[Posted 7:00 AM ET]
The Dubai Ports World Debate…Pro and Con
David Ignatius / Washington Post
“I suspect America will pay a steep price for Congress’s
rejection of this deal. It sent a message that for all the U.S.
rhetoric about free trade and partnerships with allies, America is
basically hostile to Arab investment. And it shouldn’t be
surprising if Arab investors respond in kind. One could blame it
all on craven members of Congress, if the opinion polls didn’t
show that Americans are overwhelmingly against the deal – and
suspicious of Muslims in general. Those poll numbers tell us
that America hasn’t gotten over Sept. 11, 2001. If anything, Iraq
has deepened the country’s anxiety, introspection and
foreboding….
“President Bush tried to do the right thing on the Dubai ports
deal, but he got rolled by a runaway Congress. The collapse of
the deal was a measure of Bush’s political weakness….The
ironic fact is that the UAE is precisely the kind of Arab ally the
United States needs most now. But that clearly didn’t matter to
an election-year Congress, which responded to the Dubai deal
with a frenzy of Muslim-bashing disguised as concern about
terrorism. And we wonder why the rest of the world doesn’t like
us.”
Editorial in the Wall Street Journal
“What’s especially dangerous here is that we’re seeing the re-
emergence of the ‘national security’ protectionists. They were
last seen in the late 1980s, when Japan in particular was the
target of a political foreign-investment panic. The Japanese were
buying Pebble Beach and Rockefeller Center, and so America
was soon going to be a colony of Tokyo….Those fears seem
laughable now. But here we go again, with new targets of
anxiety.
“Going well beyond Dubai, House Armed Services Chairman
Duncan Hunter (R-Calif.) says he wants Congressional oversight
of all foreign purchases of ‘critical infrastructure.’ Mull over
that one for a minute. If you think corruption on Capitol Hill is
bad now, wait until foreigners need approval from Congress for
every multi-billion-dollar investment. The current investment
review process was designed by the Reagan Administration to be
discreet, and to keep Congress out, precisely to avoid such
politicization.”
Editorial in the Washington Post
“They spend drunkenly, they fail at oversight and they can’t stop
the administration from abusing detainees or tapping phones.
But never call the members of Congress powerless….
“Of course, the speed of the announcement (that Dubai Ports
World would throw in the towel) illustrates a critical point: that
this investment always was a business decision, not the early
stages of a covert attack on Baltimore. Quite rightly, the
company and its Dubai-based owners – who are stunned,
apparently, by the unexpected reaction to what they thought was
a routine business deal – didn’t want their country’s and their
company’s names dragged through the mud, so they cut their
losses….
“But our brave new Congress has achieved more than the
irrational spiking of one business deal. It has also sent a clear
message to the Arab world: No matter how far you move along
the path of modernization and cooperation, Americans may be
unable to distinguish you from al-Qaeda. Dubai welcomes
hundreds of ship visits every year from the U.S. Navy and allied
ships. It has worked with U.S. agents to stop terrorist financing
and nuclear cooperation. But none of that mattered to the craven
members of Congress – neither to the Democrats who first
sensed a delicious political opportunity nor to the Republicans
who then fled in unseemly panic. As to long-term damage to the
United States’ security, economy and alliances? Not of concern
to the great deliberative body.
“No one should underestimate the potential damage. Any
government in a Muslim-majority country will have to ask itself:
Why take the risk of friendship? If governments find no good
answer to that question, the fight against radical Islamic
terrorism will suffer. Meanwhile, Arab investors may think
twice before putting their money in a country where their
companies risk expropriation. With the price of oil so high,
Arabs are rapidly becoming a major supplier of foreign capital.
This isn’t a good moment for Americans to discourage foreign
investment, given the nation’s dependence on foreign capital
(see: Congress, drunken spending by).”
The other side…John Podhoretz / New York Post
“Surely, his enemies say, this is curtains for Bush. Republicans
are fleeing from him, he can’t keep his troops in line – and he
can’t work his will. He’s become a lame duck, they say.
“Wrong. Just as with his last serious political miscalculation,
Bush has actually been saved by the very forces in his own
governing coalition that are opposing him.
“When the president foolishly nominated the clearly unqualified
Harriet Miers for the Supreme Court, conservative intellectuals
and pundits were so relentlessly negative that they forced him to
withdraw Miers’ name and appoint Samuel Alito in her place.
That move simultaneously helped reenergize and calm a key part
of the Bush coalition.
“Republicans in Congress did Bush an even bigger favor. The
president may have been right on the economic and foreign-
policy merits of allowing the government-owned Dubai Ports
World to manage stevedore operations inside the United States.
But he was clearly wrong when it came not only to the politics of
the deal, but also to its symbolic significance in the midst of the
War on Terror.
