[Posted 7:00 AM ET]
Wall Street
If you choose to be bullish, there is a ton of good news out there;
like the S&P 500 and the MSCI world index each hitting 3-year
highs this week, while U.S. small caps attained all-time record
levels. And even bad news like the 3rd-highest trade deficit on
record is treated as good, because the actual number was down
from previous months, while consumer sentiment is rising again.
I happen to fall in the camp that expects this Christmas season to
be a strong one. In fact I’ll go so far as to say it will be super.
But folks, I’m also beginning to feel like its 1999 all over again.
For sure there are big differences between now and then. In ’99,
I was warning of global hot spots and railing about excessive
valuations. My comments were bearish and I looked foolish for
long stretches. Then in the spring of 2000 it all changed.
Of course if you want to focus on the Big Picture, what’s
different five years later is that the hot spots I once warned of are
now staring us in the face, on a daily basis, with no real
resolution yet in sight, whether it’s Iran, Iraq or North Korea, let
alone the ever-present Israeli-Palestinian crisis, now on the front
burner more than ever. None of these were anywhere near as
important back in ’99 as they are today, yet any single one is
capable of derailing the Polar Express.
And on the economic front it’s not as if the news around the
globe is all that great. The Euro-12 had a growth rate of 0.3% in
the third quarter, Germany is stuck in the mud, the Bank of
England lowered its 2005 GDP outlook to 2.5% due to a popping
of its housing bubble, Japan reported a rise in GDP of just 0.1%
in Q3 (and deflation is still present), and the World Bank
continues to ratchet down its global outlook for next year.
In the technology sector, the signals remain mixed. For every
solid report from the likes of Dell (which did indeed break out of
a long trading range as I surmised last week), you still had
cautionary reports from Cisco. And as a terrific front page piece
in Tuesday’s Wall Street Journal pointed out, corporations are
finding new ways to get more out of less. For example, tech gear
orders were up only 4% in September (versus a year ago), while
machine orders were up 21%. This doesn’t mean category killers
like Dell or SAP won’t continue to rock ‘n’ roll, you just have to
be very careful making your selections. [I currently own three
tech dogs in the software sector, I have to admit. They’re going
nowhere unless cap spending picks up in earnest.]
One positive that can’t be ignored though, aside from the Street’s
reaction to a Bush 2nd term, is the slide in oil prices. Thanks to
more good news on the inventory front, crude oil and natural gas
tumbled anew to $47.32 and $7.17 (from $55.17 and $8.70 just
two weeks ago). There were stories that OPEC may be
increasing its productive capacity and the CEO of Total, the
French energy giant, said oil could hit $30 in ‘05 if China cools
and production picks up from non-OPEC sources.
But perhaps the best way to tie all of this together for now is to
review my still unwavering outlook for 2005. The China bubble
will burst, as will the global real estate bubble, earnings will
continue to decelerate, the consumer – after a final spasm of
spending this Christmas – will lighten up in a big way by
February, capital spending will remain at largely moribund
levels, and deflation will increasingly work its way into our
lexicon owing in no small part to overcapacity. Should one of
the aforementioned hot spots then boil over, you have serious
problems in the markets. Just don’t expect all of this to happen
in the first quarter.
Finally, a word on current valuations. I haven’t thought stocks
were terribly overvalued all this year, save the big Internet plays.
But with the recent rally many issues are getting somewhat
frothy, with the head beginning to spill over the top of the mug.
Earnings on the S&P for ‘05, for example, are projected to be
$73.60 by one estimate. Call it $74. Now divide that into an
S&P index of 1200 (currently 1184) and you get a price /
earnings multiple of 16.2. Outrageous? No. Cheap? No way.
Now some of you may think, hey, if all goes well earnings could
be far higher than now expected, thus warranting further upside.
Maybe, but were that to prove to be the case then the Federal
Reserve becomes a greater factor than currently anticipated and
that may not be good.
And back to energy prices, remember one other thing; a potential
positive, as well as existing negative. There is no way oil prices
tumble in any big manner without a commensurate slide in
global demand. And a fall in demand doesn’t exactly spell GDP
growth, certainly not above current estimates.
I am willing to acknowledge I could be wrong for a while. Amidst
the current euphoria, though, just keep this in a corner
somewhere for easy reference when you feel yourself getting a
bit too giddy. Christmas is not 365 days a year and I wouldn’t go
further into debt buying that big goose in the butcher shop
window.
