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11/30/2013

For the week 11/25-11/29

[Posted 10:00 PM ET, Friday]

Washington and Wall Street

So did you go shopping on Thanksgiving? I sure as heck hope not. I was fortunate to be able to spend much of the day with family and caught my share of football as well. 

But before we get to ObamaCare, a few economic data points of note. October durable goods came in down 2.0%, as expected, and not good; the November reading from the Chicago Purchasing Managers (PMI) came in at a strong 63.0, better than expected but down a bit from October’s stupendous 65.9; and there were conflicting sentiment readings, with the Conference Board’s consumer confidence index hitting a 7-month low, but the Michigan sentiment reading coming in better than expected, though still down substantially from July.

On the housing front, building permits for October were at their highest level in five years, though this was largely because of multi-family plans rather than the single-family variety. The S&P/Case-Shiller 20-city home price index for September (remember, this one has a bit of a lag), showed a 0.7% increase over August, 13.3% over September 2012 (the best annual rate since Feb. 2006), though there is definitely some deceleration in month-over-month gains. That said, co-founder of the index, Nobel Prize winner Robert Shiller, says there is also some bubble-type  behavior in the likes of Las Vegas, up 29.1% year over year, San Francisco up 25.7%, and to a lesser extent Los Angeles (21.8%) and San Diego (20.9%).  Some of the froth is due to the institutional nature of the buying. The New York region, on the other hand, has only seen a 4.3% increase 9/13 over 9/12.

The Case-Shiller data also masks the fact it just isn’t that easy for the average home buyer to get a mortgage, certainly nowhere near as easy as at the height of the bubble, and as Barron’s Jim McTague points out in an important piece, with the banks increasingly exiting the mortgage biz, it’s going to be tough for those looking to buy. For starters, less competition is never a good thing.

As for ObamaCare....once again the administration tried to bury an executive change to the health care law (making an announcement on Wednesday as our minds were focused elsewhere) in delaying for one year the provision that allowed small businesses to buy insurance online for their employees through the federal marketplace. The reason? The site can’t handle the back office communications, so to speak. This as we reach the Nov. 30 deadline for the site to be fully functional, or, rather, at least 80% functional, assuming we all don’t go online at the same time and crash it all over again. [Which means I’ll go online this weekend just to do my part in perhaps taking it down, he typed mischievously.]

House Speaker John Boehner immediately issued a statement: “The president bit off more than he can chew with this health care law, and small businesses are now forced to bear the consequences. Business owners across the country are already having health care plans for their employees canceled by this law, and now they’re told they won’t have access to the system the president promised them to find different coverage. Instead, they’ll have to resort to a system you’d expect to see in the 1950s.”

Yes, small businesses and their employees seeking coverage in the federal exchange could still do so, but they’d need to employ a broker or insurance agent and use a paper application.

As reported by Robert Pear in the New York Times:

“The problems engulfing President Obama’s health care law are remarkable because administration officials had repeatedly brushed aside doubts about whether they would be ready.

“Testifying before a congressional panel on Oct. 29, Marilyn B. Tavenner, the administrator of the Medicare agency, said, in response to a question, that the website for the small business exchange would be in operation by the end of this month.”

Stephanie Kirchgaessner / Financial Times

“The White House has promised that the website will work for eight in 10 Americans by the end of this week, even though it has also acknowledged that up to 40 percent of ‘back end’ functions that must work by January have yet to be built and tested.

“The fiasco is more than just an isolated political setback for Mr. Obama. The scale of the crisis facing the administration has inspired comparisons with the loss of public confidence in President George W. Bush following his disastrous handling of hurricane Katrina in 2005. Mr. Bush never recovered from that performance while he was in office.

“Fair or not, the magnitude of the political challenge facing Mr. Obama cannot be overstated. His signature domestic achievement, the passage of the 2010 Affordable Care Act, is in a shambles. Questions about his competence – to say nothing of his legacy – are mounting....

“Some see the failure as a manifestation of the White House’s insular culture, in which critics are seen as naysayers and few outside the president’s inner circle are trusted.

“Charlie Cook, the political analyst, points to anecdotes about the internal White House debates that took place in 2009, in which Rahm Emanuel, Mr. Obama’s then chief of staff, was urging the president to scale back his ambitions on healthcare reform and pursue a modest policy that could garner Republican support.

“In Mr. Cook’s view, Mr. Obama’s refusal to accept a scaled back plan was emblematic of an idealistic leader who had started to believe that ‘everything he touched would turn to gold.’

“ ‘To me, luck is sort of a thread here. They were warned but they felt lucky and pushed ahead,’ says Mr. Cook. ‘The luck just finally ran out. He put too much confidence on luck as opposed to asking the question: what is the reality? What are the real present dangers here?’”

Editorial / Wall Street Journal

Physician dissatisfaction. U.S. medicine is under major financial strain, but not because the government is paying for quality instead of volume as liberals claim. The fee-for-service status quo is largely intact and reimbursement is merely being squeezed down. Exchange insurance with Medicaid-style networks pays Medicaid rates, while ObamaCare’s Medicare cuts are also sending that program’s price controls to Medicaid levels.

“These rates are already so low that many doctors won’t take new government patients. Look for many doctors to start to conclude they will make a better living – and have more autonomy – by opting out. Providers participating in federal programs are subject to onerous quality-reporting rules, even if the metrics don’t accurately measure quality. The Affordable Care Act treats health professionals like robots on a factory line who can be reprogrammed to execute federal work orders.

“Our guess is that President Obama will try to power through all of this the way he always has: Blame others, stretch or break the law to plug the holes, squeeze insurers and try to keep Democrats from breaking ranks before the 2014 election. Perhaps it will work. But if the disruption spreads, and complaints multiply, don’t be surprised if Democrats force the White House to reopen the law.”

Finally, aside from ObamaCare, when Congress returns from its Thanksgiving recess it will be back to talk of the budget and the Dec. 13 deadline for an agreement among budget conferees, though this particular deadline is flexible. For now the only agreement seems to be on replacing the sequester (automatic cuts) with a more rational set of spending reductions.

But the conference co-chairmen, Senator Patty Murray and Congressman Paul Ryan, are struggling to find common ground on even $50 to $100 billion. Forget a big deal that makes changes to entitlements.

If Dec. 13 passes without action, you then have the Christmas recess, after which Congress faces the real deadline, Jan. 15, when government funding expires again.

The importance of these two dates is that the Federal Reserve meets in between, Dec. 17-18, and as I’ve written, should there be no agreement in principle by Dec. 13, the Fed will not begin to taper its $85 billion a month bond-buying program amid the renewed uncertainty, regardless of how the economic data plays out in the meantime, including the next jobs report, Dec. 6.

Europe: First the economic news. Europe needs inflation but the data for November, the flash estimate from Eurostat, the statistical office of the European Union, continued to be putrid, up 0.9% annualized, which is up from 0.7% in October but still well below the European Central Bank’s target of 2.0%. The core rate was 1.0% compared to 0.8% last month.

And then you had the unemployment data for October, also courtesy of Eurostat, which showed the eurozone jobless rate ticking down to 12.1% from the record high 12.2% in September. It was the first decline since February 2011.

While other data has showed the eurozone economy to be slowly recovering, the disparity between nations, especially on the employment front, is stark.

Eurostat pegs Germany’s unemployment rate at 5.2% (4.8% in Austria), but remains 27.3% in Greece (August) and 26.7% in Spain, actually up a tick from September there.

The rate in Italy is 12.5% (unchanged from September) and 10.9% in France (down from 11.1%).

The youth rate in some of the countries remains sickeningly high. 58% in Greece, 57.4% in Spain, 41.2% in Italy and 36.5% in Portugal.

Separately, retail sales in Germany for the month of October fell 0.8% over September, the second consecutive monthly decline and another sign the German economy is overly dependent on exports for its growth, much to the chagrin of everyone from Washington to the Euro periphery to the IMF.

Meanwhile, on the political front, German Chancellor Angela Merkel’s Christian Democrats (CDU) and the allied CSU have agreed on a coalition with the center-left Social Democrats (SPD), though the SPD must ratify the deal in mid-December in a referendum among 470,000 members and a ‘yes’ vote is not a certainty. A recent poll had 49% for joining the coalition, 44% against.

It’s complicated. For starters, there are many who are upset with Merkel and the CDU for giving up too much to the SPD, which gained only 26% in the Sept. election compared to 41.5% for the CDU/CSU but to some is acting like it won.

Merkel and the SPD reached settlement on issues such as the introduction of Germany’s first national minimum wage, 8.50 euro ($11.50 an hour) beginning in 2015, as well as a lower retirement age for some folks, both hardly conservative CDU stances. But the CDU gains SPD support on no tax increases, a key demand of Merkel’s.

Regardless, IF the SPD votes to join the coalition, it could be an unstable government. But if the SPD did vote ‘no,’ then Merkel would be forced to turn to the Green Party, or call new elections, at which point an anti-Euro party, that emerged out of nowhere in September to almost gain the required 5% for seats in parliament, could pick up even more support (polls show it making further post-election gains).

Lastly, understand many in the SPD wanted to stay in the opposition, especially after their last experience in a coalition with Merkel, 2005-09, when the SPD then lost support in succeeding votes because it was perceived to be a weak partner.

In Italy, former Prime Minister Silvio Berlusconi was expelled from parliament and now could face arrest over his conviction for tax fraud and other charges that thus far he has been shielded from due to his immunity from prosecution. Berlusconi told supporters it was a “day of mourning” for democracy.

Berlusconi, 77, said he would continue the fight outside parliament. No formal vote was actually held in the Senate. The speaker simply said, “The conclusions of the committee on elections have been approved, abolishing the election of senator Silvio Berlusconi.”

For now, it appears Berlusconi will have to serve a one-year sentence, probably under house arrest, for his 2012 conviction of tax fraud. He continues to appeal his convictions of paying for sex with an underage prostitute and other charges.

As for Greece, the Organization for Economic Cooperation and Development said the Greek economy would shrink a further 0.4% in 2014, while the government says it will grow 0.6%, a big difference, especially in terms of further bailout aid.

China: Last Saturday, China established an “air defense identification zone” (ADIZ) over disputed islands in the East China Sea, Senkaku in Japan and Diaoyu in China, that I have written for a few years now are a major source of tension between the two nations. 

Japan dismissed the Chinese move as “not valid at all” and a few days later the U.S. flew two unarmed B-52 bombers over the Senkakus, with the Pentagon saying Washington “continued to follow our normal procedures, which include not filing flight plans, not radioing ahead and not registering our frequencies.” The U.S. said the flights were part of a regular exercise in the area. China later said it had monitored the U.S. aircraft.

A People’s Liberation Army air force general warned that any foreign aircraft disobeying warnings and deemed to be ‘hostile’ could be shot down, though it was unclear whether the general was speaking for the government.

But Hu Xijin, editor-in-chief of the Global Times, a party mouthpiece, said on the Sina Weibo microblogging platform: “ADIZ is not equivalent to airspace. China could not possibly force the U.S. and Japan to inform all of their flight plans in ADIZ, but neither will Chinese airplanes inform them when they fly through their own air defense identification zones.”

Japan and South Korea then flew military aircraft through the zone.

Chinese state media on Friday identified Japan as Beijing’s “prime target” in the air defense zone, calling for “timely countermeasures without hesitation” if Tokyo defies it.

The Global Times editorialized: “We should carry out timely countermeasures without hesitation against Japan when it challenges China’s newly declared ADIZ,” adding, “If the U.S. does not go too far, we will not target it in safeguarding our air defense zone. What we should do at present is firmly counter provocative actions from Japan.”

Editorial / Wall Street Journal

“America’s B-52 flights on Tuesday through China’s ‘air defense identification zone’ around the Senkaku Islands seem to have had the desired effect of reassuring allies and showing Beijing that its aggression will be resisted. Japanese and South Korea military flights followed....

“The real tests of the air defense zone will be when the People’s Liberation Army uses it to challenge Japanese forces patrolling the Senkakus. The U.S. can help to deter an armed clash by making more concrete its treaty obligation to assist Japan in defending the islands. One way to do so would be joint sea and air patrols with Japanese forces. If Beijing challenges those patrols, it would be taking on both countries – a security trip-wire similar to the stationing of U.S. forces on the Korean Peninsula.

“This could lead to an eruption of Chinese anger, and the U.S. might pay a short-term price in economic and diplomatic retaliation. But allowing China’s aggression to succeed means running a high risk of future conflict, accidental or intentional. As long as Beijing continues its bullying, U.S. policy should be to make sure that China’s provocations are met with further demonstrations of solidarity and resolve.”

Philip Stephens / Financial Times

“At first glance, Beijing’s designation of an air defense zone in the East China Sea marks a calibrated escalation of its longstanding dispute with Japan about sovereignty of the Senkaku or, in Chinese, Diaoyu islands. A more worrying, and plausible, interpretation is that Beijing has decided to square up to the U.S. in the western Pacific. East Asia is looking an ever more dangerous place.

“When Xi Jinping met Barack Obama in California this year, the Chinese president told his U.S. counterpart the Pacific Ocean was large enough to accommodate two great powers. The inference was that the U.S. and China should divide the spoils. Also implicit in the remark, though, was that China would not accept a status quo that saw the U.S. remain the Pacific’s pre-eminent power. At the summit, Mr. Obama sidestepped the issue. Now it seems Mr. Xi has decided it is time for China to start grabbing its share....

“Chuck Hagel, the U.S. defense secretary, called the Chinese move ‘a destabilizing attempt to alter the status quo in the region.’ Other U.S. officials were less diplomatic. Beijing, though, is playing a long game. The $64,000 question in east Asia is whether the U.S. has the staying power to resist a sustained Chinese push for regional hegemony....

“The danger of miscalculation on both sides is far from negligible. In Shinzo Abe, Japan has a nationalist prime minister determined not to be cowed by his country’s more powerful neighbor – nor to be over-influenced by private U.S. warnings that Tokyo should play its part in lowering the political temperature.

“Mr. Abe is an unabashed revisionist with a dangerous habit of airbrushing the nasty bits from Japanese history. He is also looking for an excuse to amend Japan’s constitution to provide it with something more than a defensive military capability. A clash, accidental or intended, with China around the Senkaku would provide just such a justification....

“Chinese policy makers are nothing if not assiduous students of history. The rise of Germany at the end of the 19th century has long featured prominently in the curriculum of Beijing’s foreign policy elite. China, these officials tell visitors, will not repeat the Kaiser’s miscalculation in uniting Germany’s neighbors in opposition to its rise to great power status. This attentiveness to the past now seems to be taking second place to China’s determination to assert its power. History’s mistakes are often repeated.”

On Thursday, China’s defense ministry hit back at Japanese objections.

“Japan has absolutely no right to make irresponsible comments regarding China setting up the East China Sea ADIZ. We would like to ask Japan to revoke its own ADIZ first, China will then consider this request in 44 years,” referring to Japan establishing its ADIZ 44 years ago in 1969. [South China Morning Post]

Thursday and Friday, China sent planes over the ADIZ, asserting its determination to enforce control over the area. Friday, Prime Minister Abe said he would respond to China’s action in a “calm, assured manner.”

Vice President Joe Biden is traveling to Beijing in the next few days to “convey our concerns directly and...seek clarity regarding the Chinese intentions in making this move at this time,” a senior administration official told the BBC.   Biden will also be making stops in Japan and South Korea.

Iran: As reported exclusively by the Associated Press, “The United States and Iran secretly engaged in a series of high-level, face-to-face talks over the past year, in a high-stakes diplomatic gamble by the Obama administration that paved the way for the historic deal sealed early Sunday in Geneva aimed at slowing Tehran’s nuclear program.”

The talks went back to last March and were held in the Middle Eastern nation of Oman and elsewhere. Israeli Prime Minister Benjamin Netanyahu was not informed by President Obama until this past September 30, and while U.S. officials did not describe his reaction, it was the next day that Netanyahu delivered his U.N. General Assembly speech describing Iranian President Rohani as a “wolf in sheep’s clothing” and warning the U.S. against reading too much into Rohani’s seeming change in tone.

