Stocks and News
Home | Week in Review Process | Terms of Use | About UsContact Us
   Articles Go Fund Me All-Species List Hot Spots Go Fund Me
Week in Review   |  Bar Chat    |  Hot Spots    |   Dr. Bortrum    |   Wall St. History
Week-in-Review
  Search Our Archives: 
 

 

Week in Review

http://www.gofundme.com/s3h2w8

AddThis Feed Button

   

01/11/2014

For the week 1/6-1/10

[Posted 11:00 PM ET, Friday]
 
Washington and Wall Street

I can be brief this week. For starters, seeing as I don’t change many of my opinions over the course of a year, I’m hardly likely to alter my outlook for 2014 on Jan. 10.

But we’re off to a sloppy start. An ISM reading on the service sector for December came in at 53.0, down from November’s 53.9, while factory orders for November rose a better than expected 1.8%.

ShopperTrak said holiday sales (November and December) were up 2.7%, even as in-store traffic was down a whopping 14.6%. The 2.7% was slightly better than their initial forecast of 2.4%.

Among those retailers reporting thus far, only Macy’s and Costco appear to have done well for the season. A slew of others, as described below, had putrid numbers, including lousy margins because of all the discounting.

The Federal Reserve released the minutes from its December meeting when it began tapering to the tune of $10 billion. The minutes reflect a consensus that “further measured steps” are likely, but of course it’s all about the data, the Fed’s next meeting being Jan. 28-29.

And so on Friday we did indeed have a big data point, the December jobs report, and it shocked the Street. Only 74,000 jobs added when a figure north of 200,000 was expected. However, an unknowable number, as of today, had to be weather-related and I’m in the camp expecting a hefty upward revision later on. [November’s number was revised up a further 38,000 to 241,000.]

But what many are talking about is the drop in the official unemployment rate to 6.7% from 7.0%. Heck, we’re almost at the Fed’s original target of 6.5%, at which they once said they would consider raising the funds rate off zero, though they hedged that last month.

[A broader measure of unemployment that includes people working part time who want full-time positions and people who are marginally attached to the labor force remained at 13.1%, unchanged on the month.]

How did the rate decline so much when we added only 74,000 jobs? 347,000 dropped out of the labor force altogether. That’s not good, sports fans. Not in the least.

But the bond market took it all in and staged a big rally Friday, with the yield on the 10-year falling to 2.86% after threatening to bolt through 3.00% the past few weeks, the feeling being the Fed can’t possibly taper aggressively with such a lousy report; even though earlier jobs data from ADP and Challenger/Gray (a reading of layoffs, the lowest for Dec. in more than 13 years) were strong.

Lights please....

But earnings are just beginning to roll in and we’ll see how much CEO confidence there is. Are they optimistic about Europe’s recovery? What do they see in Asia? And, importantly, how many thus talk of new capital spending initiatives that could really help on the labor front, let alone consumer spending, which is 70% of GDP. 

So that’s what this earnings season is really all about, Charlie Brown.

As for ObamaCare, the next big date is essentially March 31 (though we’ll get lots of enrollment data beforehand), the deadline to obtain insurance without incurring a federal penalty under the individual mandate.

But much was made at the White House of figures from CMS (Centers for Medicare & Medicaid Services) that show total healthcare spending rose 3.7% in 2012, after similar increases of 3.6% in 2011, and 3.8% in both 2009-10.

Democrats claimed this was all about the Affordable Care Act, yet even CMS says ObamaCare had zero impact on the better pace; instead it was about the recession, cost of medical products not rising as much, and some big drugs coming off patents (leading to more competition and lower prices for the new alternatives).

True, prior to this period, medical costs were rising 9% annually. But all the signals on ObamaCare’s actual impact going forward are far from positive. As the Journal concluded in an editorial, “Enjoy the slowdown while it lasts.”

[Late Friday we learned the administration is not renewing the contract of CGI Group Inc. to develop and run key parts of HealthCare.gov. What seems stupid with this act is that CGI is currently involved in moving parts of the system now hosted by Verizon to a Hewlett-Packard system and the change could impact this ongoing work. The damage was already done for the October launch. But why not wait until CGI fulfills its work in the changeover?]

Europe and Asia

There was a slew of data for the eurozone this week. To begin with the final figure on the services PMI for December came in at 51.0 vs. 51.2 in November, a mild disappointment, and down in Germany from 55.7 in November to 53.5. [47.8 in France, down from 48.0].

But eurozone retail sales for November were up 1.4% over October and up 1.6% since November 2012, the largest rise in a single month since Nov. 2001, this as the expectation was for an increase of just 0.1%.

The eurozone inflation numbers for December, courtesy of Eurostats, saw inflation at an annualized rate of 0.8% (est.) vs. 0.9% in November. Remember, just as in the U.S. (and Japan for that matter), the target is 2.0% so there remains concern Europe is close to tipping over into deflation, despite the generally positive recent data on economic activity.

European Central Bank President Mario Draghi, in holding the line on interest rates again this week, continued to say, “We want to see confidence staying for a relatively long time before we can say we declare victory. I would say things are slightly better.” I imagine the upcoming reports on GDP will buttress this stance.

But Draghi also remains vague when he declares the ECB will do “whatever it takes” to protect the euro. Yes, such talk has worked, some would say masterfully so. Ireland, for example, returned to the bond market this week, a major accomplishment. Portugal could be next. [Those talking of an imminent return by Greece I think are nuts.]

The thing is Draghi knows that prices are falling in some member states, such as Greece and Portugal, and in a recent interview former U.S. Treasury Secretary Lawrence Summers said, “There’s too much complacency about Europe.”

I keep pointing out, ad nauseam, that there is no banking union in the eurozone as yet, there’s only the ECB. As The Economist noted a few weeks ago in an editorial, “Europe’s politicians have failed to agree on what to do if the capital holes (in the euro area’s biggest banks) turn out to be too large for banks or their governments to cope with. If the ECB is tough, it may reignite the crisis; if it conducts a soft review (Ed. upcoming stress tests), it will weaken its own credibility. Expect a fudge.”

I don’t want to be the boy who cried wolf. I simply maintain my own caution on Europe is warranted.

And I believe my stance holds up when you continue to have unemployment figures like we saw this week, the latest being the November jobs picture, also courtesy of Eurostats (the EU’s statistical arm).

The overall unemployment rate in the eurozone is 12.1%, the same as in April. [For the full EU-28 it was unchanged at 10.9%.]

Germany is at 5.2% (remember, the government figure is calculated differently and is 6.9%), but France is at 10.8%, Italy 12.7% (vs. 11.3% a year ago), Cyprus 17.3% (recall their economy recently collapsed into Depression), Greece 27.4% (Sept.), and Spain 26.7%. Even the Netherlands has risen the past 12 months from 5.6% to 6.9%.

The best story could be Ireland, down to 12.3% from 14.3%.

You also continue to have the sickening figures on youth unemployment in some of the periphery.

Greece has a youth jobless rate of 54.8% (Sept.), Spain 57.7%, Portugal 36.8%, Italy 41.6%.

Granted, these figures, with the exception of Greece, are for November and some of the news for December, particularly from Spain, shows potential improvement, but we are talking a ‘tenth’ here, a ‘tenth’ there.

The following has been my point for some time now. The improvements we’ve seen in some of the PMI manufacturing/service data or retail sales has done little, if anything, to improve the labor picture.

Yes, I maintain when it comes to Europe the sleeper big picture item of the year is the election for the European Parliament, May 22-25. The 28 EU members will elect 751 deputies and I have been talking of the impact the far right, Eurosceptics (including some far left parties) could have in a new parliament.

Today, anti-EU populists have 12% of seats. Come May 26, it could be as high as 25%, though there is some debate whether the vote will be split between the traditional far left and the new far right.

The far-right is anti-elitist, anti-Brussels and anti-immigration. It could win an actual plurality of the vote. In France, for example, the National Front (FN), led by Marine Le Pen, will make big inroads. In a recent poll, 55% of students said they would consider voting for the FN.

Geert Wilders’ Freedom Party in the Netherlands, Nigel Farage’s UK Independence Party, the Finns Party, the Alternative for Germany party, Norway’s Progress Party, and Hungary’s Jobbik, the third-biggest in its parliament today (they are also a bunch of total thugs).

Back to the Alternative for Germany, in its first year it barely missed entering the German parliament and no doubt will win some seats in the EU version, then use this as a springboard for future German elections.

Le Pen is pointing to initial gains in local elections in March. This week, the charismatic mother with the cigarette voice promised that nationalist parties will do “the maximum” to block further EU integration after making expected gains in the EU elections.

Speaking to U.S. and British media in Paris, she declared: “The role we will have...will be to block by all means, to the maximum, anything that contributes to the transfer of powers from our people to the European Union.”

Le Pen added: “We must bring down the wall of Brussels, just as the Berlin Wall came down.” [Financial Times]

Such Eurosceptics advocate the “orderly” dissolution of the euro area, feeding on economic anxiety. I argue the full impact of a far-right plurality in the EU parliament is not known, except it won’t be a positive in the least.

Finally, two Eurobits....

In Germany, Chancellor Angela Merkel is laid up for a number of weeks due to an accident she suffered while cross-country skiing (fractured pelvis) and the timing couldn’t be worse, what with the new government having just been formed. So will her coalition partners attempt to take advantage of her being out of the spotlight? Already there have been clashes over immigration policy.

Merkel’s strength is as a centrist, uniter, but she has found herself having to give into the extremists on some policies and her fellow Christian Democrats aren’t happy.

And in the UK, Prime Minister David Cameron’s party continues to plunge in the polls, even as the economy improves. It’s another debate over income inequality. The average Brit points to rising utility, transportation and petrol prices, for example, that are far exceeding wage increases (if you’re lucky enough to get a raise). Just as in the U.S., the middle class is shrinking. [Another reason why the UK Independence Party is making inroads.]

That said, car sales here in 2013 were at their best level since 2007, and up 10.5% over 2012. Spain was the only other country in the entire EU to show an increase in this category and this was due to a cash-for-clunkers type scheme.

Turning to Asia, in China, the data was largely disappointing. HSBC’s figure on the service sector for December came in at 50.9 vs. 52.5 in November, a six-month low, while producer prices fell a 22nd straight month, which hardly bodes well for future growth, though does give the government some room to ease. Consumer prices were up only 2.5% for December, a seven-month low, with food inflation at just 4.1%.

December exports rose a disappointing 4.3% last month vs. a solid 12.7% increase in November, though imports were up a solid 8.3%.

Add it all up and it signals a weakening economy. Should the government hit its target of 7.6% growth for all of 2013 (and one would expect the government to come darn close to it...wink wink...), that would be the lowest number in China since 1990. Many would accept 7.0% for 2014 at this point.

There was a positive story on auto sales, however, but herein lies another troublesome issue. The more cars the nation puts on the road, the more air pollution.

China became the first nation to sell over 20 million vehicles in a single year, 21.98M in 2013, up 13.9% over 2012, with an expectation of 24 million this year.

But some government ministers are saying auto sales must slow.

Lastly, on a different topic, the debt issue that I’ve taken the bullish stance on (that the government will be able to handle any banking issues before a true crisis develops), investor George Soros is talking up a China crash. Of course Soros has done this before to benefit himself, such as in his infamous attack on the British pound, which is now 22 years ago!

China, as noted by Bloomberg’s William Pesek in an op-ed this week, does however seem to be taking notice of Soros’ warnings, scrambling to announce a series of moves to rein in the shadow banking sector. One thing is for certain today, though. The Chinese stock market has been in the dumper for months.

As for Japan, the Nikkei Stock Average started off the year (no trading Jan. 2-3) with a thud, down 2.3% for the week. But the Nikkei was up 57% in 2013 so a little profit taking was to be expected.

The bigger issue is how the Japanese consumer takes the coming sales tax hike in April, and whether over the course of 2014, businesses increase wages so the consumer can take the hit in stride; at least this is what the Abe government is hoping for.

Street Bytes

--Stocks finished mixed in the first full trading week of 2014, with the Dow Jones down 0.2% to 16437, while the S&P 500 gained 0.6% and Nasdaq advanced 1.0%. But for the first five trading days of the year, a barometer some hang their hat on, the S&P was down 0.6%.

Now the focus is on earnings, with EPS for S&P 500 companies expected to rise 5% for the quarter.

--U.S. Treasury Yields

6-mo. 0.06% 2-yr. 0.37% 10-yr. 2.86% 30-yr. 3.80%

Yields plummeted on Friday on the heels of the lousy jobs report, with the key 10-year falling 10 basis points.

The Senate confirmed Janet Yellen in a 56-26 vote, with some who had threatened to vote against unable to get to Washington because of the air travel disruptions most of the country suffered through.

And on Friday, President Obama nominated Stanley Fischer to succeed Yellen as the Fed’s No. 2. I totally agree with strategist Jim Bianco, who in a conversation with CNBC’s Rick Santelli offered that Fischer is the real heavyweight, an outstanding individual, who should be the chairman, not Yellen, and that it will be interesting to see how the two manage their relationship.

Fischer, who holds dual Israeli-U.S. citizenship, is one of those rare people who could handle any job in the world more than competently, in my humble estimation. Like Paul Volcker in his prime.

So kudos to Barack Obama for bringing Fischer on board, only he should be No. 1.

--More than 20,000 flights were canceled in the U.S. owing to the Polar Vortex and snowstorms, about the same impact as 2012’s Hurricane Sandy over a four-day period.

JetBlue was emblematic; forced to stop all service for 17 hours Monday-Tuesday to catch up (and abide by new ‘rest’ rules for pilots).

--Target, the nation’s second-largest discount retailer, reported its security breach from last year was far worse than initially thought. The 40 million figure for those potentially impacted by the theft of their credit card information has expanded to as many as 110 million, and it’s possible the names, addresses, phone numbers and e-mail accounts have fallen into the hands of the evil doers.

--According to the New York Times, the total settlement figure for Wall Street in the mortgage crisis could be nearly $50 billion, or “roughly half the total annual profit of large American banks in 2012.” JPMorgan Chase recently settled for $13 billion and the Times’ analysis has Bank of America eventually settling for $11.7 billion in penalties, with an additional $5 billion in relief to homeowners.

Separately, it was announced this week JPMorgan would also pay $2.6 billion related to the Bernie Madoff Ponzi scheme in order to head off a criminal prosecution. JPMorgan bankers had concerns about Madoff for years but failed to inform authorities. JPM said it would have to top off its $23 billion war chest with another $400 million to cover its still mounting legal bills.

Back in October 2008 (two months before Madoff was arrested), a London-based JPMorgan analyst wrote an internal email highlighting Madoff’s “odd choice” of a small accounting firm and said “there are various elements in the story that could make us nervous.”

But in 1998 and 2007, JPMorgan’s asset management arm declined to invest in Madoff funds because the returns seemed “too good to be true.” [Financial Times]

Let’s face it. JPM is getting off easy. All along the way they were obligated to inform the government of their suspicions and didn’t. It’s time for Jamie Dimon to go.

--GM’s sales to China climbed 11% last year to 3.16 million vehicles. Ford, which got a late start there, saw sales soar 49% to 935,000 units. Toyota, while falling to No. 6 among foreign automakers, nonetheless had an increase of 9.2%, while Nissan and Honda sold record numbers. Toyota and Honda rebounded from 2012’s anti-Japanese boycotts.

[Ford’s Alan Mulally scotched rumors he was going to Microsoft, saying he had “no plans to do anything other than serve Ford” as chief executive.]

--In a huge deal, Boeing’s largest union wised up and accepted a new contract that will keep the bulk of the company’s jetliner manufacturing in Washington state, after Boeing threatened to take its main business elsewhere. Twenty-two states had offered 54 sites for Boeing to evaluate, but by a 51-49 margin, the eight-year deal ensures the planned 777X, a 350- to 400-seat jetliner scheduled for delivery in 2020, will be built in the Puget Sound region.

Local union leaders lost out to the union membership. International union leaders, however, were behind the pact.

Boeing employs more than 82,000 in Washington, including 12,000 working on the 777 today.

Gov. Jay Inslee was right in saying, “I don’t think you can overstate its ramifications.”

Bottom line, 51% (supposedly the margin was 600 out of 23,900 cast) wised up. They all now have job security.

--With the rise in U.S. oil production, the Energy Information Administration forecast that in 2015 the U.S. liquid fuels consumption met by net imports will fall to just 24%, down from 60% in 2005. Touting a strong trade figure for November this week, with the trade gap plunging to $34.3 billion from $39.3 billion in October, the lowest level in four years, the U.S. oil and gas industry wants to lift remaining restrictions on exports of their products. Strict controls on crude oil exports date back to the oil embargo of the 1970s.

