[Posted 7:00 AM ET]
The Iraq Debate
This was an important week in the ongoing history of the decade
that is being presented in this column. Today I note all sides of
the debate on President Bush’s “surge” in Iraq.
Editorial / London Times
“George W. Bush’s address last night has been portrayed as
signaling a ‘surge’ in America’s military activities in Iraq. But
‘surge’ rather exaggerates what might be better thought of as a
shift in resources. An extra 21,500 troops will be concentrated in
Baghdad, where the worst Shia-Sunni violence has occurred, and
in Anbar province, which has been the center of the so-called
insurgency. This represents, though, an increase of a modest
15% in American force levels. It is, however, implicit
recognition that more soldiers should have been sent some time
ago….
“In military terms, therefore, this is not a radical initiative. It
could be argued that, ideally, even more troops should be sent,
but it does not seem to be practical to move a much higher
number into Iraq quickly. It is better to begin to make an impact
in Baghdad swiftly, deploying men who have experience of the
region, rather than to wait for more units with little knowledge of
the Middle East to become available….
“The new U.S. commitment is contingent on the administration
in Baghdad improving its performance. The measures that are
expected include a drive against the Shia militias that have
mushroomed in the capital, reaching an accord on the
distribution of oil revenues between the Shia, Sunni and Kurdish
communities, and easing some of the restrictions imposed on
those who were once part of the Baath party. This is at least as
much a political as a military package. It will need to be
implemented as such if it is to achieve the success that should be
hoped for it.
“In reality, there is no credible alternative. The Iraq Study Group
proved rather better at setting out the many problems that exist in
Iraq than in offering precise solutions. Its recommendation that
the White House co-opt Iran and Syria as its allies in Iraq does
not look remotely plausible. The idea that suddenly withdrawing
American soldiers from the country would convince Shia and
Sunni hardliners to be more charitable to one another is equally
improbable. Mr. Bush’s domestic foes, notably Nancy Pelosi….
and the increasingly surreal Edward Kennedy, would simply
abandon Iraq and be done with it.
“This is not a course that the United States can afford to take.
Mr. Bush’s decision involves serious risks and it is inevitable
that more American soldiers will die as a result of being sent to
dangerous sections of Baghdad. Nor is this destined to be a
wildly popular announcement at home. It is right, nevertheless,
to make one more effort to create the sort of Iraq that its people
deserve and the vast majority of its citizens aspire to. These are
the appropriate means to what is a noble end.”
Editorial / Financial Times
“George W. Bush’s new direction in Iraq is certainly not a
strategy for victory, whatever that word, which is used ever more
desperately by the U.S. president, now means. It may be one last
heave. It may be a cover for U.S. withdrawal. But two things
are quite clear.
“Right now, Mr. Bush has the support of no more than one in
four Americans for this so-called surge of an extra 20,000 or so
troops. Very soon, as the already indecipherable ethnic and
sectarian patchwork of Iraq is pulled further and even more
bloodily to pieces, he will have none.
“Second, this policy will not succeed in fixing an Iraq
traumatized by tyranny and war and then broken by invasion and
occupation. But it may end with the U.S. ‘surging’ into Iran –
and taking the Middle East to a new level of mayhem that will
spill into nearby regions and western capitals.
“Mr. Bush’s body language in the speech bespoke a chastened
man. Yet, caught in a willfully spun web of delusion and denial,
he seems still unable to comprehend the depths of the debacle he
has caused in Iraq….
“The contradiction at the heart of the U.S. approach is this: after
casually overturning the Sunni order in Iraq and empowering the
Shia in an Arab heartland country for the first time in nearly a
millennium, Washington took fright at the way this had enlarged
the power of the Shia Islamist regime in Iran. Now, while
dependent on Tehran-aligned forces in Baghdad, and unable to
dismantle the Sunni Jihadistan it has created in western Iraq, the
U.S. is trying to put together an Arab Sunni alliance against Iran.
This is a fiasco with the fuel to combust into a region-wide
conflagration.
“The only feasible way forward is the approach of the bipartisan
Baker-Hamilton commission – which the new U.S. Congress
should embrace and insist on.
“This would make support for the Iraqi government and army
conditional on their real effort to promote national reconciliation,
which would in turn, as it progressed, be rewarded with billions
of dollars in long-term aid from the U.S. and Iraq’s neighbors.
This external support – from Turkey to Saudi Arabia and Iran to
Syria – would be built up within a wide-ranging diplomatic
offensive in the region that would include Tehran and Damascus.
Mr. Bush is instead threatening to expand the war.
“ ‘Iran is providing material support for attacks on American
troops’ he said on Wednesday. ‘We will disrupt the attacks on
our forces. We will interrupt the flow of support from Iran and
Syria.’ The Iraq surge is beginning to look like the Vietnam
escalation, spilling over into Iran and Syria the way that one did
into Cambodia and Laos.
“Mr. Bush is right to argue that defeat in Iraq would be very
serious. He is wrong in failing to recognize defeat is what he is
staring at – and that this approach will help guarantee it.”
Senator Chuck Hagel (R-NE):
“I think this speech given last night by this president represents
the most dangerous foreign policy blunder in this country since
Vietnam if it’s carried out.”
Editorial / Wall Street Journal
“Mr. Bush’s words offered the hope that the new plan won’t
simply mean employing more troops to carry out a strategy that
hasn’t been working. Though widely described in the press as a
troop ‘surge’ or even ‘escalation,’ the number of additional
soldiers being sent to Iraq is significant but not overwhelming.
The real difference will be how America uses its troops in Iraq.
But in simplest terms, Mr. Bush seems finally to have decided
that the way to defeat the insurgency is to protect the population,
especially in Baghdad.
“For the past couple of years, every visitor to the Iraqi capital has
been struck by the near invisibility of American troops on the
city’s streets. Sure, there were a few in the Green Zone, and lots
out by the airport and a bit north at the airbase in Balad. But
instead of using them to provide order, Generals George Casey
and John Abizaid limited them largely to search and destroy
missions while waiting for Iraqi forces to step up to the task of
protecting civilian neighborhoods. There were reasonable
arguments to be made for this strategy at the beginning – it might
have prevented Iraqi resentment of U.S. occupation – but it
couldn’t survive the onslaught of Abu Musab al-Zarqawi’s car
bombs and the reaction of the Shiite militias.
“The new plan grew out of ideas presented by Iraqi Prime
Minister Nouri al-Maliki when he met Mr. Bush in Jordan last
year. And under it, U.S. forces are slated to become more visible
in the Iraqi capital than they have since the invasion in 2003….
“Iraqis will take the lead in security operations, as they have in
recent days in anti-insurgent fighting along Haifa Street. But
there seems to be agreement on both sides that the Iraqis will
perform with more confidence if they have close American
support….
“Iraqi leadership will also be important to the new strategy, as
the president noted last night. Mr. Maliki will have to show that
Shiite criminals will be dealt with just as Sunni terrorists are.
That means no more special treatment for the thugs of Sadr City.
Rapid completion of a new oil law that guarantees equitable
revenue distribution would also ease Sunni fears that they are
going to lose out in the new Iraq. But we continue to believe that
the best way to help Mr. Maliki accomplish these goals is not
overt American pressure but consistent and overt American
support….
