Not a bad week, I think you’d agree, at least in the global financial markets as the rally off the March lows continues, the latest extension of which being the past four weeks, a period that has seen the S&P 500 roar ahead 15%, while Tokyo’s Nikkei is up 12%, Frankfurt’s DAX 19%, and the London FT-SE up 15%. Strong stuff…and not just because things are “less bad” in the world. There are simply some solid signs the global economy has turned the corner, though now we wait to see just how strong a recovery we get. I’m in the camp that believes the second half of the year\’s data will be good, but I still can’t get a handle on 2010 and with so much uncertainty in the world, first and foremost being what to do with Iran, you can\’t get too euphoric. Then again, after the experience of 2008 and early ’09, I can’t imagine too many are really that giddy just because their 401(K) has recovered a portion of its losses. I certainly also wouldn’t blame anyone who wanted to book some profits at this point.
But just a few notes on the real world. Start with China, where the government is increasingly concerned that its loose fiscal policy is leading to another round of bubbles, particularly in real estate, rather than money being lent for more sustainable, and needed, projects. China is looking for GDP growth in the third quarter of 9% and 9.8% in Q4, but the central bank has told the heads of the largest state-controlled financial institutions to cool it on the lending end.
In the U.K., two readings on manufacturing and industrial production showed actual growth for June and July, not just a slowing pace of contraction, and the evidence is pretty clear the property market has bottomed. But here the Bank of England felt compelled to increase its level of quantitative easing, similar to our Federal Reserve’s moves to limit any rise in interest rates, because the BoE is concerned the recovery will be weak and there is a risk of a double dip.
Germany also saw June industrial production come in far better than expected, up a super 4.5%, and then exports for the month soared 7%. But many here are talking of a V-shaped recovery. So look at Britain and Germany. Actual growth in manufacturing…and Europe was supposed to be the sick child.
In India, its reading on July manufacturing was 55.3, still solidly in growth mode.
But I do have to note on the inflation front that the Eurozone saw producer prices crater 6.6% in June, while wages in Japan were down 7% that month vs. a year earlier.
So what of the U.S. of A.? There were a number of releases this week and with one small exception, personal income, all the data points came in better than expected: June construction spending, up 0.3% (when a decline was forecast), the July ISM on manufacturing, 48.9 (46.5 expected), June consumption, up 0.4%, June factory orders, up 0.4% (when a decline was forecast), the July ISM reading on the service sector, 46.4 (OK, a second slight disappointment), and then Friday’s Big Kahuna, the July jobs report came in with a loss of 247,000, again, better than expected, and the unemployment rate actually ticked down to 9.4% (I’m on record as saying we won’t see 10.0%).
One of the downers was with the retailers, who came out with same store sales figures for July and the 30 major chains were down an average of 5.1%, but by Friday, after the better employment data, the shares were rallying anew.
And Cisco’s John Chambers offered that his critical company saw “positive signs” and that it increasingly appeared we had reached a “tipping point” in the economy, even as Cisco reported revenues for its most recent quarter that were down 18% vs. a year ago. [I view Cisco’s report more positively than the Street did.]
Then you have this “cash for clunkers” program for the auto sector. I just have a word for my fellow Republicans, many of whom want to criticize it. Talk about a bunch of hypocrites! Some of you are the same folks who have been praising the “targeted,” “directed,” Chinese stimulus because it went after specific industries….and it’s worked there. So how can you then criticize a program targeting the auto sector, my friends? C’mon. And then you have the unimaginative, unoriginal jerks on the air who say, “Well, I need a new golf driver…where’s my cash for drivers program?” And they think they’re being funny.
Look, I don’t want to see the deficits driven up any more than the next guy. I’m the one who years ago was calling it the crime of the century that we Americans put up with seeing $250 billion going to pay interest on the debt, a figure that is today far, far higher.
But you’d have to be an ostrich with their head in the sand not to recognize that last spring we needed a stimulus program of some sort, only the Obama plan that emerged was duly criticized because it didn’t do that and way too much of the $787 billion is going towards ill-conceived, or ill-timed programs. Cash for clunkers, though, at least generated immediate action. And it’s action, folks, that helps stimulate confidence, which in turn is almost inevitably self-reinforcing.
Yes, I know. Cash for clunkers is in some form taking from future sales. So be it. We’re hoping that by that time the economy is in a decent enough recovery, with some renewed job growth, that a new class of buyer reenters the car market at that point.
But in the end real growth remains dependent on two factors, housing and jobs. We’ve seen signs real estate is bottoming, at least on the lower end, but actual job growth is a ways off.
Speaking of housing, though, many of you saw a Reuters story by Al Yoon with the title “About half of U.S. mortgages seen underwater by 2011.”
“The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48% in 2011 from 26% at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.
“Home price declines will have their biggest impact on prime ‘conforming’ loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.
“ ‘We project the next phase of the housing decline will have a far greater impact on prime borrowers,’ Deutsche analysts Kim Weaver and Ying Shen said in the report.”