Street Bytes
–Another stellar week for the major averages as both the Dow
Jones and S&P 500 rose 1.5% to 10539 and 1184, respectively,
each having now gained 8% in just the past three weeks. Nasdaq
tacked on 2.3% to 2085. The bulk of the rally was on Thursday
and Friday and virtually every sector participated. The airlines
have been rocketing higher thanks to the plunge in oil prices and
a labor agreement between Delta and its pilots union. Dell
sprinting ahead by $3 Friday was certainly another major
confidence booster as well, while major money is flowing back
into equities from all directions.
–U.S. Treasury Yields
6-mo. 2.29% 2-yr. 2.82% 10-yr. 4.19% 30-yr. 4.90%
Notice how I deftly avoided any mention of the Fed until the end
of the opening commentary. “But I thought the Federal Reserve
raised short-term interest rates again?” you might be thinking.
Indeed it did; a ¼-point to 2%. Of course it’s a good sign the
Fed was basically invisible this go ‘round. Certainly the move
didn’t roil either the stock or bond markets in any manner.
But the U.S. dollar hit another low against the euro and gold
established a new 16-year high at $438, certainly not a vote of
confidence in the greenback. So is a crisis finally around the
corner? Not yet, especially as long as the United States remains
the best game in town.
The bond market does have to deal with some key figures this
coming week. On Tuesday we have the latest numbers for
producer prices and on Wednesday we get the consumer price
index, along with the latest reading on industrial production.
–A few more tidbits on energy. To give you a sense of the
destruction wrought by Hurricane Ivan in the Gulf, for the month
of September the U.S. recorded its lowest production of crude
since April 1950. This also tells you everything about how our
nation has come to rely on foreign oil the past half century.
And I liked what Joseph Quinlan, chief market strategist for
Banc of America, had to say about oil. With current record
prices for crude, global income is being transferred to oil
producers, “a redistribution of wealth that benefits very few”
since OPEC accounts for only 3% of global imports and thus
isn’t efficiently circulating its petrodollars. [Wall Street Journal]
–According to the Gartner group, personal computer shipments
in Asia-Pacific, ex-Japan, rose 9.8% in the third quarter from a
year earlier. In India, the figure was 35%. Holy cow.
–Edward C. Prescott, co-winner of the 2004 Nobel Prize on
Economics, wrote an op-ed in the Journal about “political
scaremongering” and the issue of private accounts for Social
Security. Now personally, I’ve said enough on this topic, but I
can’t help but repeat a point of mine…we already have our
private accounts. They’re called IRAs. When was the last time
the government promoted their use? But Prescott says the
following in defending the idea for Social Security.
“Further, about two dozen countries have reformed their state-
run retirement programs, including Chile, Sweden, Australia,
Peru, the U.K., Kazakhstan, China, Croatia and Poland. If
citizens in these countries can handle individual savings
accounts, especially citizens in countries without a history of
financial freedom, then U.S. citizens should be equally adept.”
Now far be it for me to say that the thoughts of a Nobel Prize
winner are incredibly stupid, but this is incredibly stupid.
For starters, each country’s situation is unique and if Prescott is
saying the vast majority of citizens in the above referenced
nations are reaping the rewards, so be it, though I know for sure
this isn’t the case. No one doubt’s Social Security has to be
reformed, but drastic measures are not required. Raise the
retirement age a bit and freeze benefits for a spell. [Medicare is
a totally different subject.]
–Japan suspects a Chinese nuclear-powered submarine was in its
waters this week. But the reason why may surprise you. The
Chinese could have been mapping a natural gas project in a
disputed region. In other words, this is what happens in the early
stages of the coming Asian war over energy resources, to begin
about a year after the 2008 Olympic Games in Beijing.
–Real Estate Bubble: I saw where Shaquille O’Neal sold his
Beverly Hills area home for $6.4 million, reduced all the way
down from $7.5 million when it went on the market in June.
And I found the following from Jonathan Clements and the
Journal (via Freddie Mac) enlightening.
U.S. property price increases over the past five years.
Washington, D.C. …97.4%
California…94.2%
Rhode Island…91.9%
Massachusetts…75.7%
New Hampshire…71.5%
New York…70.8%
New Jersey…70.6%
Nationwide average…44.8%
–While I continue to have my doubts on the pace of recovery in
the Florida housing market following the four hurricanes, it does
need to be noted that $20 billion to $25 billion is being spent on
reconstruction in the state. But while tax receipts could
temporarily soar, as some officials say, high insurance
deductibles could equate to a $1 billion out of pocket cost.
–Citigroup reached a final agreement in the WorldCom case;
$2.58 billion in restitution to investors with attorneys being
awarded $141 million in fees, split between 10 firms. While the
figure has been known for some time now, just think of the size
of it all. This is a cornerstone of the legacy of Sandy Weill.
