewing Co. is acquiring Central and East European brewer StarBev for $3.54 billion. StarBev holds the rights to brew or distribute such brands as Beck’s, Lowenbrau and my new premium favorite (in the ‘widely distributed’ category), Stella Artois. Now don’t get me wrong. If I’m feeling particularly wealthy, I’m still a Pilsner Urquell guy. Just haven’t had that many ‘premium’ days in the portfolio lately.

--Sales of Wheaties are down double digits for another year, as reported by Darren Rovell of CNBC. In the 1960s, Wheaties accounted for 6.5% of breakfast cereal sales in the U.S., but is now about 0.5% of the market. I have to say I never think to buy it, choosing different honey nut-type brands instead. Corn Flakes is also suffering; the two not being viewed as healthy enough for the Fiber One crowd.

Actually, I only eat cereal on Sunday mornings, opting for my chocolate frosted donut to go with my large black coffee at Dunkin’ Donuts, but enough about me.

--If you are eating right now, you may want to skip the next item. From the Sydney Morning Herald:

“An Australian woman told Monday how she was horrified to discover live maggots in a snack she was eating while on a Qantas flight from Los Angeles to Melbourne.

“Victoria Cleven began tucking into her snack of nuts and dried fruit…At the time, she did not turn on her overhead light as the cabin was darkened.

“ ‘It tasted strange, and I turned the light on and looked at the rest of the packet, and just started seeing maggots coming out of it everywhere,’ Cleven said.

“ ‘I couldn’t talk. I was nearly throwing up. I was beside myself.’

“Her 15-year-old son then checked two other packets of the snack and found they also were seething with maggots.”

Qantas issued an apology. “We’re speaking to the supplier of the trail mix to try to establish how it could have happened.”

OK…continuing right along…

--NBC signed Matt Lauer to a new multiyear contract to remain as the co-host of the “Today” show. Terms of the deal weren’t announced, but we had been told Lauer was seeking up to $30 million a year. [It’s probably closer to $15 million to $20 million.]

--David Letterman signed a new contract that will have him hosting his late-night program through 2014, which means he would break Johnny Carson’s record of 30 years. The Late Show With David Letterman began airing in August 1993, but he had previously hosted on NBC beginning in February 1982. Carson’s show ran from 1962-1992.

--So I didn’t even have a $2 winner among my ten Mega Millions tickets and I went spiraling into severe depression as a result, only to be cured of said ailment by my Mets winning on Opening Day, 1-0. But you know what? I’ll play again. I talked to a few lottery retailers afterwards and they all said the same thing. “You should have seen that last day. It was total amateur hour!” I didn’t concede I was one of the amateurs, not feeling a need to do so since I bought mine the day before.

But then we have what the New York Post has described as “The Maryland Mega-nut who insists she won a record Mega Millions jackpot (only she) says she’s lost the winning ticket – but isn’t breaking a sweat looking for it….

“The world’s most famous McDonald’s employee incredibly claimed she hadn’t even checked the uniform she was wearing the night she bought it.”

What a PR nightmare for McDonald’s. As much as I love the chain, I’m guessing this is a bad sign…the stock price has peaked for years to come.

One of you may have even consumed the ticket while eating your filet of fish sandwich, come to think of it.

Foreign Affairs

Iran: What a joke. So you know those nuclear energy program talks that were to take place April 13-14 in Turkey? Tehran balked, desiring them to be held in Iraq or, get this, Syria; two totally absurd choices that reveal how unserious Iran is. Iran then reportedly turned down three alternative European sites.

Turkish Prime Minister Erdogan, who had recently been in Iran to discuss the talks, called it a betrayal.

“You need to be honest,” he said. “Because of the lack of honesty, they keep losing credibility in the world. This is not the language of diplomacy, but another language. And that does not suit me.”

For its part, a hardline Iranian newspaper said “Turkey has lost its impartiality.” [New York Times]

Israeli Defense Minister Ehud Barak said this week of a strike on Iran:

“It is not needed within weeks but it is also not something that can wait a number of years. The Iranians are fortifying their facilities and moving deeper underground with every month that passes.”

Israeli Prime Minister Benjamin Netanyahu acknowledged sanctions were hurting Iran, but it was far from clear whether they would ultimately force Iran to back down.

Former Mossad chief Meir Dagan, he of the recent 60 Minutes segment, told the Jerusalem Post that Israel should trust Barack Obama when he says he will not let Iran build a nuclear bomb.

“If the U.S. president says that he is not going to allow Iran to reach nuclear capability, if we are not going to trust him, then who are we going to trust?”

Dagan repeated his view that a strike on Iran would not be able to halt Tehran’s drive for nuclear weapons, and that an attack would lead to a regional war through Iran’s proxies such as Hizbullah and Hamas.

But estimates delivered to the Israeli security cabinet the other day say that in the event of an Iranian attack on Israel, less than 300 people would be killed during three weeks of non-stop fighting on multiple fronts.

Syria: The UN Security Council urged Syria to implement “urgently and visibly” a peace plan earlier agreed upon that called for an April 10 deadline for ending a military offensive against the opposition.

But while Syria claimed all week it was pulling back ahead of the truce plan, which doesn’t require President Bashar al-Assad to leave power, Amnesty International claimed 232 had been killed by Syrian forces since Kofi Anna and Assad agreed to a timetable March 27. And the 232 figure was as of Tuesday. On Wednesday, at least another 54 were killed.

Michael Young / Daily Star (Beirut)

“What a shock it must have been for Kofi Annan to realize that the Syrian regime and opposition agree over nothing except to largely ignore his splendid little plan for ending the conflict in Syria.

“Annan, the United Nations-Arab League envoy, is no naïf. He did what all good diplomats do: He added a splash of reciprocity, a pinch of incentives, an aroma of consensus, and presto, he presented us with a more refined version of a failed Arab League plan crafted last November….

“Once Assad starts loosening his military grip on society, he will be finished. He has promised to respect a cease-fire as of April 10, but still hopes to beat the Syrians senseless to earn himself a breather and transact from a position of strength, with an opposition he selects….

“Assad rule is crumbling. The regime is on a conveyor belt of repression, and will be overwhelmed if it stops….

“The single workable strategy for Annan is to explicitly push for regime change in Syria, and to convince Russia that there is no substitute. The Russians must sense that it’s time for Plan B in Damascus. Their guy is not gaining. He has to keep killing just to avoid being killed.”

Fouad Ajami / Wall Street Journal

“For a year now, the people of Syria have been in the midst of a heroic struggle against a tyrannical regime, but no American help has come their way. Moral considerations aside, Syria is now a strategic battleground, a place where Iranian power challenges, by proxy, the moderate order of nations in the region. For three decades, the Iranian radical theocracy has waged campaigns of terror away from its soil….

“As the noted scholar of strategy Charles Hill put it, Syria is the ideal place to rattle the turbans. Were the Assad regime to bite the dust, the stranglehold of Hizbullah over Lebanon would come to an end….

“It had taken some five months for President Obama to call on Bashar al-Assad to relinquish power, but once that call was made we were reduced to mere spectators of the Syrian calamity. We exaggerated the might of the Assad killing machine, belittled the opposition, and doubting their purpose and cohesiveness, refrained from arming the defectors.

“American intelligence and policy statements could never get it right: Assad was, alternately, a dead man walking or firmly in the saddle. When a measure of ambiguity about American intentions could have aided the Syrian rebellion, the Pentagon and State Department went out of their way to reassure the despot in Damascus that there was nothing to worry about in Washington. No wonder the suspicion has grown that the Obama administration is content to see Assad ride out the storm.

“From this great contest, the administration wishes to be spared. Were Assad to fall, the claim could be made that the Obama wisdom had been vindicated, that an ‘organic’ Arab rebellion had prevailed. In the meantime, the agony of Homs and Hama, the popular upheaval against a monstrous tyranny, is left untended.

“Mr. Obama has never owned up to the fact that the cruel regimes in Tehran and Damascus were the ones he had been eager to court at the dawn of his presidency….

“History is perhaps forgiving nowadays, the Syrian rebellion could be crushed without Mr. Obama paying an appreciable political price. It is a sad truth that the president has become the embodiment, and the instrument, of our retreat from distant shores – and concerns. He trades away strategic American assets in the hopes that the American people will not care or notice. On the face of it, he exudes a sublime confidence that the world could be held at bay – at least until November past that last election.”

Lebanon: Lebanese Forces leader Samir Geagea escaped an assassination attempt when shots were fired at his residence, a dire sign considering how many political assassinations there have been in Lebanon the past decade. It was a professional attempt, as security forces later found the spot where the shots originated as Geagea was walking in his garden. Try a sniper(s) from “4 to 5 kilometers away.” Geagea’s allies include former Prime Minister Saad Hariri. Geagea is allied against the Hizbullah-led faction running the government these days.

Separately, tensions continue to mount on the 200-mile Syrian-Lebanese border as the Lebanese Army presence has increased, the military previously largely ignoring the area, not wanting to get involved in policing the traditional tribal conflicts and smuggling operations, but now they have no choice. I saw this on my trip to Baalbek in 2005. The Lebanese Army checkpoints only stretched so far before it became rather lawless.

Egypt: The Muslim Brotherhood’s choice as their presidential candidate, Khairat el-Shater, is a millionaire businessman well-known to the U.S. The first poll came out, which didn’t include Shater, and Mubarak era holdover, Amr Moussa, was in the lead, but worrisomely, radical Islamist (Salafist) Hazem Salah Abu Ismail, was a strong second.

While Ismail’s election would be devastating, Shater said this week that “Sharia was and will always be my first and final project and objective.”

It’s going to be difficult getting these two straight the next two or three months as the election is held, in two stages, but you’ll likely read many an article that Shater is the devil we know, so we’ll have to accept him and just pray Ismail doesn’t get in (Moussa could be left in the dust).

Understand that Shater had been imprisoned more than once under the Mubarak regime and the ruling military supreme council just dropped all past charges against Shater so he could run for president; which tells you a lot. The Brotherhood and military are battling over what influence the army will have after a new constitution is drafted.

And this late development…Omar Suleiman, the powerful spy chief under Mubarak, announced he was running for president. This shakes things up in a big way. More next week.

Iraq: Saudi newspapers strongly criticized the Iraqi government of Prime Minister Nouri al-Maliki over his criticism of the kingdom and Qatar for their calls to arm the Syrian opposition. One editor said, “Gulf (states) should boycott Maliki and his government,” calling for the “punishment of all who stand with the tyrant of Damascus, first and foremost Maliki’s government….Boycott him to prevent the emergence of a new Saddam or another Bashar.”

Another editorial stated: “Is Maliki a voice for Iran or the ruler of Iraq?”