It’s important to note that this analysis will not be accurate if the equity market can hold up and drag confidence, and eventually job growth, with it. I am well aware of the problems at the higher end, my office being in one of the wealthier communities in the country, and my home is next door. The New York metropolitan region, for example, had been the last market to crack, but if Wall Street stabilizes, and profitability is obviously returning, then so will housing values.
Just a few other notes. I am always uneasy when our leaders do victory laps of any sort, as Barack Obama did on Friday with regards to the employment data. Recall there was a certain Republican president by the name of Bush who donned a flight jacket as he then declared victory in Iraq, about five years too soon. All of our leaders are subject to such hubris.
And so a brief thought on Iran before expounding on the issue further below, as I do every week when it comes to this topic. You talk about a hot spot and a potential game changer…this is it. Yet I never hear a single Wall Street strategist bring it up. [Only the energy analysts do, for obvious reasons.] We could be whistling a fairly happy tune come, say, November, when bam! Israel attacks and Iran unleashes its Furies. That would be the last thing our fragile psyches could take, just before the Christmas shopping season, which will be a relative downer to begin with. Again, it’s all about confidence and sentiment as I constantly look to see what can change it.
The other item on the radar screen is of course H1N1 and, as predicted, NBC was among the networks that had a slew of reports this week, though when one gleans the news from around the world, it wasn’t all bad. The U.K., for one, said that the latest wave had peaked, while in the U.S. the government is issuing guidelines for schools to alleviate as much unnecessary panic as possible. This is good. The only problem is the second wave could hit in September before vaccine production can catch up to demand, but at least the media has been acting responsibly of late.
–I was watching the Sunday morning talk shows and it was pretty clear to me the week was going to be a positive one, barring a disaster in Friday’s employment data, as Larry Summers, Tim Geithner, and Alan Greenspan all had positive things to say about the economy; Greenspan noting he had seen “significant improvement in the financial system.” And later Goldman Sachs’ Abby Joseph Cohen talked of her firm’s outlook for 2010, as in earnings for the S&P 500 are projected to be in the $75 area. Ergo, at 1150 on the S&P, that would be a p/e of 15…certainly historically reasonable. Today, the S&P resides at 1010, its highest level since early October, and up 49% from its March closing low.
–U.S. Treasury Yields
Most experts agree the Federal Reserve will not raise interest rates for the foreseeable future, potentially straight through 2010. There is just too much of a risk that the economy could tip back over and at the same time, as noted in some of my examples above, inflation is a dead issue. [Except for health-care costs, I hasten to add, as my own renewal came in up 17%!]
–Speaking of health-care, with Congress in recess, and lawmakers having gone home to face the music on the topic, I’m going to take a few weeks off from weighing in myself. Come September, however, it\’s going to be explosive.
–Ford’s Focus was the top seller in the initial “cash for clunkers” chase, followed by Toyota’s Corolla, Honda’s Civic and Toyota’s Prius and Camry. While many of the ‘foreign’ models are indeed made in the U.S., this experience mirrors the European one.
Overall, July car sales reached 997,000, a level not seen since August 2008. Ford’s actually rose 2.3% for the month, but the others declined vs. year ago figures.
–The Washington Post ran a story on Thursday that the White House was considering an overhaul of Fannie Mae and Freddie Mac, stripping out the troubled loans and creating a bad bank to house them, thus leaving two healthy institutions with a clean balance sheet. But later that day the administration said this wasn’t in the cards, which of course is a bit disingenuous because this isn’t the kind of scintillating story a bunch of Post reporters would make up for Pulitzer consideration.
–The U.S. Postal Service lost $2.4 billion in the second quarter and, as expected, forecast a loss of $7 billion for the year. Mail volume dropped 12.6 percent over a nine-month period. Don’t blame me, sports fans. It just so happens that five of the 22 publications I subscribe to went out of business.
So the talk of suspending Saturday delivery is heating up and I say just do it. That move alone saves about $2.5 billion.
Loyal reader E.C., who works for the postal service, reinforced that under the current contract it is tough to lay off employees until 2011 (expiration of the agreement), so cuts must be found elsewhere until then…and imagine the next negotiations.
I do have to say, though, that one of the jerks on CNBC the other day was making fun of the timeliness of delivery for the USPS and while it’s popular for the Nightly News to bring up the one in six billion story of a letter getting delivered 10 years late, when it comes to Express Mail or other USPS services, they match up with FedEx and the others. Period.
So lay off the stupid, freakin’ jokes. What is clear, however, is the Postal Service has to face facts and coming cuts need to be severe. But not necessarily at the expense of the employees\’ meager pensions, as is rumored.
–If I had the time to go back through my extensive archives, I’d show you all the times how it was a joke that General Electric consistently ‘beat’ earnings expectations by a penny. Every single quarter. Beat by a penny.
