[Posted 7:00 AM ET]
Wall Street
For a holiday-shortened week where the major equity averages
declined slightly, there sure was a lot of action intra-day. Early
in the week Dallas Federal Reserve President Richard Fisher told
CNBC that the Fed would be finished tightening after one more
rate increase and the next thing you know the yield on the 10-
year Treasury was down to 3.90% from the prior week’s close of
4.07%. Friday morning, following a tepid employment report for
May, the yield hit 3.80%, but by the close was all the way back
to 3.98%; incredible volatility as these things go.
So is the Fed done? Did Fisher speak out of school? Certainly
the preponderance of data on manufacturing for months now has
been forecasting a slowdown in overall economic activity,
whether it’s a survey from Philadelphia, New York, Chicago or a
national barometer such as the ISM. All have been dropping
simultaneously (though remaining above the cut line designating
a still growing economy). On the positive side, retail sales at the
chain stores in May weren’t all bad, up 3% on average, but at the
same time an index of CEO sentiment, while fickle, nonetheless
showed a decline to its lowest level in 15 months and if you
believe in this measurement you can’t be too optimistic about the
future for capital spending.
And then you have the venerable economist Ed Hyman from ISI
Group who is calling for a big slowdown in the second half to
2% for GDP and, just as importantly, flat earnings comparisons
by the fourth quarter, well below current expectations. Given my
own forecast of a global recession by 2006 you’ll forgive me if I
take heart in this miserable outlook, assuming I can still pay my
own mortgage and utility bills, mind you. But to answer the
question ‘Is the Fed done?’ I certainly hope so. Deflation has
been my concern by year end, not inflation.
Of course while the equity markets declined some this week, the
losses would have been much larger had it not been for the
money flows crossing the pond from Europe. For the record the
French defeated the proposed European Union constitution 55-45
(turnout 70%) and the Dutch voted it down 62-38 (62% turnout).
The E.U. meets on June 16 to decide the next step but in the
meantime let me attempt to make some sense of it all.
French President Jacques Chirac was humiliated and in the post-
mortem he replaced Prime Minister Raffarin with a man who has
never stood for election, bureaucrat and anti-American
Dominique de Villepin. But the French weren’t just expressing
their disgust with Chirac, they were voting down any further
attempts to reform the economy and water down their benefits.
It was a defeat for the free market.
The Dutch, on the other hand, have different issues. For starters
they are tired of paying more per capita into the E.U. than any
other nation and they feel like they have been pushed around and
taken advantage of in exchange for limited benefit. People in the
Netherlands are also afraid of losing their national identity to a
band of faceless European elitists. And they are as scared of
Turkish immigration as anyone on the continent, thanks in no
small part to some high-profile criminal cases involving the
Muslim community.
So for now the constitution is dead, but the real debate is just
beginning. The E.U. was doing relatively well without a
defining political document so is one needed? Economic
integration is most important, not a unified foreign policy
decided on by bureaucrats whose self-interest more often than
not has nothing to do with the worker in Italy, Britain or Poland.
George Will put it best. The constitution “would accelerate the
leeching away of each nation’s sovereignty.”
The infighting is already fierce. Britain’s Tony Blair is using the
two ‘no’ votes to call for a stop to the ratification process
altogether, while Germany’s Gerhard Schroeder wants it to
continue. Meanwhile, some Italian government officials are
calling for the nation to leave the euro (first mentioned here 5/22)
and you’ll see opinion polls in the other 11 nations using the
currency opt for the same, I have no doubt.
It’s chaos, sports fans, and, again, that benefits U.S. markets to a
certain extent as we remain the safest alternative.
Two other points. The big four political leaders in Europe; Blair,
Schroeder, Chirac and Berlusconi will all be gone in the next 1 ½
years, either through the ballot box or resignation. This has
major ramifications for the war on terror, first and foremost,
though it would be foolish to assume, at this point, just where the
replacements will come down on the vital issues of the day and
one can not assume, for example, that whoever replaces Chirac
and Schroeder will naturally be a friend of the United States.
