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For the week 10/7-10/11
Washington and Wall Street
The opening of this column was never designed to be as political as it often has been this year, given the helter-skelter foreign policy of our president and now Republicans shooting themselves in the foot, nay, head, over the government shutdown and the debt-ceiling, compounded by the president’s own incredible arrogance. But we are where we are, and as House Speaker John Boehner said, “If ands and buts were candy and nuts, everyday would be Christmas.”
With what has been transpiring in Washington these past few weeks, there may not be a lot of candy and nuts come Christmas because America’s increasingly surly mood can’t possibly help the upcoming holiday shopping season.
But as a builder of the single best history of our times, let’s look at some poll numbers that historians, and political analysts, will be examining for decades to come.
An NBC News/Wall Street Journal/Marist survey had 78% of Americans believing the country was headed in the wrong direction.
60% wanted to fire all of Congress, including their own representatives.
70% of participants faulted Republicans in Congress for putting their political agenda ahead of what’s good for the country. 51% said Mr. Obama was more concerned about his agenda than the good of the country.
53% blame congressional Republicans for the government shutdown, 31% blame President Obama.
53% have a negative view of Republicans, the lowest in the history of Journal polling going back to 1989. More than twice as many hold a negative view of the GOP as a positive one. Democrats, on the other hand, come out about equal in this regard, around 40%.
By an historically wide margin of 47-39, Americans now favor Democrats over Republicans in terms of who best to control Congress in 2014.
In a Gallup survey:
Congress’ approval rating is 11%...one-point higher than the all-time low.
Republicans have just a 28% approval rating, the lowest ever (in 21 years of polling on this question). It was 38% in September.
In a Washington Post/ABC News poll:
70% disapprove of congressional Republicans when it comes to their handling of the budget battle.
51% disapprove of President Obama’s handling of the crisis.
In an AP-GfK survey:
62% blame congressional Republicans for the budget mess.
President Obama’s overall approval rating in this poll was a staggeringly low 37%.
And this is devastating for Obama, not that he personally cares since he’s not running for re-election, Allah be praised....
Among independents, 60% disapprove of the president’s job performance, while only 16% approve. As he began his second term in January, independents approved by a 48-39 margin.
But in a sign of just how clueless Americans can be, in this AP-GfK poll, 50% don’t know who Sen. Ted Cruz (R-Tx.) is.
Now you can say you don’t know what party he’s from, or what state, or whatever, but what the hell are you doing with your life if you haven’t an inkling who the guy is?
Cruz’ favorability rating in the poll, by the way, was just 24% vs. 45% unfavorable, among those who had an idea who the guy was.
“Every piece of evidence we have so far on the government shutdown shows the public is blaming Republicans most of all for the standoff....
“Yes, Democrats look bad. Yes, Obama is probably doing himself no favors by saying he won’t negotiate when the public wants politicians in Washington to work together.
“But Republicans look considerably worse. And for the Right, the Republican Party is the only game in town.
“This is what my fellow conservatives who are acting as the enablers for irresponsible GOP politicians seem not to understand. They like this fight, because they think they’re helping to hold the line on ObamaCare and government spending. They think that they’re supported by a vast silent majority of Americans who dislike what they dislike and want what they want.
“I dislike what they dislike. I want what they want. But I fear they are very, very wrong about the existence of this silent majority, and that their misperception is leading them to do significant damage to the already damaged Republican ‘brand.’
“The belief that the public is with them is based on two data points: First, twice as many people say they’re conservative as say they are liberal. And second, ObamaCare is viewed unfavorably by a majority of the American people.
“But it has been true for more than 20 years that Americans are twice as likely to call themselves conservative – and in that time Republicans have lost the popular vote in five out of six national elections. The statistic tells us little about how Americans vote or what they vote for....
“If ObamaCare had been as unpopular as conservatives believed, their plan for the shutdown – that there would be a public uprising to force Democratic senators in close races in 2014 to defund it – would’ve worked. It didn’t. Not a single senator budged.
“Their tactic failed, and now what they are left with is House Speaker John Boehner basically begging the president of the United States to negotiate with him.....
“Meanwhile, Boehner is the face of the U.S. Congress in the eyes of the public. John Boehner is also the effective head of the Republican Party. And the U.S. Congress is viewed favorably by...11 percent of Americans.
“(Here’s) the conundrum: There is only one electoral vehicle for conservative ideas in the United States – the Republican Party.
“It’s one thing to refuse to waste your time buffing and polishing the vehicle for conservative ideas in the United States – the Republican Party.
“It’s one thing to refuse to waste your time buffing and polishing the vehicle so that it looks nice and pretty; that’s what political hacks do, and ideologues have every right to disdain such frippery.
“But if, in the guise of making the vehicle function better, you muck up the engine, smash the windshield, put the wrong tires on it and pour antifreeze in the gas tank, you are impeding its forward movement. You’re ruining it, not repairing it.
“It may not have been a very good vehicle in the first place, and you may think it couldn’t drive worse, but oh man, could it ever. And it’s the only one you’ve got.”
“To adapt a 2002 speech by a certain Illinois state senator, we’re not opposed to all political wars, merely the dumb ones. The government shutdown-debt limit standoff increasingly belongs to the latter category, which is why the more rational members of both parties seem to be converging on an honorable exit that avoids a crackup.
“Under the new pitch floated Thursday by Speaker John Boehner, the House would lift the borrowing limit enough to last perhaps six weeks. Both sides would be denied the political frisson of the ‘default’ panic but could then use the reprieve until Thanksgiving to reach a negotiated settlement, presumably with fewer ultimatums....
“The Ted Cruz Republicans who think they can repeal the Affordable Care Act from one branch of Congress have found a twin in President Obama, who has refused to negotiate much less attempt to lead.
“Assuming the parties strike some deal on the shutdown, the parties could then move on to negotiate a budget accord that gives both sides something they want. Republicans could offer to ease the sequester caps that are squeezing defense and liberal domestic programs, allowing Congress to set some priorities.
“Democrats would for their part consider entitlement reforms that even the White House knows are inevitable as the baby boomers retire....
“Mr. Obama’s posture has inflamed this debate, though so too have the demands from the GOP’s Cruz bloc to defund the Affordable Care Act as a condition of keeping the government open. These Republicans and their pressure-group allies are supporting the Boehner plan as a tactical withdrawal – close down the debt-ceiling front for a few weeks in order to redirect all the troops into a continuing spending resolution that funds everything except ObamaCare.
“But this plan is even less plausible now than when they floated it this spring. They have no strategy for getting out of the box canyon other than waiting for Mr. Obama to surrender. But the White House knows the GOP won’t go over the debt-limit cliff with the economy in tow – and it also knows that Mr. Obama isn’t running for re-election again while the Republican House is up in 2014....
“The reality is that Mr. Obama is not going to defund or delay his signature achievement, and Republicans should be thinking of ways to combat it that don’t involve suicide missions.
“Above all that means preparing the political ground to retake the six Senate seats that would give the GOP a congressional majority after 2014....With the shutdown and debt-ceiling cacophony over, voters might even hear about the damage that ObamaCare is doing.
“The Cruz faction will call any budget compromise ‘surrender,’ but then we wonder if this outcome wasn’t their goal from the start. They’ve tapped into a rich vein of legitimate frustration with Washington but deceived voters about what they can realistically achieve. When their shutdown plan fails as it always would, they’ll pose as heroes against the alleged appeasement of the GOP establishment, as if there still is such a thing.”
For the record, the week started with President Obama saying things like Republicans “don’t get to demand ransom in exchange for doing their jobs,” and that any negotiations on the ongoing government shutdown or the debt limit “shouldn’t require hanging the threats of a shutdown or economic chaos over the heads of the American people.”
“We can’t make extortion routine as part of our democracy,” Obama added at another point.
House Speaker John Boehner told ABC’s “This Week” on Sunday, “The votes are not in the House to pass a clean debt limit, and the president is risking default by not having a conversation with us. I’m not going to raise the debt limit without a serious conversation about dealing with problems that are driving the debt up.”
But many conservatives at week’s end were backing off the Cruz’ bloc’s destructive tone, including the Koch brothers, who through a spokesman said they never publicly supported the defund strategy, despite Democratic assertions to the contrary, even though they remain vehemently opposed to ObamaCare.