Of course it was financial chicanery, pure and simple, and now regulators successfully jacked GE up against the wall and said, “The game is over.” The company then agreed to pony up $50 million for overstating profits by as much as $1.15 billion from 2001 to 2005 and part of ’06.
The SEC’s Enforcement Director Robert Khuzami said, “GE bent the accounting rules beyond the breaking point. Overly aggressive accounting can distort a company’s true financial condition and mislead investors.”
No kidding, Sherlock. Current CEO Jeff Immelt took over for legendary Jack Welch four days before 9/11, but it was under Welch that the shell games first began.
–Bank of America agreed to pay $33 million to settle SEC charges that it failed to provide complete information to investors about a $5 billion bonus pool at Merrill Lynch before shareholders voted on the BofA takeover of Merrill. Aside from this SEC charge, there are a slew of shareholder suits claiming that Bank of America CEO Ken Lewis and his board did not adequately disclose Merrill’s worsening condition.
–The New York Post’s Paul Tharp on AIG and the mess in the company as we, the taxpayer, shell out over $182 billion.
“AIG’s legal eagles even sued a deceased co-founder, Ernest Stempel, in federal court, in an unsuccessful effort to seize his AIG holdings last month. The loss didn’t stop them – they are pushing the claims again this week in state court, burning up more taxpayer cash.
“ ‘It’s like the inmates have taken over the asylum,’ said one high-ranking insider, of the army of consultants, lawyers and accountants at work inside the company. ‘Government can’t even run government – how can you expect it to run a business?’”
But AIG did report its first quarterly profit since 2007 on Friday and the shares rallied. However, in a filing with the SEC, AIG said that even as it sells off some businesses, less than $5 billion will be available to begin repaying its massive debt to the government.
Separately, Maurice “Hank” Greenberg, who headed AIG for 38 years before his ouster in 2005 will pay $15 million to settle SEC claims he manipulated the insurer’s earnings. SEC Director Khuzami said that Greenberg and his CFO Howard Smith played games with accounting transactions to affect the reported results, and that the moves “presented a false financial picture and allowed AIG to claim success in meeting its performance goals.” At least the SEC is finally earning its paycheck.
–Goldman Sachs CEO Lloyd Blankfein told his employees not to go nuts on high-profile purchases as the spotlight shines on the investment bank and its return to massive profitability, and obscene bonuses. Actually, Blankfein has been warning his troops to cut back on purchases of small countries and the like since last year in an effort to keep the bad press to a minimum.
But the New York Post reported that Laura Blankfein and her friend Susan Friedman, wife of Goldman executive Richard Friedman, “caused a huge scene at Super Saturday in the Hamptons last weekend when they arrived at the event before the noon start time and balked at waiting in line with the other ticket-holders.
“ ‘Their behavior was obnoxious. They were screaming,’ said one witness. Blankfein said she wouldn’t wait with ‘people who spend less money than me.’
“Another observer said the women were so impatient, it was as if they were waiting on line for a kidney transplant instead of a charitable designer clothing sale.”
But back to Goldman Sachs, the company, it is the subject of various federal probes into their trading practices and how it pays its employees. In a filing, Goldman said its trading revenue hit or surpassed the $100 million mark on 46 days in the second quarter, vs. 90 $100 million days in all of 2008.
–The International Energy Agency’s chief economist, Dr. Fatih Birol, told the Independent (U.K.) “that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilization depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated.”
An analysis of the 800 major oil fields in the world reveals that most of them have already peaked and that the rate of decline in reserves is faster than calculated just two years ago. Birol also warned that the major oil powers’ influence would continue to grow.
“One day we will run out of oil, it is not today or tomorrow, but one day we will run out and we have to leave oil before oil leaves us….
“The market power of the very few oil-producing countries, mainly in the Middle East, will increase very quickly. They already have about a 40 percent share of the oil market and this will increase much more strongly in the future.”
–Russia and Turkey reached a critical agreement that will help Russia maintain its monopoly on natural gas shipments from Asia to Europe as Turkey granted nat gas giant Gazprom use of its territorial waters in the Black Sea, under which the company wants to route a key pipeline to markets. In return, Russia agreed to help with an overland pipeline to the Mediterranean. To show the importance of the deals, they were signed by Prime Ministers Putin and Erdogan in Turkey. Italy’s Silvio Berlusconi also joined in, ostensibly to tour The Harem at Topkapi Palace, or so I’m imagining; Berlusconi always looking to history for new party ideas for his own harem.
–Despite profits declining 96% in the second quarter, CBS Corp.’s CEO Leslie Moonves offered that revenue so far this quarter is ahead of the prior one’s pace, specifically for local TV, radio and outdoor billboard businesses. “The improvement has been very steady and very real,” he said. Now that’s a ‘green shoot.’
–And publisher Mortimer Zuckerman sent an interesting signal in saying he is going to be investing more money in his newspaper, the New York Daily News, including for new printing presses.