--According to researcher Gartner Inc., PC shipments fell 10% in 2013, marking the worst-ever decline after lackluster holiday sales and the ongoing shift to mobile. As an analyst at Gartner told Bloomberg, “In emerging markets, the first connected device for consumers is most likely a smartphone, and their first computing device is a tablet.”

Lenovo remained No. 1 worldwide with 18.1% market share in the fourth quarter (sales bucking the trend, up 6.6%), followed by Hewlett-Packard with 16.4%. Dell was third, according to Gartner.

IDC projects a decline in PC shipments for 2014 of 3.8%.

--Gartner does say global IT spending will grow by 3.1% in 2014, compared to almost no growth in 2013. The 3.1% figure, though, is a decline from an earlier forecast.

[Enterprise software is expected to grow 6.8% to $320 billion.]

--Apple reported its App Store generated a record $10 billion in sales in 2013, including $1 billion for the month of December. I think I’m $100 of that...I do have an iPad app, I keep forgetting to note.

--Samsung Electronics reported fourth-quarter earnings would be down 18% from the previous quarter’s record number, thus falling short of most analysts’ predictions. Samsung suffered from Apple’s launch of its latest iPhone 5s in September.

--An Associated Press examination “has found a growing global marketplace for fake clicks, which tech companies struggle to police. Online records, industry studies and interviews show companies are capitalizing on the opportunity to make millions of dollars by duping social media....

“YouTube wiped out billions of music industry video views last December after auditors found some videos apparently had exaggerated numbers of views. Its parent-company, Google Inc., is also constantly battling people who generate fake clicks on their ads.”

Long-time readers will recall that back in like 2001-02, I reported to you how I was victimized by fake click-throughs in an ad program I was running. I admitted it, about the only person at the time who did. I also immediately put an end to it.

In my case, the company I was dealing with used a “click farm” in Uruguay, it seemed, as my traffic inexplicably soared there.

The AP reported one fellow in Indonesia offers 1,000 Twitter followers for $10 and 1 million for $600. He just creates fake followers. And of course some celebrities, and their handlers, eat this stuff up.

Moi? No thank you. [I’m up to 60 on Twitter! Though I think two of ‘em are hookers.]

--In December 2012, corporate pensions in the S&P 1500 were underfunded by $557 billion, according to consulting firm Mercer. But today, a report by consultants Towers Watson estimates corporate pensions are now 93% funded, on average. Mercer said pension plans among S&P 1500 companies are 95% funded. The half-trillion deficit has been reduced to less than $100 billion.

Yup, a 30% return year for stocks goes a long ways towards addressing any gaps, while rising rates, as should be the case going forward, will help shrink liabilities further. [Motley Fool / USA TODAY]

--Holiday sales at U.S. Sears stores were down 9.2% in the nine weeks ending January 6 and down 5.7% at its Kmart chain. Sears shares cratered 15% as the company warned on Q4 results. Sales have fallen ever since hedge fund manager Edward Lampert merged the two in 2005. I haven’t been into a Sears store in at least a decade.

--Family Dollar Stores reported first-quarter fiscal 2014 results that fell short of expectations as the retailer said same-store sales fell 2.8%. The company also reduced its forecast for its second quarter, expecting another sales decline, while lowering its outlook for the full year as well.

--Shares in Bed Bath & Beyond fell 12% after the company reported fiscal third-quarter earnings that fell short of expectations, while the company guided lower for the year.

--But Macy’s Inc. bucked the trend, with same-store sales during the holiday season up 3.6%, as the company also announced it would lay off 2,500, close a few underperforming stores, but also add some. Shares rallied on the news. [As alluded to earlier, Costco’s same-store sales rose a solid 4%.]

--Meanwhile, investors in JC Penney were left scratching their heads as the company said it was “pleased” with its holiday performance, but then gave no details. Of course the shares then fell. These guys are idiots.

--IBM is carving out Watson, its question-and-answer “cognitive” computing effort, as a separate unit and will invest $1 billion in the initiative. Watson is designed to answer questions in natural language and to make judgments, so perfect for NFL talent evaluators.

The unit plans to have 2,000 people by the end of the year and will have its own building in New York’s Silicon Alley district. 

Personally, I would have called it “Newman!”

--Alcoa recorded a $1.72 billion impairment charge as part of its fourth-quarter earnings report, tied to two acquisitions from a decade ago, while the company also announced it had come to a $384 million agreement with the U.S. government to settle bribery allegations tied to a contract with Bahrain.

But, Alcoa did project global demand for aluminum would rise 7% in 2014, though in the recently completed quarter, revenue fell 5.3%.

--Corn and wheat prices fell to three- and two-year lows, respectively, amid slack export demand, but then on Friday corn rose 5% as the harvest came in less than expected, though it still smashed the record set in 2009. Corn had fallen 40% last year because of the record bounty following the severe drought of 2012.

--Uh oh...this just in...a virus that kills young pigs has spread to farms in 22 states and is cutting into pork supplies, as reported in the Wall Street Journal late Friday. It’s called Porcine epidemic diarrhea virus, or the PED virus. It’s fatal only to young pigs and poses no threat to humans. No word, however, on if you are young and eat like a pig if you could still be at risk.

One thing is for sure. I’m buying lots of bacon at the grocery store Saturday morning before prices skyrocket.

--Investment News reported that BlackRock and Goldman Sachs were the primary beneficiaries of PIMCO’s poor 2013, taking in a combined $16 billion through the first 11 months of the year in just two of their offerings, while PIMCO saw a net $20 billion outflow for 2013 across the whole fund family ($41 billion from PIMCO Total Return Fund).

--Constellation Brands Inc. (brewers of Tsingtao, St. Pauli Girl, Corona and Pacifico, among others, as well as distributors of wine and spirits), saw revenue jump 88% for its third quarter with profits soaring. Shares acted accordingly.

--Shares in Intercept Pharmaceuticals closed Friday, Jan. 3 at $69. This Friday, Jan. 10, they closed at $445. You’re reading that right. The company announced it had developed a drug to treat nonalcoholic liver disease and that the clinical trials were going so well, the government stopped the trials so that those getting the placebo could receive the real treatment. Amazing story. Far more to it, including other needed approvals, but the drug appears to work. As for the valuation, be very careful.

--Ireland is expecting a banner tourism year. Overseas visitor numbers grew by 7% last year and 70% of tourism operators believe 2014 will be just as strong if not better. [Irish Independent]

As I note further below, however, if you are booking trips to play some of the links courses, be aware a few of them have been slammed by horrendous storms recently.

--97 million Chinese went abroad last year, up 14 million from the previous year, the China Daily reported. A researcher at the Chinese Academy of Social Sciences was quoted as saying, “Chinese tourists spend so much abroad that some foreigners are calling us ‘walking wallets.’”

London’s Harrods department store says it now has 70 Mandarin-speaking staff.

--Canada’s health minister said a person in Alberta died this week of the H5N1 bird flu virus, the first known fatality in North America. The person died in hospital two days after returning from China. There appears to be no risk to fellow air passengers.

--Talk about euphoria. Pot stocks soared this week, including one, Advanced Cannabis Solutions Inc. that posted $455 in sales last quarter. The one I’ll follow just for the hell of it is Hemp Inc., [HEMP], which on Dec. 27 was trading at one penny and then hit .0855 on Thursday, before finishing the week at .04. This company, though, claims its focus is on industrial hemp used in clothing and camping gear.

--Federal inspectors shut down a Foster Farms California poultry plant after it was found to have been infested with cockroaches four times over the past five months. Sounds like these are highly intelligent cockroaches. As Willie Sutton said....

You know, if cockroaches are said to be highly-edible and filled with protein, what’s really wrong with an infestation at a poultry farm? Seems like you want the chickens to eat them.

Paid for by “Cockroaches Get a Bad Rap.”

--Michael Wines of the New York Times reports, “The most effective methods of keeping Asian carp from invading the Great Lakes via Chicago’s web of waterways could cost up to $18.4 billion and take 25 years to put in place, the federal Army Corps of Engineers concluded in a study.”

Of course there’s no guarantee that the carp or other unwanted species wouldn’t still get into the lakes by then.

The carp are a threat to commercial and sport fishermen as it devours huge amounts of plankton that other species require.

Foreign Affairs

Iran: On Friday, Iran’s deputy foreign minister, Abbas Araqchi, told his nation’s official IRNA news agency that an agreement had been reached on implementing the Nov. 24 interim nuclear deal and that the P5+1 would respond in two days regarding whether the terms were acceptable. But as I go to post, there are still some sticking points. Diplomats are looking at Jan. 20 as a potential start date for formally setting the six-month clock in motion, though talks on reaching a long-term agreement would be expected to take as long as a year.

Earlier, there appeared to be continuing disagreement over the issue of centrifuge research, specifically involving a new model of advanced nuclear centrifuge that Iran says it has installed, and as of Friday evening it’s not known how this would be resolved.

Ayatollah Khamenei didn’t help matters when he blasted the United States on a range of issues even as negotiations resumed this week.

Addressing the topic of the impact economic sanctions had on bringing Iran to the bargaining table, Khamenei said: “The enemies think they imposed the embargo and forced Iran to negotiate. No! We have already said that if we see interest in particular topics, we will negotiate with this devil in order to eliminate trouble coming from it.”

Khamenei also said the United States is “the biggest violator of human rights in the world.” [New York Times]

Meanwhile, a Senate proposal to increase sanctions against Iran now has majority backing, with 54 senators supporting Senator Robert Menendez’s bill, which increases sanctions against Iran if it backs away from the current interim – or eventually final – agreement.

The White House has threatened to veto the measure, arguing passage of new sanctions would derail any progress made.

Sen. Robert Menendez (D-NJ) / Washington Post

“The need for additional prospective sanctions is already clear. Since an agreement was reached in Geneva in November:

“ –Iran has continued elements of construction in Arak, a heavy-water nuclear reactor site that, if completed, would provide an alternate plutonium track to a nuclear weapon.

“ –Iran announced that it is building a new generation of centrifuges for uranium enrichment and conceded that it has 19,000 centrifuges, a thousand more than previously disclosed.

“ –The Iranians fired a rocket into space, expanding their space technology program and improving their ability to develop a long-range ballistic missile.

“ –Iranian lawmakers have proposed legislation to enrich uranium up to 60 percent, well beyond any potential use for peaceful purposes.

“ –And when the Treasury Department blacklisted 19 companies for sanctions evasion last month, the Iranians, demonstrating their customary bluff-and-bluster techniques, walked out of negotiations.

“These actions cannot be accepted as simply the price of doing business with Iran....

“The legislation endorses the Obama administration’s efforts and the Joint Plan of Action achieved in November. It supports continued negotiations, gives the administration a year of flexibility to secure a comprehensive agreement, respects the sanctions relief Iran is set to receive and prevents any new sanctions from taking effect while good-faith negotiations are underway.

“If the Iranians abide by their commitments, they’ll receive the economic relief they desperately want.

“Should Iran breach this agreement or fail to negotiate in good faith, the penalties it would face are severe....

“Iranian Foreign Minister Mohammad Javad Zarif has said that ‘the entire deal is dead’ if prospective sanctions are passed by Congress. ‘We do not like to negotiate under duress,’ he told TIME magazine.

“But the opposite is true. The proposed legislation is a clarifying action. It allows all sides to negotiate in certainties and provides one year of space for the parties to continue talking....

“This is hardly a march to war, as some critics have suggested. The legislation explicitly does not authorize the use of force, though it does restate the language of a resolution, passed 99 to 0 by the Senate, supporting the United States’ commitment to Israel, should Israel be forced to defend itself against Iran.

“The American public supports diplomacy. So do I.
 
“The American public doesn’t trust the Iranian regime. Neither do I.”

Syria: So what happened in the field this week? Al-Qaeda-linked militants executed as many as 50 prisoners as they beat a strategic retreat to their stronghold in northeastern Syria after being driven out by the rebels in Aleppo. ISIS, the former al-Qaeda in Iraq, moved into Syria last year to join the fight against Assad. Initially ISIS was aligned with the main opposition force, the two sharing the same strategic goal, but it has devolved into a three-way fight. A late AP story on Friday speaks of 500 having been killed the past week in rebel-on-rebel clashes, which is only helping Assad.

We also learned intensifying violence in some parts of Syria have cut off inspectors from key chemical-arms installations, even as we’re told some of the arms have reached, and left, the port of Latakia, eventually to be dumped on the fishes. 

Then you have this supposed U.N. peace conference, still slated to begin around Jan. 22. The U.N. didn’t invite Iran and Iran wants to be there. Secretary of State Kerry wants Iran there “to help the process.” 

Bret Stephens / Wall Street Journal

“Geneva II, as the Syrian talks are known in diplospeak, is based on a June 2012 international communique calling on the Syrian government and the opposition to come together and form a ‘transitional’ government. When the communique was issued, then-Secretary of State Hillary Clinton insisted that its terms barred Bashar Assad from remaining in power, while Sergei Lavrov, her Russian counterpart, insisted the contrary.

“Otherwise, solid agreement.

“Eighteen months, multiple chemical attacks, a spiraling regional crisis, tens of thousands dead and two million refugees later, we come to Geneva II.

“In theory the meeting will bring together all the relevant parties to negotiate a political solution to the war. In reality, Assad is barrel-bombing civilians, the opposition is at war with itself, and the Syrian National Council, the main (and moderate) opposition group, has insisted that it will not take part in a sham process.

“So what is Geneva II supposed to achieve? It won’t end the war in Syria. Iran has already announced that Mr. Kerry’s ‘from the sidelines’ suggestion is incompatible with its sovereign dignity. If members of the Syrian opposition show up while others refuse, it will further fracture the side the U.S. is supposed to be on. If the U.S. agrees to give Iran a seat at that table (as Mr. Kerry will be tempted to do), the move will further strengthen Assad’s hand.

“Otherwise, the prospects are excellent.”

Iraq: Al-Qaeda is back in Ramadi and Fallujah, though at week’s end the situation is unclear. The Iraqi army is trying to avoid a full-scale assault to retake Fallujah, while it seems local tribesmen ousted the militants from Ramadi by cutting a deal of some kind to avert an assault.

Prime Minister Nouri al-Maliki brought much of this on himself in refusing for years to bring Sunnis into his government while thousands have been detained without due process in what the government conveniently labels a crackdown on terrorism. It’s no wonder Sunnis in Iraq despise Maliki.

Editorial / Wall Street Journal

“Americans want to forget about Iraq and Syria, especially since President Obama walked back from his bombing threat in September, but Syria and Iraq haven’t forgotten America. The contagion from Syria’s civil war is spilling across borders in ways that are already requiring U.S. involvement and may eventually cost American lives.

“The casualties include the stability of Lebanon, which like Syria is riven by Shiite-Sunni divisions. Thousands of Shiite Hizbullah militia have joined the war on behalf of Syrian strongman Bashar Assad, and the opposition is retaliating with a terror campaign inside Lebanon....

“Meanwhile, our Journal colleagues report that Hizbullah has smuggled advanced antiship missile systems into Lebanon from Syria. The missiles are intended for use against Israel, which has attacked arms shipments headed for Lebanon at least five times in the last year.

“The dangers are that the violence in Lebanon devolves into another civil war, or that Hizbullah provokes Israel into a response like the 2006 war. Hizbullah already has upwards of 100,000 missiles, many of them unsophisticated Katyushas, but two or three times the number it had in 2006....

“Syria’s contagion is also spilling into Iraq with the revival of al-Qaeda in neighboring Anbar province. Anbar was the heart of the Sunni insurgency in Iraq after the U.S. invasion in 2003, and American soldiers paid dearly to reclaim cities like Ramadi and Fallujah. Al-Qaeda was defeated when Sunni tribal chiefs turned on them amid the U.S. troop surge in 2007.

“But now al-Qaeda is coming back, thanks to the heavy-handed sectarian rule of Shiite Iraqi Prime Minister Nouri al-Maliki and to the rise of jihadists in Syria. The U.S. refusal to help the moderate Syrian opposition has given the advantage to Sunni jihadists, including many from Europe and probably the U.S. too....

“The costs (of America’s retreat from the region) and consequences...are now becoming clear in Syria, Lebanon, Iraq and beyond. Those costs may end up being far greater than if we had stayed engaged in Iraq and attempted to help the moderate opposition in Syria.”

Lebanon: Michael Young / Daily Star...on the latest attempt at forming a government.

“With the alchemists of government formation discussing a new ministerial formula involving March 8 [Ed. bad guys...Hizbullah-led], March 14 [Ed. good guys...Saad Hariri and his allies] and the centrists, there is hope that Tamman Salam may soon have a Cabinet to lead.