As for the debt-ceiling issue, while the unofficial deadline is Oct. 17, Treasury does have some funds in the coffers, but it also has interest payments on the debt, Oct. 31 and Nov. 15, and on Nov. 1, $50 billion is owed to Medicare, Social Security and military pay.
And just a note on the failure of President Obama to attend the Asia-Pacific Economic Cooperation (Apec) summit ( as well as another regional gathering). Secretary of State John Kerry, standing in, said, “None of what is happening in Washington diminishes one iota our commitment to our partners in Asia,” adding the dispute with Republicans in Congress was “an example of the robustness of our democracy.”
More appropriately, Ian Bremmer, president of Eurasia Group, said while investors “can still believe in the dollar and the U.S. economy,” the failure of leadership is a different matter. “The fact that we have been talking democratic free market values for decades and yet we can’t seem to govern ourselves has an impact.
“We have been very happy for decades to go around the world telling other people how they should govern themselves... We’ve got to stop doing that...We need to try humility.”
While Obama was away, Chinese President Xi Jinping held sway, handing out goodies (aid) to Malaysia and Indonesia. What “pivot to Asia?” he was thinking. ‘China is already here.’
The rest of Asia was thinking, ‘Can America really stand up to China?’
What will the United States do in any China-Japan disputes?
The optics with Obama’s absence were awful for the U.S., as even the president noted a few times in his Tuesday press conference that American credibility was hurt.
ObamaCare, the deficit and further musings....
Before the October 1st launch date of ObamaCare, in my “Week in Review” of 9/28, I quoted the Wall Street Journal’s Daniel Henninger:
“(ObamaCare’s) Achilles’ heel is technology. The software glitches are going to drive people insane.
“Creating really large software for institutions is hard. Creating big software than can communicate across unrelated institutions is unimaginably hard. ObamaCare’s software has to communicate – accurately – across a mind-boggling array of institutions: HHS, the IRS, Medicare, the state-run exchanges, and a whole galaxy of private insurers’ and employers’ software systems....
“The odds of ObamaCare’s eventual self-collapse look stronger every day. After that happens, then what? Try truly universal health insurance? Not bloody likely if the aghast U.S. public has any say.”
Well like many of you I did my own little test of healthcare.gov on Tuesday just to check out the ease of use, or lack thereof. I was placed in the waiting room, which was efficient enough, waiting just a minute or so. Then I filled out the application and answered the three security questions....and was promptly booted out...told to fill out a new application because two of my security questions contained the same answer, which of course wasn’t true.
Yes, I’d call that a glitch, and from day one many experts pointed to this specific issue as being a major flaw.
The Washington Post ran an extensive story on how the administration had been forewarned about the inadequacies of the computer system. Rep. Robert Andrews (D-N.J.), who played a key role in the passage of the legislation, said he told White House officials early this summer he had been hearing from insurers that the online system had flaws. Insurers are now pulling out their hair in discussions with the Department of Health and Human Services.
The administration’s hacks look more overwhelmed than the servers when hit with the simplest of questions and I for one will not believe one factoid being trumpeted by the White House on this matter.
I also learned this week, separately, that had I wanted to check out one of the insurance options (I told you last week I do not because I am satisfied with my plan), the Summit Medical Group that I go to is not accepting any ObamaCare enrollees until they see how everything shakes out. Very smart. It’s all about compensation. Doctors deserve to be paid! I wish they were the highest-paid members of society, frankly, as long as some form of their comp is tied to favorable outcomes, which the Summit Medical Group apparently does.
One other item on the website, though. CNN had a report on Thursday discussing how ripe healthcare.gov is for cyber-security issues. Wait ‘til we hear the first extensive examples of identity theft.
“The Obama administration has an implementation problem. More than any administration of the modern era they know how to talk but have trouble doing so. They give speeches about ObamaCare but when it’s unveiled what the public sees is a Potemkin village designed by the noted architect Rube Goldberg. They speak ringingly about the case for action in Syria but can’t build support in the U.S. foreign-policy community, in Congress, among the public. Recovery summer is always next summer. They have trouble implementing. Which, of course, is the most boring but crucial part of governing. It’s not enough to talk, you must perform.
“There is an odd sense with members of this administration that they think words are actions. Maybe that’s why they tweet so much. Maybe they imagine Bashar Assad seeing their tweets and musing: ‘Ah, Samantha is upset – then I shall change my entire policy, in respect for her emotions!’
“That gets us to the real story of last week, this week and in the future, the one beyond the shutdown, the one that normal people are both fully aware of and fully understand, and that is the utter and catastrophic debut of ObamaCare. Even for those who expected problems, and that would be everyone who follows government, it has been a shock.
“They had 3 ½ years to set it up! They knew exactly when it would be unveiled, on Oct. 1, 2013. On that date, they knew, millions could be expected to go online to see if they benefit.”
“Here is why the rollout is so damaging to ObamaCare: because everyone in America knows we spent four years arguing about the law, that it sucked all the oxygen from the room, that it commanded all focus, that it blocked out other opportunities and initiatives, and that it caused so many searing arguments – mandatory contraceptive and abortifacient coverage for religious organizations that oppose those things, fears about the sharing of private medical information, fears of rising costs and lost coverage. Throughout the struggle the American people must have thought: ‘OK, at the end it’s gotta be worth it, it’s got to give me at least some benefits to justify all this drama.’ And at the end they tried to log in, register and see their options, and found one big, frustrating, chaotic mess. As if for four years we all just wasted our time.”
“Compare the U.S. health system to those of the other large high-income countries. The U.S. spends 18 percent of its gross domestic product on health against 12 percent in the next highest spender, France. The U.S. public sector spends a higher share of GDP than those of Italy, the U.K., Japan and Canada, though many people are left uncovered. U.S. spending per head is almost 100 percent more than in Canada and 150 percent more than in the U.K. What does the U.S. get in return? Life expectancy at birth is the lowest of these countries, while infant mortality is the highest. Potential years of life lost by people under the age of 70 are also far higher. For males this must be partly due to violent deaths. But it is also true for women.”
“Shutting down the government in an effort to use a budget fight to get rid of ObamaCare isn’t the strategy I’d have recommended for the GOP. And while Republicans can be blamed for starting the shutdown, it’s increasingly apparent that President Obama and the Democrats deserve the lion’s share of blame for not only prolonging it, but for making it as painful as possible.
“Obama has always had a bit of a vindictive streak when it comes to politics. I think it stems from his Manichean view of America. There are the reasonable people – who agree with him. And there are the bitter clingers who disagree for irrational or extremist ideological reasons.
“In his various statements over the last week, he’s insisted that opponents of ObamaCare are ‘ideologues’ on an ‘ideological crusade.’ Meanwhile, he cast himself as just a reasonable guy interested in solving America’s problems. I have no issue with him calling Republican opponents ‘ideologues’ – they are – but since when is Obama not an ideologue?
“What’s unusual is the way Obama sees the government as a tool for his agenda. In the fight over the sequester, he ordered the government to make the 2 percent budget cut as painful and scary as possible.
“ ‘It’s going to be very painful for the flying public,’ Transportation Secretary Ray LaHood warned Americans....
“Now, with the shutdown and the looming fight over the debt ceiling, Obama’s doubling down this ideologically perverse strategy.
“The National Park Service, which has somehow become the unofficial goon squad of American liberalism, reversed course and let American World War II vets visit the WWII memorial in Washington, D.C. ....
“Far worse, Obama told CNBC’s John Harwood that Wall Street should be far more panicky about Republican efforts to use the debt ceiling to win concessions from the White House. I don’t blame Obama for being annoyed with Republicans for trying to use the debt ceiling the exact same way he did when he was a senator. But normally the president doesn’t try to talk down the economy just to win a political point.”
Last week, I didn’t have time to note an important piece by Gene Epstein from the 9/28 issue of Barron’s regarding spending.
Referring to a recent report by the bipartisan Congressional Budget Office:
“Its most optimistic forecast shows the federal debt growing to 100% of annual economic output by 2038, from an ‘already quite high 73%’ today. That would make the U.S. like France, which in terms of fiscal strength is none too good.
“But the CBO implicitly concedes that the outcome is likely to be a lot worse than that, and so it included its ‘alternative fiscal scenario,’ which is far more realistic. It projects the federal debt will grow to 190% of the nation’s annual economic output by 2038. That would make us worse than Greece today, which has a 27% unemployment rate and periodic bloody riots over its dreadful economic conditions....