–The NASD is alleging H&R Block fraudulently sold Enron
bonds to its investors before Enron’s collapse. The company
offered its sales people higher commission credits on the bonds,
a major no-no given the result. You can be sure the clients knew
nothing of this conflict of interest.
–The SEC has opened an investigation into some of the larger
brokerage firms, such as Morgan Stanley and Merrill Lynch, on
the issue of clients not receiving the best possible price,
particularly on the opening in Nasdaq stocks. In many cases
simply placing a firm’s trades ahead of the clients’.
–Speaking of bad behavior, it shouldn’t come as a surprise that
the SEC and Justice Department are now investigating Merck
over the marketing of Vioxx. Merck’s coveted AAA debt rating
was also reduced in wake of all the product liability claims now
facing the company.
–Microsoft settled its antitrust case with Novell for $536 million
in a longstanding tiff over Novell’s network operating system.
Microsoft is attempting to clear the table of all distractions so it
can focus on becoming a growth story again.
–Marsh & McLennan could be laying off up to 3,000 workers as
a result of New York Attorney General Eliot Spitzer’s probe into
Marsh’s illegal activities. I recognize many will point to this and
say that Spitzer clearly went too far, that thousands shouldn’t be
paying for the sins of a few.
While I feel for the employees that may be laid off, there is a far
bigger issue here, that being the corruption of America. If the
scandals of the past 4-5 years had not been uncovered, the
financial community would have continued to spin faster and
faster out of control and the consequences of the inevitable crash
would have been far worse than what we witnessed, 2000-2002
… hard as it is to imagine this.
It’s not the kind of America we want to live in, especially if we
seek to offer ourselves up to the world as the model of capitalism
and corporate behavior. As the years go by this becomes more
and more important for one gigantic reason. We need foreign
investors, both large and small, to have confidence in our way of
doing business, or we’re in deep trouble.
–The NFL will be raking in $11.5 billion for its television
packages, including $8 billion for Sunday afternoons. Fox is
paying $712 million per year for the NFC and CBS is forking
over $622 million for the AFC. As an old AFC guy, I take
offense at this shoddy treatment. But while ABC and ESPN
have yet to finalize their own deals, it was great to hear that late-
season Saturday night games are in the future. Finally, a night
I’m allowed to stay up late.
–Larry Kudlow and Jim Cramer are more out of control than
ever, particularly Kudlow on Iraq, but I do agree with them on
the issue of share buybacks. They are a crock, though this week
Cisco and Intel announced they would be expanding their own
existing programs. The main problem some of us have with
these is there are no hard and fast rules. The company can get
some good PR and then never follow up. Either distribute the
cash or build through acquisition.
–Al Gore is starting up an investment firm that will specialize in
companies taking a responsible stance on the environment. Earth
tones should work in these offices.
–Farm income is up a whopping 13% over 2003’s record level.
This we like to see and it’s due to high crop and livestock prices,
coupled with record exports thanks to free trade.
–Canadian telecom outfit Nortel still hasn’t filed revisions of its
financial statements for the past 3 ½ years and now the company
could be de-listed. Plus, Nortel is also asking the court for
permission to postpone its 2004 annual meeting a few months.
–The World Trade Organization, acting on behalf of Antigua
and Barbuda, has ruled against U.S. laws prohibiting cross-
border gambling as a violation of trade laws. Gambling is a huge
source of employment for many nations in the Caribbean and
Central America but the U.S. has always been worried about
money laundering and the impact on the more vulnerable
sections of our society.
–Martha Stewart Living Omnimedia has hired Susan Lyne to be
its new CEO. Lyne, while at ABC, had been responsible for
putting smash hits “Lost” and “Desperate Housewives” on the
air, the latter a huge favorite of your editor. Lyne will
undoubtedly have an impact on MSO’s own television plans,
perhaps including one of those Roger Corman-style women in
prison flicks that young children are prohibited from viewing.
–My portfolio: I purchased a little more of my Internet
telephony play following a favorable FCC ruling on the industry.
Otherwise, my best investment recently has been the Singapore
Fund. In other words, my portfolio of about 30% stocks is not
participating to any extent in this rally. But the cash is now
earning interest! Brought it down from its hiding place in the
Catskills and stuck it in a real bank.
Foreign Affairs
Yassir Arafat (1929-2004)
I don’t care what side of the Israeli-Palestinian conflict you come
down on; you had to be scared half to death watching the scene
Friday from Ramallah. As a good friend noted when the
choppers first alighted and were enveloped by the crowds, for a
while it looked like an Archduke Ferdinand moment in the
making as Abbas stood at the door.