“For months, the so-called 9-9-6 option (nine ministers each for March 8 and March 14 and six for the centrists) has been on the table, but was rejected by Salam and March 14. Now, the idea is to repackage the 9-9-6 formula and call it 8-8-8. Each group would have eight ministers, but March 8 and March 14 would select an additional minister each from the centrist quota. Presto! Lead would be turned into gold and Lebanon would emerge from its vacuum.

“If this scheme succeeds, it will have come after a dizzying array of maneuvers and counter-maneuvers, conditions and counter-conditions over a new government, all of which served merely to delay agreement over the 9-9-6 formula pushed by Hizbullah. Not surprisingly, foreign governments with a stake in Lebanon have become increasingly disenchanted and anxious over the paralysis in the country and have made this clear to Lebanese officials.”

It’s a freakin’ mess.
 
Michael Young:

“Lebanon cannot afford a void in the coming months, and fear of one is universal overseas. The Lebanese are getting the point, even if March 14 is worried that it will pay the price in any new order dominated by Hizbullah. But the alternative could be even worse....

“Ultimately, an American-Iranian rapprochement this year, if it happens, will provide new opportunities for all sides. It may also generate greater sectarian tension, but ultimately none of the regional powers has an interest in proliferating sectarian wars, which could consume them. Lebanon may be losing Western attention these days, but it would be a mistake to let it drift toward ruination.”

Fouad Ajami / Wall Street Journal

“The ground burns in Iraq, Syria and Lebanon. Borders are being contested, and militant Islamists have all but overwhelmed secular authorities. Yet America’s chief diplomat, Secretary of State John Kerry, was in the neighborhood this week, for the 10th time, on an expedition to Israel and the Palestinian territories. There was no sudden urgency to the impasse between Israel and the Palestinians, nor had an opening presented itself for serious negotiations. Israel’s attention was focused, as it had to be, on the large menace of Iran and its nuclear drive, and the Palestinians remained mired in their own squabbles.

“It was the practice of so many years that Arabs deployed what pressure they could exert on the United States on behalf of the Palestinians. No longer. It is the struggle for Syria, and the Iranian bid for primacy in the Fertile Crescent, that engage the Arabs. This ‘shuttle diplomacy’ of our secretary of state, if anything, is evidence of the retreat of American power.

“President Obama and his foreign policy lieutenants are given to the assertion that they don’t want the U.S. caught in the middle of other peoples’ wars. But by deeds of commission and omission, the U.S. is caught up in a deadly sectarian struggle between Shiite Iran and its ‘sister republics’ in the Arab world on one side, and the Sunni order of Arab power on the other. Mastery of the arcane details of the Shiite-Sunni schism may not be an American specialty, but over the last two years this president and his advisers have placed the U.S. on the side of Iran and its Arab satraps in Lebanon and, now, Iraq....

“When the U.S. lay down the foundations of its presence in the Arab world, it befriended and worked with the powers that be – the Sunni regimes. The Shiites were then outsiders, and the inroads Iran was to make into the Arab states were unthinkable.

“This is a radically different moment. America’s allies in Saudi Arabia, Jordan, the smaller states of the Gulf, and among the Sunnis in Lebanon and Syria can be forgiven the conclusion that the U.S. has acquiesced in this Iranian project. Washington is keen to conciliate Iran. Secretary Kerry has proposed a role for the Iranians in negotiations over Syria – even as Iranian forces and proxies are busy battering what is left of that country. Beirut once mattered to the U.S., but we have left it to the reign of Hizbullah, and what help comes to Lebanese moderates is now offered by Saudi Arabia and France.

“A cautionary note: Iran and the Fertile Crescent are not – and by a long shot – a fair reflection of the demography of Islam. The weight of Islam is in the Sunni states. If we opt for an alliance with Iran and its satraps, we should do so in the full knowledge that our choice places us at odds with the vast majority of the Islamic world. Already, our failure to come to the support of the Syrian rebellion has eroded so much of our standing among Muslim Sunnis, in the Arab world and beyond. Five years ago in Cairo, a citadel of Sunni Islam, Mr. Obama called for a new policy of engagement with the Islamic world. That seems more like light years away.”

Afghanistan: President Hamid Karzai ordered the release of 72 imprisoned terrorism suspects for lack of evidence to prosecute them. The U.S. is furious as it sees them as ongoing security risks.

This happens at the same time Karzai continues to refuse to sign a bilateral security agreement that would keep about 10,000 U.S. troops in the country beyond 2014.   The latest is that Karzai will not sign the agreement before the April presidential election, forcing the U.S. to deal with the new leader.

China: In one of the most high-profile official recognitions of the health impacts of air pollution in China, a former minister of health, Chen Zhu, in a commentary for the medical journal The Lancet, said air pollution is responsible for 350,000 to 500,000 premature deaths in China every year. This is actually a lower figure than an earlier study that said there were 1.2 million premature deaths in China in 2010 alone.

All 31 provincial governments have signed up for specific air pollution pledges for the next four years. Eleven municipalities and provinces have been told by the Ministry of Environmental Protection to cut levels of the most dangerous particulates by 10 to 25 percent.

That’s not enough, but if steps aren’t taken, the smog situation is just going to get worse and worse each year.

As reported in the South China Morning Post, “The National Meteorological Center said last week that the mainland had recorded more smoggy days in 2013 than any other year since 1961.”

And the pollution situation worsened in Hong Kong this past week with the government warning against outdoor activity. As I’m heading there in about ten days, I made a note to pack a face mask.

[I’ve been there many times when the air quality was putrid but frankly never knew what the warning levels were.]

But there was a positive development involving China and the ivory trade this week. After recently signing off on a treaty banning the slaughter of African elephants for their ivory, China very publicly destroyed six tons of ivory in Guangdong province, the first time the country has ever reduced to powder that which has been smuggled in. It’s a start. I’ve been screaming for this. But China is the only country in the world where the demand for ivory continues to rise.

Japan: Being ever unhelpful, Japan said it will accelerate the nationalization of 280 uninhabited islands in a bid to strengthen control of the country’s maritime territory. Tokyo also formally launched the newly established National Security Council, which strengthens Prime Minister Shinzo Abe’s control over various security agencies. Both moves do nothing to lessen tensions with Beijing.

Abe also said Monday he wanted talks with leaders in China and South Korea to explain his visits to the Yasukuni Shrine, which honors Japan’s war dead, but Beijing said no way. [I posted China’s response to Yasukuni in general on my “Hot Spots” link. It’s worth reading. Always good to know what the other side is telling its people.]

Then you have the issue of Japan and its barbaric whaling industry. I’ve said on many an occasion that if I could live my life over, I think I’d be a radical with someone like Sea Shepherd, the group that tries to take down Japanese whalers.

I mean there is all kinds of evidence Japan continues to hunt inside internationally designated sanctuaries. Here’s hoping Moby takes more than a few of them out. It would be proper justice.

Australian environmentalists, by the way, are furious at their new government and Prime Minister Tony Abbott, who has retreated from an election promise to send a ship out to monitor the Japanese fleet.

Whaling has been banned under an international moratorium since 1986, but the Japanese continue under the guise of scientific research.

At least demand in Japan for whale products appears to be in freefall.
 
[More on Japan and the environment...ours...down below.]

Turkey: Prime Minister Erdogan has been a busy beaver recently. This week he presented a new law curbing the independence of the judiciary and restricting use of the internet after purging hundreds (a reported 350) of police officers in Ankara in an attempt to quell an ongoing corruption investigation that has targeted people close to Erdogan, as well as business cronies. An opinion poll shows support for his AKP (Justice and Development Party) has fallen to 42%, below the 50% it won at the last election in 2011. The London Times editorialized this week that it was all about the “Putinification” of Turkey.

But the Islamists, who have been in control since 2002, are still ahead of the main opposition Republican People’s Party by 12 points.

Erdogan has long been seeking to run for a reinforced presidency this coming summer, but the current president, Abdullah Gul, long an Erdogan ally, may run as well if Erdogan’s troubles worsen.

North Korea: I wasn’t going to write anything about Dennis Rodman’s trip, but it was such a farce I had to just note it for the archives. Rodman sang “Happy Birthday” to Kim as his group of former NBA stars played some North Korean basketball players in an exhibition. Rodman played in the first half and then sat with Kim, his wife, and senior officials (who survived the purge, thus far) for the second half.

Rodman told the crowd, “Yes, he is a great leader, he provides for his people here in this country and thank God the people here love the marshal.”

Rodman later apologized for comments he made about captive American missionary Kenneth Bae in an interview with CNN, saying he was drunk.

Separately, according to reports, the aunt of Kim Jong-Un and the estranged wife of Jan Song-taek, who was executed last month, has died...possibly committing suicide, though it is also said she traveled to Russia recently for treatment for a heart ailment.

India: The diplomat accused of visa fraud for allegedly paying her nanny $3.31 an hour in New York, left the U.S. after she was indicted in a case that had India going nuts. Good riddance to Devyani Khobragade, who was ordered to leave the country by the State Department after India denied waiving her diplomatic immunity.

This should be a small-blip in a critical relationship, but good for the U.S. Attorney’s office to have the guts to bring the charges in the first place. This woman flat-out lied as part of the visa application.

On a different issue, a Ponzi scheme was uncovered that targeted the poor, with 1.74 million customers of Saradha Realty India Ltd., losing their savings. Since April, as reported by Yoolim Lee of Bloomberg, 34 who were customers or agents have committed suicide.

France: President Francois Hollande is considering legal action against a magazine that claims he is having an affair with an actress, Julie Gayet. Hollande’s official partner is Valerie Trierweiler, a real piece of work, after the president left fellow Socialist politician Segolene Royal, the mother of his four children. It’s all so very French.

The magazine, Closer, says it has evidence (and shows pictures) supporting claims Hollande routinely spends the night with Gayet at a flat not far from the Elysee Palace.

Closer also claims the president’s bodyguard arrives the following morning to deliver croissants.

Now I’m hungry.

Venezuela: What an all-too-familiar situation in this hellhole as former Miss Venezuela, Monica Spear, and her husband were killed during an attempted robbery. At least seven suspects have been arrested in a shooting that also involved their 5-year-old daughter, who was shot in the leg as Spear and her husband (they had split up four years ago but were on friendly terms) were confronted on a highway when their car was disabled by tire punctures late Monday night. Police later said the sharp object that caused the tire damage “had been placed on the highway.”

Spear was Miss Venezuela in 2004 (5thrunner-up in the Miss Universe pageant the following year) and a soap opera star.

Crime is so rampant in Venezuela, most families stay home after dark. The country has the second-worst murder and kidnapping rate in the world, next to gang-plagued Honduras.

All the more reason to remove President Nicolas Maduro. Sorry, democracy fans. The place would be better off with the military running things for a few years and then transitioning back to free elections. But without Chile/Pinochet type reprisals.

Brazil: Sepp Blatter, president of FIFA, football’s world body, said no previous host country for the World Cup has been as far behind in its preparations as Brazil is. Specifically, six of the 12 stadia are not ready, failing to meet the Dec. 31 deadline, while work on related hotels, roads and airports has yet to be complete.

Brazil’s president, Dilma Rousseff, said her country will be ready.  Of course Brazil won’t be. This was one of the more predictable moments of the century.

South Africa: Another pollution issue. Authorities revealed that a phosphate mine spill caused “extensive pollution” to a river in the country’s famed Kruger national park. Thousands of fish have been killed, but no sign of damage, yet, to big animals.

Random Musings

--The saga of Chris Christie is an important one for American politics and I have a full re-cap of everything we know as of this posting. I also identified this as a major issue back in my “Week in Review” of 12/21/13. To wit:

“New Jersey Gov. Chris Christie seems to be hoping that the holiday season, when some reporters get time off and many followers of the political scene have their minds elsewhere, will obscure a still developing scandal involving closing access lanes onto the George Washington Bridge, going back to last September. Then, and in other instances, ramps leading to the bridge in the borough of Fort Lee were closed without warning, leading to delays of up to six hours. Police and executives at the Port Authority, which runs the bridge, weren’t apprised ahead of time either.

“The Democratic mayor of Fort Lee, Mark Sokolich, had refused to endorse Christie so he saw the sudden lane closures as retribution. ‘What other conclusions could we possibly reach?’ he asked.

“The Port Authority’s deputy executive director, Bill Baroni, later claimed the closures were part of a traffic study, though he had zero proof of this. He resigned ten days ago.

“It then was determined the closures were ordered by the Port Authority’s David Wildstein, a Christie ally and political appointee. The PA’s executive director said he knew of no traffic study. So then Wildstein resigned.

“Christie’s reply was, ‘I worked the [traffic] cones.  Unbeknownst to anyone, I was working the cones,’ he said at one news conference.

“As this week ends, Christie is now confessing mistakes were made but that Democrats are making up an issue that doesn’t exist....

“This isn’t the first issue that I’ve mentioned that could torpedo Christie, and I’m not talking in a race against, say, Hillary Clinton. Christie seems to be forgetting that if he isn’t careful, it could derail him in a Republican primary debate.”

That was three weeks ago. The story exploded this past week with the release of personal emails between Christie staffers and political appointees at the Port Authority of New York and New Jersey.

“Time for some traffic problems in Fort Lee,” read an e-mail from the governor’s deputy chief of staff, Bridget Anne Kelly, dated Aug. 13, nearly a month before the Sept. 9-13 closures, which snarled traffic after local access lanes to the GWB were shut down.

The e-mail was sent to David Wildstein, the former official at the Port Authority who recently resigned. He had given the direct order to the bridge manager to close the lanes. Wildstein responded to Kelly, “Got it.”

Later text messages mocked concerns the lane closures led to students being stuck in gridlock.

“They are the children of Buono voters,” Wildstein wrote, referring to Christie’s opponent last fall, Barbara Buono.

But while aides seemed gleeful about the chaos that ensued, aside from students being late for school, emergency vehicles were also impacted, delayed in response to three people with heart problems, as the New York Times reported.

Other e-mails disparage Fort Lee’s mayor, Sokolich, as “this little Serbian,” though he’s actually Croatian, and describe him as “an idiot.”

Christie, in response to Wednesday’s e-mail disclosures, issued a statement:

“What I’ve seen today for the first time is unacceptable. I am outraged and deeply saddened to learn that not only was I misled by a member of my staff, but this completely inappropriate and unsanctioned conduct was made without my knowledge. One thing is clear: this type of behavior is unacceptable and I will not tolerate it because the people of New Jersey deserve better. This behavior is not representative of me or my administration in any way, and people will be held responsible for their actions.”

State Sen. Richard Codey, a former Democratic governor and fierce critic of Christie, said of the e-mail disclosures, “This goes to the personal integrity of the governor’s office. That governor said he asked everyone in his office if they were involved in this, and he said the answer was a blanket no. Obviously, there’s more lies there than in the confessional.”

Editorial / The New York Post...prior to Christie’s Thursday press conference:

“(This) may not be quite the Watergate Christie’s enemies suggest. But it’s no trifle – especially given the governor’s national ambitions. It’s an example of something Christie has long railed against: a political class abusing power at the expense of ordinary citizens for some petty purpose.

“These citizens deserve an unequivocal apology – and a leader who shows he will hold his own people to the same accountability he demands of others.”

Editorial / Wall Street Journal...also prior to Christie’s Thursday appearance.

“We trust Mr. Christie knows this isn’t a test of his staff but of his own credibility. America doesn’t need – after a year of revelations that the IRS was turned against President Obama’s opponents – another chief executive willing to condone government attacks on his political adversaries. And Republicans don’t need a presidential nominee who fulfills the liberal stereotype that he’s a political bully.”

So on Thursday, Christie explained his shock and dismay in a nearly two-hour press conference, saying he never knew anything about the fiasco until Wednesday morning, and that he had fired his deputy chief of staff and cut ties to his former campaign manager.

Paul Mulshine / Star-Ledger

“Forget running for president. Perhaps Chris Christie should set his sights on a seat in the U.S. Senate.

“He sure could pull off a heck of a filibuster.

“The governor’s press conference today on the Bridgegate scandal ran for almost two hours. It was quite a performance. He handled every question the assembled members of the media could throw at him. But by the end of the day, I found myself agreeing with his nemesis of the moment, Assembly Transportation Committee Chairman John Wisniewski.

“ ‘If you take him at his word, he can’t manage his own office,’ the Middlesex County Democrat told reporters following his hearing on the bridge scandal, after the governor’s press conference....

“One of the biggest questions concerns just how Christie could claim to be unaware of his administration’s role in the bridge closings when so many of his minions were in on those e-mail exchanges. One e-mail from as early as Sept. 17 directs Wildstein to call Communications Director Michael Drewniak after reporters started calling about the closures. Drewniak and Wildstein also exchanged e-mails concerning a press release announcing Wildstein’s decision to quit the Port Authority early last month. Wisniewski said the two apparently had in-depth discussions about how to craft that release.