If I’m right on my global economic forecast and even tougher
times for Europe lie ahead, regardless of who is in power
nationalism will trump European unity and that’s a call for
trouble in the streets.
Second, as for the plight of Turkey in the face of the ‘no’ votes
on the constitution, further expansion of the Union is for now a
dead issue as well. In making some predictions for ‘05, I wrote
in this space on 12/31/04, “(I) believe 2005 will see the tide turn
quickly against Turkey in its bid for European Union
membership.” I stand by this.
—
Finally, how about a little more on real estate? I can’t help but
reiterate that with interest rates remaining as low as they are
there’s no way we have a crash in prices (we may actually see a
final feeding frenzy), but my predicted stagnation can be almost
as harmful given the huge run-up of the past five years in
particular.
Housing, broadly speaking, represents 25% of economic activity
when you combine the construction industry, brokerage,
banking, insurance and other related areas, and many economists
have concluded the wealth effect from real estate is greater than
that of the stock market, which only makes sense since the home
is most everyone’s #1 asset.
But to close, economist Robert Shiller does not agree with my
thesis that real estate values won’t fall significantly until we see
either rates rise and / or there’s a recession. Shiller says it’s
more about psychology and in another op-ed he notes all the
media talk about the sector.
“Special factors may help explain the most extreme price
declines, but talk and high prices are the main things that end
bubbles. The intensity of talk about the high prices right now is
enormous, suggesting an emerging change of public thinking that
may signal the end of the bubble.”
Street Bytes
–The major averages fell only slightly but it was enough to break
Nasdaq’s winning streak at four as it lost 0.2% to 2071. The
Dow Jones slipped 0.8% to 10460 and the S&P 500 declined just
0.2% to 1196.
–U.S. Treasury Yields
6-mo. 3.11% 2-yr. 3.57% 10-yr. 3.98% 30-yr. 4.28%
4.07% to 3.80% to 3.98% for the 10-year. Some players had to
have been crushed with the yields whipping around in such
volatile fashion.
–Two weeks ago oil closed at $48.65. Today it sits at $55.03
despite more tame news on the inventory front. Traders are
concerned there won’t be enough oil and gas this coming winter.
Geezuz, I wish these guys would at least relax and enjoy summer
first, know what I’m saying? But in one respect the concerns
could be well-founded as there are increasing signs production in
Russia is slowing…at the worst possible time. As I note in the
following remarks, it’s all about the Kremlin and the destruction
of Yukos.
–After an excruciating 12 days reading the verdict, a Moscow
court convicted former Yukos Chairman Mikhail Khodorkovsky
and his partner Platon Lebedev to nine years in prison (minus
time served) for fraud and tax evasion. The Kremlin is thus
ensuring that Khodorkovsky will be in jail through the 2008
election and possibly 2012 as well.
Marsha Lipman, columnist for the Washington Post, offered up
this comment:
“An individual cannot win against a bulldozer state if the public
puts up with its arrogant lawlessness.”
Gary Kasparov, writing in the Wall Street Journal, observed:
“The real crime here was murder, the cold-blooded assassination
of the Russian justice system, perpetrated by the prosecutors by
order of the godfather himself, Vladimir Putin. Mr. Putin wasn’t
the star of this picture, but he was the producer. So far the global
audience has given mixed reviews to this tragic farce. Public
outrage was paired with the indifference of world leaders, who,
as usual, refrained from making any critical comments.”
But, Putin’s economic adviser, Andrei Illarionov, once again
spoke out himself.
“The Yukos affair has not ended. This is just the beginning,
even though this has been going on for nearly two years,” he said
at a news conference. “Over this time, the case has dealt huge
damage to our country…and the scale of the damage is not yet
known.”
As reported by Catherine Belton of The Moscow Times,
“Illarionov said the state’s move to take control of the oil sector
via its onslaught against Yukos was opening the way for a
Venezuelization of the Russian economy, a path, he suggested,
that could put an end to further economic growth.