I certainly have expressed my thoughts on Arafat over the years.
Today, I just hope for the best and maybe, just maybe, the fact
that there was no widespread violence in the Palestinian
territories is a sign the people are ready to move on with a
leadership that has its best interests at heart, a moderate
administration willing to deal in good faith with Israel.
But I also can’t help but note some of the following comments
on the passing of Arafat.
Max Boot / Los Angeles Times
“It is considered bad form to speak ill of the dead, but I will
make an exception for Yassir Arafat, the pathetic embodiment of
all that went wrong in the Third World after the demise of the
European empires.
“All too many rulers of ‘liberated’ nations in the second half of
the 20th century – the likes of Mao Tse-tung (China), Sukarno
(Indonesia), Robert Mugabe (Zimbabwe), Moammar Kadafi
(Libya) and Gamel Abdel Nasser (Egypt) – proved to be
devotees of the Louis XIV school of political philosophy: L’etat,
c’est moi. Their rapaciousness knew no bounds. Neither did
their cruelty.
“Yet even as these rulers were torturing their own people, they
were lionized in the salons of the West. European and American
intellectuals, motivated by a combination of guilt for their
countries’ past conduct, vicarious zest for revolutionary
adventure and condescension toward Africans and Asians who
were thought incapable of conforming to Western standards,
were willing to excuse any crime committed in the name of
‘national liberation’ …
“His refusal to compromise, his unwillingness to give up the way
of the gun consigned his people to economic and moral suicide.
The current intifada, launched in September 2000 after Arafat
turned down a generous peace offer from the Israelis at Camp
David, has claimed three times as many Palestinian as Israeli
victims. It has also led to a precipitous plunge in living standards
in the West Bank and Gaza Strip – not something Arafat’s wife
and daughter would notice from their cozy Paris residence….
“George W. Bush, alone among Western leaders, had the
courage to stop dealing with the Palestinian thug-in-chief. On
June 24, 2002, the president gave an important speech in which
he called on the Palestinian people ‘to elect new leaders…not
compromised by terror’ and to ‘build a practicing democracy,
based on tolerance and liberty.’ Now that Arafat has gone to the
great compound in the sky, there will be pressure on Bush to
resume the pointless ‘peace process,’ but it will be premature to
do so as long as the terrorist kleptocracy spawned by Arafat
continues to exist.”
Washington Post Editorial
“Mr. Arafat did more than anyone else to forge (the Palestinians)
national identity…and to place their cause at the center of global
affairs. But he also poisoned his movement with terrorism and
sabotaged it through his refusal to embrace the settlement with
Israel that was possible years ago. Unlike many of his followers,
Mr. Arafat was autocratic, corrupt, deceiving and, ultimately,
unwilling to unambiguously accept Israel’s permanence. His
death has prompted an understandable outpouring of grief from
Palestinians, including those who fiercely opposed him. But it
also removes the single largest obstacle to the achievement of
Palestinian sovereignty.”
Others…
“The death of Yassir Arafat is a significant moment in
Palestinian history. We express our condolences to the
Palestinian people. For the Palestinian people, we hope that the
future will bring peace and fulfillment of their aspirations for an
independent, democratic Palestine that is at peace with its
neighbors.” –President George W. Bush
“The recent events could be a historic turning point for the
Middle East. Israel is a country that seeks peace and will
continue its efforts to reach a peace deal with the Palestinians
without delay.” – Israeli Prime Minister Ariel Sharon
“President Arafat was one of those few leaders who could be
instantly recognized by people in any walk of life all around the
world. For nearly four decades, he expressed and symbolized in
his person the national aspirations of the Palestinian people.”
–UN Secretary-General Kofi Annan
[Kofi can’t go fast enough. This is my prayer.]
“However others viewed him, the Palestinians saw him as the
father of their nation.” –Former President Bill Clinton
[A fair statement.]
“With him disappears the man of courage and conviction who,
for 40 years, has incarnated the Palestinians’ combat for
recognition of their national rights.” – French President Jacques
Chirac
[See Kofi.]
“While his absence will undoubtedly be felt strongly, I hope that
a new generation of leaders will emerge to take forward the
cause of peace and stability in the Middle East.” – Afghan
President Hamid Karzai
[Appropriate.]
“I think history will judge him very harshly for not having seized
the opportunity in the year 2000 to embrace the offer that was
very courageously made by the then-Israeli Prime Minister Ehud
Barak, which involved the Israelis agreeing to about 90% of what
the Palestinians had wanted.” – Australian Prime Minister John
Howard
[Howard always “gets it.”]
Finally, my good friend Ken P.