“With the new strategy, new forces and new generals President
Bush is putting in place, we have a fighting chance to create a
virtuous circle whereby better security leads to more anti-
insurgent cooperation from the public – which in turn leads to
still better security. If Congressional Democrats have better
suggestions, we’d love to hear them. But the one ‘strategy’ that
simply isn’t credible is the idea that anybody’s interests would be
served by a hasty U.S. exit from Iraq.”
Editorial / New York Times
“President Bush told Americans last night that failure in Iraq
would be a disaster. The disaster is Mr. Bush’s war, and he has
already failed. Last night was his chance to stop offering more
fog and be honest with the nation, and he did not take it.
“Americans needed to hear a clear plan to extricate United States
troops from the disaster that Mr. Bush created. What they got
was more gauzy talk of victory in the war on terrorism and of
creating a ‘young democracy’ in Iraq. In other words, a way for
this president to run out the clock and leave his mess for the next
one.
“Mr. Bush did acknowledge that some of his previous tactics had
failed. But even then, the president sounded as if he were an
accidental tourist in Iraq. He described the failure of last year’s
effort to pacify Baghdad as if the White House and the Pentagon
bore no responsibility.
“In any case, Mr. Bush’s excuses were tragically inadequate.
The nation needs an eyes-wide-open recognition that the only
goal left is to get the U.S. military out of this civil war in a way
that could minimize the slaughter of Iraqis and reduce the
chances that the chaos Mr. Bush unleashed will engulf Iraq’s
neighbors….
“We have argued that the United States has a moral obligation to
stay in Iraq as long as there is a chance to mitigate the damage
that a quick withdrawal might cause. We have called for an
effort to secure Baghdad, but as part of the sort of comprehensive
political solution utterly lacking in Mr. Bush’s speech. This war
has reached the point that merely prolonging it could make a bad
ending even worse. Without a real plan to bring it to a close,
there is no point in talking about jobs programs and military
offensives. There is nothing ahead but even greater disaster in
Iraq.”
Editorial / Washington Post
“President Bush is right to recognize that U.S. strategy in Iraq is
not working and to seek a different policy. He is right to insist
that the United States cannot afford to abandon the mission and
to reject calls for an early withdrawal. But the new plan for the
war Mr. Bush outlined last night is very risky. It envisions new
missions and dangers for U.S. troops and counts on
unprecedented military and political steps by the Iraqi
government. The plan is likely to cause a spike in U.S.
casualties, while the chances that it will stabilize Iraq are far
lower. Moreover, Mr. Bush appears prepared to embrace this
approach despite strong opposition from Congress and the public
– setting up a conflict that in itself could hurt the war effort….
“Mr. Bush decided against the consensus strategy favored by the
Iraq Study Group because he believed it would not prevent
sectarian war from escalating. That may be right. But the
president’s policy poses a different danger: that Iraqi troops and
Iraqi leaders won’t deliver on the steps expected of them during
what must be a relatively short time, even as American soldiers
fight to secure Baghdad – and, almost certainly, die in larger
numbers than before. It also means launching a mission that –
until now, at least – has not had the domestic support that should
accompany the commitment of troops to battle.
“If the United States is not to abandon Iraq to its enemies, the
U.S. mission needs to be sustainable, in both military and
political terms, over the years it may take Iraqis to stabilize their
country. Mr. Bush is betting that a boost in U.S. troops and aid
can accelerate that process. If he is wrong, a continued
American presence in Iraq may become untenable. The
president must do more to persuade the country that the sacrifice
he is asking of American soldiers is necessary. And if Iraqis do
not deliver on their own commitments in the coming weeks, he
must reconsider his strategy – and suspend the U.S.
reinforcements.”
Editorial / New York Post
“Bush was brutally honest: ‘There is no magic formula for
success in Iraq,’ he warned. ‘We must expect more Iraqi and
American casualties.’ Indeed, ‘Our enemies in Iraq will make
every effort to ensure that our television screens are filled with
images of death and suffering.’
“But the likely alternative – a politically driven U.S. bug-out
from the central front in the global War on Terror – is too fraught
with danger to contemplate.
“So it must succeed – or at least be given a fair chance to
succeed by the new Democratic Congress. Iraq’s future is far
from all that’s at stake. So too is the effort against Islamic terror
in general – and against Iranian imperialism in particular.
“Other Arab governments in the Middle East realize this – and,
wisely, are coming to believe that a military showdown with
Tehran is inevitable….
“Failure in Iraq will only embolden the mullahs in Tehran – who
have rapidly become the region’s Public Enemy No. 1….Arab
governments are convinced that Iran is banking on a forced U.S.
withdrawal from Iraq – and has drawn up plans to effectively
take over its western neighbor once that happens.
“At the same time, Tehran – via Hizbullah terrorists – has been
strengthening its hold on both Lebanon and Syria. It also has
been training a new brigade of Palestinian terrorists through
Hamas….
“If the president was serving notice that Iran has good reason to
fear the consequences of its nuclear ambitions and regional
mischief-making, then this is a plan with a future.”
As for your editor, you should know by now where I stand. I
support the president, in this our last chance. My thoughts
basically echo those of the London Times, in particular.
But I have to add I have a tremendous amount of respect for Sen.
Chuck Hagel and in a perfect world, Vietnam War vets Hagel
and John McCain would tour the country, conducting a civilized
debate to truly educate the American people rather than much of
the drivel, bombast and poison that is prevalent on our airwaves.
This is a sad time for our country and downright depressing; not
just because we are losing the war in Iraq, but because we have
been stuck with a president who has not risen to the challenge the
way most Americans had hoped.
Yet I’m amazed how even after 9/11, and the continuing rantings
of the Islamists, including from the president of an increasingly
menacing Iran, that so many in this nation still don’t get it.
President Bush on one hand does, but it’s the execution and
strategic thinking that has been sorely lacking, and as Bush
himself is finally understanding he has been let down by a
general corps that has failed to distinguish itself, as well as a
former defense secretary who today resides in the trash bin of
history.
In Saturday’s Washington Post, Sen. McCain is quoted as saying
that the way the war has been handled “will go down as one of
the worst” mistakes in the history of the American military.
“One of the most frustrating things that’s ever happened in my
political life,” he said, “is watching this train wreck.”
The Congressional hearings and the debate are both healthy and
critically important. Our nation not only has to decide how many
months we give this last operation in Iraq without any visible
success, but what to do with Iran as it plows ahead with its
nuclear weapons program. No doubt, there are a ton of other hot
spots to concern ourselves with, such as North Korea, and
heaven help us if one of these other challenges blows this year,
but attention must be directed to the mullahs.
This week, Supreme Leader Ayatollah Ali Khamenei, who does
not appear to be near death as more than one strategist has put it
recently, rejected UN sanctions on Iran’s program.
“The Iranian nation undoubtedly will not refrain from their right
[to nuclear energy] and the country’s officials do not have the
right to refrain from the nation’s rights….