Russia: There was another air disaster, this one a crash in Siberia that claimed over 30 lives, and there are calls for the dismissal of Transportation Minister Igor Levitin, who has been in charge since 2004 and has overseen a boom era in airport and rail projects, while at the same time at least 749 have been killed in civil aviation accidents since ’04. There have also been disasters on the waterways and the bombing of trains.

But switching gears, last week I wondered out loud if U.S. Ambassador to Russia, Michael McFaul, had used U.S. taxpayer funds to bring in a yodeler for a party at the embassy. Now I really want an answer.

For starters, Ambassador McFaul is a total clown, the more I read of the guy, as he bitches and moans on his Twitter account about being spied on by Russian authorities. Well of course you are. You’re in Moscow!

But McFaul is also criticizing pro-Kremlin television station NTV for following him with its cameras, which I don’t know if this is correct or not but such matters are best handled diplomatically, behind closed doors.

So now Russian Foreign Minister Sergei Lavrov, who is himself a royal pain in the ass, blasted McFaul for his “arrogance,” in this instance for remarks McFaul made about the contentious missile defense issue.

Again, we shouldn’t be reading of these disputes. These are to be left to the respective leaders of the two nations, not fought at the ambassadorial level.

The ambassador is supposed to be a nation’s eyes and ears. He or she needs to court the power elite, in a professional way so that the lines of communication remain open between the two respective heads of state; think former Soviet Ambassador Anatoly Dobrynin.

So back to McFaul and his yodeler. A few days after my diatribe last week, we learned via an investigation by the Washington Post’s Lisa Rein and Joe Davidson, that the General Services Administration, the government accounting watchdog, had itself spent $823,000 at a training conference for 300 West Coast employees at a casino resort in Henderson, Nevada, including $75,000 for a “team-building” exercise – the goal of which was to build a bicycle; as well as $6,325 “on commemorative coins in velvet boxes to reward all participants for their work on stimulus projects.” Oh brother. That reminds me of today’s penchant for handing every fourth-grader playing youth soccer a trophy, even if their team sucked.

Sen. Joseph Lieberman (I-Conn.) said of the report, which cost the chief of the GSA her job, the episode was “a stupid and infuriating waste of taxpayer dollars.” House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) said it reflects the “waste that exists in a bloated federal government.”

I will be writing Ms. Rein and Mr. Davidson on McFaul to see if they could check up on his yodeler and his seemingly extravagant behavior.

One other item…Moscow is furious that convicted Russian arms dealer Viktor Bout was sentenced to 25 years in prison by a Federal District Court judge in Manhattan.

Burma: I give the Obama administration major kudos when it comes to this place. In by-elections held last weekend, Burmese democracy leader and Nobel Peace Prize winner Aung San Suu Kyi, celebrated her victory.

“It is not so much our triumph as a triumph of the people, who have decided that they must be involved in the political process of this country…

“We hope that this will be the beginning of a new era, when there will be more emphasis on the role of the people in the everyday politics of our country.”

It was just two years ago, general elections took place under a cloud of fear and intimidation and the results were fraudulent.

But pressure on the military rulers to open up, beginning with the release of Suu Kyi after two decades under house arrest, paid off.

The issue now is, how far does the United States and the West go in lifting the crippling sanctions that have held Burma back? The U.S. appears to be taking it one step at a time, as it should.

But as I noted months ago, the real successes to date in Burma are not about relations with the U.S. as much as they are about Burmese-Chinese relations and the impact a freer and more democratic Burma will have on the China dynamic. Beijing is undoubtedly scared to death over political developments in a resource rich nation it has largely had its way with.

China: Speaking of which, after a three-day crackdown on microblogging sites that specialize in criticizing the government, Beijing lifted restrictions on them, having proved its point that it has the ability to shut down dissent any time it goes too far.

The crackdown was precipitated by the spreading of rumors of a coup, following the ouster of former Communist Party star Bo Xilai.

Bo and his wife are believed to be under house arrest in Beijing, while their son, who had been attending Harvard, is thought to have returned to Beijing last month to stay with his parents. You wonder how many students who thought they knew the kid really didn’t; as in didn’t know exactly who he was. One of the controversy’s concerning Bo Xilai is who was funding the child’s education, not just to Harvard, but also a British private school and then Oxford.

Meanwhile, the Liberation Army Daily, China’s top military newspaper, had a front-page commentary on Friday that left no doubt the party leadership wants the People’s Liberation Army focused on their job, not politics and coup rumors.

“(Soldiers should) resolutely resist the incursion of all kinds of erroneous ideas, not be disturbed by noise, not be affected by rumors, and not be drawn by undercurrents, and ensure that at all times and under all circumstances the military absolutely obeys the command of the Party central leadership, the Central Military Commission and Chairman Hu.”

Earlier, the paper had stated:

“Conscientiously resist all kinds of mistaken words and actions damaging to the party’s image and unity, and do not heed or believe all kinds of hearsay and dark stories.”

You think someone is worried in Beijing?

France: Two weeks from tomorrow, Sunday, is the first round in the French presidential election and the latest poll shows Socialist candidate Francois Hollande regaining some momentum as his lead in a run-off is back to 12 points, 56-44, compared to the previous week where the lead had shrunk to 8, 54-46 over President Nicolas Sarkozy.

Sarkozy, who is a master at co-opting whatever positions he deems appropriate at the time, further sought to enhance his security credentials in having two Islamists expelled from France, while ordering the deportation of three others. Within hours of Sarkozy’s decision, an imam and a militant had boarded flights to their countries of origin. Well that’s efficient, I think you’d agree. As the London Times noted, “The speed of the move contrasted with Britain’s difficulties in deporting Abu Qatada, the Islamist militant released from custody in February.”

Sarkozy said at an election rally: “I am giving a warning which is very clear and which must be heard. Anyone who makes comments contrary to the values of the French Republic will be instantly removed from French territory. There will be no exceptions, there will be no indulgence.”

So the president takes support from the far right National Front, led by Marine Le Pen, with his hard line against Islamists and immigration.

But now Sarkozy needs to take from the Left so he suddenly says he might pull out of the recent European Union fiscal compact unless some trade policies contained therein are changed.

“I want a Europe that protects its citizens. I no longer want this savage competition.”

This from a guy who has long said France needed to be more like Germany, to compete to win economically, but now he’s talking of protectionism, “Buy French.”

Colombia: The Farc rebels released their last 10 police and military hostages – some of whom had spent 14 years in captivity, though Colombian President Santos said it still wasn’t enough for his government to open direct peace talks. Farc has been fighting the government for five decades, but the military has been achieving one success after another, which is pushing Farc to the brink.

Pakistan: Bizarre late story that an avalanche has buried 100 Pakistani soldiers on an army base in the Himalayas, along the Indian border. The base wasn’t supposed to be remotely in danger from such a disaster.

North Korea: The long-range missile is on the pad and being fueled. This could easily be the top story by end of next week. It’s just that for now, there has been nothing further to report on.

Random Musings

--Former Gov. Mitt Romney swept three primaries and has a basically insurmountable delegate lead. For the archives:

Romney took 70% of the vote in D.C. (where Rick Santorum wasn’t on the ballot) and defeated Santorum in Maryland 49-29, and Wisconsin 43-38.

In the delegate count [AP]:

Romney 658
Santorum 281
Gingrich 135
Paul 51 

So we now have a wait until April 24; primaries in Connecticut, Delaware, New York, Pennsylvania, and Rhode Island. Republican Party leaders want Santorum to quit, even if they aren’t outwardly saying so, but it hardly seems likely with his home state of Pennsylvania up next.

However, a survey released on Thursday by Public Policy Polling shows Romney with a 42-37 lead among likely GOP primary voters in Pennsy; up 17 points in the last month. Not exactly the kind of news Santorum wants to hear. If he does win, the calendar in May is favorable for him, with primaries in North Carolina, West Virginia, Arkansas, Kentucky and Texas. The former senator did concede, though, he was taking a four-day Easter break to contemplate his future.

For his part, Romney targeted President Obama in his victory speech in Milwaukee.

“This campaign is going to deal with many complicated issues but there is a basic choice we’re going to face. The president has pledged to transform America and he has spent the last four years building a government-centered society. I will spend the next four years rebuilding the foundation of an opportunity society led by free people and free enterprise.”

Romney also called into question Obama’s candor, bringing up the open mic episode with Russian President Dmitry Medvedev, and the president’s reversing course on his positions on corporate taxes, regulations and energy development only because it’s campaign season.

“He wants us to re-elect him so we can find out what he will actually do. With all the challenges the nation faces, this is not the time for President Obama’s hide-and-seek campaign.”

--In a USA TODAY/Gallup survey of 12 “swing states,” Obama holds a 51-42 lead over Romney; Romney having led in the same states, 48-46, in mid-February.

The two are statistically tied among men, with Romney ahead 48-47, but Obama leads among women 54-36. [Obama was favored among women voters by a 56-43 margin in his race with John McCain in 2008.]

Among all registered voters nationwide, Obama leads Romney 49-45, including 48-40 among independents.

And in a further worrisome sign for Republicans, just 43% of Romney voters say they’re enthusiastic about voting, compared with 56% who said so in January.

--A federal appeals court judge took umbrage at President Obama’s comment on the Supreme Court when he warned that if it overturned his signature health care overhaul it would amount to overreach by an “unelected” court.

U.S. 5th Circuit Court of Appeals Judge Jerry Smith, who was hearing oral arguments in a separate challenge to another aspect of Obamacare, said the president’s comments troubled a number of people who have read them as a challenge to the authority of the federal courts.

“I’m referring to statements by the president in the past few days to the effect…that it is somehow inappropriate for what he termed unelected judges to strike acts of Congress that have enjoyed, he was referring of course to Obamacare, to what he termed a broad consensus and majorities in both houses of Congress,” Smith told an attorney with the Justice Department.

It was on Monday that Obama issued his direct challenge to the Supreme Court, saying it wouldn’t take the “unprecedented” step of overturning a law passed by a strong majority of Congress.

“I want to be sure that you are telling us that the Attorney General and the Department of Justice do recognize the authority of the federal courts through unelected judges to strike acts of Congress or portions thereof in appropriates cases,” Smith said.

Editorial / Washington Post

“President Obama’s comments Monday about the Supreme Court were jarring. If the court were to strike down the health-care law, Mr. Obama said, it would be a blatant example of judicial activism. That ‘an unelected group of people would somehow overturn a duly constituted and passed law,’ the president said, would be ‘an unprecedented, extraordinary step.’ Well, not exactly, and the comments strayed perilously close to a preemptive strike on the court’s legitimacy if it were to declare the individual mandate unconstitutional.”

--Charles Krauthammer / Washington Post

“ ‘Unprecedented?’ Judicial review has been the centerpiece of the American constitutional system since Marbury v. Madison in 1803. ‘Strong majority’? The House has 435 members. In March 2010, Democrats held a 75-seat majority. Obamacare passed by seven votes.

