[Posted 12:00 a.m. ET…from Amman, Jordan]
The Middle East
So I’m in Jordan and I picked an interesting week to be in the
area, amidst Israel’s ongoing 60th anniversary celebrations,
President Bush’s trip to the region that includes Israel, Egypt and
Saudi Arabia, and the Palestinians own commemoration of
Israel’s independence, only for them it’s the “Nakbeh,” or
‘catastrophe,’ which is how Arabs refer to the creation of Israel.
Here in Jordan, I’ve already seen it all; from Mt. Nebo, the place
where Moses looked out over a promised land he never reached,
as well as it being his probable burial site according to the Bible,
to the site on the Jordan River where Jesus was baptized,
Bethany, to the Golan Heights, where my driver took me as close
as I could go without getting gunned down, amidst six Jordanian
military checkpoints in the span of about three miles. I can
appreciate firsthand how Israel is loath to give up Golan, territory
won in the 1967 War, as you really understand how Syria could
then fire down on Israel. I also paralleled Israel for about ten
miles, a mere hundred yards away, though the Israelis covered up
their defenses well from the road.
While Jordan signed a peace treaty with Israel in 1994, both
sides of the border (most of which is along the West Bank, with
the Jordan River in between) must remain on guard and the
checkpoints are in key places to ensure terrorists don’t enter
Jordan, this being the birthplace of Zarqawi after all.
Jordan receives a ton of U.S. aid, mostly for the military, and is
part of the Sunni trio that is allied with Washington; Jordan,
Saudi Arabia and Egypt. [Against the Shia arc of Iran, Iraq,
Syria and Lebanon’s Hizbullah.] Jordan, sharing a border with
Syria, Iraq, Israel and Saudi Arabia, is indeed right in the middle
of it all and is not only home to 2.8 million Palestinians (over 25
percent of the total Palestinian population…with another 25
percent in the West Bank and 15 percent in Gaza) but since the
start of the Iraq War has also become home to roughly one
million Iraqi refugees (with another million in Syria, though
these numbers are fluid). If you’re King Abdullah of Jordan, you
must constantly walk a tightrope, a la his father King Hussein
(1953-1999), equally pragmatic but a supporter of Saddam
Hussein during the first Gulf War. [For which we readily
excused him.]
Abdullah flits around the world, buffing up his image, and he has
done some nice things as he sits on this tinderbox, but then you
read the local papers and see he has placed a call to Sudan’s
dreadful leader, pledging his ongoing support there, and it’s kind
of frustrating. [Jordan and Sudan are working on some joint
economic projects.] Nonetheless, you can understand why the
king needs to be everyone’s friend, and there is no doubt he is a
friend of Washington.
All you have to know on this last bit is that Abdullah canceled
Palestinian efforts to hold massive demonstrations protesting
Israel’s birthday here in Amman, today, as I write (Friday),
though some smaller ones are still taking place from what I’ve
heard. Understand that Palestinians are furious because Israel
was allowed to commemorate its birthday in Amman last week.
It’s a double standard, but aside from trying to be Israel’s friend,
the last thing Abdullah wanted was violence during President
Bush’s visit. [As I glance outside for trouble, high up in my
hotel perch. Actually, the streets are empty.]
So Abdullah keeps walking that tightrope. In Brunei early in the
week, he said giving back the Palestinians their legitimate rights
is the only way to ensure the security and stability for all parties
involved in the Middle East, while his justice minister, at an
Arab League summit in Cairo, reiterated that his government
considers the siege and Israeli military escalation against
Palestinians in the Gaza Strip in particular a violation of human
rights conventions and international laws, especially since
civilians are affected.
I’m learning a bit more about the Palestinians, physically being
in the region. I’ve already traveled extensively and seen a few of
the Palestinian refugee camps (which are really built up towns).
My Palestinian driver pointed them out as we passed and
announced all the other places we were driving through except,
curiously, this one very depressing, spooky town, Ashona (sp?),
which I had to ask about. It sure as heck seemed like a breeding
ground for evil ones and I imagined it was a possible reason why
the driver said nothing until I inquired, and only then the name of
it.
I’ve always viewed this column as a vehicle for showcasing all
sides of the great debates of our time, with my own opinion
thrown in for good measure, and so at the risk of offending some
of you, I just want you to see an editorial from the Jordan Times
that was in the paper the day President Bush praised Israel in the
Knesset speech.
“U.S. President George W. Bush yesterday arrived in Israel to
cheer that country’s independence and celebrate Israeli
democracy. He is also there to push forward the stalled
Palestinian-Israeli peace talks.
“Bush hailed Israel as an example to the region. One wonders
which example, of the many fine examples Israel has set, Bush
refers to. How to get rid of a pesky native population? How to
create a democracy for 80 percent of its people, based on their
ethno-religious background, and present itself as a haven for
progressive values? How to occupy neighboring territory and
people and blame the victims for their oppression?