“Demographics are a key driver of future spending. By 2038, there will be 79.1 million U.S. residents 65 and over, up from 44.7 million today. The working-age population, 18 to 64, will grow at a much slower rate, to 214.7 million from 197.8 million. As a result, this ‘dependency ratio’ will plummet to 2.7 working-age people to support each senior in 2038, from 4.4 today.
“But since the elderly population won’t begin to reach critical mass until the mid-2020s, the rising tide of red ink will be relatively contained for the next decade. Under the alternative fiscal scenario, the increase in the debt-to-economic-output ratio will be relatively modest over the next 10 years, rising just eight percentage points, to 81%, before exploding to 138% by 2033 and 190% in 2038.
“The math is pretty straightforward. Retiring baby boomers are pushing up the cost of elder-care entitlements. Mainly as a result, spending will rise much faster than revenues. Deficits will therefore be incurred every year, adding to the debt. That the federal government can no longer be expected to balance its budget, however, is not in itself the reason the CBO calls the trend unsustainable. The trend cannot be sustained because yearly deficits will be so large that the debt will grow faster than the economy’s ability to pay for it.”
Finally, President Obama nominated Janet Yellen to replace Federal Reserve Board Chairman Ben Bernanke when his term expires in January. Yellen, currently vice-chair at the Fed, would become the first woman to hold the post, the most powerful job in the global economy.
Yellen will no doubt continue the easy money policies of Bernanke, she having had a major say in the development of them over the years, and she is also basically on record as saying she wouldn’t raise the short-term funds rate off zero until perhaps 2016. So you could say Janet Yellen will continue the policies that screw savers and the elderly.
That said, she’ll sail through confirmation, with perhaps 20 Republican senators voting no, and she is clearly likeable, personality wise, so there’s no reason why she won’t wear well with the American public...that is the 2% who know who she is. Until the next crisis.
I do have to add that at least in 2007, Yellen was expressing concern in Open Market Committee meetings that the Fed’s forecasts on housing were too optimistic, and in June of that year said the biggest risk to economic growth was housing.
But Yellen’s legacy will be about how she handles the unwinding of quantitative easing III, the current $85 billion-per-month bond-buying program. At the last Fed meeting in September, the minutes of which were released this week, two camps were at loggerheads.
It seems that those in the Open Market Committee who favored keeping bond purchases steady, concerned a cut in QE3, tapering, could send interest rates much higher.
The other side argued for tapering because further “delay could potentially undermine the credibility or predictability of monetary policy,” according to the minutes.
Not a lot of news in the eurozone this week, which is normally a good thing. German Chancellor Angela Merkel is slowly working on her post-election coalition. The Greens say they do not want to get involved because they won’t get what they want, while the No. 2 vote-getter, the SPD, Social Democrats, have had early discussions on a grand coalition, a la what they had with Merkel, 2005-09, but they will take their time, not wanting to get burned as before.
Remember, it’s all about what cabinet positions you would receive if you agree to join Merkel’s Christian Democrats and whether or not you’d have any real say in policy, which is why many choose to stay in the opposition where they often have more actual influence. [Not to insult anyone’s intelligence.]
Don’t look for any final decisions here until as late as yearend.
As to the German economy, exports in August were up 1% over July’s pace, and industrial production for the same month rose 1.4% over July.
In Greece, the government is forecasting growth of 0.6% in 2014, which sounds OK until you realize the economy cratered 23% since 2008, so 0.6% will hardly put a crimp in the sickening unemployment situation here.
Slovenia is a euro nation that will be finding its way into the conversation more and more in the coming months. The government is likely to ask for aid for its banks, and perhaps the government itself. GDP will shrink 2.6% this year, worse than initially forecast, and Slovenian banks have bad loans equaling 22.5% of GDP. Bank stress test results are due end of November.
In the U.K., industrial production fell 1.1% in August over July, a negative surprise.
Meanwhile, the IMF revised its 2013 and 2014 growth outlook. It sees the eurozone growing only 1% next year, compared with 2.6% in the U.S., 7.3% in China, and 1.2% in Japan, which will be dampened somewhat by the new sales tax.
Overall, the IMF cut its 2013 global growth outlook from 3.1% to 2.9%, and reduced next year’s forecast from an increase of 3.8% to 3.6%.
Just a few notes on China more specifically. Premier Li Keqiang, who is directly responsible for the economy, said GDP on the mainland grew 7.5% for the first nine months and activity was picking up. Third-quarter GDP is to be released later next week.
China’s passenger-vehicle sales in September rose 21% to an 8-month high, owing in no small part to a big rebound in Japanese sales after the consumer backlash following the territorial dispute over the Senkaku islands in the East China Sea (Diaoyu in China). Honda’s sales more than doubled, Toyota’s were up 63% and Nissan’s rose 83%. [Ford’s sales in China jumped 61% last month to over 96,000 vehicles.]
--Stocks finished mixed, despite a stupendous 430-point rally in the Dow Jones, Thursday and Friday, on hopes for a resolution of the government shutdown and debt-ceiling issues. While the Dow ended up on the week 1.1% to 15237, and the S&P 500 rose 0.7%, Nasdaq broke its five-week winning streak and declined 0.4%.
Corporate earnings get going in earnest this coming week, but due to the shutdown, most economic indicators cannot be released, which also hurts the Fed and its moves. Actually, it just makes it more certain the Fed will now stay the course. No tapering at its next meeting, Oct. 29-30. Booo!
--U.S. Treasury Yields
6-mo. 0.07% 2-yr. 0.35% 10-yr. 2.69% 30-yr. 3.75%
For a time, with fears of a government default, short-term interest rates on U.S. debt were soaring. Separately, as a precaution, Fidelity Investments (and JPMorgan Chase, among others) sold all of its short-term government paper that was coming due in late October and early November as a precaution for its money market portfolios, something it did in the summer of 2011 during a similar crisis, because it didn’t want to take the risk of ‘breaking the buck’ in terms of the net asset value. It’s the prudent thing to do.
--Machine orders in Japan surged 5.4% in August over July, more than double the forecast, another solid sign of a strengthening recovery as Prime Minister Shinzo Abe hopes momentum in the economy, along with further stimulus, offsets the aforementioned looming sales tax he approved for April. It was on Oct. 1 that an important Tankan survey of business confidence revealed the highest level since 2007.
Now what the economy needs is for employers to raise wages...and thus consumer spending.
--JPMorgan Chase had a net loss of $400 million for the third quarter after taking a $9.2 billion litigation charge. The bank’s issues are far from over as it is in talks with the Department of Justice and others to settle legal allegations it mis-sold mortgage securities. A record penalty of $11 billion has been discussed. JPMorgan’s revenue was also down in the quarter, but ex-charges, earnings were above expectations and the shares were largely unchanged following the news.
--Same-store sales for the more than 10 retailers tracked by Retail Metrics Inc. rose just 2.3 percent last month, below analysts’ estimates of a 3.4 percent gain.
--According to research firm Gartner, global shipments of personal computers have hit a five-year low, totaling 80.3 million units in the three months to September, down 8.6% from a year ago.
PC sales have now fallen six quarters in a row with the rise in popularity of tablets and smartphones.
Another research outfit, IDC, said global shipments fell by 7.6% to 81.6 million units over the same period.
Bottom line, not good for the likes of Dell and Hewlett-Packard. [Lenovo Group remains No. 1, followed by H-P and Dell.]
--According to the Interactive Advertising Bureau, mobile-ad spending in the U.S. totaled $3 billion in the first half, way up from $1.2 billion a year earlier as advertisers become more comfortable with the category.
A Unilever senior media director told the Wall Street Journal, for example, that shifting dollars to mobile was a “no brainer” owing to all the time we are wasting on our mobile devices, mused your editor.
According to eMarketer, “Adults in the U.S. are expected to spend an average of two hours and 21 minutes a day on smartphones and tablets this year, excluding time spent talking on phones. In 2010, adults spent only 24 minutes on mobile devices, not counting talk time.”[Suzanne Vranica and Christopher S. Stewart / Wall Street Journal]
Of course texting and driving makes up a lion’s share of this time, as I’ve observed from swerving to avoid 16 head-on collisions a day.