“To quote Shakespeare, ‘The evil men do lives after them. The
good is oft interred with their bones.’ In this case, only lonely
bones.”
Iraq
I hesitate to make extensive comments on the battle for Fallujah.
For now, suffice it to say I was deeply disappointed we didn’t
finish the job last April and expressed this view the day we
withdrew from the fight. It cost us dearly. Today, Fallujah may
not be the great victory we originally sought, seeing as many of
the terrorists left beforehand, though it is a necessary step in
completing the mission. Elsewhere, the events in Mosul are
more than a bit disturbing.
Writing in the Washington Post, George Will commented on
what he observed this week at Central Command in Tampa.
“General John Abizaid laconically dismissed the idea that U.S.
military energies are being depleted by ‘nation building’ duties:
‘We’re doing more fighting than fixing. The enemy gives us
ample opportunity to fight.’ But while almost 3,000 Americans
died on Sept. 11, there have been fewer than half that many
military deaths in the three years since the post-attack fighting
began, in Afghanistan. And one reason why terrorists have
killed no Americans in America since Sept. 11 is that, as one
officer puts it, ‘we’re so much in their knickers abroad.’
“Success in Iraq, people here believe, is contingent on three ifs:
if Iraqi military and security forces can stay intact during
contacts with the insurgents; if insurgents are killed in sufficient
numbers to convince the Sunni political class that it must invest
its hope in politics; and if neighboring states, especially Syria,
will cooperate in slowing the flow of money and other aid to the
insurgency. If so, then the United States can – this is the
preferred verb – ‘stand up’ an Iraqi state and recede from a
dominant role.”
Iran: Tehran is holding up the European Union, specifically
Britain, Germany and France, for more cash and prizes before it
agrees to suspend its uranium enrichment program. The
International Atomic Energy Association meets November 25
and Iran will undoubtedly do just enough to keep the IAEA from
referring the issue to the UN Security Council. One thing is for
sure, Iran will not permanently suspend its operations.
But what I found incredible is the unbelievably naïve view
emerging in Europe that Iran is still 5-6 years from having the
bomb. Over the summer U.S. intelligence sources (not that we
can bank on them, as we’ve learned), said Iran could be within a
year of testing a device. Given all I’ve read over the years, I
agree with the latter assessment.
Ivory Coast: Back in 2002, as the French were complaining
about the United States and possible unilateral military action in
Iraq (which threatened France’s oil vouchers from Saddam), the
French acted unilaterally themselves in sending troops into its
former colony, Ivory Coast, to protect its citizens and business
interests as civil war broke out. The move was without UN
approval, though the UN later joined in the peacekeeping effort.
So this week the government of Ivory Coast “accidentally” (wink
wink) bombed the French, killing 8 (plus an American civilian)
and all hell broke loose. French President Jacques Chirac
immediately called for retaliation and the French took out the
Ivory Coast’s ragtag air force. The citizens then erupted in a
spasm of anti-French violence and at week’s end the situation
remained fluid as the French sent in hundreds more troops.
Netherlands: The government launched a series of anti-terror
raids in the wake of the killing of Theo van Gogh, including one
on a Kurdistan Workers Party guerrilla camp. 29 were arrested.
It’s taken a while, but Europe is beginning to get the message.
Belgium: Of course with van Gogh’s murder, an anti-immigrant
backlash was inevitable but in Belgium the far-right Vlaams Bok
party was ruled to be racist, with a court forcing it to reform
under a different name. If you’ve never heard of this group, it
won 18% of the vote nationally in 2003 elections, running on a
platform of independence for the Flemish region while
advocating forced repatriation of Muslims and all other
immigrants.
Europe: Along the lines of the above, Wim Kok, the former
Dutch prime minister, “unveiled a scathing report (in Brussels)
last week warning that Europe was steering its economic future
dangerously off course.” [Graham Bowley / International Herald
Tribune]
The point of the document is that while Europe’s economies are
struggling today, the future is bleaker thanks to deteriorating
demographics. This isn’t a new topic, but it bears repeating
today because the only way Europe is going to be able to begin
to pay for its social welfare programs, in an age of declining
populations, is to allow massive immigration. But incidents like
what we saw in the Netherlands play into the hands of those who
can drum up support for anti-immigrant initiatives. It’s why
Turkey is such a big issue. Europe desperately needs its labor
force, but will it accept it?
Spain: President Bush blew off Prime Minister Zapatero’s
congratulatory phone call, refusing to return it. Of particular
insult to Zapatero was the fact Bush met with his predecessor,
Jose Maria Aznar, instead. Too bad.