Saturday, President Obama addressed the American people, saying in part:

“While today’s announcement is just a first step, it achieves a great deal. For the first time in nearly a decade, we have halted the progress of the Iranian nuclear program, and key parts of the program will be rolled back. Iran has committed to halting certain levels of enrichment and neutralizing part of its stockpiles. Iran cannot use its next-generation centrifuges, which are used for enriching uranium. Iran cannot install or start up new centrifuges, and its production of centrifuges will be limited. Iran will halt work at its plutonium reactor. And new inspections will provide extensive access to Iran’s nuclear facilities and allow the international community to verify whether Iran is keeping its commitments.

“These are substantial limitations which will help prevent Iran from building a nuclear weapon. Simply put, they cut off Iran’s most likely paths to a bomb. Meanwhile, this first step will create time and space over the next six months for more negotiations to fully address our comprehensive concerns about the Iranian program. And because of this agreement, Iran cannot use negotiations as cover to advance its program.”

The deal....

All uranium enrichment above 5% is to be halted.

The entire stockpile of 20% enriched material to be diluted or converted to a form not suitable for further enrichment. This 20% enriched uranium is the feedstock that Iran could use to ‘dash’ towards weapons grade material.

No more centrifuges are to be installed, and large numbers of the existing banks of centrifuges are to be left inoperable.

Iran’s stockpile of 3.5% enriched uranium is to remain the same between now and the end of the six-month period. So any excess material will have to be converted to oxide form.

In broad terms there will be no further construction or experimental work for the Arak reactor which Western experts fear could be used – once it is commissioned – for its plutonium, giving Iran a second route towards a nuclear bomb.

In return Iran gets sanctions relief to the tune of $7 billion, officially, but many believe it will be as much as $20 billion.

Not so fast....

Editorial / Washington Post

“The Fact sheet distributed by the Obama administration about the nuclear agreement with Iran is notable for its omissions. The 2,000-word document, like President Obama’s televised statement Saturday night about the deal, stresses Iran’s pledge to cap its enrichment of uranium, delay the completion of a plutonium-producing reactor and accept additional inspections – measures that will guard against an attempt to produce a bomb while negotiations continue.

“What the White House didn’t report is that the text of the accord makes several major concessions to Tehran on the terms of a planned second-stage agreement. Though White House officials and Secretary of State John F. Kerry repeatedly said that Iran’s assertion of a ‘right to enrich’ uranium would not be recognized in an interim deal, the text says the ‘comprehensive solution’ will ‘involve a mutually defined enrichment program with mutually agreed parameters.’ In other words, the United States and its partners have already agreed that Iranian enrichment activity will continue indefinitely. In contrast, a long-standing U.S. demand that an underground enrichment facility be closed is not mentioned.

“Mr. Obama and other U.S. officials have spoken about a six-month time frame for completing negotiations, but the agreement says the six-month arrangement can be renewed ‘by mutual consent’ and that ‘the parties aim to conclude negotiating and commence implementing [in] no more than one year.’ It also states that ‘there would be additional steps in between the initial measures and the final step,’ including ‘addressing the U.N. Security Council resolutions.’ Those resolutions order Iran to suspend uranium enrichment, but the agreement does not say whether those demands will be enforced.

“The most troubling part of the document provides for what amounts to a sunset clause in the comprehensive agreement. It says the final deal will ‘have a specified long-term duration to be agreed upon,’ and that once that time period is complete, ‘the Iranian nuclear program will be treated in the same manner as that of any non-nuclear weapon state party’ to the Non-Proliferation Treaty. Iran thus could look forward to a time when there would be no sanctions and no special restrictions on its nuclear capacity; it could install an unlimited number of centrifuges and produce plutonium without violating any international accord.”

Benny Avni / New York Post

“Peace is breaking out all over, so why won’t those pesky warmongers just shut up and go away?

“President Obama’s dizzying-paced Mideast diplomacy worries America’s Sunni allies (especially the Saudis, who are privately seething). Israel’s Prime Minister Netanyahu calls the interim deal signed with Iran in Geneva on Sunday a ‘historical mistake.’

“But for Tehran everything’s coming up roses. As our diplomats claim that the ‘infrastructure’ of sanctions remains intact for at least six months, Asian and European firms are already cutting deals with Iranian counterparts as if the sanctions are gone.

“Some, in fact, really are. Like the lifted-in-Geneva ban on insuring Iranian ships – a major reason that Iran’s oil exports had screeched to a near halt.

“Plus, as Tehran’s diplomats contend (and ours deny), the deal ‘kosherizes’ Iran’s uranium enrichment by promising to ultimately let it run ‘a mutually-defined enrichment program.’....

“See those cracks up there? Oops, there goes the whole dam....

“(Even) as they demolish the sanctions that had the Iranian regime in serious pain, (the administration insists) that the only alternative to the Geneva agreement (the only ‘realistic’ deal possible) is war.

“Sorry: Geneva makes war more likely, not less.”

John Podhoretz / New York Post

“The president has spent years talking tough on Iran, but his tough talk was often astoundingly disingenuous. For example, the administration has been taking credit for imposing sanctions on the Iranian regime that brought it to the negotiating table, but in fact he and his people opposed and fought the imposition of those sanctions.

“In 2011, Sen. Bob Menendez (D-NJ) harshly upbraided Obama Treasury Department official David Cohen for testifying against new sanctions in contravention of a private deal between Menendez and the administration.

“ ‘At your request, we engaged in an effort to come to a bipartisan agreement,’ Menendez raged. ‘And now you come here and vitiate that very agreement’ by testifying against it. ‘I find it pretty outrageous.’

“Obama didn’t like the sanctions because he believes maintaining a posture of confrontation is counterproductive. ‘We have sought a new era of engagement with the world,’ he said at the United Nations in September 2009.

“What could that mean? The Bush administration had scads of engagement with the world. It went to the United Nations twice before invading Iraq. It convened a six-nation parley on North Korea. There was a five-nation group to deal with Iran. It negotiated a region-wide free-trade agreement with Central America.

“Obviously, what Obama meant was a different sort of engagement – an engagement in which the United States made special efforts to engage with those who’d conventionally be considered adversaries....

“The presumption of the deal is that we will engineer trust and good will by unilaterally ending or lowering sanctions, and that will in turn change Iranian behavior when it comes to its nuclear program.

“But if the mullahs retain the nuclear material and machinery that caused the sanctions to be imposed in the first place, what incentive is there for them to go beyond the freeze-in-place to which they’ve agreed?

“The administration says the threat in the deal is that the United States will reimpose sanctions it has lifted, and that the United Nations will do the same. Maybe, but in the meantime the mullahs will have gotten their hands on $20 billion.

“One of the president’s chief promises is that Iran won’t get a nuclear weapon. That promise should be considered in light of the promises on healthcare.gov and on the Syrian red line.

“But nobody has any right to be surprised he’s letting Iran have what it wants. He’s made it perfectly clear this is where his foreign policy has been aiming all along.”

Mark Dubowitz and Orde Kittrie / Wall Street Journal

“The Geneva deal agreed to Sunday by six major powers with Iran is a gamble on Western optimism. While slightly rolling back Iranian nuclear capability, the agreement greatly weakens Western economic sanctions. Iranian sanctions-busters will be in position to exploit the changing market psychology and newly created pathways to reap billions of additional dollars in economic relief beyond those projected by the Obama administration. The Geneva deal’s provisions are too weak to prevent Iranian physicists from making further nuclear progress in several key areas....

“Remarkably, not even the agreement’s ‘elements of the final step of a comprehensive solution’ make clear reference to Iran revealing its past nuclear-weapons research. Thus, Iran’s affirmation, in the interim agreement preamble, that ‘under no circumstances will Iran ever seek or develop any nuclear weapons’ is, with respect to weapons-design research, all trust and next to no verify.

“The Security Council resolutions also explicitly require Iran to ‘not undertake any activity related to ballistic missiles capable of delivering nuclear weapons.' However, the interim agreement includes no Iranian commitments related to its ballistic-missile program. Not even the agreement’s ‘elements of the final step of a comprehensive solution’ make any reference to Iran halting its activity related to ballistic missiles that could deliver nuclear weapons.

“In the absence of verifiable Iranian commitments not to proceed with nuclear-weapon and ballistic-missile research, there is nothing to stop Iran from having a designed bomb and ballistic missile ready to go. Once Iran completes a dash to weapons-grade uranium, it can insert the warhead and quickly have a deliverable nuclear weapon.

“Thus, even if Iran faithfully implements each of its commitments under the interim agreement, it could find itself, in May 2014, a mere month further away than it is now from having weapons-grade uranium – but six months closer to having the rest of a deliverable nuclear weapon.”

Editorial / New York Post

“Why is it that the world’s nastiest regimes grow stronger when President Obama threatens them?

“We saw this in Syria. There Obama drew his famous red line over chemical weapons. Hesto presto, Bashar al-Assad turns those weapons on women and children – and thanks to a deal blessed by the White House, is now more firmly ensconced than he was before.

“Now we’re seeing the same thing all over, but this time with a larger and more dangerous power: Iran. For years the Obama claim was he would not allow Tehran to get a nuclear weapon. But once again he has come up with a deal that will do nothing to diminish Iran’s nuclear ambitions – though it might make its leaders even more dishonest.”

Jeffrey Goldberg / Bloomberg

“There are four ways to neutralize the Iranian regime’s nuclear program. The first is the military option, executed either by Israel or by the U.S. ....A bombing campaign is a bad idea: It could very well destroy many of Iran’s nuclear facilities, but it also could kill innocent people and legitimize the program. The sanctions regime would collapse following a strike, which still would not wipe out Iran’s nuclear knowledge base and could rally the country around the cause of full nuclearization.

“Crushing sanctions, the second option, have been effective at forcing Iran to the negotiating table, but years of sanctions have not placed the Iranian regime’s survival in jeopardy. The regime is willing to let its citizens absorb a great deal of pain on its behalf, and when those citizens get ornery, it hasn’t been shy about killing them. It seems unlikely that sanctions, which are already hard enough to enforce, will bring about Iran’s total nuclear capitulation.

“The third path is a campaign for a complete regime change, but the American experience in Iraq has removed this option from the table. The U.S. has neither the stomach nor the competence to bring about the collapse of the regime.

“The fourth path is diplomacy, and this interim deal may be the best the U.S. was going to get. The deal has many dubious features. It comes perilously close to recognizing Iran’s so-called right-to-enrich. It makes it even less probable that the West will confront Iran for its nefarious behavior in Syria. It frees up billions of dollars for the regime to use in exchange for nuclear concessions that are reversible. It does not require a single centrifuge to be dismantled. Iran could still make a rush for nuclear breakout in eight weeks.

“I’m fairly confident, however, that Iran won’t make such a precipitous move at the moment. I’m also reasonably confident that the Obama administration is still capable of walking away from the main show – the upcoming, actually difficult, final negotiations – if Iran refuses to dismantle those parts of its nuclear infrastructure that could be used to manufacture a bomb.

“And the U.S. might just have to walk away because there isn’t much proof that Hassan Rohani, the putatively reformist new Iranian president, or the foreign minister, Mohammad Javad Zarif, are authorized by the Supreme Leader, Ayatollah Khamenei, to actually agree to a meaningful deconstruction of the nuclear program....

“So everything that has happened over these past months may not amount to anything at all. Contra Netanyahu, who unrealistically seeks only total Iranian capitulation, it isn’t stupid for Obama to find out for sure what, if anything, the Iranians are willing to give up for good.”

Editorial / Wall Street Journal

“The best that can be said is that the weekend deal slows for a few weeks Iran’s rapid progress to a nuclear breakout. But the price is that at best it sets a standard that will allow Iran to become a nuclear-capable regime that stops just short of exploding a bomb. At worst, it will allow Iran to continue to cheat and explode a bomb whenever it is strategically convenient to serve its goal of dominating the Middle East.

“This seems to be the conclusion in Tehran, where Foreign Minister Javad Zarif boasted that the deal recognizes Iran’s right to enrich uranium while taking the threat of Western military action off the table. Grand Ayatollah Ali Khamenei also vouchsafed his approval, only days after he denounced the U.S. and called Jews ‘rabid dogs.’...

“Far from having Israel’s back, as Mr. Obama likes to say, the U.S. and Europe are moving to a strategy of trying to contain Israel rather than containing Iran. The French also fell into line as we feared they would under U.S. and media pressure.

“Mr. Obama seems determined to press ahead with an Iran deal regardless of the details or damage. He views it as a legacy project. A president has enormous leeway on foreign policy, but Congress can signal its bipartisan unhappiness by moving ahead as soon as possible to strengthen sanctions. Mr. Obama warned Congress not to do so in his weekend remarks, but it is the only way now to stop the president from accommodating a nuclear Iran.”

Bret Stephens / Wall Street Journal

“Iran will gradually shake free of sanctions and glide into a zone of nuclear ambiguity that will keep its adversaries guessing until it opts to make its capabilities known. Saudi Arabia will move swiftly to acquire a nuclear deterrent from its clients in Islamabad; Saudi billionaire Prince Alwaleed bin Talal made that clear to the Journal last week when he indiscreetly discussed ‘the arrangement with Pakistan.’ Egypt is beginning to ponder a nuclear option of its own while drawing closer to a security alliance with Russia.

“As for Israel, it cannot afford to live in a neighborhood where Iran becomes nuclear, Assad remains in power, and Hizbullah – Israel’s most immediate military threat – gains strength, clout and battlefield experience. The chances that Israel will hazard a strike on Iran’s nuclear sites greatly increased since Geneva. More so the chances of another war with Hizbullah.

“After World War II the U.S. created a global system of security alliances to prevent the kind of foreign policy freelancing that is again becoming rampant in the Middle East. It worked until President Obama decided in his wisdom to throw it away. If you hear echoes of the 1930s in the capitulation at Geneva, it’s because the West is being led by the same sort of men, minus the umbrellas.”

Senator Charles Schumer (D-NY): “(The) disproportionality of this agreement makes it more likely that Democrats and Republicans will join together and pass additional sanctions when we return in December.”

Senator Lindsay Graham (R-SC): “Unless the agreement requires the dismantling of the Iranian centrifuges, we really haven’t gained anything.”

Rep. Edward Royce (R-CA): “Instead of rolling back Iran’s program, Tehran would be able to keep the key elements of its nuclear weapons-making capability. Yet we are the ones doing the dismantling – relieving Iran of the sanctions pressure built up over years.”

Sen. Mark Kirk (R-IL): “(The agreement) appears to provide the world’s leading state sponsor of terrorism with billions of dollars in exchange for cosmetic concessions that neither fully freeze nor significantly roll back its nuclear infrastructure.”

Sen. Robert Menendez (D-NJ): “This agreement did not proportionately reduce Iran’s nuclear program for the relief it is receiving.”

Sen. Bob Corker (R-TN): “If you see the reaction in Iran right now, they’re spiking the football in the end zone.”

Senator John Cornyn (R-TX): “(It’s) amazing what the White House would do to distract attention from ObamaCare.”

Israeli Prime Minister Netanyahu: “The agreement reached in Geneva is not a historic deal, but rather a historic mistake.” Separately, “We cannot and will not allow a regime that calls for the destruction of Israel to obtain the means to achieve this goal. Israel has many friends and allies, but when they’re mistaken, it’s my duty to speak out.”

Naftali Bennett, Israeli Minister of Economy and Commerce: ‘Iran was on the mat because of the sanctions, but then the West picked it up and gave it something to drink. Israel does not have to be a party to this agreement and has the right to defend its security,” he said, alluding to possible military action. “The whole Middle East is affected but the danger to Israel is unique.”

Israeli Foreign Minister Avigdor Lieberman: “This deal will create a new arms race that includes the Middle East.”

