[Posted 7:00 AM ET]
Iraq
Last week I chose to be an optimist on Iraq because the major
parties there had finally come up with a plan to share the oil
revenues, the source of 90% of government income. But the
proposal from the Council of Ministers still has to be approved
by parliament, so guess what? After a month-long recess (how
can you have one in the midst of a war?), parliament reconvened
and 12, count ‘em, 12 out of 275 members showed up. If I’m a
U.S. soldier, busting my hump and risking my life for these
people, I’d be furious.
I was all set to quote U.S. ambassador Zalmay Khalilzad on the
oil deal from an op-ed in the Washington Post that I wasn’t able
to comment on last time, but then I learned early in the week of
the attendance figure and one of Khalilzad’s lines became almost
comical.
“While the draft law will need to be enacted by the Iraqi Council
of Representatives when it returns from recess, the prospects for
passage are excellent……”
There can be no progress, zero, until this single issue is resolved
so let’s hope the esteemed Iraqi representatives put down their
water pipes for a few hours and manage to find their way to the
Green Zone and vote on the damn thing.
But if that’s not enough, each time one wants to be optimistic
and talk of progress on the ground, we end up having another
series of attacks, like those taking out 200 Shia pilgrims in two
days, let alone the death of 9 Americans in separate incidents in
the span of a few hours.
Prime Minister Nouri al-Maliki has vowed to reshuffle the
cabinet and pursue criminal charges against politicians linked to
terrorists, including all six (of 30 total cabinet ministers)
belonging to Moqtada al-Sadr’s party.
That’s all well and good, you might muse. But then when British
and Iraqi army units raided an Iraqi intelligence compound in
Basra and found signs of torture, Maliki threw a fit and
condemned it. ‘Who authorized the action?’ he complained.
So it’s no wonder that in two separate polls, NBC News/Wall
Street Journal and USA Today/Gallup, less than 30% of
Americans believe the U.S. will in the end prevail…meaning the
establishment of a stable government that is an ally in the war on
terror, as our president is fond of saying.
You know where I’ve stood from day one; a big time supporter
of the war effort. I’m one of a still 60% majority that while
frustrated does not want to see funding cut off to our troops, as
the latest Democratic proposal threatens to do if various
benchmarks and timetables aren’t met.
But for the life of me, while I did my part (through this column)
in urging Americans to give the Iraq war one last shot, after all
the mistakes this incredibly incompetent White House has made,
I don’t understand how anyone in their right mind could not see
that by late summer, if the ‘surge’ hasn’t worked it’s over.
And let’s talk about the surge. I went to see Sen. John McCain at
a fundraiser in New York City on Thursday, being an unabashed
supporter, but even he told us it is truly pitiful (my word…I
forget his exact term) that the world’s best military still can’t get
five brigades to Iraq before June. Of course we’re stretched way
too thin these days and we need to expand the Army in
particular, as McCain himself advocates. But all we can do at
this point is continue to pray the surge works; that it buys
enough time for Iraq’s government to finally get its act together.
In the meantime I leave you with this.
Ralph Peters / op-ed New York Post
“Imagine the reaction if Western agents slaughtered a hundred
Sunni pilgrims on their way to Mecca. The outrage would spark
incendiary rhetoric, riots and revenge killings from Peshawar to
Paris.
“But when Sunni suicide bombers murdered 118 Shia pilgrims
(and wounded almost 200 more) on Tuesday, Sunnis around the
globe looked away. Shias only count as Muslims when America
can be blamed for their suffering.
“Many of those Shia victims of religious totalitarianism were
traveling on foot to Karbala to honor Mohammed’s grandson
Hussein – who was butchered by the founders of Sunni Islam, to
whom power was worth more than the Prophet’s family. The
hatred goes deep….
“The Sunni Arab campaign against Shias isn’t just a struggle for
political advantage: It reflects an impulse to genocide. And it
makes a grim joke of claims of Muslim unity….
“Where was the outcry? Human-rights groups were too busy
applauding European requests for the extradition of CIA
operatives (the real enemies of Western civilization, of course).
Since this butchery wasn’t the fault of Americans or Brits, the
Europeans themselves took no interest.
“American leftists, who raged that Abu Ghraib was another
Auschwitz, didn’t offer a single word of pity for the Muslim
victims of Muslims….
“But shouldn’t Muslims have denounced the attacks on the
pilgrims? …..Where were the public statements of sympathy by
government ministers and mullahs? Where was the noble Arab
media? Where are the outraged demonstrations?
“Not only is Islamic unity a sham, the Middle East’s hypocrisy
stinks like a shallow grave….
“The moral issues are bad enough: To the Saudi royal family,
dead Shias aren’t tragedies – they’re trophies. One almost
expects those bloated, bigoted princes to organize Shia-hunting
safaris the way they slaughter endangered species when
vacationing in impoverished African countries (been there, seen
that)….
“By the way: The two suicide bombers who killed those pilgrims
were Saudis.”
Peters’ column was written the same day Jordan’s King Abdullah
was in Washington, making a speech before Congress. Many of
us in this country tend to like Abdullah, because for the most part
he is as good a friend as we have in the Arab world (not that this
is saying much), he is Westernized in some respects, and if you
follow the world you know he has a huge Palestinian problem of
his own, one that could take him down in the blink of an eye.
But keep Peters’ comments in mind as you listen to Abdullah
lecture America.
“Sixty years of Palestinian dispossession, 40 years of occupation
…have left a bitter legacy of disappointment and despair.”
The U.S. must act fast.
“Nothing can assert America’s moral vision more clearly,
nothing can reach the world’s youth more directly than your
leadership in a peace process that delivers results, not next year,
not in five years, but this year. We need all hands on deck.”
Well I’m one who has said we need to do more to bridge the
yawning gap in the region, but obviously today the Palestinians
themselves still can’t decide on something rather basic:
Recognizing Israel’s right to exist!
The Wall Street Journal opined on Friday.
“In a speech Wednesday to a joint session of Congress, Jordan’s
King Abdullah made the remarkable claim that ‘the well-spring
of regional division, the source of resentment and frustration far
beyond, is the denial of justice and peace in Palestine.’ Solve
that, he said, and ‘hope to our region’s people’ could be restored.
“This is not the first time such sentiments have been expressed,
nor is King Abdullah the only one who believes them. For
decades, conventional wisdom held that the conflict between
Arabs and Israelis lay at the heart of most of the Middle East’s
troubles. Does anyone seriously believe that anymore?
“On Monday, 38 Iraqis were killed and 100 injured by a car
bomb in downtown Baghdad. Apparently, King Abdullah would
have us believe that the Sunni terrorists behind that massacre of
their fellow Arabs were registering a protest against Israel’s
occupation of the West Bank. Perhaps he also thinks that the
murder in 2005 of former Lebanese premier Rafik Hariri was a
function of Israeli policies, and not of Syria’s desire to dominate
its neighbor….
“Jordan is a friend of America; it played a significant role in
killing Abu Musab al-Zarqawi last year. Too bad its king can’t
match the hard-headedness he’s shown in private with some
candid public speaking about the real source of the Arab world’s
woes.”
—
Wall Street
It was very much intentional that last week I didn’t mention
former Federal Reserve chairman Alan Greenspan, for those who
wondered about this omission. There is a simple reason for this.
There is absolutely no way that Alan Greenspan was responsible
for the slide in equity prices two weeks ago when he talked of the
risk of recession. Just as his comment this week, in an attempt to
clarify those remarks, that there was a “1/3rd probability” of a
recession, didn’t carry any weight either.
The man is irrelevant…and I see zero reason to bring him up in
the future, unless it’s about his earlier forecasts as chairman
which fell woefully short of being accurate.