“If the Americans, British, and one or more Arab countries sit
down and discuss Iran’s nuclear energy to see whether or not to
allow it or approve it or relieve Israel’s concerns in this regard,
this would be a political mistake” by Islamic governments. “The
Islamic countries’ statesmen, especially those in the region,
should know that Islam’s glory and the Islamic republic’s power
are a support for them.”
Addressing British Prime Minister Tony Blair’s call for
“moderate” Arab states to form an alliance against the Islamic
Republic’s alleged support of extremism, Khamanei said:
“This alliance, with the cooperation of two dirty and sinister
governments, is against a nation that Islam is proud of – a nation
that has sacrificed a lot. Therefore Arab countries must be
careful about this dangerous trap.” [Middle East Times]
A senior Iranian military officer said this week that Iran wouldn’t
hesitate to use the ‘oil weapon’ in the standoff.
“With Iran’s authority over the Strait of Hormuz, the passageway
to more than 40% of the world’s energy, we have become so
strong that the world’s economic and energy security are in the
hands of Iran. We can exert pressure on the U.S. and British
economies as much as we ourselves are put under pressure.”
[Middle East Times]
Meanwhile, President Bush has taken the right step in moving
another carrier group into the Gulf, and he’s aggressively moving
against Iranian cells in Iraq.
But to end on a mildly optimistic note, I’ve said it’s vitally
important to read all sides, especially the musings of our
enemies. So it was with interest that I came across this
exceedingly moderate editorial in the Tehran Times a few days
ago.
“UN Resolution 1737 was the first resolution passed against Iran
since the 1979 Islamic Revolution….
“The fact that the negotiations among the 5+1 group members –
the five permanent members of the UN Security Council plus
Germany – were drawn out showed that it was not easy to reach
a consensus against Tehran, but due to its step-by-step
mechanism, the resolution can pose serious political and
economic threats to Iran in the future.
“Iranian officials have no doubt that it is an oppressive move
against the country, but they should deal with it with wisdom and
foresight.
“The resolution also requires the establishment of a special
committee to follow up the sanctions against Iran’s nuclear
program.
“The nature and responsibilities of this committee are similar to
the Iraq Sanctions Committee, recalling the West’s treatment of
the Iraq issue, whereas Iran is in no way comparable to Iraq
under Saddam Hussein.
“Although the anti-Iran resolution imposes sanctions on Iran’s
nuclear and missile programs, it also has the potential to hinder
the Islamic Republic’s relations with the international
community under the pretexts of sanctions, extensive control,
and limitation of Iran’s political and economic ties.
“The resolution requires Iran to suspend uranium enrichment-
related and reprocessing activities ‘without further delay,’ but
Iranian officials have repeatedly rejected the demand. This
shows that efforts to find a compromise have reached an
impasse.
“Meanwhile, the resolution has implicitly set the suspension of
enrichment as a precondition for the resumption of nuclear talks.
“In addition, all UN member states are required to implement the
resolution, which means it can damage Iran’s relations with its
neighbors, which could lead to increased tension and crises in the
region.
“In light of the fact that the resolution is part of a long-term anti-
Iran plot hatched by the West, which Expediency Council
Chairman Akbar Hashemi Rafsanjani has called ‘dangerous,’ it is
essential that Iran formulate a well thought out strategy to
counter the resolution.
“The adoption of Resolution 1737 has put Iran in a more difficult
situation and restricted its options. Thus, the responsibility of
Iran’s diplomatic apparatus has become even heavier.
“The Iranian government should thoroughly analyze the
resolution and take appropriate measures as soon as possible.”
People forget that Iran, despite a major clampdown on the media
over the past few years, still has independent voices. I take the
above editorial as a sign that some in the leadership want to talk.
As I’ve said over the years, Rafsanjani is the man to sit down
with….with eyes wide open. I can think of no one better to be
our spokesman for this special mission than Colin Powell.
But regardless of your own position, you have to recognize time
is running out. Iranian President Ahmadinejad has told anyone
who will listen on more than one occasion that Iran is preparing
to show the world between Feb. 11 and Feb. 20 just how far
Iran’s nuclear program has progressed. We should take him at
his word, and not be surprised by anything that is revealed.
—
Wall Street
Buy buy buy! Heck, even I bought a slew of things this week,
though that’s more because I was down to two equity holdings
and in my long-term account just one. I bought a little solar, a
water play, started to nibble at energy for the first time in 18
months, even got back into my carbon fiber stock (though at less
than 10% of what I owned before because the litigation issue is
still unresolved). Overall, lest you think I’m not following my
own advice, I’m now roughly at the 20% exposure to stocks that
I’ve been touting all along….and falling short performance-wise
as a result.
This week’s prime catalyst for the renewed rally, at least early
on, was the continuing collapse in oil prices to below $52 at one
point before finishing the week near $53, the lowest levels since
May 2005. No mystery why…it’s been warm out there, and as I
look at the temperatures in Europe daily, on Friday it was in the
40s in Moscow and in the 50s in normally cold cities such as
Warsaw and Vienna. Which means one thing. This junior
weatherman is picturing a ton of cold energy that is building up
where Santa’s work shop is and at some point, even if for just a
few days this winter, it is going to rush down and remind us here
in the northeast that there are truly four seasons, not just three, at
which point the energy group will rally.
But while the market is sanguine on oil and touting not just
inventory buildups but also OPEC disarray, these are the same
folks who were giving OPEC credit just about a month ago for
sticking to some of its production cuts; while at the same time
stronger growth, worldwide, would translate into more demand
for energy. This week, for example, China announced it
imported 14.5% more crude in 2006 than in 2005. The China
story isn’t showing any real signs of slowing just yet, India is
going full tilt, Europe is OK and now some are saying the U.S.
economy is getting its second wind. Ergo, I just thought this
week was a decent time to buy a little oil and gas, myself.
More broadly, though, there was some good news on the
economic front, such as a solid retail sales figure for December,
stronger than expected, and trade data that showed soaring
exports, so everyone is rushing to revise their forecasts for
growth in the fourth quarter, now expected to be in the 3% range
rather than 2%.
But I’m still looking at another leg down in real estate and a
moribund economy for the full year. You also know from the
opening discussion that we have more than a few things to worry
about on the geopolitical front, not that investors seem to give a
damn about that anymore.
The Center for Housing Policy conducted a study on one of my
favorite topics, affordability, and a spokesperson for the group
concluded “American workers are really not gaining ground and
they’re so far behind in the first place” when it comes to home
ownership. Barbara Lipman said “The real story is what
happened to salaries. Lower-paid occupations, such as in retail
or home healthcare, their salaries went up only about 3%.”
The study found an annual income of nearly $85,000 was needed
to afford the median-priced U.S. home. In the New York
metropolitan area, a $500,000 median-priced home required a
$171,000 annual salary. In San Francisco, a $759,000 median
home required income of $260,000. In Chicago, a median-priced
home cost $254,000, requiring $87,000.
Meanwhile, homebuilder D.R. Horton saw orders fall 23% with a
33% cancellation rate in the latest quarter. The company offered
in a statement:
“Although our cancellation rate decreased in the first quarter of
fiscal 2007 compared to the fourth quarter of fiscal 2006, we
continue to experience higher-than-normal cancellation rates and
an increased use of sales incentives in many of our markets.”