“The Venezuelan government in 1957 decided to renationalize
the oil sector in what it believed to be a patriotic drive to rid what
was a fast growing sector of U.S. imperialists and local oligarchs.
Since that decision, he said, Venezuela’s GDP per capita has
fallen consistently every year, dropping a total 32 percent per
capita since 1957. Other nations that later formed the OPEC oil
cartel followed suit and also experienced a significant slowdown
in economic growth as a result.”
“ ‘This would appear to be so attractive that we are trying to do it
on Russian soil,” Illarionov said. The state’s attack on Yukos,
which was once the fastest-growing oil company and the most
attractive for investors because of its efforts to boost
transparency, had reversed a trend for portfolio investment in the
most effective and fastest growing companies into ineffective
nontransparent ones seen as close to the state. ‘This is the
opposite of natural selection,’ he said.”
No word on what Putin will do with his maverick advisor.
–In yet another example of how the Kremlin is taking control of
its oil interests, a joint BP-TNK venture is now in doubt as
Gazprom is moving in to try and take over a key gas field for
development from the other two. Meanwhile, an arm of
Gazprom, Gazprom-Media, is buying a controlling stake in
leading daily Izvestia which has largely maintained its
independence. Now it’s expected Izvestia will become just
another mouthpiece for President Putin.
–And while it’s at it, Russia seems bent on destroying the
environment. The 4,188 km pipeline to the Pacific, which will
cost a record $11-$17 billion, is a target of environmentalists
who are already labeling it an ecological disaster. For starters
the pipeline would be routed within one mile of Lake Baikal (a
world treasure) and it is to end up at the worst possible port
location on the coast.
–Meanwhile, over in China, there is a concerted effort to capture
as many natural resources as possible to prepare for the next few
decades and the potential for diminishing supply in some key
commodities. So this week China announced it was investing
$550 million to develop copper mines with Chile’s Codelco, the
world’s largest producer, in a 50/50 joint venture. This continues
a trend of China spanning the globe to not only secure basic
materials but also to influence politics. For its part, Washington
has its head in the sand and seems totally unaware of Chinese
maneuvers. I mean we can’t even secure the oil-sands in
Canada, for crying out loud, and the pipelines I see proposed for
this soon to be critical region are heading west, not south. [I’m
exaggerating slightly, but the lion’s share of this oil will end up
in Asia, not the United States as it now stands.]
–Citigroup was fined $208 million by the SEC on fraud charges
related to the establishment of its own mutual fund transfer
agent, a move misrepresented to shareholders who were led to
believe it was a cost effective move when compared to the
existing outside vendor. It wasn’t. In other words, just another
conflict of interest as the Smith Barney fund arm raked in more
fees by taking the function in house.
So it should then be no surprise that in this new era there is talk
Citigroup will swap the $460 billion it has in assets under
management for Legg Mason’s sales force in an attempt to
eliminate any further conflicts. Folks, take it from me, a former
national sales manager for a major fund operation. Most of the
changes being forced on the industry are for the better and
brokers and financial advisors should be happy they will no
longer have branch managers breathing down their neck because
they aren’t meeting their quota in proprietary fund sales. [Most
of which underperform, to boot.]
–William Donaldson resigned as chairman of the SEC after 2 ½
years of mostly effective stewardship. Yes, many in the business
lobby believe the SEC went too far in its investigations and in
enforcing regulations such as Sarbanes-Oxley, but after the
mess we went through in the WorldCom-Enron era it was a
necessary step. Now, however, Republican Congressman
Christopher Cox comes in and he’ll undoubtedly be pro-business.
Certainly Sarbanes-Oxley needs to be tweaked with regards to
some of the onerous provisions that are hurting small business, in
particular, but a rollback to the ‘good old days’ would be
disastrous.
[Years ago I was a big fan of Cox but have trouble forgiving him
for his failure to follow through on an investigation into the sale
of missile secrets to China when he was chairing a committee
looking into the matter. Some offered at the time it was because
dirty laundry was about to be aired concerning Cox himself.]