“The politics part is simple: No Republican running for re-
election in 2006 was going to hand a challenger a stick the size
of the Space Needle to bash him over the head with. And there
could have been no easier or juicier Space Needle than ‘My
esteemed opponent voted to give an Arab country that has
supported terrorism control of our ports.’….
“(In) handing the president his hat, his party did him a service.
Republicans have made certain that a few months from now most
Americans will barely remember the whole business, which
really did threaten the continued viability of his presidency.
“More important, the public reaction to the ports deal indicates
that the American people are still very much committed to the
War on Terror. They understand that Arab nations of the Persian
Gulf cannot be and should not be deemed reliable colleagues in
our struggle against militant, extremist Islam.
“I have no doubt that Dubai has given us some assistance in
pursuing al Qaeda. But it is still a cowardly emirate that will not
do or say anything publicly to advance the fight against bin
Ladenism, and while it may not be an enemy, it is neither a
friend nor an ally.”
So there you have both sides. It shouldn’t surprise you that I
have been a supporter of DPW. If you’ve glanced at my “Hott
Spotts” column the past few months you’ve noticed I posted
some speeches from moderate leaders of the Islamic world, my
own small attempt to promote a more realistic dialogue.
But here I sit in a dwindling minority in America. To say I’m
depressed about the future is an understatement, and it doesn’t
help that over these next three critical years we have a president
who is floundering on all counts; a man who doesn’t even have
the guts to shake up his staff, many of whom have failed him
miserably.
The collapse of the Dubai Ports World transaction is a foreign
policy disaster. Americans may have short memories and
attention spans, but if you’ve learned nothing else these past few
years it’s that folks in the Middle East, both friend and foe, don’t.
The question is always asked in opinion surveys, “Is the country
headed in the right or wrong direction?” Unequivocally I would
answer the ‘wrong’ one, but not for the reasons most people
would give these days. Not because of the economy and our
massive deficits (though of course this worries me too), nor
because of globalization and job insecurity, but rather because
our nation seems incapable of taking a pragmatic approach when
looking at the world outside our borders.
We do not live in a “one size fits all world,” no matter how
much those on the far right and left would have you believe.
And unless we can accept the fact that not all Muslims are like
Mahmoud Ahmadinejad and Zarqawi, and encourage those
moderates who seek many of the simple things in life we do,
we’re doomed.
Iran
Tehran’s nuclear program has been referred to the UN Security
Council and the issue becomes will Iran be given a deadline to
stop enriching uranium. The rhetoric is heating up.
Vice President Dick Cheney warned the “international
community is prepared to impose meaningful consequences,”
while Secretary of State Condoleezza Rice reiterated her line that
Iran is the “central banker for terrorism.”
But Russia, with its veto in the Security Council, is already on
record as saying sanctions don’t work and that Iran should still
be allowed to make small quantities of nuclear fuel on its own
soil, which is in direct conflict with the U.S. and Europe; while
the International Atomic Energy Agency’s Mohamed ElBaradei
is also in the appeasement camp.
For its part, Iran’s top nuclear negotiator, Ali Larijani, warned
that if Iran was referred to the Security Council, “We will not
accept suspension of our research program.” Iranian President
Ahmadinejad added:
“Some powers have become accustomed to giving orders that
others obey, but they must realize that today is the time of the
sovereignty of nations.
“If they think they can block Iran’s progress by making political
threats, they are mistaken. They must realize that the Iranian
nation has chosen its path consciously and will continue on this
path with strength.” [Tehran Times]
Iraq
According to an ABC News / Washington Post poll, 52% say the
U.S. should begin withdrawing forces from Iraq. And three
years into the war, it would appear we are still re-fighting the
consequences of those first few critical weeks and months.
Former House Speaker Newt Gingrich, in an op-ed for the
Washington Post, offered that the big mistake was in disbanding
the Iraqi army and went on to defend Secretary of Defense
Donald Rumsfeld.
“There is no evidence that more troops would have accomplished
anything more than what was accomplished in Afghanistan….
Additional troops weren’t sent (because) we did not want to
create an even bigger footprint leading to greater alienation and
hostility on the part of the Iraqi people.”
I love how some of my fellow conservatives can’t face facts, like
how we didn’t secure the ammo dumps, for starters; an error that
is directly attributable to the loss of hundreds of American lives,
let alone thousands of Iraqis.
And you still have right-wing commentators like Ralph Peters
who this week wrote in the New York Post, “The media may
cling to its image of earlier failures, but last week was a great
Iraqi success.”
But while Rumsfeld and Co. argue there is no civil war in Iraq,
U.S. Ambassador Khalilzad concedes we are on the brink of one.