So those who said last month that real estate had bottomed may
want to readjust their thinking. I haven’t had to.
But over the coming weeks the focus will once again turn to
earnings, with Alcoa kicking things off this week with a solid
report for the fourth quarter that lent some support to a
commodities sector that has been taking it on the chin, to say the
least. If the fourth quarter was really as strong as everyone
seems to think it was, then maybe we eke out a final double-digit
gain in earnings. I’m not ‘short’ the market so I hope this is the
case. Just understand that the Federal Reserve certainly doesn’t
appear likely to cut the funds rate anytime soon, and more than
one Fed governor continues to talk of inflation pressures. I don’t
see them, or as General Anthony McAuliffe replied to the
Germans who sought his surrender at the Battle of the Bulge,
“Nuts!”
Street Bytes
–The Dow Jones hit a new all-time high, finishing the week at
12566, up 1.3%. The S&P 500, up 1.5% to 1430, and Nasdaq,
up 2.8% to 2502, are at new six-year highs. This despite the fact
there were some high-profile profit warnings from Advanced
Micro and German business software giant SAP.
–U.S. Treasury Yields
6-mo. 5.14% 2-yr. 4.88% 10-yr. 4.77% 30-yr. 4.86%
Yields continued to rise as the feeling grows the Federal Reserve
will be under zero pressure to cut the federal funds rate.
–The U.S. trade deficit with China reached another all-time high,
$214 billion in November, shattering the previous annual high of
$202 billion. And that’s with one month to go, sports fans.
But U.S. exports to all of America’s trading partners surged to
their own record, which is why many were ratcheting up their
growth forecasts.
Back to China, though, with the Democrats now in charge the
protectionist calls are growing.
–Toyota, facing trade pressures of its own these days, is working
on a plan to build as many as five new plants in North America
in the next 10 years, which would give it 12 in the region. It’s
estimated the five would create 10,000 jobs.
Toyota’s North American capacity last year was 1.5 million
vehicles and it brought in another 1.2 million from Japan to meet
demand. [Bloomberg News]
–What a week for Apple Computer. CEO Steve Jobs
announced the latest ‘must have,’ the iPod mobile phone
(iPhone), as well as an Apple TV set-top box, at Macworld.
“Today Apple is going to reinvent the phone,” he said. Aarghhh!
Of course some of us looked at the $499 price tag and thought,
‘eh.’ But it will come down, as does most everything in life,
come to think of it.
Jobs also announced Apple Computer would henceforth be
named “Apple,” as in “How do you like them Apples?”
But while the iPhone product launch was highly-anticipated,
shares in Apple nonetheless skyrocketed from $84 to an all-time
mark of $97 before backing off a bit. Seems that Cisco Systems
had already trademarked the iPhone moniker back in 2000 and
even placed it on an Internet phone called “iPhone” that uses
Voice over Internet Protocol, or VoIP. Cisco’s version was
launched just three weeks ago.
Evidently the two companies have been negotiating for years
about a possible licensing agreement but now Apple is saying the
whole dispute is “silly.” In other words, ‘Get the heck out of my
way, router-boy.’
Well I have to admit I’m kind of siding with Cisco on this one.
Plus I’m still far from sold that Steve Jobs’s role in Apple’s
options scandal is a minor issue.
From Friday’s Wall Street Journal, as reported by Steve
Stecklow and Nick Wingfield.
“Federal authorities are actively investigating a backdated stock-
option grant awarded to Steve Jobs….that carried a false October
2001 date….
“The false dating increased the value of the grant to Mr. Jobs,
and resulted in a retroactive $20 million charge to Apple’s
earnings when it was discovered by a special internal
investigation….
“In a March 2002 proxy statement, Apple told its shareholders –
wrongly – that the 2001 grant to Mr. Jobs was made at fair
market value on the date of grant. On Aug. 8, 2002, Mr. Jobs
personally signed a routine disclosure statement to the SEC
bearing the false price, and false date of Oct. 19, 2001, for the
grant. Apple has said the grant wasn’t finalized until December
of that year, when Apple’s share price was higher….
“Apple has disclosed that Mr. Jobs recommended ‘favorable’
dates for some options awards, although people familiar with the
matter say he didn’t pick any dates for grants that he received….
“Apple has said that its board ‘originally approved’ the grant
date in October 2001 on Aug. 29 of that year when the stock was
trading at $17.83. But according to a person familiar with the
situation, Mr. Jobs wasn’t satisfied with the terms of the grant in
August and negotiations continued for months. Apple has said
the grant was finally authorized by the board on Dec. 18, 2001.
“On that date, the stock was trading for $20.01. The grant,
however, was backdated to Oct. 19, when the share price was
$18.30.”
No doubt, the backdating of stock options is not always illegal, at
least by the letter of the law, but for crying out loud, in case after
case that we’ve seen either the boards or the executives
themselves failed to disclose it properly and when that is the
case, it’s fraud, pure and simple.
But, again, arrogance doesn’t always equal illegality. That said,
as Alan Sipress wrote in a page one story for the Washington
Post, “Some investor advocates call (Apple’s) explanation
disingenuous” when it comes to Jobs’s involvement.
“You are torturing the English language to say he did not benefit
from the options,” said Patrick McGurn, executive vice president
of Institutional Shareholder Services.
I know it’s confusing, but it’s clear this story is not about to go
away, even as Jobs hopes we all forget about it and focus instead
on the iPhone. I suspect the end result will be Jobs paying a very
hefty fine and perhaps suspended from working at Apple for a
year.
–The bribery scandal at Germany’s Siemens continued to grow
as the former CFO was formally named as a suspect. The current
CEO, meanwhile, warned the probe threatened the
conglomerate’s very existence, as investigators focused on the
telecom division and $hundreds of millions in bribes to countries
such as Nigeria.
–I am a ‘peak oil’ adherent and while crude’s recent swoon is
great news on a number of levels (for every $1 drop in crude
prices, American Airlines saves $80 million), longer-term I still
say the supply picture looks increasingly bleak until energy
alternatives are developed more fully. Over the years I’ve used
Norway as an example and so I note this item from last
weekend’s Journal.
“Norwegian oil and petroleum-liquids production is expected to
decline about 7% this year, while natural-gas flows should
continue to set production records, the Norwegian Petroleum
Directorate said….The report blamed delays in starting new
fields and a shortage of offshore drillings rigs. ‘The
development shows that oil production is declining and that
investments and costs are increasing,’ noted the country’s oil
minister.”
My friends at Strategic Energy Research say that as much as half
the recoverable reserves in the North Sea have already been
harvested and “decline rates will therefore increase.” Also, “The
lack of Offshore rig availability and rising Oil Service costs will
continue to impact drilling and production economics.” [On the
plus side, for consumers that is, the higher natural gas production
noted in the same story translates into lower prices in the UK, in
particular.]
–Northwest Airlines emerged as a potential suitor for Delta,
even as US Airways boosted its hostile offer by 25%.
–Interesting bit from UBS’ equity strategy group.