“Clearly oblivious to his own administration’s policies, he then
said democratic reform was the way forward for this region and
that Israel was showing the way.
“Hamas showed the way as well, but let’s forget the fact that
democracy means voting for ‘people like us’ not ‘people like
them.’
“And so, blundering along, Bush hopes to push forward peace
talks between Israelis and Palestinians. He comes not as one
demanding anything of either side but, as he put it in a recent
interview, ‘as one who encourages.’
“Shame that, because if he wanted to be demanding, he would be
on pretty solid ground. He could demand, for instance, that
Israel adhere to international law, stop its illegal settlement
building in occupied territory and clearly signal its intention to
end its illegal occupation of foreign territory and assist in the
creation of a Palestinian state.
“He could demand that justice be rendered unto Palestinian
refugees who, like all refugees, have a right to dignity, to
property, to return if they so wish and to freedom…that’s a fine
word that Bush uses so often.
“He could demand all this and he could get his way. Israel, after
all, cannot stand on its own two feet, even after 60 years, and
needs U.S. aid, the most given by any country to another,
anywhere, ever, to survive.
“Indeed, if Bush were thus demanding, he might go down in
history as ‘a guy who had principles and stuck by them,’ rather
than as the president who presided over the beginning of the next
60 years of conflict in the Middle East, even though the warning
signs were there, clear and present.
“Lucky, then, that Bush will meet Arab leaders in Egypt on
Saturday, who, undoubtedly, will set him straight about what’s
what.”
So that’s the other side of the debate we all too often in America
never hear. As for Israel, its press lapped up President Bush’s
speech that had one solitary mention of the Palestinians, but as
for any peace between the two before Bush leaves office, even
Secretary of State Condoleezza Rice said it was now
“improbable.” For starters, Israeli Prime Minister Olmert will
not survive the current corruption investigation and nothing can
get settled while he’s in limbo.
But let’s look at the broader picture and the Bush presidency as it
winds down. When it comes to any Israeli-Palestinian
agreement, it has to be founded on establishing the borders of the
Palestinian State, the future of Jerusalem, the settlements, and the
fate of the Palestinian refugees. Fat chance of agreement on all
of these for another few years, if at all.
As part of his legacy, Bush also has Iraq, which is actually
looking up a bit (as any fair-minded individual has to observe
…if even for just this week), thanks in no small part to the
surprising performance of Iraqi Prime Minister Nouri al-Maliki,
who is confounding a few skeptics, including yours truly.
But what of Lebanon? I’ve long said in the end, when historians
fairly discuss the Bush presidency, Lebanon could be as
important as Iraq and I have slammed the White House for its
disgraceful performance here. Back in the fall of 2005, I
predicted the Israeli war with Hizbullah [WIR 10/29/05], calling
it within three months, and I’m incredulous when reading some
of the accounts of the current crisis in Lebanon that act as if
increased U.S. aid the past two years to the country should have
been enough, without failing to say that following the
assassination of Rafik Hariri in February 2005, the U.S. (and
France) totally missed the window of opportunity upon the
expulsion of Syrian forces and failed to seize the moment to
strengthen the democratic forces there, including the Lebanese
Army. Because of this, Hizbullah became even further
entrenched. The ensuing 2006 war, though, should be labeled
what it was, criminal, and it was beyond belief that President
Bush didn’t tell Israel to stop. Is it any wonder why we are so
hated in the region? Is it any wonder that U.S. claims it’s an
honest broker are a joke, in terms of allowing Israel, for example,
to continue with the settlements in direct contravention of all
existing agreements? [I just read an editorial in an American
paper saying the settlements issue is absurd. The writer is an
idiot.]
And what of Bush and Saudi Arabia? The Saudis treat us like
flies, a trivial annoyance, in so many respects, not just on the oil
front. They could have stepped up and supported the Iraqi
government, but didn’t, and now they just sit back and wait to
see what the next president does. Or take Egypt, where Bush and
Rice sought to promote democracy, only to have to back off and
allow President Hosni Mubarak to continue with his dictatorship.
No, I can’t stomach any claims of success in the region during
the Bush tenure, and notice how I haven’t even brought up
Iran, another case where I believe we missed a huge opportunity
to end-run Mahmoud Ahmadinejad. [As opposed to Barack
Obama wishing to deal directly with our enemies, I said we
should have promoted a coup with Iran’s Rafsanjani…cut a dirty
deal that only those in this region understand.]
So what has Ahmadinejad been up to recently? Timed for
Bush’s arrival, the Iranian leader warned that Muslims would
uproot Israel at the first opportunity, saying the Jewish state was
“dying…throwing a birthday party for this regime is like having
a birthday party for a dead person.”