Abdullah al-Askar, Saudi parliament leader: “The government of Iran, month after month, has proven that it has an ugly agenda in the region, and in this regard no one in the region will sleep and assume things are going smoothly.... The people of the region know Iranian policies and Iranian ambitions. And they know that Iran will interfere in the politics of many countries in the region.”

Iranian Foreign Minister Javad Zarif: “(The text) twice explicitly (states) that Iran will have an enrichment program. Iran’s enrichment program will continue and be part of any agreement, now and in the future.” Iran, he said, maintained its “inalienable right” to develop nuclear power for peaceful purposes.

Iranian President Rohani: “No matter what interpretations are given, Iran’s right to enrichment has been recognized.”

As for the IAEA and the intrusive inspections said to be part of the deal, the IAEA still has not been granted access to the disputed military complex at Parchin, where Iran is suspected of testing nuclear trigger devices.

In a Reuters/Ipsos survey, 44% of Americans support the interim deal with Iran, 22% oppose it. The agreement does not need to be ratified by Congress and while there will be renewed talk of strengthening sanctions, President Obama is likely to be granted a six-month window, a pause.

Finally, it was interesting that a figure I long said (for over 10 years) the United States should negotiate with, Akbar Hashemi Rafsanjani, 79 and former two-term Iranian president, emerged for an interview with the Financial Times. Rafsanjani, leader of the so-called conservative pragmatists who threw his support to President Rohani prior to the election, expressed optimism over the Geneva accord.

“Part of it [the breakthrough] was because talking to the U.S. was a taboo. That taboo could not be easily broken and nuclear talks could not move ahead without the U.S.”

Rafsanjani dismissed Israeli threats of a military strike to curb its nuclear program. “Israel is so small; no small fish can eat big fish.”

Street Bytes

--The Dow Jones and S&P 500 eked out gains of 0.1% this holiday-shortened week to extend their winning streaks to eight. For the S&P the longest such run since 2004. Nasdaq had a much better week, up 1.7% to 4059, including the first close above 4000 since Sept. 2000. Nasdaq is now up 34% for the year, while the S&P is up 27%, which would be its best performance since 1998.

For November the S&P gained 2.8%, Nasdaq 3.6%.

--U.S. Treasury Yields

6-mo. 0.10% 2-yr. 0.28% 10-yr. 2.74% 30-yr. 3.81%

Treasuries virtually unchanged across the board this week.

--Goldman Sachs is most bullish on Japanese and European equities in 2014. Regarding the former, Goldman strategists “expect steady progress on Abenomics’ growth reforms during 2014,” including needed reflation.

--Speaking of Japan, inflation for October was up 0.9% in October, ex-food and energy up 0.3%, the best annualized performance since 1998. Further proof Abenomics is taking hold.

--The U.S. Department of Agriculture said farm incomes in America should hit their highest level in four decades this year, up 15.1% to $131 billion, the highest inflation-adjusted level since 1973.

But the era of rising prices, particularly 2006-2011, is probably over. The U.S. is expected to have had a record corn harvest and third-largest soybean crop in history. Corn was above $8 a bushel last year but has fallen to roughly $4.25. Most farmers see a much tougher 2014 at this level when you weigh in the cost of chemicals, fertilizer and seed. And that in turn could lead to lower purchases of farm equipment.

But falling feed costs are good for livestock and poultry producers.

--Shares in Hewlett-Packard rallied strongly on better than expected earnings and revenue, as well as a better outlook. Sales in the enterprise group rose 2%, including a 10% rise in server sales.

But overall revenues continued to slide, including down 2% in the PC unit though CEO Meg Whitman’s turnaround effort is generally on track, it would seem, and she touted an improving networking outlook in Asia, including China, which is in stark contrast to rival Cisco and sales declines for IBM in the region.

--Workday Inc., which provides cloud-based enterprise software solutions, primarily for human-resources applications for payroll and financial management, saw its shares soar anew on better than expected revenue for its fiscal third-quarter, even as the net loss widened, though narrower on a per-share basis. Revenue surged 76% and the company raised guidance on the current quarter.

Workday went public in October 2012 at $28 and finished the week at $82. My friend Jimbo, who is in management there, picked up the lunch tab this weekend.

--Shares in Apple surged $36 to $556 this week amid signs the company is selling a lot more product than the Street is expecting. According to market researcher Kantar Worldpanel ComTech, for example, Apple accounted for 76 percent of smartphone sales in Japan last month.

--The value of a single bitcoin, the virtual currency, topped $1,000 on Wednesday for the first time (and then $1,200 on Friday). It was $20 in January. Confidence has grown since the FBI, in a letter to a recent Senate committee hearing, described it as a “legitimate financial service.” But, they warned it could be “exploited by malicious actors,” such as the website Silk Road, which sold illegal drugs and would pay for goods using bitcoin before it was shut down.

One exchange in China is said to be the most active globally. As the BBC notes, this is probably because bitcoin is seen as the most effective way of getting money out of the country.

[Funny story from The Guardian in London about an IT worker who in clearing up his desk this past summer threw out a hard drive, only to just remember the other day it held a “digital wallet” of virtual currency containing 7,500 bitcoins, or at today’s value over $7.5 million. James Howells created them for almost nothing back in 2009. It is probably sitting in the Docksway landfill site near Newport, South Wales. But don’t bother trying to go there. A spokeswoman from the Newport council said treasure hunters would be turned away, but if it is found, “we’d return it.”]

--French spirits group Remy Cointreau blamed a “sharp slowdown” on business in China for its overall lousy earnings report. It also blamed an “uncertain economic environment” in Europe.

--But high-end jeweler Tiffany reported strong sales in Asia and its shares soared about 10% as the company reported a 4% sales increase in the Americas, but a 27% rise in the Asia-Pacific region and a 7% increase in Europe. Overall, same-store comp sales, the key metric, were also up a very solid 7%.

--India reported its GDP rose in the third quarter over the second, 4.8% compared to 4.4%. The acceleration was a little better than expected but the fourth quarter in a row with a growth rate below the 5% mark; the 4.4% rate of Q2 being the lowest in four years.

--Wal-Mart suddenly announced CEO and President Mike Duke, 63, was stepping down on Feb. 1 after five rather tumultuous years in those roles, to be replaced by 47-year-old Doug McMillon, a 23-year company veteran. McMillon, who started off as a summer intern, once led the Sam’s Club division, and in 2009 succeeded Duke to head up the international operation.

--Sears Canada announced it was laying off nearly 800, 712 in repair services. When I was a homeowner, always liked the Sears service folks. Professional and came when you wanted them to. Sears Canada is struggling to raise cash and sell off assets.

--JPMorgan Chase & Co.’s top lawyer, Stephen Cutler, addressing the massive fines leveled at his bank as well as other financial institutions, recently commented at a panel discussion, “At what point does this stop? We should all be concerned, because at a certain point people become immune to the numbers.”

Recently, JPMorgan settled with the Justice Department for $13 billion, but since Oct. 9, with the rise in its share price, the market value soared about double that figure.

It also needs to be pointed out that Mr. Cutler once worked for the SEC, and now look where he is. Typical.

And a Wall Street Journal article contains the following: “The stress and hours have taken a toll on Mr. Cutler, people close to him say. He is often in the office at 6:45 a.m. and typically works 12-hour days.”

Big freakin’ deal. When I was on Wall Street, I was the first one in the office at 6:15 a.m. and that was after driving 75 miles! [All uphill...both ways, in blinding snow....] Hard work never killed anyone, though admittedly extreme stress can.

--Based on documents obtained from former NSA contractor Edward Snowden, Microsoft is scrambling to encrypt its Internet traffic amid fears the NSA broke into its global network, impacting Hotmail and Windows Live Messenger services. General counsel Brad Smith said while the company had no independent verification of the NSA targeting, if true it would be “very disturbing” and a possible constitutional breach.

Sure would be. I told you with the very first Snowden release not to trust the government with anything. This continues to be borne out by the facts.

--China launched an antitrust probe into Qualcomm as the country gears up for the launch of high-speed LTE networks, a market that Qualcomm is a leader in. I had no idea China accounted for 49% of Qualcomm’s sales in its latest fiscal year. At issue is Qualcomm’s refusal to license its patents for use in networks on reasonable terms. The EU has had a longstanding issue with the company on this front.

--Boy, this is telling. From Bloomberg’s Francois de Beaupuy: “Average headline rents for new, redeveloped or renovated (commercial) space in Paris fell 13 percent in the third quarter from a year earlier.”

It’s about record high taxes under President Francois Hollande and a stagnating overall economy. One real estate broker said demand for new leases has fallen between 15 and 18 percent from a year earlier, a huge decline as these things go.

--Yahoo is hiring Katie Couric as Global Anchor as CEO Marissa Mayer continues to try to jumpstart a turnaround.

--Barron’s had a bullish cover story on Sirius XM. Sirius is up to 26 million subscribers and annual sales approaching $4 billion. And with the shares up about 75% this year (and up a zillion since bottoming at five cents in Feb. 2009), the stock is no longer just a favorite of day traders. [Sirius closed the week at $3.77.]

--Crain’s New York Business had a piece by Andrew J. Hawkins on the impact of New York’s three main airports – JFK, LaGuardia and Newark – on the local economy. I was surprised to see that the three now account for 448,000 jobs (213,000 at JFK, 147,000 at Newark and 87,000 at LaGuardia) compared with 248,000 in 2004, according to a study released by the Global Gateway Alliance and the Partnership for New York City. “Those jobs total $22.8 billion in wages averaging $51,000, which is higher than 75% of all incomes in the U.S. All told, the airports’ aviation operations, capital spending and tourism resulted in $63 billion in economic activity, the groups found.”

Yes, the airports are indispensable to economic growth, with 19.5 million domestic and international tourists flying through the three, “spending more than $20 billion on shopping, lodging, meals, entertainment and local ground transportation which in total created 193,000 local jobs, according to the analysis.” [Hawkins]

Current construction projects, such as at Newark’s Terminal A, are generating 1,500 jobs.

But there remain huge infrastructure issues to accommodate the growing demand. Limited space, for starters. And more than a third of all flight delays in the country originate in New York. The airports desperately need the NextGen air-traffic-control project to reduce delays but no word on when it will come to the New York area.

--Crain’s also reports that this will be the first year since 2007 that there is a pickup in demand for holiday parties among New York area companies, always a solid economic barometer. As reported by Lisa Fickenscher, “96% of corporations this year are planning to throw (them), compared with 91% in 2012 and 74% in 2011, the all-time low during the past 25 years. In 1996 and ’97, 97% of employers held holiday bashes.

But, no more caviar...the parties are far more modest. [6% of companies said they would spend more, 11% will spend less, according to a survey by executive search firm Battalia Winston.]

By the way, a holiday party at the Plaza Hotel in New York for 1,000 guests would set the company back between $150,000 and $300,000. 

Here at StocksandNews, we’re still in austerity mode and it’s likely to be a six-pack of domestic and a bag of Chex Mix. I mean the cost of my domestic just went up again, too! Goodness gracious.

--Only weeks after rejecting a takeover bid from Jos. A. Bank Clothiers Inc., Men’s Wearhouse Inc. struck back with a $1.5 billion bid of its own. The combined company would have 1,700 stores, which could raise antitrust concerns. [Men’s Wearhouse has 1,100; Jos. A. Bank 600.]

--A little book from 1640, “The Bay Psalm Book,” believed to be the first book printed in what would become the U.S., sold for $14.2 million, an auction record for a printed book, surpassing the previous record-holder, a copy of John James Audubon’s “Birds of America,” which sold for $11.5 million in 2010.

Boston’s Old South Church owned two copies of the Bay Psalm Book, with only 11 total known to have survived, and in varying degrees. The church voted to sell one of the two to increase its grants and ministries. Samuel Adams was a member of the church, which was established in 1669, and Benjamin Franklin was baptized there. Very cool. 

Originally, 1,700 copies of the book were printed on a press shipped from London, as noted in an AP story.

One more. The last time a copy of the book came on the auction block it was 1947 and sold for a then-record $151,000.

And another...the record for any book is a personal notebook of Leonardo da Vinci’s scientific writings and diagrams, which sold at a Christie’s auction in 1994.

--Alas, it’s Thanksgiving...from Crain’s... “Food pantries are serving up to double the amount of people they helped last year at this time.” Not good.

Foreign Affairs, part II

Syria: The United Nations announced there would be peace talks in Geneva on Jan. 22 for the first time between the Syrian government and the rebels, though no one seems to know just who will show up. Supposedly, the Syrian National Coalition, the main opposition group, will participate, though it has limited control over the disparate rebel groups. It does remain dead set against allowing Iran to attend. 

For its part, the government said Bashar al-Assad will not step down and may run for another term in presidential elections set for mid-2014.

On the battlefield, there have been heavy clashes in the suburbs of Damascus, with at least 160 rebels and government forces killed last weekend. The situation is so bad for some of the rebels that pictures emerged of them butchering an emaciated zoo lion for food.

Meanwhile, the U.N. issued a report on the damage being inflicted on the children of Syria, with as many as 300,000 living in Lebanon and Jordan without schooling this year. Many as young seven are working for low pay. More than half of 2.2 million Syrian refugees are children and as the U.N. High Commissioner for Refugees Antonio Guterres said: “If we do not act quickly, a generation of innocents will become lasting casualties of an appalling war.” A London-based think-tank put the number of children killed in the three-year-old civil war at more than 11,000.

Israel: A new al-Qaeda-inspired group has emerged in the West Bank that acts independently of Fatah and Hamas. The group was said to be planning attacks against Israeli and Palestinian targets. So on Tuesday, Israel’s Defense Forces killed three alleged members of the group, which has now fueled fears of renewed violence in the area. Palestinian officials have warned they will be the targets of any new uprising.

Salafist groups are expanding their presence in the West Bank, after establishing themselves in the Gaza Strip. They pledge fealty to a broader Islamist cause while Hamas, Islamist-inspired, is first and foremost a Palestinian nationalist movement.

Egypt: The interim president banned public gatherings of more than 10 people without prior government approval (three days’ notice being required). Then Egyptian security forces arrested a prominent political activist over inciting a demonstration in defiance of the new law. Alass Abdel-Fattah, a blogger, was seized at his home and his wife beaten, according to the father, a prominent lawyer in Cairo.

And in Alexandria on Wednesday, a judge sentenced 14 women who participated in an Islamist protest last month to 11 years in prison. [New York Times]

So much for Sec. of State John Kerry’s words a few weeks ago when he made his first visit to Egypt since the military coup that the government’s “road map (to democracy) is being carried out to the best of our perception.”

As the Washington Post pointed out in an editorial: “In another setback for democracy, the 50-member committee writing amendments to the constitution approved an article allowing military trials of civilians in certain cases. The article would give the regime yet another bludgeon over any opposition, threatening to bring them into military courts.”

Egypt also expelled the Turkish ambassador last weekend, a sharp escalation in tensions, accusing the envoy of strongly backing the Muslim Brotherhood and former President Mohammed Morsi.

Ukraine: President Viktor Yanukovych told the European Union to stop interfering in the fate of his rival, former Prime Minister Yulia Tymoshenko, saying her imprisonment has nothing to do with Kiev’s integration with Europe. Yanukovych said Tymoshenko was part of a ring of criminals and that her fate lied in the hands of the nation’s judges.

Germany was scheduled to receive Tymoshenko for treatment of chronic back trouble until Yanukovych blocked the move as his government did a sudden about face on signing a trade deal with the EU. Poland’s president said the failure to sign the deal was thwarted by a Russian policy of blackmail and pressure.

Thousands of protesters continue demonstrations in Kiev over the government’s move to suspend the landmark pact with the EU. More than 100,000 took to the streets last weekend in the biggest protests since the Orange Revolution in 2004.

Traveling in Italy, Russian President Vladimir Putin told EU officials to cool it with the rhetoric while endorsing three-way talks between the Russia, Ukraine and the EU.