Here’s the bottom line. We’re approaching three months since
the election and we still have no government. But eventually a
new parliament will be called into session, possibly March 19,
which would then set in motion a 60-day period in which the
heads of state and a cabinet must be selected. This will also
represent the turning over of the final hourglass. Iraq gets one
more chance…or the United States will be forced to leave,
mission not accomplished.
Wall Street
While U.S. equity markets may have sent mixed signals this
week, two global trends began to dominate conversation; rising
interest rates and potential cracks in emerging markets.
As expected, the Bank of Japan began to put an end to its super-
easy monetary policy, though it added interest rates will stay near
zero in the short-term in order to make sure the economy’s
recovery is for real. This sounds innocuous enough, but the BOJ
and Prime Minister Koizumi are still at odds over whether or not
even this announcement and the coming end of 0% short-term
rates could kill the economy.
With the end of free money here, the issue is will Japanese
investors who have gone overseas for higher returns reverse
course? At the same time, will investors playing Japan’s equity
market, 50% of whom trade on margin, be forced to pull in their
horns due to higher costs?
Again, BOJ’s announcement may not seem like much, just as
some argue that a 4.5% federal funds rate in the United States is
still low, historically. But it’s the rate of change that some find
unsettling, such as in going from 1% to 4.5% and beyond.
Percentage wise it’s a big move and so it will be, too, if the Bank
of Japan sees fit to move later on this year. Perception and
sentiment are as important in shaping asset values as any hard
data.
And along the lines of the above this week we began to see
cracks in the emerging markets which have performed so
spectacularly in recent years. It was in 1997-98 that this sector
last cratered and the potential for a debacle today is
exacerbated by geopolitical tensions that weren’t in existence
back then, as well as the soaring debt levels around the world. In
Latin America, for example, stocks had their worst day on
Tuesday in almost two years and in the Far East one can’t ignore
the recent political turmoil in the Philippines and Thailand.
But in the Middle East, stocks have been correcting since around
the first of the year, with markets in Saudi Arabia and the United
Arab Emirates off 15-35% from their highs, to cite two of the
more extreme examples. Yet price / earnings multiples in Saudi
Arabia remain in the 40s.
Noted market historian Edward Chancellor wrote of the Middle
East phenomenon in an op-ed for the Wall Street Journal. His
forecast isn’t pretty.
“There are several implications of the coming Arab crash.
Speculative booms lead to capital being misallocated. Many of
today’s investments in the Gulf region may appear, in retrospect,
as extravagant as U.S. fiber-optic expenditures in the late 1990s.
As for Dubai’s desire to become an international financial center,
it is spookily reminiscent of Tokyo’s ambition to rival New York
and London in the 1980s. Japan’s ambition was shattered by the
collapse of its bubble economy.
“The political consequences couldn’t be more serious. Arab
rulers have deliberately encouraged the boom in the hope that
rising asset prices and a strong economy would distract their
youthful populations from religious fundamentalism. This
strategy could backfire. History teaches that when speculative
bubbles burst and the public loses large sums, there is normally a
political backlash. This was true of the U.S. in the 1930s, and to
a lesser extent in the early 2000s, and of Japan in the 1990s. It’s
not hard to imagine Islamists capitalizing on a future bust with
denunciations of stock market gambling. Some of today’s young
Arab day-traders could well turn into tomorrow’s al Qaeda
recruits.”
Street Bytes
–The major averages finished mixed on the week, with the Dow
Jones up 0.5% to 11076, the fourth straight weekly close over
11000, while the S&P 500 lost 0.4% and Nasdaq finished down
1.8% to 2262. Earnings season is largely over and soon we’ll be
in the pre-announcement mode for first quarter results. If the
economy is doing as well as many say it is, then one would
expect to see a fair amount of companies guide higher.
–U.S. Treasury Yields
6-mo. 4.78% 2-yr. 4.73% 10-yr. 4.76% 30-yr. 4.75%
The yield curve flattened, but the 10-year Treasury at one point
hit 4.80%, close to the June 2004 high of 4.88%. A 30-year
fixed mortgage is now 6.40%, still far from terrible when
compared to historical norms but a rate that nonetheless will
begin to negatively impact home buying. And according to a
Los Angeles Times / Bloomberg poll, more than one-quarter of
those with an adjustable-rate mortgage say they aren’t sure
they’ll be able to make their monthly payments if their interest
rate goes up. [Tom Petruno and Kathy M. Kristof / L.A. Times]
Meanwhile, Friday’s jobs report for February, up 243,000 on
non-farm payrolls, had little impact in the bond pits, while the
government reported another record trade deficit for the month of
January, $68.5 billion, as the gap with China reached $17.9
billion, thus fueling more protectionist talk from the likes of
Senators Graham and Schumer who seek a 27.5% tariff on
Chinese goods unless the communists mend their ways,
including floating the currency.