When you visit some of the tourist spots in Jordan, you are often
“assigned” a tour guide, part of the quid pro quo between drivers
and those working the sites. Normally, I can’t stand this
arrangement, which also includes being taken to selected craft
shops whether you asked to be or not, but this was one time
where I was glad I had to cough up some extra cash to be
accompanied during the sight-seeing because a few of the
gentlemen were quite fascinating and two were very eager to
know my opinion on both the peace process and what will
happen with Iran. [I didn’t try and hide the fact I was American.
In fact I never have regardless of where I am, including Beirut.]
For starters, no one likes Bush that I’ve come across, though they
seem to tolerate Americans overall. [I’ve been treated very well
thus far myself.] I’ve had some good opportunities to mingle
amongst the folk, but you’re reminded to never let down your
guard when you see Jordanian soldiers in bullet-proof vests,
carrying assault rifles, while wandering Roman ruins thanks to
some high-profile incidents both here and in the region at the
more popular spots over the past few years. [Security at my
hotel is also heavy.]
But back to Iran, I tell those asking what I’ve been telling you;
that Israel is going to have to launch a preemptive strike. “Will
the U.S. invade Iran?” I’m then asked. No, I reply, but we’ll
obviously be helping Israel pick the right targets (at least as we
both know them), and the U.S. could go after a few ourselves.
“Oh, that would be trouble” they then say. “We need peace.”
I’m not optimistic, I then tell them, though it should be pointed
out our “friends” the Saudis would love Israel and the U.S. to
take care of their dirty work for them. [The people here also
seem confused about our election. There is zero mention of
McCain; instead they all want to know who will win, Hillary or
Obama. I have to break it to them that the race is over, but it’s
only half of it.]
So those are but a few thoughts from on site. I recognize the
news back home in terms of an international focus is still
dominated by the twin tragedies in Burma and China, for which I
have a few comments below. I will say with regards to these
catastrophes, it can’t help but make you realize just how
fortunate the rest of us are, even if life seems to be dealing you a
bad hand or two, such as with the economy and housing. If you
find yourself in an increasingly dire personal situation, keep the
faith, your life will turn around. I know that sounds trite, but
I’ve been in a tough financial predicament myself, about 20 years
ago, and then I caught a few breaks. [Ironically, part of my
problem then was that I had a big bet on oil, to the downside,
when along came Saddam’s invasion of Kuwait.] In my case,
prayer didn’t hurt.
Wall Street
I’ve caught snippets of CNBC here and there, and of course have
done some reading on the Web, but one thing I’ve found when
traveling overseas is you tend to lose a feel of what’s really
happening back home. What this normally means is that my
comments are briefer, and some of you would say mercifully so.
Increasingly, politics will intrude on Wall Street as the campaign
heats up, whether you all like it or not, so it can’t be comforting
to Republicans when the latest Washington Post/ABC News
survey has 8 in 10 believing the country is headed in the wrong
direction amidst the moribund economy. Democrats also hold a
21-point lead over Republicans, though the Obama-McCain
margin is far less. 36 percent of those surveyed see the economy
as the No. 1 issue, with Iraq polling next at 21 percent.
While Wall Street resumed its rally after a one week break, the
economic news was hardly bright and the earnings picture
remains cloudy, though housing brightened ever so slightly with
word of a positive figure on housing starts for April (though then
we learned single-family starts were at a 17-year low). Retail
sales fell in April, 0.2 percent as expected (though how some
spun this positively I can’t figure out as they conveniently
eliminated the impact of auto sales as if this isn’t still an
important part of our economy), industrial production plummeted
0.7 percent, far worse than expected, and various regional
measures of manufacturing were once again at recession levels.
One mild positive was the consumer price index for April
coming in at up 0.2 and only 0.1 percent ex-food and energy,
though you’d be hard-pressed to find anyone taking comfort in
this last bit as the energy you and I use continues to go up daily
while food costs seemingly do the same. In other words, the
government’s work is a mirage and of course if oil were to fall to
$115 a barrel from $125, over time this would translate to a
negative CPI figure for the category, even though we all would
still feel it big time in the pocket book.
Having said this, I do believe inflation will begin to moderate,
I’m just not going to pin my hopes on one or two positive
numbers; no, we’ll need more than that. I do have to note,
however, that my talk of rice being in a bubble was spot on…the
price resuming its downtrend this week amidst talk of increasing
supplies in spite of the situation in producer nation Burma.
Regarding earnings, Wal-Mart’s guidance was poor,
semiconductor equipment manufacturer Applied Materials talked
of a poor outlook for capital spending, Deere, despite robust
sales, warned on profits the balance of ‘08, and J.C. Penney said
its going to be “difficult” the rest of the year as well. Fellow
retailer Macy’s, though, came in with better than expected
results, though its own outlook is hardly rosy.
On the financial front, PIMCO’s Mohamed El-Erian said that
when it comes to the banking crisis, the “risk going forward is
less about Wall Street and more about the small and midsize
banks” that are disproportionately tied to commercial real estate
and the consumer.