Russia: The foreign minister lectured the U.S. in not causing
civilian casualties in Fallujah. I didn’t hear if anyone present
said “Ah sir? What about Chechnya?”
Georgia: In deciding to contribute more troops to the effort in
Iraq, President Mikhail Saakashvili told his nation “In today’s
world, it is impossible to decide one’s own security without
friends and allies.” Vladimir Putin does not like to hear this,
Georgia being in his own future plans.
Thailand: Watch the situation here. Prime Minister Thaksin is
making one mistake after another in confronting the growing
Islamic insurgency in the south. The story this week concerns
the disappearance of 20-40 men that were involved in the
October 25 debacle, the incident where 78 suffocated as they
were being transported to a military barracks.
Random Musings
–As I go to post, both David Brooks of the New York Times and
a front page piece in the Washington Post detail the chaos inside
the CIA. It’s outright insubordination, though the Post take is
that new Director Porter Goss and the people he has brought in
are the issue. On the other hand, if you believe Brooks, the
CIA did all it could to get John Kerry elected. Just another
intelligence failure, I guess you could say.
–Columnist William Safire wrote in his column this week that
the new National Intelligence Director could be “the shockingly
awesome retired general Tommy Franks.” Spare me. The
general failed the president.
–I can’t say I’d want to have a few beers with John Ashcroft, but
I never had a big problem with him or the Patriot Act. Of course
the latter needs to be tweaked a bit but all in all how can you
argue with Ashcroft’s success? We haven’t been hit…that’s the
bottom line. Having said this; when one’s rights have been
improperly abused, there must be immediate recompense. As for
nominee Alberto Gonzales, I’m disturbed by his role in Abu
Ghraib.
–More on moral values and the election, this from Washington
Post columnist Charles Krauthammer. Regarding the exit polls:
“It is a thin reed upon which to base a General Theory of the ’04
Election. In fact, it is no reed at all. The way the question was
set up, moral values were sure to be ranked disproportionately
high. Why? Because it was a multiple-choice question, and
moral values cover a group of issues, while all the other choices
were individual issues. Chop up the alternatives finely enough,
and moral values are sure to get a bare plurality over the others.
“Look at the choices:
Education, 4 percent.
Taxes, 5 percent.
Heath Care, 8 percent.
Iraq, 15 percent.
Terrorism, 19 percent.
Economy and Jobs, 20 percent.
Moral Values, 22 percent.
“ ‘Moral Values’ encompass abortion, gay marriage,
Hollywood’s influence, the general coarsening of the culture and,
for some, the morality of preemptive war. The way to logically
pit this class of issues against the others would be to pit it against
other classes: ‘war issues’ or ‘foreign policy issues’ (Iraq plus
terrorism) and ‘economic issues’ (jobs, taxes, health care, etc.).
“If you pit group against group, the moral values class comes in
dead last: war issues at 34 percent, economic issues variously
described at 33 percent and moral values at 22 percent – i.e., they
are at least a third less salient than the others.”
As long-time reader Jeff S. put it to me, “There is a moral
element to all of our political opinions.”
I apologize for perhaps not spelling this out more clearly last
time. But speaking of morality, it’s time for………
–The Jim McGreevey Story…starring…New Jersey Governor
James McGreevey!
The Star-Ledger is a terrific newspaper here in New Jersey and
last Sunday they released the findings of an extensive
investigation into the life of McGreevey since he burst on the
political scene. The Ledger interviewed over 50 people for its
story, most of whom are close friends and advisors of the
governor. Inside the voluminous report we learned some of the
following.
“Despite his clean-living image – and confounding those who
believed he was a closeted homosexual – McGreevey visited
traditional, female-staffed go-go bars so frequently before he
became governor that his adviser admonished him to stop,
warning that he risked political immolation. At least twice
leading up to the 2001 election, McGreevey also spent time at a
gay nightclub in Atlantic City…
“Three long-standing political allies said McGreevey sometimes
broke away from campaigning for hours at a time to visit go-go
bars in Sayreville, South Amboy, Old Bridge and Rahway. The
trips were common enough to merit their own euphemism around
the mayoral campaign: ‘McGreevey is out knocking on doors in
Sayreville.’ …
“During (the) 2001 race against former Jersey City Mayor Bret
Schundler, McGreevey made frequent stops at a Paterson go-go
bar, City Lights, owned by the son of a political ally, Alan
Levine….
“During the 2001 campaign, he also spent time at Studio Six,
known as Atlantic City’s hottest gay nightspot. On a typical
Saturday night, hundreds of people, mostly men, dance until
dawn beneath flashing, multicolored lights….