Then on Friday, at a European Union summit with six countries in eastern Europe, it was hoped the trade deal with Ukraine could be rescued, but Yanukovych vetoed it. Both German Chancellor Merkel and French President Hollande pinned full responsibility for the breakdown on Yanukovych.

Yanukovych did say Ukraine would sign a trade pact with the EU in the future but his nation required a far greater aid package than was proposed.

Protesters in Kiev’s Independence Square, on hearing Ukraine had not signed the agreement, chanted “Coward! Coward!” in reference to Yanukovych.

Afghanistan: President Hamid Karzai refused to sign a long-delayed security deal with the United States that would keep troops in the country beyond 2014 and the formal end of combat operations, with Karzai defying his own council of tribal elders (the Loya Jirga) who called on him to sign by yearend, as Washington has demanded, rather than wait until his term expires in April as Karzai now wants. The Bilateral Security Agreement also has to be approved by the Afghan parliament.

But as the Washington Post editorializes, while Karzai’s stance is frustrating, “The Obama administration unwisely responded (to his recalcitrance) by setting an unnecessary deadline of Dec. 31 for Mr. Karzai’s signature and declaring that, if it is not met, it will plan on withdrawing all forces after next year.

“Both sides seem to be betting that the other is bluffing....

“Though some U.S. officials claim that a stable Afghanistan is no longer a strategic interest, the United States also has much to lose: namely, the fragile gains purchased by a dozen years of hard fighting that have cost nearly 2,300 American lives. Those gains include an Afghan army that has taken over 99 percent of the fighting against the Taliban and held its own, as well as a nascent democratic political system that is headed toward a competitive presidential election to replace Mr. Karzai. No wonder NATO allies are quietly urging the White House not to throw away in a fit of pique the achievements of the most consequential operation in the alliance’s history.”

Thailand: Mass protests were held this week in a campaign meant to topple Prime Minister Yingluck Shinawatra. On Friday, about 1,200 stormed the grounds of the national army headquarters, though dispersed peacefully after two hours. It was an act of symbolism in a country that has seen 18 successful or attempted military coups since the 1930s.

Yingluck is being accused of serving as proxy for her billionaire brother, Thaksin Shinawatra, the former leader ousted in a coup in 2006. He has been living overseas to avoid a corruption conviction.

Yingluck survived a no-confidence vote on Thursday and said she would talk to the protesters.

Brazil: So I’ve been writing how totally unprepared Brazil is for the World Cup, with major construction issues, and on Wednesday, part of the stadium hosting the World Cup opener next year collapsed, causing significant damage and killing two people. Television footage showed “a huge metal structure buckled atop the stadium... A LED panel installed outside the venue also was hit.” Apparently a crane collapsed on top of the metal structure. FIFA was due to sign-off on all 12 newly constructed venues in December. 

Latvia: The prime minister resigned after accepting blame for the supermarket roof collapse that killed 54. Police have opened a criminal investigation. Valdis Dombrovskis came to power in 2009 amid Latvia’s financial crisis, as bad as any on the continent, and is widely credited with bringing the nation back without having to go bankrupt. But you can imagine in a little country like this one just what a tragedy this was.

Zimbabwe: The owners of foreign firms operating in certain sectors of the economy after January 1, 2014, will be subject to arrest, the government of President Robert Mugabe has warned. Specifically, farming and baking are among the sectors now reserved for “indigenous,” or black, Zimbabweans. Owners of these businesses, which also include employment and advertising agencies, face a fine or imprisonment if they are still operating come January. Most of the country’s white-owned land has already been seized, much to the detriment of the people.

Editorial / London Times

“(Mugabe’s move) will be a straightforward act of xenophobic theft and in that sense recalls the Nazi campaign of ‘Aryanisation’ that saw the number of Jewish-owned businesses fall by two thirds between 1933 and 1938. Shamefully it was not an unpopular policy. Nor is Mr. Mugabe’s.

“In human rights terms this is a disgrace. It is also staggeringly and tragically stupid. It makes Zimbabwe a place where it would literally be madness to invest or start a business, even if you were a native Zimbabwean. For who knows when the Government, for expedient or populist reasons – citing some invented imperative – might not demand your business be turned over to the State?

“The result is far more likely to be impoverishment than ‘indigenisation.’ But by the time those chickens all come home to roost, even Mr. Mugabe may have relinquished his iron grip both on Zimbabwe and on life.”

Mugabe is now 90. He cannot die too soon.

But those of you who have been with me since the beginning will recall how I long argued Mugabe should be forcibly removed (or taken out) and how the world, in those pre-9/11 days, may have ended up differently if he had.

I said then that it should be a joint U.S.-British operation with the Brits, because of their past in Rhodesia, taking the lead.

So what happens this week? In an interview with al-Jazeera, former South African President Thabo Mbeki said former British Prime Minister Tony Blair had planned on overthrowing Mugabe, but Mbeki said to British officials at the time, “Mugabe is part of the solution.” A spokesman for Mr. Blair said: “Tony Blair has long believed that Zimbabwe would be much better off without Robert Mugabe...but he never asked anyone to plan or take part in any such military intervention.”

Central African Republic: Once again, as was the case in Mali, France is stepping up and sending 1,000 troops here to keep growing chaos at bay, after a top U.N. official warned of mass atrocities since rebel groups joined forces to overthrow the president last March. France is joining an African force of about 2,500 that hopes to stabilize the situation.

Random Musings

--Tennessee Republican Sen. Lamar Alexander / Washington Post

“Thursday’s (Nov. 21) stunning rules change by Senate Democrats can best be described as ObamaCare II: another exercise of partisan political power to permit the majority to do whatever it wants. This time, the goal was advancing its agenda unchecked through the courts and executive agencies.

“With all Republican members opposed, the Senate voted 52 to 48 to invoke the ‘nuclear option,’ allowing a majority of senators present and voting (so, not necessarily 51) to approve presidential nominees except for Supreme Court justices. For those positions, this eliminated the filibuster, which required 60 votes to proceed to an up-or-down majority vote.

“This was the most dangerous restructuring of Senate rules since Thomas Jefferson wrote them. It creates a perpetual opportunity for ‘tyranny of the majority,’ which Alexis de Tocqueville called one of the greatest threats to American democracy.

“As Sen. Carl Levin (D-MI) noted [Ed. Levin was one of the Dems who voted against changing the rules], quoting former senator Arthur Vandenberg on Thursday: ‘If a majority of the Senate can change its rules at any time, there are no rules.’ It is as if the Red Sox, finding themselves behind in the ninth, added a few innings to make sure they could defeat the Cardinals in the World Series. Future majorities could, for example, end the filibuster for legislation, removing any obstacle to tyranny of the majority....

“(One of the excuses Democrats offered for changing the rules was that) Republicans have unfairly blocked the president from filling vacancies on the U.S. Court of Appeals for the D.C. Circuit.

“In 2006, Democrats insisted on doing precisely what Republicans are asking in 2013: moving judges from courts where they are not needed to where they are needed most. They did not think this unfair then.

“In 2006, Democrats on the Judiciary Committee, including Sens. Patrick Leahy, Joe Biden, Chuck Schumer and Dick Durbin, said that ‘under no circumstances’ should new judges be confirmed to the D.C. court because its workload was half the national average and there were judicial emergencies elsewhere.

“With Bush’s approval, the Senate reduced the number of seats on the D.C. Circuit by one, moving that slot to the 9th Circuit. The D.C. Circuit hears fewer cases today than it did in 2007.

“So why would Majority Leader Harry Reid (D-Nev.) engineer a rules change that he said in 2006 ‘would be the end of the Senate’? Because the vote was not about the filibuster. It was about permitting the majority to do whatever it wants.

“Call it ObamaCare II, for which the only cure is a referendum next November.”

--Tom C. Korologos / Wall Street Journal

“The Founding Fathers, taking note of various definitions regarding so-called majority rule, made it very clear when they drafted the Constitution that its operating principle would not be majority rule, but rather protection of the rights of the minority.

“To that end, the Constitution is chock-full of requirements to protect the minority. The original premise of the American system is checks and balances. Three branches of government – legislative, executive and judicial, in that order – are the subject of the first three Articles of the Constitution. Each limits the power of the others. Consider:

“ ‘Each State shall have at Least one Representative.’

“ ‘The Senate of the United States shall be composed of two Senators from each State’ – regardless of size or population.

“ ‘The Senate shall have sole Power to try all impeachments...and no Person shall be convicted without the Concurrence of two thirds of the Members present.’

“ ‘Each House may determine the Rules of its Proceedings,’ and can punish members for bad behavior – but can expel them only with a two-thirds vote.

“ ‘Before a bill becomes law, it must ‘be presented to the President of the United States; if he approves, he shall sign it, but if not he shall return it with his Objections to that House in which it shall have originated.’ If both houses then pass the bill by a two-thirds vote, the section of the Constitution continues, then it ‘shall become Law.’

“ ‘The President shall be Commander in Chief.... He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur.’

“ ‘The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments which, in either case, shall be valid....when ratified by the Legislatures of three-fourths of the several States.’”

Yes, it’s about the protection of the minority, and as Korologos concludes:

“One final thought for Senate Democrats.  At some point it is entirely possible, and perhaps increasingly likely, that Republicans will again control the White House and the Senate. So today’s majority might want to keep in mind what a wise person once advised: ‘When you build a gallows, be sure you know whom you are going to hang.’”

--George Will / Washington Post

“The place to begin understanding the unraveling of (Obama’s) presidency is page 274 of ‘The Bridge: The Life and Rise of Barack Obama.’ The author, David Remnick, editor of the New Yorker, quotes Valerie Jarrett, perhaps Obama’s closest and longest-serving adviser, on her hero’s amazingness:

“ ‘He knows exactly how smart he is....I think that he has never really been challenged intellectually....He’s been bored to death his whole life. He’s just too talented to do what ordinary people do. He would never be satisfied with what ordinary people do.’

“Leave aside the question of whether someone so smitten can be in any meaningful sense an adviser. About what can such a paragon as Obama need advice? (Although he did recently say, ‘What we’re also discovering is that insurance is complicated to buy.’ Just to buy.) It is, however, fair to note that what ordinary people ordinarily do is their jobs, competently. Obama’s inability to be satisfied with anything so banal has plunged him into Jimmy Carter territory.

“Carter’s presidency crumbled when people decided they still liked his character but had no confidence in his competence. ObamaCare’s misadventures, and Obama’s response to them, have caused people to doubt both his character and his competence.”

--Related to the above, back in February 2009, a CNN/ORC survey asked if President Obama was a strong and decisive leader (80% said ‘yes’) and if he inspired confidence (75% affirmative). Today, those figures are 46% and 44%.

And on whether the president is “honest and trustworthy,” 74% believed him to be in Feb. 2009, only 46% do today.

--Approaching his re-election year, New York Dem. Gov. Mario Cuomo has a 62% approval rating among voters, according to a Quinnipiac University poll. In a head-to-head against a possible Republican challenger, Westchester County executive Rob Astorino, Cuomo wins 56-25.* More than 80% say they don’t know enough about Astorino to form an opinion. Granted, I live in New Jersey but until just now never heard of the guy.

*A Wall Street Journal/NBC 4 New York/Marist poll has the Cuomo/Astorino gap at 65-23.

Of course I long thought Cuomo was a strong candidate for the Democratic presidential race in 2016 and he still could be. If ObamaCare truly goes up in flames, that obviously doesn’t help Hillary Clinton.

[In the WSJ/NBC survey, Hillary would defeat Cuomo in a primary among New York Democratic registered voters 64-14. In a hypothetical general election, she defeats Chris Christie 51-44 among New York state registered voters.]

--CBS placed “60 Minutes” correspondent Lara Logan and her producer on leave after finding their report on Benghazi “deficient.” The segment aired Oct. 27 and purported to be an eyewitness account of the attack, but an internal CBS investigation found Dylan Davies’ version of events was not properly vetted, nor did the report note a book co-written by Davies about the attack was published by a unit of CBS Corp.

--So I saw that Pope Francis put together a major teaching document, Evangeliii Gaudium (“The Joy of the Gospel”), and thought I’ll print it out and read it over the Christmas holidays. Doh! 224 pages. Luckily I didn’t press ‘print’ and walk away.

But I did glance through it and printed out about 15 pages. It’s the first encyclical written entirely by Francis and he heavily cites Popes John XXIII and Paul VI, who presided over the Second Vatican Council, as well as a rarity, documents of bishops’ conferences, Francis having said he wanted to give the local church a greater say in governance.

Pope Francis:

“In our time humanity is experiencing a turning-point in its history, as we can see from the advances being made in so many fields. We can only praise the steps being taken to improve people’s welfare in areas such as health care, education and communications. At the same time we have to remember that the majority of our contemporaries are barely living from day to day, with dire consequences. A number of diseases are spreading. The hearts of many people are gripped by fear and desperation, even in the so-called rich countries. The joy of living frequently fades, lack of respect for others and violence are on the rise, and inequality is increasingly evident. It is a struggle to live and, often, to live with precious little dignity.... We are in an age of knowledge and information, which has led to new and often anonymous kinds of power.

“Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape....

“In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.

“One cause of this situation is found in our relationship with money....We have created new idols. The worship of the ancient golden calf has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

“While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which becomes the only rule.

“Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person.... Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order....

“A financial reform open to such ethical considerations would require a vigorous change of approach on the part of political leaders. I urge them to face this challenge with determination and an eye to the future, while not ignoring, of course, the specifics of each case. Money must serve, not rule! The Pope loves everyone, rich and poor alike, but he is obliged in the name of Christ to remind all that the rich must help, respect and promote the poor. I exhort you to generous solidarity and to the return of economics and finance to an ethical approach which favors human beings.”

Editorial / New York Post

“We fully share the pope’s concern about an ‘economy of exclusion and inequality.’ We would only say that in the effort to help the poor and marginalized take their rightful place at the banquet of life, Pope Francis will find some of his strongest allies among the ranks of those who champion a free market that plays no favorites.”

--Finally, astronomers have been waiting with bated breath as Comet ISON hurtled toward the sun this week. Would it meet a violent death, or provide us Earthlings with a spectacular show the next few weeks. As Meeri Kim wrote in the Washington Post the other day, as the comet rounds the sun, would its tail “get ripped off by a cloud of solar particles,” or would the sun’s “brutal radiation and pressure....demolish it completely”?

Jim Green, director of the Planetary Science Division at NASA Headquarters told the Post, “ISON is very special. What makes it different is where it comes from – the further reaches of the sun’s gravity.”

The distance from the Earth to the sun is 1 AU, or astronomical unit. “Comet ISON began its journey 100,000 AU away from us,” writes Meeri Kim.

According to NASA, ISON has been heading toward the sun for at least a million years.

If it survives its slingshot trip around the sun, it’s very possible we’ll be able to see it with the naked eye during the first or second week of December (certainly with binoculars).

You’d look in the southeast skies for a prominent object with a bright tail pointing upward, around 30 minutes before sunrise.

C’mon, ISON! You can do it, Girl!

As I go to post, astronomers are hopeful at least some of it survived. We should know for sure this weekend.

---

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

God bless America.

---

Gold closed at $1250
Oil, $92.72

Returns for the week 11/25-11/29

Dow Jones +0.1% [16086]
S&P 500 +0.1% [1805]
S&P MidCap -0.3%
Russell 2000 +1.6%
Nasdaq +1.7% [4059]

Returns for the period 1/1/13-11/29/13

Dow Jones +22.8%
S&P 500 +26.6%
S&P MidCap +27.8%
Russell 2000 +34.6%
Nasdaq +34.4%

Bulls 55.7
Bears 14.4 [Source: Investors Intelligence...another all-time low for the bear reading.]

Have a great week. I appreciate your support.