But on the issue of foreign buying of U.S. securities, which has
helped keep interest rates low while masking the impact of the
deficits, Federal Reserve Bank of New York President Timothy
Geithner warned that today’s environment contributes “to a false
sense of reassurance” that the deficits won’t “crowd out” private
investment and hurt growth. The real result being that private
investors “raise leverage” and take on more risk. [Greg Ip / Wall
Street Journal]
–Back in 1984, Ma Bell was broken up and if it seems as though
recent moves point to a resurrection for the old giant of telecom,
you wouldn’t be far off in thinking so. This week AT&T (SBC
Communications) acquired another Baby Bell, BellSouth, in a
move that creates a colossus with $130 billion in assets and a
dominant position in 22 states. Coupled with ownership of
Cingular, the largest U.S. cellphone company, the re-transformed
AT&T is going full bore after the cable, wireless, conventional
phone and telecom equipment businesses. For consumers the
jury is out and it will be a while before a verdict on this new era
is rendered. Some say the consumer will pay more but there is
hope in the bundling of services.
–After rallying the past few weeks back above $63, oil fell back
below $60 ($59.96) on the heels of further inventory gains.
Inventories for crude now stand at their highest level since May
1999 and to many it makes zero sense that oil remains so high,
even with a significant terror premium. You can talk all you
want about tight supply and declining production out of some
major fields, but the numbers speak otherwise. So while Saudi
Arabia, Kuwait and the UAE have the only available spare
capacity in OPEC, and as #2 and #3 Venezuela and Iran can’t
maintain old production levels due to depleting fields and lack of
investment, again, you look at today’s sky-high inventory levels,
not just with crude but other products, and it’s easy to see why
some just shake their heads.
I’m going to attempt to break it all down next week. I feel like I
need to take a long drive, burn off some fuel, and sort through a
few things in my own mind. After all, I’d love the price of crude
and energy stocks to continue to correct as they have since end of
January. I missed most of 2005’s spectacular advance and I want
another chance. Patient investors should be rewarded….or so I’d
like to believe.
–As alluded to above in the discussion of Dubai Ports World and
China, protectionism is simmering worldwide these days and this
could spell big trouble for global markets. For example, Spain is
fighting to defend the nation’s largest power company, Endesa
SA, from a takeover by German utility E.On AG. “Every nation
tries to protect industries it considers strategic,” said Spain’s
industry minister. [Bloomberg News] And last week France put
together a merger of two French utilities, Gaz de France SA and
Suez SA to prevent a takeover by Italy’s Enel SpA.
The European Commission is warning nations not to go down
this slippery slope
–As for direct investment in the United States by Arab countries,
at the end of 2004 it was just $4 billion, according to Commerce
Department data. And as Paul Blustein of the Washington Post
pointed out:
“British investors, by contrast, held $252 billion, Japanese
investors held $177 billion, Dutch investors held $167 billion
and German investors held $163 billion. Their holdings span
industries often deemed ‘critical,’ such as telecommunications
(Finland’s Nokia Corp. and Sweden’s Ericsson Inc.), energy
(British Petroleum PLC and Royal Dutch Shell PLC) and utilities
(E.On AG of Germany, which controls much of the gas and
electricity and electricity distribution in Kentucky)….
“To be sure, most of the money flowing into the United States
comes in the form of Treasury bonds and other financial assets
rather than corporate acquisitions. Foreigners held roughly $9
trillion of U.S. financial assets at the end of 2004….Middle
Eastern oil exporters held a modest percentage of that, including
about $121 billion in U.S. government securities, the data show.
“But the oil revenue flooding into the Mideast means that the
region’s financial strength is rising apace. The cumulative trade
surplus of Middle Eastern oil exporters, which was $500 billion
from 2000 to 2005, will come close to $800 billion by year-end,”
(economist Brad) Setser wrote recently.
“ ‘Which is just to say,’ he added, ‘that there are a lot more
Dubai Ports Worlds out there.’”
[Ed. If Congress will allow them.]
–From 1982 to 2004, “U.S. corporations earned an annual
average return of 7.6% from their foreign subsidiaries – much
higher than the 2.2% that foreign multinationals received from
their operations in the USA, according to a Congressional
Budget Office study.” [David Lynch / USA Today]
–Foreign visitors spent $104.8 billion in the U.S. in 2005, up
12% from ’04. But the actual number of tourists is still below
the 2000 peak and with spreading anti-Americanism the trend
will continue to be down on this count.