For his part, Fed Chairman Ben Bernanke said banks have to do
a better job in identifying risks, such as in housing, credit and
financing, ahead of time. Well, Mr. Chairman, you could say
that while you have stated the obvious, you didn’t exactly do a
great job yourself in predicting the hurt that has swept the land.
As for Wall Street, it’s long been proven it’s all about the
commish, and little more.
I have consistently focused on housing over the credit crisis on
Wall Street because while I agree with many of our esteemed
titans of finance that the worst is over in terms of “systemic
risk,” which Bernanke and Treasury Secretary Paulson
effectively combated in the Bear Stearns bailout (whether we like
this fact or not), it still comes down to the consumer. That’s
been my tune forever, frankly, so I just have to note what
JPMorgan CEO Jamie Dimon said this week:
“Even if the capital markets crisis is resolved, it does not mean
that this country will not go into a bad recession. The recession
just started.”
Bingo, though I remain in the long, slow slog, rather than
anything approaching depression camp. I do have to add on the
housing starts number, I said about three months ago beware of a
false start in this sector. I’ll stick with that pronouncement.
Anyway, if you were looking for bad news on housing, there was
still no shortage of it. The National Association of Realtors,
chief shills for the industry, nonetheless had to admit the median
home price by its measurement dropped 7.7 percent in the first
quarter to $196,000. Better data comes from Josh P. out in San
Diego County, where the median price is $395,000, down from
the Nov. 2005 peak of $518,000. And as Josh avers, it’s clearly
headed lower still. That translates into major pain on a number
of levels. Nor should it be any surprise to learn that nationally
foreclosures were up 65 percent in April over a year ago and up 4
percent just from March, with Nevada still the worst on a relative
basis.
On the oil front, as noted above it’s highly unlikely Saudi Arabia
will appease President Bush and turn on the spigots, and indeed
they told him for now they won’t, outside of a minor adjustment,
while OPEC itself is not expected to meet again until September;
which is their way of saying “deal with it.” Josh P. notes that the
price of gasoline is $4.30 a gallon out San Diego way, just so you
know I’m connected to my friends across the country, even
though I’m paying about 60 cents less in New Jersey.
So with some of the above I may yet eat crow when it comes to
my moderating inflation comment. Brad K., who runs the steel
pool manufacturing company and is in touch with the market
better than anyone I know, keeps telling me of all the increases
ArcelorMittal levies on his operation….with a take it or leave it
attitude. Brad then in turns passes on the increases to his
customers, not dollar for dollar but more than enough to imperil
business, let alone the broader macro issues facing consumers
and discretionary purchases of this kind.
How’s the economy in Jordan? There are a lot more construction
cranes than I expected, and there is a ton of residential building
going on, but I’ve also been mystified by the fact I only seem to
see one or two workers at a given site. I’ll get answers to this
puzzle before I leave the country.
Street Bytes
–On the week the major averages regained their losses from the
prior one, with the Dow Jones tacking on 1.9% to 12986 and
Nasdaq adding 3.4% to 2528. A terrible consumer confidence
number out of the Univ. of Michigan on Friday put a damper on
further advances as this particular index hit a 28-year low.
–U.S. Treasury Yields
6-mo. 1.90% 2-yr. 2.45% 10-yr. 3.85% 30-yr. 4.58%
Yields rose across the board, thanks in no small part to still
soaring energy prices. I’ll have more on the bond pits next week.
Can’t say I was focused on this while on Mt. Nebo.
–The China earthquake disaster may have impacted up to 40%
of the nation’s natural gas deposits, the full effect yet to be
determined. China is also dealing with 8.5% inflation, but at the
same time, retail sales here for April rose 22% as the government
seeks to offset weaker export growth.
–South Korea had to cull the entire poultry population in Seoul
following a second outbreak of bird flu. There have been no
human cases, however.
–Hewlett-Packard acquired Electronic Data Systems for $13.9
billion in a bid to go after IBM, EDS providing the technology
servicing angle that HP generally lacks.
–Oppenheimer analyst Meredith Whitney, whose profile has
soared the past year, slammed Citigroup’s prospects because of
its “seismic” costs to restructure, as well as the poor revenue and
profits outlook in many of Citi’s divisions. Whitney also
continues to slam the banking industry in general. I can’t help
but agree.
–Merrill Lynch said not to worry when it comes to the $50
billion in debt due in the next year. I’d worry.
–JPMorgan said it is retaining about 5,600 of Bear Stearns’
employees, while cutting 3,000 at JPM due to redundancies.
–There was more bad news on the mortgage related front as the
likes of MBIA, IndyMac and HSBC revealed not only further
writedowns, but in the case of mortgage lender IndyMac, which
specialized in Alt-A paper (that nebulous market between
subprime and prime), it doesn’t see any profit potential the rest
of 2008. HSBC, though, in reporting better than expected
figures, said its overall profit rose despite a weakening U.S. due
to still strong business in Asia.