Catch me on Twitter @stocksandnews

Brian Trumbore



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-11/30/2013-      
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Week in Review

11/30/2013

For the week 11/25-11/29

[Posted 10:00 PM ET, Friday]

Washington and Wall Street

So did you go shopping on Thanksgiving? I sure as heck hope not. I was fortunate to be able to spend much of the day with family and caught my share of football as well. 

But before we get to ObamaCare, a few economic data points of note. October durable goods came in down 2.0%, as expected, and not good; the November reading from the Chicago Purchasing Managers (PMI) came in at a strong 63.0, better than expected but down a bit from October’s stupendous 65.9; and there were conflicting sentiment readings, with the Conference Board’s consumer confidence index hitting a 7-month low, but the Michigan sentiment reading coming in better than expected, though still down substantially from July.

On the housing front, building permits for October were at their highest level in five years, though this was largely because of multi-family plans rather than the single-family variety. The S&P/Case-Shiller 20-city home price index for September (remember, this one has a bit of a lag), showed a 0.7% increase over August, 13.3% over September 2012 (the best annual rate since Feb. 2006), though there is definitely some deceleration in month-over-month gains. That said, co-founder of the index, Nobel Prize winner Robert Shiller, says there is also some bubble-type  behavior in the likes of Las Vegas, up 29.1% year over year, San Francisco up 25.7%, and to a lesser extent Los Angeles (21.8%) and San Diego (20.9%).  Some of the froth is due to the institutional nature of the buying. The New York region, on the other hand, has only seen a 4.3% increase 9/13 over 9/12.

The Case-Shiller data also masks the fact it just isn’t that easy for the average home buyer to get a mortgage, certainly nowhere near as easy as at the height of the bubble, and as Barron’s Jim McTague points out in an important piece, with the banks increasingly exiting the mortgage biz, it’s going to be tough for those looking to buy. For starters, less competition is never a good thing.

As for ObamaCare....once again the administration tried to bury an executive change to the health care law (making an announcement on Wednesday as our minds were focused elsewhere) in delaying for one year the provision that allowed small businesses to buy insurance online for their employees through the federal marketplace. The reason? The site can’t handle the back office communications, so to speak. This as we reach the Nov. 30 deadline for the site to be fully functional, or, rather, at least 80% functional, assuming we all don’t go online at the same time and crash it all over again. [Which means I’ll go online this weekend just to do my part in perhaps taking it down, he typed mischievously.]

House Speaker John Boehner immediately issued a statement: “The president bit off more than he can chew with this health care law, and small businesses are now forced to bear the consequences. Business owners across the country are already having health care plans for their employees canceled by this law, and now they’re told they won’t have access to the system the president promised them to find different coverage. Instead, they’ll have to resort to a system you’d expect to see in the 1950s.”

Yes, small businesses and their employees seeking coverage in the federal exchange could still do so, but they’d need to employ a broker or insurance agent and use a paper application.

As reported by Robert Pear in the New York Times:

“The problems engulfing President Obama’s health care law are remarkable because administration officials had repeatedly brushed aside doubts about whether they would be ready.

“Testifying before a congressional panel on Oct. 29, Marilyn B. Tavenner, the administrator of the Medicare agency, said, in response to a question, that the website for the small business exchange would be in operation by the end of this month.”

Stephanie Kirchgaessner / Financial Times

“The White House has promised that the website will work for eight in 10 Americans by the end of this week, even though it has also acknowledged that up to 40 percent of ‘back end’ functions that must work by January have yet to be built and tested.

“The fiasco is more than just an isolated political setback for Mr. Obama. The scale of the crisis facing the administration has inspired comparisons with the loss of public confidence in President George W. Bush following his disastrous handling of hurricane Katrina in 2005. Mr. Bush never recovered from that performance while he was in office.

“Fair or not, the magnitude of the political challenge facing Mr. Obama cannot be overstated. His signature domestic achievement, the passage of the 2010 Affordable Care Act, is in a shambles. Questions about his competence – to say nothing of his legacy – are mounting....

“Some see the failure as a manifestation of the White House’s insular culture, in which critics are seen as naysayers and few outside the president’s inner circle are trusted.

“Charlie Cook, the political analyst, points to anecdotes about the internal White House debates that took place in 2009, in which Rahm Emanuel, Mr. Obama’s then chief of staff, was urging the president to scale back his ambitions on healthcare reform and pursue a modest policy that could garner Republican support.

“In Mr. Cook’s view, Mr. Obama’s refusal to accept a scaled back plan was emblematic of an idealistic leader who had started to believe that ‘everything he touched would turn to gold.’

“ ‘To me, luck is sort of a thread here. They were warned but they felt lucky and pushed ahead,’ says Mr. Cook. ‘The luck just finally ran out. He put too much confidence on luck as opposed to asking the question: what is the reality? What are the real present dangers here?’”

Editorial / Wall Street Journal

Physician dissatisfaction. U.S. medicine is under major financial strain, but not because the government is paying for quality instead of volume as liberals claim. The fee-for-service status quo is largely intact and reimbursement is merely being squeezed down. Exchange insurance with Medicaid-style networks pays Medicaid rates, while ObamaCare’s Medicare cuts are also sending that program’s price controls to Medicaid levels.

“These rates are already so low that many doctors won’t take new government patients. Look for many doctors to start to conclude they will make a better living – and have more autonomy – by opting out. Providers participating in federal programs are subject to onerous quality-reporting rules, even if the metrics don’t accurately measure quality. The Affordable Care Act treats health professionals like robots on a factory line who can be reprogrammed to execute federal work orders.

“Our guess is that President Obama will try to power through all of this the way he always has: Blame others, stretch or break the law to plug the holes, squeeze insurers and try to keep Democrats from breaking ranks before the 2014 election. Perhaps it will work. But if the disruption spreads, and complaints multiply, don’t be surprised if Democrats force the White House to reopen the law.”

Finally, aside from ObamaCare, when Congress returns from its Thanksgiving recess it will be back to talk of the budget and the Dec. 13 deadline for an agreement among budget conferees, though this particular deadline is flexible. For now the only agreement seems to be on replacing the sequester (automatic cuts) with a more rational set of spending reductions.

But the conference co-chairmen, Senator Patty Murray and Congressman Paul Ryan, are struggling to find common ground on even $50 to $100 billion. Forget a big deal that makes changes to entitlements.

If Dec. 13 passes without action, you then have the Christmas recess, after which Congress faces the real deadline, Jan. 15, when government funding expires again.

The importance of these two dates is that the Federal Reserve meets in between, Dec. 17-18, and as I’ve written, should there be no agreement in principle by Dec. 13, the Fed will not begin to taper its $85 billion a month bond-buying program amid the renewed uncertainty, regardless of how the economic data plays out in the meantime, including the next jobs report, Dec. 6.

Europe: First the economic news. Europe needs inflation but the data for November, the flash estimate from Eurostat, the statistical office of the European Union, continued to be putrid, up 0.9% annualized, which is up from 0.7% in October but still well below the European Central Bank’s target of 2.0%. The core rate was 1.0% compared to 0.8% last month.

And then you had the unemployment data for October, also courtesy of Eurostat, which showed the eurozone jobless rate ticking down to 12.1% from the record high 12.2% in September. It was the first decline since February 2011.

While other data has showed the eurozone economy to be slowly recovering, the disparity between nations, especially on the employment front, is stark.

Eurostat pegs Germany’s unemployment rate at 5.2% (4.8% in Austria), but remains 27.3% in Greece (August) and 26.7% in Spain, actually up a tick from September there.

The rate in Italy is 12.5% (unchanged from September) and 10.9% in France (down from 11.1%).

The youth rate in some of the countries remains sickeningly high. 58% in Greece, 57.4% in Spain, 41.2% in Italy and 36.5% in Portugal.

Separately, retail sales in Germany for the month of October fell 0.8% over September, the second consecutive monthly decline and another sign the German economy is overly dependent on exports for its growth, much to the chagrin of everyone from Washington to the Euro periphery to the IMF.

Meanwhile, on the political front, German Chancellor Angela Merkel’s Christian Democrats (CDU) and the allied CSU have agreed on a coalition with the center-left Social Democrats (SPD), though the SPD must ratify the deal in mid-December in a referendum among 470,000 members and a ‘yes’ vote is not a certainty. A recent poll had 49% for joining the coalition, 44% against.

It’s complicated. For starters, there are many who are upset with Merkel and the CDU for giving up too much to the SPD, which gained only 26% in the Sept. election compared to 41.5% for the CDU/CSU but to some is acting like it won.

Merkel and the SPD reached settlement on issues such as the introduction of Germany’s first national minimum wage, 8.50 euro ($11.50 an hour) beginning in 2015, as well as a lower retirement age for some folks, both hardly conservative CDU stances. But the CDU gains SPD support on no tax increases, a key demand of Merkel’s.

Regardless, IF the SPD votes to join the coalition, it could be an unstable government. But if the SPD did vote ‘no,’ then Merkel would be forced to turn to the Green Party, or call new elections, at which point an anti-Euro party, that emerged out of nowhere in September to almost gain the required 5% for seats in parliament, could pick up even more support (polls show it making further post-election gains).

Lastly, understand many in the SPD wanted to stay in the opposition, especially after their last experience in a coalition with Merkel, 2005-09, when the SPD then lost support in succeeding votes because it was perceived to be a weak partner.

In Italy, former Prime Minister Silvio Berlusconi was expelled from parliament and now could face arrest over his conviction for tax fraud and other charges that thus far he has been shielded from due to his immunity from prosecution. Berlusconi told supporters it was a “day of mourning” for democracy.

Berlusconi, 77, said he would continue the fight outside parliament. No formal vote was actually held in the Senate. The speaker simply said, “The conclusions of the committee on elections have been approved, abolishing the election of senator Silvio Berlusconi.”

For now, it appears Berlusconi will have to serve a one-year sentence, probably under house arrest, for his 2012 conviction of tax fraud. He continues to appeal his convictions of paying for sex with an underage prostitute and other charges.

As for Greece, the Organization for Economic Cooperation and Development said the Greek economy would shrink a further 0.4% in 2014, while the government says it will grow 0.6%, a big difference, especially in terms of further bailout aid.

China: Last Saturday, China established an “air defense identification zone” (ADIZ) over disputed islands in the East China Sea, Senkaku in Japan and Diaoyu in China, that I have written for a few years now are a major source of tension between the two nations. 

Japan dismissed the Chinese move as “not valid at all” and a few days later the U.S. flew two unarmed B-52 bombers over the Senkakus, with the Pentagon saying Washington “continued to follow our normal procedures, which include not filing flight plans, not radioing ahead and not registering our frequencies.” The U.S. said the flights were part of a regular exercise in the area. China later said it had monitored the U.S. aircraft.

A People’s Liberation Army air force general warned that any foreign aircraft disobeying warnings and deemed to be ‘hostile’ could be shot down, though it was unclear whether the general was speaking for the government.

But Hu Xijin, editor-in-chief of the Global Times, a party mouthpiece, said on the Sina Weibo microblogging platform: “ADIZ is not equivalent to airspace. China could not possibly force the U.S. and Japan to inform all of their flight plans in ADIZ, but neither will Chinese airplanes inform them when they fly through their own air defense identification zones.”

Japan and South Korea then flew military aircraft through the zone.

Chinese state media on Friday identified Japan as Beijing’s “prime target” in the air defense zone, calling for “timely countermeasures without hesitation” if Tokyo defies it.

The Global Times editorialized: “We should carry out timely countermeasures without hesitation against Japan when it challenges China’s newly declared ADIZ,” adding, “If the U.S. does not go too far, we will not target it in safeguarding our air defense zone. What we should do at present is firmly counter provocative actions from Japan.”

Editorial / Wall Street Journal

“America’s B-52 flights on Tuesday through China’s ‘air defense identification zone’ around the Senkaku Islands seem to have had the desired effect of reassuring allies and showing Beijing that its aggression will be resisted. Japanese and South Korea military flights followed....

“The real tests of the air defense zone will be when the People’s Liberation Army uses it to challenge Japanese forces patrolling the Senkakus. The U.S. can help to deter an armed clash by making more concrete its treaty obligation to assist Japan in defending the islands. One way to do so would be joint sea and air patrols with Japanese forces. If Beijing challenges those patrols, it would be taking on both countries – a security trip-wire similar to the stationing of U.S. forces on the Korean Peninsula.

“This could lead to an eruption of Chinese anger, and the U.S. might pay a short-term price in economic and diplomatic retaliation. But allowing China’s aggression to succeed means running a high risk of future conflict, accidental or intentional. As long as Beijing continues its bullying, U.S. policy should be to make sure that China’s provocations are met with further demonstrations of solidarity and resolve.”

Philip Stephens / Financial Times

“At first glance, Beijing’s designation of an air defense zone in the East China Sea marks a calibrated escalation of its longstanding dispute with Japan about sovereignty of the Senkaku or, in Chinese, Diaoyu islands. A more worrying, and plausible, interpretation is that Beijing has decided to square up to the U.S. in the western Pacific. East Asia is looking an ever more dangerous place.

“When Xi Jinping met Barack Obama in California this year, the Chinese president told his U.S. counterpart the Pacific Ocean was large enough to accommodate two great powers. The inference was that the U.S. and China should divide the spoils. Also implicit in the remark, though, was that China would not accept a status quo that saw the U.S. remain the Pacific’s pre-eminent power. At the summit, Mr. Obama sidestepped the issue. Now it seems Mr. Xi has decided it is time for China to start grabbing its share....

“Chuck Hagel, the U.S. defense secretary, called the Chinese move ‘a destabilizing attempt to alter the status quo in the region.’ Other U.S. officials were less diplomatic. Beijing, though, is playing a long game. The $64,000 question in east Asia is whether the U.S. has the staying power to resist a sustained Chinese push for regional hegemony....

“The danger of miscalculation on both sides is far from negligible. In Shinzo Abe, Japan has a nationalist prime minister determined not to be cowed by his country’s more powerful neighbor – nor to be over-influenced by private U.S. warnings that Tokyo should play its part in lowering the political temperature.

“Mr. Abe is an unabashed revisionist with a dangerous habit of airbrushing the nasty bits from Japanese history. He is also looking for an excuse to amend Japan’s constitution to provide it with something more than a defensive military capability. A clash, accidental or intended, with China around the Senkaku would provide just such a justification....

“Chinese policy makers are nothing if not assiduous students of history. The rise of Germany at the end of the 19th century has long featured prominently in the curriculum of Beijing’s foreign policy elite. China, these officials tell visitors, will not repeat the Kaiser’s miscalculation in uniting Germany’s neighbors in opposition to its rise to great power status. This attentiveness to the past now seems to be taking second place to China’s determination to assert its power. History’s mistakes are often repeated.”

On Thursday, China’s defense ministry hit back at Japanese objections.

“Japan has absolutely no right to make irresponsible comments regarding China setting up the East China Sea ADIZ. We would like to ask Japan to revoke its own ADIZ first, China will then consider this request in 44 years,” referring to Japan establishing its ADIZ 44 years ago in 1969. [South China Morning Post]

Thursday and Friday, China sent planes over the ADIZ, asserting its determination to enforce control over the area. Friday, Prime Minister Abe said he would respond to China’s action in a “calm, assured manner.”

Vice President Joe Biden is traveling to Beijing in the next few days to “convey our concerns directly and...seek clarity regarding the Chinese intentions in making this move at this time,” a senior administration official told the BBC.   Biden will also be making stops in Japan and South Korea.

Iran: As reported exclusively by the Associated Press, “The United States and Iran secretly engaged in a series of high-level, face-to-face talks over the past year, in a high-stakes diplomatic gamble by the Obama administration that paved the way for the historic deal sealed early Sunday in Geneva aimed at slowing Tehran’s nuclear program.”