–A large-scale industrial espionage ring was broken in Israel
where the spies introduced Trojan horse e-mail attachments, thus
giving highly sophisticated computers access to competitors’
secrets in various industries. Authorities estimate victims lost
$10s of millions in future business and the case has broad
implications for foreign investment in the country. This story
has legs.
–The Supreme Court overturned Arthur Andersen’s 2002
conviction for obstructing the investigation into Enron on a
technicality in the jury trial. Many are rushing to say ‘Ah ha!
Arthur Andersen was innocent.’ No, but the judge in the case
improperly handed down instructions to the jury and that is what
the Court ruled on. What isn’t in dispute is that well before
Enron, AA had been involved in a slew of other accounting fraud
cases, including Waste Management, WorldCom, Qwest and
Global Crossing.
–AIG finally released its annual report and restated net income
over the past five years to the tune of $3.9 billion. An internal
report pointed the finger directly at CEO Hank Greenberg and
CFO Howard Smith for overriding internal controls in
concocting fraudulent deals to gussie up the books. We eagerly
await criminal indictments.
–The New York Times reported that the U.S. is testing a missile
defense system for commercial aircraft to deal with the shoulder-
fired missile threat. Some say attention to this is misguided and
that the bigger threat is with the more standard suitcase bomb.
But I say, ‘why the heck is there even debate on this?’ We have
to do everything…everything…in this war on terror. And, yes, it
will cost money, drive up deficits and hurt financial markets.
Just remember my mantra; no one ever said investors are entitled
to 10% returns on stocks each year.
The reason why this item is a ‘street byte’ is because the
potential contract of $10 billion or so in the first decade would
go to the likes of Northrop Grumman and BAE Systems.
–The National Highway Transportation Safety Administration is
investigating the gas-electric hybrid Toyota Prius after a slew of
reports the engine stalls without warning at 35 and 65 mph,
which would be rather disconcerting if you had a tractor-trailer in
your rearview mirror at the time. [According to Toyota, no one
has been hurt in these incidents.]
–Reader Billy F. had the following observation on property
taxes.
“Many jurisdictions apply a single rate of tax to land and
building values, which encourages the buying and holding of
land for speculative gain. The resulting ‘shortage’ of land
increases development costs, fosters urban blight and sprawl, and
makes the provision of public services less efficient and more
expensive. Communities can encourage more efficient use of
land by taxing the location value of land while reducing taxes on
building values.”
–Sun Microsystems is acquiring Storage Technology in a move
intended to dominate the data storage space. The deal was met
with a big yawn, except to shareholders of Storage Tech who
received a solid premium on their investment.
–A Stanford School of Medicine study concludes “Only 50% of
high-risk patients who visit doctors receive statins.”
–Condom ads are now being shown on prime-time television.
Heck, everything else is.
–“Upfront” television ad sales for the fall season are up
substantially at ABC, CBS and Fox, but NBC is forced to accept
lower prices due to its lousy lineup.
–Former chairwoman of the Metropolitan Opera, Beverly Sills,
on disgraced money manager Alberto Vilar who was arrested on
charges of stealing $5 million from a client to help pay off his
charity obligations. “He was not, how shall I say, quiet, about
his giving. I think that was a turn-off for other members of the
board, the fact that he wanted more attention.” As of this
writing Vilar is still in prison, not being able to make bail. [New
York Times]
Foreign Affairs
Iraq: The U.S. is losing control. About 850 have now died since
April 28 and the formation of the new government, yet the Bush
administration, treating us all like idiots, attempts to convince us
this is just a passing phase. Overall, the Iraqis themselves now
estimate 12,000 civilians (not including Iraqi security forces)
have died since the launch of the insurgency (about 20 a day).
Echoing my thoughts of last week, Jim Hoagland of the
Washington Post wrote there is a “need for public accounting
from the president.”