“In his next-day walk back, the president implied that he was merely talking about the normal ‘restraint and deference’ the courts owe the legislative branch. This concern would be touching if it weren’t coming from the leader of a party so deeply devoted to the ultimate judicial usurpation – Roe v. Wade, which struck down the abortion laws of 46 states – that fealty to it is the party’s litmus test for service on the Supreme Court.

“With Obamacare remaking one-sixth of the economy, it would be unusual for the Supreme Court to overturn legislation so broad and sweeping. On the other hand, it is far more unusual to pass such a fundamentally transformative law on such a narrow, partisan basis.

“Obamacare passed the Congress without a single vote from the opposition party – in contradistinction to Social Security, the Civil Rights Act, the Voting Rights Act, Medicare and Medicaid, similarly grand legislation, all of which enjoyed substantial bipartisan support. In the Senate, moreover, Obamacare squeaked by through a parliamentary maneuver called reconciliation that was never intended for anything so sweeping. The fundamental deviation from custom and practice is not the legal challenge to Obamacare but the very manner of its enactment….

“Democrats are reeling. Obama was so taken aback, he hasn’t even drawn up contingency plans should his cherished reform be struck down. Liberals still cannot grasp what’s happened – the mild revival of constitutionalism in a country they’ve grown so used to ordering about regardless. When asked about Obamacare’s constitutionality, Nancy Pelosi famously replied: ‘Are you serious?’ She was genuinely puzzled.

“As was Rep. Phil Hare (D-Ill.). As Michael Barone notes, when Hare was similarly challenged at a 2010 town hall, he replied: ‘I don’t worry about the Constitution.’ Hare is now retired, having been shortly thereafter defeated for reelection by the more constitutionally attuned owner of an East Moline pizza shop.”

--Republican Senator Orrin Hatch (Utah) on Obama’s view of the Supreme Court:

“It must be nice living in a fantasy world where every law you like is constitutional and every Supreme Court decision you don’t is ‘activist.’”

--Peggy Noonan / Wall Street Journal

“Something’s happening to President Obama’s relationship with those who are inclined not to like his policies. They are now inclined not to like him. His supporters would say, ‘Nothing new there,’ but I actually think there is. I’m referring to the broad, stable, non-radical, non-birther right. Among them the level of dislike for the president has ratcheted up sharply the past few months.

“It’s not due to the election, and it’s not because the Republican candidates are so compelling and making such brilliant cases against him. That, actually, isn’t happening.

“What is happening is that the president is coming across more and more as a trimmer, as an operator who’s not operating in good faith. This is hardening positions and leading to increased political bitterness. And it’s his fault, too. As an increase in polarization is a bad thing, it’s his fault….

“Events of just the past 10 days have contributed to the shift. There was the open-mic conversation with Dmitry Medvedev in which Mr. Obama pleaded for ‘space’ and said he will have ‘more flexibility’ in his negotiations once the election is over and those pesky voters have done their thing. On tape it looked so bush-league, so faux-sophisticated. When he knew he’d been caught, the president tried to laugh it off by comically covering a mic in a following meeting. It was all so…creepy….

“If you jumped into a time machine to the day after the election, in November 2012, and saw a headline saying ‘Obama Loses,’ do you imagine that would be followed by widespread sadness, pain and a rending of garments? You do not. Even his own supporters will not be that sad. It’s hard to imagine people running around in 2014 saying, ‘If only Obama were president!’ Including Mr. Obama, who is said by all who know him to be deeply competitive, but who doesn’t seem to like his job that much. As a former president he’d be quiet, detached, aloof. He’d make speeches and write a memoir laced with a certain high-toned bitterness. It was the Republicans’ fault. They didn’t want to work with him.

“He will likely not see even then that an American president has to make the other side work with him. You think Tip O’Neill liked Ronald Reagan?  You think he wanted to give him the gift of compromise? He was a mean, tough partisan who went to work every day to defeat Ronald Reagan. But forced by facts and numbers to deal, he dealt. So did Reagan.

“An American president has to make cooperation happen.

“But we’ve strayed from the point. Mr. Obama has a largely nonexistent relationship with many, and a worsening relationship with some.

“Really, he cannot win the coming election. But the Republicans, still, can lose it. At this point in the column we usually sigh.”

--Trayvon Martin fallout, continued…

I’ve said my piece…here are the thoughts of others.

Patrick J. Buchanan:

“If it had been a white teenager who was shot, and a 28-year-old black guy who shot him, the black guy would have been arrested.

“So assert those demanding the arrest of George Zimmerman, who shot and killed Trayvon Martin.

“And they may be right.

“Yet if Trayvon had been shot dead by a black neighborhood watch volunteer, Jesse Jackson would not have been in a pulpit in Sanford, Fla., howling that he had been ‘murdered and martyred.’

“Maxine Waters would not be screaming ‘hate crime.’

“Rep. Hank Johnson would not be raging that Trayvon had been ‘executed.’ And ex-Black Panther Bobby Rush would not have been wearing a hoodie in the well of the House.

“Which tells you what this whipped-up hysteria is all about….

“It is about the exacerbation of and the exploitation of racial conflict….

“The real America is a country where the black crime rate is seven times as high as the white rate. It is a country where white criminals choose black victims in 3 percent of their crimes, but black criminals choose white victims in 45 percent of their crimes….

“As Heather MacDonald of the Manhattan Institute has written, from January to June 2008 in New York City, 83% of all identified gun assailants were black and 15% were Hispanics…

“But now that it is being investigated by a special prosecutor, the FBI, the Justice Department and a coming grand jury, what is the purpose of this venomous portrayal of George Zimmerman?

“As yet convicted of no crime, he is being crucified in the arena of public opinion as a hate-crime monster and murderer.

“Is this our idea of justice?

“No. But if the purpose here is to turn this into a national black-white face-off, instead of a mutual search for truth and justice, it is succeeding marvelously well.”

Shelby Steele / Wall Street Journal

“(Trayvon’s) sad fate clearly sent a quiver of perverse happiness all across America’s civil rights establishment, and throughout the mainstream media as well. His death was vindication of the ‘poetic truth’ that these establishments live by. Poetic truth is like poetic license where one breaks grammatical rules for effect. Better to break the rule than lose the effect. Poetic truth lies just a little; it bends the actual truth in order to highlight what it believes is a larger and more important truth.

“The civil rights community and the liberal media live by the poetic truth that America is still a reflexively racist society, and that this remains the great barrier to black equality. But this ‘truth’ has a lot of lie in it. America has greatly evolved since the 1960s. There are no longer any respectable advocates of racial segregation.   And blacks today are nine times more likely to be killed by other blacks than by whites….

“There is now a long litany of racial dust-ups – from Tawana Brawley to the Duke University lacrosse players to the white Cambridge police officer who arrested Harvard professor Skip Gates a summer ago – in which the poetic truth of white racism and black victimization is invoked so that the actual truth becomes dismissible as yet more racism.

“When the Cambridge cop or the Duke lacrosse players or the men accused of raping Tawana Brawley tried to defend themselves, they were already so stained by poetic truth as to never be entirely redeemed. No matter the facts – whether Trayvon Martin was his victim or his assailant – George Zimmerman will also never be entirely redeemed.”

NBC News reported on Thursday that previous phone calls George Zimmerman placed to police, non-911 audiotapes, prove that Zimmerman was not racial profiling in his job as neighborhood  watch volunteer.

--A Pew Research Center poll found that 43% of whites in general say enough is enough when it comes to media coverage of the Trayvon Martin case. 56% of Republicans are fed up, just 25% of Democrats are. 16% of blacks say they’ve had enough as well.

A USA TODAY/Gallup survey revealed a divide along racial lines. 73% of blacks said they believe George Zimmerman would have been arrested if Trayvon was white, while 33% of whites agreed. The majority of whites polled – 52% - said race made no difference in the case.

--I like Defense Secretary Leon Panetta, but the following is yet further fodder for those screaming about the federal deficit.

It was just revealed by defense officials that Panetta has made at least 27 personal trips to his home in California since taking over the Pentagon in July, and he’s paid about $17,000, total, for those round-trip excursions, while each one costs the Pentagon about $32,000, or $860,000.

Panetta is required to take Air Force aircraft because they have the secure communications equipment he needs to stay in constant contact with the president and other top officials. All understandable…but still…it’s outrageous.

--In a book by Mike Allen and Evan Thomas, who’ve been following the presidential campaign from the beginning, an operative told the authors of “Inside the Circus” that Texas Gov. Rick Perry was hampered by powerful painkillers in the aftermath of back surgery that affected his behavior and performance. It was evidently well-known in campaign circles that Perry was reliant on powerful medication just to be able to stand during two-hour debates, which certainly explains some of his statements during this time.

--The eastern two-thirds of the nation saw thousands of temperature records fall in March, helping to make it the warmest March on record, nationwide. It was the warmest March on record here in New Jersey, and it was the warmest first quarter on record for Jersey as well.  

Britain had its third-warmest March since records began in 1659!

--Turkey is asking museums such as the J. Paul Getty Museum, the Metropolitan Museum of Art, and the Cleveland Museum of Art to return some of its antiquities.

Time to give it back, boys. Start with the guys and girls missing an arm or head. The Venus de Milo is the only armless dame worth a damn and she’s already ensconced in the Louvre.

--In catching up on some reading (I never fully catch up, actually), the following from a look back at William L. Shirer’s 1960 “The Rise and Fall of the Third Reich” by Ron Rosenbaum in the February issue of Smithsonian struck me, especially when one thinks about today’s world.

“Of course, few ideas were more stupid and evil than Hitler’s notion of his own divine destiny, forbidding, for instance, even tactical retreats. ‘This mania for ordering distant troops to stand fast no matter what their peril,’ Shirer writes, ‘…was to lead to Stalingrad and other disasters and to help seal Hitler’s fate.’

“Indeed, the foremost object lesson from rereading Shirer’s remarkable work 50 years on might be that the glorification of suicidal martyrdom, its inseparability from delusion and defeat, blinds its adherents to anything but murderous faith – and leads to little more than the slaughter of innocents.

“And, yes, perhaps one corollary that almost need not be spelled out: There is danger in giving up our sense of selfhood for the illusory unity of a frenzied mass movement, of devolving from human to herd for some homicidal abstraction. It is a problem we can never be reminded of enough, and for this we will always owe William Shirer a debt of gratitude.”