–In another real estate tidbit, Josh P. tells me home sales are
down sharply in the San Diego market, including the once super
hot condo sector, with residential real estate of all kinds selling
below list price about 5% on average. It’s not a crash, but the
peak is in. And I just saw a story that after growing at an annual
rate of 30% to 40% from 2002 to the middle of 2005, home-
equity loans have leveled off…actually down a bit since August.
[Wall Street Journal]
–But what’s this? The housing market in London is
rebounding after a welcome slowdown in much of 2005. Should
this trend continue, though, it will put pressure on the Bank of
England to raise interest rates, unless consumer spending and the
overall economy slow in coming months.
–Former Enron CFO Andrew Fastow told a jury in the trial of
Ken Lay and Jeffrey Skilling that Skilling told him to use the off-
the-books partnerships that Fastow had devised to “give me all
the juice you can” on earnings. But later under cross-
examination, Fastow admitted there was no documentation
proving Skilling’s involvement, leaving it a he-said, he-said
proposition for the jury to digest.
–General Motors is freezing accrued pension benefits for 42,000
salaried workers hired before 2001; with the others moving
exclusively to defined-contribution plans (401Ks). Separately,
talks continue between GM, Delphi and the United Autoworkers
in an attempt to avert a crippling strike. One potential provision
in a settlement would involve giving Delphi workers lump sums
of $25,000 to $50,000 in return for accepting drastically lower
wages and benefits…..not exactly hitting the lottery.
–Google has been in the news for all the wrong reasons recently
and this week started with an admission from the company that it
used ‘internal use only’ slides during an analyst presentation last
week when it forecast $9.5 billion in advertising revenues for
2006. Google has a policy of not providing forecasts and in a
filing to the SEC it stated the figure should not be construed as
actual guidance. But analysts already had what they needed…
sales growth would slow dramatically from 92% in 2005 to 58%
this year.
And then you had the burgeoning issue of click fraud. Google
settled a class-action lawsuit for $90 million in legal fees and
credits on behalf of a small collectibles retailer, representing
others, that alleges Google and other search companies
improperly charged it for fraudulent clicks. 97% of Google’s
revenues are generated through pay-per-click advertising so this
remains a huge issue for both it and the industry. Some analysts
believe click fraud costs Web advertisers over $1 billion
annually.
–Using data from a Federal Reserve study, Neil Irwin of the
Washington Post writes:
“Meet the typical American family.
“It has about $3,800 in the bank. No one has a retirement
account, and the neighbors who do only have about $35,000 in
theirs. Mutual funds? Stocks? Bonds? Nope. The house is
worth $160,000, but the family owes $95,000 on it to the bank.
The breadwinners make more than $43,000 a year but can’t
manage to pay off a $2,200 credit card balance.”
–Meanwhile, Forbes magazine has identified a record 793
billionaires around the world these days. Bill Gates remains the
richest with a net worth of $50 billion.
–And speaking of wealth, Norway’s richest man, John
Fredriksen (#114 on the Forbes list), acquired Chile’s second-
largest salmon producer for $1.6 billion, thus making him the
world’s biggest fish farmer. Just thought I’d give you something
to wow your friends with at the next cocktail party. Then again,
they may flee to the other side of the room so pick your spot
wisely.
“Barnaby, ahem…ahem…, the money spent on your kitchen is
indeed quite impressive, but did you know the world’s biggest
fish farmer……..”
–Hewlett-Packard is facing a shareholder suit over former CEO
Carly Fiorina’s severance package, reported to be $21.4 million
but which could be worth up to $42 million.
–A small piece of good news for President Bush was contained
in an ABC News / Washington Post survey. The percentage of
those feeling the economy is good has risen to 43% from 35%
four months ago.
–If you are buying a diamond for your significant other, or
you’re a rap artist who wants to ruin a perfectly good tooth by
implanting one in your mouth, understand that there is a scandal
in the industry when it comes to grading them. The Gemological
Institute of America has been suspending appraisers that the
organization has discovered accepted bribes in return for higher
marks. [Wall Street Journal]
–The Justice Department has latched onto an old investigation
involving the FCC and auctions for cellphone spectrums from
1995-2000, filing a civil suit against money manager Mario
Gabelli for allegedly scheming to deceive the FCC. Gabelli
backed minority interests who were able to purchase the
spectrums and then turned around and sold them for huge gains,
even though the investors’ lack of experience went against the
spirit of the rules. It’s a hard case to describe but the bottom line
is Gabelli is well-known on Wall Street and basically despised
by all. No tears will be shed should the government wrestle
some $200 million back from him, as is the goal of the suit.
–Pearson’s Penguin Press imprint is ponying up a reported $8.5
million for Alan Greenspan’s memoirs. I’m thinking I’d rather
buy a case of premium lager than pick this one up.