I caught Bill O’Reilly and Dick Morris on Thursday night and
O’Reilly was urging Bush to take the initiative against those who
harp on things like Abu Ghraib and Guantanamo. It’s all a left-
wing plot, in his mind, which may be surprising to some of us
conservatives (and supporters of the war). No doubt O’Reilly is
correct; the president has been AWOL (my word) since the
insurgency took hold, but O’Reilly and his ilk continue to miss
the broader point. We have to be perfect and we haven’t been.
I didn’t hear Mr. Bill talk about another huge mistake the U.S.
made just this week. In a raid we arrested a prominent Sunni
leader, Abdel Hamid, who has been urging dialogue between his
people and the Shia. Hamid had a bag put over his head as he
was led away, humiliated, and it was hours before the military
realized what an awful move it had made. Immediately, Iraq’s
leaders, representing all parties, condemned the arrest. Said a
senior U.S. official of the action, “(it) wasn’t well planned.” And
we wonder why we aren’t winning over the hearts and minds.
Yes, it’s also no wonder that the White House is losing support at
home, the critical variable as I’ve been pointing out for some
time now. [Dick Morris concurred in his appearance with
O’Reilly.] Dwindling support translates into disaster for U.S.
foreign policy.
Afghanistan: The level of violence here has picked up
considerably and a key supporter of President Karzai was
assassinated this week; a man who had recently been highly
critical of the Taliban and specifically Mullah Omar (remember
him?). So then at this fellow’s funeral, a suicide bomber killed at
least 20, including Kabul’s police commander. [On Saturday
two U.S. soldiers were killed in an attack.]
And just a further note on Afghanistan’s opium production (in
acres)
2002 – 75,984
2004 – 510,786
[Source: U.S. News / Department of State]
Lebanon: Back on 5/7/05 following my trip to Beirut, I wrote of
the pending election “this is an incredibly complicated place and
in the end I’m afraid the status quo will prevail, which is not in
the nation’s best interest.” And now after round one of the vote
last Sunday, to this observer that’s what we have. 19 of the 128
seats in parliament were up for grabs in the Beirut region and
Rafik Hariri’s 35-year-old son and his supporters captured them
all. But understand 9 of the 19 were uncontested and turnout was
a pitiful 28%. [It was 35% in 2000 when Syria controlled
matters.]
Following Hariri’s assassination last February, the democracy
movement spread like wildfire, but as I have been writing this
country is dominated by tribal factions who are all out to protect
their turf, first and foremost. The election may be free, but it is
not fair, and you have the same jockeying for power that you had
before.
The young people in particular feel let down and alienated and
it’s still possible it will all far apart. One thing that hurts is the
youth of Saad Hariri. This man is not ready for prime time yet
he’s being thrust into the fire. If you read his interview in the
Washington Post and Newsweek you couldn’t help but reach the
same conclusion. He is all over the map in his opinions,
especially on the paramount issue of disarming Hizbollah.
So the Lebanese will continue the process the next three
weekends and then we’ll see if the new parliament gets down to
the business of tackling the economy (and the huge deficits),
Hizbollah and relations with Syria.
Regarding the latter, if you needed further reminding Lebanon is
still a dangerous place you got it in the form of a car bomb that
took out Lebanon’s leading journalist, Samir Qaseer, a man
virulently anti-Syria. No doubt Syrian agents took him out. The
army may have left but plenty of bad guys remain behind.
Prime Minister Najib Mikati (a decent man as far as I can tell)
said of the assassination, “Every time we take a step forward, we
see that there are those who want to mess up the security of the
country.”
First Hariri, the top businessman, then the top journalist. It
doesn’t give one a sense of confidence that Lebanon will become
the important victory the West so desperately needs these days.
[I’ll have more on Syria itself next week as the Baath Party
meets amidst increasing internal tension. The body of a leading
Kurdish cleric was just turned over to his family and it is
believed he was tortured to death by Syrian intelligence forces,
the Kurds representing just 10% of the population but
nonetheless viewed as a threat, similar to the experience of the
Turks in dealing with them.]