Now that I have that out of the way, let me also interject that
some such as Larry Kudlow say Treasury Secretary Hank
Paulson is the main man these days, not Fed Chairman Ben
Bernanke. That too is a bunch of garbage. Paulson is a far better
treasury secretary than his two predecessors, that’s for sure, but
to think anything he says about the economy is important is
absurd. He’s a cabinet member; what do you expect him to say?
His comments on China and the currency can, however, be
newsworthy, but for Paulson to get credit like he did this week
for saying there is “solid growth, low inflation and high levels of
liquidity” makes zero sense.
So what should you care about these days? Let me put it to you
this way. You know how Lucy Van Pelt told Charlie Brown the
only thing she wanted at Christmas was real estate? She was last
seen huddling with her real estate expert and accountant on how
much further she needed to slash the sales price of the 600
condos she was intending to flip in order to stay solvent. It was a
fun ride for Lucy on the way up….but there is hell to pay on the
way down, and lord knows Lucy isn’t handling it well. [As for
Charlie Brown he’s chuckling over Lucy’s problems, after all she
did to him. The kid who once gave a home to a scrawny little
tree put the standard 20% down on his first and only home years
ago and is sleeping soundly today. Yes, good things do happen
to good people.]
You see, today’s crisis in the subprime market continues. In fact
it’s almost comical how some just a few weeks ago, let alone
months, were trying to convince you the bottom was in. As John
Wayne would say, gaze fixed on an unknowing target, “Well
hold on there, pilgrim. You see a bottom?” “Ah, no, Mr.
Wayne. Sorry I brought it up.”
You know you have problems when the nation’s second-largest
subprime mortgage lender, New Century Financial, may have
filed for bankruptcy by the time you read this. Or when every
developer, like Hovnanian, or a bank such as HSBC, continues to
speak of serious issues in the housing sector, overall, and not just
subprime.
In fact as you’ve undoubtedly heard, but which I would be
remiss in not mentioning at least for the archives, Donald
Tomnitz, CEO of builder D.R. Horton, told investors in New
York that “2007 is going to suck, all 12 months of the calendar
year.” Let me tell you…when this comment hit the tape, it did
indeed move the market. Alan Greenspan? Pshaw. Donald
Tomnitz? He rocks.
The more serious issue on an individual basis is of course the
fact there is real pain out there in America and I truly feel for
those who were either given bum advice or didn’t know to ask
the right questions. Mortgage lenders, like credit card
companies, can be masters of deception when it comes to
explaining loan or credit terms.
But as I’ve written before, whenever we do hit the bottom in real
estate that doesn’t mean we bounce right back up. A long
period of stagnation would then ensue and that’s not going to do
anything of a positive nature when it comes to the wealth effect
and the average American’s #1 asset. This is why some of us
continue to wait for the inevitable consumer spending crunch.
Here’s a real life example from Noelle Knox and USA Today
that breaks your heart.
“Edward Booker is one of nearly 3 million homeowners with
adjustable-rate mortgages who’ve had trouble paying their bills.
And, like Booker, many of them won’t be able to refinance their
loans once the interest rates start rising. At that point, they’ll
have to tighten their belts, sell their homes or lose them through
foreclosure.
“This month, the mortgage payment on Booker’s Chicago home
rose $200, to about $1,300. It’ll go up again in September. He
wants to refinance, but he fell behind on payments after his wife
died of cancer in 2005, so no lender wants to take the risk.
“ ‘I’m just trying to hold onto my house until I can figure out
something else to do,’ says Booker, 58, a former rail-car
inspector who’s on disability.”
Some of us were telling folks to quickly get into a fixed rate
mortgage before reset, and tens of thousands did. But it’s easy to
forget that once you fall behind it’s too late.
Noelle Knox’s excellent piece [from 3/5] also points out that “on
average, first-time buyers made only a 2% down payment last
year,” according to the National Association of Realtors. 2%.
But now we have another lag effect to worry about, the job
market. Sure, Friday’s employment report sounded OK as the
U.S. economy added 97,000 to the non-farm payrolls, with yet
another revision upwards to December’s and January’s numbers.
But as housing continues to slide and then stagnate, as the large
existing inventories, much of which are not accurately reflected
in the official data, are eventually sopped up, layoffs will be the
order of the day. It starts when builders finish their last projects
and then it works down the chain.
Josh P. passed on the musings of one of my favorite CEOs,
Richard Manoogian of home supply giant Masco, who once
again warned “I think things are worse than you’ve seen. I think
you’re gong to see a pickup in unemployment rates and I think
that’s going to have a positive impact on commodity costs,
positive impact on interest rates, because I think the Federal
Reserve will act once they see how the economy is softening.
We’re one company and we’re laying off 8,000 people. You
multiply us times many other companies in our industry, you get
to appliance people and furniture people…I think you will see a
little bit bigger ripple effect in the economy than most people
expect.”
J.P. also passed on the latest from the economists at UCLA. Try
100,000 projected layoffs in the construction sector for
California alone over the next 2 ½ years. [Source: The San
Diego Union-Tribune]
You look at some of the above and is it any wonder that in the
latest NBC News/Wall Street Journal survey, only 16% of us
believe the economy will get better the next 12 months? Of
course not. Interestingly, back in October 2002, when the major
market equity averages were bottoming out, 41% said things
would be better a year hence.
Meanwhile, the Federal Reserve’s survey of regional economic
activity, the Beige Book, spoke of housing “remain(ing) weak”
and just a “modest expansion in economic activity.” That’s a
comedown from prior pronouncements. It’s more like 1-2%
growth by my way of thinking, at best.
As for stocks, they staged a modest rebound after the prior
week’s drubbing with the Dow Jones up 1.3% to 12276, the S&P
500 up 1.1% to 1402, and Nasdaq ahead 0.8% to 2387. Part of
the reason for the rebound was a slight weakening in the yen vs.
the dollar. I wouldn’t make too much of the rally in equity
prices. We need to see how real estate plays itself out in terms of
damage to the overall economy and, remember, this is largely a
global bubble, despite what you may read from across the pond
about a still soaring London market. London is like Manhattan.
Prices rise for reasons different than anywhere else in their
respective countries; huge bonuses related to the financial
services and banking sectors. Period. But if the sloppy action
of the past few weeks becomes a longer-term trend, the
Goldmans and Merill Lynchs of the world won’t be shelling out
sacks of gold for much longer.
Finally, once again I nibbled at one of my own holdings and
purchased a little more, but only at a price I wanted to pay
(meaning Mr. Market said, “If that’s the way you are, I’m not
giving you everything you want!”). Which also means I haven’t
sold a share during this period of mini-crisis and I still have a
considerable cash holding, like 75%. [One issue I told you last
time that I wanted to sell, I still haven’t.]
I’ve never been a good trader, and I’m a worse short-seller, but I
think I’m pretty good at value type plays and then on the
speculative side I pray one of them hits now and then. Most of
them don’t, but that’s the nature of that game.
But in one of the many newsletters I subscribe to, most of which
I read in all of 10 seconds unless I see a name that’s intriguing,
this one fellow Chris Mayer summed up a mistake I’ve made
from time to time. [You’ll recognize it, J. P.]
“I don’t sell stocks because they’ve gone up a lot. I sell stocks
when something fundamental has changed and/or my thesis is
wrong or no longer valid.
“Back in the day when I was still learning to invest, I would
often sell things quickly. I’d get a 40% gain and be out. But then
what? You pay taxes. Then you have to find another idea,
which may not be as good. Worthy investment ideas are relative
rarities. It’s not like changing your socks.
“Oftentimes, the stocks I sold would go up a lot more. Slowly, I
learned to hold on longer. I became more a follower of Marty
Whitman’s ‘sit-on-your-ass’ investing style. Then I started
making really big gains in the stock market.”