“During the past few months there has been extensive
commentary about two economic themes:
(1) Wage stagnation and rising inequality – While the rich get
richer in a globalizing economy, the income of the average
consumer is stagnating.
(2) Alternative energy – An alternative to cheap energy is needed
to fight global warming and achieve energy independence from
unstable foreign regimes.
“These two topics, like corn and soybeans, are usually placed in
separate conceptual silos, but we think this is a mistake. The
issues are closely linked because if the U.S. eschews cheap
energy in favor of more expensive alternative energy, that policy
– though arguably justifiable on environmental and geopolitical
grounds – will contribute to wage stagnation. Therefore policies
favoring alternative energy would be bearish for the consumer
sector and bullish for firms that either build the alternative
energy infrastructure (consisting of solar, wind, ethanol, nuclear,
etc.) or that retool the economy to make it more energy efficient.
“We believe this may well be a major investment theme for the
next decade.”
–On a related topic, European Union leaders are proposing a
20% cut in EU emissions by 2020 compared with 1990 levels as
European Commission President Jose Manuel Barroso called on
President Bush to join the fight against global warming.
For his part Bush will be stressing energy as a central theme in
his State of the Union address, but what kind of immediate
impact his initiatives will have could be muted by his lack of
credibility these days.
–And then there’s ethanol; no doubt a big part of the president’s
upcoming speech. California Governor Arnold Schwarzenegger
is plowing ahead with his own program, ordering a cut of “at
least 10%” in the carbon content of motor-vehicle fuels by 2020
which benefits ethanol.
But as ethanol use rises, odds are food prices will as well as the
demand for corn continues to soar. Michael Swanson, an
economist at Wells Fargo, told the Journal’s John Fialka that
many producers “are already lowering the number of young
chicks they raise and are fattening cattle less because of soaring
corn costs, trends that Mr. Swanson predicted will soon raise
retail meat prices.”
And while this isn’t a new story, policy makers better take into
consideration issues like drought when mandating ethanol use.
Or as the above UBS report concludes, the middle- and lower-
class will be increasingly squeezed in yet another area.
–Next to Giants Stadium in the New Jersey Meadowlands is a
new project called Xanadu, which is going to be a massive
shopping mall, and eventually a new stadium for the Giants and
Jets.
The developer of Xanadu is an outfit called Mills Corp., owner
of 38 shopping malls across America, and this week Mills
announced it might be forced into bankruptcy due to executive
misconduct and accounting errors.
Now these kinds of stories happen all the time, I think you’d
agree, but what caught my eye was the fact Goldman Sachs
Mortgage Co. has a $1.1 billion loan out to Mills that was
originally due Dec. 31, 2006. Last month, according to
Bloomberg News, Mills received an extension.
Assuming Mills eventually meets its obligations, I still just
wanted to point out the various arrangements that are out there,
as we stroll along, zip-pi-ty-do-daaaaing away. When the music
finally stops, grab a chair.
–In the meantime, enjoy. New York City’s tax revenues will be
$250 million higher in the current fiscal year than initially
projected, according to the Independent Budget Office, thanks to
Wall Street’s boom. Mayor Michael Bloomberg’s budget may
show a total surplus of $2.1 billion, though he’ll need this
because the 2008 shortfall is currently estimated to be $3.6
billion.
–New York tax authorities are going after former NYSE
chairman Dick Grasso for allegedly dodging New York City
taxes in 2002 and 2003; Grasso having failed to file returns for
those years because he claims his main residence was on Long
Island, not in Manhattan. The New York Post has previously
reported that Grasso has five separate homes…and 14 cars! This
boils down to proving he was out of the Big Apple 183 days.
When last seen, Grasso was rummaging through shoeboxes full
of receipts.
–I really had no idea how poorly Sprint Nextel Corp. was doing
until the company announced this week it was laying off 5,000
after losing 300,000 monthly subscribers in the fourth quarter.
And they can include me in the first quarter, as I consolidate
some phones I never use in the first place.
–After cashing in 9 million shares valued at $3.7 billion last
year, 16 Google insiders will owe the state of California as much
as $380 million in taxes, enough to cover the salaries of more
than 3,000 state workers.
–The estimated 10-year cost of the dividend tax credit is $125.7
billion. I’m all for an extension of the Bush tax cuts when it
comes to the income tax rates, but I’ve argued all along that the
dividend tax cut is nothing but a total sop to the rich and for the
life of me, from a purely political junkie standpoint, I can’t
understand why the Democrats don’t focus on this. And why is
it a sop to the rich? Because middle- and lower-income investors
are already at an ordinary tax rate that is essentially at the
dividend rate, if they own any dividend paying investments to
begin with.
–Ben Stein, in an op-ed for The New York Times:
“The amazing thing is that intelligent people are taking it
seriously, this matter of rolling back corporate controls [ed.
Sarbanes-Oxley] to make life even easier for misbehaving
corporate wheeler-dealer types. What’s more amazing is that
anyone is even thinking of rolling back corporate controls to
make life richer for Wall Street.
“The Street just finished paying out tens of billions in bonuses –
even as the Army and Marines are so starved for money that
untrained soldiers are sent to Iraq because there is not enough
equipment to properly train them first.
“There is an acute shortage of Ferraris because of those bonuses,
and there is a long waiting list for Lurssen yachts. But somehow,
we are supposed to feel bad for Wall Street and for the class that
has wrought so much mischief at the corporate helm, most
recently with backdating.
“But no committee of powerful corporate leaders and
academicians are at work computing the moral and mortal costs
of starving the Army and Marines of the equipment and training
they need to do their jobs with minimal loss of life. What a
world – where smart people worry about helping those suffering
from a shortage of Ferraris, but hardly anyone outside the
Pentagon notices the shortage of lifesaving equipment for the
soldiers fighting our wars.
“Where is the outcry? Where is the rage? It’s not a partisan
thing. The Democrats are just as complaisant about this as the
Republicans. Have the leaders of both parties and the boys at the
research groups been so thoroughly blinded – or corrupted – by
the plutocrats that no one will say ‘boo’ about it?
“I guess so. My letters tell me that there are a lot of angry people
out there, and some of them have children in Iraq and wonder
why all this looting is allowed while their sons and daughters are
at war for a law-abiding and just America.
“I’m no longer sure what to tell them, except that it’s all about
money, and if you don’t get it, you don’t get it. And it’s deeply
sad.”
–Brian Grow had a telling piece on former Home Depot CEO
Bob Nardelli in the Jan. 15, 2007, edition of BusinessWeek. To wit:
“(With) the stock price stuck at just over 40, roughly the same as
when Nardelli arrived six years ago, he could no longer rely on
other sterile metrics to assuage the quivering anger his arrogance
provoked within every one of his key constituencies: employees,
customers, and shareholders.”
Comparing former GE senior executives Nardelli and James
McNerney, the latter of 3M and Boeing…BW’s Diane Brady
wrote:
“Consider how the former GE rivals approached their new jobs.
Nardelli arrived at Home Depot full of bombast, standing up at
one meeting to say ‘you guys don’t know how to run a f—ing
business,’ according to a former senior executive at Home Depot.
In contrast, McNerney spent his first six months at Boeing
talking to employees to better understand the businesses. He
didn’t yell or publicly humiliate anyone.”