–Meanwhile, Sirius XM Radio reported a widening loss of $157 million for the quarter, while losing 185,000 net subscribers. Satellite radio is no longer a ‘must have.’
–Twitter and Facebook were hit by denial of service attacks on Thursday as their servers were flooded with data in an effort to disable them. But then we learned the coordinated attacks were directed at one individual, a pro-Georgian blogger known as Cyxymu, and not the sites themselves.
–There is growing skepticism on China’s growth figures. Even the government’s official English-language mouthpiece quoted a survey that found 91% of respondents were a bit disbelieving, up from 79% in 2007.
I wrote extensively on this topic years ago and how it’s all about the provinces and the incentives to paint as rosy a picture as possible when they pass along data to the central government. It’s about keeping one’s job here.
–Deflation Watch: Josh P.’s San Diego area home’s tax assessment was lowered a second time and is now 35% lower than the original one. Of course J.P. has been aggressive in getting it reduced…you all need to do the same.
–Tourism to France was down about 30 percent in June and July, though more French themselves are staying closer to home which will make up some of the difference. For example, at the Eiffel Tower, there was a big drop in tickets from British and Spanish visitors, but overall ticket sales were up as more French families took in the sites.
–Finally, like three months later than expected, the White House handed out its grants for the battery sector…$2.4 billion worth…and for selfish reasons I was pleased to see an investment of mine (relatively minor one) got its fair share. President Obama did make an accurate comment in Indiana, a state receiving much of the largesse.
“For too long, we failed to invest in this kind of innovative work, even as countries like China and Japan were racing ahead.”
China is indeed leaping ahead in all things clean energy.
–The medical examiner has ruled that cocaine contributed to the death of pitchman Billy Mays. Nooooooooo!!! [Of course now it all makes perfect sense. “Awesome Augur”? I think not.]
–Cisco CEO John Chambers had some great advice in an interview with the New York Times on the topic of hiring, as in ‘How do you hire?’
Chambers: “First thing I want to ask you about: tell me about your results. I never get hard work confused with success. So I’d walk you through the successes, and what did you do right.
“I’d also ask you to tell me about your failures. And that’s something people make a tremendous mistake on. First, all of us have had mistakes and failures. And it’s surprising how many people say, ‘Well, I can’t think of one.’ That immediately loses credibility. It’s the ability to be very candid on what mistakes they’ve made, and then the question is, what would you do differently this time?
“Then I ask them who are the best people you recruited and developed, and where are they today? Third, I try to figure out if they’re really oriented around the customer. Are they driven by the customer, or is the customer just somebody who gets in the way?
“And I look at their communication skills, and one of the largest parts of communications is…listening. Seeing how they listen, and are they willing to challenge you? And then I look at their knowledge in industry segments, especially the area I’m interested in.”
Iran: President Ahmadinejad was sworn in to a second term amid protests as the crisis of authority continues unabated. Former Presidents Rafsanjani and Khatami, as well as opposition leaders and presidential candidates Mousavi and Karroubi, blew off the ceremony, while it was clear Supreme Leader Ayatollah Khamenei intended to send a notice to Ahmadinejad that he was on a short leash. For his part, the president, in his address to the people, noted the countries that did not congratulate him after his sham victory; the United States, U.K., France, Germany and Italy.
Last weekend, the regime held a show trial for about 100 detainees, many of whom “confessed” that the post-election protests were preplanned and that there was no election fraud and that the U.S. was responsible for masterminding a ‘velvet revolution.’ The Iranian opposition, led by the above named leaders, blasted the process.
Editorial / Washington Post
“The trials have reinforced the image of a regime whose extremely modest tolerance for public dissent has shriveled as its own grip on power has weakened. Opposition protests continue in the streets of Tehran despite a crackdown by hard-line militias loyal to the regime. Public spats are reported between Mr. Khatami and Mahmoud Ahmadinejad, the president who was sworn in Monday. These are dangerous days in Tehran, which only underscores the dilemma the Obama administration faces as it clings to a strategy of engaging Iran to contain its nuclear ambitions: Who is there to talk to?”
On the nuclear front, the London Times reported that it’s all up to Ayatollah Khamenei to give the go-ahead on building a bomb. According to various intelligence estimates, Iran already has the know how when it comes to detonating a warhead so it’s more a matter of enriching enough uranium and then assembling the device…6 to 12 months, total.
Recognizing other intelligence reports have said Iran doesn’t have the weapons capability as yet, the issue is still one of timing…when does Israel strike? Clearly, Iran is not going to meet the Obama administration’s September deadline for sitting down in serious negotiation and that will set in motion a series of new sanctions. But Iran would just continue its heretofore brilliant ‘four corners’ offense (stall game) and Israel can’t afford to wait much longer.
Then it’s a matter of just how good Israeli intelligence is. For example, is the large plant at Natanz where the key elements of the nuclear program are located? If not, how disbursed is it? Where are these other locations? And, of course, what is the blowback?