The great thing about this game, even as the hedge funds and
institutions have increasingly turned it into a casino, is that you
are always learning. Sometimes it’s painful, no doubt, which is
why in these uncertain times I opt to hold a large cash position. I
just sleep better. Investing is also certainly mentally stimulating,
albeit it’s not for everyone. If you’re in this last group, by all
means park your allocation to stocks in an S&P 500 index fund
and relax.
Street Bytes
–U.S. Treasury Yields
6-mo. 5.13% 2-yr. 4.67% 10-yr. 4.59% 30-yr. 4.72%
Bonds basically gave up the gains from the prior week on the
heels of the stronger than expected jobs figure. But I reached a
decision on Friday as I was watching CNBC’s Rick Santelli for
the umpteenth time talk about the same things over and over
again. Don’t get me wrong, Santelli is the best the network has
to offer; it just hit me that until we break out of what has been
an incredibly narrow trading range for bonds, I’m turning off the
sound because it is nothing but noise. And for those new readers
(who thankfully replace those who have died or left me….I do
often wonder about people I haven’t heard from in some time),
the Fed is not raising interest rates in 2007. If they were to do
this, it would be suicide for the financial markets and if you
thought the subprime debacle was bad, wait ‘til you see what
would happen next. Ben Bernanke knows this.
–Alert…original research: As I’ve mentioned from time to time,
I have various market indicators handwritten on spread sheets
going back to March 1990 and when I noticed in Barron’s last
weekend that the trailing 12 months price/earnings multiple on
the S&P 500 had dipped below 17, I was curious as to when that
had last occurred. Try the week ending 11/10/95, when the Dow
Jones was 4870. A year later it was 6300 and a month after that
it hit 6600 as Alan Greenspan gave his ill-timed irrational
exuberance speech. Ergo, if you’re a bull, just another arrow in
your quiver…even though earnings are in a decelerating mode.
[Sorry, folks. I mean it. It’s all handwritten; don’t ask for it on
disc. And being a creature of habit, for the last 17 years I have
written down the weekly close of Sydney’s Dow Jones
equivalent. As I’m logging it in I’m thinking, now why is it
that I do this?]
–We’re going to look back on the Bush years and think it’s been
one lost opportunity after another…8 years with nothing to show
for it but tax cuts. And while I favored these, and continue to do
so (except the cut on dividends), it will be 8 long years when the
Republicans couldn’t advance one step the implementation of a
flat tax, which is what is truly needed. When you think about
even an issue like this, it’s yet another reason why George W.
Bush will go down in history as one of the worst.
And when it comes to Latin America, if I hear one more time
from an administration lackey that the White House was
distracted by 9/11 and that’s why it paid the region little heed, I
think I’ll scream. There was absolutely zero reason to ignore the
continent like the president did.
But now, over six years in, Bush is finally doing what he should
have been all along; aggressively pursuing a positive agenda in
Latin America. Only one problem. Because he dickered and
dithered for so long, we now have as many enemies down there
as friends, and the free trade agreements that this administration
did put forward are in some jeopardy.
[And can someone please tell me why Commerce Secretary
Carlos Gutierrez, a Cuban-American born in Havana, isn’t with
the president, at least as of Friday when Bush was in Brazil?
Gutierrez has been the most misused cabinet official in recent
memory. I told you from the day he was nominated he should be
living in Latin America because of his roots. He has extensive
prior experience in Mexico. But I guess it made too much
sense.]
At least the agreement between the U.S. and Brazil on
promoting ethanol use throughout Latin America and the
Caribbean appears to be a good one. I’m not a proponent of the
stuff, but the Brazilians have shown the technology can work
for them and that’s a good thing. As for the cries from the U.S.
corn-belt that any help for Brazil could lead to an increase in
imports of cheap foreign ethanol…good! You’ll just have to go
back to growing something else; something that we can eat, for
crissakes. Iowa Republican Sen. Charles Grassley wonders why
we would allow Brazil to escape the tariff on imported ethanol.
[Though the 54 cents per gallon levy wasn’t part of Friday’s
deal.] Because that’s free trade, Senator. Maybe we are a dying
breed, but some of your fellow Republicans still believe in it.
–Fed Chairman Bernanke said in a speech that Fannie Mae and
Freddie Mac should restrict their business “almost exclusively”
to promoting affordable housing.
“The size and the potentially rapid growth of (government-
sponsored enterprises like Fannie and Freddie) raise substantial
systemic risk concerns.”
If the mortgage giants met Bernanke’s standards, it would
require a drastic reduction in the companies’ portfolios,
dominated by regular mortgages and mortgage-backed securities.
Only 30% of the current holdings are related to affordable
housing, according to regulators. But there isn’t likely to be any
immediate upheaval due to various issues in Congress.
–China is ending 30 years of tax breaks for foreign companies
and will now equalize the rates paid by local and overseas
enterprises, which seems fair to me. Chinese companies have
long complained they faced discrimination over their foreign
competitors and now there will be a single 25% tax rate on all,
versus the current system of Chinese companies being taxed at
up to a 33% rate while foreign enterprises have been paying as
little as 15%. [Financial Times]
–For the first time, China is now producing more passenger cars
than the U.S. Consider this…back in 1997 China’s car output
was just 5.4% of ours. And for those looking for $40 oil anytime
soon, at least for now these cars are running on gasoline.
–While shares in the major investment banks rallied after taking
a drubbing the previous week, there is increasing talk among
insiders at the likes of Goldman Sachs, Merrill Lynch and
Morgan Stanley that their own firms are barely more
creditworthy than junk bonds. This is due to the huge exposures
they have to the credit-default swaps market and the exposure to
housing.
“These guys have made a lot of money securitizing mortgages
over the years in a mortgage boom time,” Richard Hoffman, a
bond analyst with CreditSights told Bloomberg News. “The
question now is what is the exposure to credit risk and what are
the potential revenue headwinds if they’re not able to keep that
securitization machine humming along.”
My point, as it’s always been, is the banks often don’t even know
who’s holding the other side of the trade! CreditSights also
notes that a firm like Bear Stearns has 13% of its “tangible”
equity tied up in non-investment grade mortgage securities.
Goldman, Morgan Stanley and Merrill don’t disclose such a
figure.
–Global semiconductor sales rose 9.2% in January over a year
earlier, driven by business in Asia and Europe. But it was
unchanged in the Americas; an example of which was contained
in yet another earnings warning from Advanced Micro Devices,
blaming weaker than expected demand for computers. AMD
also said its gross margins dipped to 40% in the fourth quarter,
compared with 57% a year earlier due to sliding prices. Yikes.
Can you say layoffs?
–In a huge blow to Vonage, the Internet telephony company, a
federal court ruled it infringed on three of Verizon’s patents and
now must cough up $58 million in damages plus royalties.
That’s a lot of money for this outfit.
–The Wall Street Journal had a story on the large amount of
backdating of options that took place in the days after 9/11. For
example, “At KLA-Tencor Corp., at least 11 top executives
purportedly were awarded options on Oct. 2, 2001, at the very
bottom of a sharp dip in the semiconductor-equipment maker’s
stock. But in a recent filing KLA said those options were among
some that were improperly backdated, suggesting in a securities
filing they weren’t actually awarded until weeks later. The post-
9/11 backdating increased KLA insiders’ potential profit on the
options by more than $12 million.” It’s enough to make you
sick, or as former SEC chairman Harvey Pitt put it, it was
“offensive” for companies to capitalize on the market panic
caused by 9/11. The terror attacks “created many pressures,
difficulties and dislocations,” Pitt told the Journal. “The one
thing it cannot be used to justify is the fraudulent backdating of
documents.”