Russia: Last Sunday on “Meet the Press,” Tim Russert devoted
the hour to the threat posed by Russia’s loose nuclear material
and weapons. Nothing you haven’t read before in this space as I
have long argued there is no more important issue than this one.
Sam Nunn (of Nunn-Lugar) noted that the chances of an
accidental nuclear exchange with Russia are way up these days
because thousands of missiles on both sides remain on hair-
trigger alert. But when it comes to Russia these days, the
Bush administration is basically “Hear no evil, speak no evil.”
The aforementioned Gary Kasparov weighed in on a broader
topic in the same Journal op-ed previously cited.
“The last resort of Western leaders is to talk about Russia’s
cooperation on global security. This is also a sad joke. Russia
continues to: (1) supply nuclear technology to Iran; (2) support
undemocratic regimes in Uzbekistan, Belarus, and Turkmenistan;
(3) help China build up its military arsenal; (4) refuse to play a
positive role in the Middle East peace process. Now Russia is
preparing to sell weapons to Hugo Chavez in Venezuela,
weapons that would inevitably cross the border to Colombian
guerrillas. Mr. Bush should be honest enough to officially add
Mr. Putin to the White House list of ‘repugnant but necessary’
strongmen along with Pervez Musharraf of Pakistan and Egypt’s
Hosni Mubarak.
“America’s ‘serious concerns’ about Russia are meaningless.
It’s code for telling Mr. Putin ‘anything goes, we won’t
interfere.’”
Shifting gears, I can’t help but take note of a column by political
scientist Yevgenia Albats that I read in The Moscow Times.
Referring to the recent blackout in Moscow and neighboring
regions, Albats writes:
“(The) psychological effect of the electricity crunch in Moscow
seems to equal or even to surpass that of the Beslan tragedy,
when around 350 people were killed, more than half of them
children, as a result of the hostage crisis.
“This tells you something about the moral fabric of Russian
society. But it also tells you about the hidden fears and persistent
beliefs that are deeply rooted in the national consciousness.
“One of these fears is the fear of foreign invasion. The other is
the belief that when worse comes to worse, the state – and not
your neighbor – will come to your rescue.
“The most common statement about the outage that I heard from
acquaintances and colleagues who reside in the southern part of
the city, which was most affected, was, ‘I thought war had
started.’”
Albats then writes of how all Russians, since childhood, were
prepared for a nuclear assault. There were constant reports of
new underground bunkers being built, supplies being stocked,
and special phone lines installed. “The country and state
agencies, we were assured, were more thoroughly prepared for
war than they were for any other disaster.”
“But as last week’s power outage showed, this either was never
true at all, or it ceased to be true some time ago, even for a minor
disaster in the capital.”
For hours there was no real information. And “though usually
omnipresent, the police on the streets suddenly disappeared.”
“(The) culture of the reliance on the state played a dirty trick on
citizens. There were quite a few reports of people helping each
other, but many reported just the opposite. Memory brings back
the images from New York City in 2003, where teens were
directing traffic and neighbors helping those stuck in elevators.
“Yet in Moscow, stories abound about muscular men pushing
little old ladies out of buses and taxi drivers taking advantage of
those unable to get home. And you ask yourself, what would
happen if this were not just a blackout, but a war?”
This is a deeply troubled place, my friends. And it should scare
the hell out of all of us.
Iran: The Guardian Council issued an edict forcing Iran to
develop its nuclear technology and proceed with uranium
enrichment. 175 of 290 legislators in parliament then sent a
letter to President Khatami asking for resumption of activities “as
soon as possible.” Both moves were seen as strengthening the
hand of Iran’s negotiators in its dealings with the Euro 3 –
Britain, France and Germany.
Former Middle East envoy Dennis Ross had the following
thoughts in U.S. News & World Report:
“The Iranians are manipulating the Europeans brilliantly, raising
the pressure, then easing the pressure, counting on the (Euro 3) to
be grateful when they pull back from their threats. Ultimately,
the basic Iranian strategy appears to be to tell the Europeans that
Iran must have the capability to complete the nuclear fuel cycle
on its own – meaning that it can enrich uranium and reprocess
plutonium….In such circumstances, Iran will be able to produce
nuclear fuel for electricity and fissile material for nuclear
warheads. Of course, it will guarantee the Europeans that it
won’t create nuclear weapons – only nuclear power.”