Israel: So the government of Prime Minister Netanyahu really needs to know, just where does the United States stand? Yes, the Obama administration seeks talks, but even the White House understands they don’t have a clue who they’re really going to deal with these days, except for the fact that Ayatollah Khamenei still calls the shots. But there is a chance, once unthinkable, that he could be replaced.
Meanwhile, Fatah, the dominant faction in the Palestine Liberation Organization, held its first party conference in years and President Mahmoud Abbas accused Netanyahu of evading peace talks, while blasting Hamas for its responsibility in splitting Palestinians. Abbas also accused Hamas of executing 100s of Palestinians in Gaza, with many being thrown off roofs.
And on the settlement issue, which blew up in Jerusalem this week as the Israelis sought to boot some Palestinian families, the White House has asked Israel to freeze West Bank settlements for a year to get Arab nations to respond in kind and normalize relations with Israel, according to an Israeli newspaper. The Netanyahu government evidently prefers a six-month freeze. President Abbas has said there can be no peace talks until settlement construction stops. It doesn’t help that in the past week, Saudi Arabia, Kuwait and Jordan have all renounced Israel, blaming it for the lack of progress on the peace front, while ignoring Obama administration pleas for confidence-building measures, such as opening trade offices, allowing academic exchanges and permitting Israeli aircraft to overfly Arab territory. The fact that Saudi and Jordanian leaders said these things in front of the visiting Sec. Clinton spoke volumes on the state of things these day.
Then you have the growing issue of Lebanon and Hizbullah, the latter having stockpiled an estimated 40,000 rockets, including anti-aircraft missiles. And as the Jerusalem Post reported, there are renewed concerns Syria will supply Hizbullah with “balance-altering” weaponry. It was also disturbing that Lebanese Druse leader Walid Jumblatt was threatening to take his party out of the ruling coalition, Jumblatt saying he wanted to return to his socialist roots.
Afghanistan: It was another bloody week with at least 19 NATO soldiers killed in action (12 U.S.) after July’s tally of 75 (43 Americans), the deadliest month yet. General Stanley McChrystal, the new commander in the theater, wants to see the Afghan police and army forces increased to 400,000, compared to its current combined force of 166,000, which would represent a far costlier commitment. But it’s not known just when McChrystal will pressure President Obama to cough up the funds. And the presidential election here is coming up quickly, Aug. 20. This is going to be a mess, but at this point all the U.S. is looking for is a relatively clean vote that would legitimize the probable victor, President Karzai, who himself is hopelessly corrupt and ineffective. To give you a sense of how unruly the election is going to be, two Taliban leaders are in the field as presidential candidates and the Taliban will indeed have a presence in local governments.
Ralph Peters / New York Post
“The echoes of Vietnam keep getting louder. Our well-intentioned aid only corrupts. We never pause to try to think like Afghans. And we comfort ourselves with platitudes, then lie about our prospects….
“Readers…know I believe in killing our enemies wherever we can find them. But I don’t believe in killing our own troops because our leaders duck fundamental questions.
“During his election campaign, President Obama promised us that he knew how to fix Afghanistan. His macho rhetoric made it his war. But I’m willing to let him off the hook on that one – if we just stop pouring lives and money down a bottomless rat-hole. Concentrate on destroying our global enemies, not on teaching hygiene to Afghan hillbillies.
“In the words Gen. David Petraeus applied to Iraq, ‘Tell me how this ends?’….
“I believe that Gen. McChrystal is doing his best. I’m convinced his subordinate officers are doing their best. And I know our troops are doing their best. But for what?”
[At least when it comes to the Taliban, there is growing evidence their leader, Baitullah Mehsud, who was responsible for the assassination of Benazir Bhutto, as well as plotting attacks against Americans in Afghanistan, was taken out in a drone attack. A huge blow.]
North Korea: I think the big news on the week here wasn’t that American reporters Euna Lee and Laura Ling were returned home aboard the Hollywood Express, piloted by Bill Clinton, but rather how good Kim Jong-il looked. Just a few weeks ago he looked like a cadaver, so I’m thinking Clinton brought along some makeup artists for Lil’ Kim.
But while we’re all glad the two women were returned, having been seized on March 17 and sentenced to 12 years of hard labor (though they were living in a comfy guest house), this was another classic case of ‘wait 24 hours.’ For instance, we’ve learned that the mission was all about Clinton himself, the former president being the only one Kim wanted to meet with.
Michael Saul / New York Daily News
“Bill Clinton played it aw-shucks humble on Thursday as he gave his first personal account of his dramatic rescue of two jailed journalists from North Korea.
“ ‘My job was to do one thing, which I was profoundly honored to do as an American and as a father – I wanted both young women to be able to come home,’ declared Clinton.
“He placed his hand on his chest in a gesture reminiscent of his glory days, when lower-lip biting was his body language to signify emotion.”