And in a separate Journal story, Research in Motion, makers of
the BlackBerry, said “all options granted before late February
2002 and approximately 321 grants made between that time and
August 2006 were improperly accounted for.” Earnings will be
reduced some $250 million, but Wall Street hasn’t been
punishing the share prices of these companies. It’s also
increasingly apparent few executives at these houses of fraud
will pay the ultimate price ….a few months in a cell with Bubba.
–Billionaire Mark Cuban is going after Google, demanding it
hand over the names of those illegally uploading movie clips
from Cuban’s Magnolia Pictures film company. It was Cuban
who was the first to say any potential YouTube buyer would
have to be a “moron” because of the potential legal liabilities
inherent with its business. Here’s hoping Cuban cleans up.
–Of course Cuban isn’t the only one going after Google these
days. Microsoft attacked it for its “cavalier” approach to
copyrights in Google’s alleged exploitation of books, music,
films and television programs without permission.
–Emerging market fund flows suffered their worst week ever
following the Feb. 27 sell-off; $8.9 billion in outflows. That was
more than one-third of the record $22.4 billion of net buying in
these funds in 2006, according to EmergingPortfolio.com.
–More evidence of a slump in housing. The sale price on Wilt
Chamberlain’s old home in Bel-Air (Los Angeles), now occupied
by some television writers, has been reduced from $11.5 million
to $10.5 million. A lot of history in that place, if you catch my
drift.
–Follow-up on my Quiznos comment of last week. Leah K.
reports that her local one in New Jersey is also dying. Zero
customers at peak hours.
–Sheila H. attended a charity event in New York City and
someone paid $110,000 for a football signed by former Giants
running back Tiki Barber. $110,000! Aside from the fact I can’t
imagine why anyone would want the disingenuous Barber’s
signature, no matter what the cause, as Sheila said it’s just
another example of all the funny money out there today.
–Bill Gates remains atop the Forbes list of billionaires for a 13th
straight year at $56 billion, with Warren Buffett hot on his tail at
$52 billion. But what’s interesting is that there are 150 more
billionaires this year than last, up to a total of 946 worldwide.
Their assets also increased a staggering 35%, collectively, to
$3.5 trillion. Forbes’ editor in chief Steve Forbes said “This
boom goes beyond commodities. One of the things that has
facilitated it globally, bringing hundreds of millions of people
into the global economy, is of course technology….This is the
richest year in human history.”
Forbes himself can be so full of it, sometimes. On Friday he was
on Kudlow’s program, with the two of them going on about free
markets and such, and Forbes, thinking we all are morons, tried
to convince the listeners that Russia was a free market and free
economy and that crony capitalism creates new innovations and
businesses. Ah, Mr. Forbes? Is Gazprom innovating? And
aren’t some of Russia’s billionaires outright crooks and thieves?
The only one who tried to do good, Mikhail Khodorkovsky, is in
one of Putin’s prisons.
Foreign Affairs
Iran: Let’s see, it’s hard to keep the UN Security Council
resolutions and six-party agreements straight when it comes to
Iran and North Korea, but it seems to me that Tehran’s 60-day
window to cease with its uranium enrichment program ended
weeks ago, didn’t it? So why does it continue to defy the UN?
Because Russia and China aren’t more forcefully coming down
on Iran, that’s why. The U.S. needs their help and isn’t getting
it.
This week the International Atomic Energy Agency at least
suspended 23 technical aid programs it had with Iran, and now
the rest of us await the latest sanctions regime out of the Security
Council.
I in turn have been arguing for engagement with President
Ahmadinejad’s rivals; recognizing that we have wasted the past
few years while Iran’s nuclear program proceeds apace. My
point today is that the Iranian people need to see the U.S.
negotiating with major figures, in and out of government, just not
the president. End run the increasingly unpopular Ahmadinejad,
in other words. So I was surprised to see the following in a
Journal op-ed by neocon Michael Ledeen.
“Regime change in Iran does not require an invasion, or even the
sort of bombing so many are now advocating in order to thwart
the mullahs’ program to build atomic bombs. The issue is the
regime, not its instruments; thousands of Americans have already
been killed and wounded by Iran’s terror army. We should
assault the mullahs with our most potent weapons, which are
primarily political. The recent sanctions against Iran are
welcome, but support for freedom is the key to regime change in
Tehran.
“The mullahs know their doom will come from their own people,
which is why they have embarked on a new wave of mass
repression, with a spate of public hangings in the Kurdish,
Balouch and Ahwaz areas, a wave of arrests of pro-democracy
leaders in Tehran and Isfahan (the most famous face of the
Iranian resistance, Ahmad Batebi, reportedly suffered a stroke in
the mullahs’ torture chambers, and is now in a coma)….
“A free Iran would deliver a devastating global blow to the
terrorists, and would no doubt change the calculus – and perhaps
the regime – of Syria. Under those happy circumstances, we
might muster the will to insist that the Saudis shut down the
Wahhabi schools and mosques, which constitute an assembly
line of fanatics all over the world.
“It’s an ambitious strategy, but we are an ambitious people. We
are engaged in a global war, and while we have done well in
many respects, we have thus far refused to recognize the real
nature of the fight.”
Ledeen was one of the chief architects of the war against Saddam
and it’s good to see him take such a stance. And if we play our
cards right, remember this coming May 22; the day the Iranian
government will finally raise the price of gasoline, fixed for the
past three years at 9 cents a liter. As I’ve been writing, Iran’s
domestic consumption of oil has been skyrocketing and it’s not
only depriving the Treasury of potentially more export dollars,
it’s costing the treasury dearly in increased subsidies. The
mullahs must bring down consumption and raising the price is
Econ. 101.
But the people aren’t going to be happy. The economy isn’t
doing well to begin with and they have long viewed cheap oil as
a birth-right. Look for major protests, possibly bloody ones, if
the government follows through. The U.S. can benefit; but if
you knew this wouldn’t you be talking to the opposition today,
as I’ve advocated?
China: Prime Minister Wen Jiabao gave his annual address and
pledged his country would combat pollution in a more aggressive
way as well as become more energy-efficient.
“We must make conserving energy, decreasing energy
consumption, protecting the environment and using land
intensively the breakthrough point and main fulcrum for
changing the pattern of economic growth.”
But at the same time, Wen emphasized nothing is more important
than maintaining the current boom.
[China’s pollution is going to become an increasing issue in the
United States. The latest research report from the National
Academy of Sciences notes that pollution from Asia is disrupting
weather patterns along the West Coast. As Robert Lee Hotz
wrote in the Los Angeles Times, “Carried on prevailing winds,
the industrial outpouring of dust, sulfur, carbon grit and trace
metals from booming Asian economies is having an
intercontinental cloud-seeding effect, the researchers reported
….The study is the first large-scale analysis to draw a link
between Asian air pollution and the changing Pacific weather
patterns.”]
Meanwhile, China’s space agency announced it expects to be
able to land a man on the moon within 15 years. We better get
back there first, or they’ll suck out all the minerals before we
have a chance to even test them. Actually, while a senior official
denied it was doing so, look for China’s third manned spaceflight
to occur during the Olympic Games next year in Beijing.
For its part, the U.S. State Department’s annual report on human
rights slammed China yet again for endemic corruption,
discrimination against women and minorities, Internet
censorship, and lax legal standards. It also said that the number
of practitioners of the Falun Gong spiritual movement estimated
to have died in custody is anywhere from a few hundred to a few
thousand.
But let’s turn the discussion to defense spending and China’s
plans for its military, shall we? Prime Minister Wen didn’t
mention in his speech that the defense budget was increasing
18% (at least the formal figure…the informal one is far higher,
like anywhere from 2 to 4 Xs). Officials say the increase is for
modernization and to deter Taiwan’s push for independence. A
National People’s Congress spokesman said “Deterring Taiwan’s
independence and maintaining peace in the Taiwan Strait
remains the most pressing task, (because China expects) to see
Taiwan continuing its push for de jure independence this year.”