–Gillette’s new Fusion five-blade razor is grabbing 55% of new
razor purchases four weeks after launch, thereby proving P.T.
Barnum’s adage that “there’s a sucker born every minute.”
–Note to bosses of America. This coming Thursday and Friday,
your charges are going to appear to be working intently after
noon, Eastern Time. Just understand they’re really watching the
NCAA tournament, courtesy of CBS which will be broadcasting
it free online. If you’re smart you’ll let it slide, maybe even
encourage it in the name of building up morale. Just extract
extra hours from them the following week. [Management advice
…another free feature of StocksandNews.]
–Finally, I saw this note too late to include last time but it
involves Pfizer suing Procter & Gamble, with Pfizer saying P&G
falsely advertised its Crest Pro Health mouthwash to gain an
unfair advantage over Pfizer’s Listerine. From the AP:
“Pfizer said in the lawsuit that P&G falsely claims four out of
five dentists recommend Crest Pro Health for reasons related to
the product’s efficacy, superiority or other characteristics. Yet, it
added, P&G ‘has no substantiation for either claim and neither
statement is true.’…
“Pfizer (also) said P&G has tried to circumvent a requirement
that it obtain substantiation for the claim about dentists by saying
the dentists ‘would recommend’ Crest Pro Health rather than that
they do.
“ ‘But P&G’s carefully crafted wording and visuals do not
provide P&G with legal immunity for the false and misleading
nature of its commercials,’ the lawsuit said.”
Boy, I may be the only one ticked off at something like this, but I
hope Pfizer cleans up.
Foreign Affairs
Israel: Acting Prime Minister Ehud Olmert has set a goal of
establishing final borders by 2010, but Hamas’ political leader,
Khaled Meshall, said “Israel’s unilateral disengagement from the
Palestinian territories is a declaration of war against the
Palestinian people.” [Agence France Presse] For his part, Olmert
warned that Hamas’ prime minister-designate Ismail Haniyah is
a “marked man” should there be a single terrorist attack against
Israel. The Israeli election is March 28 and while the Kadima
Party is slipping, it maintains a sizable lead over both Likud and
Labor.
North Korea: Pyongyang fired a few short-range bottle rockets to
stir things up, while prospects for a renewal of six-party talks are
virtually nil.
Pakistan / Afghanistan: These two had a very public spat, with
Presidents Karzai and Musharraf blaming each other for the
failure to crack down on terrorists. Karzai said Musharraf wasn’t
doing enough to go after Taliban using Pakistani territory as a
safe haven. But Musharraf countered, “I feel there is a very
deliberate attempt to malign Pakistan by some agents, and
President Karzai is totally oblivious to what is happening in his
own country.” Coincidentally, perhaps, Musharraf launched a
large-scale operation in Waziristan; one in which at least 125
Taliban were reportedly killed.
China: The U.S. State Department’s annual report on human
rights in China said repression worsened in 2005, with a trend
toward “increased harassment, detention, and imprisonment” of
people seen as threats to the Chinese government.
But China struck back in denouncing the U.S. The State
Council, China’s cabinet, said “For a long time, the life and
security of the people of the United States has not been under
efficient protection….As in previous years, the State Department
pointed the finger at human rights situations in more than 190
countries and regions, including China, but kept silent on the
serious violations of human rights in the United States….(It is)
an act that fully exposes its hypocrisy and double standards on
human rights issues.” [South China Morning Post]
Gotta know how the other side is shaping opinion, I always say.
But over on Taiwan, its military issued a report on the threat
posed by the People’s Liberation Army. Defense officials
offered up satellite photos as proof China has now deployed 784
ballistic missiles capable of reaching the island, while the
following conclusion from Taiwan’s defense officials may look
familiar as I’ve been writing of this scenario for years.
“(Beijing) would be able to launch five rounds of (missile)
attacks for 10 consecutive hours at our airports’ runways,
electricity generation facilities and military, as well as civilian
logistic units,” according to the head of the military intelligence
center, thus decapitating the regime.
Separately, a leader of China’s Catholic Church (which means he
ministers at the pleasure of the communists) warned that the
Vatican’s appointment of Hong Kong Bishop Joseph Zen to
become cardinal was like the toppling of communism in Poland
when John Paul II became Pope.
“Why would you appoint someone who doesn’t support
communism as a cardinal? Is it like Poland?….China’s socialist
system comes from God. We should all protect it and obey it.
This is what the Bible tells us to do.” [AP]
Guess I better pick up my own Bible to refresh my memory. I
seem to have missed this.
Russia: In an opinion piece for the Washington Post, Anne
Applebaum makes the following observation about Russia and
the upcoming G-8 summit.