But according to the AP, despite the fact Clinton held three hours of talks with Kim, a discussion on the nuclear weapons program was off limits per prior agreement, though the White House is hopeful the North will reenter six-party talks. [Not likely…Kim just wants to talk to the U.S.]
“There are new indications that North Korea may be transferring nuclear weapons technology to Myanmar, the dictatorship also known as Burma, and that it earlier supplied a reactor to Syria. For many years, based on five visits to North Korea and its border areas, I’ve argued for an ‘engagement’ approach toward Pyongyang, but now I’ve reluctantly concluded that we need more sticks.
“Burmese defectors have provided detailed accounts of a North Korean reactor, perhaps a mirror of the one provided to Syria, built inside a mountain deep in Myanmar.”
If the defector accounts are accurate, Burma could have a bomb in about five years.
“Where we have intelligence that North Korean ships are transferring nuclear materials or technology to a country like Myanmar or Iran, we should go further and board those vessels. That’s an extreme step, but the nightmare would be if Iran simply decided to save time and buy a nuclear weapon or two from North Korea. We can’t allow that to happen.”
“Indeed, though Washington will deny it, this was a hostage ransom – starting with Secretary of State Hillary Clinton’s plea for ‘amnesty,’ which carried a basic admission of wrongdoing.
“ ‘It speaks well of our country that when two American citizens are in harm’s way, that so many people will just put things aside and [ensure] a happy ending,’ said Vice President Gore.
“Indeed. But why should Washington have been put in such a position to begin with? What were Gore & Co. thinking when they sent these two women to one of the most dangerous places on earth?
“Such conduct has consequences – and in this case, they go far beyond the simple risk to two people whose arrest was as predictable as the morning sunrise.
“The result: America’s foreign policy regarding an unstable, highly belligerent emerging nuclear power was needlessly complicated, and both the region and the world are more dangerous because of it. What was the point?”
To which I’d add…and just what the heck did Clinton and Kim talk about for three hours? Granted, I’m thinking they discussed women for a spell, but what about the other 2 ½?
Russia: It was revealed two Russian attack subs were patrolling off the East Coast, though hundreds of miles out, in a brazen example of machismo; Prime Minister Putin having also bared his chest in his latest vacation photos, the better to fan the flames of nationalism.
But the biggest issue is the growing tensions in Georgia, with Russia having strengthened the combat readiness of its forces in the disputed republics of South Ossetia and Abkhazia as Friday represented the one-year anniversary of the Russia-Georgia war. There have been skirmishes the past few days between the two sides.
Georgian President Saakashvili admitted he cannot take back the rebel regions, but fears Moscow has renewed designs on Tbilisi…and him. Saakashvili also noted the world had failed to hold Russia accountable for “mass ethnic cleansing” of Georgians for fear of jeopardizing energy and trade interest.
“I am still sitting in this office despite solemn pledges by Putin to hang me by different parts of my body, to crush Georgia’s statehood,” said Saakashvili.
As for Putin himself, this month is the tenth anniversary of his rise from obscurity to power, first to prime minister and then a few months later president. The Moscow Times notes that throughout, his popularity has been sky high and as of July remained at 78%. He’s generally been above 70, with the notable exception being the aftermath of the Kursk submarine disaster in August 2000.
Australia: Authorities arrested five suspected Islamic terrorists, all Aussie citizens, who were planning an attack on a military base and have tied the cell to insurgency activity in Somalia. It was to be a suicide shoot-out and the group had been under surveillance for seven months.
Africa: The Obama administration has been garnering plaudits even from the editorial board of the Wall Street Journal for its frank talk on the continent and its penchant for corrupt leaders and regimes. Secretary of State Hillary Clinton, for example, blasted the Kenyan government while she was there and then took aim at Eritrea for its support of militants seeking to further destabilize Somalia, the same group responsible for the Aussie plot.
–Michael Gerson / Washington Post
“It was steamy and nice while it lasted. The 44th president was elected as a voice of reason transcending stale ideological debates and a symbol of unity in a nation long afflicted by bigotry. He seemed, on brief public acquaintance, to be pragmatic, positive, steady, moderate and thoughtful. In the months following his election, Obama expanded his support well beyond the coalition that had voted for him in November, attracting many seniors and white men – working-class and college-educated – who had supported John McCain.
“But, as Ron Brownstein argued last week on NationalJournal.com, recent polls have revealed a president ‘back to something like square one in his political coalition.’ Obama’s core support remains strong. His post-election gains, however, have largely dissipated. According to Brownstein, the president ‘failed to convert many voters who gave him a second look after preferring John McCain last year.’ [Ed. count me as one of these.] Obama still dominates the political landscape, but he has not changed his contours.
“Honeymoons always end. But it is fair to ask: What did Obama use this initial period of unique standing and influence to achieve? It will seem strange to history, and probably, eventually, to Obama himself, that the president’s main expenditure of political capital and largest legislative achievement was a $787 billion stimulus package he did not design and that ended up complicating the rest of his policy agenda. Such a pleasant honeymoon – yet all we got was this lousy stimulus bill….