–Along these lines, this week Germany and Japan reported far
stronger growth for the first quarter than expected, but housing
starts in the U.K. fell 25 percent.
–The Energy Department said 20% of U.S. electricity needs can
be met by wind power by 2030, enough to displace 50% of our
natural gas consumption, which should then be redirected to fuel
our autos. On a related note, T. Boone Pickens’ Mesa Power
LLP said it was ordering 667 wind turbines from GE, a $2 billion
order, as part of phase one of its massive Texas wind farm
project that eventually will supply enough electricity for at least
300,000 homes.
–The Senate voted 97-1 to stop supplying the Strategic
Petroleum Reserve as a supposed way of ending the rise in the
price of crude oil. This is ludicrous, seeing as the SPR is only
taking 70,000 barrels of oil per day from the market (out of U.S.
consumption of 21 mm), though at the same time I’m ambivalent
on the whole matter, seeing as we have more than enough oil
already to meet any emergency needs and the SPR is almost full,
anyway. Of more import is the fact the Senate rejected yet
another proposal to drill at ANWR as well as offshore, 56-42.
–Much is being made of the weak dollar, and rightfully so, and
as Peter Goodman of the New York Times points out a recent
IMF study found that between 2001 and the end of 2007, “the
dollar’s share of the world’s total foreign exchange reserves
shrank from about 73 percent to 64 percent, as the euro expanded
18 percent to more than 25 percent.”
But, “That change does not reflect a selling of dollars, the (IMF)
reports. Rather, it captures how the dollar has fallen in value
against many currencies, making the total value of dollars a
smaller percentage of all money. ‘It hasn’t been an active
diversification,’ said John Lipsky, first deputy managing director
at the fund. ‘Central bankers tend to be the most conservative
investors. Whatever they do is going to be done with exceeding
caution.’” In other words, don’t panic, but we do need a stronger
dollar.
–Carl Icahn launched a proxy contest to replace Yahoo’s board,
aligning himself with Microsoft’s $33 increased offer at the same
time.
–Broadcom co-founders Henry Nicholas and Henry Samueli
have been charged by the government with systematically
backdating 232 million in options, including for 88 separate
grants, details of which were then hidden from shareholders.
–The New York Post reported that Blackstone Group CEO Steve
Schwarzman, in explaining how his firm could fail to buy
mortgage lender PHH Corp. for $1.7 billion in the midst of the
credit crisis, said:
“No one in the world would lend us money. It is the first time
we haven’t performed.” But then he added, “Trying to buy a
mortgage bank in the midst of the subprime crisis was the
equivalent of being a noodle salesman in Nagasaki when the
atomic bomb went off. Not a lot of noodles left or even a person
– and that’s what happened to us on this deal.”
Unreal. Of course this is the same Schwarzman who is getting
his name plastered all over the New York Public Library after
giving the foundation $100 million. Yet another sign of the
apocalypse.
–Jake Adelstein spent about 12 years as crime reporter for
Japan’s leading newspaper, the Yomiuri Shimbun, quite a feat
considering he is an American. Now he is writing a book on his
experiences covering organized crime there, specifically the
yakuza, the Japanese mob, and in an op-ed for the Washington
Post noted that the most powerful yakuza faction, the
Yamaguchi-gumi, is known as “the Wal-Mart of the yakuza” and
reportedly has 40,000 members. “In Tokyo alone, the police
have identified more than 800 yakuza front companies,”
including investment and auditing firms.
Particularly troublesome is the conclusion of Japan’s SEC which
has an index of more than 50 companies with ties to organized
crime that are listed on the stock exchanges. In other words,
with Americans having billions tied up in the Japanese equity
market, we could be funding the yakuza.
[Meanwhile, because of his extensive reporting, both Adelstein
and his family’s lives have been threatened and the yakuza are
always serious about carrying out their threats.]
Foreign Affairs
Lebanon: To finish my thoughts from above, in the here and
now, Lebanon’s pro-West government once again proved how
weak it truly is, thanks again in no small part for our failure to
support them heavily in the aftermath of the Cedar Revolution.
This week Prime Minister Fouad Siniora gave a fiery speech one
day, condemning Hizbullah for its actions in Beirut and
elsewhere, then the next day he climbed down in totally
humiliating fashion, rescinding the orders concerning security at
the airport and the closing of Hizbullah’s private phone network
that had precipitated the crisis. Siniora likes to talk a tough
game, about how Hizbullah needs to be disarmed, but there isn’t
one other person on the planet today who believes this can occur,
unless you first topple the regime in Iran (more so than Syria)
and even that wouldn’t lead to immediate disarmament.
If anything good can be said of the past week as the brief civil
war ended, leaving over 70 dead, it is that the Lebanese Army
filled the breach, but even here it did so only after Hizbullah
allowed it to retake territory once held. The Army has a solid
reputation as being neutral, but neutral is not what is required,
longer term.