---

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

God bless America. Happy Easter!
---

Gold closed at $1630…lowest close in 12 weeks
Oil, $103.31

Returns for the week 4/2-4/6

Dow Jones -1.1% [13060]
S&P 500 -0.7% [1398]
S&P MidCap -1.0%
Russell 2000 -1.5%
Nasdaq -0.4% [3080]

Returns for period 1/1/12-4/6/12

Dow Jones +6.9%
S&P 500 +11.2%
S&P MidCap +12.0%
Russell 2000 +10.4%
Nasdaq +18.2%

Bulls 52.7
Bears 21.5 [Source: Investors Intelligence…spread of over 30 between bulls and bears normally a warning sign.]

Dr. Bortrum posted a new column.

Don’t forget the official StocksandNews iPad app… recommended for children between ages 8-14, and adults 40-54.

Have a great week. I appreciate your support.

Brian Trumbore



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Week in Review

04/07/2012

For the week 4/2-4/6

[Posted 6:00 AM ET]

Europe, Washington and Wall Street

Hope you enjoyed your little break from the European debt crisis because it’s back. First, Europe needs growth and there is none. Second, Europe needs a major firewall to shoot down the vultures who are circling Spain and, to a slightly lesser extent, Italy. Europe’s existing firewall is insufficient to deal with either one, if you look at the numbers honestly, let alone both at the same time. Third, both Italy and Spain desperately need real labor reform, but with Italian “superstar” Prime Minister Mario Monti caving into parliament and signing off on very weak measures, and Spain’s parliament not likely to accept anything approaching what’s needed there, the crisis will be hitting full force before long.

This week, Spain’s 10-year bond traded with a yield over 5.80%, the highest since December, while Italy’s 10-year was back up to 5.50%. If both economies were growing at 2% to 3%, you could live with those rates when weighing future refinancing needs, but knowing both are in recession, with Spain basically in depression when you consider its new record high 23.6% unemployment rate (50% among the youth), there is no way yields will remain below 6.00%.

But you know all those stories about the LTROs, the long-term refinancing operations? If I told you both Italian and Spanish paper is now at yields higher than December, what does that mean? It means the banks that sopped up all the essentially free cash and then reinvested it in higher yielding Spanish and Italian government debt, which is what the European Central Bank wanted the financial institutions to do, now have losses on those very same bonds, in some cases substantial ones. Which means what? The capital structure of these banks could be screwed up all over again. Which means what? If rates continue to inch higher, and the losses on the paper grow, they’ll have to raise more capital! Where will they find said capital? Beats the crap out of me. Cue the Homer Simpson blank stare.

I mean think about it. Europe legitimately thought that with the two LTROs, they bought about a year or so to get their fiscal house in order, helped by the fact that by year end, most euro economies would be back in solid growth mode. Well, the state of calm lasted about a quarter.

And if you think various euro nations, such as Germany, Finland and the Netherlands, are anxious to put their taxpayers further on the hook to increase the size of the firewall for Italy and Spain, then you’re just not dealing with reality.

But here are some stats on the euro-region economy, as if you needed more bad news.   The PMI on manufacturing for the 17 nations sharing the currency came in at 47.7 for March vs. 49 in February. Germany was at 48.4, a 3-month low; France at 46.7, a 33-month low; Spain at 44.5; and Greece, 41.3, to name a few.

The eurozone unemployment rate hit 10.8% in February (latest available), the highest in 14+ years. You saw Spain’s rate. Italy’s, at 9.3%, is a cycle high, plus youth unemployment there is 32%. [The good figures come from Austria, just 4.2%; Netherlands, 4.9%; and Germany, 5.7%.]

Spain’s parliament is debating $36 billion in further austerity cuts, as mandated by the ECB and EC, but its big problem is the ‘regions,’ who represent 50% of government spending. The central government is reasonably transparent (from what I know) in its finances, but the regions are hopelessly corrupt. It was the regions, after all, that fueled the housing bubble which I documented so well in this space; one in which the level of corruption between the developers and municipal governments was off the charts, both being in cahoots with the banks; all three hiding the damage on their respective books. Actually, the developers didn’t keep any books. They just left town.

No wonder Spain’s Prime Minister Rajoy, who’s wondering why he wanted the job, said his nation was in “extreme difficulty.”

Then there is Greece. You remember them. A heartbreaking event occurred this week as a 77-year-old pensioner shot himself in the head outside parliament, not wanting to leave his family with debts. It’s the kind of tragedy that galvanizes a nation. In the alleged suicide note, he said:

“The government has annihilated all traces for my survival, which was based on a very dignified pension that I alone paid for 35 years with no help from the state.

“And since my advanced age does not allow me a way of dynamically reacting…I see no other solution than this dignified end to my life, so I don’t find myself fishing through garbage cans for my sustenance.”

Crowds soon formed and there were violent, albeit small, clashes with riot police; but these particular demonstrations could grow as they now have a symbol of their despair.

Washington

Stocks finished lower for this holiday-shortened week, and are likely to open lower on Monday, following a disappointing jobs report for March, with the economy only adding 120,000 jobs when 205,000 was the consensus estimate. [The unemployment rate ticked down to 8.2% from 8.3% only because the labor pool shrunk; as in more people stopped looking.] 

While the stock market was closed, Friday, the futures market was open and stocks dropped 1% or thereabouts, foretelling Monday’s open.

Federal Reserve Chairman Ben Bernanke looks a little prescient (for once) as he’s been warning the recent employment gains could fizzle, and the Fed’s minutes from its March 13 meeting did indicate that some members of the Open Market Committee were concerned “additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below” 2%.

So while at the time the financial markets took the March minutes as a sign there was decreased urgency for further stimulus, or QE3, with Friday’s poor jobs data, QE3 could be back on the table and that in turn could help soften the blow on Monday.

One thing is for sure. The economy has slowed, despite strong largely weather-related auto and retail sales.

But this was a week where everyone all at once seemed to focus on the deficit, and the looming train wreck following the election and a lame duck Congress that will be faced with deciding the fate of the Bush tax cuts, limits to entitlement spending, and the automatic budget cuts already planned, the “sequester” that takes effect Jan. 1 unless Congress acts beforehand. Plus, there is a very good chance we’ll have another debt ceiling debate, not just prior to year end, but possibly before the election itself.

So we’re talking about a truly tumultuous finish to the year, which will begin to give people the heebie-jeebies no later than mid-summer…as in I like my call for a crash, as first enunciated middle of last year, better and better. A crash, you understand, exacerbated by the computer program/high-frequency traders that the SEC, almost two years after the Flash Crash, is still just “investigating.” I mean seriously, folks, I don’t mention the articles that come almost every week talking of a new SEC investigation because the bottom line is they haven’t done anything, and these HFT players will one day screw us all worse than before.

Mohamed El-Erian / Financial Times

“The hesitancy (in hiring) is understandable, particularly given the uncertain outlook for demand. American consumers, as a group, still carry too much debt and have to cope with higher oil prices. The prospects for exports, which have grown markedly, are gradually dimming now that the rest of the world is slowing. Meanwhile, policymakers have yet to find a way to deal properly with a year-end fiscal cliff, the result of Washington’s repeated inability to design coherent fiscal policy….

“After a period of relative calm, Friday’s employment report should again sound alarm bells in many parts of Washington. The combined risk of an unemployment problem that is increasingly structural in nature and a rate that is bottoming out way too soon is bad news. It is the last thing America and, more broadly, the global economy need, especially at a time when Europe remains fragile.

“The hope is that Friday’s report will act as a catalyst for a renewed initiative on the part of Congress and the administration to lift the impediments to growth that have been repeatedly identified yet never suitably treated. More likely, however, is that political bickering and dithering may again deliver a depressingly familiar seasonal pattern that undermines the wellbeing of millions and renders the subsequent recovery even more difficult to secure.”

Speaking of bickering, President Obama blasted the House Republican budget of Rep. Paul Ryan (Wis.), calling it a “radical proposal,” a “Trojan horse” and “a prescription for decline.”

“This is now the party’s governing platform. It is thinly veiled social Darwinism.”

House Speaker John Boehner replied:

“Instead of reaching across the aisle to enact the changes needed to restore America’s prosperity, the president has resorted to distortions and partisan potshots, and recommitted himself to policies that have made our country’s debt crisis worse.”

What’s so incredibly stupid, and infuriating, about this debate is that broadly speaking we are only talking about reducing the rate of growth in the federal budget. But President Obama is flat-out lying in his descriptions of the Ryan plan. Nor does he refuse to level with the American people on entitlements, let alone his fellow Democrats, among which, in case you haven’t noticed, is not one…not one…leader among the bunch these days. Congressman Chris Van Hollen? Puh-leeze.

Editorial / Wall Street Journal

“The President’s depiction of the wonkish and formerly obscure House Budget Chairman as some political monster is itself telling. Mr. Obama is conceding that he can’t run on the economic recovery, the stimulus, health care, green energy or any of the other grand liberal ambitions that have dominated his time in office. All of those are unpopular or failures. He was elected on hope and change, but now his only hope is to change the subject to the ogres he claims are the disloyal opposition….

“The list of untrue things that Mr. Obama wants Americans to believe is evidently so long that Mr. Obama associated himself with Republicans, albeit mostly dead Republicans like Lincoln and Eisenhower. For the first time we can recall, Mr. Obama even praised George W. Bush, of all people, because his predecessor created a new entitlement for prescription drugs. He also said Newt Gingrich showed how smart he was when he called Mr. Ryan’s budget ‘radical’ and ‘right-wing social engineering’ last year.

“All of this in a political fable carefully constructed to erase the record of the last three years and blame every current anxiety on a GOP House that has been in office for all of 14 months. The President claims to have ‘eliminated dozens of programs that weren’t working,’ but the savings from these eliminations amount to less than 0.1% of the budget, or less than $100 million.

“Meanwhile, the budget has grown by more than 20% since he has been President. After deficits of $1.412 trillion, $1.293 trillion, and $1.299 trillion over the last three years, and an estimated $1.326 trillion due for 2012, he still claims the deficits are all Mr. Bush’s fault – except for the extra spending on Medicare, which he likes.

“It is especially rich of Mr. Obama to accuse Republicans of breaking last summer’s debt-limit deal – given that even the most sympathetic press accounts that are now emerging make it clear that the President blew up his ‘big deal’ with John Boehner. The House Speaker was prepared to trade higher taxes for mostly notional changes to entitlements, but Mr. Obama thought he could roll him at the last minute for even greater tax increases….

“The last two days have revealed Mr. Obama at his least appealing – and least Presidential – first warning the Supreme Court not to dare overturn his health-care law, and now demonizing the motives of his political opposition. It is a long, long way from his ‘there’s no red America, there’s no blue America’ stuff of 2004, much less the inspiration of 2008.

“If nothing else, Americans are getting a preview of the rhetorical uplift, the bipartisan problem-solving, and the unifying national purpose that would attend another four years.”