“McGreevey benefited in his rise to power from a small circle of
loyalists who came to be known in political circles as his
personal cleanup squad. The political guardians quashed rumors,
reassured supporters fearful of lurid revelations and, in their most
brazen act, shipped a female prostitute out of state just before the
1997 gubernatorial election after she claimed McGreevey
regularly paid her for sex….
This particular woman’s name was Myra Rosa.
“On Oct. 21, 1997, after a gubernatorial debate, a Star-Ledger
reporter confronted McGreevey about Rosa’s allegations. He
burst into tears and said he knew about the claims, but he
vehemently denied them….
“The Star-Ledger tracked down Rosa on Oct. 29, 1997, at Lucky
7 Bail Bonds, where she had purportedly found a job. The
company, she said, was sending her to Florida for a seminar.
Crying, she asked to be left alone….
For various legitimate reasons, the Star-Ledger did not print this
story at the time.
“Four years later, on April 26, 2001, Rosa died of a drug
overdose in Philadelphia….
“Rosa’s mother, Aurora Gomez, said in a recent interview that
her daughter told her seven years ago, as she prepared to leave
for Florida, that it was the ‘McGreevey people’ who provided her
bail money and who were responsible for the Florida trip.”
As for Golan Cipel, the man directly behind the governor’s
resignation:
“A former administration official recalled twice arriving at the
governor’s mansion for a 7:30 a.m. meeting and finding Cipel
there, dressed in sweat pants.
“ ‘It was very obvious that he spent the night,’ the official said.
‘You don’t go to the governor’s mansion with a sweat suit on.
His hair was not combed. His face did not look like he washed
it.’”
What I’m giving you is just a fraction of the full story. But wait,
there’s more! Here’s a different look into McGreevey’s
character, courtesy of a piece by Jill P. Capuzzo in the Sunday
New York Times. It seems the governor and his wife, Dina
Matos McGreevey, recently attended a charity fund-raising
event, post-resignation announcement.
“Looking decidedly less comfortable was her husband, Governor
McGreevey, who stood chatting with hospital officials as he
waited to deliver a brief speech. The governor and his wife
joined each other only once, beside the podium, when Mr.
McGreevey gave voice to the subject no doubt on everyone’s
mind.
“ ‘I’d especially like to thank the people of Columbus Hospital
for your generosity and support for me and Dina during this
difficult journey,’ he told the gathering….
“All eyes turned to Mrs. Matos McGreevey, whose graceful
smile quickly melted into a stoic grimace as her husband
elaborated, inexplicably, on the unexpected turn their lives had
taken. A quiet murmur passed through the crowd as the well-
heeled guests questioned the governor’s tact in addressing the
subject.”
And now we advance to this past week when the governor gave
his farewell address. Noticeably absent were his wife and two
parents, all of whom had been by his side in August when he first
announced his resignation. We were told the parents were ill.
No doubt, in one form or another, this was the truth. Following
are some of the governor’s words.
“I have to begin today with humility by simply saying I am sorry
– so, so sorry that mistakes in my judgment made this day
necessary for all of us. I am sorry that my actions have hurt
those I love in my personal and political lives. I am sorry to
those who vested their careers with me that this abrupt transition
has caused them upheaval. And I am sorry that I have
disappointed the citizens of the state of New Jersey who gave me
this enormous trust. To be clear, I am not apologizing for being
a gay American, but rather for having let personal feelings
impact my decision-making and for not having had the courage
to be open about whom I was….
“You see, today I stand before you as a changed man…I stand
before you as a man who has experienced the freedom that
comes with the truth – claiming that promise, ‘The truth will set
you free.’ …And so, as I have been preparing for this day, I have
been doing some mending in my soul. I so want the words of my
mouth and the actions of my hands and the thoughts of my heart
to be one and the same thing. That brings proper alignment,
something true and whole.”
This guy was our freakin’ governor, for crying out loud! The
Star-Ledger opined in an editorial the day following his address.
“No one realistically expected him to list the scandals that
plagued his time in office, the number of fund-raisers who have
pleaded guilty to federal crimes, the aides still under
investigation or even the questionable appointments of people
with few credentials for the jobs….
“McGreevey seemed to lay his problems at the feet of his
repressed homosexuality. He said he regretted not having had
the courage to be open about who he was. He also talked about
the lack of civility in politics and tried to attach his situation to
the residue of hard feelings left behind from the recent
presidential election. He said public service has been reduced to
a blood sport. Incredibly, he concluded, ‘You see, we are all
complicit.’
“McGreevey’s place in the roll call of sordid New Jersey politics,
however, wasn’t secured because he is gay. Or because
Americans are politically embittered and unable to reach out to
each other.