But while $3 billion ad spend is substantial, it still pales in comparison to the $66.35 billion spent on TV ads in the U.S.
And with the goodness of television, you don’t have to worry about your every movement being tracked because you can’t lug it with you; as opposed to your every step being tracked when you are browsing the Web on mobile.
--Alcatel-Lucent announced it would lay off a net 10,000 employees world-wide over the next two years in its ongoing rebuilding effort, with Alcatel announcing about 6,000 of the cuts would be in Europe, the Middle East and Africa.
In France, where the company is headquartered, Alcatel said it would slash 900 jobs, close offices and potentially reduce 900 more, which got a response from French Prime Minister Ayrault, who said, not so fast.
“There must be a negotiation within the company to save as many jobs as possible,” adding that he understood some cuts had to be made given Alcatel’s financial situation.
So here’s yet another example of why executives think twice about headquartering and running operations in France.
Prime Minister Ayrault could also work with the unions to gain them an increase in their severance payments. As one analyst put it, the restructuring will go through, but “Alcatel doesn’t have the time for distractions.”
--Yum Brands Inc., with 4,463 KFC outlets in China, continues to screw up as sales there fell 2% in the third-quarter from a year earlier, though same-store sales (franchises open at least a year) tumbled 11% in the period, far more than expected.
China had been a huge success for Yum, accounting for half of its global revenues in 2012 and a similar amount of its profits.
But since last November, Yum has been killed by a Chinese state media probe of improper antibiotics use by some of its chicken suppliers, and then a bird-flu outbreak last spring added to its woes.
Yum is also suffering from a stodgy look, going back to its entry in China in the late 1980s as fresher competitors for both chicken and Yum’s Pizza Hut brand arrive.
--As the first old-line company to report third-quarter earnings, Alcoa was emblematic of recent trends; profit was up, but revenues were down year over year.
--Jos. A. Bank made an all-cash offer for its bigger rival, Men’s Wearhouse Inc., but Men’s Wearhouse, thinking it didn’t have the space for all of Bank’s clothes, turned it down.
Actually, Men’s Wearhouse rejected the offer of $48 a share, a 36% premium to the prior closing price, saying it significantly undervalued the company and could raise antitrust issues.
Jos. A. Bank, which earlier said its customers in its fiscal second-quarter hadn’t been responding as well to its traditional marketing campaigns, “Buy one...get 36 free!”, is looking to diversify.
--Italian oil company ENI said it would cut off Alitalia’s fuel supplies if the airline didn’t raise fresh capital. ENI’s CEO said his company could not provide credit “to a company whose future seems no longer assured.” Air France KLM, which owns 25% of Alitalia, wants to buy the rest of the carrier.
Of course it wouldn’t want Alitalia’s debt so deep cuts would be in order.
[At last word, Alitalia is to receive an emergency capital injection from Italy’s state-owned post office, but it wouldn’t be nearly enough to keep the airline afloat.]
--Shares in U.K. postal service Royal Mail PLC soared nearly 40% in their first day of trading. The IPO, which represented 52% of the value of the postal-services group, is part of the Cameron government’s plan to sell off state assets to help reduce the budget deficit
--Puerto Rico has 3.7 million residents and $87 billion in debt, including pensions; a similar per person debt load to Detroit. Both are losing population, too, which makes the situation all the more difficult.
Puerto Rico, as a territory, was able to sell bonds that pay tax-exempt interest in all 50 states, but it turned into a Ponzi scheme. Puerto Rico sold hundreds of millions of dollars of new bonds to meet payments on its older bonds. And then it sold paper to meet its pension obligations.
So when the appetite began to dry up as investors, including institutions, began to realize the game had to end at some point, Puerto Rico suddenly found it was no longer able to go to the bond market for its financing needs.
Governor Garcia Padilla has taken a number of measures to improve confidence in the island’s financial position, such as pension reforms, raising utility taxes and imposing new ones, and stepping up the fight against tax evasion.
But Puerto Rico needs time....and it is increasingly looking like it will run out of it.
--It’s funny how Oracle CEO Larry Ellison has been paying himself for years (through a very pliant compensation committee) gobs and gobs of money, but suddenly everyone seems to have caught on at once.
This week’s latest example is New York City Comptroller John Liu, who is part of a drive by activist shareholders to cut Ellison’s pay and unseat those directors overseeing executive compensation.
The problem is whenever shareholders try to reject company pay practices in actual shareholder votes, they run up against the fact Ellison owns 34% of the company.
--According to a Credit Suisse Research Institute study, the richest 1% own 46% of all global wealth; the richest 10% own 86%, as measured in money, property and other material resources available. David Lazarus of the Los Angeles Times had a good summation of the profound implications.
“In the United States, consumer spending accounts for about 70% of all economic activity. If most consumers are getting by with less, the inevitable outcome is that they’ll have fewer dollars to pump into the economy.”
Former Labor Secretary Robert Reich, who has been sounding the alarm over wealth inequality, notes that it was greatest in this country in 1928 and 2007, when the top 1% represented about a quarter of total income. Of course these were two rather important peaks.
And in line with the above on Larry Ellison, U.S. chief executives made an average of $12.3 million last year, or 354 times what the average rank-and-file worker pulled down, according to the AFL-CIO. Thirty years ago, the average CEO was paid 42 times what ordinary workers received.
--Back to texting and driving, from Amy Li of the South China Morning Post:
“Distracted Beijing drivers playing with their smartphones were the primary cause of road accidents and traffic jams during the ‘golden week’ holiday, said traffic authorities in the Chinese capital.
“Drivers talking to friends on Wechat, a popular instant messaging platform, or snapping photos and posting messages on Weibo while driving had resulted in poor driving and collisions, according to authorities.”
--New Jersey’s Division of Gaming Enforcement just approved its first Internet gambling permit, issued to the Borgata Hotel Casino and Spa. A trial period will begin on Nov. 21. Assuming all goes well, New Jersey residents will be allowed to begin full online gambling Nov. 26. All table and slots games will be available.
So it’s hoped online gambling will give Atlantic City’s casinos a shot in the arm as A.C.’s revenues have plunged from a high of $5.2 billion in 2006 to $3 billion last year and are expected to drop further in 2013.
[Revenues at the casinos fell nearly 13% in September compared with 2012, it was just announced. Table game revenue was down a whopping 19%. The return of the Miss America pageant was not a positive catalyst as hoped. October and November should show year-to-year gains, however, due to comparisons following Superstorm Sandy.]
But I don’t want online gambling. I want sports betting, gosh darnit! That isn’t likely to happen for some time to come, much to the chagrin of Gov. Christie and a bipartisan coalition of legislators here.
“Stand-up comedians have long joked that some things, like the actual components of chicken nuggets, are better left mysterious.
“Recently, Mississippi researchers found out why: two nuggets they examined consisted of 50 percent or less chicken muscle tissue, the breast or thigh meat that comes to mind when a customer thinks of ‘chicken.’
“The nuggets came from two national fast food chains in Jackson. The three researchers selected one nugget from each box....then looked at them under a microscope.
“The first nugget was about half muscle, with the rest a mix of fat, blood vessels and nerves. Close inspection revealed cells that line the skin and internal organs of the bird, the authors write in the American Journal of Medicine.
“The second nugget was only 40 percent muscle, and the remainder was fat, cartilage and pieces of bone.”
But fret not, sports fans. The nutritional information on your chicken nuggets is readily available.
--Last weekend, “Gravity” had the biggest October debut ever, taking in $55.6 million.
Following is from a Chuck Vinch review in Army Times:
“Just as the landmark ‘2001: A space Odyssey’ broke new ground way back in 1968, ‘Gravity’ feels like a similar evolutionary milestone. No exaggeration, it’s one of the best films I’ve ever seen – a display of stunning technical prowess, gorgeous design, powerhouse acting and riveting story....
“With plenty of surprises tucked into its meaty emotional layers, ‘Gravity’ proves to be a moving, mesmerizing, near-mystical masterwork.”
Iran: Nuclear arms negotiations between Iran and the P5+1 (five permanent members of the U.N. Security Council and Germany) resume this week, Oct. 15-16, in Geneva. Iran appears poised to offer key curbs to its nuclear activities, including an offer to send its stored 20 percent-enriched uranium to another nation. In return, Iran would seek relief on the sanctions imposed against its oil industry, as well as relief from financial sanctions. Iran’s top lawmaker on Wednesday said a potential halt to producing uranium may also be on the table.