The talks went back to last March and were held in the Middle Eastern nation of Oman and elsewhere. Israeli Prime Minister Benjamin Netanyahu was not informed by President Obama until this past September 30, and while U.S. officials did not describe his reaction, it was the next day that Netanyahu delivered his U.N. General Assembly speech describing Iranian President Rohani as a “wolf in sheep’s clothing” and warning the U.S. against reading too much into Rohani’s seeming change in tone.

Saturday, President Obama addressed the American people, saying in part:

“While today’s announcement is just a first step, it achieves a great deal. For the first time in nearly a decade, we have halted the progress of the Iranian nuclear program, and key parts of the program will be rolled back. Iran has committed to halting certain levels of enrichment and neutralizing part of its stockpiles. Iran cannot use its next-generation centrifuges, which are used for enriching uranium. Iran cannot install or start up new centrifuges, and its production of centrifuges will be limited. Iran will halt work at its plutonium reactor. And new inspections will provide extensive access to Iran’s nuclear facilities and allow the international community to verify whether Iran is keeping its commitments.

“These are substantial limitations which will help prevent Iran from building a nuclear weapon. Simply put, they cut off Iran’s most likely paths to a bomb. Meanwhile, this first step will create time and space over the next six months for more negotiations to fully address our comprehensive concerns about the Iranian program. And because of this agreement, Iran cannot use negotiations as cover to advance its program.”

The deal....

All uranium enrichment above 5% is to be halted.

The entire stockpile of 20% enriched material to be diluted or converted to a form not suitable for further enrichment. This 20% enriched uranium is the feedstock that Iran could use to ‘dash’ towards weapons grade material.

No more centrifuges are to be installed, and large numbers of the existing banks of centrifuges are to be left inoperable.

Iran’s stockpile of 3.5% enriched uranium is to remain the same between now and the end of the six-month period. So any excess material will have to be converted to oxide form.

In broad terms there will be no further construction or experimental work for the Arak reactor which Western experts fear could be used – once it is commissioned – for its plutonium, giving Iran a second route towards a nuclear bomb.

In return Iran gets sanctions relief to the tune of $7 billion, officially, but many believe it will be as much as $20 billion.

Not so fast....

Editorial / Washington Post

“The Fact sheet distributed by the Obama administration about the nuclear agreement with Iran is notable for its omissions. The 2,000-word document, like President Obama’s televised statement Saturday night about the deal, stresses Iran’s pledge to cap its enrichment of uranium, delay the completion of a plutonium-producing reactor and accept additional inspections – measures that will guard against an attempt to produce a bomb while negotiations continue.

“What the White House didn’t report is that the text of the accord makes several major concessions to Tehran on the terms of a planned second-stage agreement. Though White House officials and Secretary of State John F. Kerry repeatedly said that Iran’s assertion of a ‘right to enrich’ uranium would not be recognized in an interim deal, the text says the ‘comprehensive solution’ will ‘involve a mutually defined enrichment program with mutually agreed parameters.’ In other words, the United States and its partners have already agreed that Iranian enrichment activity will continue indefinitely. In contrast, a long-standing U.S. demand that an underground enrichment facility be closed is not mentioned.

“Mr. Obama and other U.S. officials have spoken about a six-month time frame for completing negotiations, but the agreement says the six-month arrangement can be renewed ‘by mutual consent’ and that ‘the parties aim to conclude negotiating and commence implementing [in] no more than one year.’ It also states that ‘there would be additional steps in between the initial measures and the final step,’ including ‘addressing the U.N. Security Council resolutions.’ Those resolutions order Iran to suspend uranium enrichment, but the agreement does not say whether those demands will be enforced.

“The most troubling part of the document provides for what amounts to a sunset clause in the comprehensive agreement. It says the final deal will ‘have a specified long-term duration to be agreed upon,’ and that once that time period is complete, ‘the Iranian nuclear program will be treated in the same manner as that of any non-nuclear weapon state party’ to the Non-Proliferation Treaty. Iran thus could look forward to a time when there would be no sanctions and no special restrictions on its nuclear capacity; it could install an unlimited number of centrifuges and produce plutonium without violating any international accord.”

Benny Avni / New York Post

“Peace is breaking out all over, so why won’t those pesky warmongers just shut up and go away?

“President Obama’s dizzying-paced Mideast diplomacy worries America’s Sunni allies (especially the Saudis, who are privately seething). Israel’s Prime Minister Netanyahu calls the interim deal signed with Iran in Geneva on Sunday a ‘historical mistake.’

“But for Tehran everything’s coming up roses. As our diplomats claim that the ‘infrastructure’ of sanctions remains intact for at least six months, Asian and European firms are already cutting deals with Iranian counterparts as if the sanctions are gone.

“Some, in fact, really are. Like the lifted-in-Geneva ban on insuring Iranian ships – a major reason that Iran’s oil exports had screeched to a near halt.

“Plus, as Tehran’s diplomats contend (and ours deny), the deal ‘kosherizes’ Iran’s uranium enrichment by promising to ultimately let it run ‘a mutually-defined enrichment program.’....

“See those cracks up there? Oops, there goes the whole dam....

“(Even) as they demolish the sanctions that had the Iranian regime in serious pain, (the administration insists) that the only alternative to the Geneva agreement (the only ‘realistic’ deal possible) is war.

“Sorry: Geneva makes war more likely, not less.”

John Podhoretz / New York Post

“The president has spent years talking tough on Iran, but his tough talk was often astoundingly disingenuous. For example, the administration has been taking credit for imposing sanctions on the Iranian regime that brought it to the negotiating table, but in fact he and his people opposed and fought the imposition of those sanctions.

“In 2011, Sen. Bob Menendez (D-NJ) harshly upbraided Obama Treasury Department official David Cohen for testifying against new sanctions in contravention of a private deal between Menendez and the administration.

“ ‘At your request, we engaged in an effort to come to a bipartisan agreement,’ Menendez raged. ‘And now you come here and vitiate that very agreement’ by testifying against it. ‘I find it pretty outrageous.’

“Obama didn’t like the sanctions because he believes maintaining a posture of confrontation is counterproductive. ‘We have sought a new era of engagement with the world,’ he said at the United Nations in September 2009.

“What could that mean? The Bush administration had scads of engagement with the world. It went to the United Nations twice before invading Iraq. It convened a six-nation parley on North Korea. There was a five-nation group to deal with Iran. It negotiated a region-wide free-trade agreement with Central America.

“Obviously, what Obama meant was a different sort of engagement – an engagement in which the United States made special efforts to engage with those who’d conventionally be considered adversaries....

“The presumption of the deal is that we will engineer trust and good will by unilaterally ending or lowering sanctions, and that will in turn change Iranian behavior when it comes to its nuclear program.

“But if the mullahs retain the nuclear material and machinery that caused the sanctions to be imposed in the first place, what incentive is there for them to go beyond the freeze-in-place to which they’ve agreed?

“The administration says the threat in the deal is that the United States will reimpose sanctions it has lifted, and that the United Nations will do the same. Maybe, but in the meantime the mullahs will have gotten their hands on $20 billion.

“One of the president’s chief promises is that Iran won’t get a nuclear weapon. That promise should be considered in light of the promises on healthcare.gov and on the Syrian red line.

“But nobody has any right to be surprised he’s letting Iran have what it wants. He’s made it perfectly clear this is where his foreign policy has been aiming all along.”

Mark Dubowitz and Orde Kittrie / Wall Street Journal

“The Geneva deal agreed to Sunday by six major powers with Iran is a gamble on Western optimism. While slightly rolling back Iranian nuclear capability, the agreement greatly weakens Western economic sanctions. Iranian sanctions-busters will be in position to exploit the changing market psychology and newly created pathways to reap billions of additional dollars in economic relief beyond those projected by the Obama administration. The Geneva deal’s provisions are too weak to prevent Iranian physicists from making further nuclear progress in several key areas....

“Remarkably, not even the agreement’s ‘elements of the final step of a comprehensive solution’ make clear reference to Iran revealing its past nuclear-weapons research. Thus, Iran’s affirmation, in the interim agreement preamble, that ‘under no circumstances will Iran ever seek or develop any nuclear weapons’ is, with respect to weapons-design research, all trust and next to no verify.

“The Security Council resolutions also explicitly require Iran to ‘not undertake any activity related to ballistic missiles capable of delivering nuclear weapons.' However, the interim agreement includes no Iranian commitments related to its ballistic-missile program. Not even the agreement’s ‘elements of the final step of a comprehensive solution’ make any reference to Iran halting its activity related to ballistic missiles that could deliver nuclear weapons.

“In the absence of verifiable Iranian commitments not to proceed with nuclear-weapon and ballistic-missile research, there is nothing to stop Iran from having a designed bomb and ballistic missile ready to go. Once Iran completes a dash to weapons-grade uranium, it can insert the warhead and quickly have a deliverable nuclear weapon.

“Thus, even if Iran faithfully implements each of its commitments under the interim agreement, it could find itself, in May 2014, a mere month further away than it is now from having weapons-grade uranium – but six months closer to having the rest of a deliverable nuclear weapon.”

Editorial / New York Post

“Why is it that the world’s nastiest regimes grow stronger when President Obama threatens them?

“We saw this in Syria. There Obama drew his famous red line over chemical weapons. Hesto presto, Bashar al-Assad turns those weapons on women and children – and thanks to a deal blessed by the White House, is now more firmly ensconced than he was before.

“Now we’re seeing the same thing all over, but this time with a larger and more dangerous power: Iran. For years the Obama claim was he would not allow Tehran to get a nuclear weapon. But once again he has come up with a deal that will do nothing to diminish Iran’s nuclear ambitions – though it might make its leaders even more dishonest.”

Jeffrey Goldberg / Bloomberg

“There are four ways to neutralize the Iranian regime’s nuclear program. The first is the military option, executed either by Israel or by the U.S. ....A bombing campaign is a bad idea: It could very well destroy many of Iran’s nuclear facilities, but it also could kill innocent people and legitimize the program. The sanctions regime would collapse following a strike, which still would not wipe out Iran’s nuclear knowledge base and could rally the country around the cause of full nuclearization.

“Crushing sanctions, the second option, have been effective at forcing Iran to the negotiating table, but years of sanctions have not placed the Iranian regime’s survival in jeopardy. The regime is willing to let its citizens absorb a great deal of pain on its behalf, and when those citizens get ornery, it hasn’t been shy about killing them. It seems unlikely that sanctions, which are already hard enough to enforce, will bring about Iran’s total nuclear capitulation.

“The third path is a campaign for a complete regime change, but the American experience in Iraq has removed this option from the table. The U.S. has neither the stomach nor the competence to bring about the collapse of the regime.

“The fourth path is diplomacy, and this interim deal may be the best the U.S. was going to get. The deal has many dubious features. It comes perilously close to recognizing Iran’s so-called right-to-enrich. It makes it even less probable that the West will confront Iran for its nefarious behavior in Syria. It frees up billions of dollars for the regime to use in exchange for nuclear concessions that are reversible. It does not require a single centrifuge to be dismantled. Iran could still make a rush for nuclear breakout in eight weeks.

“I’m fairly confident, however, that Iran won’t make such a precipitous move at the moment. I’m also reasonably confident that the Obama administration is still capable of walking away from the main show – the upcoming, actually difficult, final negotiations – if Iran refuses to dismantle those parts of its nuclear infrastructure that could be used to manufacture a bomb.

“And the U.S. might just have to walk away because there isn’t much proof that Hassan Rohani, the putatively reformist new Iranian president, or the foreign minister, Mohammad Javad Zarif, are authorized by the Supreme Leader, Ayatollah Khamenei, to actually agree to a meaningful deconstruction of the nuclear program....

“So everything that has happened over these past months may not amount to anything at all. Contra Netanyahu, who unrealistically seeks only total Iranian capitulation, it isn’t stupid for Obama to find out for sure what, if anything, the Iranians are willing to give up for good.”

Editorial / Wall Street Journal

“The best that can be said is that the weekend deal slows for a few weeks Iran’s rapid progress to a nuclear breakout. But the price is that at best it sets a standard that will allow Iran to become a nuclear-capable regime that stops just short of exploding a bomb. At worst, it will allow Iran to continue to cheat and explode a bomb whenever it is strategically convenient to serve its goal of dominating the Middle East.

“This seems to be the conclusion in Tehran, where Foreign Minister Javad Zarif boasted that the deal recognizes Iran’s right to enrich uranium while taking the threat of Western military action off the table. Grand Ayatollah Ali Khamenei also vouchsafed his approval, only days after he denounced the U.S. and called Jews ‘rabid dogs.’...

“Far from having Israel’s back, as Mr. Obama likes to say, the U.S. and Europe are moving to a strategy of trying to contain Israel rather than containing Iran. The French also fell into line as we feared they would under U.S. and media pressure.

“Mr. Obama seems determined to press ahead with an Iran deal regardless of the details or damage. He views it as a legacy project. A president has enormous leeway on foreign policy, but Congress can signal its bipartisan unhappiness by moving ahead as soon as possible to strengthen sanctions. Mr. Obama warned Congress not to do so in his weekend remarks, but it is the only way now to stop the president from accommodating a nuclear Iran.”

Bret Stephens / Wall Street Journal

“Iran will gradually shake free of sanctions and glide into a zone of nuclear ambiguity that will keep its adversaries guessing until it opts to make its capabilities known. Saudi Arabia will move swiftly to acquire a nuclear deterrent from its clients in Islamabad; Saudi billionaire Prince Alwaleed bin Talal made that clear to the Journal last week when he indiscreetly discussed ‘the arrangement with Pakistan.’ Egypt is beginning to ponder a nuclear option of its own while drawing closer to a security alliance with Russia.

“As for Israel, it cannot afford to live in a neighborhood where Iran becomes nuclear, Assad remains in power, and Hizbullah – Israel’s most immediate military threat – gains strength, clout and battlefield experience. The chances that Israel will hazard a strike on Iran’s nuclear sites greatly increased since Geneva. More so the chances of another war with Hizbullah.

“After World War II the U.S. created a global system of security alliances to prevent the kind of foreign policy freelancing that is again becoming rampant in the Middle East. It worked until President Obama decided in his wisdom to throw it away. If you hear echoes of the 1930s in the capitulation at Geneva, it’s because the West is being led by the same sort of men, minus the umbrellas.”

Senator Charles Schumer (D-NY): “(The) disproportionality of this agreement makes it more likely that Democrats and Republicans will join together and pass additional sanctions when we return in December.”

Senator Lindsay Graham (R-SC): “Unless the agreement requires the dismantling of the Iranian centrifuges, we really haven’t gained anything.”

Rep. Edward Royce (R-CA): “Instead of rolling back Iran’s program, Tehran would be able to keep the key elements of its nuclear weapons-making capability. Yet we are the ones doing the dismantling – relieving Iran of the sanctions pressure built up over years.”

Sen. Mark Kirk (R-IL): “(The agreement) appears to provide the world’s leading state sponsor of terrorism with billions of dollars in exchange for cosmetic concessions that neither fully freeze nor significantly roll back its nuclear infrastructure.”

Sen. Robert Menendez (D-NJ): “This agreement did not proportionately reduce Iran’s nuclear program for the relief it is receiving.”

Sen. Bob Corker (R-TN): “If you see the reaction in Iran right now, they’re spiking the football in the end zone.”

Senator John Cornyn (R-TX): “(It’s) amazing what the White House would do to distract attention from ObamaCare.”

Israeli Prime Minister Netanyahu: “The agreement reached in Geneva is not a historic deal, but rather a historic mistake.” Separately, “We cannot and will not allow a regime that calls for the destruction of Israel to obtain the means to achieve this goal. Israel has many friends and allies, but when they’re mistaken, it’s my duty to speak out.”

Naftali Bennett, Israeli Minister of Economy and Commerce: ‘Iran was on the mat because of the sanctions, but then the West picked it up and gave it something to drink. Israel does not have to be a party to this agreement and has the right to defend its security,” he said, alluding to possible military action. “The whole Middle East is affected but the danger to Israel is unique.”

