For the week 12/21-12/25

Just the basics on the economy for one more week before I unveil my thoughts on 2010 next time, including extensive musings on the geopolitical front. 

Stocks hit new post-Crash highs despite decidedly mixed economic data. The final report on third quarter GDP showed the U.S. grew just 2.2%, down from the initial 3.5% report in October. It’s clear that without cash-for-clunkers the economy barely moved. Estimates for the fourth quarter, though, are for stronger growth. 

The news on housing was mixed. November existing home sales soared, far more than expected, with the median home price ticking up again, but then on Wednesday we learned of poor new home sales for the month. 

And the data on November personal income and consumption, as well as durable goods (big ticket items), while in the ‘+’ category, were also all below projections. Hardly encouraging. But weekly jobless claims were better than two recent reports on this key data point and at the end of the day it’s still all about jobs, jobs, jobs. 

One cause of the stock market’s decidedly positive tone, however, appears to have been the steepening yield curve, with the yield between the 2- and 10-year Treasury at a record 286 basis points (2.86%) on Thursday.  In normal times this means a strengthening economy. The Federal Reserve continues to tell you they will keep short-term interest rates low for the foreseeable future, this being what the Fed can control, while bond market vigilantes take up the yield on the longer end of the curve, which they control, as inflation expectations rise, as one would expect should solid growth return. 

But is this really going to be the case, at least the first half of next year? With unofficial employment still in the 17% ballpark, and the official rate at 10%, where is the consumer spending going to come from to ensure a true recovery? And if the consumer doesn’t return in a big way for another few quarters, how do you come up with inflation when the outlook for labor, still the chief component of most products, remains so bleak with wage pressures nonexistent? Small business, for example, the backbone of America, continues to get slaughtered. I was reading an article in the Los Angeles Times on the jewelry district there and every single store the reporter went into said the same thing…sales were off 90%! Small-business bankruptcies in California as a whole are up 81% for the 12 months ended 9/30 (44% nationwide). 

And to those who persist in saying the Christmas shopping season was positive, wait until about the third week in January when the definitive figures normally roll in. 

Overseas, most of the economic news was limited to China, where the government reiterated it would continue to spend yuan already allocated for further stimulus in 2010. Seeking to allay fears the central bank will tighten precipitously, officials stated the banks are fundamentally sound despite record levels of loan originations, but modest capital raises could be necessary. Beijing also announced the target for growth next year is 8%, which they say virtually every year, but economists expect it to be closer to 9%. 

In Japan, the export picture continued to brighten thanks largely to, one guess, China, but the jobless rate ticked up to 5.2%.

But let’s turn to two big items that reached conclusions, at least interim ones, over the past 7-10 days…climate change and health-care reform. 

Virtually everyone associated with the UN summit in Copenhagen walked away saying, “What was that all about?” Nothing was achieved…nothing… though many of us are happy for this. There are no legally binding targets on emissions reductions, let alone anything that can be enforced, meaning the last few years have been totally wasted as it remains a developed world vs. the developing one. Business, especially in the United States and Europe, was looking for guidance and leadership so they can plan ahead, as successful businessmen are wont to do, but received neither. Because Copenhagen was such a failure, though, there are increased fears of protectionism. 

And the blame game is now on. Brazil’s President Lula said President Obama wasn’t prepared to make sufficient cuts, which in turn led to other countries avoiding commitments of their own. 

Britain accused China of hijacking the talks in its refusal to support binding cuts. China said it was Britain’s fault. [Maybe we’ll have another Opium War between these two.] 

Environmental groups were furious, with Greenpeace U.S. head Phil Radford saying President Obama was “the man who killed Copenhagen.” Friends of the Earth said, “Climate negotiations in Copenhagen have yielded a sham agreement with no real requirements for any countries.” 

“Chaos and farce reigned at the birth of the climate accord agreed to by a clique of leaders, with statesmen going missing, critics crying foul and hacks stampeding on vain hunts for U.S. President Barack Obama. 

“Fatigue fermented a feverish cocktail of human emotion as Obama claimed to have staved off a default in the dying hours of global-warming talks in Copenhagen…. 

“While Obama’s team clearly had an interest in spinning the climax of the talks to the young U.S. president’s advantage, they revealed a succession of events more apt to a French farce than a major world summit. 

“Frustrated at deadlock in the talks, largely over China’s refusal to accept a transparency regime to monitor developing states’ emissions, Obama apparently vowed to have ‘one more run at getting this done.’ 

“Desperate for a foreign-policy win, Obama drew the line when a comparatively minor Chinese official, Yu Qingtai, an expert on climate change, showed up at a meeting instead of Premier Wen Jiabao. ‘I don’t want to mess around with this any more. I want to just talk with Premier Wen,’ a senior aide quoted Obama as saying. 

“Obama also decided he wanted to speak to leaders of major developing powers seen in China’s camp.” 

This set off a search for the likes of Indian Prime Minister Singh, who some said was already at the airport believing talks were over. But Wen’s team said they were ready to meet Obama, and it was then Obama’s aides realized Singh hadn’t left and that he was with Wen, Lula and Jacob Zuma of South Africa. 

“ ‘Mr. Premier, are you ready to see me? Are you ready? Mr. Premier, are you ready to see me? Are you ready?’ Obama cried. U.S. officials insisted the president did not barge in uninvited, but was merely showing up on time for his talks with Wen.” 

Too much. There wasn’t even a seat for Obama, so he pulled one up and sat next to Lula. “Hey, Lula,” said our president. 