Ali Larijani, the parliament speaker, told CNN’s Christiane Amanpour that “From Iran’s side, I can say that we are ready” to “clearly show and prove” to world powers that it was not developing a nuclear bomb.
However, Iran would still insist on the ability to enrich uranium to lower levels. That will definitely be a problem for Israel. And Larijani said any resolution would “take a long time” if the West seeks to “bargain with us or if they have ulterior motives.”
Importantly there is no word as yet on whether Iran will allow a long-sought investigation into its past nuclear-weapons related activity.
For his part, Israeli Prime Minister Benjamin Netanyahu has been touring Europe and flooding media there with interviews trying to sway European public opinion against agreeing to ease sanctions on Iran in return for what Israel calls cosmetic concessions.
Israeli Intelligence Minister Yuval Steinitz called what Iran was reportedly ready to offer “laughable.”
“Closing the (underground) facility in Qom means that Iran will be able to produce in its first year of nuclearization five bombs instead of six,” he said. “Giving up on enriching to 20% is less significant at a time when Iran already has 20,000 centrifuges.”
Steinitz said Israel was willing to accept a deal whereby Iran’s nuclear capabilities would be similar to those of Canada and Mexico – it could generate electricity from a reactor, but would have to buy the reactor fuel from another country.
Netanyahu has been saying Iran must do four things: stop all enrichment, remove from Iran all its stockpiles of enriched uranium, close down Qom, and stop all work on the heavy water reactor at Arak aimed at producing a plutonium path towards a bomb. [London Times]
Israeli officials have said all along that Iran would angle for a deal that relieves sanctions pressure while maintaining the fundamentals of the nuke program.
If Iran is allowed to maintain its 20,000 centrifuges, many now of the modern variety, and if it is allowed to produce low-grade fuel, the “breakout” to high-grade [weapons usable] enrichment could take place in a matter of weeks.
Separately, Akbar Hashemi Rafsanjani, the former president who I advocated the U.S. conduct back-channel negotiations with over ten years ago, has gone public with his opposition to the continued use of the phrase “Death to America.” But this is easier said than done, it being so accepted, and engrained, since 1979. This also doesn’t necessarily mean rapprochement with the U.S.
And one final note. Since President Rohani took office in August, according to two human rights groups, one based in New York, the other in Norway, about 150 people have been executed. The former said 125 since mid-August, the latter 154.
[And along these lines, not for nothing but Iraq hung 42 prisoners this week convicted of terrorism.]
Syria: The U.N. Security Council said full-scale disarmament of Syria’s chemical weapons stockpile would begin on November 1, and that it would deploy up to 100 employees to finish the job by June 30. Thus far, an early team is reporting good cooperation from President Bashar Assad’s regime. Supposedly, all of the known sites for holding the WMD are in regime-held territory. Officials believe the government concentrated its chemical weapons activity in at least nine sites as it has lost ground elsewhere to the rebels. Who the heck really knows? You can only hope for the best, even as the war itself rages on.
Human Rights Watch, for example, reported that Syrian rebels killed at least 190 civilians and took more than 200 hostages during an offensive on the Assad regime’s home base in Latakia province back in August; what is being called the first evidence of crimes against humanity by opposition forces. HRW says many of the victims were executed.
And Turkish Prime Minister Erdogan said he no longer considers Assad a political leader, but rather labels him as a “terrorist.” Last weekend, Assad warned Turkey would “pay dearly” for supporting opposition fighting to “overthrow his regime.”
In an extensive interview with Germany’s Der Spiegel, Assad did not say whether he would run for president again when his term expires next August.
Egypt: After a months-long review, the White House decided to partially cut aid to Egypt’s military; maintaining assistance for security and counter-terrorism efforts while suspending delivery of hardware, including tanks, helicopters and fighter jets. The administration said it was looking to send “a pretty clear message” to the Egyptian leadership, which is really the military, that it needs to end the violent clampdown that last weekend re-erupted in Cairo and elsewhere, resulting in the deaths of over 50 protesters, mostly from the Muslim Brotherhood. The White House said the aid could be restored when Egypt took steps back towards democratic rule.
Egypt’s foreign ministry office said, “The decision was wrong. Egypt will not surrender to American pressure and is continuing its path toward democracy as set by the roadmap.”
One date to watch is Nov. 4, when Mohammed Morsi is slated to go on trial on charges of inciting violence, a move that will only inflame tensions between the army and the Brotherhood.
“The Obama administration’s partial suspension of aid to Egypt reflects an attempt to balance what President Obama calls ‘core interests,’ such as the security of Israel and counterterrorism, with U.S. support for liberal values. The idea is that the United States can punish the military-backed regime for not advancing a democratic agenda by withholding a few helicopters and tanks while preserving its cooperation on security matters by supplying it with spare parts.
“The mixed message appears unlikely to reverse the course of Gen. Abdel Fatah al-Sissi, who controls the interim government and who is cultivating a role for himself as a nationalist, populist strongman. It also looks like a poor bet for defending the interests that Mr. Obama, in his recent address to the United Nations, placed above the defense of democracy and human rights.
“In fact, Sunday’s renewed bloodshed in Cairo, in which at least 50 opposition protesters were gunned down by security forces, adds to the growing evidence that the Sissi regime is failing to establish its authority. That failure stems directly from its attempt to establish an autocracy more repressive than any seen in Egypt in decades....
“The United States seeks the stabilization of Egypt under ‘an inclusive, democratically elected civilian government based on the rule of law, fundamental freedoms and an open and competitive economy,’ the State Department said Wednesday in announcing the new aid policy. The problem is that its mixed approach leaves it still betting on a regime that is delivering none of those goods.”
“The Obama administration plans to suspend the delivery of ‘nonessential’ weapons to Egypt’s military-led government. If gestures that made America feel good about itself were the stuff of a successful foreign policy, then the White House has scored another hit.
“Back in the real world, it’s hard to see how this policy shift helps U.S. interests in Egypt and the region. The annual $1.2 billion Egyptian military aid program predates by three decades the 2011 uprising against Hosni Mubarak and subsequent stillborn attempts to establish a legitimate government. America’s security alliance with Egypt has kept this combustible patch of the Middle East stable since the Camp David peace accords in 1978....
“The U.S. is managing to anger nearly everyone in Cairo. The Islamists who demand President Morsi’s return and the shrinking band of liberal democrats will see this as continued U.S. support for the generals. The generals get to feel the back of Washington’s hand without being given an incentive to change their behavior at home. Israel is also upset, since its peace with Cairo was premised in part on U.S. aid.
“The U.S. will always be the Egyptian military’s best and for some equipment only option. But if the government concludes the U.S. is a fickle friend, it may turn to Russia and the Gulf states for closer political ties and even some weapons. As Iran and resurgent al-Qaeda seek to squeeze the U.S. out of the region, Washington can hardly afford to lose reliable Middle Eastern allies.”
One other item. A day after the deadly protests in Cairo, a trio of attacks on the military and government-linked targets by Islamists killed nine, including six soldiers in one incident.
Iraq: It’s virtually impossible to keep up with all the attacks and bombings here, though I note one particularly heinous act...a suicide bomber detonated a truck filled with explosives on the playground of an elementary school, killing 13 children and the headmaster. 80 were wounded.
Israel: According to a survey by the Israel Democracy Institute and Tel Aviv University, 2/3s of Jewish Israelis believe President Obama will fail to keep his promise to prevent Iran’s development of nuclear weapons, while only 27% believe he will succeed. 63% of Israelis said the U.S. was projecting weakness.
On Monday, Israel bore witness to the largest funeral in its history...800,000 who turned out in Jerusalem to mourn the death of Shas spiritual leader, and former chief rabbi, Ovadia Yosef. Of course owing to tradition, there was a crush following word of his death as he was then buried the same day.
Libya: Prime Minister Ali Zeidan was kidnapped from his luxury Tripoli hotel before dawn on Thursday and then released hours later, unharmed, in a truly bizarre move by whatever group carried it out. Bottom line, it reflected the state of the dysfunctional Libyan government and the totally lawless nature of the entire country, where militias are interwoven into the power structure. There is in effect no police or army, so you have state security agencies that are more beholden to their commanders than government officials.