Israeli Foreign Minister Avigdor Lieberman: “This deal will create a new arms race that includes the Middle East.”

Abdullah al-Askar, Saudi parliament leader: “The government of Iran, month after month, has proven that it has an ugly agenda in the region, and in this regard no one in the region will sleep and assume things are going smoothly.... The people of the region know Iranian policies and Iranian ambitions. And they know that Iran will interfere in the politics of many countries in the region.”

Iranian Foreign Minister Javad Zarif: “(The text) twice explicitly (states) that Iran will have an enrichment program. Iran’s enrichment program will continue and be part of any agreement, now and in the future.” Iran, he said, maintained its “inalienable right” to develop nuclear power for peaceful purposes.

Iranian President Rohani: “No matter what interpretations are given, Iran’s right to enrichment has been recognized.”

As for the IAEA and the intrusive inspections said to be part of the deal, the IAEA still has not been granted access to the disputed military complex at Parchin, where Iran is suspected of testing nuclear trigger devices.

In a Reuters/Ipsos survey, 44% of Americans support the interim deal with Iran, 22% oppose it. The agreement does not need to be ratified by Congress and while there will be renewed talk of strengthening sanctions, President Obama is likely to be granted a six-month window, a pause.

Finally, it was interesting that a figure I long said (for over 10 years) the United States should negotiate with, Akbar Hashemi Rafsanjani, 79 and former two-term Iranian president, emerged for an interview with the Financial Times. Rafsanjani, leader of the so-called conservative pragmatists who threw his support to President Rohani prior to the election, expressed optimism over the Geneva accord.

“Part of it [the breakthrough] was because talking to the U.S. was a taboo. That taboo could not be easily broken and nuclear talks could not move ahead without the U.S.”

Rafsanjani dismissed Israeli threats of a military strike to curb its nuclear program. “Israel is so small; no small fish can eat big fish.”

Street Bytes

--The Dow Jones and S&P 500 eked out gains of 0.1% this holiday-shortened week to extend their winning streaks to eight. For the S&P the longest such run since 2004. Nasdaq had a much better week, up 1.7% to 4059, including the first close above 4000 since Sept. 2000. Nasdaq is now up 34% for the year, while the S&P is up 27%, which would be its best performance since 1998.

For November the S&P gained 2.8%, Nasdaq 3.6%.

--U.S. Treasury Yields

6-mo. 0.10% 2-yr. 0.28% 10-yr. 2.74% 30-yr. 3.81%

Treasuries virtually unchanged across the board this week.

--Goldman Sachs is most bullish on Japanese and European equities in 2014. Regarding the former, Goldman strategists “expect steady progress on Abenomics’ growth reforms during 2014,” including needed reflation.

--Speaking of Japan, inflation for October was up 0.9% in October, ex-food and energy up 0.3%, the best annualized performance since 1998. Further proof Abenomics is taking hold.

--The U.S. Department of Agriculture said farm incomes in America should hit their highest level in four decades this year, up 15.1% to $131 billion, the highest inflation-adjusted level since 1973.

But the era of rising prices, particularly 2006-2011, is probably over. The U.S. is expected to have had a record corn harvest and third-largest soybean crop in history. Corn was above $8 a bushel last year but has fallen to roughly $4.25. Most farmers see a much tougher 2014 at this level when you weigh in the cost of chemicals, fertilizer and seed. And that in turn could lead to lower purchases of farm equipment.

But falling feed costs are good for livestock and poultry producers.

--Shares in Hewlett-Packard rallied strongly on better than expected earnings and revenue, as well as a better outlook. Sales in the enterprise group rose 2%, including a 10% rise in server sales.

But overall revenues continued to slide, including down 2% in the PC unit though CEO Meg Whitman’s turnaround effort is generally on track, it would seem, and she touted an improving networking outlook in Asia, including China, which is in stark contrast to rival Cisco and sales declines for IBM in the region.

--Workday Inc., which provides cloud-based enterprise software solutions, primarily for human-resources applications for payroll and financial management, saw its shares soar anew on better than expected revenue for its fiscal third-quarter, even as the net loss widened, though narrower on a per-share basis. Revenue surged 76% and the company raised guidance on the current quarter.

Workday went public in October 2012 at $28 and finished the week at $82. My friend Jimbo, who is in management there, picked up the lunch tab this weekend.

--Shares in Apple surged $36 to $556 this week amid signs the company is selling a lot more product than the Street is expecting. According to market researcher Kantar Worldpanel ComTech, for example, Apple accounted for 76 percent of smartphone sales in Japan last month.

--The value of a single bitcoin, the virtual currency, topped $1,000 on Wednesday for the first time (and then $1,200 on Friday). It was $20 in January. Confidence has grown since the FBI, in a letter to a recent Senate committee hearing, described it as a “legitimate financial service.” But, they warned it could be “exploited by malicious actors,” such as the website Silk Road, which sold illegal drugs and would pay for goods using bitcoin before it was shut down.

One exchange in China is said to be the most active globally. As the BBC notes, this is probably because bitcoin is seen as the most effective way of getting money out of the country.

[Funny story from The Guardian in London about an IT worker who in clearing up his desk this past summer threw out a hard drive, only to just remember the other day it held a “digital wallet” of virtual currency containing 7,500 bitcoins, or at today’s value over $7.5 million. James Howells created them for almost nothing back in 2009. It is probably sitting in the Docksway landfill site near Newport, South Wales. But don’t bother trying to go there. A spokeswoman from the Newport council said treasure hunters would be turned away, but if it is found, “we’d return it.”]

--French spirits group Remy Cointreau blamed a “sharp slowdown” on business in China for its overall lousy earnings report. It also blamed an “uncertain economic environment” in Europe.

--But high-end jeweler Tiffany reported strong sales in Asia and its shares soared about 10% as the company reported a 4% sales increase in the Americas, but a 27% rise in the Asia-Pacific region and a 7% increase in Europe. Overall, same-store comp sales, the key metric, were also up a very solid 7%.

--India reported its GDP rose in the third quarter over the second, 4.8% compared to 4.4%. The acceleration was a little better than expected but the fourth quarter in a row with a growth rate below the 5% mark; the 4.4% rate of Q2 being the lowest in four years.

--Wal-Mart suddenly announced CEO and President Mike Duke, 63, was stepping down on Feb. 1 after five rather tumultuous years in those roles, to be replaced by 47-year-old Doug McMillon, a 23-year company veteran. McMillon, who started off as a summer intern, once led the Sam’s Club division, and in 2009 succeeded Duke to head up the international operation.

--Sears Canada announced it was laying off nearly 800, 712 in repair services. When I was a homeowner, always liked the Sears service folks. Professional and came when you wanted them to. Sears Canada is struggling to raise cash and sell off assets.

--JPMorgan Chase & Co.’s top lawyer, Stephen Cutler, addressing the massive fines leveled at his bank as well as other financial institutions, recently commented at a panel discussion, “At what point does this stop? We should all be concerned, because at a certain point people become immune to the numbers.”

Recently, JPMorgan settled with the Justice Department for $13 billion, but since Oct. 9, with the rise in its share price, the market value soared about double that figure.

It also needs to be pointed out that Mr. Cutler once worked for the SEC, and now look where he is. Typical.

And a Wall Street Journal article contains the following: “The stress and hours have taken a toll on Mr. Cutler, people close to him say. He is often in the office at 6:45 a.m. and typically works 12-hour days.”

Big freakin’ deal. When I was on Wall Street, I was the first one in the office at 6:15 a.m. and that was after driving 75 miles! [All uphill...both ways, in blinding snow....] Hard work never killed anyone, though admittedly extreme stress can.

--Based on documents obtained from former NSA contractor Edward Snowden, Microsoft is scrambling to encrypt its Internet traffic amid fears the NSA broke into its global network, impacting Hotmail and Windows Live Messenger services. General counsel Brad Smith said while the company had no independent verification of the NSA targeting, if true it would be “very disturbing” and a possible constitutional breach.

Sure would be. I told you with the very first Snowden release not to trust the government with anything. This continues to be borne out by the facts.

--China launched an antitrust probe into Qualcomm as the country gears up for the launch of high-speed LTE networks, a market that Qualcomm is a leader in. I had no idea China accounted for 49% of Qualcomm’s sales in its latest fiscal year. At issue is Qualcomm’s refusal to license its patents for use in networks on reasonable terms. The EU has had a longstanding issue with the company on this front.

--Boy, this is telling. From Bloomberg’s Francois de Beaupuy: “Average headline rents for new, redeveloped or renovated (commercial) space in Paris fell 13 percent in the third quarter from a year earlier.”

It’s about record high taxes under President Francois Hollande and a stagnating overall economy. One real estate broker said demand for new leases has fallen between 15 and 18 percent from a year earlier, a huge decline as these things go.

--Yahoo is hiring Katie Couric as Global Anchor as CEO Marissa Mayer continues to try to jumpstart a turnaround.

--Barron’s had a bullish cover story on Sirius XM. Sirius is up to 26 million subscribers and annual sales approaching $4 billion. And with the shares up about 75% this year (and up a zillion since bottoming at five cents in Feb. 2009), the stock is no longer just a favorite of day traders. [Sirius closed the week at $3.77.]

--Crain’s New York Business had a piece by Andrew J. Hawkins on the impact of New York’s three main airports – JFK, LaGuardia and Newark – on the local economy. I was surprised to see that the three now account for 448,000 jobs (213,000 at JFK, 147,000 at Newark and 87,000 at LaGuardia) compared with 248,000 in 2004, according to a study released by the Global Gateway Alliance and the Partnership for New York City. “Those jobs total $22.8 billion in wages averaging $51,000, which is higher than 75% of all incomes in the U.S. All told, the airports’ aviation operations, capital spending and tourism resulted in $63 billion in economic activity, the groups found.”

Yes, the airports are indispensable to economic growth, with 19.5 million domestic and international tourists flying through the three, “spending more than $20 billion on shopping, lodging, meals, entertainment and local ground transportation which in total created 193,000 local jobs, according to the analysis.” [Hawkins]

Current construction projects, such as at Newark’s Terminal A, are generating 1,500 jobs.

But there remain huge infrastructure issues to accommodate the growing demand. Limited space, for starters. And more than a third of all flight delays in the country originate in New York. The airports desperately need the NextGen air-traffic-control project to reduce delays but no word on when it will come to the New York area.

--Crain’s also reports that this will be the first year since 2007 that there is a pickup in demand for holiday parties among New York area companies, always a solid economic barometer. As reported by Lisa Fickenscher, “96% of corporations this year are planning to throw (them), compared with 91% in 2012 and 74% in 2011, the all-time low during the past 25 years. In 1996 and ’97, 97% of employers held holiday bashes.

But, no more caviar...the parties are far more modest. [6% of companies said they would spend more, 11% will spend less, according to a survey by executive search firm Battalia Winston.]

By the way, a holiday party at the Plaza Hotel in New York for 1,000 guests would set the company back between $150,000 and $300,000. 

Here at StocksandNews, we’re still in austerity mode and it’s likely to be a six-pack of domestic and a bag of Chex Mix. I mean the cost of my domestic just went up again, too! Goodness gracious.

--Only weeks after rejecting a takeover bid from Jos. A. Bank Clothiers Inc., Men’s Wearhouse Inc. struck back with a $1.5 billion bid of its own. The combined company would have 1,700 stores, which could raise antitrust concerns. [Men’s Wearhouse has 1,100; Jos. A. Bank 600.]

--A little book from 1640, “The Bay Psalm Book,” believed to be the first book printed in what would become the U.S., sold for $14.2 million, an auction record for a printed book, surpassing the previous record-holder, a copy of John James Audubon’s “Birds of America,” which sold for $11.5 million in 2010.

Boston’s Old South Church owned two copies of the Bay Psalm Book, with only 11 total known to have survived, and in varying degrees. The church voted to sell one of the two to increase its grants and ministries. Samuel Adams was a member of the church, which was established in 1669, and Benjamin Franklin was baptized there. Very cool. 

Originally, 1,700 copies of the book were printed on a press shipped from London, as noted in an AP story.

One more. The last time a copy of the book came on the auction block it was 1947 and sold for a then-record $151,000.

And another...the record for any book is a personal notebook of Leonardo da Vinci’s scientific writings and diagrams, which sold at a Christie’s auction in 1994.

--Alas, it’s Thanksgiving...from Crain’s... “Food pantries are serving up to double the amount of people they helped last year at this time.” Not good.

Foreign Affairs, part II

Syria: The United Nations announced there would be peace talks in Geneva on Jan. 22 for the first time between the Syrian government and the rebels, though no one seems to know just who will show up. Supposedly, the Syrian National Coalition, the main opposition group, will participate, though it has limited control over the disparate rebel groups. It does remain dead set against allowing Iran to attend. 

For its part, the government said Bashar al-Assad will not step down and may run for another term in presidential elections set for mid-2014.

On the battlefield, there have been heavy clashes in the suburbs of Damascus, with at least 160 rebels and government forces killed last weekend. The situation is so bad for some of the rebels that pictures emerged of them butchering an emaciated zoo lion for food.

Meanwhile, the U.N. issued a report on the damage being inflicted on the children of Syria, with as many as 300,000 living in Lebanon and Jordan without schooling this year. Many as young seven are working for low pay. More than half of 2.2 million Syrian refugees are children and as the U.N. High Commissioner for Refugees Antonio Guterres said: “If we do not act quickly, a generation of innocents will become lasting casualties of an appalling war.” A London-based think-tank put the number of children killed in the three-year-old civil war at more than 11,000.

Israel: A new al-Qaeda-inspired group has emerged in the West Bank that acts independently of Fatah and Hamas. The group was said to be planning attacks against Israeli and Palestinian targets. So on Tuesday, Israel’s Defense Forces killed three alleged members of the group, which has now fueled fears of renewed violence in the area. Palestinian officials have warned they will be the targets of any new uprising.

Salafist groups are expanding their presence in the West Bank, after establishing themselves in the Gaza Strip. They pledge fealty to a broader Islamist cause while Hamas, Islamist-inspired, is first and foremost a Palestinian nationalist movement.

Egypt: The interim president banned public gatherings of more than 10 people without prior government approval (three days’ notice being required). Then Egyptian security forces arrested a prominent political activist over inciting a demonstration in defiance of the new law. Alass Abdel-Fattah, a blogger, was seized at his home and his wife beaten, according to the father, a prominent lawyer in Cairo.

And in Alexandria on Wednesday, a judge sentenced 14 women who participated in an Islamist protest last month to 11 years in prison. [New York Times]

So much for Sec. of State John Kerry’s words a few weeks ago when he made his first visit to Egypt since the military coup that the government’s “road map (to democracy) is being carried out to the best of our perception.”

As the Washington Post pointed out in an editorial: “In another setback for democracy, the 50-member committee writing amendments to the constitution approved an article allowing military trials of civilians in certain cases. The article would give the regime yet another bludgeon over any opposition, threatening to bring them into military courts.”

Egypt also expelled the Turkish ambassador last weekend, a sharp escalation in tensions, accusing the envoy of strongly backing the Muslim Brotherhood and former President Mohammed Morsi.

Ukraine: President Viktor Yanukovych told the European Union to stop interfering in the fate of his rival, former Prime Minister Yulia Tymoshenko, saying her imprisonment has nothing to do with Kiev’s integration with Europe. Yanukovych said Tymoshenko was part of a ring of criminals and that her fate lied in the hands of the nation’s judges.

Germany was scheduled to receive Tymoshenko for treatment of chronic back trouble until Yanukovych blocked the move as his government did a sudden about face on signing a trade deal with the EU. Poland’s president said the failure to sign the deal was thwarted by a Russian policy of blackmail and pressure.

Thousands of protesters continue demonstrations in Kiev over the government’s move to suspend the landmark pact with the EU. More than 100,000 took to the streets last weekend in the biggest protests since the Orange Revolution in 2004.