Charles Hurt / New York Post 

“(Obama) later tried to put a positive spin on the meeting, saying a ‘meaningful and unprecedented breakthrough’ had been reached. ‘We have come a long way, but we have much further to go.’…. 

“Others derided the conference as a failure that did little more than provide Third World dictators like Venezuela’s Hugo Chavez and Zimbabwe’s Robert Mugabe a platform for again bashing the United States.” 

And then you have the issue of the developed world coughing up $100 billion for poor nations to help them limit emissions over the coming decades. Fat chance the American taxpayer will stand for putting up, say, $10 billion of it in short order. 

As for health-care, the Senate got its 60 votes after all as Nebraska Democratic Senator Ben Nelson picked up permanent funding for much of his state’s Medicaid tab in exchange for his vote. The annual bill is said to be $45 million+, forever, plus Nelson gained tax breaks for the likes of Mutual of Omaha. Earlier, Louisiana Democrat Mary Landrieu raked in $300 million in largely one-time benefits for her state if she’d vote for the Senate bill. But it’s Nelson’s deal, one that the other 49 states will now have to pay for, that has many Americans all riled up. As the Republicans railed, these backroom deals are nothing more than the worst form of corruption (though I hasten to add Republicans have of course been guilty of same over the history of our Republic). 

Now the Senate version must be reconciled with the House’s and a conference between the two will take it up around Jan. 20 following the recess. It seems highly unlikely a final version will be passed by both Houses in time for President Obama’s State of the Union speech. 

There are some elements of both plans that are good, such as no denial of coverage for preexisting conditions, but the reality is the costs will soar far above the estimates the Congressional Budget Office came up with in ‘scoring’ the proposals. Take one critical item…Medicare. Medicare is at the heart of the packages, as in severe cuts in it are to pay for the lion’s share of other programs. 

But Congress has never allowed Medicare to be cut even one dime! Sure, the bill could get approved in largely its current form but then later the Medicare cuts could be rescinded and it’s suddenly another half a trillion added to the deficit. 

Robert Samuelson / Washington Post 

“The various health-care proposals represent atrocious legislation. To be sure, they would provide insurance to 30 million or more Americans by 2019. People would enjoy more security. But even these gains must be qualified. Some of the newly insured will get healthier, but how many and by how much is unclear. The uninsured now receive 50 to 70 percent as much care as the insured. The administration argues that today’s system has massive waste. If so, greater participation in the waste by the newly insured may not make them much better off…. 

“(Obama’s) plan amounts to this: partial coverage of the uninsured; modest improvements (possibly) in their health; sizable budgetary costs worsening a bleak outlook; significant, unpredictable changes in insurance markets; weak spending control. This is a bad bargain. Health benefits are overstated, long-term economic costs understated. The country would be the worse for this legislation’s passage. What it’s become is an exercise in political symbolism: Obama’s self-indulgent crusade to seize the liberal holy grail of ‘universal coverage.’ What it’s not is leadership.” 

“And tidings of comfort and joy from Harry Reid too. The Senate Majority Leader has decided that the last few days before Christmas are the opportune moment for a narrow majority of Democrats to stuff ObamaCare through the Senate to meet an arbitrary White House deadline…. 

“Mr. Obama promised a new era of transparent good government, yet on Saturday morning Mr. Reid threw out the 2,100-page bill that the world’s greatest deliberative body spent just 17 days debating and replaced it with a new ‘manager’s amendment’ that was stapled together in covert partisan negotiations. Democrats are barely even bothering to pretend to care what’s in it, not that any Senator had the chance to digest it in the 38 hours before the first cloture vote at 1 a.m. this morning…. 

“The rushed, secretive way that a bill this destructive and unpopular is being forced on the country show that ‘reform’ has devolved into the raw exercise of political power for the single purpose of permanently expanding the American entitlement state. An increasing roll of leaders in health care and business are looking on aghast at a bill that is so large and convoluted that no one can truly understand it.” 

Health-care costs for business will absolutely soar, and for the young. A centralized system means far less choice. The deficit is going to soar. [Don’t be an idiot and fall for the talk it’s going to be reduced.] 

But perhaps George Will summed up best in his Washington Post column the “simultaneous climaxes in Copenhagen and Congress. The former’s accomplishment was indiscernible, the latter’s was unsightly. 

“It would have been unprecedented had the president not described the outcome of the Copenhagen climate change summit as ‘unprecedented,’ that being the most overworked word in his hardworking vocabulary of self-celebration. Actually, the mountain beneath the summit – a mountain of manufactured hysteria, predictable cupidity, antic demagoguery and dubious science – labored mightily and gave birth to a mouselet, a 12-paragraph document committing the signatories to…make a list. 

“A list of goals they have no serious intention of trying to meet. The document even dropped the words ‘as soon as possible’ from its call for a binding agreement on emissions. 

“The 1992 Rio climate summit begat Kyoto. It, like Copenhagen, which Kyoto begat, was ‘saved,’ as Copenhagen was, by a last-minute American intervention (Vice President Al Gore’s) that midwifed an agreement that most signatories evaded for 12 years. The Clinton-Gore administration never submitted Kyoto’s accomplishment for ratification, the Senate having denounced its terms 95 to 0…. 

“At least the president got a health-care bill through the Senate. But what problem does it ‘solve’ (Obama’s word)? Not that of the uninsured, 23 million of whom will remain in 2019. Not that of rising health-care spending. This will rise faster over the next decade…. 