“ ‘We’re talking about some very senior people in the administration,’ said Wisniewski. ‘I find it hard to believe these senior people are cherry-picking what they’re discussing with the governor.’

“So do I. I also find it hard to believe the governor had no inkling of the retaliatory nature of the bridge closing....last month two bridge employees testified under oath that they were pressured by Wildstein to go along with the lane closure. They also said they were ordered not to warn local officials.

“If Christie read that testimony and still thought the closing was legitimate, he’s too clueless to be governor.”

Editorial / New York Daily News

“New Jersey Gov. Chris Christie’s one-hour-and-forty-seven-minute self-serving, self-pitying display of contrition on Thursday was a climactic act in a brazen cover-up that threatens to further unravel his political career.

“Ever so thoroughly the governor scoured the thesaurus for words of apology, regret and painless self-flagellation while nervily playing the victim and mercilessly destroying the aide who played only a supporting role for the George Washington Bridge political revenge plot.

“Christie needed blood to express his outrage to the public, so he drew it from deputy chief of staff Bridget Kelly for the sin, the governor said, of lying to him. Perhaps, Kelly did lie, although it seems incredible that anyone would flat-out attempt to deceive an intense, emergency inquiry.

“Regardless, Christie made roadkill of Kelly and his former campaign manager while wholly exempting the close pals who were central to the lane-closure conspiracy that caused four days of gridlock and dangerously slowed emergency response in Fort Lee. Pathetic.”

Editorial / New York Post

“It was an uncharacteristically subdued but still assertive Chris Christie who began his press conference Thursday by apologizing to ‘the people of New Jersey, the people of Fort Lee...and the state Legislature’ for the traffic chaos...

“Certainly his reputation has taken a big hit, not least because people look to Christie to challenge the abuse of power at the expense of the public for cheap purposes. Likely this scandal will never fully go away. But it’s also possible opponents will overplay their hand, especially if nothing emerges to challenge Christie’s account.

“Americans are sadly used to politicians on both sides of the political aisle who have one set of standards for themselves and another for their opponents. On Thursday, Christie pledged something different.

“So the question is not how Christie ‘handled’ his presser or what it all means for a presidential run. The question is whether New Jersey’s governor told the truth to his citizens – and can show with his actions what taking responsibility really means.”

Editorial / Wall Street Journal

“(Meanwhile, the Obama Administration) quickly leaked to the media that the U.S. Attorney is investigating the lane closures as a criminal matter. Well, that sure was fast, and nice of Eric Holder’s Justice Department to show its typical discretion when investigating political opponents.

“This is the same Administration that won’t tell Congress what resources it is devoting to the IRS probe, and appears to be slow-rolling it. It has also doubled down by expanding the political vetting of 501(c)(4) groups seeking tax-exempt status. Lois Lerner, who ran the IRS tax-exempt shop and took the Fifth before Congress, was allowed to ‘retire,’ presumably with a pension. Acting IRS commissioner Steven Miller resigned under pressure but no other heads have rolled. Yet compared to using the IRS against political opponents during an election campaign, closing traffic lanes for four days is jaywalking.

“We raise this mostly because our media friends have been complicit in dismissing the IRS abuses, and for that matter every other legal abuse during the Obama years. The exception is the Edward Snowden theft of National Security Agency documents, which so far have exposed not a single example of law-breaking.

“Not that this should make Mr. Christie or any other potential GOP candidate complacent. Republicans operate under a double media standard that holds them to a much lower scandal threshold. In that sense the pathetic New Jersey traffic-lane scandal may be, as Mr. Obama likes to say, a teachable moment.”

Friday afternoon, 1,000 pages of documents, obtained by the New Jersey legislature under subpoena, detail the political chicanery that took place but do not tie Christie directly to the closures.

A Rasmussen Reports survey conducted after Christie’s press conference revealed 56% of New Jersey likely voters said Christie should resign from office if it’s proven that he knew about the GWB lane closures before they happened, while 54% say it’s at least somewhat likely the governor knew it was happening. Only 36% say it’s unlikely Christie had no prior knowledge of the closures.

Either Christie told the truth or he didn’t. Either he survives, badly wounded, or he’s toast.
 
---

--Editorial / Wall Street Journal...the best summation of the week’s other big political revelation.

“The open secret of Washington’s memoirs is that they typically confirm what we already know or suspect. In the case of the excerpts from the forthcoming book by Robert Gates, who was Defense Secretary for two years under George W. Bush and two and a half under President Obama, this isn’t reassuring.

“Gates’ revelations include that Mr. Obama and Hillary (Clinton) admitted that their opposition to the 2007 Iraq surge of troops was entirely political; that Vice President Joe Biden is a blowhard who ‘has been wrong on nearly every major foreign policy and national security issue over the past four decades’; that Mr. Obama didn’t believe in his own Afghanistan strategy and wanted mainly to get out from the first day; that the White House national security staff is full of political operatives who like to push generals around; and that Congress is mostly a crowd of parochial-minded bullies.

“None of this is news – at least not to anyone who has been paying reasonable attention. Mr. Gates’ contribution is to provide confirming detail and judgment from a source the media consider credible, and in that sense his memoir is educational and disconcerting.

“That’s especially so on matters of war, when American lives are on the line. Whatever one thinks of the 2003 decision to go to war in Iraq, Mr. Bush’s 2007 troop surge and strategy shift were gutsy calls and an historic success. They defeated al Qaeda in Iraq and created space for a long-term U.S.-Iraqi partnership that Mr. Obama later abandoned by refusing to leave some troops behind a la South Korea or Japan.

“Readers may recall that at the height of the surge in September 2007, General David Petraeus reported to the Senate on its early but still uncertain progress. Then Senators Obama and Clinton were withering in their attacks on the surge and its chances for success.

“After the duo had ascended to the executive branch, Mr. Gates writes that in one meeting ‘Hillary told the president [Obama] that her opposition to the [2007] surge in Iraq had been political because she was facing him in the Iowa primary... The president conceded vaguely that opposition to the Iraq surge had been political. To hear the two of them making these admissions, and in front of me, was as surprising as it was dismaying.’

“Mr. Obama won the Presidency despite his dreadful surge judgment, but his habit of treating war mainly as domestic politics has carried over to the Oval Office and undermined his own policies. That’s especially true in Afghanistan, as Mr. Gates reports that by early 2010 he had concluded that the President ‘doesn’t believe in his own strategy, and doesn’t consider the war to be his. For him, it’s all about getting out.’

“This was only weeks after Mr. Obama had ordered a troop surge in which thousands of Americans gave their lives.* Mr. Gates’ revelations explain why Mr. Obama has so rarely spoken about the Afghan mission to the American people, why he undermined it with an exit date before it even began, and why the Taliban and Pakistan have figured they can wait us out....

“Mr. Gates’ account also helps to explain why America’s friends are worried (Israel) or increasingly going their own way (the Saudis), while our enemies (Iran, al-Qaeda) are confident that now is a time to advance. They didn’t need a memoir to draw those conclusions, but they too have taken the measure of Mr. Obama and the lack of will behind his words.

“With such a President, it is going to be up to some of Congress’ few grown-ups to steer the country away from the dangers ahead and avoid lasting damage to U.S. security and world order. Any candidates?”

*I was disappointed the Journal was as sloppy with the facts as it was when it comes to American war dead since the beginning of the surge.....I read the figures every week. It’s not “thousands,” but closer to 1,000. More than bad enough but I’m writing a history here.

Gates has a lot more to say than just his apparent disgust for the politicization of Afghanistan and the surge.

Richard McGregor / Financial Times

“Mr. Gates’ tone is also a reflection of what he describes as the pain he witnessed firsthand at the loss of American lives and the damage to military families from successive wars.

“While not criticizing Mr. Bush directly, he said presidents in recent decades had been ‘too often too quick to reach for a gun’ when confronted by tough foreign policy problems.

“ ‘Our foreign and national security policy has become too militarized, the use of force too easy for presidents,’ the book says.

“ ‘For too many people, including defense ‘experts,’ members of Congress, executive branch officials and ordinary citizens, war has become a kind of video game or action movie: bloodless, painless and odorless,’ the book says.

“ ‘But my years at the Pentagon left me even more skeptical of systems analysis, computer models, game theories or doctrines that suggest that war is anything other than tragic, inefficient and uncertain.’”

Bob Woodward / Washington Post

“Gates’ severe criticism is even more surprising – some might say contradictory – because toward the end of ‘Duty,’ he says of Obama’s chief Afghanistan policies, ‘I believe Obama was right in each of these decisions.’ That particular view is not a universal one; like much of the debate about the best path to take in Afghanistan, there is disagreement on how well the surge strategy worked, including among military officials.

“The sometimes bitter tone in Gates’ 594-page account contrasts sharply with the even-tempered image that he cultivated during his many years of government service, including stints at the CIA and National Security Council.... In ‘Duty,’ Gates describes his outwardly calm demeanor as a façade. Underneath, he writes, he was frequently ‘seething’ and ‘running out of patience on multiple fronts.’”

Since I’m not likely to read the book myself anytime soon, I enjoyed this passage from Woodward’s article.

“Life at the top was no picnic, Gates writes. He did little or no socializing. ‘Every evening I could not wait to get home, get my office homework out of the way, write condolence letters to the families of the fallen, pour a stiff drink, wolf down a frozen dinner or carry out,’ since his wife, Becky, often remained at their home in Washington state.

“ ‘I got up at five every morning to run two miles around the Mall in Washington, past the World War II, Korean, and Vietnam memorials, and in front of the Lincoln Memorial. And every morning before dawn, I would ritually look up at that stunning white statue of Lincoln, say good morning, and sadly ask him, How did you do it?’”

--Back to local politics, New York City Mayor Bill de Blasio insisted he would promote a five-year tax hike on those earning $500,000 a year or more to pay for his universal pre-K program. “No half measures or partial funding,” he said.

But Gov. Andrew Cuomo, running for reelection, unveiled a plan to cut state taxes, particularly the corporate tax rate from 7.1% to 6.5%, as well as a property-tax credit to manufacturers.

“The business climate in New York is exceedingly important, it’s all about jobs,” said Cuomo.

Plus Cuomo offered an income-tax credit related to property taxes and a freeze on same, as well as a renter’s credit for those with an annual income under $100,000.

The governor cited fiscal restraint and a budget surplus for being able to reduce taxes.

But as Crain’s New York Business’ Greg David wrote:

“New Yorkers can be forgiven if the tax cut plan Gov. Andrew Cuomo announced Monday is making their heads hurt. The reason is simple: It’s about politics, not public policy and economics.”

The fact is New York has the highest state and local tax burden in the country, 12.8%.

New Jersey is second, 12.4%, followed by the Nutmeg State, Connecticut, at 12.3%. [Source: Crain’s / Tax Foundation]

There’s a lot more to this, and as Greg David notes, Cuomo’s small changes will take years to implement. But the governor can at least talk about lower taxes during his campaign.

--Liz Cheney, citing health issues with her family, dropped out of the race for senator in Wyoming. Good. Hers was a classic case of potentially blowing a Senate seat as Republican incumbent Mike Enzi didn’t appear to be threatened, but Cheney’s candidacy no doubt would have wounded him, assuming he emerged victorious in the primary.

--There was a despicable example of massive corruption in New York City this week with the indictment of 106 former cops and firefighters claiming 9/11 trauma as an excuse to lead an easy life on the taxpayer’s dime, prosecutors allege; all part of a broader $400 million Social Security fraud that goes beyond this group.

The former cops and firefighters were directed to shady doctors, having been coached by the ringleaders on how to act, with the doctors then green-lighting disability payments of $30,000 to $50,000 a year.

New NYPD Police Commissioner William Bratton said, “I can only express my disgust at the actions of the individuals involved in this scheme.”

72 former members of the NYPD “disgraced themselves, embarrassed their families. The idea that many of them chose the events of 9/11 to claim as the bases for this disability brings further dishonor to themselves,” Bratton added.

The larger ring has been operating for about 25 years with 1,000 filing false claims.

--According to a Defense News poll, 45% of analysts say a cyber-attack is the single greatest threat to U.S. national security, 20 points higher than terrorism.

House Intelligence Committee Chairman Mike Rogers (R-Mich.) has noted it is the “largest national security threat to face the U.S. that we are not even close to being prepared to handle as a country.”

--The Obama administration extended the life of the International Space Station for an additional four years, or until 2024, according to NASA.   The budget had already allowed for ISS activity through 2020. I love the space program, but this is a waste to extend it.

--I was watching Bill Nye, “the science guy,” on CNBC during the Polar Vortex, and he asked a question that would be more than a bit disconcerting if it proved true. This was the coldest weather much of the country had seen in two decades, but Nye wondered, “What if this became the norm?” As in once a year, not every 20? For starters, parts of the infrastructure, read utilities, were very close to the breaking point (but cracked in only small ways this time). Nye was concerned how well the electrical grid can handle such extreme cold.

But I was thinking, while it only lasted 2-3 days in most places, it was awful! And needless to say did a huge number on the air transportation network, let alone left behind mammoth potholes all over the place which ends up having an economic impact of its own.

This was not ‘normal winter weather.’ But, again, Nye was referring to a specific issue. What if a part of the polar vortex broke off as it did this time on a more regular basis? Let’s hope this doesn’t prove to be the case.

So for the archives, a few of the record lows around the country. I mean we’re talking some marks were absolutely smashed.

6 in Atlanta (10 the old record). 14 (18) in Florence, S.C. 19 (25) in Gulfport, Miss. -1 (3) in Asheville, N.C. [Johnny Mac, down in Asheville, said it hit -21 on Mt. Mitchell.] 1 (6) in Roanoke, Va. -9 (-5) in Pittsburgh. 3 (10) in Newark, N.J. -11 (-5) in Akron-Canton, Ohio. -14 (-5) in Detroit...nine degrees!

--Speaking of weather...a shout out to my dear friends back in Lahinch, Ireland, who are among those suffering after a series of huge storms that in the case of Lahinch, destroyed their oceanfront promenade that is a key to its tourism, let alone extensive damage to their world-class golf links that I’m a member of.

--Trader George passed on a story on a new study recently published in the journal Proceedings of the National Academy of Sciences. Scientists from the Monterey Bay Aquarium Research Institute (MBARI) in California “recently discovered that the number of dead sea creatures blanketing the floor of the Pacific is higher than it has ever been in the 24 years that monitoring has taken place, a phenomenon that the data suggests is a direct consequence of nuclear fallout from Fukushima. Though the researchers involved with the work have been reluctant to pin Fukushima as a potential cause...the timing of the discovery suggests that Fukushima is, perhaps, the cause.”

Christine Huffard, a marine biologist at MBARI and leader of the study, told National Geographic, “In the 24 years of this study, the past two years have seen the biggest amounts of this detritus by far.” At a particular ocean research station located 145 miles out to sea between the California cities of Santa Barbara and Monterey, the masses of dead sea creatures, including jellyfish and other oceanic matter that typically cover 1% of the ocean floor were now found to cover 98% of it. Other stations have reported similar percentages.

Recall it was summer of 2012 that I saw up close the first large structure from Fukushima to wash up on the Oregon coast (near Newport). I walked miles to see it and it was quite a site...a huge piece of a steel dock, like a floating barge. The public initially wasn’t allowed to get near it because it was encrusted with contaminated sea creatures.

So I see zero reason not to believe Fukushima had a substantial impact, and will continue to do so, on our west coast.

--A new CNN/ORC International survey released this week shows a majority of Americans support legalizing marijuana, 55%, while 44% do not.

Back in 1987, support was at 16%. 34% in 2002, and 43% two years ago. Just 36% of Republicans back legalizing pot. 62% of Democrats and 59% of Independents do.

In 1972, when President Nixon declared drugs “public enemy Number One,” 65% said the use of marijuana was a very serious problem for the United States. Now that is down to 19%.

--Pope Francis announced he was going to visit Holy Land sites in Jordan, Israel and the Palestinian Territories in May. This will be one of the major events of 2014. 

Interestingly, a CNN/ORC International poll asked American Catholics how they felt about Francis and he has an 88% approval rating. 4% believe he is too conservative. 7% think he’s too liberal. But 87% say he’s about right. So take that, Rush. 

---

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

God bless America.

---

Gold closed at $1246
Oil $92.72

Returns for the week 1/6-1/10

Dow Jones -0.2% [16437]
S&P 500 +0.6% [1842]
S&P MidCap +1.1%
Russell 2000 +0.7%
Nasdaq +1.0% [4174]

Returns for the period 1/1/14-1/10/14

Dow Jones -0.8%
S&P 500 -0.3%
S&P MidCap +0.5%
Russell 2000 +0.1%
Nasdaq -0.1%

Bulls 60.6
Bears 15.2 [Source: Investors Intelligence]

Have a great week. I appreciate your support.