Then, as over the past two decades, Iran will break every
agreement it signs.
Israel: Prime Minister Sharon and Palestinian President Abbas
have their second summit slated for June 21. This week Israel
released 400 more Palestinian prisoners but the Palestinians are
asking for thousands. [One complaint being most of those
released had basically served their sentences already.]
Meanwhile, the outgoing Army chief of staff, Lt.-Gen. Ya’alon,
created quite a stir when he told the leading Arab daily that Israel
could defend itself without the Golan Heights in exchange for
peace with Syria.
China: A reporter for the Singapore Straits Times was arrested in
China on April 22 but it was just made public when the
reporter’s wife spoke up. The gentleman was supposedly
attempting to obtain a secret manuscript of an interview with the
former prime minister, the late Zhao Ziyang, who back in 1989
was against the use of force at Tiananmen Square. Beijing
denies this, saying the reporter was merely spying. Regardless,
it’s just the latest in a series of chilling moves designed to stifle
the press…and dissent.
Separately, talks between Japan and China over ownership of the
disputed gas fields in the East China Sea went nowhere.
Pakistan: Sectarian strife continued, but Sunnis and Shias
somehow always find a way to take it out on the U.S. as this
week six Kentucky Fried Chicken employees at one outlet were
burned to death.
Zimbabwe: President Robert Mugabe recently launched a
sweeping crackdown on all opposition, which consists primarily
of the poorest of the poor in this hellhole. There is no gasoline to
be found these days and the food shelves are bare. That’s it. I’m
not traveling here.
The Balkans: Look for renewed interest in this region as a video
has surfaced that shows the killing of Bosnian Muslim prisoners
from Srebrenica back in 1995. I was watching a BBC News
report on Friday and a recent poll of Serbians revealed that 50%
didn’t believe there ever was a massacre. For this and other
reasons the video will arouse passions all over again.
Random Musings
–A front page story in the Washington Post this week detailed
President Bush’s dwindling political capital and, frankly, his
performance at the press conference was poor. Of course the
White House’s focus on Social Security and private accounts has
been a killer and has helped to set back the entire agenda. And
then you have Iraq. Further thoughts on this from columnist Jim
Hoagland:
“It is not enough to say these incidents (at Abu Ghraib and
Guantanamo) are isolated and are being investigated and to leave
it at that. They will undermine cohesion at home and falsely
symbolize American values abroad as long as the broader context
of the struggle is not explained by the nation’s leaders and in
more direct and compelling terms.”
Fareed Zakaria of Newsweek wrote of the Bush administration’s
“Jekyll-and-Hyde problem” when it comes to the war on terror.
“(While) Dr. Jekyll makes speeches by day on Arab liberty,
some nights he turns into Mr. Hyde. There is within the Bush
administration another impulse, a warrior ethos that believes in
beating up bad guys without much regard for such niceties as
international law. Excessive concern for such matters would be a
sign of weakness, the kind of thing liberals do. Men like Dick
Cheney and Don Rumsfeld see themselves above all else as
tough guys.
“The historian Walter Russell Mead has argued that the Bush
administration fits into the ‘Jacksonian tradition’ in American
politics. One of this tradition’s core beliefs is that normal rules
of warfare are suspended when dealing with ‘dishonorable
enemies.’ Mead gives the example of the Indian wars in which
American soldiers, enraged by Indian fighting tactics, waged
battle ruthlessly and with no holds barred….
“I have some sympathy for the Jacksonian view. War is hell and
Al Qaeda is as dishonorable an enemy as there has ever been.
The trouble is, in today’s world, militarily effective methods can
generate huge political costs….