“Nebraska’s Ben Nelson voted for the Senate bill after opposing both the Medicare cuts and taxes on high-value insurance plans – the heart of the bill’s financing. Arkansas’ Blanche Lincoln, Indiana’s Evan Bayh and Virginia’s Jim Webb voted against one or the other. Yet they support the bill. They will need mental health care to cure their intellectual whiplash. 

“Before equating Harry Reid to Henry Clay, understand that buying 60 Senate votes is a process more protracted than difficult. Reid was buying the votes of senators whose understanding of the duties of representation does not rise above looting the nation for local benefits. And Reid had two advantages – the spending, taxing and borrowing powers of the federal leviathan, and an almost gorgeous absence of scruples or principles. Principles are general rules, such as: Nebraska should not be exempt from burdens imposed on the other 49 states. 

“Principles have not, however, been entirely absent: Nebraska’s Republican governor, Dave Heineman, and Republican senator, Mike Johanns, have honorably denounced Nebraska’s exemption from expanded Medicaid costs…. 

“During this long debate, the left has almost always yielded ground. Still, to swallow the Senate bill, the House will have to swallow its pride, if it has any. The conference report reconciling the House and Senate bills will reveal whether the House is reconciled to being second fiddle in a one-fiddle orchestra.” 

Lastly, Iran’s Green movement is gathering renewed strength as a result of the death of 87-year-old Grand Aytatollah Hossein Ali Montazeri. Montazeri was a leader of the 1979 Iranian Revolution, having served years in prison beforehand for his work to bring down the Shah. He was deemed the successor to Ayatollah Khomenei at one point but then broke with the regime when he accused Khomenei and the revolution of creeping dictatorship and repression. Montazeri was placed under house arrest for years as he railed against the harsh justice being imposed on the people. He thus became a leading voice of the opposition. 

Montazeri’s influence then grew following the fraudulent presidential election but his failing health limited him to speaking out from the holy city of Qom. It was left to the other three leaders of the opposition, Mousavi, Karroubi, and former president Khatami to carry on but all are still subject to government pressure. Karroubi even went so far as to say the other day that the West should let Iran solve its own problems, but added President Ahmadinejad should not remain in power. 

Montazeri’s death, though, has galvanized the Green movement, and 6 of 12 leading clerics paid their last respects, a significant sign of discontent with the ruling regime. One of the more popular chants at the growing demonstrations around the country now is “Montazeri is not dead – it is the Government that is dead.” Grand Ayatollah Yousef Sanei is expected to replace Montazeri and he is even more aggressive in his denunciations of Ahmadinejad et al. 

But the government is fighting back and the protests are being violently suppressed by the Iranian Revolutionary Guards and their thug arm the Basij (pronounced ‘Ba-see-gee’). Mousavi has been dismissed from his position of head of Iran’s Academy of Arts. It is reported that hundreds of Basij descended on Ayatollah Sanei’s offices, beating his staff. Government supporters are staging counter-demonstrations. 

Editorial / Washington Post 

“Montazeri…linked the democratization of Iran to its peaceful coexistence with the West. Before his death, he apologized for the 1979 Iranian seizure of the U.S. Embassy in Tehran and – undoubtedly most irritating to (Supreme Leader Ayatollah) Khamenei – opposed the regime’s nuclear ambitions. ‘In light of the scope of death and destruction they bring,’ Mr. Montazeri wrote, ‘and in light of the fact that such weapons cannot be used solely against an army of aggression but will invariably sacrifice the lives of innocent people, even if these innocent lives are those of future generations, nuclear weapons are not permitted according to reason or Sharia [Islamic law].’ 

“We would not underestimate the fact that a figure such as this can bring forth multitudes – even in death – while Mr. Ahmadinejad is reduced to unleashing his militia and shrieking at the West. The most momentous international event of 2009 was the uprising in Iran, and though the regime’s collapse is not imminent, it is hardly unthinkable. President Obama is prudent to pursue a diplomatic solution to Iran’s nuclear ambitions. But in doing so, he must not diminish the prospect that Iran’s people might ultimately deliver both themselves and the world from the menace.” 

Meanwhile, it’s yearend and Iran will ignore the deadline for accepting a uranium enrichment fuel deal, at which point the White House and some of our allies have promised harsher sanctions. “Who are they to set us a deadline?” screeched Ahmadinejad. “You should know that if we had any intention of building a bomb, we would have had enough guts and courage to announce that without any fear from you.” 

But when will the P5+1 [Russia, China, the U.S., France, Britain and Germany] act? Supposedly not until the second half of January at the earliest. 

Back to Montazeri, the Wall Street Journal quoted him thusly: 

“A political system based on force, oppression, changing people’s votes, killing, closure, arresting and using Stalinist and medieval torture, creating repression, censorship of newspapers, interruption of the means of mass communications, jailing the enlightened and the elite of society for false reasons, and forcing them to make false confessions in jail, is condemned and illegitimate.” 

President Obama must take advantage of this moment. As Senator John McCain said: 

“The president should stand up for the people who are demonstrating and risking their very lives on behalf of freedom on the streets of Tehran. Let’s make it very clear we are with these people who are struggling for freedom as we always have.” 

Note: Watch for major protests across Iran on Sunday, a holiday. 

–It was a terrific holiday-shortened week. I have to admit I thought the economic data, coupled with reduced trading volume, may have led to more volatility but it was essentially straight up for stocks in an orderly fashion as the Dow Jones tacked on 1.8% to close at 10520, its best finish since October 2008. Ditto the S&P 500 which rose 2.2%, while Nasdaq climbed 3.3%. The S&P is now up 66.5% off the March lows and has erased half its losses from the Oct. 2007 peak. 