You have to get a kick out of that. Taiwan obviously isn’t about
to invade anyone nor launch a blockade of the shipping lanes. So
what the heck do you mean, sir, when you say “maintaining
peace in the Taiwan Strait”?
No doubt, however, the issue of Taiwan is a huge one. I had the
opportunity to ask Sen. John McCain on Thursday the following,
but for various reasons passed, the least of which being Dr.
Henry Kissinger, a big McCain supporter and seated in front,
would have been giving me the evil eye.
“Senator, Taiwan’s President Chen Shui-bian is once again
calling for independence. While the chances are virtually nil the
parliament and the people would approve steps to change the
constitution, it’s already enough to rile China. Suppose China
then launches a volley of missiles to take out Taiwan’s key
military installations, then attempts to sue for peace…and one
China. What does the United States do?”
Of course today we would do absolutely nothing. We are in no
position to, after all, which is why the current military buildup on
the island of Guam is critical over the coming years. China must
see we have a viable counter to Chinese aggression.
China’s Foreign Minister Li Zhaoxing said anyone wanting to
split Taiwan from the mainland was a “criminal,” this as Chen
said in a speech on Sunday, “Taiwan should be independent.”
The top general, Guo Boxiong, said the People’s Liberation
Army would “effectively perform our glorious mission of
safeguarding national sovereignty and territorial integrity in
accordance with the will of the motherland and the wishes of the
people,” Xinhua News Agency reported. [South China Morning
Post]
What does all this mean and what should you be watching for?
When the day comes that China’s economy cracks, rising unrest
on the mainland will force the government to whip out the only
card it has…the nationalism card, and an immediate ratcheting
up of tensions with Taiwan. Let’s just hope this doesn’t happen
for quite some time, but that is defying the laws of economics.
I also need to close this discussion with further sobering thoughts
from Mark Helprin, senior fellow at the Claremont Institute, who
authored a scary op-ed for the Washington Post. Helprin writes
that we need to forget about North Korea.
“The Asian nuclear power of which we must take account is not
North Korea but China….
“In altering their position relative to that of the United States, the
Chinese have received generous assistance from the past two
American presidents, who have accomplished first a carefree
diminution of our orders of battle and then the incompetent
deployment of what was left, in a campaign analogous to losing a
protracted struggle with Portugal. China advances and we
decline because, among other things, its vision is disciplined and
clear, while ours is burdened by fear, decadence and officials
who understand neither Chinese grand strategy nor its nuclear
component.
“This has led the United States unwittingly to encourage China
to move toward nuclear parity. In the next five years, as we
reduce our arsenal from 10,000 strategic warheads to 1,700,
China’s MIRV’d silo-based missiles and imminent generations
of MIRV’d mobile and sea-based ICBMs will easily allow a
breakout from warhead numbers now variously estimated to
range from 80 to 1,800.
“Once, the vast imbalance (in 1987, 500:1) might have
discouraged China from such augmentation, but no longer. Our
reductions and their growth provide fewer targets for more
missiles and will create the possibility and therefore the
temptation, however remote, of a first strike. As we have cut the
stable sea-based leg of our nuclear deterrent from 37 ballistic
missile submarines to 14, China works to build its own and a
fleet that can provide protected bastions at sea as well as hunt
down the small number of American boats on station.”
Lovely, isn’t it? But wait…there’s more. The Chinese have
always possessed a deterrent. Now, however, they have other
options.
“They know that every facet of America’s economy, military and
society depends on individual and networked electronic devices.
Were these to fail all at once and irreparably, the nation would
seize up, perhaps for years.
“Faced with victory, or with loss, they might choose to – and
who would venture to guarantee that they would not? – detonate
half a dozen high-megatonnage nuclear charges in the
mesosphere, in an electro-magnetic pulse (EMP) strike perhaps
not even in American airspace, cooking almost every circuit and
semiconductor, rendering the American government blind, deaf
and dumber than it is already and the country unable to resist the
inroads that would surely follow.
“Though we would undoubtedly respond in kind, China is not as
technically dependent as we are. Nor, given China’s sufficiency
for a counterstrike, could we deter an EMP attack with the
prospect of massive retaliation, especially because an EMP
strike, with no immediate casualties, would seem as peaceful as
snow in still air.”
In other words, the United States must immediately redesign its
essential systems and network to build in redundancies, as well
as continue to deploy and enhance our missile defense system.
Helprin writes of how Washington is ignoring the explicit
warnings from the congressionally chartered EMP commission:
“In regard to war and the sometimes counterintuitive actions for
avoiding it, we are no longer either confident or clearsighted.
What a pity to have come so far to find that our rivals and
enemies all over the world can run rings around us because half
of our politicians have lost their intelligence and the other half
have lost their nerve.”
—
Russia: Another reporter was murdered, the 14th since Vladimir
Putin took office. This fellow, who had been investigating
Russian arms sales to Syria and Iran, supposedly fell out a fifth
story window, but considering the fact he had just returned from
the store with a big bag of groceries and there was no note, it
wasn’t suicide. Not one of the now 14 cases has ever resulted in
a conviction.
And there is the strange case of Paul Joyal, an American expert
on the KGB, who was shot outside his Maryland home. Four
days earlier he had appeared on NBC’s “Dateline” program,
saying that “a message has been communicated to anyone who
wants to speak out against the Kremlin: ‘If you do, no matter
who you are, where you are, we will find you, and we will
silence you – in the most horrible way possible.”
What’s strange is that witnesses saw two black men fleeing the
scene, so it was immediately dismissed as being a coincidence.
But of course the KGB could easily have employed others.
Separately, Putin’s thugs were at work in St. Petersburg last
Saturday as more than 100 were arrested, part of a group led by
opposition leader, and former chess champion, Garry Kasparov.
It was one of the largest protests in recent years. Kasparov was
not one of those taken in but I would only buy drinks in a can
and thoroughly wash off the top before using if I were him.
And I do have to note something I wrote in this space just two
weeks ago, 2/24, concerning the appointment of 30-year-old
Ramzan Kadyrov by Putin to be the new president of Chechnya.
“He is an absolutely horrible, vile, disgusting thug that’s a
walking human rights nightmare…This, comrades, is the face of
today’s Russia.”
Editorial / Washington Post…3/3/07
“This week Vladimir Putin delivered another clear message
about the kind of state Russia is becoming. He did so by
nominating as the new president of the republic of Chechnya a
man named Ramzan Kadyrov – an unspeakably savage and
corrupt warlord….
“Mr. Kadyrov has already been pursuing this agenda for some
time. He and his ‘kadyrovtsy’ are feared throughout the shattered
republic: They are known for grisly acts of torture, extortion,
kidnapping, rape and murder. The heads of slain rebels are
displayed in some villages as a warning against crossing the new
leader….
“By installing him, Mr. Putin is telling the world that Russia has
become a place where the most sadistic criminals can be political
leaders, where the murder of opponents is openly sanctioned and
where the only qualification that matters is loyalty to Mr. Putin.
Luckily, perhaps, for the Russian president, George W. Bush and
the other leaders of the Group of Seven democracies, who
continue to treat Mr. Putin as a strategic partner, are doing their
best to ignore that message.”
All together now………….why is Russia still in the club?!
Afghanistan: It’s getting lost in the other news of the day, but the
two incidents here within 24 hours that resulted in a large
number of civilian deaths are most unfortunate when you are
trying to win over the hearts and minds and prevent al Qaeda and
Taliban types from exploiting it on the Internet. I recognize
coalition forces were only retaliating for assaults on their bases
and troops, it just points out how much further we have to go
here before we can declare victory. It’s also increasingly
difficult to protect President Hamid Karzai from being
assassinated.
North Korea: Deputy Secretary of State John Negroponte refuted
assertions Kim Jong-il and his Orcs aren’t enriching uranium.