China: I’ve seen the videos from the earthquake zone and of
course it’s sickening and so tragic. At least the Chinese
government, unlike that of Burma, sprang to action though the
task of recovery would overwhelm any government. Premier
Wen Jiabao and President Hu Jintao thus far have done
everything right. A far better response than the Bush
administration’s one to Katrina, for example, which is quite an
indictment.
On a different matter, German leaders are refusing to meet with
the Dalai Lama when he tours Germany.
Burma: There is little more to be said here, as the UN now
believes well over 1.5 million are at critical risk of starvation and
disease in the wake of the cyclone (with more awful weather
pounding the area). The junta refuses to buckle under and let a
concerted worldwide relief effort take place (and here China is
not helping influence its neighbor). As an editorial in the Wall
Street Journal first offered last weekend, at least kick Burma out
of the UN for its abominable behavior. I’d just add, then bring
the leaders before a trial at The Hague and, upon conviction,
execute them. [The builders in China of some of the substandard
buildings, incidentally, will undoubtedly be executed as well.]
Russia: New Prime Minister Vladimir Putin wasted no time in
putting his stamp on things by naming a cabinet with more than a
few figures resembling that of when he was president, including
Foreign Minister Sergey Lavrov, who retains his post. But
former first deputy prime minister Sergei Ivanov was demoted to
simply deputy prime minister, of which there are about a
hundred. In case you wanted to know who really is in charge,
now that Dmitry Medvedev is president (as if you had any
doubts), it was Putin who spoke first in presenting the cabinet to
Medvedev.
Also, Putin’s former chief of staff, Igor Sechin, a real hardliner,
is not only the new head of industrial development, but he
remains chairman of state-owned oil giant Rosneft. This would
be like Dick Cheney being vice president, or secretary of
whatever, while running Halliburton. Unfathomable in our
system.
Pakistan: The coalition of the late Benazir Bhutto’s party,
chaired by her widower, Asif Zardari, and long-time rival Nawaz
Sharif, is breaking up over the disposition of the judges that
President Musharraf sacked last November, which precipitated
the government crisis that led to Bhutto’s assassination. Zardari
wants to reinstate the judges but still allow Musharraf to stay in
office with reduced powers. Sharif, though, wants the judges
reinstated while sacking Musharraf, which would probably lead
to another crisis. Musharraf, for his part, can still dismiss the
government, an equally bad option.
Meantime, the government has instituted a prisoner exchange
with the Taliban, just what Washington doesn’t want to see. In
the end, no one should be surprised to see Musharraf reemerge as
the main power here.
North Korea: Pyongyang handed over 18,000 pages of
documents on its nuclear program, going back to 1986, and the
U.S. State Department triumphantly displayed them as proof the
administration’s policy is working on the negotiating front, even
though the North is now five months late in complying with the
Six-Party agreement to cough everything up. The State Dept. had
to admit the documents still aren’t sufficient.
On the famine front, I noted upon my trip to South Korea a few
years ago that when you go to the DMZ, you can look across and
see how the trees in the North have been denuded. It turns out
the latest edition of the famine is so severe, the people are back
to eating tree bark, as well as grass.
India: A shady group calling itself the India Mujahadeen is
claiming responsibility for a series of bombings in Jaipur, a
tourist mecca, that killed over 60. For now it appears to be
another attempt by such groups to stoke a war between Hindus
and Muslims.
Serbia: In parliamentary elections, the pro-West party won, but
the nationalist forces may yet be able to form a coalition
majority, so this is far from being taken off the hot spot list.
Zimbabwe: The government of Robert Mugabe extended the
deadline for the runoff between himself and Morgan Tsvangirai
to June 27, a totally illegal move under the constitution.
Tsvangirai has nonetheless agreed to participate in the new vote.
South Africa: There are growing concerns that when Jacob Zuma
takes over for current President Thabo Mbeki, Zuma won’t be up
to the challenge. The reason? How can I put this gently? Let’s
just say he’s an idiot. For starters, this guy has zero formal
education, which in and of itself wouldn’t disqualify him, I
guess, but he’s shown time and time again to be erratic; witness
some of the responses he has given on the AIDS front and having
been brought up on a rape charge (though he was acquitted).
Zuma has a history of being confronted on an issue, any issue,
only to immediately change the subject after his customary
chuckle. For example, something like the following:
“Mr. Zuma, how do you feel about the prospects for South
Africa’s economy?”
“Ha ha ha….you know, when I was a boy I carried water up the
hill.”
“Ah, Mr. Zuma? Can you answer the question?”
Sudan: The government survived a shocking coup attempt by
Darfur rebels, who traveled hundreds of miles in their ill-fated
maneuver, but the thought is that there is no way this didn’t come
off in the first place without internal dissent in the Sudanese
government.
Venezuela: President Hugo Chavez compared German
Chancellor Angela Merkel to Hitler after Merkel said Chavez
doesn’t speak for all of Latin America.