“With likeability a buzzword among CEO headhunters, it can
make all the difference. Nardelli clearly cared about Home
Depot. When it came to measures like profitability, his push was
paying off. What he neglected was the touchy-feely stuff: the
enthusiasm of his people, a sense of humility before his board,
the care and feeding of his shareholders. It all seems so soft and
irrelevant, until the injured egos decide to fight back.”
Amen, Ms. Brady. This particular story struck a chord with me
as I thought back on my Wall Street career and the terrific bosses
I had, most of whom I keep in touch with to this day.
–Thank goodness I didn’t have to work for former Putnam
Investments CEO Larry Lasser. Boy, he had a reputation as a
real pain in the butt; Mr. Arrogance. Lasser was shown the door
in 2003 amid a trading scandal, but the SEC just penalized him
for separate allegations concerning Putnam’s “pay-to-play”
arrangements with brokerage firms, a practice I was all too
familiar with when I was in the industry.
But Lasser was forced to pay just $75,000 for failing to tell
Putnam funds’ independent trustees about the arrangements,
while he exited in 2003 with a $78 million payment. From what
I know of the man, he probably flipped off the SEC when they
turned their backs to him.
–The mutual fund industry can not be happy with the Journal’s
drastically reduced fund coverage in its new, lighter format. For
some large fund groups, about 80% of its entries have been
eliminated from the daily price tables; not exactly great for
marketing. Exchange-traded funds, on the other hand, now have
a higher visibility.
–The value of all stocks, bonds and other financial assets in the
world hit $140 trillion, according to McKinsey & Co. The U.S.
is 33% of it, $47 trillion, while the Euro area accounts for $26.5
trillion and Japan $17.3 trillion.
–As a result of the war between Israel and Hizbullah last
summer, Lebanon’s tourism fell 35% in 2006 over 2005; a huge
blow.
–When Howard Stern signed on with Sirius Satellite Radio in
October 2004, his contract stipulated that if he exceeded a target
of 3.5 million subscribers by a further 2 million, two years later,
he would receive a hefty bonus. Sirius ended 2006 with just over
6 million subscribers and Stern took down $80+ million as a
result. A deal is a deal.
–Super Bowl tickets have a face value of around $700, but you
can buy them on Web sites like StubHub.com for a mere $2,500.
And seeing as there are a lot of folks these days who would pay
that much for the Big Game, or other major events, I guess it
shouldn’t be much of a surprise that StubHub was acquired by
eBay for $300 million. The secondary market for tickets online
is said to be more than $1 billion annually. Just about four years
ago, StubHub turned down eBay’s offer of $20 million. You’ve
gotta love stories like that….especially if you are the two
Stanford classmates who thought up the idea in the first place
and today collectively own about a third of the company.
–The House passed a minimum wage bill that increases the
hourly wage from $5.15 to $7.25 over two years. Now it moves
on to the Senate. Even with the boost, none of the folks
impacted will be buying Super Bowl tickets, that’s for sure.
Foreign Affairs
Israel: The London Times ran the non-story/story that Israel was
preparing an attack on Iran’s three key nuclear facilities. I
should hope they are practicing such a move, but as I’ve said the
past few weeks, Israel’s government is in such disarray I can’t
imagine anything is imminent. [Unless Iran does more next
month than I think they will do.]
Israeli Prime Minister Olmert spent three days in China this
week, in an attempt to get its leaders to come down hard on
Tehran, but China is far more concerned about keeping the oil
flowing these days than any nuke threat it faces from Iran.
Premier Wen Jiabao did tell Olmert, however, that his
government fully backs the sanctions now in place on the
financial end…and there are signs that in the case of both Iran
and North Korea, the sanctions are beginning to bite, witness the
above cited editorial in the Tehran Times.
Venezuela: Frankly, I don’t understand what all the hoopla was
about this week, nor why the Caracas stock market tanked 19%
on Tuesday following President Hugo Chavez’s announcement
he was nationalizing the electricity and telecom industries. What
did investors expect? This is Hugo Chavez, socialist champion.
What has history taught us? This is often what socialists do,
especially unenlightened proponents such as the mentally
deficient president.
Of course the Venezuelan equity market has been nuts to begin
with, and beyond all rational explanation. The two days before
Chavez’s announcement the key Caracas index rose 7% and 4%.
Last year it was up over 150%. Congratulations if you played
this, but I for one never considered investing in it for a second
because it is a broken country. Today the issue is whether or not
Chavez will offer fair compensation to the likes of Verizon,
which otherwise stands to lose $hundreds of millions for its 28%
stake in the largest telecom here. Chavez has to understand that
if he doesn’t, the U.S. can freeze state-owned Citgo’s assets in
the states.
But as Chavez moves his nation to “21st-century socialism,” and
as he shuts down the television network most critical of his
regime, investors and political strategists continue to miss the
broader point.
Iran is increasing its influence in Venezuela, and through it other
countries on the continent with similar leanings, such as
Nicaragua.
And guess who’s coming to dinner this weekend? Why if it isn’t
President Ahmadinejad himself. For a while now I’ve warned
you of the obvious dangers here. It’s one thing for Iran to have
terrorist bases in Iraq, Iran or Somalia. It’s quite another to have
‘world-class terrorists’ located a few hours flight from our
shores.
[Ahmadinejad is also going to visit Chavez’s new friend for play
dates, Nicaragua’s socialist leader Daniel Ortega, who is back in
power for the first time since 1990. Ortega has vowed, however,
to have a balanced approach when it comes to relations with the
United States and to respect private property.]
Somalia: Just another example of the adage ‘wait 24 hours.’
First, we were told the U.S., with aid from Ethiopia and Somali
forces aligned with Washington, attacked some al-Qaeda
hideouts following the ouster of the Islamist Courts government
in Mogadishu. Good, I mused, especially upon learning along
with the rest of you that at least one of three key al-Qaeda leaders
in Africa, a mastermind of the 1998 embassy bombings in Kenya
and Tanzania, had been among the victims. The new transitional
president, veteran warlord Yusuf, said the right thing. “The U.S.
has a right to bombard terrorist suspects who attacked its
embassies.”
But a few days later, as the streets of Mogadishu and elsewhere
in Somalia became increasingly disenchanted with the U.S.
airstrikes, as well as the lingering presence of their long-time
enemy, Ethiopia, we find out that none of the al-Qaeda targets
had been killed. [A ‘senior U.S. official’ told the media.] At
least on Friday many of the warlords announced their forces
would join a new Somali army.
Russia / Belarus: For the first time on the energy security issue, I
side with Russia for playing hardball with one-time ally Belarus
and its dictator president Alexander Lukashenko. Lukashenko
has been dependent on about $4 billion annually in energy
subsidies and he had a good thing going with Gazprom and its
predecessors charging Belarus significantly below market rates
for natural gas.
So recall that Russia and Belarus reached an agreement on New
Year’s to gradually hike the price to more realistic levels, but
then Lukashenko decided this wasn’t good enough so he slapped
a tariff on Russian crude oil transiting Belarus’ pipeline that
extends into Europe; one that provides the continent with 10% of
its oil needs. [44% of all European oil imports come from Russia
one way or another.]