He said he has “no doubt” they are. Negroponte, in meetings
with South Korean officials, also reiterated that the North must
come clean and fully disclose all activities within the 60-day
window that commenced with the signing of the six-party
agreement back on Feb. 13, let alone shut down the facility at
Yongbyon.
Meanwhile, bilateral talks between Japan and North Korea aimed
at normalizing relations were shelved. No reason given that I
can see.
Japan: Prime Minister Shinzo Abe continues to suck up to the
right-wingers he desperately needs for support and their denial
that hundreds of thousands of women under Japanese occupation
during World War II were sex slaves. As I’ve noted often in the
past, this is an explosive issue for South Korea and China and
Abe is going against a 1993 apology over the “comfort women”
made by a prominent cabinet secretary. A leading conservative
who rejects the ’93 apology said “For the honor of the former
Japanese military, we have to counter criticism which is based on
a misunderstanding.” Abe said, “None of the evidence
confirmed coercion in the narrow sense – coercion like the
hunting of comfort women, with officials rushing into houses to
drag women out, like kidnapping them.” This is pitiful and a big
disappointment to those of us who have been defending Japan.
Lebanon: There are some solid signs of a reconciliation between
the Sunnis and the Shiites as Saad Hariri, leader of Lebanon’s
Sunni March 14 coalition, met with Shia Parliament speaker
Nabih Berri in an attempt to end the political crisis that is
destroying Lebanon’s economy. Ironically, Iranian President
Ahmadinejad and Saudi King Abdullah may have had something
to do with it through their supposed promise to encourage peace
in the country. [Ahmadinejad representing the Shia, Abdullah
the Sunni.]
But it’s all extremely complicated and for the Sunnis, as well as
the U.S., it’s still all about the UN-mandated tribunal to bring
those responsible for Rafik Hariri’s assassination in 2005 to
justice.
Any agreement reached between the two main factions must also
deal with Hizbullah. But here it appears the West caught a break
with the apparent defection of a top Iranian general to the U.S.,
the first senior Iranian official to defect since the revolution 27
years ago. Of particular interest to both the U.S. and Israel is
knowledge of Hizbullah’s operations in Lebanon and beyond.
Ali Resa Asgari, according to the former head of Israel’s
Mossad, was said to have taken his family with him so that they
couldn’t be pressured. [London Times]
Turkey: Jackson Diehl of the Washington Post commented on a
nonbinding congressional resolution on Armenia and the
Ottoman Empire, one that could have huge ramifications for
relations between the United States and Turkey. It’s about the
alleged “genocide” that took place. I’ve reported on this before
and noted how Turkish Foreign Minister Abdullah Gul has been
lobbying Washington against it. But as Diehl points out, this is
all about “constituent pandering, far-flung history and front-line
foreign policy. And that’s just on the American side; in Turkey
there is the painful struggle of a deeply nationalist society to
come to terms with its past, and in the process become more of
the Western democracy it wants to be.”
“Imagine the 435 members of the House, many of whom still
don’t know the difference between Iraqi Shiites and Sunnis,
solemnly weighing whether (Congressman and sponsor) Schiff’s
version of events 92 years ago in northeastern Turkey deserves
congressional endorsement. But the consequences of passage
could be deadly serious: To begin with, Turkey’s powerful
military has been hinting that U.S. access to the Incirlik air base,
which plays a key role in the wars in Iraq and Afghanistan, could
be restricted. Gul warned that a nationalist tidal wave could
sweep Turkey and force the government to downgrade its
cooperation with the United States, which needs Turkey’s help
this year to stabilize Iraq and contain Iran.”
There were atrocities that qualify for genocide, of course, and
Turkey’s political class needs to come to terms with this, just as
Japan”s needs to; but Congress has no business interjecting itself in
this issue.
France: Things are heating up big time in the presidential race
here. Suddenly, Francois Bayrou, a 55-year-old mentored by
former President Valery Giscard d’Estaing and the leader of a
center-right party, has polled at 24% in the latest survey vs. 26%
for Nicolas Sarkozy and 25% for leftist Segolene Royal. The top
two in the April 22 vote then go on to a run-off May 6. Bayrou’s
whole pitch is that “the French people want a president who
brings them together, rather than one who divides them; a
president who reassures them rather than one who worries them,”
he said in an interview with the International Herald Tribune.
But with just about a month to go, 45% of the people are still
undecided.
Czech Republic: Only 6% of the people here are strongly in
favor of having the U.S. place parts of the anti-missile system on
its soil. Not surprising, but also not helpful if you are the leaders
of governments that want it.
Denmark: Anarchists (read ‘dirtballs’) from all over northern
Europe descended on Copenhagen over the past week, sparking
the worst violence seen here in 10 years. It all began when a
police anti-terror squad evicted squatters (read another version of
‘dirtballs’) from a downtown building that for years had been
used as a ‘cultural center for anarchists.’ In a two-day period,
over 400 were arrested with numerous injuries.
I have a solution; the perfect sting operation. Promote a huge
free concert, appealing to the dirtball element, round ‘em all up,
chopper them out to the North Sea, and dump them.
Zimbabwe: As I wrote a few weeks ago there is finally hope here
that two-time StocksandNews “Dirtball of the Year” Robert
Mugabe is about to be deposed. His ruling party is breaking
apart as officials have seen their own business interests go up in
flames with the rest of the economy. It would be like one of
Congress’s more corrupt officials having seen his ill-gotten gains
go from $4 million to $69.95. At some point you’d get upset.
Random Musings
–I wrote the following in this space on 2/24/07:
“I hope you now know why I’ve basically ignored the Scooter
Libby trial. Unless there is some smoking gun beyond what we
already know concerning Vice President Cheney, this whole
exercise has been a total waste of time.”
With the verdict now in, I stand by the above. I also thought the
Washington Post had the best editorial on the case, reading in
part:
“The fall of this skilled and long-respected public servant is
particularly sobering because it arose from a Washington scandal
remarkable for its lack of substance. It was propelled not by
actual wrongdoing but by inflated and frequently false claims,
and by the aggressive and occasionally reckless response of
senior Bush administration officials – culminating in Mr. Libby’s
perjury.
“Mr. Wilson was embraced by many because he was early in
publicly charging that the Bush administration had ‘twisted,’ if
not invented, facts in making the case for war against Iraq….
“A bipartisan investigation by the Senate intelligence committee
subsequently established that all of these claims were false – and
that Mr. Wilson was recommended for the Niger trip by Ms.
Plame, his wife. When this fact, along with Ms. Plame’s name,
was disclosed in a column by Robert D. Novak, Mr. Wilson
advanced yet another sensational charge: that his wife was a
covert CIA operative and that senior White House officials had
orchestrated the leak of her name to destroy her career and thus
punish Mr. Wilson.
“The partisan furor over this allegation led to the appointment of
special prosecutor Patrick J. Fitzgerald. Yet after two years of
investigation, Mr. Fitzgerald charged no one with a crime for
leading Ms. Plame’s name. In fact, he learned early on that Mr.
Novak’s primary source was former deputy secretary of state
Richard L. Armitage, an unlikely tool of the White House. The
trial has provided convincing evidence that there was no
conspiracy to punish Mr. Wilson by leaking Ms. Plame’s identity
– and no evidence that she was, in fact, covert.
“It would have been sensible for Mr. Fitzgerald to end his
investigation after learning about Mr. Armitage. Instead, like
many Washington special prosecutors before him, he pressed on,
pursuing every tangent in the case. In so doing he unnecessarily
subjected numerous journalists to the ordeal of having to disclose
confidential sources or face imprisonment. One, Judith Miller of
the New York Times, lost several court appeals and spent 85
days in jail before agreeing to testify. The damage done to
journalists’ ability to obtain information from confidential
government sources has yet to be measured.