Catch me on Twitter @stocksandnews

Brian Trumbore

 



AddThis Feed Button

-01/11/2014-      
Web Epoch NJ Web Design  |  (c) Copyright 2016 StocksandNews.com, LLC.

Week in Review

01/11/2014

For the week 1/6-1/10

[Posted 11:00 PM ET, Friday]
 
Washington and Wall Street

I can be brief this week. For starters, seeing as I don’t change many of my opinions over the course of a year, I’m hardly likely to alter my outlook for 2014 on Jan. 10.

But we’re off to a sloppy start. An ISM reading on the service sector for December came in at 53.0, down from November’s 53.9, while factory orders for November rose a better than expected 1.8%.

ShopperTrak said holiday sales (November and December) were up 2.7%, even as in-store traffic was down a whopping 14.6%. The 2.7% was slightly better than their initial forecast of 2.4%.

Among those retailers reporting thus far, only Macy’s and Costco appear to have done well for the season. A slew of others, as described below, had putrid numbers, including lousy margins because of all the discounting.

The Federal Reserve released the minutes from its December meeting when it began tapering to the tune of $10 billion. The minutes reflect a consensus that “further measured steps” are likely, but of course it’s all about the data, the Fed’s next meeting being Jan. 28-29.

And so on Friday we did indeed have a big data point, the December jobs report, and it shocked the Street. Only 74,000 jobs added when a figure north of 200,000 was expected. However, an unknowable number, as of today, had to be weather-related and I’m in the camp expecting a hefty upward revision later on. [November’s number was revised up a further 38,000 to 241,000.]

But what many are talking about is the drop in the official unemployment rate to 6.7% from 7.0%. Heck, we’re almost at the Fed’s original target of 6.5%, at which they once said they would consider raising the funds rate off zero, though they hedged that last month.

[A broader measure of unemployment that includes people working part time who want full-time positions and people who are marginally attached to the labor force remained at 13.1%, unchanged on the month.]

How did the rate decline so much when we added only 74,000 jobs? 347,000 dropped out of the labor force altogether. That’s not good, sports fans. Not in the least.

But the bond market took it all in and staged a big rally Friday, with the yield on the 10-year falling to 2.86% after threatening to bolt through 3.00% the past few weeks, the feeling being the Fed can’t possibly taper aggressively with such a lousy report; even though earlier jobs data from ADP and Challenger/Gray (a reading of layoffs, the lowest for Dec. in more than 13 years) were strong.

Lights please....

But earnings are just beginning to roll in and we’ll see how much CEO confidence there is. Are they optimistic about Europe’s recovery? What do they see in Asia? And, importantly, how many thus talk of new capital spending initiatives that could really help on the labor front, let alone consumer spending, which is 70% of GDP. 

So that’s what this earnings season is really all about, Charlie Brown.

As for ObamaCare, the next big date is essentially March 31 (though we’ll get lots of enrollment data beforehand), the deadline to obtain insurance without incurring a federal penalty under the individual mandate.

But much was made at the White House of figures from CMS (Centers for Medicare & Medicaid Services) that show total healthcare spending rose 3.7% in 2012, after similar increases of 3.6% in 2011, and 3.8% in both 2009-10.

Democrats claimed this was all about the Affordable Care Act, yet even CMS says ObamaCare had zero impact on the better pace; instead it was about the recession, cost of medical products not rising as much, and some big drugs coming off patents (leading to more competition and lower prices for the new alternatives).

True, prior to this period, medical costs were rising 9% annually. But all the signals on ObamaCare’s actual impact going forward are far from positive. As the Journal concluded in an editorial, “Enjoy the slowdown while it lasts.”

[Late Friday we learned the administration is not renewing the contract of CGI Group Inc. to develop and run key parts of HealthCare.gov. What seems stupid with this act is that CGI is currently involved in moving parts of the system now hosted by Verizon to a Hewlett-Packard system and the change could impact this ongoing work. The damage was already done for the October launch. But why not wait until CGI fulfills its work in the changeover?]

Europe and Asia

There was a slew of data for the eurozone this week. To begin with the final figure on the services PMI for December came in at 51.0 vs. 51.2 in November, a mild disappointment, and down in Germany from 55.7 in November to 53.5. [47.8 in France, down from 48.0].

But eurozone retail sales for November were up 1.4% over October and up 1.6% since November 2012, the largest rise in a single month since Nov. 2001, this as the expectation was for an increase of just 0.1%.

The eurozone inflation numbers for December, courtesy of Eurostats, saw inflation at an annualized rate of 0.8% (est.) vs. 0.9% in November. Remember, just as in the U.S. (and Japan for that matter), the target is 2.0% so there remains concern Europe is close to tipping over into deflation, despite the generally positive recent data on economic activity.

European Central Bank President Mario Draghi, in holding the line on interest rates again this week, continued to say, “We want to see confidence staying for a relatively long time before we can say we declare victory. I would say things are slightly better.” I imagine the upcoming reports on GDP will buttress this stance.

But Draghi also remains vague when he declares the ECB will do “whatever it takes” to protect the euro. Yes, such talk has worked, some would say masterfully so. Ireland, for example, returned to the bond market this week, a major accomplishment. Portugal could be next. [Those talking of an imminent return by Greece I think are nuts.]

The thing is Draghi knows that prices are falling in some member states, such as Greece and Portugal, and in a recent interview former U.S. Treasury Secretary Lawrence Summers said, “There’s too much complacency about Europe.”

I keep pointing out, ad nauseam, that there is no banking union in the eurozone as yet, there’s only the ECB. As The Economist noted a few weeks ago in an editorial, “Europe’s politicians have failed to agree on what to do if the capital holes (in the euro area’s biggest banks) turn out to be too large for banks or their governments to cope with. If the ECB is tough, it may reignite the crisis; if it conducts a soft review (Ed. upcoming stress tests), it will weaken its own credibility. Expect a fudge.”

I don’t want to be the boy who cried wolf. I simply maintain my own caution on Europe is warranted.

And I believe my stance holds up when you continue to have unemployment figures like we saw this week, the latest being the November jobs picture, also courtesy of Eurostats (the EU’s statistical arm).

The overall unemployment rate in the eurozone is 12.1%, the same as in April. [For the full EU-28 it was unchanged at 10.9%.]

Germany is at 5.2% (remember, the government figure is calculated differently and is 6.9%), but France is at 10.8%, Italy 12.7% (vs. 11.3% a year ago), Cyprus 17.3% (recall their economy recently collapsed into Depression), Greece 27.4% (Sept.), and Spain 26.7%. Even the Netherlands has risen the past 12 months from 5.6% to 6.9%.

The best story could be Ireland, down to 12.3% from 14.3%.

You also continue to have the sickening figures on youth unemployment in some of the periphery.

Greece has a youth jobless rate of 54.8% (Sept.), Spain 57.7%, Portugal 36.8%, Italy 41.6%.

Granted, these figures, with the exception of Greece, are for November and some of the news for December, particularly from Spain, shows potential improvement, but we are talking a ‘tenth’ here, a ‘tenth’ there.

The following has been my point for some time now. The improvements we’ve seen in some of the PMI manufacturing/service data or retail sales has done little, if anything, to improve the labor picture.

Yes, I maintain when it comes to Europe the sleeper big picture item of the year is the election for the European Parliament, May 22-25. The 28 EU members will elect 751 deputies and I have been talking of the impact the far right, Eurosceptics (including some far left parties) could have in a new parliament.

Today, anti-EU populists have 12% of seats. Come May 26, it could be as high as 25%, though there is some debate whether the vote will be split between the traditional far left and the new far right.

The far-right is anti-elitist, anti-Brussels and anti-immigration. It could win an actual plurality of the vote. In France, for example, the National Front (FN), led by Marine Le Pen, will make big inroads. In a recent poll, 55% of students said they would consider voting for the FN.

Geert Wilders’ Freedom Party in the Netherlands, Nigel Farage’s UK Independence Party, the Finns Party, the Alternative for Germany party, Norway’s Progress Party, and Hungary’s Jobbik, the third-biggest in its parliament today (they are also a bunch of total thugs).

Back to the Alternative for Germany, in its first year it barely missed entering the German parliament and no doubt will win some seats in the EU version, then use this as a springboard for future German elections.

Le Pen is pointing to initial gains in local elections in March. This week, the charismatic mother with the cigarette voice promised that nationalist parties will do “the maximum” to block further EU integration after making expected gains in the EU elections.

Speaking to U.S. and British media in Paris, she declared: “The role we will have...will be to block by all means, to the maximum, anything that contributes to the transfer of powers from our people to the European Union.”

Le Pen added: “We must bring down the wall of Brussels, just as the Berlin Wall came down.” [Financial Times]

Such Eurosceptics advocate the “orderly” dissolution of the euro area, feeding on economic anxiety. I argue the full impact of a far-right plurality in the EU parliament is not known, except it won’t be a positive in the least.

Finally, two Eurobits....

In Germany, Chancellor Angela Merkel is laid up for a number of weeks due to an accident she suffered while cross-country skiing (fractured pelvis) and the timing couldn’t be worse, what with the new government having just been formed. So will her coalition partners attempt to take advantage of her being out of the spotlight? Already there have been clashes over immigration policy.

Merkel’s strength is as a centrist, uniter, but she has found herself having to give into the extremists on some policies and her fellow Christian Democrats aren’t happy.

And in the UK, Prime Minister David Cameron’s party continues to plunge in the polls, even as the economy improves. It’s another debate over income inequality. The average Brit points to rising utility, transportation and petrol prices, for example, that are far exceeding wage increases (if you’re lucky enough to get a raise). Just as in the U.S., the middle class is shrinking. [Another reason why the UK Independence Party is making inroads.]

That said, car sales here in 2013 were at their best level since 2007, and up 10.5% over 2012. Spain was the only other country in the entire EU to show an increase in this category and this was due to a cash-for-clunkers type scheme.

Turning to Asia, in China, the data was largely disappointing. HSBC’s figure on the service sector for December came in at 50.9 vs. 52.5 in November, a six-month low, while producer prices fell a 22nd straight month, which hardly bodes well for future growth, though does give the government some room to ease. Consumer prices were up only 2.5% for December, a seven-month low, with food inflation at just 4.1%.

December exports rose a disappointing 4.3% last month vs. a solid 12.7% increase in November, though imports were up a solid 8.3%.

Add it all up and it signals a weakening economy. Should the government hit its target of 7.6% growth for all of 2013 (and one would expect the government to come darn close to it...wink wink...), that would be the lowest number in China since 1990. Many would accept 7.0% for 2014 at this point.

There was a positive story on auto sales, however, but herein lies another troublesome issue. The more cars the nation puts on the road, the more air pollution.

China became the first nation to sell over 20 million vehicles in a single year, 21.98M in 2013, up 13.9% over 2012, with an expectation of 24 million this year.

But some government ministers are saying auto sales must slow.

Lastly, on a different topic, the debt issue that I’ve taken the bullish stance on (that the government will be able to handle any banking issues before a true crisis develops), investor George Soros is talking up a China crash. Of course Soros has done this before to benefit himself, such as in his infamous attack on the British pound, which is now 22 years ago!

China, as noted by Bloomberg’s William Pesek in an op-ed this week, does however seem to be taking notice of Soros’ warnings, scrambling to announce a series of moves to rein in the shadow banking sector. One thing is for certain today, though. The Chinese stock market has been in the dumper for months.

As for Japan, the Nikkei Stock Average started off the year (no trading Jan. 2-3) with a thud, down 2.3% for the week. But the Nikkei was up 57% in 2013 so a little profit taking was to be expected.

The bigger issue is how the Japanese consumer takes the coming sales tax hike in April, and whether over the course of 2014, businesses increase wages so the consumer can take the hit in stride; at least this is what the Abe government is hoping for.

Street Bytes

--Stocks finished mixed in the first full trading week of 2014, with the Dow Jones down 0.2% to 16437, while the S&P 500 gained 0.6% and Nasdaq advanced 1.0%. But for the first five trading days of the year, a barometer some hang their hat on, the S&P was down 0.6%.

Now the focus is on earnings, with EPS for S&P 500 companies expected to rise 5% for the quarter.

--U.S. Treasury Yields

6-mo. 0.06% 2-yr. 0.37% 10-yr. 2.86% 30-yr. 3.80%

Yields plummeted on Friday on the heels of the lousy jobs report, with the key 10-year falling 10 basis points.

The Senate confirmed Janet Yellen in a 56-26 vote, with some who had threatened to vote against unable to get to Washington because of the air travel disruptions most of the country suffered through.

And on Friday, President Obama nominated Stanley Fischer to succeed Yellen as the Fed’s No. 2. I totally agree with strategist Jim Bianco, who in a conversation with CNBC’s Rick Santelli offered that Fischer is the real heavyweight, an outstanding individual, who should be the chairman, not Yellen, and that it will be interesting to see how the two manage their relationship.

Fischer, who holds dual Israeli-U.S. citizenship, is one of those rare people who could handle any job in the world more than competently, in my humble estimation. Like Paul Volcker in his prime.

So kudos to Barack Obama for bringing Fischer on board, only he should be No. 1.

--More than 20,000 flights were canceled in the U.S. owing to the Polar Vortex and snowstorms, about the same impact as 2012’s Hurricane Sandy over a four-day period.

JetBlue was emblematic; forced to stop all service for 17 hours Monday-Tuesday to catch up (and abide by new ‘rest’ rules for pilots).

--Target, the nation’s second-largest discount retailer, reported its security breach from last year was far worse than initially thought. The 40 million figure for those potentially impacted by the theft of their credit card information has expanded to as many as 110 million, and it’s possible the names, addresses, phone numbers and e-mail accounts have fallen into the hands of the evil doers.

--According to the New York Times, the total settlement figure for Wall Street in the mortgage crisis could be nearly $50 billion, or “roughly half the total annual profit of large American banks in 2012.” JPMorgan Chase recently settled for $13 billion and the Times’ analysis has Bank of America eventually settling for $11.7 billion in penalties, with an additional $5 billion in relief to homeowners.

Separately, it was announced this week JPMorgan would also pay $2.6 billion related to the Bernie Madoff Ponzi scheme in order to head off a criminal prosecution. JPMorgan bankers had concerns about Madoff for years but failed to inform authorities. JPM said it would have to top off its $23 billion war chest with another $400 million to cover its still mounting legal bills.

Back in October 2008 (two months before Madoff was arrested), a London-based JPMorgan analyst wrote an internal email highlighting Madoff’s “odd choice” of a small accounting firm and said “there are various elements in the story that could make us nervous.”

But in 1998 and 2007, JPMorgan’s asset management arm declined to invest in Madoff funds because the returns seemed “too good to be true.” [Financial Times]

Let’s face it. JPM is getting off easy. All along the way they were obligated to inform the government of their suspicions and didn’t. It’s time for Jamie Dimon to go.

--GM’s sales to China climbed 11% last year to 3.16 million vehicles. Ford, which got a late start there, saw sales soar 49% to 935,000 units. Toyota, while falling to No. 6 among foreign automakers, nonetheless had an increase of 9.2%, while Nissan and Honda sold record numbers. Toyota and Honda rebounded from 2012’s anti-Japanese boycotts.

[Ford’s Alan Mulally scotched rumors he was going to Microsoft, saying he had “no plans to do anything other than serve Ford” as chief executive.]

--In a huge deal, Boeing’s largest union wised up and accepted a new contract that will keep the bulk of the company’s jetliner manufacturing in Washington state, after Boeing threatened to take its main business elsewhere. Twenty-two states had offered 54 sites for Boeing to evaluate, but by a 51-49 margin, the eight-year deal ensures the planned 777X, a 350- to 400-seat jetliner scheduled for delivery in 2020, will be built in the Puget Sound region.

Local union leaders lost out to the union membership. International union leaders, however, were behind the pact.

Boeing employs more than 82,000 in Washington, including 12,000 working on the 777 today.

Gov. Jay Inslee was right in saying, “I don’t think you can overstate its ramifications.”

Bottom line, 51% (supposedly the margin was 600 out of 23,900 cast) wised up. They all now have job security.

--With the rise in U.S. oil production, the Energy Information Administration forecast that in 2015 the U.S. liquid fuels consumption met by net imports will fall to just 24%, down from 60% in 2005. Touting a strong trade figure for November this week, with the trade gap plunging to $34.3 billion from $39.3 billion in October, the lowest level in four years, the U.S. oil and gas industry wants to lift remaining restrictions on exports of their products. Strict controls on crude oil exports date back to the oil embargo of the 1970s.

--According to researcher Gartner Inc., PC shipments fell 10% in 2013, marking the worst-ever decline after lackluster holiday sales and the ongoing shift to mobile. As an analyst at Gartner told Bloomberg, “In emerging markets, the first connected device for consumers is most likely a smartphone, and their first computing device is a tablet.”