Mexico: In the case of the assassination of the national police
chief the other week, the government arrested a federal police
officer for masterminding a conspiracy. This was so cold-
blooded, we’ve now learned the chief was gunned down by a
man inside who fired on the chief as he opened the door to his
home. The chief’s bodyguard, also hit, still managed to wrestle
and arrest the gunman, and after tracking numbers on the trigger
man’s cellphone, the trail led to the police officer. There is no
other way to describe the drug war in Mexico as anything but a
full-blown insurgency.
Spain: This nation is suffering from its worst drought in 60 years
as the reservoirs serving Barcelona are down to 20% of capacity.
Austria: Just what the heck is it about this place? Yet another
incredibly gruesome case as a man confessed to hacking his wife,
daughter, parents and father-in-law to death with an axe, saying
he wanted to spare his family the shame of being saddled with
debt. [On the other hand, former NBA star Charles Barkley is
expressing little remorse at being told he owed Wynn Resort in
Las Vegas $400,000 from last October. Told he better pay up
now or face jail time, Barkley said “All they had to do is call and
say, ‘Hey, you owe us this money.’” That, my friends, is a jerk.]
Random Musings
–In the national polls, Barack Obama leads John McCain 46-40
(Bloomberg/LA Times) and 51-44 (ABC/Washington Post). In
the Bloomberg/Times survey, blacks favor Obama over McCain
by a staggering 79-3 margin. McCain also ranks poorly on the
issue of who can better handle the economy, which is as it should
be, given that McCain has been an embarrassment when
speaking of it. [Some of his policies I certainly agree with, but
when pressed he is exhibiting a shockingly poor knowledge of
the issues.]
–John Edwards endorsed Obama as he battles it out with the
likes of Hillary and Bill Richardson to be tabbed as Obama’s
running mate. One thing about the former North Carolina
senator, while he’s a lightweight, he certainly wouldn’t be a
polarizing figure, a la Hillary, and Obama would never have to
worry about being undermined while in the Oval Office. I’m not
so sure he wouldn’t be a bad pick for Barack, seeing as he wants
the spotlight to remain on him and not his veep selection.
–David Ignatius of the Washington Post had an interesting
thought on Obama’s campaign.
“The past several months have revealed Obama’s vulnerabilities,
but they’ve also shown his ability to take a punch. Many whites
are furious that he didn’t throw Wright overboard sooner, but
blacks surely like him all the more for resisting the pressure.
And there’s an instinctive American fondness for people who
don’t rat out their friends, even when their friends are creeps.
That’s why a Wright-based strategy may backfire for the
Republicans, just as it did for Hillary Clinton.”
–John McCain suddenly set a timetable for Iraq, saying all
combat forces could be out by 2013; this after previously bashing
rivals from both sides for saying essentially the same thing. I
don’t know who advised McCain to do this, but that individual
should be fired. Events may yet work out for McCain regarding
progress in Iraq by this fall (or they might not), but this gives
Obama further ammunition to say he was right all along.
–President Bush said in an interview that he hasn’t played golf
since August of 2003 because he felt it wouldn’t look right to do
so out of respect for the soldiers dying in Iraq.
–For the archives, Hillary romped in West Virginia, 67-26, and
will do likewise in Kentucky this week, after which she can
gracefully exit.
–As expected, former congressman Bob Barr (1995-2003)
announced he will seek the Libertarian nomination for president,
which could really screw things up for John McCain. Barr, far
from a likeable fellow, has nonetheless vowed to be strict on
immigration, slash federal spending, and get our troops out of
Iraq. Because of his relatively high national profile, Barr taking
2-3 percent of the vote is a distinct likelihood and in selected
swing states that could be enough to prevent McCain from
defeating Obama.
–As I go to post, I still haven’t seen whether New York
Congressman Vito Fossella has opted not to seek reelection and
flee to Guam, per my earlier advice. Fellow Republican
Congressman Peter King is defending Fossella against the
“jackals” in the media, for which I’ve lost a lot of respect for
King, seeing as Mr. “Family Values” Fossella not only lied to
everyone involved, but he was squiring his mistress on overseas
trips on the taxpayers’ dime. The guy is simply a dirtball/
slimeball (not a great combination), Cong. King. Face the facts.
I’ve always felt the world was comprised of only 50% good
people and 50% bad and Congress is clearly representative of
those figures.
–Once again Al Sharpton is under fire for owing up to $1.5
million in federal income taxes as a result of his National Action
Network’s dealings. But we’ll never learn when it comes to this
charlatan. Then again, since Charles Barkley said he’d pay up,
maybe the Rev. can borrow some money from Sir Charles,
seeing as Barkley claims to be just fine financially.
–Can you believe Barkley once felt he could run for governor of
Alabama? Has TNT fired Barkley yet?
–As of early this week, this has been the deadliest tornado
season in 10 years, 98 dead, with Alabama having already seen
45 twisters when it normally gets 42 for an entire year, and
Arkansas having 49 vs. 48 as a normal, yearly average.