–U.S. Treasury Yields 

–This will be a big theme of mine in my 2010 outlook, but California remains the poster boy for state budget problems. For instance 200,000 state workers who are currently forced to take 3 unpaid days off a month (a 14% pay cut) may see more of the same well into 2010. 

–The Financial Times named Goldman Sachs CEO Lloyd Blankfein its Person of the Year. 

“In 2009…Wall Street faced a wave of public anger at how banks that survived only with the assistance of taxpayers seemed unchanged and unrepentant. Goldman’s profitability, and suspicions that its deep links with governments around the world give it unfair advantages, made it a symbol of Wall Street greed and excess. It was described by the Rolling Stone writer Matt Taibbi as ‘a great vampire squid wrapped around the face of humanity.’ 

“Mr. Blankfein has struggled to rebut the criticism effectively, shifting from insisting that it would probably have survived the crisis without help from the U.S. Treasury, to apologizing for its conduct, and finally (in a typically jaunty line at the end of an interview with the Sunday Times) asserting that it was ‘doing God’s work.’ 

“Yet he has also steered Goldman adeptly through the crisis, betting correctly that the global investment banks would survive the turmoil (with government help) and not be dismantled by regulators. Instead, his bank has stuck to its strengths, unashamedly taken advantage of the low interest rates and diminished competition resulting from the crisis to make big trading profits.” 

Or you could say Blankfein, and Goldman, are classic examples of the good, the bad, and the ugly. 

–When it comes to the bad and ugly, Gretchen Morgenson and Louise Story had a piece in the New York Times about the ongoing investigations by the SEC, Congress and other agencies of Goldman’s role in the $billions of losses on securities owned by pension and insurance companies as a result of instruments (C.D.O.’s) created by Goldman, as well as others such as Deutsche Bank and Morgan Stanley. While this isn’t necessarily news, each time you read of it the more upset you get. 

“How these disastrously performing securities were devised is now the subject of scrutiny by investigators…. 

“While the investigations are in the early phases, authorities appear to be looking at whether securities laws or rules of fair dealing were violated by firms that created and sold these mortgage-linked debt instruments and then bet against the clients who purchased them…. 

“One focus of the inquiry is whether the firms creating the securities purposely helped to select especially risky mortgage-linked assets that would be most likely to crater, setting their clients up to lose billions of dollars if the housing market imploded. 

“Some securities packaged by Goldman…ended up being so vulnerable that they soured within months of being created.” 

Of course Goldman and others, including hedge funds, were then profiting by placing “unusually large negative bets that were not mainly for hedging purposes.” 

“ ‘The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen,’ said Sylvain R. Raynes, an expert in structured finance at R&R Consulting in New York. ‘When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.’” 

It’s why Americans should continue to be sick to their stomach in reading of bonus packages for many of the dirtballs that brought the system down. Goldman is indeed worthy of the highest contempt. This story cannot die and those responsible should be prosecuted. The problem is the laws under which such cases could be pursued are full of loopholes. I live among these creeps. For the most part they are not good people, or, at best, totally clueless when it comes to their fellow man. And remember, every time you hear of Goldman’s charitable work, I first told you years ago, in talking of the likes of Sandy Weill, that these guys hide behind it. 

–The Washington Post reported on Wednesday that despite AIG executives’ promises to return bonuses earlier this year of some $165 million that prompted outrage across the land, from the president on down, “Only about $19 million has been given back, according to a report by the special inspector general for the government’s bailout program.” 

Some employees left, taking their cash with them. Others still with AIG’s Financial Products unit are waiting to see how pay czar Kenneth Feinberg will rule. Many of those impacted believe they are entitled to keep the “retention bonuses” because they earned them. Bottom line, as the Post put it, AIG and the government are on another collision course. 

–Talk about a travel disaster, how about Eurostar and the shutdown of the Channel Tunnel for days after cold weather caused five trains to break down, with some 2,200 passengers stranded/trapped for up to 16 hours before they were evacuated. Separately, severe weather across Europe forced many airports to close.  

–There are conflicting reports on the status of Bernie Madoff as I go to post.  A local ABC affiliate said he was assaulted.  Another said he was in the hospital simply for high blood pressure.

–Deflation Alert: In Ireland, “Wages are falling faster than most economists had predicted – which could have significant implications for forecasts of consumer spending and economic growth.” Wages fell 1.8% in the second quarter (2.8% in the private sector), and for the full year are projected to be down anywhere from 3% to 5%. The outlook for 2010 is no better. [Irish Independent] 

–The Journal reported the FBI is investigating a cyber security breach targeting Citigroup, most likely by a Russian gang, that resulted in the theft of $tens of millions. Strangely, Citigroup denied the FBI is investigating. Security officials are increasingly concerned the hacking will go beyond stealing money to manipulating data that could bring down the banking system by rapidly going from one bank to another. 

–Just minutes from the offices of StocksandNews sits that of David Tepper, whose hedge-fund firm, Appaloosa Management, made a reported profit of $7 billion this year, with Mr. Tepper taking home $2.5 billion himself. According to the Journal’s Gregory Zuckerman, Tepper made his big killing by betting on financials last February and March during the depths of the banking crisis when a stock like Bank of America was trading at around $3. [As opposed to Goldman’s wealth, I have zero issue with Tepper’s. He made a smart bet and won.] 