“So these are the main accomplishments of the Obama honeymoon: a widely criticized stimulus package, a health debate poorly begun and a growing, potentially consuming deficit problem. The initial period of Obama’s presidency has revealed an odd mixture of boldness and timidity. A bold, even fiscally reckless, embrace of the priorities of the Democratic left. A timid, and politically unwise, deference to the views and approaches of the Democratic congressional leadership.
“Obama can, of course, recover, as other presidents have. But he did not take full advantage of his honeymoon – and he will not get it back.”
–Irwin Stelzer / London Times
“It is too early to say that the presidential agenda is dead in the water. But it is not too early to say that he made some serious errors. The stimulus not only failed to keep the unemployment rate to 8%, as Obama promised. It also unleashed a flood of red ink that shifted voters’ attention to the dire implications of the deficit for their children’s and grandchildren’s standard of living. So when the president insisted that Congress pass a cap-and-trade program that would drive up energy costs, and a healthcare plan that would add more than $1 trillion to the deficit or the tax burden over the next decade, Congress heard from unhappy constituents, and momentum shifted from the president to more centrist Democrats.”
–Judge Sonia Sotomayor becomes the first Hispanic justice to the Supreme Court as she was confirmed by a 68-31 vote, including nine Republicans. Significantly, the lone senator not to vote was Ted Kennedy. And why is that significant? Because his health is that poor and his vote could be critical in any potential health-care votes. It’s easy to say, well, he fought for reform his entire Senate career so they’ll wheel him in if they have to but I wouldn’t be so sure. Ditto, Sen. Robert Byrd, another ailing Democrat who should have been put out to pasture decades ago.
–Talk about disturbing. From an editorial in the Washington Post concerning the killing spree of Seung Hui Cho two years ago at Virginia Tech and an ongoing investigation into the state of his mental health at the time.
“What was going through the mind of Robert Miller, the former counseling center director, when he removed Mr. Cho’s records, and those of a few other patients, upon leaving his job there in 2006, a year before Mr. Cho’s rampage? And why did it take him more than two years – until, he says, a lawsuit prompted him to undertake a search at his home – to recall that he had ‘inadvertently’ (and possibly illegally) removed the documents?
“As Suzanne Grimes, whose son was injured in the shootings, told The Post: ‘When you retire, you take the pictures off the wall. You don’t take records.’”
–This is a story right out of the last season of “24.” Erik Prince, the founder of security company Blackwater, is being investigated for a number of crimes, including “murder, weapons smuggling and the deliberate slaughter of civilians” as reported by the London Times’ Tim Reid. The accusations are being made by two former employees in sworn affidavits submitted to a Virginia court on Monday.
“John Doe 2 claimed in his affidavit that – based on information he said was provided to him by former colleagues – ‘it appears that Mr. Prince and his employees murdered or had murdered one or more persons who have provided information, or who were planning to provide information, to the federal authorities about the ongoing criminal conduct.’ John Doe 2 alleged Prince ‘views himself as a Christian crusader tasked with eliminating Muslims and the Islamic faith from the globe.’”
–Remember that giant particle collider? The “biggest, most expensive physics machine in the world”? Remember how it’s taken 15 years and $9 billion to construct the darned thing, and then when they attempted to switch it on last September, it failed? Well, it’s still supposed to become operational at some point but the 17-mile underground racetrack has lost its ability to operate at high enough energies due to faulty magnets.
I was reading a piece in the New York Times by Dennis Overbye and he notes “scientists say it could be years, if ever, before the collider runs at full strength, stretching out the time it should take to achieve the collider’s main goals, like producing a particle known as the Higgs boson thought to be responsible for imbuing other elementary particles with mass, or identifying the dark matter that astronomers say makes up 25 percent of the cosmos.”
Now I have no idea what the above discussion is really all about, but what sucks is you have to picture that a lot of younger scientists in particular were going to use the data for thesis work.
“In an e-mail exchange, Lucio Rossi, head of magnets for CERN [European Center for Nuclear Research], said that 49 magnets had lost their training in the sectors tested and that it was impossible to estimate how many in the entire collider had gone bad. He said the magnets in question had all met specifications and that the problem might stem from having sat outside for a year before they could be installed.”
Think about that. Are they rusting away, having sat out in the rain? Goodness gracious. I hope there was at least a tarp pulled over them.
–Now if the above isn’t bad enough, check this out. The Dallas Cowboys are opening their new stadium next month, one that cost a record $1.15 billion and seats 82,000. By all accounts it is spectacular. [It better be for that price, eh?]
But owner Jerry Jones wants to set an NFL attendance record so he’s decided to sell $29 Party Pass tickets for at least two of the regular season games (as well as preseason contests), that allows the fans to watch the action, standing, with the goal of accommodating an additional 15,000 to 35,000, all crammed into “free space,” with the sections behind seats in each end zone and on a series of six elevated platforms connected by stairways.