Traveling in Italy, Russian President Vladimir Putin told EU officials to cool it with the rhetoric while endorsing three-way talks between the Russia, Ukraine and the EU.

Then on Friday, at a European Union summit with six countries in eastern Europe, it was hoped the trade deal with Ukraine could be rescued, but Yanukovych vetoed it. Both German Chancellor Merkel and French President Hollande pinned full responsibility for the breakdown on Yanukovych.

Yanukovych did say Ukraine would sign a trade pact with the EU in the future but his nation required a far greater aid package than was proposed.

Protesters in Kiev’s Independence Square, on hearing Ukraine had not signed the agreement, chanted “Coward! Coward!” in reference to Yanukovych.

Afghanistan: President Hamid Karzai refused to sign a long-delayed security deal with the United States that would keep troops in the country beyond 2014 and the formal end of combat operations, with Karzai defying his own council of tribal elders (the Loya Jirga) who called on him to sign by yearend, as Washington has demanded, rather than wait until his term expires in April as Karzai now wants. The Bilateral Security Agreement also has to be approved by the Afghan parliament.

But as the Washington Post editorializes, while Karzai’s stance is frustrating, “The Obama administration unwisely responded (to his recalcitrance) by setting an unnecessary deadline of Dec. 31 for Mr. Karzai’s signature and declaring that, if it is not met, it will plan on withdrawing all forces after next year.

“Both sides seem to be betting that the other is bluffing....

“Though some U.S. officials claim that a stable Afghanistan is no longer a strategic interest, the United States also has much to lose: namely, the fragile gains purchased by a dozen years of hard fighting that have cost nearly 2,300 American lives. Those gains include an Afghan army that has taken over 99 percent of the fighting against the Taliban and held its own, as well as a nascent democratic political system that is headed toward a competitive presidential election to replace Mr. Karzai. No wonder NATO allies are quietly urging the White House not to throw away in a fit of pique the achievements of the most consequential operation in the alliance’s history.”

Thailand: Mass protests were held this week in a campaign meant to topple Prime Minister Yingluck Shinawatra. On Friday, about 1,200 stormed the grounds of the national army headquarters, though dispersed peacefully after two hours. It was an act of symbolism in a country that has seen 18 successful or attempted military coups since the 1930s.

Yingluck is being accused of serving as proxy for her billionaire brother, Thaksin Shinawatra, the former leader ousted in a coup in 2006. He has been living overseas to avoid a corruption conviction.

Yingluck survived a no-confidence vote on Thursday and said she would talk to the protesters.

Brazil: So I’ve been writing how totally unprepared Brazil is for the World Cup, with major construction issues, and on Wednesday, part of the stadium hosting the World Cup opener next year collapsed, causing significant damage and killing two people. Television footage showed “a huge metal structure buckled atop the stadium... A LED panel installed outside the venue also was hit.” Apparently a crane collapsed on top of the metal structure. FIFA was due to sign-off on all 12 newly constructed venues in December. 

Latvia: The prime minister resigned after accepting blame for the supermarket roof collapse that killed 54. Police have opened a criminal investigation. Valdis Dombrovskis came to power in 2009 amid Latvia’s financial crisis, as bad as any on the continent, and is widely credited with bringing the nation back without having to go bankrupt. But you can imagine in a little country like this one just what a tragedy this was.

Zimbabwe: The owners of foreign firms operating in certain sectors of the economy after January 1, 2014, will be subject to arrest, the government of President Robert Mugabe has warned. Specifically, farming and baking are among the sectors now reserved for “indigenous,” or black, Zimbabweans. Owners of these businesses, which also include employment and advertising agencies, face a fine or imprisonment if they are still operating come January. Most of the country’s white-owned land has already been seized, much to the detriment of the people.

Editorial / London Times

“(Mugabe’s move) will be a straightforward act of xenophobic theft and in that sense recalls the Nazi campaign of ‘Aryanisation’ that saw the number of Jewish-owned businesses fall by two thirds between 1933 and 1938. Shamefully it was not an unpopular policy. Nor is Mr. Mugabe’s.

“In human rights terms this is a disgrace. It is also staggeringly and tragically stupid. It makes Zimbabwe a place where it would literally be madness to invest or start a business, even if you were a native Zimbabwean. For who knows when the Government, for expedient or populist reasons – citing some invented imperative – might not demand your business be turned over to the State?

“The result is far more likely to be impoverishment than ‘indigenisation.’ But by the time those chickens all come home to roost, even Mr. Mugabe may have relinquished his iron grip both on Zimbabwe and on life.”

Mugabe is now 90. He cannot die too soon.

But those of you who have been with me since the beginning will recall how I long argued Mugabe should be forcibly removed (or taken out) and how the world, in those pre-9/11 days, may have ended up differently if he had.

I said then that it should be a joint U.S.-British operation with the Brits, because of their past in Rhodesia, taking the lead.

So what happens this week? In an interview with al-Jazeera, former South African President Thabo Mbeki said former British Prime Minister Tony Blair had planned on overthrowing Mugabe, but Mbeki said to British officials at the time, “Mugabe is part of the solution.” A spokesman for Mr. Blair said: “Tony Blair has long believed that Zimbabwe would be much better off without Robert Mugabe...but he never asked anyone to plan or take part in any such military intervention.”

Central African Republic: Once again, as was the case in Mali, France is stepping up and sending 1,000 troops here to keep growing chaos at bay, after a top U.N. official warned of mass atrocities since rebel groups joined forces to overthrow the president last March. France is joining an African force of about 2,500 that hopes to stabilize the situation.

Random Musings

--Tennessee Republican Sen. Lamar Alexander / Washington Post

“Thursday’s (Nov. 21) stunning rules change by Senate Democrats can best be described as ObamaCare II: another exercise of partisan political power to permit the majority to do whatever it wants. This time, the goal was advancing its agenda unchecked through the courts and executive agencies.

“With all Republican members opposed, the Senate voted 52 to 48 to invoke the ‘nuclear option,’ allowing a majority of senators present and voting (so, not necessarily 51) to approve presidential nominees except for Supreme Court justices. For those positions, this eliminated the filibuster, which required 60 votes to proceed to an up-or-down majority vote.

“This was the most dangerous restructuring of Senate rules since Thomas Jefferson wrote them. It creates a perpetual opportunity for ‘tyranny of the majority,’ which Alexis de Tocqueville called one of the greatest threats to American democracy.

“As Sen. Carl Levin (D-MI) noted [Ed. Levin was one of the Dems who voted against changing the rules], quoting former senator Arthur Vandenberg on Thursday: ‘If a majority of the Senate can change its rules at any time, there are no rules.’ It is as if the Red Sox, finding themselves behind in the ninth, added a few innings to make sure they could defeat the Cardinals in the World Series. Future majorities could, for example, end the filibuster for legislation, removing any obstacle to tyranny of the majority....

“(One of the excuses Democrats offered for changing the rules was that) Republicans have unfairly blocked the president from filling vacancies on the U.S. Court of Appeals for the D.C. Circuit.

“In 2006, Democrats insisted on doing precisely what Republicans are asking in 2013: moving judges from courts where they are not needed to where they are needed most. They did not think this unfair then.

“In 2006, Democrats on the Judiciary Committee, including Sens. Patrick Leahy, Joe Biden, Chuck Schumer and Dick Durbin, said that ‘under no circumstances’ should new judges be confirmed to the D.C. court because its workload was half the national average and there were judicial emergencies elsewhere.

“With Bush’s approval, the Senate reduced the number of seats on the D.C. Circuit by one, moving that slot to the 9th Circuit. The D.C. Circuit hears fewer cases today than it did in 2007.

“So why would Majority Leader Harry Reid (D-Nev.) engineer a rules change that he said in 2006 ‘would be the end of the Senate’? Because the vote was not about the filibuster. It was about permitting the majority to do whatever it wants.

“Call it ObamaCare II, for which the only cure is a referendum next November.”

--Tom C. Korologos / Wall Street Journal

“The Founding Fathers, taking note of various definitions regarding so-called majority rule, made it very clear when they drafted the Constitution that its operating principle would not be majority rule, but rather protection of the rights of the minority.

“To that end, the Constitution is chock-full of requirements to protect the minority. The original premise of the American system is checks and balances. Three branches of government – legislative, executive and judicial, in that order – are the subject of the first three Articles of the Constitution. Each limits the power of the others. Consider:

“ ‘Each State shall have at Least one Representative.’

“ ‘The Senate of the United States shall be composed of two Senators from each State’ – regardless of size or population.

“ ‘The Senate shall have sole Power to try all impeachments...and no Person shall be convicted without the Concurrence of two thirds of the Members present.’

“ ‘Each House may determine the Rules of its Proceedings,’ and can punish members for bad behavior – but can expel them only with a two-thirds vote.

“ ‘Before a bill becomes law, it must ‘be presented to the President of the United States; if he approves, he shall sign it, but if not he shall return it with his Objections to that House in which it shall have originated.’ If both houses then pass the bill by a two-thirds vote, the section of the Constitution continues, then it ‘shall become Law.’

“ ‘The President shall be Commander in Chief.... He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur.’

“ ‘The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments which, in either case, shall be valid....when ratified by the Legislatures of three-fourths of the several States.’”

Yes, it’s about the protection of the minority, and as Korologos concludes:

“One final thought for Senate Democrats.  At some point it is entirely possible, and perhaps increasingly likely, that Republicans will again control the White House and the Senate. So today’s majority might want to keep in mind what a wise person once advised: ‘When you build a gallows, be sure you know whom you are going to hang.’”

--George Will / Washington Post

“The place to begin understanding the unraveling of (Obama’s) presidency is page 274 of ‘The Bridge: The Life and Rise of Barack Obama.’ The author, David Remnick, editor of the New Yorker, quotes Valerie Jarrett, perhaps Obama’s closest and longest-serving adviser, on her hero’s amazingness:

“ ‘He knows exactly how smart he is....I think that he has never really been challenged intellectually....He’s been bored to death his whole life. He’s just too talented to do what ordinary people do. He would never be satisfied with what ordinary people do.’

“Leave aside the question of whether someone so smitten can be in any meaningful sense an adviser. About what can such a paragon as Obama need advice? (Although he did recently say, ‘What we’re also discovering is that insurance is complicated to buy.’ Just to buy.) It is, however, fair to note that what ordinary people ordinarily do is their jobs, competently. Obama’s inability to be satisfied with anything so banal has plunged him into Jimmy Carter territory.

“Carter’s presidency crumbled when people decided they still liked his character but had no confidence in his competence. ObamaCare’s misadventures, and Obama’s response to them, have caused people to doubt both his character and his competence.”

--Related to the above, back in February 2009, a CNN/ORC survey asked if President Obama was a strong and decisive leader (80% said ‘yes’) and if he inspired confidence (75% affirmative). Today, those figures are 46% and 44%.

And on whether the president is “honest and trustworthy,” 74% believed him to be in Feb. 2009, only 46% do today.

--Approaching his re-election year, New York Dem. Gov. Mario Cuomo has a 62% approval rating among voters, according to a Quinnipiac University poll. In a head-to-head against a possible Republican challenger, Westchester County executive Rob Astorino, Cuomo wins 56-25.* More than 80% say they don’t know enough about Astorino to form an opinion. Granted, I live in New Jersey but until just now never heard of the guy.

*A Wall Street Journal/NBC 4 New York/Marist poll has the Cuomo/Astorino gap at 65-23.

Of course I long thought Cuomo was a strong candidate for the Democratic presidential race in 2016 and he still could be. If ObamaCare truly goes up in flames, that obviously doesn’t help Hillary Clinton.

[In the WSJ/NBC survey, Hillary would defeat Cuomo in a primary among New York Democratic registered voters 64-14. In a hypothetical general election, she defeats Chris Christie 51-44 among New York state registered voters.]

--CBS placed “60 Minutes” correspondent Lara Logan and her producer on leave after finding their report on Benghazi “deficient.” The segment aired Oct. 27 and purported to be an eyewitness account of the attack, but an internal CBS investigation found Dylan Davies’ version of events was not properly vetted, nor did the report note a book co-written by Davies about the attack was published by a unit of CBS Corp.

--So I saw that Pope Francis put together a major teaching document, Evangeliii Gaudium (“The Joy of the Gospel”), and thought I’ll print it out and read it over the Christmas holidays. Doh! 224 pages. Luckily I didn’t press ‘print’ and walk away.

But I did glance through it and printed out about 15 pages. It’s the first encyclical written entirely by Francis and he heavily cites Popes John XXIII and Paul VI, who presided over the Second Vatican Council, as well as a rarity, documents of bishops’ conferences, Francis having said he wanted to give the local church a greater say in governance.

Pope Francis:

“In our time humanity is experiencing a turning-point in its history, as we can see from the advances being made in so many fields. We can only praise the steps being taken to improve people’s welfare in areas such as health care, education and communications. At the same time we have to remember that the majority of our contemporaries are barely living from day to day, with dire consequences. A number of diseases are spreading. The hearts of many people are gripped by fear and desperation, even in the so-called rich countries. The joy of living frequently fades, lack of respect for others and violence are on the rise, and inequality is increasingly evident. It is a struggle to live and, often, to live with precious little dignity.... We are in an age of knowledge and information, which has led to new and often anonymous kinds of power.

“Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape....

“In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.

“One cause of this situation is found in our relationship with money....We have created new idols. The worship of the ancient golden calf has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

“While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which becomes the only rule.

“Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person.... Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order....

“A financial reform open to such ethical considerations would require a vigorous change of approach on the part of political leaders. I urge them to face this challenge with determination and an eye to the future, while not ignoring, of course, the specifics of each case. Money must serve, not rule! The Pope loves everyone, rich and poor alike, but he is obliged in the name of Christ to remind all that the rich must help, respect and promote the poor. I exhort you to generous solidarity and to the return of economics and finance to an ethical approach which favors human beings.”

Editorial / New York Post

“We fully share the pope’s concern about an ‘economy of exclusion and inequality.’ We would only say that in the effort to help the poor and marginalized take their rightful place at the banquet of life, Pope Francis will find some of his strongest allies among the ranks of those who champion a free market that plays no favorites.”

--Finally, astronomers have been waiting with bated breath as Comet ISON hurtled toward the sun this week. Would it meet a violent death, or provide us Earthlings with a spectacular show the next few weeks. As Meeri Kim wrote in the Washington Post the other day, as the comet rounds the sun, would its tail “get ripped off by a cloud of solar particles,” or would the sun’s “brutal radiation and pressure....demolish it completely”?

Jim Green, director of the Planetary Science Division at NASA Headquarters told the Post, “ISON is very special. What makes it different is where it comes from – the further reaches of the sun’s gravity.”

The distance from the Earth to the sun is 1 AU, or astronomical unit. “Comet ISON began its journey 100,000 AU away from us,” writes Meeri Kim.

According to NASA, ISON has been heading toward the sun for at least a million years.

If it survives its slingshot trip around the sun, it’s very possible we’ll be able to see it with the naked eye during the first or second week of December (certainly with binoculars).

You’d look in the southeast skies for a prominent object with a bright tail pointing upward, around 30 minutes before sunrise.

C’mon, ISON! You can do it, Girl!

As I go to post, astronomers are hopeful at least some of it survived. We should know for sure this weekend.

---

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

God bless America.

---

Gold closed at $1250
Oil, $92.72

Returns for the week 11/25-11/29

Dow Jones +0.1% [16086]
S&P 500 +0.1% [1805]
S&P MidCap -0.3%
Russell 2000 +1.6%
Nasdaq +1.7% [4059]

Returns for the period 1/1/13-11/29/13

Dow Jones +22.8%
S&P 500 +26.6%
S&P MidCap +27.8%
Russell 2000 +34.6%
Nasdaq +34.4%

Bulls 55.7
Bears 14.4 [Source: Investors Intelligence...another all-time low for the bear reading.]

Have a great week. I appreciate your support.

Catch me on Twitter @stocksandnews

Brian Trumbore