–The Obama administration has blocked the sale of a majority stake in a small Nevada gold mining operation to the Chinese government because of the proximity to a nearby Navy air station, as well as “other sensitive and classified security and military assets that cannot be identified.” The Navy site is a training facility for testing laser-guided weapons. There was also concern over just what the Chinese would be extracting from the earth; “rare earth elements” being a big topic on this front these days. [Eric Lipton / New York Times] 

–Prepare to be grossed out. USA TODAY reviewed inspection records for nearly 800 airport restaurants and “found items such as tuna salad and turkey sandwiches stored at dangerously warm temperatures, raw meat contaminating ready-to-eat foods, rat droppings and kitchens lacking soap for workers to wash hands.” 

A big culprit is those grab-and-go coolers for sandwiches and salads. They just don’t keep either cold enough. Like check this out. Cold food is supposed to be kept at about 40 degrees. “At Detroit’s airport, chicken in salads was 60 degrees in a cooler Dec. 4 at the Fuddruckers near Gate C25.” Mr. Fudd Rucker should be ashamed of himself. 

Rats also appear to be having a field day at Atlanta’s airport, sports fans, with at least 12 cases of ye olde droppings in one six-month period. Atlanta officials claim they’ve solved the problem.  No word on where the nuclear fallout ended up.

–Speaking of airports and airlines and such, the federal government is ordering the airlines to stop holding passengers hostage for hours on grounded planes. Under the new rules, airlines have to get travelers in the air within three hours or let them off the plane, plus provide some tasty grab-and-go sandwiches and salads after the first two hours of being delayed on the tarmac. Plus, there must be “operable lavatories.” What a unique concept. No “overwhelmed toilets”! [The new rules apply to domestic flights only.] 

–Deflation Alert, part deux: Yahoo is shutting down most operations during Christmas week, with employees given the choice of using vacation time or taking unpaid leave. So it’s basically a cut in pay for some. 

–Italy’s tax amnesty program has worked wonders, about $110 billion collected thus far which is no small piece of change, like 5% of GDP. The Swiss, though, are none too happy as they say their clients are being intimidated. It’s estimated $720 billion in undeclared funds reside outside the country. 

–“Avatar” took in $242 globally its first weekend, $77 million of which was in the U.S.  

–I sold my house, which had been on the market since Sept. 1. Luckily it’s looking like a quick closing. Sold to a Chinese couple, all cash. And that pretty well sums up the state of things these days, doesn’t it boys and girls? 

Pakistan: The Taliban blew up a ninth girls’ school in the Khyber district over the past six weeks. Meanwhile, the crisis deepens over President Zardari’s rule after the high court scrapped an amnesty on corruption charges. 

Israel: The pending prisoner exchange involving Israeli Sgt. Gilad Schalit in exchange for 1,000 Palestinians is all the talk in Israel. Schalit has been held 3 ½ years and the debate is whether releasing 1,000 Palestinians is a boost or a hindrance to further terrorism, with many in Israel’s leadership saying none of the larger figures will be released unless they are then immediately deported. Hamas, with whom Israel is negotiating, is not amenable to this. Stuck in the middle is the Palestinian Authority, which doesn’t want Hamas to gain in popularity should they obtain the exchange. 

Israel is also facing an uproar over Prime Minister Netanyahu’s settlement freeze as the far right clashes with Israeli Defense Forces. 

Lebanon: Prime Minister Saad Hariri traveled to Damascus for talks, a significant first in that it was Hariri’s father, Rafik, who was assassinated by suspected Syrian agents in Feb. 2005. Syria has denied the charges and a long-running U.N investigation has gone nowhere recently. 

Afghanistan: Britain suffered two ‘friendly fire’ casualties in 48 hours, both killed in the dark in Helmand province, a big blow to morale for our vital allies here; the Brits now having lost 242 in Afghanistan, 105 this year alone. It also needs to be noted that Georgia, which is not even in NATO, has committed almost 1,000 additional troops to the effort here. President Mikheil Saakashvili, in an op-ed for the Wall Street Journal: 

“The test of the bonds among nations is not what we do when it is easy, but rather what we do when it is hard. Georgia has been grateful for the extent to which the U.S. and Europe have stood alongside us over recent years. Now we are proud to stand – and fight – alongside you.” 

[Just a little sidebar on Georgia, though. A mother and her eight-year-old daughter were killed by lumps of concrete that hurtled into the courtyard of their home as workers blew up a Soviet war memorial.  An official said, as if you needed to see this, that “security norms were violated.” The memorial was being removed for a new parliament building.] 

North Korea: South Korea’s military said hackers may have stolen a summary of joint war plans with U.S. forces, though this was the result of a careless act; a South Korean officer failed to remove a USB device when he switched a military computer from a restricted-access intranet to the internet. Pyongyang is sure to be involved in the subsequent hacking. ‘Holy cow…the window is open! Quick!’ The hackers did use a Chinese IP address. 

China: Beijing is furious over what it calls “gross interference” in its internal affairs with the trial of dissident Liu Xiaobo, a writer previously jailed over the 1989 Tiananmen Square protests who was tried again for “inciting subversion of state power” after a call for political reform last year. 

“Chinese leader Hu Jintao is putting Christmas to the most cynical use imaginable: jailing a prominent dissident on a holiday when most of the world’s media and government workers will be preoccupied with family and friends. 

“While millions of Christians are commemorating the day ‘grace and truth’ became incarnate in Bethlehem, Liu Xiaobo will be sentenced for speaking truth to communist power. This callous exploitation of Christmas should inspire freedom-loving people, whether Christian or not, to keep Mr. Liu and his family in their thoughts over the holiday…. 