Street Bytes

--The Dow Jones fell 1.1% for a second time in three weeks, closing at 13060, while the S&P 500 lost 0.7% and Nasdaq declined 0.4%, just the second losing week for Nasdaq in 2012.

--U.S. Treasury Yields

6-mo. 0.13% 2-yr. 0.31% 10-yr. 2.05% 30-yr. 3.22%

Bonds staged a huge rally on the long end following Friday’s poor jobs report.

In other economic news, the March ISM reading on manufacturing came in at 53.4 vs. 52.4 in February, while the March ISM service sector reading was 56.0, slightly less than expectations, though still solid.

--Automakers in the U.S. posted the best sales month in nearly five years, selling about 1.4 million vehicles as a combination of good weather, the desire for more fuel-efficient vehicles and the simple fact the average car in the country is ten years old, drove sales. The March total of 1.47 million was the best since August 2007.

Chrysler Group’s sales rose 34%, Ford’s were up 5% for its best March since 2007, and GM’s rose 12%.

Volkswagen’s U.S. sales, up 34.6%, represented the best March for the automaker since 1973. Nissan’s, up 12.5%, hit a record level for any month in the company’s history. Kia Motors saw a 30.2% gain for its largest monthly total ever. Hyundai’s, up 12.7%, were a monthly record as well.

Toyota’s sales in March rose 15.4% as it continues a comeback from the 2011 tsunami and earthquake. But Honda Motor was the only player to see a decline, down 5%, as demand sagged for its flagship Accord and Civic models.

--Ford announced it would spend $500 million to turn the inland Chinese powerhouse city of Chongqing into its major manufacturing facility for passenger cars – Chongqing having been led by Bo Xilai before he was removed from office (see latest below). Ford has a target of 1.3 million vehicle sales in China by the end of the decade.

Meanwhile, GM reported its March sales in China rose 11% from a year earlier to nearly 258,000 vehicles, 745,000 for the first quarter, up 8.7%.

--Speaking of China…in a highly significant move, the China Securities Regulatory Commission announced that international fund managers would be allowed in invest up to $80 billion in China’s onshore capital markets – up from a current limit of $30 billion; also increasing the amount that foreign investors can raise in Hong Kong for investment back on the mainland.

At the same time, Premier Wen Jiabao said the nation’s biggest state-run banks had grown too much and needed to be broken up.

“Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital.

“That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly.”

And I noticed some animal spirits were returning, albeit in a haphazard way, to the China small-cap sector. Even my own main holding there stirred some.

--China’s service sector PMI rose to 58.0 from 57.3 in February (and 55.7 in January), though the service sector here is just 45% of the economy, far less a percentage than most developed nations. Nonetheless, coupled with the 53.1 PMI reading on manufacturing for March, it certainly doesn’t look like a hard landing, sports fans. A government official, one of those in the know, wink wink, estimated first-quarter GDP would come in around 8.4%. Morgan Stanley raised its 2012 estimate of growth in China to 9% from 8.4%.

--China’s Vice-Premier Li Keqiang, who is slated to take over for Wen Jiabao, said the government will stick to its policy goal of stabilizing economic growth while curbing inflation.

“The fundamentals of the Chinese economy remain good and the momentum of economic growth has not changed. We will be able to maintain steady and relatively fast development in the long term.

“Expanding domestic consumption is our top priority in adjusting the economic structure.”

However, while…

“The world economy is showing some signs of recovery, (the) deep impact from the global financial crisis has not disappeared and Europe’s sovereign debt crisis lingers.” 

Importantly, Li met with his Taiwanese counterpart, “with sources attending the meeting saying both sides were positive about boosting trade and financial ties.” [South China Morning Post]

--Gaming revenue in Macau for the month of March rose a solid 24.4%, another strong sign there will be no hard landing in China. One analyst believes gaming revenue will rise 20% this year, which would be terrific after it rose 42% in 2011. Sands Cotai Central, a $4 billion casino, hotel and shopping complex, opens April 11, which won’t hurt matters. 

For the first quarter, revenue was 27% higher than last year. 60% of the tourists to Macau were from the mainland.

--China has surpassed the U.S. as the world’s largest market for food and grocery retail, surpassing the U.S., according to research put out by IGD. I have a small position in a Chinese company that continues to increase its exposure to this sector, and it just reported super earnings, yet still trades at a P/E of one.

--Auto sales for the month of March in Japan soared 78% from year earlier levels, as government subsidies for fuel-efficient cars carried the day, while the comparison was of course helped by putrid sales in March 2011 as a result of the twin disasters.

--India’s economy is definitely in slowdown mode as its PMI reading on manufacturing hit 54.7 in March, down from February’s 56.6 and 57.5 in January. Shortages of some raw materials, such as coal, aren’t helping. One major issue hurting India is the infrastructure for bringing finished goods to market is still awful.

--Canada added its most jobs since September 2008 last month as the unemployment rate dipped to 7.2%.  

Editorial / Wall Street Journal

“Not too many years ago, Americans could get away with cracking jokes about spendthrift Canada, its weak dollar and the long wait for MRIs. These days, the joke is on Americans, as Canada’s government has cleaned up its fiscal mess and focused on private economic growth.”

Bottom line, when it comes to fiscal responsibility, and energy policy, a true vision for the future, Canada is kicking our butt all over the place.

That’s Canada…the best alternative to the United States.

--The Russian Central Bank reported that capital outflows reached $35 billion in the first quarter, almost double the rate of a year ago; this despite Vladimir Putin’s reelection and the stability that is supposed to bring.

--Russia is hosting the 2018 World Cup and it was announced this week the event would bring the nation nearly 1 million jobs. Russia needs to spend $10 billion on new stadiums and roads, before factoring in high-speed rail projects. It hasn’t been revealed yet which 12 cities will host the Cup. As for Russia hosting the 2014 Winter Olympics in Sochi, no word lately on just how far behind they are.

--Talk about a travel nightmare, due to staffing cuts as a result of government cutbacks, good luck getting through Heathrow and Gatwick. Comprehensive checks on every passenger entering Britain these days are causing massive gridlock, with some passengers being kept on board aircraft on the tarmac until congestion in arrival halls eases.

And this is just in time for the Olympics! Oh joy.

--For the record, Tokyo’s Nikkei index registered the best performance among leading international stock markets in the first quarter, up 19.3%. Spain was worst, down 6.5%.

--IRS Commissioner Douglas Shulman warned that next year’s tax filing could be disastrous if Congress waits until the end of the year or acts retroactively on expired tax laws owing to “total confusion” about existing tax law.

--U.S. crude oil in storage rose by 16.1 million barrels over the past two weeks, the biggest increase in absolute terms since March 2001. Meanwhile, Saudi Arabia has boosted its production to the highest level in 30 years, but as much as it wants the price to go down some in order to avoid triggering a global recession, the Saudis are using up too much of their supply domestically. In fact, Saudi Arabia now consumes more oil than Germany.

--Meanwhile, U.S. gas consumption is at an 11-year-low, down 4.3% from a year ago, which as the Wall Street Journal reports, is doing a number on independent gas stations. Station owners mark up what they pay for the fuel about 15 cents a gallon, but margins are slipping on card-processing fees, as well as less traffic for those selling other goods. It’s thus harder and harder to pay the rent or mortgage on their properties and one firm specializing in taking over distressed businesses told the Journal that it’s seen a 30% increase in gas-station defaults over the past two years.

--Macy’s Inc. was among the big retailers reporting strong March same-store sales, up 7.3%, far better than expected, as Chairman, President and CEO Terry Lundgren said in a statement, “The early warm weather drew attention to our outstanding assortments of fresh spring goods.” Yup, it was all about the weather. Target’s sales for the month were also up the same 7.3%.

--Facebook selected Nasdaq to list its shares, under the symbol “FB,” when it goes public, reportedly in May, though the timetable could stretch into June. Needless to say the New York Stock Exchange is disappointed. Facebook’s planned $5 billion issuance of stock would be the largest U.S. IPO ever on Nasdaq.

--Yahoo is laying off 2,000, or 14% of the workforce. This is the company’s sixth mass layoff in the past four years. Yahoo deserves to be enshrined in the StocksandNews Hall of Blowdom.

--Avon Products Inc. rejected a buyout offer from beauty company Coty Inc., the latter not being affiliated in any way with the kody-mundy of Mutual of Omaha’s Wild Kingdom fame.

--JPMorgan Chase & Co.’s Jamie Dimon picked up $23 million in cash and prizes for 2011. Dimon earned $49.9 million in 2007, before the crash. In his annual shareholder letter, Dimon blasted U.S. and international officials for making “the recovery worse than it otherwise would have been,” adding, “We have hundreds of rules, many of which are uncoordinated and inconsistent with each other. Complexity and confusion should have been alleviated, not compounded.”

--Richard Fisher, president of the Federal Reserve Bank of Dallas, and Harvey Rosenblum wrote an op-ed in the Wall Street Journal calling for a breakup of the big banks.

“Since the early 1970s, the share of assets controlled by the five largest banking institutions in the U.S. has tripled to 52% from 17%. With size came complexity, magnifying the opportunities for opacity, obfuscation and mismanaged risk.

“The phrase ‘too big to fail’ is misleading. It really means too complex to manage. Not just for top bank executives, but too complex as well for creditors and shareholders to exert market discipline. And too big and complex for bank supervisors to exert regulatory discipline when internal management discipline and market discipline are lacking.”

--For the archives, I forgot to note last time that Ray Dalio of Bridgewater Associates made more money than any other hedge fund manager in 2011, $3.9 billion. Bridgewater is the largest hedge fund in the world, with $70 billion in assets under management. Carl Icahn was next at $2.5 billion, followed by quant king James Simons of Renaissance Technologies, who made $2.1 billion. The wives and mistresses of these three are undoubtedly very proud of their beaus.

--Detroit evaded bankruptcy as it was able to restructure $13.2 billion in long-term debt. It will receive $137 million in needed cash in coming months to pay essential services, though city workers will have to make further concessions as Detroit slides into total oblivion.

[Statewide, Michigan has seen the steepest decline in state unemployment rates, from 10.7% in Feb. 2011 to 8.8% in Feb. 2012, owing to the ongoing rebound in the auto sector.]

--Molson Coors Brewing Co. is acquiring Central and East European brewer StarBev for $3.54 billion. StarBev holds the rights to brew or distribute such brands as Beck’s, Lowenbrau and my new premium favorite (in the ‘widely distributed’ category), Stella Artois. Now don’t get me wrong. If I’m feeling particularly wealthy, I’m still a Pilsner Urquell guy. Just haven’t had that many ‘premium’ days in the portfolio lately.

--Sales of Wheaties are down double digits for another year, as reported by Darren Rovell of CNBC. In the 1960s, Wheaties accounted for 6.5% of breakfast cereal sales in the U.S., but is now about 0.5% of the market. I have to say I never think to buy it, choosing different honey nut-type brands instead. Corn Flakes is also suffering; the two not being viewed as healthy enough for the Fiber One crowd.