“(By) going to St. Petersburg, President Bush, Prime Minister
Tony Blair, President Jacques Chirac, and the leaders of Italy,
Germany, Canada and Japan will in effect place their stamp of
approval on the removal of political rights, the harassment of
independent groups, the renationalization of energy and the
censorship of media that Putin has imposed on his country since
he took over from Yeltsin six years ago. They will also give
their blessing to Putin’s use of gas pipelines to threaten Ukraine,
and to his ambiguous role in Iranian nuclear and Middle East
peace negotiations. And after Bush goes home, the denizens of
the Kremlin – along with Venezuelans, Iranians, Arab leaders
and others around the world – will sit back, laugh and agree that
the leaders of the so-called West merely pay lip service to the
ideals of freedom and democracy; they don’t really believe in
them. If you have enough oil, they’ll let you into their clubs
anyway. The long-term result: The American president’s ability
to speak credibly about democracy and political freedom will be
irreparably damaged.”
Lebanon: Just two years ago, Druze leader Walid Jumblatt
harshly criticized U.S. policies in the region, but this week he
was in Washington asking for support in removing Syrian
influence from his country.
“It took me a long political trip to come to the U.S. and ask for
help against the (Syrian) dictator,” he said, adding that if the U.S.
fails in Lebanon, the Bush administration’s hopes for democracy
in the Middle East are doomed “and we’ll go back to
dictatorships.”
But while Jumblatt was in Washington, he was also the cause for
a break-up in Lebanon’s national dialogue, which was taking
place in Beirut, because of his call to disarm Hizbullah, as well
as his comments on pro-Syrian President Emile Lahoud.
Kuwait: There are some positive developments in the region.
From an editorial in Lebanon’s Daily Star:
“On Monday, Kuwait’s press, which was already seen as one of
the freest in the Arab world, became even freer. The Kuwaiti
Parliament passed a new press law that prevents the government
from suspending newspapers and allows new newspapers to
obtain licenses for the first time in three decades. While critics
have said that the new law does not go far enough to protect
freedom of expression – journalists can still be jailed or fined for
religious offenses, for example – it nonetheless marks an
important step in the country’s reform process…
“It is also worth noting that the Gulf States’ steps toward
political liberalization are not an attempt to either emulate the
West or to succumb to Western demands for democratization.
The need for political reform stems from within these societies as
they develop economically. Fortunately for Kuwaitis and
Emiratis, their leaders have chosen to respond to these needs as
they arise by allowing the rights of citizens to blossom alongside
their flourishing economies.”
Japan: My hoped for alliance of the U.S., U.K., Australia, India
and Japan took another step towards fruition (this is a long-term
project I readily note) when the U.S. used Japanese technology in
its latest test of the missile defense system. Japan was
responsible for a new nosecone and it was successful, as far as I
could determine.
Random Musings
–In a Washington Post / ABC News survey, 46% have negative
views of Islam and 33% say the religion stokes violence (the
latter figure was 14% in January). It doesn’t help when you have
incidents like that in Chapel Hill, North Carolina, where an
Iranian grad student from UNC was charged with 9 counts of
attempted murder when he rammed a crowd with his car. The
fellow said afterwards he sought to “avenge the deaths or
murders of Muslims around the world.”
–Columnist Robert Novak:
“President Bush’s visit to Katrina-ravaged Louisiana Wednesday
follows six months of bungling that threatens political
catastrophe for the state’s Republicans. He will boost his belated
$4.2 billion plan finally to provide housing for people made
homeless by the storm, but it may be too little, too late….
“(Congressman Richard Baker, Republican from Baton Rouge)
expressed ‘great frustration’ to me about the $27 billion in
federal funds actually spent (well below the widely mentioned
$85 billion figure). He said he ‘abhorred’ 12 percent
administrative expenses incurred by FEMA. Of the $27 billion,
nothing has been spent on housing. ‘We have thousands of acres
of homes just standing in ruins, and the pace with which that
cleanup is going is bitterly frustrating,’ Baker said.”
–Economist Robert Samuelson / Washington Post, in advocating
a fence along the U.S. / Mexico border.
“In 2005 the Border Patrol stopped 1.19 million people trying to
enter the United States illegally; 98.5 percent of them were
caught along the southern border. Of those who got through and
stayed (crude estimate: some 500,000 annually), about two-thirds
lack a high school education. Even a country as accepting of
newcomers as the United States cannot effortlessly absorb
infinite numbers of poor and unskilled workers. Legal
immigration totals 750,000 to 1 million people annually, many of
them also unskilled.