“His trial comes in the midst of an intensifying crackdown on all forms of dissent.” 

A verdict was reached on Friday…11 years in prison.  An official with the U.S. Embassy immediately called for his release. 

Separately, one of the mainland’s huge long-term issues is dealing with the elderly and the lack of a strong safety net. The State Council announced that pensions would rise about 10% next year and make it easier for retirees to collect their benefits wherever they live, a particular issue for 230 million migrant workers. But the highest pension is still less than $200 a month, even after the increase, and in some districts outside the major urban areas, the pension is about $100. 

Across the Strait, Taiwanese prosecutors have indicted former President Chen Shui-bian on new bribery and money-laundering charges, while Taipei and Beijing signed a few more joint agreements on items such as food safety, industrial standards and fishing. 

Japan: Support for the government of new Prime Minister Hatoyama is already below 50% (48) from 71% when he took office in September. 

Russia: So much for efforts to control the weather, particularly over Moscow, where the mayor would prefer to see zero snow. Moscow had a record 7 ½ inches which caused monumental traffic jams. Understand most parts of Russia really don’t get that much snow, it’s just that what falls normally hangs around until April. 

Update: The death toll in the Perm nightclub fire has reached a staggering 152.  74 remain hospitalized.

Yemen: The border war with Saudi Arabia seems to have picked up with 30 suspected al-Qaeda militants taken out in an air strike in Yemen. Al-Qaeda is seeking refuge in the mountains around Yemen’s capital of Sanaa which also happens to be fairly close to the Saudi border. There is a report that Muslim preacher Anwar al-Awlaki, the man linked to Maj. Nidal Hasan of the Fort Hood killings, was taken out. This could be big, but as I go to post I haven’t seen any confirmation of the initial stories. 

I also didn’t realize that 73 Saudi soldiers have died in the fighting here as of earlier this week, with 470 wounded. 

Somalia: I’ve been writing recently of the extensive Somali community in Minneapolis and how many are being recruited by al-Qaeda affiliated groups to fight in the civil war in their homeland, with the threat they could return to the U.S. and wreak havoc here. Britain has its own issues with the Somali population. One estimate puts the figure at 150,000 legal immigrants and three times as many illegal ones. A 2008 report by the U.K.’s Institute for Public Policy Research suggested that 46% had arrived in Britain since 2000, 48% had no qualifications and barely a quarter of the working age population was employed – mostly in menial jobs. An earlier study found 51% of Somali adults were illiterate in any language. Talk about being ripe for recruiting among the extremists. Somalis have already been involved in botched plots in Britain. 

Colombia: Last week I mentioned how the two main Colombian rebel groups, FARC and ELN, had merged and that this was a dangerous development. Then on Monday, a governor of a southern province was kidnapped and found dead less than a day later, his throat slit. FARC was blamed for the killing. Luis Francisco Cuellar was the highest-profile abducted politician since President Alvaro Uribe came into office in 2002.   FARC was once thought to be on the run but appears to have rallied under new leadership. 

The government also announced it is building a new military base on the border with Venezuela as relations between these two hit a new all-time low. 

Mexico: When the first reports came out of the successful taking down of Mexico’s leading drug lord, Arturo Beltran Leyva, we weren’t told a Mexican soldier had died in the raid, Marine Melquisedet Angulo, who was then hailed as a national hero later at his memorial service.  

But gunmen took out their revenge on his mother, aunt and siblings; the message being, ‘You go after us, we wipe out your families.’ Four killed, one seriously injured. President Calderon called the attack “a cowardly act,” adding, “Those who act like this deserve the unanimous repudiation of society and they must pay for their crime.” 

There has to be a special place in hell for them. [Unfortunately, as the only casualty of the operation to kill Leyva, Angulo’s name was released. The other Marines involved are being protected.] 

–I was involved in Christmas Day activities and didn’t know of the failed bomb attempt aboard the Northwest Airlines plane until late.  We’ll all learn a lot more shortly.

–Rudy Giuliani announced he isn’t running for either governor or the senate in New York, endorsing former congressman Rick Lazio for the gubernatorial race against incumbent David Paterson and probably Andrew Cuomo. Giuliani said he is too busy with his business, but he’s leaving open the possibility of running for president again in 2012. [I doubt it.] 

What it means is that Democratic Sen. Kirsten Gillibrand, who was tabbed to fill Hillary Clinton’s seat, doesn’t as yet face a serious Republican challenger for next fall’s vote. Gillibrand also would appear to be a total idiot; she having no clue that she just screwed her own state in terms of financing for the Senate health-care proposal. [As for fellow Democratic Senator Charles Schumer, he is interested in becoming majority leader so he had different reasons for not fighting for New York, a la, say, Ben Nelson of Nebraska.] 

–Alabama Congressman Parker Griffith announced he is switching parties to become a Republican due to passage of the health-care bill. It’s “bad for our doctors…bad for our patients [Griffith is an oncologist-turned-politician], and…bad for the young men and women who are considering going into the health-care field.” 

–Appearing on American Urban Radio Networks, President Obama rejected criticism he isn’t doing enough to help black Americans. “Is there grumbling? Of course there’s grumbling, because we just went through the worst economic crisis since the Great Depression.” 

Obama then stupidly said (at least from this white man’s perspective), “If you want me to line up all the black actors, for example, who support me and put them on one side of the room and a couple who are grumbling on the other, I’m happy to have that.” 