“Mr. Wilson’s case has besmirched nearly everyone it touched.
The former ambassador will be remembered as a blowhard. Mr.
Cheney and Mr. Libby were overbearing in their zeal to rebut
Mr. Wilson and careless in their handling of classified
information. Mr. Libby’s subsequent false statements were
reprehensible. And Mr. Fitzgerald has shown again why handing
a Washington political case to a federal special prosecutor is a
prescription for excess.
“Mr. Fitzgerald was, at least, right about one thing: The Wilson-
Plame case, and Mr. Libby’s conviction, tell us nothing about the
war in Iraq.”
But at least for now, the repercussions remain. Ed Rogers, a
Republican strategist, commented to the Post’s Peter Baker:
“This has been a huge cloud over the White House. It caused a
lot of intellectual, emotional and political energy to be expended
when it should have been expended on the agenda. They’re
never going to fully recover from this. If you’re looking at
legacy, this episode gets prominently mentioned in every recap
of the Bush administration, much like Iran-contra and Monica
Lewinsky.”
Mary Matalin, former Cheney counselor, compared the cases of
Libby and former Clinton national security adviser Samuel R.
Berger who smuggled out documents. “Scooter didn’t do
anything. And his personal record and service are impeccable.
How do you make sense of a system where a security principal
admits to stuffing classified docs in his pants and says, ‘I’m
sorry,’ and a guy who is rebutting a demonstrable partisan liar is
going through this madness?’”
To me it was about drawing the line between ‘pure politics’ and
issues of genuine concern. For example, the Washington Post’s
George Will writes of all the writhing and screaming going on in
the conservative ranks these days; that it’s top three candidates –
John McCain, Mitt Romney and Rudy Giuliani – “are flawed,”
he writes. “Such conservatives should conduct a thought
experiment.”
“Suppose someone seeking the presidential nomination had, as a
governor, signed the largest tax increase in his state’s history and
the nation’s most permissive abortion law. And by signing a law
institutionalizing no-fault divorce, he had unwittingly but
substantially advanced an idea central to the campaign for same-
sex marriages….
“Question: Is it not likely that such a presidential aspirant would
be derided by some of today’s fastidious conservatives? A
sobering thought, that, because the attributes just described were
those of Ronald Reagan.”
Back to Scooter, Will opines:
“On Fox’s ‘Hannity & Colmes’ Tuesday night, superlawyer
David Boies said Fitzgerald never should have prosecuted Libby
because there was no underlying criminal violation. Boies
scoffed at Fitzgerald’s contention that Libby had obstructed him
from exposing criminal activity. Boies, who represented Al Gore
in the 2000 election dispute, is hardly a Bush sympathizer. But
neither is he a Democratic partisan trying to milk this obscure
scandal.
“George W. Bush lost control of this issue when he permitted a
special prosecutor to make decisions that, unlike going after a
drug dealer or Mafia kingpin, turned out to be inherently
political. It would have taken courage for the president to have
aborted this process. It would require even more courage for him
to pardon Scooter Libby now, and not while he is walking out of
the White House in January 2009.”
The above is the last I’ll make note of the pardon issue. I
honestly couldn’t care less, as the Libby trial has been obscuring
some far more important items, such as the conditions at Walter
Reed and the firing of the eight U.S. attorneys. While Secretary
of Defense Robert Gates has a handle on the former, the issue of
the U.S. attorneys is potentially explosive, especially if it is
proved that Republican lawmakers sought to influence pending
cases.
–For detailed polling, this week we turn to the NBC News / Wall
Street Journal survey.
When respondents are asked for their choice, on the Democratic
side it reads:
Hillary 40%, Obama 28% and Edwards 15%. When you make it
just Hillary vs. Obama, it’s Hillary by a 47-39 margin.
Similarly, for the Republicans we have:
Giuliani 38%, McCain 24%, Gingrich 10% and Romney 8%.
But when it’s Giuliani vs. McCain, Rudy takes it 55-34.
Obama has a few issues that he’ll have to deal with down the
road. The New York Times ran a story on how the senator
invested in two highly speculative companies whose biggest
investors included some of his major political donors. Obama
sold the stocks when he supposedly learned of them in the fall of
2005, taking a net loss of $13,000.
But the coincidence of his having invested in these two for his
blind trust is too hard to ignore. This is on top of a real estate
investment involving his own home with a highly questionable
developer who has since been indicted.
Then there’s Giuliani and his family problems, especially with
estranged son Andrew, now 21. Andrew told ABC’s “Good
Morning America” that he received his values “from my
mother,” Donna Hanover. “I have problems with my father, but
it doesn’t mean he won’t make a great president.”
Thanks, kid, Rudy must have mused. [Like McCain he’s
working on controlling his temper.] Andrew evidently can’t
stand wife no. 3, Judith Nathan; not exactly the kind of news one
running for the White House wants to have to deal with, and a
Crain’s New York Business snap poll this week revealed that
Andrew’s comments will definitely renew concerns about
Rudy’s personal life.
But along the lines of George Will’s comments on how the far-
right is upset over its choices, the New York Post had a story that
there is a “whisper” campaign to target Rudy because twice he
was involved in cross-dressing stunts.
Here’s a note of advice to my far, far-right friends. If you aren’t
from the New York City area and don’t understand the annual
charity event politicians do with the reporters covering them, get
over it. The other episode was on “Saturday Night Live.”
Enough said.
–Under no circumstances would I ever consider voting for Newt
Gingrich. I saw enough snakes at the market in Marrakech.
–Columnist David Brooks of the New York Times (a
conservative if you aren’t familiar with his work) had some
interesting thoughts on Democratic presidential candidate Bill
Richardson.
“Richardson is actually something of a throwback pol – a Daley
or La Guardia who doesn’t treat politics as a moral crusade. That
might appeal this year.
“On the nuts and bolts of the campaign, he has some advantages
as well. He won’t have the $150 million war chests that Clinton
and Obama will have. On the other hand, he won’t have the
gigantic apparatuses that fund-raising on that scale requires.
While those campaigns may be bloated, overmanaged and
remote, Richardson has the potential to be small and nimble.
“Furthermore, he could generate waves of free media the way
John McCain did in 2000. He’s a reporters’ favorite – candid,
accessible and fun to be around. ‘I’m a real person, not canned.
I don’t have a whole bunch of advisers. I’m a little overweight,
though I’m trying to dress better,’ he told me last week. So far,
rumors of personal peccadilloes are unfounded.
“Finally, there is the matter of his personal style. This is his
biggest drawback. He’s baggy-faced, sloppy (we like our leaders
well groomed), shamelessly ambitious and inelegant. On the
other hand, once a century or so the Democratic Party actually
nominates somebody the average person would like to have a
beer with. Bill Richardson is that kind of guy.
“He is garrulous, amusing, touchy-feely (to a fault), a little
rough-edged and comfortably mass-market. He’s Budweiser, not
microbrew. It doesn’t hurt that he’s Hispanic and Western.
“In short, when you try to think forward to next winter, you see
that this campaign will at some point leave the ‘American Idol’ /
‘Celebrity Deathmatch’ phase. The Clinton-Obama
psychodrama may cease to fascinate while the sheer intensity of
coverage will create a topsy-turvy series of revolutions.
“I wouldn’t bet a paycheck on Richardson. But I wouldn’t count
him out. At the moment, he’s the candidate most likely to rise.”
–Then there’s Ann Coulter. Why do us Republicans stomach
her? Actually, many of us don’t. Her comment about John
Edwards, calling him a word that begins with ‘f’ and one which I
will never use on this site, was beyond despicable.
–Interesting story in the Los Angeles Times on Republican
insiders, as measured by the 165 members of the Republican
National Committee. Of the 133 who responded to a survey,
Mitt Romney got the most votes.