Actually, I only eat cereal on Sunday mornings, opting for my chocolate frosted donut to go with my large black coffee at Dunkin’ Donuts, but enough about me.

--If you are eating right now, you may want to skip the next item. From the Sydney Morning Herald:

“An Australian woman told Monday how she was horrified to discover live maggots in a snack she was eating while on a Qantas flight from Los Angeles to Melbourne.

“Victoria Cleven began tucking into her snack of nuts and dried fruit…At the time, she did not turn on her overhead light as the cabin was darkened.

“ ‘It tasted strange, and I turned the light on and looked at the rest of the packet, and just started seeing maggots coming out of it everywhere,’ Cleven said.

“ ‘I couldn’t talk. I was nearly throwing up. I was beside myself.’

“Her 15-year-old son then checked two other packets of the snack and found they also were seething with maggots.”

Qantas issued an apology. “We’re speaking to the supplier of the trail mix to try to establish how it could have happened.”

OK…continuing right along…

--NBC signed Matt Lauer to a new multiyear contract to remain as the co-host of the “Today” show. Terms of the deal weren’t announced, but we had been told Lauer was seeking up to $30 million a year. [It’s probably closer to $15 million to $20 million.]

--David Letterman signed a new contract that will have him hosting his late-night program through 2014, which means he would break Johnny Carson’s record of 30 years. The Late Show With David Letterman began airing in August 1993, but he had previously hosted on NBC beginning in February 1982. Carson’s show ran from 1962-1992.

--So I didn’t even have a $2 winner among my ten Mega Millions tickets and I went spiraling into severe depression as a result, only to be cured of said ailment by my Mets winning on Opening Day, 1-0. But you know what? I’ll play again. I talked to a few lottery retailers afterwards and they all said the same thing. “You should have seen that last day. It was total amateur hour!” I didn’t concede I was one of the amateurs, not feeling a need to do so since I bought mine the day before.

But then we have what the New York Post has described as “The Maryland Mega-nut who insists she won a record Mega Millions jackpot (only she) says she’s lost the winning ticket – but isn’t breaking a sweat looking for it….

“The world’s most famous McDonald’s employee incredibly claimed she hadn’t even checked the uniform she was wearing the night she bought it.”

What a PR nightmare for McDonald’s. As much as I love the chain, I’m guessing this is a bad sign…the stock price has peaked for years to come.

One of you may have even consumed the ticket while eating your filet of fish sandwich, come to think of it.

Foreign Affairs

Iran: What a joke. So you know those nuclear energy program talks that were to take place April 13-14 in Turkey? Tehran balked, desiring them to be held in Iraq or, get this, Syria; two totally absurd choices that reveal how unserious Iran is. Iran then reportedly turned down three alternative European sites.

Turkish Prime Minister Erdogan, who had recently been in Iran to discuss the talks, called it a betrayal.

“You need to be honest,” he said. “Because of the lack of honesty, they keep losing credibility in the world. This is not the language of diplomacy, but another language. And that does not suit me.”

For its part, a hardline Iranian newspaper said “Turkey has lost its impartiality.” [New York Times]

Israeli Defense Minister Ehud Barak said this week of a strike on Iran:

“It is not needed within weeks but it is also not something that can wait a number of years. The Iranians are fortifying their facilities and moving deeper underground with every month that passes.”

Israeli Prime Minister Benjamin Netanyahu acknowledged sanctions were hurting Iran, but it was far from clear whether they would ultimately force Iran to back down.

Former Mossad chief Meir Dagan, he of the recent 60 Minutes segment, told the Jerusalem Post that Israel should trust Barack Obama when he says he will not let Iran build a nuclear bomb.

“If the U.S. president says that he is not going to allow Iran to reach nuclear capability, if we are not going to trust him, then who are we going to trust?”

Dagan repeated his view that a strike on Iran would not be able to halt Tehran’s drive for nuclear weapons, and that an attack would lead to a regional war through Iran’s proxies such as Hizbullah and Hamas.

But estimates delivered to the Israeli security cabinet the other day say that in the event of an Iranian attack on Israel, less than 300 people would be killed during three weeks of non-stop fighting on multiple fronts.

Syria: The UN Security Council urged Syria to implement “urgently and visibly” a peace plan earlier agreed upon that called for an April 10 deadline for ending a military offensive against the opposition.

But while Syria claimed all week it was pulling back ahead of the truce plan, which doesn’t require President Bashar al-Assad to leave power, Amnesty International claimed 232 had been killed by Syrian forces since Kofi Anna and Assad agreed to a timetable March 27. And the 232 figure was as of Tuesday. On Wednesday, at least another 54 were killed.

Michael Young / Daily Star (Beirut)

“What a shock it must have been for Kofi Annan to realize that the Syrian regime and opposition agree over nothing except to largely ignore his splendid little plan for ending the conflict in Syria.

“Annan, the United Nations-Arab League envoy, is no naïf. He did what all good diplomats do: He added a splash of reciprocity, a pinch of incentives, an aroma of consensus, and presto, he presented us with a more refined version of a failed Arab League plan crafted last November….

“Once Assad starts loosening his military grip on society, he will be finished. He has promised to respect a cease-fire as of April 10, but still hopes to beat the Syrians senseless to earn himself a breather and transact from a position of strength, with an opposition he selects….

“Assad rule is crumbling. The regime is on a conveyor belt of repression, and will be overwhelmed if it stops….

“The single workable strategy for Annan is to explicitly push for regime change in Syria, and to convince Russia that there is no substitute. The Russians must sense that it’s time for Plan B in Damascus. Their guy is not gaining. He has to keep killing just to avoid being killed.”

Fouad Ajami / Wall Street Journal

“For a year now, the people of Syria have been in the midst of a heroic struggle against a tyrannical regime, but no American help has come their way. Moral considerations aside, Syria is now a strategic battleground, a place where Iranian power challenges, by proxy, the moderate order of nations in the region. For three decades, the Iranian radical theocracy has waged campaigns of terror away from its soil….

“As the noted scholar of strategy Charles Hill put it, Syria is the ideal place to rattle the turbans. Were the Assad regime to bite the dust, the stranglehold of Hizbullah over Lebanon would come to an end….

“It had taken some five months for President Obama to call on Bashar al-Assad to relinquish power, but once that call was made we were reduced to mere spectators of the Syrian calamity. We exaggerated the might of the Assad killing machine, belittled the opposition, and doubting their purpose and cohesiveness, refrained from arming the defectors.

“American intelligence and policy statements could never get it right: Assad was, alternately, a dead man walking or firmly in the saddle. When a measure of ambiguity about American intentions could have aided the Syrian rebellion, the Pentagon and State Department went out of their way to reassure the despot in Damascus that there was nothing to worry about in Washington. No wonder the suspicion has grown that the Obama administration is content to see Assad ride out the storm.

“From this great contest, the administration wishes to be spared. Were Assad to fall, the claim could be made that the Obama wisdom had been vindicated, that an ‘organic’ Arab rebellion had prevailed. In the meantime, the agony of Homs and Hama, the popular upheaval against a monstrous tyranny, is left untended.

“Mr. Obama has never owned up to the fact that the cruel regimes in Tehran and Damascus were the ones he had been eager to court at the dawn of his presidency….

“History is perhaps forgiving nowadays, the Syrian rebellion could be crushed without Mr. Obama paying an appreciable political price. It is a sad truth that the president has become the embodiment, and the instrument, of our retreat from distant shores – and concerns. He trades away strategic American assets in the hopes that the American people will not care or notice. On the face of it, he exudes a sublime confidence that the world could be held at bay – at least until November past that last election.”

Lebanon: Lebanese Forces leader Samir Geagea escaped an assassination attempt when shots were fired at his residence, a dire sign considering how many political assassinations there have been in Lebanon the past decade. It was a professional attempt, as security forces later found the spot where the shots originated as Geagea was walking in his garden. Try a sniper(s) from “4 to 5 kilometers away.” Geagea’s allies include former Prime Minister Saad Hariri. Geagea is allied against the Hizbullah-led faction running the government these days.

Separately, tensions continue to mount on the 200-mile Syrian-Lebanese border as the Lebanese Army presence has increased, the military previously largely ignoring the area, not wanting to get involved in policing the traditional tribal conflicts and smuggling operations, but now they have no choice. I saw this on my trip to Baalbek in 2005. The Lebanese Army checkpoints only stretched so far before it became rather lawless.

Egypt: The Muslim Brotherhood’s choice as their presidential candidate, Khairat el-Shater, is a millionaire businessman well-known to the U.S. The first poll came out, which didn’t include Shater, and Mubarak era holdover, Amr Moussa, was in the lead, but worrisomely, radical Islamist (Salafist) Hazem Salah Abu Ismail, was a strong second.

While Ismail’s election would be devastating, Shater said this week that “Sharia was and will always be my first and final project and objective.”

It’s going to be difficult getting these two straight the next two or three months as the election is held, in two stages, but you’ll likely read many an article that Shater is the devil we know, so we’ll have to accept him and just pray Ismail doesn’t get in (Moussa could be left in the dust).

Understand that Shater had been imprisoned more than once under the Mubarak regime and the ruling military supreme council just dropped all past charges against Shater so he could run for president; which tells you a lot. The Brotherhood and military are battling over what influence the army will have after a new constitution is drafted.

And this late development…Omar Suleiman, the powerful spy chief under Mubarak, announced he was running for president. This shakes things up in a big way. More next week.

Iraq: Saudi newspapers strongly criticized the Iraqi government of Prime Minister Nouri al-Maliki over his criticism of the kingdom and Qatar for their calls to arm the Syrian opposition. One editor said, “Gulf (states) should boycott Maliki and his government,” calling for the “punishment of all who stand with the tyrant of Damascus, first and foremost Maliki’s government….Boycott him to prevent the emergence of a new Saddam or another Bashar.”

Another editorial stated: “Is Maliki a voice for Iran or the ruler of Iraq?”

Russia: There was another air disaster, this one a crash in Siberia that claimed over 30 lives, and there are calls for the dismissal of Transportation Minister Igor Levitin, who has been in charge since 2004 and has overseen a boom era in airport and rail projects, while at the same time at least 749 have been killed in civil aviation accidents since ’04. There have also been disasters on the waterways and the bombing of trains.

But switching gears, last week I wondered out loud if U.S. Ambassador to Russia, Michael McFaul, had used U.S. taxpayer funds to bring in a yodeler for a party at the embassy. Now I really want an answer.

For starters, Ambassador McFaul is a total clown, the more I read of the guy, as he bitches and moans on his Twitter account about being spied on by Russian authorities. Well of course you are. You’re in Moscow!