But then he correctly said, “The only thing I cannot do is, by law, I cannot pass laws that say ‘I’m just helping black folks.’ I’m the President of the entire United States. What I can do is make sure that I am passing laws that help all people, particularly those who are most vulnerable and most in need.” 

–Kathleen Parker / Washington Post 

“Perhaps it is the spirit of the season, but my empathy receptors are in overdrive for poor Barack Obama. All he wanted for Christmas was a health-care reform bill – and all he got was a lousy insurance industry bailout that few can love. 

“Lefties hate it became there’s no public option and no Medicare buy-in for those 55 and over. Righties hate it because requiring that Americans buy private insurance or face penalties means taxpayers will have to hand over more of their hard-earned dollars (assuming they have a job) to the government. 

“Obama, in other words, is having a Harriet Miers moment. Or, rather, he’s having a George W. Bush moment. 

“When Bush nominated the in-over-your-head Miers to the Supreme Court, his fan base turned on him. As one ardent Bush supporter told me at the time: ‘It was in that moment that I realized he really might not know what he’s doing. [Ed. ain’t that the truth.] 

“And so things seem to have turned for Obama. Left-leaning Democrats suddenly are wondering: Who is this guy? What happened to the liberal dream-maker who was going to provide health care to every person in the country while hand-feeding grateful polar bears basking on vast expanses of restored sea ice?” 

–David Broder / Washington Post 

“In the last year or so of George W. Bush’s second term, commentators used to talk a lot about the conspicuous scarcity of other Republicans willing to stand up and defend him. I never thought we’d see Barack Obama face a similar problem before his first year was over. 

“But as Obama’s approval scores sink, it is getting harder and harder to find a full-throated supporter of the president.” 

Look at how former Democratic National Committee chairman Howard Dean attacked the health-care legislation. And now Speaker Nancy Pelosi is strongly intimating that when it comes to approving the 30,000 extra troops for Afghanistan, Obama is on his own. And with the mid-term elections next November, when his fellow Democrats are up for reelection while he isn’t, it’s only going to get worse. Or as Broder puts it: 

–Michael Goodwin / New York Post 

“I am a baby boomer, which is to say my life has coincided with turbulent and awesome times. From the Cold War to Vietnam, from Watergate to Monicagate, through the horrors of 9/11 and the stunning lifestyle advances, my generation’s era has been historic and exciting. 

“Yet for all the drama and change, the years only occasionally instilled in me the sensation I feel almost constantly now. I am afraid for my country. 

“I am afraid – actually, certain – we are losing the heart and soul that made America unique in human history. Yes, we have enemies, but the greatest danger comes from within. 

“Watching the freak show in Copenhagen last week, I was alternately furious and filled with dread. The world has gone absolutely bonkers and lunatics are in charge. 

“Mugabe and Chavez are treated with respect and the United Nations is serious about wanting to regulate our industry and transfer our wealth to kleptocrats and genocidal maniacs. 

“Even more frightening, our own leaders joined the circus. Marching to the beat of international drummers, they uncoupled themselves from the will of the people they were elected to serve. 

“President Obama, for whom I voted because I believed he was the best choice available, is a profound disappointment. I now regard his campaign as a sly bait-and-switch operation, promising one thing and delivering another. Shame on me. 

“Equally surprising, he has become an insufferable bore. The grace notes and charm have vanished, with peevishness and petty spite his default emotions. His rhetorical gifts now serve his loathsome habit of fear-mongering…. 

“Instead of provoking thought and inspiring ideas, the man hailed for his Ivy League nuance insists we stop thinking and do what he says. Now.” 

–There was an inexcusable tragedy in New York the past week that captured quite a bit of attention in these parts. Two EMTs, Jason Green, 32, and Melisa Jackson, 23, work in an Emergency Medical Service dispatch center in downtown Brooklyn, directly above where a coffee shop is located. 

So the other morning, the two (who are said to be dating), were at Au Bon Pain ordering breakfast when a woman, Eutisha Rennis, collapsed in front of them and lay gasping on the floor. The two did nothing while their order was being filled, then left, with Jackson making a call to 911. Rennis, 23, died later in the hospital and lost her premature baby as well. Witnesses said the EMTs “had a callous disregard for that woman. They didn’t show an ounce of remorse.” 

Here’s hoping they serve long, long prison terms, though I recognize nothing more than losing their jobs will happen to them. But talk about outraged, you should have seen Mayor Bloomberg this week. 

–Murders have dropped 17% in Los Angeles this year despite the awful economy, which goes against traditional thought on crime. Departing Chief William Bratton deserves a ton of credit for the improvement, while some criminologists suggest that with more people home, and not working, they serve as “guardians” against crime in their neighborhoods. 

–I knew of the Auschwitz sign stealing when I posted my column last week but opted not to write anything about it because of my ‘wait 24 hours’ policy. Once again it was the right thing to do because if I had commented then after the first reports, I would have been talking of the theft being the work of Neo-Nazis. 

It turns out the theft of this historic sign (which translates to “Work Will Set You Free”) was cut into three pieces and may have been ordered by a foreigner, according to a Polish prosecutor, and that the five men who were arrested – all Poles – have no Neo-Nazi links but were evidently shipping it to Sweden, to fund attacks on the government there, including one on the prime minister. 

–The legendary rock group The Who is slated to perform at the Super Bowl half-time show but various advocacy groups are trying to get guitarist Pete Townshend banned from participating because Townshend is currently on a British sex offenders’ register for five years after he admitted accessing child pornography online. This could get interesting. 