Last weekend, Zeidan had been summoned along with the U.S. ambassador to explain the snatch and grab of terrorist Abu Anas al-Libi, who was seized in broad daylight from his car on a Tripoli street. A General National Congress statement stressed “the need for the immediate surrender” of Libi, and described the U.S. operation as a “flagrant violation” of Libya’s sovereignty.
Al-Libi was on the FBI’s most wanted list with a $5 million bounty on his head for his alleged role in the 1998 twin bombings of two U.S. embassies in Tanzania and Kenya.
Prime Minister Zeidan, again, days before he was himself kidnapped, said, “We insist that Libyan citizens must be tried in Libya, and Libya will not deliver its citizens abroad for trial.”
Separately, the Libyan government has reportedly given the U.S. “tacit approval” to conduct operations inside Libya in order to apprehend suspects tied to the terror attack on the U.S. consulate in Benghazi.
[A separate Navy SEAL raid on an al-Shabaab base in eastern Somalia did not go as well as the SEALs withdrew when they met far fiercer resistance than they expected. They feared civilian casualties if they continued with the operation...exact target of which is unknown, though believed to be an al-Shabaab leader connected to the Westgate Mall attack in Nairobi.]
Afghanistan: Once again the United States is at an impasse on a “status of forces agreement,” this time with Afghanistan and its leader Hamid Karzai. The last time, regarding Iraq, the U.S. wasn’t allowed to maintain a broad presence, and you’ve seen the resulting chaos that has totally destroyed any good that may have come from the Iraq war.
In Afghanistan, the time for reaching an agreement on maintaining at least a base or two is running short with a presidential election in April. The United States, and its European allies, could conclude the full NATO mission by the end of 2014, which will leave the Taliban totally in the clear to topple a weak Afghan leadership and security structure. Financial aid would also dry up.
The biggest roadblock to the U.S. maintaining a minimal force level for terror operations is that Karzai refuses to sign any agreement that would allow American forces to search in his country for al-Qaeda.
Regarding Afghanistan’s female police, they fear that one by one they are going to be murdered. In Helmand province, the entire contingent is set to resign after three of their colleagues were taken out in apparent assassinations.
And on Sunday, four Americans were killed by an IED, bringing to 136 the number of foreign forces killed in Afghanistan in 2013, 106 of which are U.S. soldiers.
There was some joy in this hellhole, however, when the cricket team defeated Kenya to advance to the World Cup for the first time in its history.
But Afghanistan can’t play at home because of the security situation, and its fans are too poor to travel.
China: Years ago, China surpassed the U.S. as the largest importer of Persian Gulf crude oil, but now it is on track to overtake the U.S. as the No. 1 importer of oil from OPEC, overall. So as the Wall Street Journal’s Brian Spegele and Matt Bradley point out:
“The turnabout has added to tensions because it leaves the U.S. military securing China’s growing oil shipments in the region at a time Beijing resists U.S. pressure on it to back American foreign policy in the Middle East.
“For years, China and other oil-consuming nations have benefited as Washington spent billions of dollars a year to police checkpoints like the Strait of Hormuz and other volatile parts of the Middle East to ensure oil flowed around the globe.
“But the rise of North America’s shale oil and gas industry has put the U.S. on track to pass Russia this year as the world’s largest combined producer of oil and gas, if it hasn’t already done so.”
The two sides set up what is called the U.S.-China Middle East dialogue to mitigate tensions over energy security, but the discussions have produced limited results, according to the Journal and their sources.
On a different matter, President Xi Jinping’s anti-corruption purge is more about him instilling his Maoist ideas rather than true reform; what some are calling a Maoist restoration that seeks to restore party discipline, thus the idea of stamping out lavish banquets, expensive watches and such. So it’s not a good time to be selling luxury goods there.
Meanwhile, Premier Li Keqiang is pressing for an Asian free trade zone that would include the 10-member Asean bloc, while the U.S. is pushing its own regional free trade pact, the Trans-Pacific Partnership, which does not include China.
Who do you think will get the deal done first? Li did at least talk about interaction between the TPP and his Regional Comprehensive Economic Partnership, RCEP.
North Korea: Kim Jong-un appears to be successfully removing / retiring the old guard in the military, replacing nearly half of the top tier of generals with a younger generation. This week, state media confirmed the firing of numero uno. Since taking power, Kim has replaced 44% of the top military, party and government officials, according to a South Korean report. Those promoted will owe their allegiance to Kim and not his late father, Kim Jong-il.
Related to the above, a South Korean newspaper reported the North has finished building a number of subterranean missile silos not far from China. Not that this is a threat to China, but more importantly, an anonymous South Korean government analyst was quoted by the paper as saying, “It appears that North Korea is creating a scenario through which they can attack the South with its short-range missiles...and attack Guam or Okinawa with its mid-range missiles.” The new silos appear to be for the use of intermediate-range ballistic missiles capable of targeting U.S. forces in the region. [Global Security Newswire]
Pakistan: Former President Pervez Musharraf had an interesting week. The country’s supreme court granted him bail in a case related to charges stemming from his 1999-2008 rule, including his alleged role in the assassination of Benazir Bhutto, shortly after returning from self-imposed exile. It appeared Musharraf could then leave the country.
But hours later, he was rearrested over a 2007 mosque raid that left 100 dead.
Meanwhile, India said it killed seven fighters from a Pakistan-backed force that had crossed a mountain border area, this as leaders of the two countries were trying to de-escalate tensions.
Vietnam: The U.S. and Vietnam reached agreement on a nuclear trade pact that U.S. officials said included an agreement by Hanoi not to reprocess spent nuclear fuel or enrich uranium – applications in the development of warheads.
Turkey: The government decree to end a 90-year-old ban on wearing Islamic headscarves and veils in civil service jobs sparks fears of renewed unrest similar to last spring’s showdowns.
The ban, dating back to Kemal Ataturk in 1925 after the fall of the Ottoman Empire, was described by Prime Minister Erdogan as “a dark period” finally being brought to an end.
The change pits a rising group of religiously observant Turks who run the country against the once-powerful secular elite that has been losing control to Erdogan’s forces.
The head scarf ban remains for the military and police forces, as well as the judiciary, but government officials say the ban could soon be lifted in those sectors too.
Britain: The director of Britain’s domestic security service, MI5, said newspaper leaks showing how the intelligence agencies intercept voice and internet communications are a “gift” to terrorists, causing “enormous damage” in the fight against jihadists. Without naming him, it was clear who was responsible. Edward Snowden.
France: Interior Minister Manuel Valls, who has managed to emerge as a popular figure in Francois Hollande’s unpopular government, warned about the rise of the far right Front National headed by Marine Le Pen.
“They could be the leading political party in (next May’s) European elections,” says Valls. “The threat is not just in France. I fear there is a risk that the extreme right and populists will gain real weight in the European parliament.”
Valls’ own popularity is surging because of his tough stances on crime and immigration and he polls ahead of both Le Pen and former president Nicolas Sarkozy.
The guy also happens to be very good-looking and his wife, a concert violinist, recently told a Spanish newspaper: “Lots of women want to sleep with him.” [Financial Times]
Argentina: President Cristina Fernandez de Kirchner underwent surgery to treat bleeding on her brain, with a recovery time of at least a month that is throwing the nation into a bit of turmoil, seeing as how the vice president faces a corruption investigation.
Russia: Finally, the Sochi Olympics are but four months away and the main Olympic Stadium is nowhere close to being finished. The cost has skyrocketed from about $375 million to up to $1 billion, according to some. It’s undergone at least three major design changes and no one knows now what it is supposed to look like.
Again, we’re talking this is the site of the opening ceremonies...four months away.
Boris Nemtsov, a prominent opposition leader and Sochi native, said in a telephone interview with the Moscow Times, “It is a [expletive] disaster. The [expletive],” he added, referring to President Putin, “wants to dazzle the whole world, so he told the event’s organizers to just do it or drop dead!” [Referring to the latest design change.]
The current plan is to finish the stadium by end of the year, leaving just five weeks to test it out. Make sure you go to the bathroom in your hotel before leaving for the place. At least that would be my first advice.
--The Washington Post’s Philip Rucker reported on the infighting within the Republican Party over the tea party’s tone in the current debate; as in some are beginning to see a backlash against the insurgency in some of their districts.