But McFaul is also criticizing pro-Kremlin television station NTV for following him with its cameras, which I don’t know if this is correct or not but such matters are best handled diplomatically, behind closed doors.

So now Russian Foreign Minister Sergei Lavrov, who is himself a royal pain in the ass, blasted McFaul for his “arrogance,” in this instance for remarks McFaul made about the contentious missile defense issue.

Again, we shouldn’t be reading of these disputes. These are to be left to the respective leaders of the two nations, not fought at the ambassadorial level.

The ambassador is supposed to be a nation’s eyes and ears. He or she needs to court the power elite, in a professional way so that the lines of communication remain open between the two respective heads of state; think former Soviet Ambassador Anatoly Dobrynin.

So back to McFaul and his yodeler. A few days after my diatribe last week, we learned via an investigation by the Washington Post’s Lisa Rein and Joe Davidson, that the General Services Administration, the government accounting watchdog, had itself spent $823,000 at a training conference for 300 West Coast employees at a casino resort in Henderson, Nevada, including $75,000 for a “team-building” exercise – the goal of which was to build a bicycle; as well as $6,325 “on commemorative coins in velvet boxes to reward all participants for their work on stimulus projects.” Oh brother. That reminds me of today’s penchant for handing every fourth-grader playing youth soccer a trophy, even if their team sucked.

Sen. Joseph Lieberman (I-Conn.) said of the report, which cost the chief of the GSA her job, the episode was “a stupid and infuriating waste of taxpayer dollars.” House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) said it reflects the “waste that exists in a bloated federal government.”

I will be writing Ms. Rein and Mr. Davidson on McFaul to see if they could check up on his yodeler and his seemingly extravagant behavior.

One other item…Moscow is furious that convicted Russian arms dealer Viktor Bout was sentenced to 25 years in prison by a Federal District Court judge in Manhattan.

Burma: I give the Obama administration major kudos when it comes to this place. In by-elections held last weekend, Burmese democracy leader and Nobel Peace Prize winner Aung San Suu Kyi, celebrated her victory.

“It is not so much our triumph as a triumph of the people, who have decided that they must be involved in the political process of this country…

“We hope that this will be the beginning of a new era, when there will be more emphasis on the role of the people in the everyday politics of our country.”

It was just two years ago, general elections took place under a cloud of fear and intimidation and the results were fraudulent.

But pressure on the military rulers to open up, beginning with the release of Suu Kyi after two decades under house arrest, paid off.

The issue now is, how far does the United States and the West go in lifting the crippling sanctions that have held Burma back? The U.S. appears to be taking it one step at a time, as it should.

But as I noted months ago, the real successes to date in Burma are not about relations with the U.S. as much as they are about Burmese-Chinese relations and the impact a freer and more democratic Burma will have on the China dynamic. Beijing is undoubtedly scared to death over political developments in a resource rich nation it has largely had its way with.

China: Speaking of which, after a three-day crackdown on microblogging sites that specialize in criticizing the government, Beijing lifted restrictions on them, having proved its point that it has the ability to shut down dissent any time it goes too far.

The crackdown was precipitated by the spreading of rumors of a coup, following the ouster of former Communist Party star Bo Xilai.

Bo and his wife are believed to be under house arrest in Beijing, while their son, who had been attending Harvard, is thought to have returned to Beijing last month to stay with his parents. You wonder how many students who thought they knew the kid really didn’t; as in didn’t know exactly who he was. One of the controversy’s concerning Bo Xilai is who was funding the child’s education, not just to Harvard, but also a British private school and then Oxford.

Meanwhile, the Liberation Army Daily, China’s top military newspaper, had a front-page commentary on Friday that left no doubt the party leadership wants the People’s Liberation Army focused on their job, not politics and coup rumors.

“(Soldiers should) resolutely resist the incursion of all kinds of erroneous ideas, not be disturbed by noise, not be affected by rumors, and not be drawn by undercurrents, and ensure that at all times and under all circumstances the military absolutely obeys the command of the Party central leadership, the Central Military Commission and Chairman Hu.”

Earlier, the paper had stated:

“Conscientiously resist all kinds of mistaken words and actions damaging to the party’s image and unity, and do not heed or believe all kinds of hearsay and dark stories.”

You think someone is worried in Beijing?

France: Two weeks from tomorrow, Sunday, is the first round in the French presidential election and the latest poll shows Socialist candidate Francois Hollande regaining some momentum as his lead in a run-off is back to 12 points, 56-44, compared to the previous week where the lead had shrunk to 8, 54-46 over President Nicolas Sarkozy.

Sarkozy, who is a master at co-opting whatever positions he deems appropriate at the time, further sought to enhance his security credentials in having two Islamists expelled from France, while ordering the deportation of three others. Within hours of Sarkozy’s decision, an imam and a militant had boarded flights to their countries of origin. Well that’s efficient, I think you’d agree. As the London Times noted, “The speed of the move contrasted with Britain’s difficulties in deporting Abu Qatada, the Islamist militant released from custody in February.”

Sarkozy said at an election rally: “I am giving a warning which is very clear and which must be heard. Anyone who makes comments contrary to the values of the French Republic will be instantly removed from French territory. There will be no exceptions, there will be no indulgence.”

So the president takes support from the far right National Front, led by Marine Le Pen, with his hard line against Islamists and immigration.

But now Sarkozy needs to take from the Left so he suddenly says he might pull out of the recent European Union fiscal compact unless some trade policies contained therein are changed.

“I want a Europe that protects its citizens. I no longer want this savage competition.”

This from a guy who has long said France needed to be more like Germany, to compete to win economically, but now he’s talking of protectionism, “Buy French.”

Colombia: The Farc rebels released their last 10 police and military hostages – some of whom had spent 14 years in captivity, though Colombian President Santos said it still wasn’t enough for his government to open direct peace talks. Farc has been fighting the government for five decades, but the military has been achieving one success after another, which is pushing Farc to the brink.

Pakistan: Bizarre late story that an avalanche has buried 100 Pakistani soldiers on an army base in the Himalayas, along the Indian border. The base wasn’t supposed to be remotely in danger from such a disaster.

North Korea: The long-range missile is on the pad and being fueled. This could easily be the top story by end of next week. It’s just that for now, there has been nothing further to report on.

Random Musings

--Former Gov. Mitt Romney swept three primaries and has a basically insurmountable delegate lead. For the archives:

Romney took 70% of the vote in D.C. (where Rick Santorum wasn’t on the ballot) and defeated Santorum in Maryland 49-29, and Wisconsin 43-38.

In the delegate count [AP]:

Romney 658
Santorum 281
Gingrich 135
Paul 51 

So we now have a wait until April 24; primaries in Connecticut, Delaware, New York, Pennsylvania, and Rhode Island. Republican Party leaders want Santorum to quit, even if they aren’t outwardly saying so, but it hardly seems likely with his home state of Pennsylvania up next.

However, a survey released on Thursday by Public Policy Polling shows Romney with a 42-37 lead among likely GOP primary voters in Pennsy; up 17 points in the last month. Not exactly the kind of news Santorum wants to hear. If he does win, the calendar in May is favorable for him, with primaries in North Carolina, West Virginia, Arkansas, Kentucky and Texas. The former senator did concede, though, he was taking a four-day Easter break to contemplate his future.

For his part, Romney targeted President Obama in his victory speech in Milwaukee.

“This campaign is going to deal with many complicated issues but there is a basic choice we’re going to face. The president has pledged to transform America and he has spent the last four years building a government-centered society. I will spend the next four years rebuilding the foundation of an opportunity society led by free people and free enterprise.”

Romney also called into question Obama’s candor, bringing up the open mic episode with Russian President Dmitry Medvedev, and the president’s reversing course on his positions on corporate taxes, regulations and energy development only because it’s campaign season.

“He wants us to re-elect him so we can find out what he will actually do. With all the challenges the nation faces, this is not the time for President Obama’s hide-and-seek campaign.”

--In a USA TODAY/Gallup survey of 12 “swing states,” Obama holds a 51-42 lead over Romney; Romney having led in the same states, 48-46, in mid-February.

The two are statistically tied among men, with Romney ahead 48-47, but Obama leads among women 54-36. [Obama was favored among women voters by a 56-43 margin in his race with John McCain in 2008.]

Among all registered voters nationwide, Obama leads Romney 49-45, including 48-40 among independents.

And in a further worrisome sign for Republicans, just 43% of Romney voters say they’re enthusiastic about voting, compared with 56% who said so in January.

--A federal appeals court judge took umbrage at President Obama’s comment on the Supreme Court when he warned that if it overturned his signature health care overhaul it would amount to overreach by an “unelected” court.

U.S. 5th Circuit Court of Appeals Judge Jerry Smith, who was hearing oral arguments in a separate challenge to another aspect of Obamacare, said the president’s comments troubled a number of people who have read them as a challenge to the authority of the federal courts.

“I’m referring to statements by the president in the past few days to the effect…that it is somehow inappropriate for what he termed unelected judges to strike acts of Congress that have enjoyed, he was referring of course to Obamacare, to what he termed a broad consensus and majorities in both houses of Congress,” Smith told an attorney with the Justice Department.

It was on Monday that Obama issued his direct challenge to the Supreme Court, saying it wouldn’t take the “unprecedented” step of overturning a law passed by a strong majority of Congress.

“I want to be sure that you are telling us that the Attorney General and the Department of Justice do recognize the authority of the federal courts through unelected judges to strike acts of Congress or portions thereof in appropriates cases,” Smith said.

Editorial / Washington Post

“President Obama’s comments Monday about the Supreme Court were jarring. If the court were to strike down the health-care law, Mr. Obama said, it would be a blatant example of judicial activism. That ‘an unelected group of people would somehow overturn a duly constituted and passed law,’ the president said, would be ‘an unprecedented, extraordinary step.’ Well, not exactly, and the comments strayed perilously close to a preemptive strike on the court’s legitimacy if it were to declare the individual mandate unconstitutional.”

--Charles Krauthammer / Washington Post

“ ‘Unprecedented?’ Judicial review has been the centerpiece of the American constitutional system since Marbury v. Madison in 1803. ‘Strong majority’? The House has 435 members. In March 2010, Democrats held a 75-seat majority. Obamacare passed by seven votes.

“In his next-day walk back, the president implied that he was merely talking about the normal ‘restraint and deference’ the courts owe the legislative branch. This concern would be touching if it weren’t coming from the leader of a party so deeply devoted to the ultimate judicial usurpation – Roe v. Wade, which struck down the abortion laws of 46 states – that fealty to it is the party’s litmus test for service on the Supreme Court.

“With Obamacare remaking one-sixth of the economy, it would be unusual for the Supreme Court to overturn legislation so broad and sweeping. On the other hand, it is far more unusual to pass such a fundamentally transformative law on such a narrow, partisan basis.