But, alas, when it was apparent Lukashenko was messing with
the wrong people, and was perhaps in danger of receiving a
polonium-210 cocktail, he caved to Gazprom, i.e., Vladimir
Putin. The bad blood between the two, however, is now forever.
So here’s a thought, thinking outside the box. Since Lukashenko
now despises Putin for potentially breaking his economy,
perhaps he tacks West to irk the Kremlin further. He could start
by attempting to improve relations with two of his neighbors,
Ukraine and Poland, announce a new round of elections, etc.
Maybe become sort of a Pinochet, in other words. He’d still
need a taste-tester by his side, however.
[On a related matter, Azerbaijan stuck it to Moscow by
announcing it would supply neighbor Georgia with needed gas,
thus eliminating the need for Georgia to rely on Gazprom. So we
hereby name Azerbaijan StocksandNews “Nation of the Week.”]
Pakistan: Outgoing National Intelligence Director John
Negroponte, who is moving over to the State Department and
duty in Iraq, uttered publicly what we all already knew; Pakistan
is in essence harboring al-Qaeda. The significance is in the Bush
administration’s very public acknowledgment, before a Senate
committee, that our friend, President Pervez Musharraf, is not
doing enough to aid U.S. efforts to take down the group.
Negroponte said:
“We have captured or killed numerous senior al-Qaeda
operatives, but al-Qaeda’s core elements are resilient. They
continue to plot attacks against our homeland and other targets
with the objective of inflicting mass casualties,” adding “They
are cultivating stronger operational connections and relationships
that radiate outward from their leaders’ secure hide-out in
Pakistan.”
This is an embarrassment to Musharraf and the Pakistani
government went on the defensive in a big way. Just as Iraqi
Prime Minister Maliki is running out of time, so is Pakistan’s
ruler; in his case when it comes to outward U.S. support and
$billions in ongoing aid.
Lebanon: Hizbullah-led protests fizzled this week, but
Parliament Speaker, and Hizbullah supporter, Nabi Berri warned
of a “very dangerous” internal situation as Hizbullah maintained
it will bring down the government. Further protests are
scheduled this weekend.
China: According to the London Times, Chinese President Hu
Jintao is facing increasing opposition within the Communist
Party to give up leadership of one of the three posts he currently
controls; president, party chief and head of the military.
Personally, I’d give up the presidency given China’s existing
system, but that appears to be the last thing Hu wants to do. It
could all come to a head at this coming fall’s party gathering.
France: Pundits here are wondering why President Jacques
Chirac has been so active on the policy front recently, including
his proposal to drastically cut corporate taxes. Could it be the
74-year-old is actually contemplating another run for office, with
the first round of elections slated for April 22? If he does it’s
political suicide with 81% of French voters opposed to him
entering the race.
Poland: It’s sad what has happened here with the scandal in the
Roman Catholic Church over allegations some clergymen had
ties to the Communist-era secret police. New Archbishop
Stanislaw Wielgus stepped down moments before he was to be
installed as it was felt revelations were forthcoming. Another
key figure also resigned before the facts were released.
Prime Minister Jaroslaw Kaczynski said the scandal has left
Poland facing a “national crisis.” But the reason why I say it’s
sad is because it will darken the image of the Polish church, with
future generations undoubtedly not appreciating the role the
church played in bringing down Communism as a result of Pope
John Paul II’s heroic actions.
Random Musings
–You want to be scared out of your wits? Consider the
following, as reported by Peter Finn in the Washington Post.
Related to the recent poisoning of former Russian KGB agent
Alexander Litvinenko:
“97% of the legal production of one of the world’s rarest
industrial products – the intensely radioactive isotope polonium-
210 – takes place at a closely guarded nuclear reactor near the
Volga River 450 miles southeast of Moscow.
“In an average year, about three ounces of the substance is made
at the Avangard facility, a former nuclear weapons plant, then
sold under strict controls to Russian and foreign companies that
prize it for its abilities to reduce static electricity.”
There is no reason to believe the Avangard facility itself is not
safe, at least not now, but that doesn’t mean safeguards couldn’t
be circumvented if, say, high-level officials in the Kremlin
wanted them to be.
And just how dangerous is this? “In its pure form, polonium-210
is a soft, silvery metal. One microgram, or millionth of a gram,
can be fatal, and the body of (Litvinenko) contained multiple
times the lethal dose. One gram, about 0.035 of an ounce, could
theoretically kill tens of millions of people.”
One gram. If you doubt this, though, just think of how
authorities in the Litvinenko case, even this week, were still
finding traces of the stuff at various locations around London.
If you’re a terrorist, why waste time trying to develop and/or
conceal a nuclear bomb, even of the dirty variety, when you
could employ this? There are supposedly reactors all over the
world capable of creating polonium-210; so you’d think it would
require just 2 or 3 insiders to muck things up for the rest of us.
Can you imagine the panic if a facility discovered that a gram of
the stuff was missing?
–Columnist Robert Novak / Washington Post
“Republicans in Congress who do not want to be quoted tell me
that the State Department under Condoleezza Rice is a mess.
This comes at a time when the U.S. global position is precarious.
While attention is focused on Iraq, American diplomacy is being
tested worldwide….The judgment by thoughtful Republicans is
that Rice has failed to manage that endeavor.”
–Is there a bigger phony in all of Washington than Senate
Majority Leader Harry Reid? Less than a month ago he was on
television supporting a troop surge in Iraq.
–I am livid that some such as radio talk show host Don Imus are
questioning Sen. John McCain’s stance on more troops. This
week I happened to be listening when Imus guest Bob Schieffer
(CBS News / “Face the Nation”) himself then said of McCain “I
have to go back and check the record.” What?!
The beauty of this column is that it’s all here, this crazy decade
of ours, and I have well-documented McCain’s position in this
very space. He has been a supporter of more troops since Aug.
2003…period. He hasn’t deviated one iota since then. And,
recall, he was an early denouncer of Donald Rumsfeld.
Unfortunately for America, President Bush didn’t listen to
McCain and we’re paying a heavy price.
–When President Bush mentioned Sen. Joe Lieberman in his
speech on Wednesday, I thought ‘good’; Bush also has a chance
to co-opt Hillary Clinton by mentioning her excellent idea for
sharing oil revenues, co-sponsored by Rep. Sen. John Ensign of
Nevada. [WIR 12/23/06]
Instead, it was a big opportunity missed. This is what the
president should have said.
“I welcome the idea by Senators Clinton and Ensign on the
sharing of oil revenues, and I look forward to working with them
as we formulate a plan with the Iraqi government.”
It would have been a stroke of political genius. Imagine the
discussion.
Bush: “Hillary, I read that Journal op-ed piece of yours and the
oil trust idea is a good one. Come on over. We’ll discuss it and
then bring reporters in.”
Clinton: “But, I, err, you know, I seem to have a conflict on my
schedule………………click.”
Bush and his aides could then say, “We reached out and look
what happened.”
Then again, Karl Rove is supposedly Boy Wonder.