Vin Weber, a former GOP congressman who is close to the House leadership, said, “It’s a new dynamic, and we don’t know how far it’s going to go. All the energy in the Republican Party the last few years has come from the tea party. The notion that there might be some energy from the radical center, the people whose positions in the conservative mainstream are more center-right but who are just furious about the dysfunctionality of government – that’s different.”
“The pushback is also seen inside the Beltway, where tough conservatives ranging from Sen. Tom Coburn (R-Okla.) to anti-tax maven Grover Norquist have deplored the shutdown squad and taken on its leaders. That boiled over when Senate Republicans turned on Sen. Ted Cruz (R-Tex.) behind closed doors for having no game plan and risking chaos for personal advancement....
“As a practical matter, the anti-tea party objectors understand that the Republican Party can’t win the Senate and the White House while bearing the image of a zealous, destructive insurgency....
“Republicans in business, in their community and in their families are especially dependent on predictable, sane and, even, occasionally helpful government. They want that government to run better; they don’t want to throw sand in the wheels so the entire thing comes to a screeching halt. Unlike talk-show hosts, those whose livelihood intersects with courts, agencies and a variety of government officials and services do not relish when the government ceases to function. They rightly regard the shutdown as a total failure of governance.
“And this brings us to the philosophical impetus for the tea party backlash. Whether I am talking to ordinary suburban Republican voters or business groups or respected conservative think-tankers, the reaction is the same: They are appalled. They are dismayed. You hear: ‘This isn’t what I signed up for.’....
“Again, the anti-tea party Republicans don’t go around quoting the Federalist Papers, but they understand that our system abhors extremism, is designed to require cooperation and has institutions specifically designed (e.g. the Senate) to prevent radicals fueled by the passions of the day from taking the country on a joy ride.
“The anti-tea party Republican faction...is justified in its outrage and should be as determined as the tea party in organizing and instilling an ethos in as many fellow citizens as possible. They must, in short, become fiercely moderate, demand officials who exercise good judgment and be willing to fight for a responsible conservative movement that aims to reform and not smash government.”
--Kathleen Parker / Washington Post...on the closing of the World War II memorial...
“Shutting out veterans from their memorial touchstone was more than a bad call, a lapse of judgment, a mere moment of tone-deafness. In reality, it may have been the tidy effort of a box-checking bureaucrat, but it reeked of the small work of a petty bully.
“Ditto the closing of the D-Day cemetery in Normandy, France, where more than 9,000 Americans are buried. And this is the president who recently declared that the American People are not political pawns to be used to score political points?
“Barack Obama must have been an inkling in the prescient mind of H.L. Mencken when the curmudgeon from whom all op-eds flow once described democracy as ‘the theory that the common people know what they want, and deserve to get it good and hard.’
“While one may sympathize with Obama’s contempt for his congressional adversaries, he may have cut off his own nose with an unforced error of magnified proportions. Spite is unbecoming a president, as Richard Nixon proved in another era of national disruption. But beyond personality, it is baffling to imagine anyone thinking that the way to winning hearts and minds is by disrespecting the nation’s most beloved demographic.
“I’ve often lamented the prospect of a world without my parents’ generation, not because they were perfect but because these mothers and fathers take with them a national treasure – their personal experiences and memories of the Great Depression and World War II and the lessons of sacrifice, thrift, courage and duty that defined them.
“In their place, we have a bickering, twittering, snarling, snarky, toxic public square that has contaminated even our highest offices. How surreal it must seem to our oldest and wisest citizens to witness the breaking bad of America.”
--Jennifer Rubin, again....my favorite conservative pundit these days...
“There is a misnomer about the ‘grassroots’ on the right. It goes something like this:
“Longtime congressmen and senators are in a D.C. bubble and out of touch with the grassroots. The authentic expression for those people can be found among talk show hosts (many of whom reside in either New York or Washington D.C.), certain D.C.-based Washington think tanks, and the most ferocious of the right-wing bloggers and TV talking heads.
“The problem: It isn’t true. Oh, and the latter group of people don’t really know what they are doing, having never been responsible for running more than a 3-hour radio show or a think tank supported by multi-millionaires and a fundraising list that must be constantly engaged.
“Let’s look at who is out of touch and who isn’t, and which group is more adept at achieving conservative aims.
“Sen. Mike Lee (R-Utah), a principal leader of the shutdown strategy has dropped a net 25 points in a recent poll among Republican Utahns. (Net favorability went from 70 to 57 while net unfavorability went from 21 to 33 percent).
“Sen. Ted Cruz (R-Tex.), the most prominent shutdown advocate is underwater in his poll numbers. In the most recent Fox poll 44 percent view him unfavorably and 22 percent view him favorably.
“The shutdown strategy is regarded unfavorably by voters in every publicly released poll. In every poll, voters blame Republicans more than Democrats. It’s gotten so bad Cruz had to cook up his own poll, but even that poll showed ‘By a margin of 46 percent to 39 percent, voters blamed Republicans for the shutdown... by a margin of 42 percent to 36 percent, independent voters blamed Republicans for the shutdown over Obama and the Democrats.....
“There is nothing wrong with pumping up the troops and telling the true-believers what they want to hear. There certainly can be a division of labor on the right just as there is on the left.... The problem comes when Republicans take them seriously, following their advice and their lead over the cliff and into the political abyss.”
--A scathing report by the Committee to Protect Journalists concludes that President Obama’s promise for transparency is a bunch of malarkey; that the White House routinely blocks information for reporters, seeks aggressive prosecution for those leaking classified information, and uses its media channels to shape its messages.
Understand the report was authored by Leonard Downie Jr., a former Washington Post executive editor, and includes a comment from veteran New York Times reporter David Sanger.
“This is the most closed, control freak administration I’ve ever covered,” said Sanger.
--Gov. Chris Christie’s lead over his Democratic challenger, state Sen. Barbara Buono, is now 62-33 in his reelection bid, according to a Quinnipiac University poll. Importantly, for this Democratic state, his favorability rating is 63-31.
[In a separate poll by the Fairleigh Dickinson PublicMind folks, 62% approved of Christie’s job performance, up from 58% in August, while President Obama’s rating among New Jerseyans is down to 45%.]
This coming week is the special election for the senate seat once held by Democrat Frank Lautenberg. Cory Booker vs. Republican Steve Lonegan.
--In New York City, Democrat Bill de Blasio leads Republican Joe Lhota by a 67-23 margin among likely voters, according to the latest Wall Street Journal/NBC 4 New York/Marist survey. De Blasio leads among likely African-American voters 89-4, and among Latino voters 76-14.
--Former Detroit mayor Kwame Kilpatrick was sentenced to 28 years in prison for running what the government called a money-making racket out of City Hall. Kilpatrick steered millions to himself, family and friends...a dirtball and scumbag of the first order. Oh, and he was found guilty on five counts of extortion.
“Top Internal Revenue Service ObamaCare official Sarah Hall Ingram discussed confidential taxpayer information with senior Obama White House officials, according to 2012 emails obtained by the House Oversight and Government Reform Committee and provided to The Daily Caller.
“Lois Lerner, then head of the IRS Tax Exempt Organizations division, also received an email alongside White House officials that contained confidential information....
“Ingram appeared before Rep. Darrell Issa’s House Oversight Committee Wednesday and claimed she could not recall a document that contained confidential taxpayer information.
“ ‘Well one of the areas of interest is there’s a significant redaction that quotes the statute 6103. Do you know who is underneath that blackout?’ Issa asked Ingram.
“ ‘I don’t recall the document so I can’t help you with what’s underneath that redaction,’ Ingram said.
“ ‘Her response has not put concerns to rest,’ Oversight staffer Frederick Hill said. ‘This caught people’s eye.’”
--Pakistani teenager Malala Yousafzai was expected to win the Nobel Peace Prize, but she lost out to the Organization for the Prohibition of Chemical Weapons, the body overseeing the destruction of Syria’s chemical arsenal. What an incredibly stupid selection. Next year, perhaps, give it to them if they do their job well.
But then the Nobel folks, when it comes to the peace prize, are known for their questionable decisions. Chelsea Bradley Manning, the traitor also known as El Creepo, was among the list of contenders, after all.
One year ago (10/9/12) Malala survived an assassination attempt by the Taliban. God has bigger plans for her than some shiny medal.