“Obamacare passed the Congress without a single vote from the opposition party – in contradistinction to Social Security, the Civil Rights Act, the Voting Rights Act, Medicare and Medicaid, similarly grand legislation, all of which enjoyed substantial bipartisan support. In the Senate, moreover, Obamacare squeaked by through a parliamentary maneuver called reconciliation that was never intended for anything so sweeping. The fundamental deviation from custom and practice is not the legal challenge to Obamacare but the very manner of its enactment….

“Democrats are reeling. Obama was so taken aback, he hasn’t even drawn up contingency plans should his cherished reform be struck down. Liberals still cannot grasp what’s happened – the mild revival of constitutionalism in a country they’ve grown so used to ordering about regardless. When asked about Obamacare’s constitutionality, Nancy Pelosi famously replied: ‘Are you serious?’ She was genuinely puzzled.

“As was Rep. Phil Hare (D-Ill.). As Michael Barone notes, when Hare was similarly challenged at a 2010 town hall, he replied: ‘I don’t worry about the Constitution.’ Hare is now retired, having been shortly thereafter defeated for reelection by the more constitutionally attuned owner of an East Moline pizza shop.”

--Republican Senator Orrin Hatch (Utah) on Obama’s view of the Supreme Court:

“It must be nice living in a fantasy world where every law you like is constitutional and every Supreme Court decision you don’t is ‘activist.’”

--Peggy Noonan / Wall Street Journal

“Something’s happening to President Obama’s relationship with those who are inclined not to like his policies. They are now inclined not to like him. His supporters would say, ‘Nothing new there,’ but I actually think there is. I’m referring to the broad, stable, non-radical, non-birther right. Among them the level of dislike for the president has ratcheted up sharply the past few months.

“It’s not due to the election, and it’s not because the Republican candidates are so compelling and making such brilliant cases against him. That, actually, isn’t happening.

“What is happening is that the president is coming across more and more as a trimmer, as an operator who’s not operating in good faith. This is hardening positions and leading to increased political bitterness. And it’s his fault, too. As an increase in polarization is a bad thing, it’s his fault….

“Events of just the past 10 days have contributed to the shift. There was the open-mic conversation with Dmitry Medvedev in which Mr. Obama pleaded for ‘space’ and said he will have ‘more flexibility’ in his negotiations once the election is over and those pesky voters have done their thing. On tape it looked so bush-league, so faux-sophisticated. When he knew he’d been caught, the president tried to laugh it off by comically covering a mic in a following meeting. It was all so…creepy….

“If you jumped into a time machine to the day after the election, in November 2012, and saw a headline saying ‘Obama Loses,’ do you imagine that would be followed by widespread sadness, pain and a rending of garments? You do not. Even his own supporters will not be that sad. It’s hard to imagine people running around in 2014 saying, ‘If only Obama were president!’ Including Mr. Obama, who is said by all who know him to be deeply competitive, but who doesn’t seem to like his job that much. As a former president he’d be quiet, detached, aloof. He’d make speeches and write a memoir laced with a certain high-toned bitterness. It was the Republicans’ fault. They didn’t want to work with him.

“He will likely not see even then that an American president has to make the other side work with him. You think Tip O’Neill liked Ronald Reagan?  You think he wanted to give him the gift of compromise? He was a mean, tough partisan who went to work every day to defeat Ronald Reagan. But forced by facts and numbers to deal, he dealt. So did Reagan.

“An American president has to make cooperation happen.

“But we’ve strayed from the point. Mr. Obama has a largely nonexistent relationship with many, and a worsening relationship with some.

“Really, he cannot win the coming election. But the Republicans, still, can lose it. At this point in the column we usually sigh.”

--Trayvon Martin fallout, continued…

I’ve said my piece…here are the thoughts of others.

Patrick J. Buchanan:

“If it had been a white teenager who was shot, and a 28-year-old black guy who shot him, the black guy would have been arrested.

“So assert those demanding the arrest of George Zimmerman, who shot and killed Trayvon Martin.

“And they may be right.

“Yet if Trayvon had been shot dead by a black neighborhood watch volunteer, Jesse Jackson would not have been in a pulpit in Sanford, Fla., howling that he had been ‘murdered and martyred.’

“Maxine Waters would not be screaming ‘hate crime.’

“Rep. Hank Johnson would not be raging that Trayvon had been ‘executed.’ And ex-Black Panther Bobby Rush would not have been wearing a hoodie in the well of the House.

“Which tells you what this whipped-up hysteria is all about….

“It is about the exacerbation of and the exploitation of racial conflict….

“The real America is a country where the black crime rate is seven times as high as the white rate. It is a country where white criminals choose black victims in 3 percent of their crimes, but black criminals choose white victims in 45 percent of their crimes….

“As Heather MacDonald of the Manhattan Institute has written, from January to June 2008 in New York City, 83% of all identified gun assailants were black and 15% were Hispanics…

“But now that it is being investigated by a special prosecutor, the FBI, the Justice Department and a coming grand jury, what is the purpose of this venomous portrayal of George Zimmerman?

“As yet convicted of no crime, he is being crucified in the arena of public opinion as a hate-crime monster and murderer.

“Is this our idea of justice?

“No. But if the purpose here is to turn this into a national black-white face-off, instead of a mutual search for truth and justice, it is succeeding marvelously well.”

Shelby Steele / Wall Street Journal

“(Trayvon’s) sad fate clearly sent a quiver of perverse happiness all across America’s civil rights establishment, and throughout the mainstream media as well. His death was vindication of the ‘poetic truth’ that these establishments live by. Poetic truth is like poetic license where one breaks grammatical rules for effect. Better to break the rule than lose the effect. Poetic truth lies just a little; it bends the actual truth in order to highlight what it believes is a larger and more important truth.

“The civil rights community and the liberal media live by the poetic truth that America is still a reflexively racist society, and that this remains the great barrier to black equality. But this ‘truth’ has a lot of lie in it. America has greatly evolved since the 1960s. There are no longer any respectable advocates of racial segregation.   And blacks today are nine times more likely to be killed by other blacks than by whites….

“There is now a long litany of racial dust-ups – from Tawana Brawley to the Duke University lacrosse players to the white Cambridge police officer who arrested Harvard professor Skip Gates a summer ago – in which the poetic truth of white racism and black victimization is invoked so that the actual truth becomes dismissible as yet more racism.

“When the Cambridge cop or the Duke lacrosse players or the men accused of raping Tawana Brawley tried to defend themselves, they were already so stained by poetic truth as to never be entirely redeemed. No matter the facts – whether Trayvon Martin was his victim or his assailant – George Zimmerman will also never be entirely redeemed.”

NBC News reported on Thursday that previous phone calls George Zimmerman placed to police, non-911 audiotapes, prove that Zimmerman was not racial profiling in his job as neighborhood  watch volunteer.

--A Pew Research Center poll found that 43% of whites in general say enough is enough when it comes to media coverage of the Trayvon Martin case. 56% of Republicans are fed up, just 25% of Democrats are. 16% of blacks say they’ve had enough as well.

A USA TODAY/Gallup survey revealed a divide along racial lines. 73% of blacks said they believe George Zimmerman would have been arrested if Trayvon was white, while 33% of whites agreed. The majority of whites polled – 52% - said race made no difference in the case.

--I like Defense Secretary Leon Panetta, but the following is yet further fodder for those screaming about the federal deficit.

It was just revealed by defense officials that Panetta has made at least 27 personal trips to his home in California since taking over the Pentagon in July, and he’s paid about $17,000, total, for those round-trip excursions, while each one costs the Pentagon about $32,000, or $860,000.

Panetta is required to take Air Force aircraft because they have the secure communications equipment he needs to stay in constant contact with the president and other top officials. All understandable…but still…it’s outrageous.

--In a book by Mike Allen and Evan Thomas, who’ve been following the presidential campaign from the beginning, an operative told the authors of “Inside the Circus” that Texas Gov. Rick Perry was hampered by powerful painkillers in the aftermath of back surgery that affected his behavior and performance. It was evidently well-known in campaign circles that Perry was reliant on powerful medication just to be able to stand during two-hour debates, which certainly explains some of his statements during this time.

--The eastern two-thirds of the nation saw thousands of temperature records fall in March, helping to make it the warmest March on record, nationwide. It was the warmest March on record here in New Jersey, and it was the warmest first quarter on record for Jersey as well.  

Britain had its third-warmest March since records began in 1659!

--Turkey is asking museums such as the J. Paul Getty Museum, the Metropolitan Museum of Art, and the Cleveland Museum of Art to return some of its antiquities.

Time to give it back, boys. Start with the guys and girls missing an arm or head. The Venus de Milo is the only armless dame worth a damn and she’s already ensconced in the Louvre.

--In catching up on some reading (I never fully catch up, actually), the following from a look back at William L. Shirer’s 1960 “The Rise and Fall of the Third Reich” by Ron Rosenbaum in the February issue of Smithsonian struck me, especially when one thinks about today’s world.

“Of course, few ideas were more stupid and evil than Hitler’s notion of his own divine destiny, forbidding, for instance, even tactical retreats. ‘This mania for ordering distant troops to stand fast no matter what their peril,’ Shirer writes, ‘…was to lead to Stalingrad and other disasters and to help seal Hitler’s fate.’

“Indeed, the foremost object lesson from rereading Shirer’s remarkable work 50 years on might be that the glorification of suicidal martyrdom, its inseparability from delusion and defeat, blinds its adherents to anything but murderous faith – and leads to little more than the slaughter of innocents.

“And, yes, perhaps one corollary that almost need not be spelled out: There is danger in giving up our sense of selfhood for the illusory unity of a frenzied mass movement, of devolving from human to herd for some homicidal abstraction. It is a problem we can never be reminded of enough, and for this we will always owe William Shirer a debt of gratitude.”

---

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

God bless America. Happy Easter!
---

Gold closed at $1630…lowest close in 12 weeks
Oil, $103.31

Returns for the week 4/2-4/6

Dow Jones -1.1% [13060]
S&P 500 -0.7% [1398]
S&P MidCap -1.0%
Russell 2000 -1.5%
Nasdaq -0.4% [3080]

Returns for period 1/1/12-4/6/12

Dow Jones +6.9%
S&P 500 +11.2%
S&P MidCap +12.0%
Russell 2000 +10.4%
Nasdaq +18.2%

Bulls 52.7
Bears 21.5 [Source: Investors Intelligence…spread of over 30 between bulls and bears normally a warning sign.]

Dr. Bortrum posted a new column.

Don’t forget the official StocksandNews iPad app… recommended for children between ages 8-14, and adults 40-54.

Have a great week. I appreciate your support.

Brian Trumbore