–We congratulate the polar bear for gaining protection on the
endangered species list. They can now raid garbage dumps to
their heart’s content rather than having to worry about decreasing
sea ice and starving to death while attempting to kill seals. As
for the seals, I’d advise them to keep their guard up. Lots of
Shamus out there who still like to snack on ‘em.
–My, the world has changed. At the Hyatt Regency at Charles
de Gaulle Airport, where I stayed this past Monday night, there
were 40 Chinese businesswomen at breakfast, and not all in one
group. There were about 8 others in the room, including yours
truly, the now increasingly token American it seems most places
I go.
–I can’t imagine why anyone would buy Cherie Blair’s memoirs,
but it was kind of amusing when it was revealed husband Tony’s
heart sank when he learned George Bush had defeated Al Gore in
2000 because of Bush’s lack of foreign policy acumen. They
both did learn to like the “quirky” Bush, however.
–And a few thoughts on Jordan. The city of Amman was
originally founded on 7 hills, now 19, and has a population of 3
million, or about half the total population of the country. My
driver for the week is Palestinian and was born on the West Bank
in Jericho and as we’re spending a final 12 hours together today
(long road trip, to say the least) I need to pin him down on the
Palestinian refugee population here.
Jordan is 98 percent Arab, with roughly 93 percent being Sunni
(as opposed to Iran which is 90% Shia).
In ancient times, Amman was the site of “Philadelphia,” part of
the Roman Decapolis. Since there was no Santa Claus in those
days, Philadelphians couldn’t boo him.
I saw a lot of Bedouin tribesmen traveling about. I was told they
aren’t all as poor as they look, but you could fool me.
I also couldn’t believe the mansions I saw both in and outside
Amman. My driver said some were $12 million and up and I
could believe this. I’m surprised because Jordan has no oil and
little on the technology front (though this is gradually growing).
There is little farming, relatively, and really just some mining for
things such as fertilizer and uranium. So I asked where they got
the money and he said, “When you ask, you never get an
answer.” Of course I already knew the answer; corruption and
organized crime. Amman in this respect reminds me a bit of
Sofia, Bulgaria, though King Abdullah has been trying to crack
down on it.
You see King Abdullah’s picture everywhere. I mean about
every quarter mile, and sometimes three pictures on one building.
Queen Rania is featured a fair amount as well, which seeing how
beautiful she is isn’t a bad thing.
While Jordan is a constitutional monarchy, King Abdullah has
instituted some legitimate democratic reforms, including open
municipal elections for which 20 percent of the seats are reserved
for women. Parliament is also somewhat independent, though as
indicated in some of my opening remarks, obviously Abdullah
has final say.
“Honour killings” are big here. For instance a guy killed his
sister after her husband accused her of having an affair. The
Court sentenced the man to death, but then commuted it to ten
years. Nonetheless, the government is trying to crack down on
these acts, with courts previously just handing out sentences of
six months. Amnesty International said there were 17 such
murders last year.
I drove past the U.S. Embassy compound in Amman. Talk about
security. It seems impossible to breach, with Jordanian soldiers
outside with mounted machine guns on jeeps and the knowledge
that on the other side of the walls is a heavy contingent of
Marines.
At the tourist spots, I saw a lot of Russians and their families and
my driver confirmed that Jordan (as is the case almost
everywhere in the world these days) is seeing a huge influx of
Russian tourists with their oil-driven economy and he added it’s
funny to see them with absolutely huge wads of cash (U.S.
dollars, incidentally). “They just peel off $100 bills like there’s
no tomorrow.” One Russian stayed at my hotel in a special villa
charging $14,000…per night…for an entire month. [My nice
room, on the other hand, is about $200, not including meals.
Dinner, though, can easily run over $100 depending on what you
drink.]
–Finally, two uplifting notes from the world at large. I saw a
clip of sniffer dogs being loaded onto a transport plane in China.
It always warms your heart to see this, even amidst tragedy. You
might even say there is something deeply spiritual about it.
And Irena Sendler died. She was 98. It was during World War
II that Sendler, a Roman Catholic, spearheaded an effort to
smuggle 2,500 children out of the Warsaw Ghetto. An authentic
saint.
—
Pray for the men and women of our armed forces.
God bless America.
—
Gold closed at $899
Oil, $126.29
Returns for the week 5/12-5/16
Dow Jones +1.9% [12986]
S&P 500 +2.7% [1425]
S&P MidCap +3.5%
Russell 2000 +2.9%
Nasdaq +3.4% [2528]
Returns for the period 1/1/08-5/16/08
Dow Jones -2.1%
S&P 500 -2.9%
S&P MidCap +3.0%
Russell 2000 -3.2%
Nasdaq -4.7%
Bulls 46.0
Bears 29.9 [Source: Chartcraft / Investors Intelligence]
Have a great week. I appreciate your support.
Brian Trumbore