–Of course after the above you shouldn’t be surprised that House
Minority Leader John Boehner, as pointed out in a Journal
editorial on Friday, gave fellow House Republican Jeff Flake of
Arizona the shaft. Flake, you see, has been Mr. Porkbuster, as
profiled on “60 Minutes” last fall, so Boehner yanked Flake off
the Judiciary Committee. That, my friends, is the definition of
an a-hole. Here’s hoping Flake has had enough of this b.s. and
starts a true third party, something it’s all too apparent our
country desperately needs.
–Former national security advisor Zbigniew Brzezinski wrote an
op-ed in the Washington Post blasting the Bush strategy for Iraq;
not a great surprise. But he concludes with this thought.
“The speech reflects a profound misunderstanding of our era.
America is acting like a colonial power in Iraq. But the age of
colonialism is over. Waging a colonial war in the post-colonial
age is self-defeating. That is the fatal flaw of Bush’s policy.”
I don’t necessarily agree with this, but it’s an important point
nonetheless. The other day, Tuesday if I recall, I decided to
glance at the front pages of a slew of Middle East papers on the
Web, about ten of them, and all had the exact same coverage
above the fold; the joint U.S.-Iraqi raid on a Baghdad
neighborhood that killed about 50 insurgents and the attack on
the suspected al-Qaeda target in Somalia.
The two stories were accompanied by the same photos. One of
smoke rising from the Baghdad conflict and the other of an AC-
130 gunship of the kind used in the Somali effort.
If you take a world view, you couldn’t help but see all this and
think, ‘no wonder so many in this region are against us.’
Again, I’m not saying our actions were wrong in these instances;
I support both. But you have to put yourself in the shoes of
others from time to time.
–Skip Rozin / Wall Street Journal, on alleged steroid-muncher
Mark McGwire’s failure to get elected to Baseball’s Hall of
Fame this week
“Trust in the integrity of the game is all that separates sports
from the show-business spectacle that it daily threatens to
become. We can stand for choreographed introductions of
players, sculptured cheerleaders and dramatically produced half-
time shows if we believe that at least between the lines the game
itself is honest, that the team that won actually won.
“And we need to know, on those magical occasions when a
player without a history of performing Herculean feats lifts
himself or herself to do something really great, that only muscle
and heart made it happen. When an average pitcher throws a
brilliant game, the way that Don Larsen did when he pitched a
perfect game in the 1956 World Series….we need to know that
we can cheer instead of immediately suspecting that he’s done
something terribly wrong.
“Hollywood can produce fairy-tale endings, but nothing thrills
more than athletes beating the odds. Anyone who watched Boise
State’s football team complete its improbable undefeated season
by beating mighty Oklahoma in overtime in this season’s Fiesta
Bowl knows this….
“(McGwire) will be judged again next year, and the year after
that, and some voters may change their minds. But I doubt if
enough will to make a difference. In the court of public opinion,
the heroics of Mark McGwire will forever be questioned.
“And in the world of sports, ultimately, that is the only court that
matters. Once fans stop believing in the game, it’s only a show.”
–I didn’t know this. A study out of the University of Illinois
“found that after three days in the store and three days in a
refrigerator, fresh green beans retained 36 percent of their
vitamin C, while the frozen version retained 77 percent.”
[Runners World]
–I really hope soccer star David Beckham succeeds in his
attempt to transform the game in America. But aside from the
fact he is past his prime, I hope he understands that for $250
million over five years he doesn’t dare take one game off for a
minor injury, as he and others in his sport have done rather
frequently in the past. He’ll be eaten alive in the media. And
welcome to America, Victoria! Paris, Britney and Lindsay are
going to be very jealous of all the attention you’ll be receiving.
Just eat some meat now and then, OK? [Victoria is too skinny,
you see.]
–The Democrats have selected Denver to be the site for their
convention in 2008, giving them ample time to clear away the
snow.
–Outside of Denver’s snow issues, however, it’s official. 2006
was the warmest year on record for the continental U.S., a full
2.2 degrees above the mean for the century. Australian
researchers recently reported that the rate at which carbon
dioxide is being released into the atmosphere has doubled since
the 1990s.
–From a review by the Journal’s John Fund of the book “The
Education of Ronald Reagan” by Thomas W. Evans.
“(The lessons) Reagan had learned during his GE barnstorming
[1954 to 1962] stuck with him. Several passages in The Speech
of 1964 came directly from his GE talks. (‘There is no such
thing as a left or right. There is only an up or down: up to man’s
age-old dream, the ultimate in individual freedom consistent with
law and order; or down to the ant heap of totalitarianism.’)
“The influence of those years lasted well into Reagan’s
presidency. The Time magazine journalist Hugh Sidey recalled
admiring some of Reagan’s White House speeches so much that
he asked a speechwriter who had written them. ‘Reagan,’ he was
told. ‘They were actually pretty much the speeches he had given
when he worked for General Electric.’ And for the GE talks,
Reagan was his own speechwriter.
“It was in these forgotten GE years, brought to life so vividly by
Mr. Evans, that Reagan developed into ‘The Great
Communicator’ – someone not only with an engaging speaking
style but with something principled to say. A gifted popularizer
of liberty had thus found the perfect partner in a business leader
who believed in aggressively defending the free-market system.
Would that more such business leaders existed today.”
–U.S. News & World Report had a blurb on the Duke lacrosse
case, which thankfully is on the verge of totally falling apart
though the damage has been done. Applications for binding
early admission were down 20% this year.
–Irish researchers found traces of cocaine on every one of 45
banknotes in a random test for drug contamination of currency,
similar to a recent study in Spain.
–Karl Szmolinsky of Germany won a prize for breeding his
country’s largest rabbit, 23 lb., as noted in the London Times.
So now he has been contacted by North Korea “to supply giant
rabbits to help to boost meat production in the reclusive
Communist country, which is suffering severe food shortages.”
The commies are flying Karl to Pyongyang in April to advise
them on setting up a breeding farm. Before then, however, Karl
shipped 12 rabbits to North Korea after an attaché paid him a
visit. [One of his monster rabbits yields 15 lb. of meat,
incidentally.] The 12 rabbits, 8 females and 4 males, could
produce at least 60 babies in a year, because that’s what they do.
Well, there are a few problems with this. The rabbits themselves
eat a ton and North Korea only has dirt as a foodstuff these days.
So I’m thinking Kim Jong-il’s minions might be forced to feed
the bunnies nuclear waste, at which point the entire world could
have a serious problem on its hands; as your editor hashes out a
blockbuster movie plot.
–Finally, any fan of rock and roll has to be upset that once again
the Rock Hall of Fame has excluded the great British Invasion
group, the Dave Clark Five. Somehow we have to right this
wrong for next year.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $609
Oil, $56.31
Returns for the week 1/8-1/12
Dow Jones +1.3% [12566]
S&P 500 +1.5% [1430]
S&P MidCap +2.5%
Russell 2000 +2.4%
Nasdaq +2.8% [2502]
Returns for the period 1/1/07-1/12/07
Dow Jones +0.7%
S&P 500 +0.9%
S&P MidCap +2.0%
Russell 2000 +0.8%
Nasdaq +3.6%
Bulls 55.4
Bears 20.7 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