The L.A. Times also surveyed the Democratic National
Committee and they still line up behind Hillary.
“But whereas 83% of Republicans [again, of the RNC] said the
country was on the right track – and all said the economy was
doing well – 95% of Democrats said the country was headed the
wrong way, and more than 6 in 10 said the economy was in bad
shape.”
–Hillary Clinton’s campaign is furious with New York’s
Democratic governor, Eliot Spitzer, for not endorsing her as yet.
–Speaking of Spitzer, he is winning rave reviews from some
conservative circles as he fights the health-care union and
reforms the workers’ compensation laws. When the likes of the
Wall Street Journal (“Kudos for Spitzer”) and New York Post
(“Go get ‘em, Steamroller”) praise a Democrat, that’s saying
something. What Spitzer is also proving is just how awful
Republican Governor George Pataki was.
–Interesting story in USA Today on rising racial tensions in
Hawaii between Native Hawaiians and whites. I’ve been to
Hawaii a few times (though only to Oahu) and haven’t found the
people to be particularly friendly (except you, Dan D.!).
–Drug Watch…an irregular feature of StocksandNews. Quest
Diagnostics, the nation’s largest provider of employment drug
testing, said that among 9 million given urinalyses by the
company last year, 3.8% tested positive for drugs, down from a
high of 13.6% in 1988, the first year it began compiling data.
I love to tell some of the younger folks that if they think today’s
times are wild they should have been around in the 80s;
especially on Wall Street. Lots of powder on the sidewalks in
those days, sports fans.
–Scary story by Ellen Nakashima of the Washington Post
concerning how even law students can feel the lasting effects of
anonymous attacks on the Web.
For example, one woman “thinks she is a victim of a new form
of reputation-maligning: online postings with offensive content
and personal attacks that can be stored forever and are easily
accessible through a Google search.”
And this was at the University of Pennsylvania, where a third-
year law student is running a message board. Called AutoAdmit,
it is supposed to contain useful insights on schools and firms, but
it also has hundreds of chats posted by anonymous users. Ergo,
employers then Google a prospect and voila! You’re hosed, even
though in 99% of the cases you are totally innocent. But if
you’re the employer, it’s hard to ignore this stuff.
I know it’s not easy being a parent these days, but do what you
can to keep your kids off sites like Facebook. [Sorry, that was
stupid….I know you can’t prevent it. Just remind them it can be
a real deal breaker down the road, unless you want to be a stripper
and appear on “American Idol.”]
–Violent crime is increasing and will be an issue in the 2008
campaign. Homicides are up 10% in just two years, with 20%
increases in Boston, Cincinnati, Cleveland, Hartford, Memphis
and Orlando. Richmond, Calif., police chief Chris Magnus noted
he goes to the scene of a crime and often discovers that 30 to 75
shots have been fired. “It speaks to the level of anger, the
indiscriminate nature of the violence.” [Kate Zernike / New York
Times]
–Further proof that crossing the street is far more dangerous than
any other activity we do. Last weekend in New York City, three
pedestrians in three different incidents were killed in the span of
a few hours.
–Yet another reason why we all hate Congress. Michael E.
Ruane and Joe Stephens report in the Washington Post that the
new Capitol Visitor Center, already three years delayed and now
pushed out to summer 2008, is going to cost more than double
the initial $265 million budget projection from 1999. Try $600
million. Washington’s new baseball stadium, for crying out
loud, is going to cost $611 million. Sometimes I think 12-18
months with a benign dictator to clean things up is what we
need……………..………………………..just kidding!
–Then again, here in New Jersey we have Gov. Jon Corzine and
his perky former girlfriend/union leader, Carla Katz. As
chronicled in these pages years ago, Corzine forgave a $470,000
mortgage he had set up for her when he was running for
governor (though knowledge of this was not immediately
forthcoming), and now we learn Ms. Katz bought a $1.1 million
condo when she clearly doesn’t have the wherewithal to do it
herself. So the Star-Ledger on Friday ran the headline “Corzine
digs in as Katz builds out” with Corzine saying it’s all personal
and he’s not disclosing if he helped her further or not. Sounds
like a job for Jack Bauer.
–Drat! NASA is saying the threat from an asteroid may not be
as great as others think. This screws up my plans to ‘short’ the
stock market 3 months before it is supposed to hit, and then go
‘long’ 24 hours before doomsday. Then as it whooshes by,
missing us by mere miles, I take my fortune and buy premium
lager for everyone! Of course if I was wrong, there’s no one left
to criticize me.
–Update on my comment last time concerning the Hong Kong
Marathon. As far as I can tell no one died in the race, though an
article in the South China Morning Post started out “Apart from
death and taxes, and possibly the bad air, there was one more
certainty added to life in Hong Kong – a Kenyan winning the
annual Standard Chartered Marathon.” The Kenyans swept and
the runner-up said “The heat and humidity is not too bad and can
be handled.”
One guy, however, has Hong Kong’s tourism officials up in
arms. Aboard the Queen Mary 2, British lecturer John Reich
described Hong Kong as an “extremely polluted city” with
“inferior museums.” He’s right on both counts, but the city still
has some spectacular attractions, not the least being the
mesmerizing harbor. [I’m semi-sucking up, seeing as I’m
headed back there in a month.]
Reich’s problem, as well as that of Cunard Line, is that the ship
was heading to Hong Kong the next day.
–So do you want a little color on the McCain fundraiser? I
thought you did. Cindy McCain was resplendent in a cream-
colored pantsuit that was, shall we say, more than a bit sexy.
She’s also a terrific speaker. Bottom line, as the senator
correctly says all the time himself, Cindy McCain is his #1 asset.
[Former Sen. Phil Gramm introduced Cindy. It was good to see
him again.]
–I will be protesting the fact the Dave Clark Five isn’t in the
Rock and Roll Hall of Fame at Monday’s induction ceremony in
New York. If you see someone being dragged kicking and
screaming outside the Waldorf, that’s me. But one thing I’ve
learned the past week; I won’t be hiring Ted Wells as my
attorney.
–Goodness gracious. Federal prosecutors are investigating
whether auction houses, collectors or importers of wine
knowingly sold counterfeit bottles. The Wall Street Journal
notes that Wine Spectator magazine estimates as much as 5% of
rare vintages sold privately or at auction today may be fake.
–Movie review: Jeffrey Lyons, one of the more influential critics
and my own favorite, absolutely loved “300.”
–My niece is long past the Girl Scout years and I don’t have a
neighbor with a daughter who could sell me Girl Scout cookies,
so I was fired up to see a stand with three Girl Scouts outside the
hardware store I was heading into. “I’ll take two of those…and
two of those…” I drooled, like Homer Simpson spotting a plate
of donuts. But what got me was the incredibly poor attitude on
the part of these kids. Not one of them was polite or thanked me.
I just kind of shot the mother in charge a look of disgust.
What is it with kids these days, anyway? I’ve had a lot of
discussions with friends and family in the area and we are
floored by the lack of simple social graces. A little over a week
ago NBC Nightly News had a segment on a university study
about this current “Me Generation” as it’s being correctly
labeled. To tell you the truth, it kind of makes it tougher to care
what happens to them. Certainly don’t expect them to take care
of you.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $649
Oil, $60.05
Returns for the week 3/5-3/9
Dow Jones +1.3% [12276]
S&P 500 +1.1% [1402]
S&P MidCap +1.1%
Russell 2000 +1.3%
Nasdaq +0.8% [2387]
Returns for the period 1/1/07-3/9/07
Dow Jones -1.5%
S&P 500 -1.1%
S&P MidCap +3.5%
Russell 2000 -0.3%
Nasdaq -1.1%
Bulls 46.2
Bears 26.9 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