“And in a war for hearts and minds, the benefits of the
intelligence gained might well be outweighed by the cost to
America’s image….American soldiers operate with high moral
standards, something often forgotten by the rest of the world
because of the intense scrutiny they are subjected to by both
domestic and foreign media. [How many front-page stories have
there been on the Russian Army’s behavior in Chechnya or the
French Army’s assistance to the Hutus in Rwanda?] Remember
that it was the uniformed services and former chairman of the
Joint Chiefs Colin Powell who argued against (Alberto)
Gonzales’s cavalier attitude toward the Geneva Conventions….
“Some of these new pressures are unfair, all are costly, but in the
open, globalized world we live in, they’re inevitable and that’s
not going to change. Tough guys should understand that.”
–New Jersey holds its gubernatorial primary on Tuesday. Us
Republicans are as enthusiastic as someone who was just handed
free tickets to an Atlanta Hawks game. Regardless of who we
come up with (Doug Forrester, it appears), we’ll get our butt
kicked by Senator Jon Corzine. New Jersey is a cesspool of
corruption anyway. A Star-Ledger / Eagleton poll showed that
90% of my fellow New Jerseyans believe there is “some” or “a
lot” of it, which just goes to show that the other 10% are total
idiots. But the same survey gave the highest grades for ethical
standards to nurses, to whom we now raise our glass.
–John K. wrote to question whether Rex of “Desperate
Housewives” is really dead. He has a point as it’s a bit murky,
but it’s also a natural plot line for next season that the creepy
pharmacist is finally implicated, whereupon he commits suicide.
At least that’s my story and I’m sticking to it.
–Reason #215 why I like Bono. In a Times of London story on
an upcoming book on U2’s leader, Bono discusses his encounter
a few years ago with Senator Jesse Helms as Bono sought
support for his AIDS initiative.
“People said to me: this is the devil himself you’re going to meet,
and his politics are just right of Attila the Hun. But I found him
to be a beautiful man with convictions that I wouldn’t all agree
with but had to accept that he believed in them passionately.
“This is happening to me a lot. I am discovering how much
respect I have for people who stay true to their convictions, no
matter how unpopular. As you get older, your idea of good guys
and bad guys changes.
“Jesse Helms did me and everyone working on the global AIDS
emergency a great favor when he came out in our support. It was
a great irony for me to find myself feeling such affection for this
old cold warrior.”
–Regarding “Deep Throat,” Mark Felt, I wouldn’t go so far as to
call him a “hero,” but neither is he a “traitor.” I think all you
have to do, though, is look at the fact he himself was ashamed of
his actions because he clearly broke his trust at the FBI. I agree
with those who say there were better ways of getting the story
out.
But on the issue of the now 91-year-old and his family
convincing him to come forward before he died, obviously there
is a money angle, witness the shoddy treatment accorded the co-
author of Felt’s original autobiography (as revealed on Chris
Matthews’ “Hardball” the other day). And why would you buy
the book anyway? You’ve seen Felt. Unless he kept notes from
that time all these years it would be a work of fiction. I’m not
sure the guy knows the difference between the Runaway Bride
and Michael Jackson, after all, let alone details from 33 years
ago. Better to buy Bob Woodward’s book, now being rushed to
print.
–Uh oh, big news on the hair front. As reported in Friday’s Wall
Street Journal, Clairol says brown shades increased their share of
overall hair color for the 12 months ending in April by 7%, while
blond hues fell six points. L’Oreal says brown shades now
account for 39% of all sales, while light blond is down to 18%. I
better stay out of this, but you can discuss amongst yourselves.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $424
Oil, $55.03
Returns for the week 5/30-6/3
Dow Jones -0.8% [10460]
S&P 500 -0.2% [1196]
S&P MidCap +0.7%
Russell 2000 +0.6%
Nasdaq -0.2% [2071]
Returns for the period 1/1/05-6/3/05
Dow Jones -3.0%
S&P 500 -1.3%
S&P MidCap +1.7%
Russell 2000 -4.8%
Nasdaq -4.8%
Bulls 47.8
Bears 25.0 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
🙂 _]