Lenovo remained No. 1 worldwide with 18.1% market share in the fourth quarter (sales bucking the trend, up 6.6%), followed by Hewlett-Packard with 16.4%. Dell was third, according to Gartner.

IDC projects a decline in PC shipments for 2014 of 3.8%.

--Gartner does say global IT spending will grow by 3.1% in 2014, compared to almost no growth in 2013. The 3.1% figure, though, is a decline from an earlier forecast.

[Enterprise software is expected to grow 6.8% to $320 billion.]

--Apple reported its App Store generated a record $10 billion in sales in 2013, including $1 billion for the month of December. I think I’m $100 of that...I do have an iPad app, I keep forgetting to note.

--Samsung Electronics reported fourth-quarter earnings would be down 18% from the previous quarter’s record number, thus falling short of most analysts’ predictions. Samsung suffered from Apple’s launch of its latest iPhone 5s in September.

--An Associated Press examination “has found a growing global marketplace for fake clicks, which tech companies struggle to police. Online records, industry studies and interviews show companies are capitalizing on the opportunity to make millions of dollars by duping social media....

“YouTube wiped out billions of music industry video views last December after auditors found some videos apparently had exaggerated numbers of views. Its parent-company, Google Inc., is also constantly battling people who generate fake clicks on their ads.”

Long-time readers will recall that back in like 2001-02, I reported to you how I was victimized by fake click-throughs in an ad program I was running. I admitted it, about the only person at the time who did. I also immediately put an end to it.

In my case, the company I was dealing with used a “click farm” in Uruguay, it seemed, as my traffic inexplicably soared there.

The AP reported one fellow in Indonesia offers 1,000 Twitter followers for $10 and 1 million for $600. He just creates fake followers. And of course some celebrities, and their handlers, eat this stuff up.

Moi? No thank you. [I’m up to 60 on Twitter! Though I think two of ‘em are hookers.]

--In December 2012, corporate pensions in the S&P 1500 were underfunded by $557 billion, according to consulting firm Mercer. But today, a report by consultants Towers Watson estimates corporate pensions are now 93% funded, on average. Mercer said pension plans among S&P 1500 companies are 95% funded. The half-trillion deficit has been reduced to less than $100 billion.

Yup, a 30% return year for stocks goes a long ways towards addressing any gaps, while rising rates, as should be the case going forward, will help shrink liabilities further. [Motley Fool / USA TODAY]

--Holiday sales at U.S. Sears stores were down 9.2% in the nine weeks ending January 6 and down 5.7% at its Kmart chain. Sears shares cratered 15% as the company warned on Q4 results. Sales have fallen ever since hedge fund manager Edward Lampert merged the two in 2005. I haven’t been into a Sears store in at least a decade.

--Family Dollar Stores reported first-quarter fiscal 2014 results that fell short of expectations as the retailer said same-store sales fell 2.8%. The company also reduced its forecast for its second quarter, expecting another sales decline, while lowering its outlook for the full year as well.

--Shares in Bed Bath & Beyond fell 12% after the company reported fiscal third-quarter earnings that fell short of expectations, while the company guided lower for the year.

--But Macy’s Inc. bucked the trend, with same-store sales during the holiday season up 3.6%, as the company also announced it would lay off 2,500, close a few underperforming stores, but also add some. Shares rallied on the news. [As alluded to earlier, Costco’s same-store sales rose a solid 4%.]

--Meanwhile, investors in JC Penney were left scratching their heads as the company said it was “pleased” with its holiday performance, but then gave no details. Of course the shares then fell. These guys are idiots.

--IBM is carving out Watson, its question-and-answer “cognitive” computing effort, as a separate unit and will invest $1 billion in the initiative. Watson is designed to answer questions in natural language and to make judgments, so perfect for NFL talent evaluators.

The unit plans to have 2,000 people by the end of the year and will have its own building in New York’s Silicon Alley district. 

Personally, I would have called it “Newman!”

--Alcoa recorded a $1.72 billion impairment charge as part of its fourth-quarter earnings report, tied to two acquisitions from a decade ago, while the company also announced it had come to a $384 million agreement with the U.S. government to settle bribery allegations tied to a contract with Bahrain.

But, Alcoa did project global demand for aluminum would rise 7% in 2014, though in the recently completed quarter, revenue fell 5.3%.

--Corn and wheat prices fell to three- and two-year lows, respectively, amid slack export demand, but then on Friday corn rose 5% as the harvest came in less than expected, though it still smashed the record set in 2009. Corn had fallen 40% last year because of the record bounty following the severe drought of 2012.

--Uh oh...this just in...a virus that kills young pigs has spread to farms in 22 states and is cutting into pork supplies, as reported in the Wall Street Journal late Friday. It’s called Porcine epidemic diarrhea virus, or the PED virus. It’s fatal only to young pigs and poses no threat to humans. No word, however, on if you are young and eat like a pig if you could still be at risk.

One thing is for sure. I’m buying lots of bacon at the grocery store Saturday morning before prices skyrocket.

--Investment News reported that BlackRock and Goldman Sachs were the primary beneficiaries of PIMCO’s poor 2013, taking in a combined $16 billion through the first 11 months of the year in just two of their offerings, while PIMCO saw a net $20 billion outflow for 2013 across the whole fund family ($41 billion from PIMCO Total Return Fund).

--Constellation Brands Inc. (brewers of Tsingtao, St. Pauli Girl, Corona and Pacifico, among others, as well as distributors of wine and spirits), saw revenue jump 88% for its third quarter with profits soaring. Shares acted accordingly.

--Shares in Intercept Pharmaceuticals closed Friday, Jan. 3 at $69. This Friday, Jan. 10, they closed at $445. You’re reading that right. The company announced it had developed a drug to treat nonalcoholic liver disease and that the clinical trials were going so well, the government stopped the trials so that those getting the placebo could receive the real treatment. Amazing story. Far more to it, including other needed approvals, but the drug appears to work. As for the valuation, be very careful.

--Ireland is expecting a banner tourism year. Overseas visitor numbers grew by 7% last year and 70% of tourism operators believe 2014 will be just as strong if not better. [Irish Independent]

As I note further below, however, if you are booking trips to play some of the links courses, be aware a few of them have been slammed by horrendous storms recently.

--97 million Chinese went abroad last year, up 14 million from the previous year, the China Daily reported. A researcher at the Chinese Academy of Social Sciences was quoted as saying, “Chinese tourists spend so much abroad that some foreigners are calling us ‘walking wallets.’”

London’s Harrods department store says it now has 70 Mandarin-speaking staff.

--Canada’s health minister said a person in Alberta died this week of the H5N1 bird flu virus, the first known fatality in North America. The person died in hospital two days after returning from China. There appears to be no risk to fellow air passengers.

--Talk about euphoria. Pot stocks soared this week, including one, Advanced Cannabis Solutions Inc. that posted $455 in sales last quarter. The one I’ll follow just for the hell of it is Hemp Inc., [HEMP], which on Dec. 27 was trading at one penny and then hit .0855 on Thursday, before finishing the week at .04. This company, though, claims its focus is on industrial hemp used in clothing and camping gear.

--Federal inspectors shut down a Foster Farms California poultry plant after it was found to have been infested with cockroaches four times over the past five months. Sounds like these are highly intelligent cockroaches. As Willie Sutton said....

You know, if cockroaches are said to be highly-edible and filled with protein, what’s really wrong with an infestation at a poultry farm? Seems like you want the chickens to eat them.

Paid for by “Cockroaches Get a Bad Rap.”

--Michael Wines of the New York Times reports, “The most effective methods of keeping Asian carp from invading the Great Lakes via Chicago’s web of waterways could cost up to $18.4 billion and take 25 years to put in place, the federal Army Corps of Engineers concluded in a study.”

Of course there’s no guarantee that the carp or other unwanted species wouldn’t still get into the lakes by then.

The carp are a threat to commercial and sport fishermen as it devours huge amounts of plankton that other species require.

Foreign Affairs

Iran: On Friday, Iran’s deputy foreign minister, Abbas Araqchi, told his nation’s official IRNA news agency that an agreement had been reached on implementing the Nov. 24 interim nuclear deal and that the P5+1 would respond in two days regarding whether the terms were acceptable. But as I go to post, there are still some sticking points. Diplomats are looking at Jan. 20 as a potential start date for formally setting the six-month clock in motion, though talks on reaching a long-term agreement would be expected to take as long as a year.

Earlier, there appeared to be continuing disagreement over the issue of centrifuge research, specifically involving a new model of advanced nuclear centrifuge that Iran says it has installed, and as of Friday evening it’s not known how this would be resolved.

Ayatollah Khamenei didn’t help matters when he blasted the United States on a range of issues even as negotiations resumed this week.

Addressing the topic of the impact economic sanctions had on bringing Iran to the bargaining table, Khamenei said: “The enemies think they imposed the embargo and forced Iran to negotiate. No! We have already said that if we see interest in particular topics, we will negotiate with this devil in order to eliminate trouble coming from it.”

Khamenei also said the United States is “the biggest violator of human rights in the world.” [New York Times]

Meanwhile, a Senate proposal to increase sanctions against Iran now has majority backing, with 54 senators supporting Senator Robert Menendez’s bill, which increases sanctions against Iran if it backs away from the current interim – or eventually final – agreement.

The White House has threatened to veto the measure, arguing passage of new sanctions would derail any progress made.

Sen. Robert Menendez (D-NJ) / Washington Post

“The need for additional prospective sanctions is already clear. Since an agreement was reached in Geneva in November:

“ –Iran has continued elements of construction in Arak, a heavy-water nuclear reactor site that, if completed, would provide an alternate plutonium track to a nuclear weapon.

“ –Iran announced that it is building a new generation of centrifuges for uranium enrichment and conceded that it has 19,000 centrifuges, a thousand more than previously disclosed.

“ –The Iranians fired a rocket into space, expanding their space technology program and improving their ability to develop a long-range ballistic missile.

“ –Iranian lawmakers have proposed legislation to enrich uranium up to 60 percent, well beyond any potential use for peaceful purposes.

“ –And when the Treasury Department blacklisted 19 companies for sanctions evasion last month, the Iranians, demonstrating their customary bluff-and-bluster techniques, walked out of negotiations.

“These actions cannot be accepted as simply the price of doing business with Iran....

“The legislation endorses the Obama administration’s efforts and the Joint Plan of Action achieved in November. It supports continued negotiations, gives the administration a year of flexibility to secure a comprehensive agreement, respects the sanctions relief Iran is set to receive and prevents any new sanctions from taking effect while good-faith negotiations are underway.

“If the Iranians abide by their commitments, they’ll receive the economic relief they desperately want.

“Should Iran breach this agreement or fail to negotiate in good faith, the penalties it would face are severe....

“Iranian Foreign Minister Mohammad Javad Zarif has said that ‘the entire deal is dead’ if prospective sanctions are passed by Congress. ‘We do not like to negotiate under duress,’ he told TIME magazine.

“But the opposite is true. The proposed legislation is a clarifying action. It allows all sides to negotiate in certainties and provides one year of space for the parties to continue talking....

“This is hardly a march to war, as some critics have suggested. The legislation explicitly does not authorize the use of force, though it does restate the language of a resolution, passed 99 to 0 by the Senate, supporting the United States’ commitment to Israel, should Israel be forced to defend itself against Iran.

“The American public supports diplomacy. So do I.
 
“The American public doesn’t trust the Iranian regime. Neither do I.”

Syria: So what happened in the field this week? Al-Qaeda-linked militants executed as many as 50 prisoners as they beat a strategic retreat to their stronghold in northeastern Syria after being driven out by the rebels in Aleppo. ISIS, the former al-Qaeda in Iraq, moved into Syria last year to join the fight against Assad. Initially ISIS was aligned with the main opposition force, the two sharing the same strategic goal, but it has devolved into a three-way fight. A late AP story on Friday speaks of 500 having been killed the past week in rebel-on-rebel clashes, which is only helping Assad.

We also learned intensifying violence in some parts of Syria have cut off inspectors from key chemical-arms installations, even as we’re told some of the arms have reached, and left, the port of Latakia, eventually to be dumped on the fishes. 

Then you have this supposed U.N. peace conference, still slated to begin around Jan. 22. The U.N. didn’t invite Iran and Iran wants to be there. Secretary of State Kerry wants Iran there “to help the process.” 

Bret Stephens / Wall Street Journal

“Geneva II, as the Syrian talks are known in diplospeak, is based on a June 2012 international communique calling on the Syrian government and the opposition to come together and form a ‘transitional’ government. When the communique was issued, then-Secretary of State Hillary Clinton insisted that its terms barred Bashar Assad from remaining in power, while Sergei Lavrov, her Russian counterpart, insisted the contrary.

“Otherwise, solid agreement.

“Eighteen months, multiple chemical attacks, a spiraling regional crisis, tens of thousands dead and two million refugees later, we come to Geneva II.

“In theory the meeting will bring together all the relevant parties to negotiate a political solution to the war. In reality, Assad is barrel-bombing civilians, the opposition is at war with itself, and the Syrian National Council, the main (and moderate) opposition group, has insisted that it will not take part in a sham process.

“So what is Geneva II supposed to achieve? It won’t end the war in Syria. Iran has already announced that Mr. Kerry’s ‘from the sidelines’ suggestion is incompatible with its sovereign dignity. If members of the Syrian opposition show up while others refuse, it will further fracture the side the U.S. is supposed to be on. If the U.S. agrees to give Iran a seat at that table (as Mr. Kerry will be tempted to do), the move will further strengthen Assad’s hand.

“Otherwise, the prospects are excellent.”

Iraq: Al-Qaeda is back in Ramadi and Fallujah, though at week’s end the situation is unclear. The Iraqi army is trying to avoid a full-scale assault to retake Fallujah, while it seems local tribesmen ousted the militants from Ramadi by cutting a deal of some kind to avert an assault.

Prime Minister Nouri al-Maliki brought much of this on himself in refusing for years to bring Sunnis into his government while thousands have been detained without due process in what the government conveniently labels a crackdown on terrorism. It’s no wonder Sunnis in Iraq despise Maliki.

Editorial / Wall Street Journal

“Americans want to forget about Iraq and Syria, especially since President Obama walked back from his bombing threat in September, but Syria and Iraq haven’t forgotten America. The contagion from Syria’s civil war is spilling across borders in ways that are already requiring U.S. involvement and may eventually cost American lives.

“The casualties include the stability of Lebanon, which like Syria is riven by Shiite-Sunni divisions. Thousands of Shiite Hizbullah militia have joined the war on behalf of Syrian strongman Bashar Assad, and the opposition is retaliating with a terror campaign inside Lebanon....

“Meanwhile, our Journal colleagues report that Hizbullah has smuggled advanced antiship missile systems into Lebanon from Syria. The missiles are intended for use against Israel, which has attacked arms shipments headed for Lebanon at least five times in the last year.

“The dangers are that the violence in Lebanon devolves into another civil war, or that Hizbullah provokes Israel into a response like the 2006 war. Hizbullah already has upwards of 100,000 missiles, many of them unsophisticated Katyushas, but two or three times the number it had in 2006....

“Syria’s contagion is also spilling into Iraq with the revival of al-Qaeda in neighboring Anbar province. Anbar was the heart of the Sunni insurgency in Iraq after the U.S. invasion in 2003, and American soldiers paid dearly to reclaim cities like Ramadi and Fallujah. Al-Qaeda was defeated when Sunni tribal chiefs turned on them amid the U.S. troop surge in 2007.

“But now al-Qaeda is coming back, thanks to the heavy-handed sectarian rule of Shiite Iraqi Prime Minister Nouri al-Maliki and to the rise of jihadists in Syria. The U.S. refusal to help the moderate Syrian opposition has given the advantage to Sunni jihadists, including many from Europe and probably the U.S. too....

“The costs (of America’s retreat from the region) and consequences...are now becoming clear in Syria, Lebanon, Iraq and beyond. Those costs may end up being far greater than if we had stayed engaged in Iraq and attempted to help the moderate opposition in Syria.”

Lebanon: Michael Young / Daily Star...on the latest attempt at forming a government.

“With the alchemists of government formation discussing a new ministerial formula involving March 8 [Ed. bad guys...Hizbullah-led], March 14 [Ed. good guys...Saad Hariri and his allies] and the centrists, there is hope that Tamman Salam may soon have a Cabinet to lead.

“For months, the so-called 9-9-6 option (nine ministers each for March 8 and March 14 and six for the centrists) has been on the table, but was rejected by Salam and March 14. Now, the idea is to repackage the 9-9-6 formula and call it 8-8-8. Each group would have eight ministers, but March 8 and March 14 would select an additional minister each from the centrist quota. Presto! Lead would be turned into gold and Lebanon would emerge from its vacuum.