“Chronic electrical surges at the massive new data-storage facility central to the National Security Agency’s spying operation have destroyed hundreds of thousands of dollars’ worth of machinery and delayed the center’s opening for a year, according to project documents and current and former officials.
“There have been 10 meltdowns in the past 13 months that have prevented the NSA from using computers at its new Utah data-storage center, slated to be the spy agency’s largest, according to project documents reviewed by the Wall Street Journal....
“The causes remain under investigation, and there is disagreement whether proposed fixes will work....
“The Utah facility, one of the Pentagon’s biggest construction projects, has become a symbol of the spy agency’s surveillance prowess.... It spans more than one-million square feet, with construction costs pegged at $1.4 billion – not counting the Cray supercomputers that will reside there.”
Let’s see...the operations dysfunction of ObamaCare...the new NSA data center....
The Army Corps of Engineers, which is overseeing the data center’s construction, “concluded the contractor’s proposed solutions fall short and the causes of eight of the failures haven’t been conclusively determined.”
--Last week I wrote of how Vice Adm. Tim Giardina was relieved of duty as second-in-command at the organization that oversees all U.S. nuclear forces, the U.S. Strategic Command, because he was under investigation in a gambling matter. While I didn’t say so at the time, I was thinking this was sports gambling.
This week we learned, however, that he is under investigation for using counterfeit gambling chips at a casino in Iowa. Geezuz, what an idiot. What scum.
Apparently he will drop from 3-stars to 2-stars. That’s an equally pathetic punishment.
And then on Friday, we learned Air Force Maj. Gen. Michael Carey was removed for “behavior during a temporary duty assignment.” [Reportedly alcohol related.] Carey, a two-star, was responsible for maintaining intercontinental ballistic missiles at three bases across the U.S., a total of 450 of them.
--Peter Higgs of Britain and Francois Englert of Belgium have won the Nobel prize in physics for the discovery of the “God particle,” or Higgs boson, that explains why mass exists.
Researchers at CERN, the European Organization for Nuclear Research, said in 2012 it had observed a particle that may be the Higgs boson; a missing link in a theory explaining how the universe is built.
It’s great these two, 84 and 80, who developed the theory back in 1964, were recognized before their passing. A third colleague, Robert Brout, also from Belgium, died two years ago. I didn’t realize he wasn’t eligible for Nobel recognition because it is limited to living recipients.
--So if you saw “60 Minutes” last week, I hope the ‘cosmic roulette’ segment looked familiar, your editor having covered the exact topic in this space weeks earlier. Also, you got to see my favorite senator, Tom Coburn (R-Ok.), as he goes after the disability scam. Those were two very brave women highlighted in the segment who have been helping expose rampant abuse in the system, like in the state of Kentucky.
--I want Senate chaplain Barry Black for president. He’d be better than what we’ve got now, that’s for sure.
--Funny how President Obama shut out the major network White House reporters from his Tuesday press conference. They were seething. I hope they have a vindictive streak.
--British researchers have confirmed the long-held belief that those who live near airports are at a greater risk of suffering and dying from heart disease and stroke, in a study of those living by the loudest areas near Heathrow, a 10-20 percent increased risk. Earlier, a U.S. study reached the same conclusion.
But, the risk is much less than that from smoking, poor diet or lack of exercise.
Researchers don’t know why there is a correlation between noise and heart disease, but they say the noise could contribute to heightened blood pressure or it could be disturbing sleep patterns.
--Pope Francis announced he would visit Israel and address the Knesset as the personal guest of the Knesset speaker, Yuli Edelstein, who met with the pontiff at the Vatican this week. No date has been set but this would be a great moment.
--Reader’s Digest recently concluded an experiment that saw its reporters drop 192 wallets in 16 cities around the world to test people’s honesty. Each wallet contained a cell phone number, a family photo, coupons, business cards and the equivalent of $50 in cash. The reporters left wallets in parks, on sidewalks and near shopping centers, and then watched to see what would happen.
So that’s 12 wallets in each city and the most honest one was Helsinki, with 11 out of 12 returned, followed by Mumbai (nine returned), Budapest and New York (eight...which isn’t bad, Gothamites...)
Moscow was ranked “fairly honest,” with seven out of 12 returned.
Among other notables...Berlin (six), London and Warsaw (five)...Bucharest, Rio and Zurich (four each), Prague (three...very surprised with this one...must be the Gypsy element, ditto Budapest...), Madrid (two) and Lisbon (one...gee, you think it has to do with the eurozone crisis there...and in Madrid?)
But wait...the lone wallet that was returned in Lisbon was handed over by an elderly Dutch couple visiting as tourists!
Now I found the above in an article in the Moscow Times by Andrew McChesney, who notes that the Reader’s Digest experiment is similar to a ploy the U.S. State Department has warned Americans about when traveling in Russia. From the State Department’s web site:
“A common street scam in Russia is the ‘turkey drop’ in which an individual ‘accidentally’ drops money on the ground in front of an intended victim, while an accomplice either waits for the money to be picked up, or picks up the money him/herself and offers to split it with the pedestrian. The individual who dropped the currency then returns, aggressively accusing both of stealing the money. This confrontation generally results in the theft of the pedestrian’s money.
“Avoidance is the best defense,” the State Department says. “Do not get trapped into picking up the money, and walk quickly away from the scene.”
--I was reading a piece in The Economist about professional chess (apparently there’s a big match for the World Chess Championship next month in India...Magnus Carlsen from Norway vs. the host nation’s Viswanathan Anand) and I was just surprised that 50% of adults in India play chess at least once a month (30% in Russia, 10% in Germany, and about 6% in the U.S.).
The point of the article was there’s an attempt to turn professional chess back into a television event, such as when many of us were tuned into PBS in 1972 for Bobby Fischer vs. Boris Spassky. I know my father and I were glued to the tube, and would play afterwards.
I also can’t believe my feeble brain immediately remembered who the PBS analyst was...Shelby Lyman.
I also know for a fact I haven’t played chess since high school...which is pretty pathetic.
--We note the passing of Project Mercury astronaut Scott Carpenter, 88, which leaves only John Glenn among the original seven who captured America’s spirit and imagination. Carpenter was the second American to orbit the Earth and survived a near disaster when he splashed down over 250 miles off target. He remained in his orange life raft for three hours before being rescued.
--Finally, the London Times had an editorial on the struggles for the African elephant.
“Tanzania’s despairing Tourism Minister has demanded an official shoot-to-kill policy against elephant poachers in his country’s national parks. It is not hard to see why.
“The minister, Khamis Kagasheki, estimates that between 30 and 70 adult elephants are being slaughtered for ivory every day in Tanzania alone. In Zimbabwe last month, 81 elephants were poisoned with cyanide in the biggest single act of poaching since records began. In Gabon, where forest elephants’ pink ivory is especially highly prized, nearly 20,000 animals have been lost to poachers in the past 15 years.”
But as the Times’ points out, despite numerous well-intentioned efforts, including through the Convention on International Trade in Endangered Species, which “urged governments to prosecute the ivory trade’s financiers with the energy it devotes to illegal drugs,” nothing is working.
“There are two main reasons. First, China has not yet faced up to the crisis or its role in it. Campaigners claim that an edict from the Chinese President outlawing ivory carving could save a species. There is certainly a huge public education task that only Beijing can undertake, if the Chinese people are finally to understand that buying ivory is wrong....
“The need for China to meet its responsibilities is therefore all the more urgent. China values its commercial ties to Africa, but they must be legal. Beijing must do what it takes to shut down Chinese demand for ivory, or the battle over supply will only get bloodier.”
How many times have I written, “President Xi, say something!”?
Pray for the men and women of our armed forces...and all the fallen.
We pray for the families of those recently killed in Afghanistan who were caught up in the government shutdown.
God bless America.
Gold closed at $1268
Returns for the week 10/7-10/11
Dow Jones +1.1% 
S&P 500 +0.7% 
S&P MidCap +0.5%
Russell 2000 +0.6%
Nasdaq -0.4% 
Returns for the period 1/1/13-10/11/13
Dow Jones +16.3%
S&P 500 +19.4%
S&P MidCap +23.6%
Russell 2000 +27.7%
Bears 20.6 [Source: Investors Intelligence]
*I haven’t expounded on my social media efforts, as I said I would a few weeks ago, because I am so totally not committed to it as yet. And without the commitment, not gonna talk about it; wouldn’t be prudent.