This has to be the absolute dumbest idea I’ve ever heard…like cramming folks in for an English League football (soccer) contest with those high fences that lead to stampedes.
If I had a seat, I’d be furious having to deal with a large increase in crowds for concessions, for example, and what of the bathroom situation? You design the place to accommodate 82,000…and then you add another 35,000? Of course they don’t add more toilets. [I drink beer…always thinking…]
So what kind of fan experience is it for those shelling out big bucks in the end zones? Oh well, I can’t stand the Cowboys…I don’t know why I’m getting so upset.
–This was a week where Vitamin D was in the news as a slew of studies over the past year reach the same conclusion. It’s good for you. As Shari Ryan writes in the Los Angeles Times:
“Long considered just a supplement consumed with calcium for bone health, this humble vitamin may have untapped potential in fighting or preventing disease, suggests an explosion of new research. Not only has it shown promise in reducing the risk, of, among other things, diabetes, pancreatic cancer, breast cancer and cardiovascular disease, but it also seems to improve infertility, weight control and memory.”
Now food industry executives are exploring ways to fortify more products with our new best friend.
But what is worrisome, and a sign of the times, is our children aren’t getting nearly enough of it. They don’t drink as much milk as they should, substituting sports drinks, for one, and our kids don’t go out to play like we used to and get the benefits of the sun.
Looking back, though, the good thing is our daughters are far more physically active than they used to be. Which is why women will increasingly steamroll men. Guys, you’ve been warned.
–Then again, there’s Sarah Palin. She really did say the following, as noted in Newsweek, as she was extolling the virtues of the Alaskan wilderness during her last speech as governor.
“It is as throughout all Alaska that big wild good life teeming along the road that is north to the future.”
–In a big blow to Los Angeles, Police Chief William Bratton is stepping down with three years left in his second five-year term. Bratton has done a super job bringing a troubled force back from the brink, with the department just recently released from eight years of oversight by the U.S. Department of Justice. Bratton will become CEO of Altegrity Security Consultants, a newly-formed private security company. Crime steadily declined in L.A. under Bratton’s tenure. Some say he is angling to run for mayor of New York in 2013.
–Former Congressman William J. Jefferson was convicted on 11 of 16 counts for bribery, racketeering and money laundering. Back in 1990, Jefferson became the first black congressman elected in Louisiana since Reconstruction and was a powerful committee chairman, including on African trade. But in 2005 the FBI raided his home and found $90,000 in cold cash wrapped in foil and stuffed inside Boca Burger boxes. Jefferson will probably be sentenced to something like 20 years (total guess on my part….the max is 150).
–Uh oh. A new El Nino threatens to turn 2010 into one of the hottest years on record. Such was the case in 1997-98, when an El Nino helped lead to the world’s hottest year since Raquel Welch was vamping for the cameras one million B.C.
–Three glaciers in the state of Washington and Alaska have been shrinking rapidly the past two decades in what the U.S. Geological Survey says is yet further confirmation of global warming. While glaciers in the Northwest have gained and lost mass since 1957 when the agency began collecting data, since 1989 it has been an almost one-way street. As a senior scientist put it, “That’s telling us something on a larger scale is happening.”
–Check this out. From Adam Sage / London Times
“Holidaymakers have been told to keep away from beaches in northern France covered in seaweed after doctors gave warning that it could give off lethal fumes when it rots.
“A stretch of beach had to be closed after a horse rider lost consciousness as a result of the putrefying algae. His horse was killed. Local residents have also been treated in hospital.
“The incident was in Brittany, where green seaweed is spreading across the region’s beaches as nitrates pollute the water supply as a result of intensive agriculture….
“Alain Menesguen, director of research at the French Institute for Sea Research and Exploitation, said: ‘This is a very toxic gas, which smells like rotten eggs. It attacks the respiratory system and can kill a man or an animal in minutes.’ Some scientists believe that a build-up of hydrogen sulphide in the atmosphere wiped out the dinosaurs 300 million years ago.”
Geezuz. The stuff is as toxic as cyanide, according to another expert.
–Lastly, being a Mets fan, I’m fired up for…football! And what a year it’s going to be in the college game as Tim Tebow, Colt McCoy and Sam Bradford return to lead the preseason top three squads; Florida, Texas and Oklahoma. But my Wake Forest Demon Deacons are going to shock the world! [I’m not saying national champions, but perhaps Top 15, which would be cause to bring home some premium by year end.]
Pray for the men and women of our armed forces, and all the fallen.
Gold closed at $956
Oil, $70.78
Returns for the week 8/3-8/7
Dow Jones +2.2% [9370]
S&P 500 +2.3% [1010]
S&P MidCap +4.3%
Russell 2000 +2.8%
Nasdaq +1.1% [2000]
Returns for the period 1/1/09-8/7/09
Have a great week. I appreciate your support.