“If this scheme succeeds, it will have come after a dizzying array of maneuvers and counter-maneuvers, conditions and counter-conditions over a new government, all of which served merely to delay agreement over the 9-9-6 formula pushed by Hizbullah. Not surprisingly, foreign governments with a stake in Lebanon have become increasingly disenchanted and anxious over the paralysis in the country and have made this clear to Lebanese officials.”

It’s a freakin’ mess.
 
Michael Young:

“Lebanon cannot afford a void in the coming months, and fear of one is universal overseas. The Lebanese are getting the point, even if March 14 is worried that it will pay the price in any new order dominated by Hizbullah. But the alternative could be even worse....

“Ultimately, an American-Iranian rapprochement this year, if it happens, will provide new opportunities for all sides. It may also generate greater sectarian tension, but ultimately none of the regional powers has an interest in proliferating sectarian wars, which could consume them. Lebanon may be losing Western attention these days, but it would be a mistake to let it drift toward ruination.”

Fouad Ajami / Wall Street Journal

“The ground burns in Iraq, Syria and Lebanon. Borders are being contested, and militant Islamists have all but overwhelmed secular authorities. Yet America’s chief diplomat, Secretary of State John Kerry, was in the neighborhood this week, for the 10th time, on an expedition to Israel and the Palestinian territories. There was no sudden urgency to the impasse between Israel and the Palestinians, nor had an opening presented itself for serious negotiations. Israel’s attention was focused, as it had to be, on the large menace of Iran and its nuclear drive, and the Palestinians remained mired in their own squabbles.

“It was the practice of so many years that Arabs deployed what pressure they could exert on the United States on behalf of the Palestinians. No longer. It is the struggle for Syria, and the Iranian bid for primacy in the Fertile Crescent, that engage the Arabs. This ‘shuttle diplomacy’ of our secretary of state, if anything, is evidence of the retreat of American power.

“President Obama and his foreign policy lieutenants are given to the assertion that they don’t want the U.S. caught in the middle of other peoples’ wars. But by deeds of commission and omission, the U.S. is caught up in a deadly sectarian struggle between Shiite Iran and its ‘sister republics’ in the Arab world on one side, and the Sunni order of Arab power on the other. Mastery of the arcane details of the Shiite-Sunni schism may not be an American specialty, but over the last two years this president and his advisers have placed the U.S. on the side of Iran and its Arab satraps in Lebanon and, now, Iraq....

“When the U.S. lay down the foundations of its presence in the Arab world, it befriended and worked with the powers that be – the Sunni regimes. The Shiites were then outsiders, and the inroads Iran was to make into the Arab states were unthinkable.

“This is a radically different moment. America’s allies in Saudi Arabia, Jordan, the smaller states of the Gulf, and among the Sunnis in Lebanon and Syria can be forgiven the conclusion that the U.S. has acquiesced in this Iranian project. Washington is keen to conciliate Iran. Secretary Kerry has proposed a role for the Iranians in negotiations over Syria – even as Iranian forces and proxies are busy battering what is left of that country. Beirut once mattered to the U.S., but we have left it to the reign of Hizbullah, and what help comes to Lebanese moderates is now offered by Saudi Arabia and France.

“A cautionary note: Iran and the Fertile Crescent are not – and by a long shot – a fair reflection of the demography of Islam. The weight of Islam is in the Sunni states. If we opt for an alliance with Iran and its satraps, we should do so in the full knowledge that our choice places us at odds with the vast majority of the Islamic world. Already, our failure to come to the support of the Syrian rebellion has eroded so much of our standing among Muslim Sunnis, in the Arab world and beyond. Five years ago in Cairo, a citadel of Sunni Islam, Mr. Obama called for a new policy of engagement with the Islamic world. That seems more like light years away.”

Afghanistan: President Hamid Karzai ordered the release of 72 imprisoned terrorism suspects for lack of evidence to prosecute them. The U.S. is furious as it sees them as ongoing security risks.

This happens at the same time Karzai continues to refuse to sign a bilateral security agreement that would keep about 10,000 U.S. troops in the country beyond 2014.   The latest is that Karzai will not sign the agreement before the April presidential election, forcing the U.S. to deal with the new leader.

China: In one of the most high-profile official recognitions of the health impacts of air pollution in China, a former minister of health, Chen Zhu, in a commentary for the medical journal The Lancet, said air pollution is responsible for 350,000 to 500,000 premature deaths in China every year. This is actually a lower figure than an earlier study that said there were 1.2 million premature deaths in China in 2010 alone.

All 31 provincial governments have signed up for specific air pollution pledges for the next four years. Eleven municipalities and provinces have been told by the Ministry of Environmental Protection to cut levels of the most dangerous particulates by 10 to 25 percent.

That’s not enough, but if steps aren’t taken, the smog situation is just going to get worse and worse each year.

As reported in the South China Morning Post, “The National Meteorological Center said last week that the mainland had recorded more smoggy days in 2013 than any other year since 1961.”

And the pollution situation worsened in Hong Kong this past week with the government warning against outdoor activity. As I’m heading there in about ten days, I made a note to pack a face mask.

[I’ve been there many times when the air quality was putrid but frankly never knew what the warning levels were.]

But there was a positive development involving China and the ivory trade this week. After recently signing off on a treaty banning the slaughter of African elephants for their ivory, China very publicly destroyed six tons of ivory in Guangdong province, the first time the country has ever reduced to powder that which has been smuggled in. It’s a start. I’ve been screaming for this. But China is the only country in the world where the demand for ivory continues to rise.

Japan: Being ever unhelpful, Japan said it will accelerate the nationalization of 280 uninhabited islands in a bid to strengthen control of the country’s maritime territory. Tokyo also formally launched the newly established National Security Council, which strengthens Prime Minister Shinzo Abe’s control over various security agencies. Both moves do nothing to lessen tensions with Beijing.

Abe also said Monday he wanted talks with leaders in China and South Korea to explain his visits to the Yasukuni Shrine, which honors Japan’s war dead, but Beijing said no way. [I posted China’s response to Yasukuni in general on my “Hot Spots” link. It’s worth reading. Always good to know what the other side is telling its people.]

Then you have the issue of Japan and its barbaric whaling industry. I’ve said on many an occasion that if I could live my life over, I think I’d be a radical with someone like Sea Shepherd, the group that tries to take down Japanese whalers.

I mean there is all kinds of evidence Japan continues to hunt inside internationally designated sanctuaries. Here’s hoping Moby takes more than a few of them out. It would be proper justice.

Australian environmentalists, by the way, are furious at their new government and Prime Minister Tony Abbott, who has retreated from an election promise to send a ship out to monitor the Japanese fleet.

Whaling has been banned under an international moratorium since 1986, but the Japanese continue under the guise of scientific research.

At least demand in Japan for whale products appears to be in freefall.
 
[More on Japan and the environment...ours...down below.]

Turkey: Prime Minister Erdogan has been a busy beaver recently. This week he presented a new law curbing the independence of the judiciary and restricting use of the internet after purging hundreds (a reported 350) of police officers in Ankara in an attempt to quell an ongoing corruption investigation that has targeted people close to Erdogan, as well as business cronies. An opinion poll shows support for his AKP (Justice and Development Party) has fallen to 42%, below the 50% it won at the last election in 2011. The London Times editorialized this week that it was all about the “Putinification” of Turkey.

But the Islamists, who have been in control since 2002, are still ahead of the main opposition Republican People’s Party by 12 points.

Erdogan has long been seeking to run for a reinforced presidency this coming summer, but the current president, Abdullah Gul, long an Erdogan ally, may run as well if Erdogan’s troubles worsen.

North Korea: I wasn’t going to write anything about Dennis Rodman’s trip, but it was such a farce I had to just note it for the archives. Rodman sang “Happy Birthday” to Kim as his group of former NBA stars played some North Korean basketball players in an exhibition. Rodman played in the first half and then sat with Kim, his wife, and senior officials (who survived the purge, thus far) for the second half.

Rodman told the crowd, “Yes, he is a great leader, he provides for his people here in this country and thank God the people here love the marshal.”

Rodman later apologized for comments he made about captive American missionary Kenneth Bae in an interview with CNN, saying he was drunk.

Separately, according to reports, the aunt of Kim Jong-Un and the estranged wife of Jan Song-taek, who was executed last month, has died...possibly committing suicide, though it is also said she traveled to Russia recently for treatment for a heart ailment.

India: The diplomat accused of visa fraud for allegedly paying her nanny $3.31 an hour in New York, left the U.S. after she was indicted in a case that had India going nuts. Good riddance to Devyani Khobragade, who was ordered to leave the country by the State Department after India denied waiving her diplomatic immunity.

This should be a small-blip in a critical relationship, but good for the U.S. Attorney’s office to have the guts to bring the charges in the first place. This woman flat-out lied as part of the visa application.

On a different issue, a Ponzi scheme was uncovered that targeted the poor, with 1.74 million customers of Saradha Realty India Ltd., losing their savings. Since April, as reported by Yoolim Lee of Bloomberg, 34 who were customers or agents have committed suicide.

France: President Francois Hollande is considering legal action against a magazine that claims he is having an affair with an actress, Julie Gayet. Hollande’s official partner is Valerie Trierweiler, a real piece of work, after the president left fellow Socialist politician Segolene Royal, the mother of his four children. It’s all so very French.

The magazine, Closer, says it has evidence (and shows pictures) supporting claims Hollande routinely spends the night with Gayet at a flat not far from the Elysee Palace.

Closer also claims the president’s bodyguard arrives the following morning to deliver croissants.

Now I’m hungry.

Venezuela: What an all-too-familiar situation in this hellhole as former Miss Venezuela, Monica Spear, and her husband were killed during an attempted robbery. At least seven suspects have been arrested in a shooting that also involved their 5-year-old daughter, who was shot in the leg as Spear and her husband (they had split up four years ago but were on friendly terms) were confronted on a highway when their car was disabled by tire punctures late Monday night. Police later said the sharp object that caused the tire damage “had been placed on the highway.”

Spear was Miss Venezuela in 2004 (5thrunner-up in the Miss Universe pageant the following year) and a soap opera star.

Crime is so rampant in Venezuela, most families stay home after dark. The country has the second-worst murder and kidnapping rate in the world, next to gang-plagued Honduras.

All the more reason to remove President Nicolas Maduro. Sorry, democracy fans. The place would be better off with the military running things for a few years and then transitioning back to free elections. But without Chile/Pinochet type reprisals.

Brazil: Sepp Blatter, president of FIFA, football’s world body, said no previous host country for the World Cup has been as far behind in its preparations as Brazil is. Specifically, six of the 12 stadia are not ready, failing to meet the Dec. 31 deadline, while work on related hotels, roads and airports has yet to be complete.

Brazil’s president, Dilma Rousseff, said her country will be ready.  Of course Brazil won’t be. This was one of the more predictable moments of the century.

South Africa: Another pollution issue. Authorities revealed that a phosphate mine spill caused “extensive pollution” to a river in the country’s famed Kruger national park. Thousands of fish have been killed, but no sign of damage, yet, to big animals.

Random Musings

--The saga of Chris Christie is an important one for American politics and I have a full re-cap of everything we know as of this posting. I also identified this as a major issue back in my “Week in Review” of 12/21/13. To wit:

“New Jersey Gov. Chris Christie seems to be hoping that the holiday season, when some reporters get time off and many followers of the political scene have their minds elsewhere, will obscure a still developing scandal involving closing access lanes onto the George Washington Bridge, going back to last September. Then, and in other instances, ramps leading to the bridge in the borough of Fort Lee were closed without warning, leading to delays of up to six hours. Police and executives at the Port Authority, which runs the bridge, weren’t apprised ahead of time either.

“The Democratic mayor of Fort Lee, Mark Sokolich, had refused to endorse Christie so he saw the sudden lane closures as retribution. ‘What other conclusions could we possibly reach?’ he asked.

“The Port Authority’s deputy executive director, Bill Baroni, later claimed the closures were part of a traffic study, though he had zero proof of this. He resigned ten days ago.

“It then was determined the closures were ordered by the Port Authority’s David Wildstein, a Christie ally and political appointee. The PA’s executive director said he knew of no traffic study. So then Wildstein resigned.

“Christie’s reply was, ‘I worked the [traffic] cones.  Unbeknownst to anyone, I was working the cones,’ he said at one news conference.

“As this week ends, Christie is now confessing mistakes were made but that Democrats are making up an issue that doesn’t exist....

“This isn’t the first issue that I’ve mentioned that could torpedo Christie, and I’m not talking in a race against, say, Hillary Clinton. Christie seems to be forgetting that if he isn’t careful, it could derail him in a Republican primary debate.”

That was three weeks ago. The story exploded this past week with the release of personal emails between Christie staffers and political appointees at the Port Authority of New York and New Jersey.

“Time for some traffic problems in Fort Lee,” read an e-mail from the governor’s deputy chief of staff, Bridget Anne Kelly, dated Aug. 13, nearly a month before the Sept. 9-13 closures, which snarled traffic after local access lanes to the GWB were shut down.

The e-mail was sent to David Wildstein, the former official at the Port Authority who recently resigned. He had given the direct order to the bridge manager to close the lanes. Wildstein responded to Kelly, “Got it.”

Later text messages mocked concerns the lane closures led to students being stuck in gridlock.

“They are the children of Buono voters,” Wildstein wrote, referring to Christie’s opponent last fall, Barbara Buono.

But while aides seemed gleeful about the chaos that ensued, aside from students being late for school, emergency vehicles were also impacted, delayed in response to three people with heart problems, as the New York Times reported.

Other e-mails disparage Fort Lee’s mayor, Sokolich, as “this little Serbian,” though he’s actually Croatian, and describe him as “an idiot.”

Christie, in response to Wednesday’s e-mail disclosures, issued a statement:

“What I’ve seen today for the first time is unacceptable. I am outraged and deeply saddened to learn that not only was I misled by a member of my staff, but this completely inappropriate and unsanctioned conduct was made without my knowledge. One thing is clear: this type of behavior is unacceptable and I will not tolerate it because the people of New Jersey deserve better. This behavior is not representative of me or my administration in any way, and people will be held responsible for their actions.”

State Sen. Richard Codey, a former Democratic governor and fierce critic of Christie, said of the e-mail disclosures, “This goes to the personal integrity of the governor’s office. That governor said he asked everyone in his office if they were involved in this, and he said the answer was a blanket no. Obviously, there’s more lies there than in the confessional.”

Editorial / The New York Post...prior to Christie’s Thursday press conference:

“(This) may not be quite the Watergate Christie’s enemies suggest. But it’s no trifle – especially given the governor’s national ambitions. It’s an example of something Christie has long railed against: a political class abusing power at the expense of ordinary citizens for some petty purpose.

“These citizens deserve an unequivocal apology – and a leader who shows he will hold his own people to the same accountability he demands of others.”

Editorial / Wall Street Journal...also prior to Christie’s Thursday appearance.

“We trust Mr. Christie knows this isn’t a test of his staff but of his own credibility. America doesn’t need – after a year of revelations that the IRS was turned against President Obama’s opponents – another chief executive willing to condone government attacks on his political adversaries. And Republicans don’t need a presidential nominee who fulfills the liberal stereotype that he’s a political bully.”

So on Thursday, Christie explained his shock and dismay in a nearly two-hour press conference, saying he never knew anything about the fiasco until Wednesday morning, and that he had fired his deputy chief of staff and cut ties to his former campaign manager.

Paul Mulshine / Star-Ledger

“Forget running for president. Perhaps Chris Christie should set his sights on a seat in the U.S. Senate.

“He sure could pull off a heck of a filibuster.

“The governor’s press conference today on the Bridgegate scandal ran for almost two hours. It was quite a performance. He handled every question the assembled members of the media could throw at him. But by the end of the day, I found myself agreeing with his nemesis of the moment, Assembly Transportation Committee Chairman John Wisniewski.

“ ‘If you take him at his word, he can’t manage his own office,’ the Middlesex County Democrat told reporters following his hearing on the bridge scandal, after the governor’s press conference....

“One of the biggest questions concerns just how Christie could claim to be unaware of his administration’s role in the bridge closings when so many of his minions were in on those e-mail exchanges. One e-mail from as early as Sept. 17 directs Wildstein to call Communications Director Michael Drewniak after reporters started calling about the closures. Drewniak and Wildstein also exchanged e-mails concerning a press release announcing Wildstein’s decision to quit the Port Authority early last month. Wisniewski said the two apparently had in-depth discussions about how to craft that release.

“ ‘We’re talking about some very senior people in the administration,’ said Wisniewski. ‘I find it hard to believe these senior people are cherry-picking what they’re discussing with the governor.’