–Mark R., in looking at my comments on Moscow’s record cold weather last week, took some of the dates I noted and plugged them into his favorite Website, Spaceweather.com, which reveals the sunspot cycles dating back over 250 years and the corresponding weather. Less activity, cooler temperatures, for example. Recently there’s been little action so until things pick up, Mark recommends buying extra blankets during the post-holiday sales (I added this last bit) while putting another log on the fire. 

–The U.S. Postal Service expects to deliver 11% fewer Christmas cards this year, with many saying they cut back because of the expense. Even the use of e-mail cards is dropping. 

–The Vatican’s newspaper congratulated “The Simpsons” on their 20th anniversary. Yes, the Vatican’s official publication, “L’Osservatore Romano,” praised the show’s philosophical leanings and even its irreverent side. Without Homer et al, the article said, “many today wouldn’t know how to laugh.” 

Granted, the article criticized The Simpsons “excessively crude language” and some of the violence, but Homer’s religious confusion and ignorance are “a mirror of the indifference and the need that modern man feels toward faith.” 

Commenting on several religion-themed episodes, including one in which Homer calls for divine intervention by crying: “I’m not normally a religious man, but if you’re up there, save me, Superman!” 

“Homer finds in God his last refuge, even though he sometimes gets His name sensationally wrong,” L’Osservatore said. “But these are just minor mistakes, after all, the two know each other well.” 

[As an aside, I can’t believe the Pope didn’t get hurt on Christmas Eve.]

–A poll of Australians for the Sydney Morning Herald has half believing in psychic powers, while 34% believe UFOs exist. And even though Australia is viewed as a widely secular nation, 68% believe in God. 22% believe in witches, however. There…now I’ve given you a conversation starter for your New Year’s cocktail party. 

–Edward Lu, a former astronaut now working on Google’s space initiative, says NASA needs to speed things up and start launching rockets more frequently. Heck, the past few years we’ve only averaged four shuttle launchings per annum. Lu contrasts that with the Russians and their Soyuz rocket, variants of which “have flown more than 1,700 times, averaging about 30 launchings a year. As a result, the Soyuz is among the most reliable of all existing rockets. In fact, I flew into space aboard a Soyuz rocket in 2003 when NASA space shuttles had been grounded after the Columbia disaster.” 

NASA needs a similar workhorse of a rocket, argues Lu. Only then can we have a vibrant, innovative program. “By launching early and launching often, NASA could get back in the business of exploring space.” 

–Lastly, Ross Cameron, a former member of Australia’s parliament, had an interesting op-ed in the Sydney Morning Herald on the message of Christmas. Just a few excerpts. 

“Jesus is easily the most influential person in history, and the most universally loved…. 

“While other preachers and prophets, like John, attracted a following over time, the Jesus movement was instant, fuelled by a mix of charisma, messianic hope and a new message of truth, love and forgiveness. He moved into the countryside to escape conflict with the religious authorities and to better accommodate the crowds that grew with his celebrity…. 

“There are at least 10 non-miraculous theories, of varied plausibility, attempting to explain the resurrection…. 

“Whatever happened, something did, and the mystery surrounding its founder’s death threw kero on the flickering wick of the fledgling movement. Roman historical sources confirm that within 30 years, there was a thriving Christian presence in Rome and in most Mediterranean cities…. 

“Despite Christian pacifism, the Romans rightly perceived a threat. For three centuries, the persecutions continued, including the spectacle of hundreds torn apart by wild beasts in a stadium artfully designed for the purpose and for the pleasure of cheering Roman spectators. Before the slaughter began, each Christian was invited to recant and survive by admitting ‘Caesar is god.’ Few accepted the deal and the purity of their devotion, and the invention of charity in AD200, drew wide admiration…. 

“Within a century, a majority of Romans were Christian. By AD1000, Europe was Christian. By AD2000, five out of six inhabited continents are majority-Christian. The passing of 2000 years from Jesus’ death in 2033 will be the biggest anniversary of the 21st century. 

“We are left to ponder how one year in the life of a seeming nobody could transform the Roman Empire and the entire planet. The reason for the triumph of this nobody is to be found in his first recorded words. ‘Blessed are the meek for they shall inherit the earth.’ Jesus is specially kind to the weak and the outcast – to women, the poor, children, a madman in chains and a hated tax collector. 

“In the pre-Jesus record, in virtually every human society, vast faceless classes of people were less valued than domestic animals. The world’s second-greatest philosopher, Aristotle, while writing the 101 course of every academic discipline, fervently endorsed the keeping of slaves as natural and desirable to good order. Slavery continued for centuries after Jesus but the impulse to end it was Christian. Beyond the Jewish scriptures, to which Jesus gave a megaphone, no-one cared about those on the margins. Jesus establishes the sublime idea that everyone matters. 

“Today that single thought has transformed our sense of what it means to be human. Major political parties of the earth, whether left, centrist or right wing (with the possible exception of the Greens) agree the welfare of the whole human race is our common goal. ‘Blessed are the meek’ evolved into ‘All men are created equal, endowed by their Creator with certain inalienable rights, among which are life, liberty and the pursuit of happiness.’ 

“From whatever perspective we come, thinking people ought to be able to agree, the birth of Jesus was a good day for mankind. I suspect I may never quite shake the childlike hunch that there is some uniquely divine imprint on the central individual of the human story. Happy Birthday, Jesus.” 

Pray for the men and women of our armed forces, and all the fallen. 

Have a great week. Hope Santa was good to you…given the economy and all. I got some premium beer, which makes it the best Christmas I ever had!