“McGreevey, New Jersey’s 51st governor, yesterday talked about
embarking on a journey of self-discovery. It is unfortunate for
him, his family and the state that he didn’t do it sooner.”
I have long catalogued the misdeeds during McGreevey’s
time in office, going back to when he spent $100,000 in state
funds for a trip to Ireland and only when confronted did he have
the state Democratic Party pay some of it back. [“Week in
Review” 11/30/02] He deserves jail time but it would appear
he will escape any prosecution, while looming down the road is
the gubernatorial candidacy of one Senator Jon Corzine.
–Let’s change the subject for a minute, shall we? I found the
following listing of the ten most expensive shopping streets by
country interesting. The figures, compiled by Cushman &
Wakefield Healey & Baker, are reflected in ‘annual rent per sq.
meter.’
1. United States…New York…5th Avenue…$10,226
2. France…Paris…Champs Elysees…$7,648
3. Hong Kong…Hong Kong…Causeway Bay…$6,126
4. Britain…London…Oxford Street…$5,564
5. Ireland…Dublin…Grafton Street…$4,103
6. Germany…Munich…Kaufingerstrasse…$3,577
7. Russia…Moscow…Tverskaya…$3,500 [More black
Mercedes on this one than anywhere else in the world.]
8. Australia…Sydney…Pitt Street Mall…$3,449
9. Japan…Tokyo…Ginza…$3,348
10. South Korea…Seoul…Myeongdong…$3,241
Now let’s go shopping!
Actually, from an investment standpoint you may want to look at
Riga, Latvia…Krasta Street…only $420 and with great potential,
I imagine. [Source: Moscow Times]
–Scary stuff as Ireland’s first human case of “mad cow” was
discovered, a man in his 20s. And now scientists in Britain think
there is a new strain of vCJD that may take longer to develop in
the body, meaning a second epidemic could be on the way in
Britain. 147 have died of mad cow there.
–Congratulations to golfer Charlie Sifford for gaining admission
to the World Golf Hall of Fame. Sifford was the first African-
American to be granted his PGA Tour card back in 1960, at the
age of 37, and then at 45 he won the Greater Hartford Open, thus
becoming the first black to win a Tour-sanctioned event.
–Oh, but how Sifford would get a kick out of the Indiana Pacer’s
Ron Artest. In one of the incredible stories of the year, Artest
was suspended for two games with management saying the
integrity of the team had come into question. So for 24 hours
sports fans were left to question just what the heck was going on.
Then we learned the truth.
Now understand Artest has been one of the game’s great head
cases during his career, but he’s an all-star and pulling down $6
million a year. Are you ready?
Ron Artest offered that he needed to take a month off, with pay,
to promote his new rap album. Seriously, he said “I wore myself
down physically, I wore myself mentally (in making and
promoting the album),” but now he wanted to kick back…and do
more promotion work.
Perhaps I shouldn’t be so surprised we’ve plunged to these
depths. “Thanks for the contract, but I’ll decide when I go to
work.” At least when Miami’s Ricky Williams walked away, he
only tried to keep his $8 million signing bonus…wrote the editor,
facetiously. I’d love to hear Bill Cosby, or Sifford, muse on this
one.
–“The Phantom of the Opera” will soon pass the 7,000
performance level. Only “Cats” has more, 7,485. Thank God no
one ever dragged me to the latter.
–“60 Minutes” had a great segment on aviation pioneer Burt
Rutan of SpaceShipOne fame. What an inspiration for our
youth, as he said Werner von Braun had been for him.
–Aleta St. James, 57, gave birth to twins in New York. But
Mary Frances Harris of Sylvester (speaking of cats), Georgia,
age 59, is pregnant with twins herself. Harris has six great-
grandchildren. Goodness gracious.
–The fact 20 of 225 ABC stations refused to air “Saving Private
Ryan” for fear of running afoul of FCC indecency rules is totally
absurd, as well as insulting to the millions who have served in
our military.
–National Geographic had a terrific program on Arlington
Cemetery. Many of those killed in Iraq are now buried here
…section 60.
—
God bless the men and women of our armed forces.
God bless America.
—
Gold closed at $438
Oil, $47.32
Returns for the week 11/8-11/12
Dow Jones +1.5% [10539]
S&P 500 +1.5% [1184]
S&P MidCap +2.3%
Russell 2000 +2.9%
Nasdaq +2.3% [2085]
Returns for the period 1/1/04-11/12/04
Dow Jones +0.8%
S&P 500 +6.5%
S&P MidCap +10.1%
Russell 2000 +11.7%
Nasdaq +4.1%
Bulls 58.1
Bears 22.6 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