“So do I. I also find it hard to believe the governor had no inkling of the retaliatory nature of the bridge closing....last month two bridge employees testified under oath that they were pressured by Wildstein to go along with the lane closure. They also said they were ordered not to warn local officials.

“If Christie read that testimony and still thought the closing was legitimate, he’s too clueless to be governor.”

Editorial / New York Daily News

“New Jersey Gov. Chris Christie’s one-hour-and-forty-seven-minute self-serving, self-pitying display of contrition on Thursday was a climactic act in a brazen cover-up that threatens to further unravel his political career.

“Ever so thoroughly the governor scoured the thesaurus for words of apology, regret and painless self-flagellation while nervily playing the victim and mercilessly destroying the aide who played only a supporting role for the George Washington Bridge political revenge plot.

“Christie needed blood to express his outrage to the public, so he drew it from deputy chief of staff Bridget Kelly for the sin, the governor said, of lying to him. Perhaps, Kelly did lie, although it seems incredible that anyone would flat-out attempt to deceive an intense, emergency inquiry.

“Regardless, Christie made roadkill of Kelly and his former campaign manager while wholly exempting the close pals who were central to the lane-closure conspiracy that caused four days of gridlock and dangerously slowed emergency response in Fort Lee. Pathetic.”

Editorial / New York Post

“It was an uncharacteristically subdued but still assertive Chris Christie who began his press conference Thursday by apologizing to ‘the people of New Jersey, the people of Fort Lee...and the state Legislature’ for the traffic chaos...

“Certainly his reputation has taken a big hit, not least because people look to Christie to challenge the abuse of power at the expense of the public for cheap purposes. Likely this scandal will never fully go away. But it’s also possible opponents will overplay their hand, especially if nothing emerges to challenge Christie’s account.

“Americans are sadly used to politicians on both sides of the political aisle who have one set of standards for themselves and another for their opponents. On Thursday, Christie pledged something different.

“So the question is not how Christie ‘handled’ his presser or what it all means for a presidential run. The question is whether New Jersey’s governor told the truth to his citizens – and can show with his actions what taking responsibility really means.”

Editorial / Wall Street Journal

“(Meanwhile, the Obama Administration) quickly leaked to the media that the U.S. Attorney is investigating the lane closures as a criminal matter. Well, that sure was fast, and nice of Eric Holder’s Justice Department to show its typical discretion when investigating political opponents.

“This is the same Administration that won’t tell Congress what resources it is devoting to the IRS probe, and appears to be slow-rolling it. It has also doubled down by expanding the political vetting of 501(c)(4) groups seeking tax-exempt status. Lois Lerner, who ran the IRS tax-exempt shop and took the Fifth before Congress, was allowed to ‘retire,’ presumably with a pension. Acting IRS commissioner Steven Miller resigned under pressure but no other heads have rolled. Yet compared to using the IRS against political opponents during an election campaign, closing traffic lanes for four days is jaywalking.

“We raise this mostly because our media friends have been complicit in dismissing the IRS abuses, and for that matter every other legal abuse during the Obama years. The exception is the Edward Snowden theft of National Security Agency documents, which so far have exposed not a single example of law-breaking.

“Not that this should make Mr. Christie or any other potential GOP candidate complacent. Republicans operate under a double media standard that holds them to a much lower scandal threshold. In that sense the pathetic New Jersey traffic-lane scandal may be, as Mr. Obama likes to say, a teachable moment.”

Friday afternoon, 1,000 pages of documents, obtained by the New Jersey legislature under subpoena, detail the political chicanery that took place but do not tie Christie directly to the closures.

A Rasmussen Reports survey conducted after Christie’s press conference revealed 56% of New Jersey likely voters said Christie should resign from office if it’s proven that he knew about the GWB lane closures before they happened, while 54% say it’s at least somewhat likely the governor knew it was happening. Only 36% say it’s unlikely Christie had no prior knowledge of the closures.

Either Christie told the truth or he didn’t. Either he survives, badly wounded, or he’s toast.
 
---

--Editorial / Wall Street Journal...the best summation of the week’s other big political revelation.

“The open secret of Washington’s memoirs is that they typically confirm what we already know or suspect. In the case of the excerpts from the forthcoming book by Robert Gates, who was Defense Secretary for two years under George W. Bush and two and a half under President Obama, this isn’t reassuring.

“Gates’ revelations include that Mr. Obama and Hillary (Clinton) admitted that their opposition to the 2007 Iraq surge of troops was entirely political; that Vice President Joe Biden is a blowhard who ‘has been wrong on nearly every major foreign policy and national security issue over the past four decades’; that Mr. Obama didn’t believe in his own Afghanistan strategy and wanted mainly to get out from the first day; that the White House national security staff is full of political operatives who like to push generals around; and that Congress is mostly a crowd of parochial-minded bullies.

“None of this is news – at least not to anyone who has been paying reasonable attention. Mr. Gates’ contribution is to provide confirming detail and judgment from a source the media consider credible, and in that sense his memoir is educational and disconcerting.

“That’s especially so on matters of war, when American lives are on the line. Whatever one thinks of the 2003 decision to go to war in Iraq, Mr. Bush’s 2007 troop surge and strategy shift were gutsy calls and an historic success. They defeated al Qaeda in Iraq and created space for a long-term U.S.-Iraqi partnership that Mr. Obama later abandoned by refusing to leave some troops behind a la South Korea or Japan.

“Readers may recall that at the height of the surge in September 2007, General David Petraeus reported to the Senate on its early but still uncertain progress. Then Senators Obama and Clinton were withering in their attacks on the surge and its chances for success.

“After the duo had ascended to the executive branch, Mr. Gates writes that in one meeting ‘Hillary told the president [Obama] that her opposition to the [2007] surge in Iraq had been political because she was facing him in the Iowa primary... The president conceded vaguely that opposition to the Iraq surge had been political. To hear the two of them making these admissions, and in front of me, was as surprising as it was dismaying.’

“Mr. Obama won the Presidency despite his dreadful surge judgment, but his habit of treating war mainly as domestic politics has carried over to the Oval Office and undermined his own policies. That’s especially true in Afghanistan, as Mr. Gates reports that by early 2010 he had concluded that the President ‘doesn’t believe in his own strategy, and doesn’t consider the war to be his. For him, it’s all about getting out.’

“This was only weeks after Mr. Obama had ordered a troop surge in which thousands of Americans gave their lives.* Mr. Gates’ revelations explain why Mr. Obama has so rarely spoken about the Afghan mission to the American people, why he undermined it with an exit date before it even began, and why the Taliban and Pakistan have figured they can wait us out....

“Mr. Gates’ account also helps to explain why America’s friends are worried (Israel) or increasingly going their own way (the Saudis), while our enemies (Iran, al-Qaeda) are confident that now is a time to advance. They didn’t need a memoir to draw those conclusions, but they too have taken the measure of Mr. Obama and the lack of will behind his words.

“With such a President, it is going to be up to some of Congress’ few grown-ups to steer the country away from the dangers ahead and avoid lasting damage to U.S. security and world order. Any candidates?”

*I was disappointed the Journal was as sloppy with the facts as it was when it comes to American war dead since the beginning of the surge.....I read the figures every week. It’s not “thousands,” but closer to 1,000. More than bad enough but I’m writing a history here.

Gates has a lot more to say than just his apparent disgust for the politicization of Afghanistan and the surge.

Richard McGregor / Financial Times

“Mr. Gates’ tone is also a reflection of what he describes as the pain he witnessed firsthand at the loss of American lives and the damage to military families from successive wars.

“While not criticizing Mr. Bush directly, he said presidents in recent decades had been ‘too often too quick to reach for a gun’ when confronted by tough foreign policy problems.

“ ‘Our foreign and national security policy has become too militarized, the use of force too easy for presidents,’ the book says.

“ ‘For too many people, including defense ‘experts,’ members of Congress, executive branch officials and ordinary citizens, war has become a kind of video game or action movie: bloodless, painless and odorless,’ the book says.

“ ‘But my years at the Pentagon left me even more skeptical of systems analysis, computer models, game theories or doctrines that suggest that war is anything other than tragic, inefficient and uncertain.’”

Bob Woodward / Washington Post

“Gates’ severe criticism is even more surprising – some might say contradictory – because toward the end of ‘Duty,’ he says of Obama’s chief Afghanistan policies, ‘I believe Obama was right in each of these decisions.’ That particular view is not a universal one; like much of the debate about the best path to take in Afghanistan, there is disagreement on how well the surge strategy worked, including among military officials.

“The sometimes bitter tone in Gates’ 594-page account contrasts sharply with the even-tempered image that he cultivated during his many years of government service, including stints at the CIA and National Security Council.... In ‘Duty,’ Gates describes his outwardly calm demeanor as a façade. Underneath, he writes, he was frequently ‘seething’ and ‘running out of patience on multiple fronts.’”

Since I’m not likely to read the book myself anytime soon, I enjoyed this passage from Woodward’s article.

“Life at the top was no picnic, Gates writes. He did little or no socializing. ‘Every evening I could not wait to get home, get my office homework out of the way, write condolence letters to the families of the fallen, pour a stiff drink, wolf down a frozen dinner or carry out,’ since his wife, Becky, often remained at their home in Washington state.

“ ‘I got up at five every morning to run two miles around the Mall in Washington, past the World War II, Korean, and Vietnam memorials, and in front of the Lincoln Memorial. And every morning before dawn, I would ritually look up at that stunning white statue of Lincoln, say good morning, and sadly ask him, How did you do it?’”

--Back to local politics, New York City Mayor Bill de Blasio insisted he would promote a five-year tax hike on those earning $500,000 a year or more to pay for his universal pre-K program. “No half measures or partial funding,” he said.

But Gov. Andrew Cuomo, running for reelection, unveiled a plan to cut state taxes, particularly the corporate tax rate from 7.1% to 6.5%, as well as a property-tax credit to manufacturers.

“The business climate in New York is exceedingly important, it’s all about jobs,” said Cuomo.

Plus Cuomo offered an income-tax credit related to property taxes and a freeze on same, as well as a renter’s credit for those with an annual income under $100,000.

The governor cited fiscal restraint and a budget surplus for being able to reduce taxes.

But as Crain’s New York Business’ Greg David wrote:

“New Yorkers can be forgiven if the tax cut plan Gov. Andrew Cuomo announced Monday is making their heads hurt. The reason is simple: It’s about politics, not public policy and economics.”

The fact is New York has the highest state and local tax burden in the country, 12.8%.

New Jersey is second, 12.4%, followed by the Nutmeg State, Connecticut, at 12.3%. [Source: Crain’s / Tax Foundation]

There’s a lot more to this, and as Greg David notes, Cuomo’s small changes will take years to implement. But the governor can at least talk about lower taxes during his campaign.

--Liz Cheney, citing health issues with her family, dropped out of the race for senator in Wyoming. Good. Hers was a classic case of potentially blowing a Senate seat as Republican incumbent Mike Enzi didn’t appear to be threatened, but Cheney’s candidacy no doubt would have wounded him, assuming he emerged victorious in the primary.

--There was a despicable example of massive corruption in New York City this week with the indictment of 106 former cops and firefighters claiming 9/11 trauma as an excuse to lead an easy life on the taxpayer’s dime, prosecutors allege; all part of a broader $400 million Social Security fraud that goes beyond this group.

The former cops and firefighters were directed to shady doctors, having been coached by the ringleaders on how to act, with the doctors then green-lighting disability payments of $30,000 to $50,000 a year.

New NYPD Police Commissioner William Bratton said, “I can only express my disgust at the actions of the individuals involved in this scheme.”

72 former members of the NYPD “disgraced themselves, embarrassed their families. The idea that many of them chose the events of 9/11 to claim as the bases for this disability brings further dishonor to themselves,” Bratton added.

The larger ring has been operating for about 25 years with 1,000 filing false claims.

--According to a Defense News poll, 45% of analysts say a cyber-attack is the single greatest threat to U.S. national security, 20 points higher than terrorism.

House Intelligence Committee Chairman Mike Rogers (R-Mich.) has noted it is the “largest national security threat to face the U.S. that we are not even close to being prepared to handle as a country.”

--The Obama administration extended the life of the International Space Station for an additional four years, or until 2024, according to NASA.   The budget had already allowed for ISS activity through 2020. I love the space program, but this is a waste to extend it.

--I was watching Bill Nye, “the science guy,” on CNBC during the Polar Vortex, and he asked a question that would be more than a bit disconcerting if it proved true. This was the coldest weather much of the country had seen in two decades, but Nye wondered, “What if this became the norm?” As in once a year, not every 20? For starters, parts of the infrastructure, read utilities, were very close to the breaking point (but cracked in only small ways this time). Nye was concerned how well the electrical grid can handle such extreme cold.

But I was thinking, while it only lasted 2-3 days in most places, it was awful! And needless to say did a huge number on the air transportation network, let alone left behind mammoth potholes all over the place which ends up having an economic impact of its own.

This was not ‘normal winter weather.’ But, again, Nye was referring to a specific issue. What if a part of the polar vortex broke off as it did this time on a more regular basis? Let’s hope this doesn’t prove to be the case.

So for the archives, a few of the record lows around the country. I mean we’re talking some marks were absolutely smashed.

6 in Atlanta (10 the old record). 14 (18) in Florence, S.C. 19 (25) in Gulfport, Miss. -1 (3) in Asheville, N.C. [Johnny Mac, down in Asheville, said it hit -21 on Mt. Mitchell.] 1 (6) in Roanoke, Va. -9 (-5) in Pittsburgh. 3 (10) in Newark, N.J. -11 (-5) in Akron-Canton, Ohio. -14 (-5) in Detroit...nine degrees!

--Speaking of weather...a shout out to my dear friends back in Lahinch, Ireland, who are among those suffering after a series of huge storms that in the case of Lahinch, destroyed their oceanfront promenade that is a key to its tourism, let alone extensive damage to their world-class golf links that I’m a member of.

--Trader George passed on a story on a new study recently published in the journal Proceedings of the National Academy of Sciences. Scientists from the Monterey Bay Aquarium Research Institute (MBARI) in California “recently discovered that the number of dead sea creatures blanketing the floor of the Pacific is higher than it has ever been in the 24 years that monitoring has taken place, a phenomenon that the data suggests is a direct consequence of nuclear fallout from Fukushima. Though the researchers involved with the work have been reluctant to pin Fukushima as a potential cause...the timing of the discovery suggests that Fukushima is, perhaps, the cause.”

Christine Huffard, a marine biologist at MBARI and leader of the study, told National Geographic, “In the 24 years of this study, the past two years have seen the biggest amounts of this detritus by far.” At a particular ocean research station located 145 miles out to sea between the California cities of Santa Barbara and Monterey, the masses of dead sea creatures, including jellyfish and other oceanic matter that typically cover 1% of the ocean floor were now found to cover 98% of it. Other stations have reported similar percentages.

Recall it was summer of 2012 that I saw up close the first large structure from Fukushima to wash up on the Oregon coast (near Newport). I walked miles to see it and it was quite a site...a huge piece of a steel dock, like a floating barge. The public initially wasn’t allowed to get near it because it was encrusted with contaminated sea creatures.

So I see zero reason not to believe Fukushima had a substantial impact, and will continue to do so, on our west coast.

--A new CNN/ORC International survey released this week shows a majority of Americans support legalizing marijuana, 55%, while 44% do not.

Back in 1987, support was at 16%. 34% in 2002, and 43% two years ago. Just 36% of Republicans back legalizing pot. 62% of Democrats and 59% of Independents do.

In 1972, when President Nixon declared drugs “public enemy Number One,” 65% said the use of marijuana was a very serious problem for the United States. Now that is down to 19%.

--Pope Francis announced he was going to visit Holy Land sites in Jordan, Israel and the Palestinian Territories in May. This will be one of the major events of 2014. 

Interestingly, a CNN/ORC International poll asked American Catholics how they felt about Francis and he has an 88% approval rating. 4% believe he is too conservative. 7% think he’s too liberal. But 87% say he’s about right. So take that, Rush. 

---

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

God bless America.

---

Gold closed at $1246
Oil $92.72

Returns for the week 1/6-1/10

Dow Jones -0.2% [16437]
S&P 500 +0.6% [1842]
S&P MidCap +1.1%
Russell 2000 +0.7%
Nasdaq +1.0% [4174]

Returns for the period 1/1/14-1/10/14

Dow Jones -0.8%
S&P 500 -0.3%
S&P MidCap +0.5%
Russell 2000 +0.1%
Nasdaq -0.1%

Bulls 60.6
Bears 15.2 [Source: Investors Intelligence]

Have a great week. I appreciate your support.

Catch me on Twitter @stocksandnews

Brian Trumbore