“I do not like advocating a fence. It looks and feels bad. It’s
easily stigmatized as racist. It would antagonize Mexico. The
imagery is appalling, but it beats the alternative: a growing
underclass and social tensions. Moreover, a genuine fence would
probably work. The construction of about 10 miles of steel and
concrete barriers up to 15 feet high in San Diego has reduced
illegal crossings in that sector by about 95 percent since 1992,
reports Rep. Duncan Hunter (R-Calif.), a supporter of a U.S.-
Mexico fence. Sure, there will be tunnels and ladders. But
getting in will be harder. Policing will be easier…
“As for assimilation, it’s true that millions of Hispanic families
are moving into – and reshaping – the American mainstream.
But average trends look less encouraging. Since 1990 about 90
percent of the increase in people living below the government’s
poverty lines has come among Hispanics. That has to be mainly
immigrants and their U.S.-born children. In a report, the Pew
Hispanic Center notes:
“Residential segregation is increasing. In 2000, 43 percent of
Hispanics lived in neighborhoods with Hispanic majorities, up
from 39 percent in 1990.
“The median net worth of Hispanic households is about 9 percent
of that of non-Hispanic whites.
“Only about a quarter of Hispanic college students graduate
compared with about half for non-Hispanic whites.”
–Lobbyist Jack Abramoff is to be sentenced March 29, much to
the chagrin of prosecutors who believe he still has much to offer.
Coincidentally, Interior Secretary Gale Norton resigned on
Friday; some on her staff being intimately involved in
Abramoff’s criminal activities.
–Smoking has declined 20% since 1998 and the tobacco
settlement with the states. But 21% of adults still light up.
–I received another one of those Nigerian e-mails, only this one
was from the “widow” of Rafik Hariri. Wouldn’t you know that
after Syria assassinated him, in the explosion “that rocked central
Beirut’s fashionable seafront district” (these dirtballs really need
better writers), a private security firm in Europe asked her to
“come forth to claim a safety deposit my husband has in their
Vault in his name…. The safety deposit, which is a trunk, is
stocked with hard currency totaling $36,000,000, which was
generated from cash payments from his business associates.”
The lesson here? Always check the contents of any trunk before
discarding it.
–Did you see that avalanches have killed more than 80 people in
the Alps this winter? Goodness gracious. A record 47 alone
have died in France, compared to 25 last year. But in all but one
instance, people were skiing “off piste” – away from marked and
maintained trails. Yes, the world is full of idiots, mon freres.
–Taiwan’s Ang Lee won the Oscar for Best Director for
“Brokeback Mountain,” the first Asian to win the award which
set off a celebration across the island as office workers took time
off to watch the event. But it’s funny observing how the
mainland is also claiming him as one of their own. In his
acceptance speech, Lee walked the political tightrope.
–I can’t say I’ve watched much of “Saturday Night Live” over
the past few years…actually, since John Belushi died…but I
loved the comment from the Bush character last week who noted
“It’s been six months and not another hurricane. The hurricanes
are on the run.”
–This week any true fan of baseball has to be livid over the latest
revelations concerning Barry Bonds. But what’s equally
distressing are the comments of some reputed fans. “It’s old
news to me.” “It’s a witch hunt.” You call yourself fans of the
sport? The guy cheated to threaten two of baseball’s cherished
marks; the home run totals of Ruth and Aaron. That doesn’t
matter?! Of course pitcher Roger Clemens also called it a “witch
hunt.” Clemens would say that, seeing as he has gotten a free
ride himself on the steroids issue, even though any real fan only
has to look at his record and question just what the hell has been
going on with his remarkable performance since turning 35.
–The British government is about to outlaw the use of some wild
animals in traveling circuses, including those species “whose
welfare needs cannot be satisfactorily met.” It’s suspected this
will impact bears, elephants and big cats. I would just ask
authorities to keep in mind that for many of these animals the
circus is their only way out of what would otherwise be a life of
crime and poverty.
–And once again, space provides us all with a respite from the
often depressing events that pass for life on Planet Earth. This
week the Cassini spacecraft has found evidence of water spewing
from geysers on one of Saturn’s icy moons. Kind of boggles the
mind, doesn’t it?
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $542
Oil, $59.96
Returns for the week 3/6-3/10
Dow Jones +0.5% [11076]
S&P 500 -0.4% [1281]
S&P MidCap -1.9%
Russell 2000 -1.6%
Nasdaq -1.8% [2262]
Returns for the period 1/1/06-3/10/06
Dow Jones +3.4%
S&P 500 +2.7%
S&P MidCap +3.7%
Russell 2000 +7.9%
Nasdaq +2.6%
Bulls 42.7
Bears 31.3 [Source: Chartcraft / Investors Intelligence….
Reminder, this is a contrarian indicator and the bear reading is
the highest since April 2003, which was just weeks after the
market bottomed…for you bulls out there.]
Have a great week. I appreciate your support.
Brian Trumbore
